BEACON CAPITAL PARTNERS INC
POS AM, 1999-06-22
REAL ESTATE INVESTMENT TRUSTS
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     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 22, 1999

                                            REGISTRATION STATEMENT NO. 333-56937
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------


                       POST-EFFECTIVE AMENDMENT NO. 4 TO
                                   FORM S-11
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                         BEACON CAPITAL PARTNERS, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                              <C>
                   MARYLAND                                        04-3403281
        (State or other jurisdiction of                         (I.R.S. Employer
        incorporation or organization)                         Identification No.)
</TABLE>

                         ONE FEDERAL STREET, 26TH FLOOR
                          BOSTON, MASSACHUSETTS 02110
                                 (617) 457-0400
         (Address and Telephone Number of Principal Executive Offices)

                               ALAN M. LEVENTHAL
                            CHIEF EXECUTIVE OFFICER
                                      AND
                             WILLIAM A. BONN, ESQ.
                                GENERAL COUNSEL
                         BEACON CAPITAL PARTNERS, INC.
                         ONE FEDERAL STREET, 26TH FLOOR
                          BOSTON, MASSACHUSETTS 02110
                                 (617) 457-0400
(Name, Address and Telephone Number, Including Area Code, of Agent for Service)
                         ------------------------------

                                    COPY TO:
                             GILBERT G. MENNA, P.C.
                            KATHRYN I. MURTAGH, ESQ.
                          GOODWIN, PROCTER & HOAR LLP
                                BOSTON, MA 02109
                                 (617) 570-1000
                            ------------------------

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after this registration statement becomes effective, as determined by the
Registering Stockholder.

    If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
                            ------------------------

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.

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- --------------------------------------------------------------------------------
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITYHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.

<PAGE>


<TABLE>
<S>                     <C>                                <C>
SUBJECT TO COMPLETION
                              20,394,843 SHARES            Prospectus filed pursuant
                        BEACON CAPITAL PARTNERS, INC.              to Rule 424(b)(1)
                                                            relating to Registration
                                COMMON STOCK                     Statement 333-56937
</TABLE>


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

    Beacon Capital Partners, Inc. is a real estate investment trust that
conducts real estate investment and development activities.

    This Prospectus relates to 20,394,843 shares of our Common Stock which may
be sold by certain Selling Stockholders. We are registering these securities on
behalf of the Selling Stockholders. We are not selling any of these securities
and we will not receive any proceeds from the sale of these securities.

    Our principal executive offices are located at One Federal Street, 26th
Floor, Boston, Massachusetts 02110. Our telephone number is (617) 457-0400.

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

    INVESTING IN THESE SECURITIES INVOLVES CERTAIN RISKS. THE FOLLOWING
DISCUSSION SUMMARIZES SOME OF THESE RISKS. YOU SHOULD CAREFULLY CONSIDER THE
INFORMATION SET FORTH IN "RISK FACTORS" BEGINNING ON PAGE 7.

    - We rely upon two key personnel.

    - We have a limited operating history and no established sources of
      financing.

    - There is currently no market for our Common Stock and we do not currently
      plan to list our Common Stock on an exchange or on The Nasdaq Stock
      Market.

    - We intend to leverage our assets, and may, under our current guidelines,
      borrow up to 60% of our total market capitalization. This may compound
      losses. Our organizational documents contain no limits on our ability to
      leverage our assets.

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

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                 THE DATE OF THIS PROSPECTUS IS JUNE   , 1999.

<PAGE>
                           FORWARD-LOOKING STATEMENTS

    Statements in this Prospectus under the captions "Offering Summary," "Risk
Factors," "Investment Strategies and Experience," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
Prospectus are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). When we
use the words "anticipate," "believe," "estimate," "expect" and other similar
expressions in this Prospectus, they are generally intended to identify
forward-looking statements. In connection with such forward-looking statements,
you should consider that they involve known and unknown risks, uncertainties and
other factors which are, in some cases, beyond our control and which could
materially affect our actual results, performance or achievements. Factors that
could cause our actual results, performances or achievements to differ
materially from those expressed or implied by our forward-looking statements
include, but are not limited to, the following:

    - international, national, regional and local economic and political
      conditions;

    - demographic changes;

    - industry trends;

    - competition;

    - changes in business strategy or development plans;

    - availability, terms and deployment of capital;

    - our Year 2000 compliance;

    - Year 2000 compliance of third parties with whom we transact business;

    - the impact of pending or future litigation;

    - variation in quarterly operating results;

    - the ability to obtain third party shareholder approval for investment
      transactions;

    - availability of qualified personnel; and

    - changes in, or the failure or inability to comply with, government
      regulation.

    We disclaim any obligation to update these factors or to publicly announce
the result of any revisions to any of these forward-looking statements to
reflect subsequent events or developments.

                                       i
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                               TABLE OF CONTENTS


<TABLE>
<S>                                                                             <C>
FORWARD-LOOKING STATEMENTS....................................................          i
PROSPECTUS SUMMARY............................................................          1
  The Company.................................................................          1
  Business Strategy...........................................................          1
  Advantages of the Company Structure.........................................          3
  The BCP Sister Corp. .......................................................          3
  The Voting Trust............................................................          3
  Selling Stockholders........................................................          4
  Summary Risk Factors........................................................          4
  Relationships...............................................................          5
  The Offering................................................................          6
RISK FACTORS..................................................................          7
  Economic and Business Risks.................................................          7
    Dependence on Key Personnel Whose Continued Service is Not Guaranteed.....          7
    We May Not Successfully Implement Our Growth Strategy.....................          7
      We Have No Established Sources of Financing.............................          7
      We May Fail to Effectively Manage Our Rapid Growth......................          7
      Complex Acquisitions Have a Greater Risk of Failure.....................          8
      Development or Redevelopment of Assets is Costly and May Not Yield
        Economic Benefits.....................................................          8
    Conflicts of Interest Exist Between the Company and Others................          9
      Conflicts Relating to the Operating Partnership.........................          9
      Conflicts Relating to the BCP Sister Corp. .............................          9
      Conflicts Relating to the Incentive Return..............................         10
      Policies With Respect to Conflicts of Interest..........................         11
    Leverage Can Reduce Income Available for Distribution to Stockholders.....         11
    Risks Associated With Hedging Investments and Investments in Derivatives..         12
    The Company's Insurance Will Not Cover All Losses.........................         13
    Property Taxes Decrease Returns on Real Estate............................         13
    Compliance with Americans with Disabilities Act and Other Changes in
      Governmental Rules and Regulations May Be Costly........................         13
    Adverse Effect on Results of Operations Due to Possible Environmental
      Liabilities.............................................................         14
    BCP Sister Corp. Will Have Separate Financing, Which May Not Be
      Available...............................................................         14
    We Are a Newly Organized Corporation With a Limited Operating History.....         15
  Investment Activity Risks...................................................         15
    Appropriate Investments May Not Be Available..............................         15
    Real Estate Is Illiquid and Value Is Dependent on Conditions Beyond the
      Company's Control.......................................................         15
</TABLE>


                                       ii
<PAGE>

<TABLE>
<S>                                                                             <C>
    We Must Compete With Other Companies for Acquisitions.....................         16
    We Must Be Able to Pay Off Our Financing..................................         16
    Real Estate Investment Risks..............................................         16
    Risks Related to Investments in Mortgage Loans............................         17
      Commercial Mortgage Loans May Involve a Risk of Loss....................         17
      Volatility of Values of Mortgaged Properties May Adversely Affect the
        Company's Mortgage Loans..............................................         17
      General Default Risks...................................................         18
    Our Multi-Sector Investment Strategy is More Complicated Than a Single
      Sector Investment Strategy..............................................         18
    Geographically Concentrated Assets Are Vulnerable to Downturns in Local
      Economic Conditions.....................................................         19
    New Markets May Have Conditions Unlike Our Existing Markets...............         19
    We Will Not Have Full Control over Investments Made Through Partnerships
      and Joint Ventures......................................................         20
    We Will Not Have Full Control over Investments Made Through
      Subsidiaries............................................................         20
    Foreign Real Properties Are Subject to Currency Conversion Risks and
      Uncertainty of Foreign Laws.............................................         20
  Legal and Tax Risks.........................................................         21
    Tax Risks.................................................................         21
    Adverse Impact of Future Legislation Regarding REITs......................         23
    Aggregate Stock Ownership Limit May Restrict Business Combination
      Opportunities...........................................................         23
    Foreign Investors Should Consider Tax Risks Under FIRPTA..................         23
    Plans Should Consider ERISA Risks of Investing in Common Stock............         23
    Changes in Management May Be Deterred.....................................         25
    Board of Directors May Change Certain Policies Without Stockholder
      Consent.................................................................         25
    Loss of Investment Company Act Exemption Would Adversely Affect the
      Company.................................................................         25
    Limitation on Liability of Officers and Directors of the Company..........         26
  Other Risks.................................................................         26
    Risk that Market for Common Stock Will Not Develop........................         26

THE COMPANY...................................................................         27
  Recent Acquisitions.........................................................         28
  Insurance...................................................................         33
  Investment in Cypress Communications, Inc...................................         33
  Investment in Wyndham International, Inc. and Patriot American Hospitality,
    Inc.......................................................................         33
  Environmental Matters.......................................................         34
  Competition.................................................................         34
  Seasonality.................................................................         34
</TABLE>



                                      iii

<PAGE>

<TABLE>
<S>                                                                             <C>
  Employees...................................................................         34
  The Properties and Pending Acquisition......................................         35
  Occupancy Rates, Base Rents and Net Effective Rents.........................         36
  Lease Expirations--All Properties and Pending Acquisition...................         37
  Historical Operating Information............................................         42
  Mortgage Indebtedness.......................................................         44
  Management Compensation.....................................................         46
  Compensation Committee Interlocks and Insider Participation.................         48
  Certain Relationships and Related Transactions..............................         48
  Directors and Executive Officers............................................         49
  Other Professionals.........................................................         53
  Board of Directors and Indemnification of Officers and Directors............         55
  Long-Term Incentive Plan....................................................         58
  Stock Incentive Plan........................................................         60
  Employment Agreements; Covenants Not to Compete.............................         63
  Credit Facility.............................................................         63
  Available Information.......................................................         63
  Certain Relationships; Conflicts of Interest................................         63
USE OF PROCEEDS...............................................................         64
DISTRIBUTION POLICY...........................................................         65
INVESTMENT STRATEGIES AND EXPERIENCE..........................................         66
  Investment Strategies and Experience........................................         66
  Investment Management.......................................................         67
  The BCP Sister Corp. .......................................................         68
  Policies with Respect to Certain Other Activities...........................         70
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................         71
PRICE RANGE OF COMMON STOCK...................................................         73
CAPITALIZATION................................................................         73
SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA....................         74
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
  OPERATIONS..................................................................         75
  Overview....................................................................         75
  Results of Operations.......................................................         75
  Liquidity and Capital Resources.............................................         76
  Short and Long-Term Liquidity...............................................         77
  Financing Activities........................................................         77
  Investing Activities........................................................         78
  Capitalization..............................................................         80
  Environmental Matters.......................................................         81
  Inflation...................................................................         81
</TABLE>



                                       iv

<PAGE>

<TABLE>
<S>                                                                             <C>
  Recent Developments.........................................................         81
  Year 2000 Readiness Disclosure..............................................         81
  Quantitative and Qualitative Disclosures About Market Risk..................         82
DESCRIPTION OF SECURITIES.....................................................         84
  General.....................................................................         84
  Common Stock................................................................         84
  Preferred Stock.............................................................         85
  Power to Issue Additional Shares of Common Stock and Preferred Stock........         85
  Dividend Reinvestment Plan..................................................         85
  Transfer Agent and Registrar................................................         86
  Transfer Restrictions.......................................................         86
  Registration Rights.........................................................         88
CERTAIN PROVISIONS OF MARYLAND LAW AND OF
  BCP'S CHARTER AND BYLAWS....................................................         90
  Amendment of Charter and Bylaws.............................................         90
  Dissolution of the Company..................................................         90
  Meetings of Stockholders....................................................         90
  The Board of Directors......................................................         91
  Limitation of Liability and Indemnification.................................         91
  Indemnification Agreements..................................................         93
  Business Combinations.......................................................         93
  Control Share Acquisitions..................................................         94
COMMON STOCK AVAILABLE FOR FUTURE SALE........................................         95
OPERATING PARTNERSHIP AGREEMENT...............................................         96
  Classes of Units............................................................         96
  Management..................................................................         96
  Removal of the General Partner; Transfer of the General Partner's
    Interest..................................................................         97
  Amendments of the Operating Partnership Agreement...........................         97
  Transfer of Units; Substitute Limited Partners..............................         98
  Redemption of OP Units......................................................         98
  Operations..................................................................         98
  Issuance of Additional Limited Partnership Interests........................         99
  Extraordinary Transactions..................................................         99
  Exculpation and Indemnification of the General Partner......................        100
  Tax Matters.................................................................        100
FEDERAL INCOME TAX CONSIDERATIONS.............................................        101
  Taxation of the Company.....................................................        101
  Requirements for Qualification..............................................        103
  Impact of Future Legislation................................................        112
  Failure to Qualify..........................................................        112
  Taxation of Taxable U.S. Stockholders.......................................        112
  Taxation of Stockholders on the Disposition of the Common Stock.............        114
</TABLE>



                                       v

<PAGE>

<TABLE>
<S>                                                                             <C>
  Information Reporting Requirements and Backup Withholding...................        114
  Taxation of Tax-Exempt Stockholders.........................................        115
  Taxation of Non-U.S. Stockholders...........................................        116
  Other Tax Consequences......................................................        118
  BCP Sister Corp.............................................................        118
ERISA CONSIDERATIONS..........................................................        119
  The Treatment of the Company's Underlying Assets Under ERISA................        119
SELLING STOCKHOLDERS..........................................................        120
PLAN OF DISTRIBUTION..........................................................        133
LEGAL MATTERS.................................................................        134
EXPERTS.......................................................................        134
AVAILABLE INFORMATION.........................................................        135
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES...................................        F-1
</TABLE>


                                       vi
<PAGE>
                               PROSPECTUS SUMMARY

    THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY BEFORE
DECIDING WHETHER TO INVEST IN OUR COMMON STOCK.

                                  THE COMPANY

    Beacon Capital Partners, Inc. ("we" or the "Company") is a Maryland
corporation established to conduct real estate investment and development
activities. We formed on January 21, 1998 as a Massachusetts corporation and
reincorporated (through a merger) in Maryland on March 17, 1998. We intend to
qualify as a real estate investment trust (a "REIT"). We are the sole General
Partner of Beacon Capital Partners, L.P. (the "Operating Partnership").


    Upon the closing of Fort Point Place, we will own, directly or through a
joint venture, 26 operating properties, consisting of 44 buildings and
approximately 3.5 million rentable square feet. We are also part of a joint
venture that is developing a high-rise building in Seattle, Washington. In
addition, we are part of another joint venture which is developing a twelve-acre
site with two mid-rise office/ R&D buildings in Sunnyvale, California, and we
are redeveloping two buildings in the South Boston Waterfront District of
Boston, Massachusetts.



    All of the Common Stock offered by this Prospectus was initially sold as
part of an offering (the "Original Offering") to NationsBanc Montgomery
Securities LLC, predecessor of Banc of America Securities, LLC ("Banc of
America"). Banc of America subsequently sold the shares they acquired to persons
and institutions defined by the Securities Act of 1933 (the "Securities Act") as
Qualified Institutional Buyers and Accredited Investors. The Common Stock being
offered by this Prospectus is being offered by these purchasers, and their
transferees, donees, or successors (collectively, the "Selling Stockholders").


    We believe that we have developed an organization of investment and
investment management professionals that is well-positioned to take advantage of
today's real estate and capital markets environment. Our management team
combines real estate, capital markets and corporate expertise, which we believe
will uniquely position us to capitalize on market and industry trends in complex
real estate-related transactions across product, geographic and industry lines.

                               BUSINESS STRATEGY

    Our management's experience in the real estate industry drives our business
strategy. As the capitalization of the real estate industry continues to evolve
toward a publicly-held format, we believe that numerous investment opportunities
will emerge that reflect several primary shifts in the real estate industry.
These shifts include:

    - rapid recovery of real estate markets

    - extraordinary growth of the public capital markets for real estate
      companies

    - continued consolidation of the ownership of real estate

    - alignment of interests between investors and management

                                       1
<PAGE>
    - recognition of real estate companies as operating businesses


    These shifts have resulted in significant investment opportunities in real
estate. It is our belief that as the real estate industry continues to
transform, there will be significant opportunities for our skilled and
experienced management team.


    Initially, we expect to focus on opportunities in the office sector. As the
real estate market cycle advances, we expect additional opportunities to emerge
in non-office market sectors, including opportunities in the hotel, residential
and industrial sectors. Increasingly, management expertise and creative real
estate solutions will be required for successful real estate companies. Our
management team has a proven track record in the office sector and other
property types.

    Our strategy is to profitably purchase, develop and manage real estate. We
will implement this strategy through our senior management, which has experience
managing both public and private real estate companies. Our senior management
has extensive experience in the real estate industry. They have demonstrated an
ability to identify and capitalize on industry trends. They will apply these
skills to capitalize on opportunities that emerge as the real estate industry
continues to transform and mature. They have also developed an informal network
of domestic and foreign institutional relationships in the real estate industry.
They will attempt to use these relationships to help identify opportunities to
implement our strategy.

    Our investments will target the following principal real estate areas (the
"Real Estate-Related Assets"), although we cannot anticipate with any certainty
the percentage of our investments that will be made in each category:

    - VALUE-ADDED REPOSITIONINGS AND DISCOUNTED PURCHASES--repositioning and
      recapitalization of under-utilized or poorly capitalized real property by
      purchasing the debt on such property. This includes investment in mortgage
      loans at a discount to the face value of the debt, or purchase of equity
      in the property at a discount to the property's replacement cost;

    - DEVELOPMENT AND RE-DEVELOPMENT--strategic ground-up development or
      re-development of existing properties that can benefit from repositioning;

    - MULTIPLE PROPERTY PORTFOLIOS--acquisition of portfolios of real property
      owned by financial institutions, corporations and other non-strategic
      owners of real estate, as well as liquidating closed-end commingled funds
      and other large holders of real estate portfolios;

    - JOINT VENTURES AND STRATEGIC PARTNERSHIPS--formation of, or acquisition of
      interests in, joint ventures or strategic partnerships as a way to
      leverage both capital and management expertise; and

    - REAL ESTATE COMPANIES AND REAL ESTATE-RELATED BUSINESSES--investment in
      companies primarily engaged in the business of real estate ownership, real
      estate services or other real estate intensive operating businesses, as
      well as related companies that serve the changing needs of the real estate
      industry.

                                       2
<PAGE>
    Although we may also invest in other areas (the "Other Assets" and together
with the Real Estate-Related Assets, the "Assets") that we believe may add value
to the Company, we have no current plans to do so. If we make such investments,
they will not be the principal focus of our investment strategy. We intend to
conduct all of our investment activities in a manner consistent with maintaining
our status as a REIT for United States federal income tax purposes. Other than
these restrictions, we have no policy limiting our investment opportunities or
amounts.

    We believe that we will have distinct advantages over other real estate
investment companies because our management team has extensive experience in the
acquisition, development, financing, management and disposition of Real Estate-
Related Assets. As the capitalization of the real estate industry continues to
evolve toward a publicly-held format, our management team believes that its
prior success in managing a publicly-held REIT will provide us with an
additional competitive advantage over other privately-held REITs and real estate
investment funds.

                      ADVANTAGES OF THE COMPANY STRUCTURE

    We believe that by managing our day-to-day operations internally, we will
offer competitive advantages to our stockholders in comparison to externally
managed REITs because of the alignment of interests between management and
stockholders. We also believe that we have a competitive advantage over certain
other real estate investment entities because we can use the Operating
Partnership in potential acquisitions in ways that may provide certain tax
benefits to sellers.

                              THE BCP SISTER CORP.


    We anticipate that we may identify Real Estate-Related Assets that may be
advantageous investments but which may be inappropriate for investment by a
REIT. To permit stockholders to participate in the economic benefits that may be
associated with these investments, we may use a structure often referred to as a
"paper clip." This "paper clip" structure would involve distributing to our
stockholders the equity interests of a newly-organized BCP Sister Corp. that
would not elect to qualify as a REIT and would make investments in certain
non-qualifying REIT Assets. At the present time, we have not formed a BCP Sister
Corp., nor do we have any current plans to do so. The BCP Sister Corp. is
intended to function primarily as an operating company, in contrast to our
principal focus on investment as a REIT in Real Estate-Related Assets. Our
ability to fully use this structure may be adversely affected by future
legislation.



                                THE VOTING TRUST



    We have agreed, along with several other investors, to invest up to $1
billion in Wyndham International, Inc. and Patriot American Hospitality, Inc.
Because we would not be able to maintain our status as a REIT if we were to hold
all of the Series B Preferred of Wyndham that we are committed to purchase, we
have elected an alternative investment structure pursuant to which all or a
portion of the shares of Series B Preferred would be held through one or more
voting trusts. In connection with structuring this investment, we anticipate
distributing interests representing between $90 million and $150 million worth
of the Series B Preferred, subject to the voting trust, to unitholders and
stockholders as


                                       3
<PAGE>

of June 8, 1999, the record date for the distribution. Although we anticipate
making this distribution following the closing of the Securities Purchase
Agreement, we reserve the right to abandon the proposed distribution and pursue
an alternative investment structure. See "The Company--Investment in Wyndham
International, Inc. and Patriot American Hospitality, Inc."


                              SELLING STOCKHOLDERS

    We are not selling any of the securities offered by this Prospectus, and
will not receive any of the proceeds from their sale. We are registering the
Common Stock on behalf of certain Selling Stockholders.

    The Selling Stockholders may sell these securities directly to purchasers or
they may sell these securities to purchasers through agents, underwriters or
dealers pursuant to this Prospectus. The Selling Stockholders will receive all
of the proceeds from the sale of their securities and will pay all underwriting
discounts, selling commissions and transfer taxes applicable to any sale.
Registration of these securities does not necessarily mean that any Selling
Stockholder will actually sell their securities.

                              SUMMARY RISK FACTORS

    An investment in our Common Stock involves various risks. You should
carefully consider the matters discussed under "Risk Factors." Such risks
include, among others, the following:

    - We rely upon two key personnel.

    - We have a limited operating history and no established sources of
      financing.

    - There is currently no market for our Common Stock and we do not currently
      plan to list our Common Stock on an exchange or on The Nasdaq Stock
      Market.

    - Our management may earn substantial compensation from certain incentive
      plans, which, if paid, could substantially reduce cash available for
      distribution to you.

    - We have a management incentive plan with an incentive reward based upon
      our performance over a specified period. Management's interest in the
      return over this period could conflict with your interests if you have
      shorter or longer term investment goals.

    - We intend to leverage our assets, and could, under our current guidelines,
      borrow up to 60% of our total market capitalization. This may compound
      losses. Our organizational documents contain no limits on our ability to
      leverage our assets.

    - In order to insure compliance with the REIT qualification requirements, we
      have placed limits on the amount of stock any stockholder may own. One of
      these limits generally prohibits any person from owning more than 9.8% of
      our stock. This could inhibit a change of control of the Company.

    - We may be subject to income tax at regular corporate rates if we fail to
      qualify as a REIT. This would substantially reduce the amount of cash
      available for distribution to you.

                                       4
<PAGE>
RELATIONSHIPS

    The relationship among Beacon Capital Partners, Inc., Beacon Capital
Partners, L.P., Beacon Capital Participation Plan and BCP Sister Corp. (if
formed), and the equity ownership thereof is depicted in the picture shown
below.

     [Chart describing the relationship of BCP, the Operating Partnership,
  Other Limited Partners, Beacon Capital Participation Plan, BCP Sister Corp.
          and the BCP Sister Corp. Operating Partnership (if formed)]

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

(1)  We anticipate that at the time of formation of the BCP Sister Corp., the
    stockholders of the Company and the BCP Sister Corp. would be the same.
    However, the equity interests of the Company and the BCP Sister Corp. may be
    owned and transferred separately and independently of each other and,
    consequently, the stockholder constituency of each entity may change over
    time.

                                       5
<PAGE>
                                  THE OFFERING

    The principal terms of our Common Stock are summarized below. For a more
complete description, see "Description of Securities." The Selling Stockholders
will receive all of the proceeds from any sales of the Common Stock offered by
this Prospectus. We will not receive any proceeds from this Offering.

Common Stock:

<TABLE>
<S>                              <C>
Issuer.........................  Beacon Capital Partners, Inc.

Securities Offered (1).........  20,394,843 shares of Common Stock

Common Stock Outstanding.......  20,973,932 shares

Voting Rights..................  Each share of Common Stock has one vote.

Listing........................  The Common Stock is not currently listed on
                                 any exchange or on any Nasdaq market. We do
                                 not currently plan to list the Common
                                 Stock.

Trading........................  The Common Stock has been accepted for
                                 trading in the PORTAL Market.

Stock Ownership Limits.........  No single Stockholder may beneficially own
                                 more than 9.8% of the Common Stock.
</TABLE>

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

(1) This Offering of our Common Stock excludes 579,089 shares of Common Stock
    and shares underlying 225,201 Operating Partnership Units which the Company
    sold to Alan M. Leventhal and Lionel P. Fortin in connection with the
    formation of the Company.

                                       6
<PAGE>
                                  RISK FACTORS

    An investment in our Common Stock involves various risks. You should
carefully consider the following risk factors:

                          ECONOMIC AND BUSINESS RISKS

WE DEPEND ON KEY PERSONNEL WHOSE CONTINUED SERVICE IS NOT GUARANTEED

    We believe that our success depends in large part upon the experience of
Alan M. Leventhal, Lionel P. Fortin and other members of our senior management
whose continued service is not guaranteed. We have executed employment and
non-competition agreements with Messrs. Leventhal and Fortin, but we cannot
guarantee that these agreements are judicially enforceable. If we lost the
services of either Mr. Leventhal or Mr. Fortin, our operations may suffer. Until
we found a qualified replacement, we would be less capable of:

    - obtaining real estate investment opportunities;

    - capitalizing upon relationships in the real estate industry; and

    - structuring and executing potential investments.

    We cannot assure you that we would replace Mr. Leventhal or Mr. Fortin with
someone who has equivalent knowledge and experience. We may not be able to
successfully recruit additional personnel. Any additional personnel we do
recruit may not have the requisite skills, knowledge or experience necessary or
desirable to enhance our incumbent management. In addition, we do not currently
intend to maintain key-man life insurance on any of our executive officers. See
"The Company--Directors and Executive Officers" and "The Company--Management
Compensation."

WE MAY NOT SUCCESSFULLY IMPLEMENT OUR GROWTH STRATEGY

    WE HAVE NO ESTABLISHED SOURCES OF FINANCING


    Our ability to implement our growth strategy depends on access to the
capital necessary to invest in Assets. Since the Company formed recently, we
have a limited operating history. We are currently negotiating the terms of a
$100 million secured credit facility with a commercial lending institution.
There can be no assurance that we will be able to successfully complete these
negotiations and enter into a credit facility on acceptable terms. If we fail to
obtain the necessary capital, our ability to acquire Assets could suffer.


    WE MAY FAIL TO EFFECTIVELY MANAGE OUR RAPID GROWTH

    To successfully implement our acquisition strategy, we must integrate the
acquired Assets into our existing operations. As such, we must consolidate
functions and integrate the departments, systems and procedures of the acquired
Assets with our operations. Integration presents a significant challenge to us.
If we fail to effectively integrate new Assets, our results of operations and
financial condition could suffer.

                                       7
<PAGE>
    COMPLEX ACQUISITIONS HAVE A GREATER RISK OF FAILURE

    We intend to acquire multiple Assets in a single transaction. This technique
reduces acquisition expenses and provides us with operating leverage. However,
portfolio acquisitions are more complex than single-property acquisitions. The
risk that a multiple-property acquisition will not close is greater than in a
single-property acquisition. In addition, the cost of a failed portfolio
acquisition closing is greater than the cost of a failed single-property
acquisition closing. If one of our portfolio acquisition closings failed, we
would incur a charge against our earnings for the costs related to that failed
acquisition.

    Our portfolio acquisitions may result in the acquisition of Assets located
in geographically dispersed markets that are geographically removed from our
principal markets. This geographic diversity could strain our ability to manage
such dispersed Assets. In addition, a seller may demand that we purchase a group
of properties together despite one or more failing to meet our investment
criteria. If this were to occur, we would attempt to either:

    - make a joint bid with another buyer; or

    - purchase the portfolio with the intent to subsequently dispose of those
      Assets which do not meet our investment criteria.

This strategy presents two problems:

    - If we participate in a joint bid, the other buyer may default on its
      obligations and increase the risk that the acquisition may not close.

    - If we intend to dispose of Assets that we do not wish to own, there can be
      no assurance as to how quickly we could sell or exchange such Assets or
      the terms on which they could be sold or exchanged.

    DEVELOPMENT OR REDEVELOPMENT OF ASSETS IS COSTLY AND MAY NOT YIELD ECONOMIC
     BENEFITS

    We intend to develop and construct Real Estate-Related Assets in accordance
with our development and underwriting policies. Risks associated with such
development and construction activities include the risks that:

     (i) we may abandon development opportunities after expending resources to
         determine feasibility;

    (ii) construction costs may exceed original estimates;

    (iii) occupancy rates and rents at a newly completed property may not be
          sufficient to make the project profitable;

    (iv) financing may not be available on favorable terms;

    (v) construction and lease-up may not be completed on schedule and thus
        result in increased debt service expenses and construction costs;

                                       8
<PAGE>
    (vi) we may be unable to obtain (or be delayed in obtaining) all necessary
         zoning, land-use, building, occupancy, and other required governmental
         permits and authorizations;

   (vii) since new projects require a substantial portion of management's time
         and attention, management may be significantly preoccupied with these
         new projects (regardless of whether or not they are ultimately
         successful);

   (viii) permanent financing may not be available or may only be available on
          unfavorable terms; and

    (ix) our losses may exceed our investment return if the project is
         unsuccessful.

CONFLICTS OF INTEREST EXIST BETWEEN THE COMPANY AND OTHERS

    CONFLICTS RELATING TO THE OPERATING PARTNERSHIP

    The Company (as the General Partner of the Operating Partnership) will have
fiduciary obligations to the limited partners of the Operating Partnership that
may conflict with the interests of our stockholders. In addition, the limited
partners will have the right to vote:

    - as a class on certain amendments to the Operating Partnership Agreement;
      and

    - individually to approve certain amendments that would adversely affect
      their rights.

    The limited partners' voting rights may be exercised in a manner that
conflicts with your interests if you should acquire shares of our Common Stock.


    Under the terms of the Operating Partnership Agreement, the General Partner
(currently the Company) must obtain approval from the partners of the Operating
Partnership to engage in certain transactions if, pursuant to the Maryland
General Corporate Laws or our organizational documents, a transaction would
require a vote of our stockholders. As such, approval of the stockholders and
the partners would be necessary before certain transactions could be
consummated. The partners' interest in approving any such transaction may or may
not align with the stockholders' interest in approving the transaction. Thus,
the partners may prevent consummation of a transaction which the stockholders
believe is in their best interest. See "The Company--Certain Relationships;
Conflict of Interest."


    CONFLICTS RELATING TO THE BCP SISTER CORP.

    Certain of our officers and directors may also serve as officers or
directors of the BCP Sister Corp. (if and when formed). This may create
conflicting demands on the time of those officers and directors serving both the
Company and the BCP Sister Corp. If (as expected) ownership of the BCP Sister
Corp. and the Company ultimately differ, conflicts of interest may develop. We
cannot assure you that conflicts between the Company and the BCP Sister Corp.
will not arise concerning short-term or long-term

                                       9
<PAGE>
business plans, investment strategy, geographic concentration or services
provided. See "The Company--Certain Relationships; Conflicts of Interest."

    In addition, provisions in the BCP Sister Corp.'s formation documents are
expected to:

     (i) enable the BCP Sister Corp. to enter into transactions with the Company
         to the extent deemed beneficial by their respective boards of
         directors; and

    (ii) generally prohibit the BCP Sister Corp. from engaging in activities or
         making investments appropriate for a REIT unless:

       - the Company is first given the opportunity to engage in the activity or
         make the investment; and

       - the Company elects to not engage in the activity or make the
         investment.

    We cannot assure you that any agreement will prevent conflicts between the
Company and the BCP Sister Corp. regarding which person or entity may pursue
potential business opportunities (if any).

    CONFLICTS RELATING TO THE INCENTIVE RETURN

    Our Long-Term Incentive Plan consists of a Convertible Unit issued to Beacon
Capital Participation Plan on March 16, 1998. The Participation Plan is an
entity owned and controlled by our management. Beacon Capital Participation Plan
was established to receive the Convertible Unit of the Operating Partnership.
Messrs. Leventhal and Fortin control and own equity interests in Beacon Capital
Participation Plan and certain members of our management also hold minority
interests in Beacon Capital Participation Plan.

    If we meet certain earnings goals, the Convertible Unit will convert into a
number of Incentive Units of limited partnership interest in the Operating
Partnership ("Incentive Units"). The earnings goals are measured at the end of
the three-year period following the completion of the first calendar year
following the closing of the Original Offering to NationsBanc. The value of the
Incentive Units will be equal to the Incentive Return. The Incentive Return is
calculated based on the growth of the Company's Funds from Operations above a
specified benchmark (measured at the end of a specified period). Thus,
management has an incentive to maximize growth during this period. However,
management's interest in the return over this period may conflict with the
interests of stockholders with shorter or longer investment goals.

    The Long-Term Incentive Plan was designed to align the interests of our
management with the interests of our stockholders by having members of
management purchase an equity interest in the Beacon Capital Participation Plan.
However, we cannot assure you that conflicts will not arise between management's
interests and stockholders' interests. See "The Company--Long-Term Incentive
Plan."

                                       10
<PAGE>
    POLICIES WITH RESPECT TO CONFLICTS OF INTEREST

    We intend to adopt policies designed to eliminate or minimize conflicts of
interest. One such policy would require that all transactions in which officers
or directors have a conflicting interest must be approved by a majority of our
Independent Directors. However, we cannot assure you that any policy will
successfully minimize or eliminate conflicts of interest. If our policies fail,
decisions could be made that do not fully reflect the stockholders' interests.

LEVERAGE CAN REDUCE INCOME AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS


    We intend to leverage our Assets by borrowings through bank credit
facilities, mortgage loans on real estate and other borrowings. At this time,
our outstanding indebtedness only consists of mortgage indebtedness. See "The
Company--The Properties and Pending Acquisition--Mortgage Indebtedness." Our
return on investments and cash available for distribution to stockholders might
suffer by changes in market conditions which cause the cost of the financing to
exceed the income from the asset. At this time, we have no variable rate
financing. We are in the process of negotiating the terms of a secured credit
facility. If we successfully complete these negotiations and enter into a credit
facility, such facility would probably provide for variable rate financing. If
we obtained such financing in the future and did not engage in a successful
hedging strategy, an increase in the interest rate payable on such financing
could cause higher debt payments and could materially adversely affect liquidity
and results from operations.


    Leverage creates an opportunity for increased returns on equity, but also
creates risks. For example, debt service payments can reduce the net income
available for distributions to stockholders. We cannot assure you that we will
be able to meet our debt service obligations and, to the extent that we cannot,
we may lose some or all of our Assets to foreclosure or sale to satisfy our debt
obligations. Interest rate changes can affect our income by affecting:

    - the spread between the income on our Assets and interest-bearing
      liabilities;

    - the value of our interest-earning Assets; and

    - our ability to realize gains from the sale of Assets.

    We have adopted guidelines to maintain a debt to total market capitalization
ratio not in excess of 60%. This policy enables us to incur additional
indebtedness as our stock price increases even though there has not necessarily
been a corresponding increase in our ability to service our indebtedness. For
purposes of this policy, our debt to market capitalization ratio is calculated
as:

    - our proportionate share of total consolidated and unconsolidated debt as a
      percentage of the sum of the market value of outstanding shares of our
      capital stock and our units in the Operating Partnership; plus

    - our proportionate share of total consolidated and unconsolidated debt.

                                       11
<PAGE>
    Our Charter and Bylaws do not limit the amount of indebtedness we can incur.
Accordingly, our Board of Directors could alter or eliminate this policy. They
would do so, for example, if it were necessary for us to continue to qualify as
a REIT. See "Certain Provisions of Maryland Law and of BCP's Charter and Bylaws"
and "Risk Factors-- Legal and Tax Risks--Board of Directors May Change Certain
Policies Without Stockholder Consent."

RISKS ASSOCIATED WITH HEDGING INVESTMENTS AND INVESTMENTS IN DERIVATIVES

    Interest rate changes may adversely affect our investments. Interest rates
are highly sensitive to many factors, including:

    - governmental, monetary and tax policies;

    - domestic and international economic and political considerations; and

    - other factors beyond our control.

    We may employ a hedging strategy to limit the effects of interest rate
changes on our operations, including engaging in interest rate swaps, caps,
floors and other interest rate exchange contracts. Our use of these types of
derivatives to hedge our Assets and liabilities carries certain risks, such as:

    - losses on a hedge position may reduce the funds available for distribution
      to stockholders; and

    - losses on a hedge position may exceed the amount invested in such
      instruments.

    We have no formal policy with respect to hedging investments or investments
in derivatives. There is no perfect hedge for any investment, and a hedge may
not perform its intended use of offsetting losses on an investment. Moreover, we
are exposed to the risk that the counter parties with whom we trade may stop
making markets and quoting prices in such instruments. If this happened, we
would be unable to enter into an offsetting transaction with respect to an open
position.

    Any losses incurred may be amplified if the hedging vehicle moves more or
less than the price movement of the asset being hedged. We cannot assure you of
a correlation between price movements in a hedging vehicle and an asset being
hedged. This presents the risk that both the hedging vehicle and the hedged
asset may decline in value at the same time. In addition, if a party to a
hedging transaction defaults, we may only have contractual remedies (which may
be limited by bankruptcy, insolvency or similar laws) pursuant to the agreement
related to the transaction. Our profitability may be adversely affected during
any period as a result of changing interest rates or due to losses incurred in
hedging transactions. This could possibly result in a material adverse impact on
our liquidity and results from operations. For a discussion of the treatment of
income from hedging investments under the REIT qualification requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), see "Federal Income Tax
Considerations-- Requirements for Qualification--Income Tests."

                                       12
<PAGE>
THE COMPANY'S INSURANCE WILL NOT COVER ALL LOSSES

    We intend to maintain comprehensive insurance on each of our Assets. This
coverage includes liability and fire and extended coverage, in amounts
sufficient to permit the replacement of the Assets in the event of a total loss,
subject to applicable deductibles. We will endeavor to obtain coverage of the
type and in the amount customarily obtained by owners of similar properties.
However, certain losses are generally uninsurable or not economically insurable:

    - catastrophic losses such as fire, flood and hurricane;

    - economic conditions such as inflation;

    - legal conditions such as changes in building codes and ordinances;

    - environmental considerations; or

    - other conditions or considerations which may make it infeasible to use
      insurance proceeds to replace an asset if it is damaged or destroyed.

    Under such circumstances, the insurance proceeds we received might not be
adequate to restore our economic position with respect to the affected asset.

PROPERTY TAXES DECREASE RETURNS ON REAL ESTATE

    Each of our Assets will be subject to real and (in some instances) personal
property taxes. The real and personal property taxes on our Assets may increase
or decrease as property tax rates change or as the Assets are assessed or
reassessed by taxing authorities. If property taxes on our investments increase,
our cash available for distribution to our stockholders would be adversely
affected.

COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT AND OTHER CHANGES IN
  GOVERNMENTAL RULES AND REGULATIONS MAY BE COSTLY

    Under the Americans with Disabilities Act of 1990 (the "ADA"), all public
properties are required to meet certain federal requirements related to access
and use by disabled persons. Properties we acquire may not be in compliance with
the ADA. If a property is not in compliance with the ADA, we will be required to
make modifications to such property to bring it into compliance. If we fail to
comply, we face the possibility of an imposition of fines or an award of damages
to private litigants. In addition, we could face changes in governmental rules
and regulations or enforcement policies affecting the use and operation of the
properties, including changes to building codes and fire and life-safety codes.
If we were required to make substantial modifications to our properties to
comply with the ADA or other changes in governmental rules and regulations, our
ability to make expected distributions to stockholders could be adversely
affected.

                                       13
<PAGE>
ADVERSE EFFECT ON RESULTS OF OPERATIONS DUE TO POSSIBLE ENVIRONMENTAL
  LIABILITIES

    Our operating costs may be affected by the obligation to pay for the cost of
complying with existing and future environmental laws, ordinances and
regulations. Environmental problems could materially impair the value of Assets.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable (often regardless of knowledge or responsibility) for the costs of
removal or remediation of hazardous or toxic substances releases at its
property. These costs could be substantial. The presence of such substances (or
the failure to properly remediate the contamination) may materially and
adversely affect the owner's ability to borrow against, sell or rent the
affected property.

    Persons who arrange for the transportation, disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility, whether or
not such facility is or ever was owned or operated by such person. In addition,
certain environmental laws and common law principles impose liability for
releases of hazardous materials into the environment, including
asbestos-containing materials ("ACMs"). These laws may impose liability for
release of ACMs and may provide for third parties to seek recovery from owners
or operators of real properties for personal injury associated with exposure to
released ACMs or other hazardous materials. In connection with our ownership and
operation of certain Assets, we may potentially be liable for such costs.

    Environmental laws may also impose restrictions on the use or transfer of
property and on the manner in which a business is operated. These restrictions
may require expenditures. We may be liable for any such costs in connection with
certain of our Assets. In addition, the cost of defending against claims of
liability or remediating contaminated property and the cost of complying with
such environmental laws could materially adversely affect our results of
operations and financial condition.

    In connection with the acquisition of Real Estate-Related Assets, we intend
to obtain Phase I environmental site assessments ("ESAs") prepared by qualified
independent environmental engineers. The purpose of ESAs is to identify
potential sources of contamination for which the Assets may be responsible and
to assess the status of environmental regulatory compliance. It is possible,
however, that these ESAs will not reveal all environmental liabilities or that
such Assets may be subject to material environmental liabilities of which we are
unaware.

BCP SISTER CORP. WILL HAVE SEPARATE FINANCING, WHICH MAY NOT BE AVAILABLE

    We anticipate that the BCP Sister Corp. (if and when formed) will obtain its
own financing, separate from that of the Company. We cannot assure you that such
financing will be readily available or (if available) that it will be on terms
acceptable to the BCP Sister Corp. In addition, to the extent that the BCP
Sister Corp. should default under such financing, we cannot assure you that it
would be able to obtain sufficient financing to cure such default. We also
cannot ascertain the full impact of such default on the Company.

                                       14
<PAGE>
WE ARE A NEWLY-ORGANIZED CORPORATION WITH A LIMITED OPERATING HISTORY


    We formed on January 21, 1998 and re-incorporated (through a merger) in
Maryland on March 17, 1998. Consequently, we have a limited operating history
and do not yet have any established sources of financing. We are currently
negotiating the terms of a $100 million secured credit facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Financing Activities." We depend upon the experience and expertise
of our senior management in administering our day-to-day operations. We cannot
assure you that our management will be able to implement successfully the
strategies which we intend to pursue. In addition, as a newly-organized company,
our policies and procedures are subject to change over time. See "The
Company--Directors and Executive Officers."


                           INVESTMENT ACTIVITY RISKS

APPROPRIATE INVESTMENTS MAY NOT BE AVAILABLE

    Although we may invest in Other Assets as opportunities arise, we intend to
focus primarily on acquiring Real Estate-Related Assets consistent with our
investment strategy. We cannot assure you that:

    - we will identify Assets that meet our investment criteria;

    - we will be successful in acquiring any Assets that may be identified; or

    - acquired Assets will produce a return on our investment.

    We will have broad authority to invest in Assets consistent with our
investment strategy. We may invest in highly-leveraged Assets, which may
increase the likelihood of a loss of our Assets through foreclosure. No
assurance can be made that our decisions in this regard will result in a profit
for the Company. Investment in real estate is a highly-competitive business and
the acquisition of Assets is often based on competitive bidding. Consequently,
our inability to identify appropriate Assets may have an adverse effect on our
results of operations and hinder our growth rate.

REAL ESTATE IS ILLIQUID AND VALUE IS DEPENDENT ON CONDITIONS BEYOND THE
  COMPANY'S CONTROL

    We expect to invest in Assets which may be subject to varying degrees of
risk generally incident to the ownership of real property. Real estate
investments are relatively illiquid. Our ability to vary investments in response
to changes in economic and other conditions will be limited. We cannot assure
you that the fair market value of any Assets we acquire will not decrease in the
future. The underlying value of our Assets, our income and our ability to make
distributions to stockholders are dependent upon our ability to operate our
Assets in a manner sufficient to maintain or increase revenue in excess of
operating expenses and debt service. Our revenue may be adversely affected by
the following:

    - adverse changes in national or local economic conditions;

    - competition from other properties offering the same or similar services;

                                       15
<PAGE>
    - changes in interest rates and in the availability, cost and terms of
      mortgage funds;

    - impact of present or future environmental legislation and compliance with
      environmental laws;

    - ongoing need for capital improvements (particularly in older structures);

    - changes in real estate tax rates and other operating expenses;

    - adverse changes in governmental rules and fiscal policies;

    - civil unrest;

    - acts of God, including earthquakes, hurricanes and other natural disasters
      (which may result in uninsured losses);

    - acts of war;

    - adverse changes in zoning laws; and

    - other factors which are beyond our control either in whole or in part.

WE MUST COMPETE WITH OTHER COMPANIES FOR ACQUISITIONS

    We intend to invest in real estate industry sectors which are highly
competitive. We may compete for Assets with entities which have substantially
greater economic and personnel resources than the Company and better
relationships with sellers of assets, lenders and others. These entities may
also generally be able to accept more risk than we can prudently manage.
Competition may generally reduce the number of suitable prospective assets
offered to us and increase the bargaining power of property owners seeking to
sell, thereby increasing prices.

WE MUST BE ABLE TO PAY OFF OUR FINANCING

    We are subject to the risks normally associated with debt financing. This
includes the risk that our cash flow will be insufficient to meet required debt
service. In addition, we may be unable to refinance our existing indebtedness.
If we do refinance, the terms of the financing may not be as favorable as the
existing indebtedness terms.

REAL ESTATE INVESTMENT RISKS

    Real property investments have varying degrees of risks. Our cash flow and
ability to make distributions to stockholders will be adversely affected if our
Assets do not generate revenues sufficient to meet operating expenses, including
debt service and capital expenditures. An asset's revenues and value may be
adversely affected by the following:

    - the general economic climate;

    - the local economic climate;

    - local real estate conditions;

                                       16
<PAGE>
    - the ability of the owner to provide adequate management, maintenance and
      insurance; and

    - increased operating costs.

    Certain significant expenditures associated with an equity investment are
generally not reduced when circumstances cause a reduction in income from the
investment. These include mortgage payments, real estate taxes, or insurance and
maintenance costs. In addition, we face numerous competitors for development and
acquisitions of properties which may have greater resources than the Company.

RISKS RELATED TO INVESTMENTS IN MORTGAGE LOANS

    Mortgage loan investments have certain risks that other types of investment
do not, including without limitation the following:

    COMMERCIAL MORTGAGE LOANS MAY INVOLVE A RISK OF LOSS

    Commercial mortgage loans have a high degree of risk because of a variety of
factors, including:

    - the loans are dependent for repayment on successful operation of the
      mortgaged property and any tenant businesses operating on the property;

    - the loans are usually non-recourse to the borrower;

    - the loans have terms that include amortization schedules longer than
      stated maturity.

    - the loan terms provide for balloon payments at stated maturity rather than
      periodic principal payments; and

    - the value of the property underlying the loan can be affected
      significantly by the supply and demand in the market for that type of
      property.


    VOLATILITY OF VALUES OF MORTGAGED PROPERTIES MAY ADVERSELY AFFECT THE
     COMPANY'S MORTGAGE LOANS


    Commercial real estate values and the net operating income derived from the
property are subject to volatility and may be affected adversely by a number of
factors, including, but not limited to:

    - national, regional and local economic conditions;

    - local real estate conditions;

    - changed or continued weakness in specific industry segments;

    - general public perceptions of the safety, convenience, services and
      attractiveness of the property;

    - willingness and ability of the property's owner to:

         (i) provide capable management,

                                       17
<PAGE>
         (ii) provide adequate maintenance,

        (iii) make capital expenditures and improvements, and

        (iv) provide leasing concessions;

    - construction quality, age and design; and

    - increases in operating expenses (such as energy costs).

    GENERAL DEFAULT RISKS

    With respect to our investments in mortgage loans, we face the risks of
borrower defaults, bankruptcies, fraud and special hazard losses (which are not
covered by standard hazard insurance). If a borrower defaults, we bear a risk of
loss of principal to the extent that the value of the collateral is less than
the amount due on the mortgage loan. In addition, failure to receive interest
payments because of borrower default could have a materially adverse effect on
our cash flow from operations. If a borrower declares bankruptcy, we face the
following risks:

    - the bankruptcy court determines the value of the underlying collateral at
      the time of bankruptcy;

    - the bankruptcy trustee may avoid the lien securing the mortgage loan; and

    - the debtor-in-possession may avoid the lien securing the mortgage loan to
      the extent the lien is unenforceable under state law.

    If we have to foreclose a mortgage, the process can be expensive and
lengthy. These costs could adversely affect our anticipated return on the
foreclosed mortgage loan.

OUR MULTI-SECTOR INVESTMENT STRATEGY IS MORE COMPLICATED THAN A SINGLE-SECTOR
  INVESTMENT STRATEGY

    Our current strategy is to acquire Assets in a variety of real estate
product-types within a variety of geographic locations. Initially we will
emphasis office Assets. Accordingly, we will be required to maintain expertise,
relationships and market knowledge across a broad range of product-types and
geographic regions.

    In addition, we face market conditions that affect each such product-type in
the various markets, including such factors as:

    - local economic climate;

    - business layoffs;

    - industry slowdowns;

    - changing demographics; and

    - local supply and demand issues affecting each such market.

    Our multi-sector approach could require more management time, staff support
and expense than a company focused upon a single product-type in fewer
jurisdictions than contemplated by the Company.

                                       18
<PAGE>
GEOGRAPHICALLY CONCENTRATED ASSETS ARE VULNERABLE TO DOWNTURNS IN LOCAL ECONOMIC
  CONDITIONS

    The economic performance and value of our Assets are subject to all of the
risks incident to the ownership and operation of real estate. These include the
risks normally associated with changes in national, regional and local economic
and market conditions. Such conditions can affect tenants' ability to make
rental payments. Our Assets are located in four markets--East Cambridge,
Massachusetts; Sunnyvale, California; Dallas, Texas; and Seattle, Washington. We
have no limits on becoming more geographically concentrated.

    Local real estate market conditions may include a large supply of competing
space and competition for tenants, including competition based on:

    - rental rates;

    - attractiveness;

    - location of property; and

    - quality of maintenance, insurance and management services.

    Other factors may adversely affect the performance and value of an asset,
including:

    - changes in laws and governmental regulations (including those governing
      usage, zoning and taxes);

    - changes in interest rates; and

    - availability of financing.

    If the Assets do not generate sufficient income to meet operating expenses,
our income and ability to make distributions to stockholders may be adversely
affected.

NEW MARKETS MAY HAVE CONDITIONS UNLIKE OUR EXISTING MARKETS

    Although our management has historical experience with Real Estate-Related
Assets and other Assets and investments in a variety of geographic areas of the
country, our expertise in those markets may not assist us in new markets. In
such event, we may be exposed to risks associated with:

    - lack of market knowledge and understanding of the local economy;

    - inability to access land and property acquisition opportunities;

    - inability to obtain construction tradespeople;

    - sudden adverse shifts in supply and demand factors; and

    - unfamiliarity with local governmental procedures.

                                       19
<PAGE>
WE WILL NOT HAVE FULL CONTROL OVER INVESTMENTS MADE THROUGH PARTNERSHIPS AND
  JOINT VENTURES

    Instead of purchasing properties directly, we may invest as a partner or a
co-venturer. Partnership or joint venture investments may involve risks not
otherwise present, including:

    - our partner or co-venturer might become bankrupt;

    - our partner or co-venturer might at any time have economic or other
      business interests or goals which are inconsistent with our business
      interests or goals; and

    - our partner or co-venturer may be in a position to take action:

         (i) contrary to our instructions or requests; or

         (ii) contrary to our policies or objectives, including our policy with
              respect to maintaining our qualification as a REIT.

    These investments may also have the potential risk of impasse on decisions
because neither we nor our partner co-venturer would have full control over the
partnership or joint venture. We will seek to maintain sufficient control of
such partnerships or joint ventures to achieve our objectives. Our
organizational documents do not limit the amount of available funds which we may
invest in partnerships or joint ventures.

WE WILL NOT HAVE FULL CONTROL OVER INVESTMENTS MADE THROUGH SUBSIDIARIES


    The common stock of three of our subsidiaries, BCP Milliennium Residential,
Inc., Cambridge Kendall SPC, Inc. and Tenant Communications, Inc. consists of
two classes: voting and nonvoting. Of the voting common stock, Messrs. Leventhal
and Fortin hold 91% and the Operating Partnership holds 9%. The Operating
Partnership holds all of the nonvoting stock. The Operating Partnership owns 99%
of the economic interest in these subsidiaries and Messrs. Leventhal and Fortin
jointly own 1% of such economic interest. As holders of 91% of the voting common
stock, Messrs. Leventhal and Fortin have the ability to elect the board of
directors of these subsidiaries. We are not able to elect the directors, which
means that we may not be able to influence the day-to-day decisions affecting
these subsidiaries. As such, the board of directors of these subsidiaries may
implement business policies or decisions that would not have been implemented by
persons controlled by the Company and may be adverse to our interests and could
adversely impact our results of operations.


FOREIGN REAL PROPERTIES ARE SUBJECT TO CURRENCY CONVERSION RISKS AND UNCERTAINTY
  OF FOREIGN LAWS

    In addition to making investments in domestic Assets, we may invest in
Assets located outside the United States. Risks inherent in investing in real
estate located in foreign countries generally include:

    - unexpected changes in regulatory environments;

    - longer accounts receivable payment cycles;

                                       20
<PAGE>
    - potentially adverse tax consequences; and

    - the burden of complying with a wide variety of foreign laws.

Moreover, investments in foreign Assets may be exposed to the risk of
fluctuations in the foreign exchange rates between the US dollar and the
currency in which a transaction is conducted.

                              LEGAL AND TAX RISKS

TAX RISKS

    We intend to operate in a manner that will enable us to qualify as a REIT
for federal income tax purposes. Although we do not intend to request a ruling
from the Internal Revenue Service (the "IRS") as to our REIT status, we received
(in connection with the filing of this Registration Statement) an opinion from
our counsel, Goodwin, Procter & Hoar LLP, dated October 16, 1998. Their opinion
stated the following:

    - that the Company has been and will be organized in conformity with the
      requirements for qualification as a REIT; and

    - that the Company's proposed manner of operation will enable it to qualify
      as a REIT.


    This opinion was based on certain factual and other assumptions and
representations with respect to the Company's past and expected ongoing
businesses and investment activities and other customary matters. No assurances
can be given to you as to the accuracy of such assumptions or that the Company
has been able to comply with the representations it made to Goodwin, Procter &
Hoar LLP or will be able to comply with them in the future. Furthermore, this
opinion is not binding on the IRS or any court, and no assurance can be given
that we will operate in a manner so as to qualify or remain qualified as a REIT.
This opinion of Goodwin, Procter & Hoar LLP represented only their view, as of
the date of their opinion, based on their review and analysis of existing law,
which includes no controlling precedent and which is subject to change (possibly
on a retroactive basis). See "Federal Income Tax Considerations--Requirements
for Qualification." The opinion has not been updated since it was issued in
October, 1998.



    Furthermore, both the validity of this opinion and the Company's continued
qualification as a REIT will depend on the Company's satisfaction of certain
asset, income, organizational, distribution and stockholder ownership
requirements on a continuing basis. Our operations have not been and will not be
monitored by Goodwin, Procter & Hoar LLP to ensure continued compliance with the
REIT requirements.


    If we were to fail to qualify as a REIT in any taxable year, we would be
subject to federal income tax (including any applicable alternative minimum tax)
on our taxable income at regular corporate rates, and distributions to
stockholders would not be deductible by the Company in computing its taxable
income. Any such corporate tax liability could be substantial and would reduce
the amount of cash available for distribution to stockholders, which in turn
could have an adverse impact on the value of (and trading prices for) our Common
Stock. Unless entitled to relief under certain REIT

                                       21
<PAGE>
provisions of the Code, we also would be disqualified from taxation as a REIT
for the four taxable years subsequent to the year during which we ceased to
qualify as a REIT. See "Federal Income Tax Considerations--Requirements for
Qualification."

    We must distribute annually at least 95% of our net taxable income
(excluding any net capital gain) in order to avoid corporate income taxation of
the earnings that we distribute. In addition, we will be subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid or deemed paid by the Company with respect to any calendar year are less
than the sum of:

    - 85% of the Company's ordinary income for that year;

    - 95% of the Company's capital gain net income for that year; and

    - 100% of the Company's undistributed taxable income from prior years.

    The amount of any net long-term capital gains that we elect to retain and
pay income tax on will be treated as distributed for purposes of the 4% excise
tax.

    We intend to make distributions to our stockholders to comply with the 95%
distribution requirement and to avoid the nondeductible excise tax. However,
differences in timing between the recognition of taxable income and the actual
receipt of cash could require the Company to borrow funds or sell assets on a
short-term basis to meet the 95% distribution requirement and to avoid the
nondeductible excise tax. The requirement to distribute a substantial portion of
the Company's net taxable income could cause the Company:

    - to sell assets in adverse market conditions;

    - to distribute amounts that represent a return of capital; or

    - to distribute amounts that would otherwise be spent on future
      acquisitions, capital expenditures, or repayment of debt.

    Gains from the disposition of any asset held primarily for sale to customers
in the ordinary course of business generally will be subject to a 100% tax. See
"Federal Income Tax Considerations--Requirements for Qualification."

    It is anticipated that we may purchase mortgage loans. If we purchases such
Assets and are deemed to have issued debt obligations having two or more
maturities (the payments on which correspond to payments on such mortgage loans)
such arrangement will be treated as a "taxable mortgage pool" for federal income
tax purposes. If all or a portion of the Company is considered a "taxable
mortgage pool," the Company's status as a REIT generally should not be impaired,
but a portion of the Company's taxable income may be characterized as "excess
inclusion income" and allocated to stockholders. Any excess inclusion income:

    - could not be offset by net operating losses of a stockholder;

    - would be subject to tax as "unrelated business taxable income" to a
      tax-exempt stockholder;

                                       22
<PAGE>
    - would be subject to the application of federal income tax withholding
      (without reduction pursuant to any otherwise applicable income tax
      treaty), with respect to amounts allocable to foreign stockholders; and

    - would be taxable (at the highest corporate tax rate) to the Company
      (rather than its stockholders) to the extent allocable to shares of stock
      of the Company held by disqualified organizations (generally, tax-exempt
      entities not subject to tax on unrelated business taxable income,
      including governmental organizations).

ADVERSE IMPACT OF FUTURE LEGISLATION REGARDING REITS.


    The Company's ability to qualify as a REIT, the benefits of REIT
qualification, and/ or our ability to use a BCP Sister Corp could be adversely
impacted by future legislation.


AGGREGATE STOCK OWNERSHIP LIMIT MAY RESTRICT BUSINESS COMBINATION OPPORTUNITIES

    To maintain our qualification as a REIT, five or fewer individuals may not
own (directly or indirectly) more than 50% of our Common Stock at any time
during the last half of our taxable year. As such, our Charter contains an
aggregate stock ownership provision which generally prohibits any single
stockholder from owning more than 9.8% of our Common Stock. In addition, our
Charter contains a look-ownership limit that permits certain mutual funds and
certain other widely-held entities (other than pension plans as described in
Section 401(a) of the Code) to own up to 15% of our Common Stock. The Board of
Directors may waive or modify either of these two provisions if it is satisfied
(based upon the receipt of a ruling from the IRS or the advice of tax counsel)
that ownership in excess of this limit will not jeopardize our status as a REIT.
In addition, these ownership limits may inhibit or impede a change in control.
Such inhibitions and impediments could adversely affect stockholders' ability to
realize a premium over the then-prevailing market price for our Common Stock in
connection with such a transaction. See "Description of Securities--Transfer
Restrictions" and "Federal Income Tax Considerations--Requirements for
Qualification."

FOREIGN INVESTORS SHOULD CONSIDER TAX RISKS UNDER FIRPTA

    If the Company is not a domestically controlled REIT, non-U.S. Stockholders
who own and then sell our Common Stock will be taxed according to the Foreign
Investment in Real Property Tax Act of 1980 ("FIRPTA"). We will be a
domestically controlled REIT if non-U.S. persons own (directly or indirectly)
less than 50% of our Common Stock during specified testing periods. We cannot
assure you that we will continue to be a domestically-controlled REIT. Even if
not subject to FIRPTA, non-U.S. stockholders are subject to taxation under
certain other circumstances. See "Federal Income Tax Considerations--Taxation of
Non-U.S. Stockholders."

PLANS SHOULD CONSIDER ERISA RISKS OF INVESTING IN COMMON STOCK

    ERISA is a broad statutory framework that governs non-governmental employee
benefit plans in the United States. Fiduciaries of pension, profit-sharing or
other employee benefit plans subject to Title I of ERISA ("ERISA Plans") should
carefully

                                       23
<PAGE>
consider the impact of ERISA and the regulations of the Department of Labor (the
"DOL") thereunder on the ERISA Plan's decision to invest in our Common Stock. In
particular, a fiduciary of an ERISA Plan should consider whether its decisions
with respect to these matters would satisfy the requirements set forth in Part 4
of subtitle B of Title I of ERISA, including:

    - the diversification and prudence requirements of ERISA;

    - the requirement that the decisions be in the best interests of the
      participants and beneficiaries of the ERISA Plan; and

    - the requirement that the decisions be authorized under the appropriate
      governing instruments and investment policies of the ERISA Plan.


    ERISA also prohibits certain transactions involving an ERISA Plan and
persons who are "parties in interest" with respect to the ERISA Plan. In
addition, the Code provides for similar prohibited transaction rules applicable
to "plans" (as defined in Section 4975 of the Code) and "disqualified persons"
with respect to such plans. The fiduciary of an ERISA Plan or a plan described
in Section 4975 of the Code (referred to together herein as "Plans")
contemplating an investment in our Common Stock should consider whether the
acquisition of such Common Stock would result in a prohibited transaction under
ERISA and/or the Code, and (if so) whether an exemption from these prohibited
transaction rules is available. In addition, the Plan Assets Regulation provides
that (subject to certain exceptions) the assets of an entity in which a Plan
holds an equity interest may be treated as assets of the investing Plan, in
which event the underlying assets of such entity (and transactions involving
such assets) would be subject to ERISA and applicable provisions of the Code
(including prohibited transaction provisions of ERISA and the Code).


    We intend to take such steps as may be necessary to qualify the Company and
the Operating Partnership (and any BCP Sister Corp.) for one or more of the
exceptions available under such regulation and, thereby, prevent the assets of
the Company from being treated as assets of any investing Plan. Specifically, we
will use our reasonable best efforts to qualify as a "real estate operating
company" (within the meaning of the Plan Assets Regulation) at least until such
time as our Common Stock qualifies as a class of "publicly offered securities"
(as such term is defined in such regulation). In addition, with respect to any
BCP Sister Corp., we will take such steps as may be necessary to qualify such
BCP Sister Corp. as an operating company or a venture capital operating company
or for one of the other available exceptions under the Plan Assets Regulation
prior to distributions of its equity interests (although no assurances can be
made in this regard). See "ERISA Considerations--The Treatment of the Company's
Underlying Assets Under ERISA."

                                       24
<PAGE>
CHANGES IN MANAGEMENT MAY BE DETERRED

    We are subject to the Maryland General Corporation Law (the "MGCL") because
we are incorporated in Maryland. Certain provisions of the MGCL:

    - impose restrictions and require procedures with respect to business
      combinations, including (but not limited) to transactions with holders of
      more than 10% of the voting power of our equity securities; and

    - limit voting rights for holders of 20% or more of the voting power of our
      stock.

    These provisions could discourage a takeover or other transaction involving
a change in control. Our Charter exempts from the MGCL any business combination
with Alan M. Leventhal, Lionel P. Fortin or current or future affiliates,
associates or other persons acting in concert as a group with either of Messrs.
Leventhal or Fortin. In addition, the right of the Participation Plan to receive
an Incentive Return in the event of a change of control of the Company (as
defined in the Operating Partnership Agreement) may deter third parties from
entering into transactions with the Company. See "Certain Provisions of Maryland
Law and of BCP's Charter and Bylaws--Business Combinations," "--Control Share
Acquisitions" and "The Company--Long-Term Incentive Plan."

BOARD OF DIRECTORS MAY CHANGE CERTAIN POLICIES WITHOUT STOCKHOLDER CONSENT

    Our policies will be determined by our Board of Directors. The Board of
Directors may amend or revise these policies, or approve transactions that
deviate from these policies without a vote of the stockholders. These changes in
policy may be positive or negative. See "Certain Provisions of Maryland Law and
of BCP's Charter and Bylaws."

LOSS OF INVESTMENT COMPANY ACT EXEMPTION WOULD ADVERSELY AFFECT THE COMPANY

    We intend to avoid regulation as an investment company under the Investment
Company Act of 1940. The Investment Company Act exempts entities that (directly
or through majority-owned subsidiaries) are "primarily engaged in the business
of purchasing or otherwise acquiring mortgages and other liens on and interests
in real estate" (the "Qualifying Interests"). The commission currently
interprets the Investment Company Act to exempt companies that:

    - maintain at least 55% of their Assets in Qualifying Interests, and

    - maintain an additional 25% in Qualifying Interests or other Real
      Estate-Related Assets.

As such, the Assets we may acquire are limited by this exemption. In addition,
we could be required to either:

    - change the manner in which we conduct our operations to avoid being
      required to register as an investment company; or

    - register as an investment company.

                                       25
<PAGE>
    Either of these possibilities could have an adverse effect on the Company
and the market price for our Common Stock.

LIMITATION ON LIABILITY OF OFFICERS AND DIRECTORS OF THE COMPANY

    Our Charter limits the liability of a director or officer to the Company and
our stockholders for money damages, except for liability resulting from:

    - actual receipt of an improper benefit or profit in money, property or
      services; or

    - active and deliberate dishonesty established by a final judgment as being
      material to the cause of action.

See "Certain Provisions of Maryland Law and of BCP's Charter and Bylaws."

                                  OTHER RISKS

RISK THAT MARKET FOR COMMON STOCK WILL NOT DEVELOP

    Our Common Stock presently has no established trading market and there is no
assurance one will develop. Our Common Stock has been accepted for trading in
the PORTAL Market, a real-time electronic National Association of Securities
Dealers marketplace that facilitates trading in securities offered pursuant to
Rule 144A transactions. We cannot assure you that an active trading market for
our Common Stock will develop in the PORTAL Market or elsewhere. In addition,
access to the PORTAL Market (unlike other prominent stock exchanges or Nasdaq
markets) is restricted to certain parties and can only be used for the trading
of certain restricted securities. Accordingly, we cannot assure you as to:

    - the likelihood that an active market for our Common Stock will develop;

    - the liquidity of any such market;

    - your ability to sell your Common Stock; or

    - the prices that you may obtain for your Common Stock.

                                       26
<PAGE>
                                  THE COMPANY

    Beacon Capital Partners, Inc. is a Maryland corporation established to
conduct real estate investment and development activities. We formed on January
21, 1998 as a Massachusetts corporation and reincorporated (through a merger) in
Maryland on March 17, 1998. The Operating Partnership is a Delaware limited
partnership. Our principal executive offices are located at One Federal Street,
26th Floor, Boston, Massachusetts 02110. Our telephone number is (617) 457-0400.
We have regional offices in Chicago, Illinois and Los Angeles, California. We
intend to qualify as a REIT for federal tax purposes.

    We believe that our senior management has long-standing relationships with
institutional owners, lenders, bankers and other real estate operators and
developers. We anticipate that these relationships may provide us with regular
access to transaction activity and investment opportunities. In addition, our
senior management has gained operating experience through the management of
public and private companies. This experience provides a unique perspective that
is expected to be particularly valuable to us as the real estate cycle changes
and as the real estate industry continues to transform from private to public
capitalization. In addition, our senior management has been active in the
development, acquisition and management of a broad spectrum of property types,
including:

    - office;

    - lodging;

    - apartment;

    - industrial;

    - retail; and

    - mixed-use projects.

    Beacon Capital Partners Management, LLC ("Management Affiliate") is a
Delaware limited liability company and our wholly-owned subsidiary. The
Management Affiliate manages our properties. We have executed management
agreements with the Management Affiliate to assure that the quality of services
rendered to our tenants is appropriate for the type of property under
management. The Management Affiliate engages sub-agents to handle the day-to-day
and on-site management responsibilities for each property. The sub-agent's
compensation for its services depends upon the particular property and the
property's occupancy situation. This compensation can be either:

    - a flat fee;

    - a flat fee with an incentive component; or

    - based upon a percentage of gross rental income realized.

    We manage the Management Affiliate. As such, the Management Affiliate and
the Company share the same management team. We do not award additional
compensation

                                       27
<PAGE>
to our officers and employees who handle the business affairs of the Management
Affiliate.

    The Management Affiliate manages The Athenaeum Portfolio, Technology Square,
The Draper Building and the Dallas Office and Industrial Portfolio. The
Management Affiliate has engaged Spaulding & Slye as sub-agent under an
agreement that expires on December 31, 1999 to manage The Athenaeum Portfolio,
Technology Square and The Draper Building. The Management Affiliate can
terminate the agreement without cause or penalty on 30 days' notice to the
sub-agent.

    Transwestern Property Company LLC manages, as sub-agent, the Dallas Office
and Industrial Portfolio under an agreement that expires on December 31, 1999.
During the first year, the Management Affiliate can terminate the agreement
without cause or penalty on 90 days' notice to the sub-agent, and can do so
after the first year on 30 days' notice.


    An affiliate of Martin Smith Real Estate Services will manage Millennium
Tower (once constructed). We negotiated the management arrangement as part of a
joint venture structure.



    An affiliate of Menlo Equities will manage the Mathilda Research Centre
(once constructed). We negotiated the management arrangement as part of a joint
venture structure.


RECENT ACQUISITIONS

    THE ATHENAEUM PORTFOLIO

    On May 1, 1998 we purchased a portfolio of eleven buildings in Cambridge,
Massachusetts, known as The Athenaeum Portfolio for $195 million, including the
assumption of approximately $69.1 million of first mortgage debt. We estimate
that the aggregate purchase price is approximately 80% of replacement cost. The
mixed-use portfolio consists of approximately 970,000 square feet and contains
office, laboratory and retail uses as well as a 1,530 space parking garage. Two
limited liability companies hold title to these properties. On May 20, 1998, we
formed a joint venture with PW Acquisitions IX, LLC (an affiliate of
PaineWebber). Under the joint venture agreement, each party has a 50% interest
in a master limited liability company that controls the two limited liability
companies holding title to the properties.


    The portfolio has two components: One Kendall Square and The Athenaeum House
(215 First Street), which are located within close proximity of M.I.T. Several
of the buildings were originally built as manufacturing buildings at the turn of
the century and were fully renovated in the mid-1980's for office and laboratory
uses. A nine-screen cinema was added to the complex in 1994. The buildings are
currently 99% occupied. Major tenants which occupy more than 10% of the
portfolio include: Genzyme, CLAM Associates, and Mitotix.


                                       28
<PAGE>
    The Athenaeum Portfolio is located in the East Cambridge office market. The
overall Cambridge office market includes approximately 10 million square feet.
According to Spaulding & Slye, the Cambridge office market had an overall
vacancy rate of 6.4% as of December 31, 1998.

    Since the time that we purchased The Athenaeum Portfolio demand, primarily
from biotechnology, biological science and pharmaceutical companies, has driven
market rents from $21.00 per square foot to nearly $30.00 per square foot. The
current unleveraged net operating income ("NOI") yield of approximately 10% is
expected to rise to 12% by 2002. The projected internal rate of return ("IRR"),
assuming 54% leverage and a seven year holding period, is 20.4%.

    TECHNOLOGY SQUARE & THE DRAPER BUILDING

    On June 24, 1998 we purchased a four-building complex known as Technology
Square and an adjacent building known as The Draper Building from a partnership
managed by Prudential. The properties are located in Cambridge, Massachusetts,
adjacent to One Kendall Square (described above) and M.I.T. and consist of
1,026,000 square feet. We paid $123 million for the properties. As part of the
purchase, Prudential accepted approximately $51.4 million in the form of units
of the Operating Partnership at a blended rate of $20.31 per unit. There are no
mortgages outstanding against these properties.


    Technology Square is currently 61% leased to three tenants: M.I.T., Polaroid
Corporation and Curl Corporation. Curl Corporation is a new tenant occupying
14,000 square feet of office space in building 549 on a temporary basis until
their new space is available in building 565. We are currently in the process of
re-developing buildings 565 and 575, which were previously occupied by Polaroid.
Polaroid has been vacating their premises in stages over the first six months of
1999. The estimated cost of the re-development is approximately $34 million and
will be funded from cash on hand or additional debt. Average net lease rates in
place currently are $8.50 per square foot, which we believe to be substantially
below current market rates. To date we have entered into leases with two new
tenants that will occupy in excess of 145,000 square feet of office space in
building 565 at average annual rents of approximately $38.00 per square foot. We
are continuing to market the buildings and project the re-development and lease
up will continue for the next 12-15 months.


    The Draper Building is 100% leased to Draper Labs under a long-term lease
that expires on October 20, 2001. The lease contains extension options through
October 2051, pursuant to which the tenant has an option (under certain
circumstances) to acquire The Draper Building.


    Technology Square and The Draper Building are located in the East Cambridge
office market. The overall Cambridge office market includes approximately 10
million square feet. We own approximately 2 million square feet of office and
commercial space in the Cambridge market, including The Athenaeum Portfolio,
Technology Square and


                                       29
<PAGE>
The Draper Building. According to Spaulding & Slye, the Cambridge office market
had an overall vacancy rate of 6.4% as of December 31, 1998.

    Since the time that we purchased Technology Square and The Draper Building,
office market rents have increased from $26.00 per square foot (gross) to $36.00
per square foot (gross). Massachusetts Institute of Technology, which occupies
106,000 square feet (approximately 20% of the space), has agreed to terms for a
new five-year lease, at an average rate of approximately $35.00 per square foot.
Demand from prospective tenants for the remaining space is strong. As a result
(without the additional development), we expect to achieve a stabilized,
unleveraged NOI yield of approximately 14% by 2000. In addition, we expect to
gain approval for additional development of approximately 500,000 square feet
during 1999. This additional development, which will likely commence in 1999, is
expected to generate an unleveraged NOI yield of 12-14%. The projected IRR,
assuming 60% leverage and a seven year holding period, is 20.5%.

    THE DALLAS OFFICE AND INDUSTRIAL PORTFOLIO

    On July 1, 1998 we acquired a 1,335,000 square foot portfolio of seven
office properties and seven research & development (R&D) properties located in
suburban Dallas, Texas. We purchased the properties from Breunig Commercial
Management, Inc.(a Dallas-based real estate owner and manager) for a total
consideration of $91.2 million, including the assumption of approximately $21.7
million of first mortgage debt. The purchase price is approximately $68 per
square foot, which we estimate to be approximately 65% of the replacement cost
of the assets.

    The properties are predominately located along the North Central Expressway
corridor in North Dallas. As measured on a square foot basis, the portfolio is
approximately two-thirds office (842,000 s.f.) and one-third R&D (493,000 s.f.).
The current average occupancy rate for the portfolio is 94%. However, leases for
nearly 50% of the space in the buildings expire over the next 3 years. Average
net rents at the properties are more than $3.00/s.f. (or nearly 56%) below what
we estimate to be current market rents. Since the space is currently leased at
below market rates, we believe that we can substantially increase the net
operating income by re-leasing the properties at current market rents. Major
tenants include: Blue Cross, Dallas Teachers Credit, Puretan, Inc., and
Specialized Resources.


    The overall Dallas office market contains 140.9 million square feet of
space. According to Cushman & Wakefield, as of March 31, 1999, the overall
vacancy rate was 17.4%. The office properties in the Dallas Office and
Industrial Portfolio are located primarily in the North Central Expressway and
LBJ Freeway submarkets where the March 31, 1999 vacancy rates were 14.2% and
11.1%, respectively.



    The Office/Showroom category of the Dallas industrial market (which includes
R&D space), contains 52.1 million square feet of space. The overall vacancy rate
as of March 31, 1999 was 6.1%. The R&D properties in the Dallas Office and
Industrial Portfolio are located primarily in the Richardson/Plano and North
Dallas submarkets, where the March 31, 1999 vacancy rates were 6.1% and 6.7%,
respectively.


                                       30
<PAGE>

    The Dallas Office and Industrial Portfolio, which will experience rollover
of approximately 50% over the next three years, will benefit from the disparity
between rents-in-place and market rents. We have leased approximately 106,000
square feet of office space since we acquired this portfolio, increasing rents
by approximately 80% from approximately $6 per square foot (net) to
approximately $11 per square foot (net). We have also leased in excess of 81,000
square feet of R&D/Industrial space at net rental rates which are 45% greater
than the expiring rental rates. We expect to achieve a stabilized unleveraged
NOI yield of 12% by 2001. The projected IRR, assuming 60% leverage and seven
year holding period, is 19.8%.


    MILLENNIUM TOWER

    On September 1, 1998 we executed a joint venture agreement with HA L.L.C.,
an affiliate of Martin Smith Real Estate Services (a Seattle based real estate
developer) by which we agreed to fund 66 2/3% of the equity required to develop
a high-rise building in downtown Seattle, Washington and HA L.L.C. agreed to
fund 33 1/3%. After each party receives a 15% per annum return on their equity,
the profits from the venture will be split 60% to the Company and 40% to HA
L.L.C. The building will be located at Second Avenue and Columbia Street. It
will consist of 13 floors of Class A office space above which there will be
located 6 floors of luxury residential condominiums. The ground floor will be
devoted to retail uses. Of the 261,000 square feet in the building:

    - the office area will comprise 188,000 square feet;

    - the retail area will comprise 10,000 square feet; and

    - the residential portion will comprise 63,000 square feet.

    Construction has begun and we currently expect it to be completed in the
fourth quarter of 2000. At this point, we have not pre-leased the office space.
However, we have initiated marketing programs for both the office space and the
condominiums.


    HA L.L.C. contributed the land to the joint venture for an agreed value of
$10.5 million. As such, we agreed to fund the first $19 million of cash
requirements for the venture. On June 9, 1999, the venture obtained a $45
million construction loan from two institutions. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Financing
Activities." Our $19 million contribution is to be used before any monies are
drawn down under the construction loan. The estimated cost of the project is $71
million, including the value of the land.



    The property is located in the downtown Seattle office market, which
includes approximately 27.9 million square feet of office space, of which 14.9
million square feet is Class A space. According to Colliers Parrish
International, as of March 31, 1999 the market had an overall office vacancy
rate of 3.3%, and the Class A sub-market had a vacancy rate of 2.6%.


    The projected leveraged IRR is expected to be 18.2%, assuming the property
is sold at stabilization.

                                       31
<PAGE>
    MATHILDA RESEARCH CENTRE

    On August 9, 1998, we executed a joint venture agreement with Mathilda
Partners LLC, an affiliate of Menlo Equities (a California based developer).
Under the agreement, we have agreed to fund 87.5% of the equity required to
develop two Class A office/R&D buildings and Mathilda Partners LLC has agreed to
fund 12.5%. After each party receives a 12% per annum return on their equity,
the profits from the venture will be split equally. In November 1998, the
venture acquired a twelve-acre site on Mathilda Avenue in Sunnyvale, California.
The venture plans to construct two four-story office/ R&D buildings with surface
parking containing an aggregate of approximately 267,000 square feet. The site
is fully entitled, and the venture has implemented a marketing program. The
venture intends to finance the development as follows:

    - cash contributions for approximately 35% of the development expenditures
      (including the acquisition of the land); and

    - construction loan from an institutional lender for the balance of the
      expenditures.

    The estimated cost of the development is approximately $57.0 million. We
expect to commence construction in the second quarter of 1999.


    The site for the development is in the Sunnyvale office/R&D market, which
includes approximately 23.1 million square feet. According to Colliers Parrish
International, the Sunnyvale office/R&D market had an overall vacancy rate as of
March 31, 1999 of 6.5%.


    The projected leveraged IRR is expected to be 21.8%, assuming the property
is sold at stabilization.


PENDING ACQUISITION



    FORT POINT PLACE



    On March 8, 1999, we executed a Purchase and Sale Agreement to acquire a
four-building, 355,000 square foot complex known as Fort Point Place, located in
the South Boston Waterfront District of Boston, Massachusetts. The purchase
price is $24.3 million, or $73 per square foot. At this time, we have completed
our due diligence.



    Two buildings consist of approximately 145,000 square feet of office space.
The buildings were constructed in the early 1900's and were renovated and
converted to office space in 1988. These two buildings are currently 97%
occupied, with average rents in place approximately 60% below current market
rates. Leases on approximately 68% of the space expire in 1999 and 2000.



    The other two buildings currently consist of approximately 190,000 square
feet of warehouse space which will be delivered to Beacon vacant. We are
considering various redevelopment opportunities for these buildings, including
conversion into residential or other commercial uses.



    The South Boston Waterfront District includes approximately 2.9 million
square feet of Class B office space as of January, 1999. According to Fallon,
Hines & O'Connor, a


                                       32
<PAGE>

Trammell Crow Company, as of January, 1999, the market had an overall vacancy
rate of approximately 8.3%.



    We are currently seeking financing for these properties.


INSURANCE

    In the opinion of management, each of our properties is adequately insured.

INVESTMENT IN CYPRESS COMMUNICATIONS, INC.

    On September 30, 1998, we invested $5 million to acquire preferred stock in
Cypress Communications, Inc. ("Cypress"). Our investment represents a 13.5%
fully diluted ownership position in the company. Dividends will be earned on our
investment as and when dividends are declared on the preferred stock or any
other class of stock in Cypress. Our preferred stock will be treated
preferentially upon a liquidation of Cypress (should a liquidation occur) and is
held by the Operating Partnership and Tenant Communications, Inc., a
Massachusetts corporation ("Tenant Communications"). Messrs. Leventhal and
Fortin hold 91% of the voting common stock of Tenant Communications. The
Operating Partnership holds 9% of the voting common stock and all of the
non-voting stock of Tenant Communications. The Operating Partnership owns 99% of
the economic interests in Tenant Communications and Messrs. Leventhal and Fortin
jointly own a 1% economic interest in Tenant Communications.

    Cypress provides bundled communications services to tenants in multi-tenant
commercial buildings. These bundled services include Internet access, video,
voice mail and telephone service. By bundling services to multiple tenants in an
office building, Cypress can aggregate the traffic of customers and give them
the advantage of a cost-effective service with a high level of customer care.


INVESTMENT IN WYNDHAM INTERNATIONAL, INC.
  AND PATRIOT AMERICAN HOSPITALITY, INC.



    Effective as of February 28, 1999, the Company, along with Apollo Real
Estate Advisors, L.P., Apollo Management, L.P., Thomas H. Lee Company and
Strategic Real Estate Investments I, LLC (collectively, the "Investor Group"),
entered into a Securities Purchase Agreement with Wyndham International, Inc.
and Patriot American Hospitality, Inc. (collectively, "Wyndham") whereby the
Investor Group agreed to invest up to $1 billion in Wyndham in exchange for
preferred stock. Our commitment represents approximately 15% of the total
commitment or a maximum of $150 million, which amount may be reduced to
approximately $100 million following a rights offering to current Wyndham
shareholders. The transaction, which requires the approval of Wyndham's
shareholders, is expected to close in June, 1999. Wyndham may accept an offer
from a competing bidder and, if so, will be obligated to pay the Investor Group
a "break-up fee" ranging from $30 million to $50 million. In addition, the
Investor Group is to be paid an equity transaction funding fee in the amount of
$21 million, our portion of which may be taken by us as a reduction in our
investment.


                                       33
<PAGE>

    Because we would not be able to maintain our status as a REIT if the
Operating Partnership were to hold all of the Series B Preferred that it is
committed to purchase, our Board of Directors has elected an alternative
investment structure pursuant to which all or a portion of the shares of Series
B Preferred will be held through one or more voting trusts. In connection with
structuring this investment, we anticipate distributing interests representing
between $90 million and $150 million worth of the Series B Preferred, subject to
a voting trust, to unitholders and stockholders as of June 8, 1999, the record
date for the distribution. We anticipate making this distribution following the
closing of the Securities Purchase Agreement. We reserve the right to establish
a second voting trust to hold any shares of Series B Preferred not contributed
to the first voting trust.



    The foregoing distributions are contingent upon the closing of the
Securities Purchase Agreement, the timing of such closing, the certification by
unitholders and stockholders that they are accredited investors and our decision
to go forward with the proposed investment structure. No assurances can be given
that the proposed Wyndham investment will be consummated. In addition, we
reserve the right to increase the amount of Series B Preferred to be
distributed, to abandon the proposed distributions and pursue an alternative
investment structure or to make additional cash distributions of equivalent
value to those unitholders and stockholders who are not accredited investors.
Accordingly, the aggregate value of the proposed distributions cannot be
accurately determined at this time.


ENVIRONMENTAL MATTERS

    When repairing a catch basin in a parking lot at The Athenaeum Portfolio, we
recently discovered some discolored urban fill beneath the catch basin. We
retained a licensed environmental site professional to investigate the matter
and to notify the appropriate governmental authorities of their findings. We
have environmental insurance covering the site and, therefore, do not expect any
costs associated with this environmental issue to have a material adverse impact
on the Company.


COMPETITION


    We compete in the leasing of office and industrial space with a considerable
number of other realty concerns, some of which may have greater marketing and
financial resources than us.

SEASONALITY

    The Company's office and industrial properties have not traditionally
experienced significant seasonality.

EMPLOYEES


    As of June 15, 1999, we had 31 full time employees.


                                       34
<PAGE>

THE PROPERTIES AND THE PENDING ACQUISITION



    Set forth below are summary descriptions of the Properties and the Pending
Acquisition. (1)(2)(3)



<TABLE>
<CAPTION>
                                                                                                         PERCENT
                                                                                           RENTABLE      LEASED
                                     YEAR BUILT/    OWNERSHIP     NO. OF     PROPERTY       AREA IN        AT
PROPERTY/PENDING ACQUISITION          RENOVATED    INTEREST (4)   BLDGS.     LOCATION     SQUARE FEET    3/31/99
- -----------------------------------  -----------   ------------   ------   -------------  -----------   ---------
<S>                                  <C>           <C>            <C>      <C>            <C>           <C>
SOUTH BOSTON, MA:
                                                                           SOUTH BOSTON,
FORT POINT PLACE(5)................   1910/1988        100%          2     MA                145,222       97%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average
    South Boston, MA...............                                  2                       145,222       97%
                                                                    --
                                                                                          -----------   ---------
CAMBRIDGE, MA:
215 First Street (6)...............   1885/1981         50%          1     Cambridge, MA     306,084       99%
One Kendall Square Cinema (6)......     1994            50%          1     Cambridge, MA      31,641      100%
Buildings 100-500 (6)..............   1887/1984         50%          4     Cambridge, MA     222,372      100%
Buildings 600/650/700 (6)..........   1916/1985         50%          2     Cambridge, MA     236,661       97%
Buildings 1500 & 1700 (6)..........   1914/1986         50%          2     Cambridge, MA      39,707       90%
Building 1400 (6)..................     1989            50%          1     Cambridge, MA     133,211      100%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average (4)....                                 11                       969,676       99%
                                                                    --
                                                                                          -----------   ---------
545 Technology Square (7)..........     1965           100%          1     Cambridge, MA     144,123      100%
549 Technology Square..............     1962           100%          1     Cambridge, MA      40,377       35%
565 Technology Square..............     1965           100%          1     Cambridge, MA     201,816       30%
575 Technology Square..............     1965           100%          1     Cambridge, MA     165,208       69%
The Draper Building (6)(8).........     1976           100%          1     Cambridge, MA     474,817      100%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average........                                  5                     1,026,341       79%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average
    Cambridge, MA..................                                 16                     1,996,017       88%
                                                                    --
                                                                                          -----------   ---------
SUBURBAN DALLAS, TX:
OFFICE
Bank One LBJ.......................     1982           100%          1     Dallas, TX         42,000       73%
Brandywine Place...................     1984           100%          4     Plano, TX          66,237       99%
Crosspoint Atrium..................     1981           100%          1     Dallas, TX        220,212       96%
Forest Abrams Place................     1983           100%          2     Dallas, TX         68,827       89%
6500 Greenville Avenue (9).........   1981/1996        100%          1     Dallas, TX        114,600       91%
Northcreek Place II (10)...........     1984           100%          2     Dallas, TX        163,303       93%
One Glen Lakes (11)................     1982           100%          1     Dallas, TX        166,272       93%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average........                                 12                       841,451       92%
                                                                    --
                                                                                          -----------   ---------
R&D / INDUSTRIAL
                                                                           Richardson,
Park North Business Center.........     1979           100%          2     TX                 36,885       88%
Plaza at Walnut Hill...............     1982           100%          2     Dallas, TX         88,280       95%
                                                                           Richardson,
Richardson Business Center.........     1983           100%          2     TX                 66,300      100%
Richardson Commerce Centre.........     1981           100%          3     Dallas, TX         60,517      100%
                                                                           Richardson,
Sherman Tech.......................     1981           100%          1     TX                 16,176      100%
                                                                           Richardson,
T I Business Park..................     1980           100%          3     TX                 96,902       85%
                                                                           Farmers
Venture Drive Tech Center..........     1975           100%          1     Branch, TX        128,322      100%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average........                                 14                       493,382       95%
                                                                    --
                                                                                          -----------   ---------
  Subtotal/Weighted Average
    Suburban Dallas, TX............                                 26                     1,334,833       93%
                                                                    --
                                                                                          -----------   ---------
  Total/Weighted Average Properties
    and Pending Acquisition........                                 44                     3,476,072       91%
                                                                    --
                                                                    --
                                                                                          -----------   ---------
                                                                                          -----------   ---------
</TABLE>


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

(1) Pending Acquisition appears in italics.


(2) Millennium Tower has not been included in these figures because it is a
    development project. The joint venture between the Company and HA L.L.C.
    plans to build a Class A high-rise building in downtown Seattle, Washington.


(3) Mathilda Research Centre has not been included in these figures because it
    is a development project. The joint venture between the Company and Mathilda
    Partners L.L.C. plans to build two Class A office/R&D buildings in
    Sunnyvale, California.


(4) The Company holds a 50% interest in The Athenaeum Portfolio which includes
    11 buildings, a nine screen--1,200 seat Cinema and 1,530 structured parking
    spaces.


(5) Fort Point Place includes two additional buildings that are not included in
    these figures because they are a re-development project. We plan to develop
    the two remaining buildings for residential or other commercial use.


(6) Currently being offered for sale. See "Recent Developments."


(7) Technology Square includes 955 structured parking spaces.


(8) The Draper Building includes 965 structured parking spaces.


(9) 6500 Greenville Avenue includes 281 structured parking spaces.


(10) Northcreek Place II includes 232 structured parking spaces.


(11) One Glen Lakes includes 546 structured parking spaces.



                                       35

<PAGE>

OCCUPANCY RATES, BASE RENTS AND NET EFFECTIVE RENTS



    The following chart sets forth the occupancy rate, expressed as a
percentage, the average annual Base Rent (as defined below) and the average Net
Effective Rent (as defined below) per square foot for each of our properties and
pending acquisition as of March 31, 1999. Base Rent is gross rent excluding
payments by tenants on account of real estate tax and operating expense
escalation. Net Effective Rent is Base Rent adjusted on a straight-line basis
for contractual rent step-ups and free rent periods, plus tenant payments on
account of real estate tax and operating expense escalation, less total
operating expenses and real estate taxes.



<TABLE>
<CAPTION>
                                                                                                      AVERAGE      AVERAGE
                                                                              TOTAL         %          BASE        NET EFF
PROPERTY/PENDING ACQUISITION (1)                                              AREA       LEASED        RENT         RENT
- --------------------------------------------------------------------------  ---------  -----------  -----------  -----------
<S>                                                                         <C>        <C>          <C>          <C>
SOUTH BOSTON, MA:
FORT POINT PLACE..........................................................    145,222          97%   $   15.31    $   13.06
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average South Boston, MA..........................    145,222          97%   $   15.31    $   13.06
                                                                            ---------         ---   -----------  -----------
CAMBRIDGE, MA:
215 First Street (2)......................................................    306,084          99%       20.11        15.02
One Kendall Square Cinema (2).............................................     31,641         100%       18.29        13.48
Buildings 100--500 (2)....................................................    222,372         100%       25.94        19.50
Buildings 600/650/700 (2).................................................    236,661          97%       33.90        24.95
Buildings 1500 & 1700 (2).................................................     39,707          90%       16.07        11.56
Building 1400 (2).........................................................    133,211         100%       27.23        19.68
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average...........................................    969,676          99%       25.57        18.93
                                                                            ---------         ---   -----------  -----------
545 Technology Square (NNN)...............................................    144,123         100%       13.35        13.35
549 Technology Square.....................................................     40,377          35%       14.29        14.29
565 Technology Square.....................................................    201,816          30%        6.30         3.95
575 Technology Square.....................................................    165,208          69%        7.23         4.14
The Draper Building (NNN) (2).............................................    474,817         100%        6.16         6.16
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average...........................................  1,026,341          79%        7.74         7.13
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average Cambridge, MA.............................  1,996,017          88%       17.40        13.52
                                                                            ---------         ---   -----------  -----------
SUBURBAN DALLAS, TX:
OFFICE
Bank One LBJ..............................................................     42,000          73%       13.53         7.53
Brandywine Place..........................................................     66,237          99%       11.46         9.62
Crosspoint Atrium.........................................................    220,212          96%       13.03         7.17
Forest Abrams Place.......................................................     68,827          89%       12.39         6.86
6500 Greenville Avenue....................................................    114,600          91%       13.15         7.30
Northcreek Place II.......................................................    163,303          93%       14.73         8.58
One Glen Lakes............................................................    166,272          93%       15.89        10.05
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average...........................................    841,451          92%       13.78         8.23
                                                                            ---------         ---   -----------  -----------
R&D / INDUSTRIAL
Park North Business Center................................................     36,885          88%        5.72         4.81
Plaza at Walnut Hill......................................................     88,280          95%        7.34         4.63
Richardson Business Center................................................     66,300         100%        4.42         4.27
Richardson Commerce Centre................................................     60,517         100%        6.90         5.57
Sherman Tech..............................................................     16,176         100%        7.05         4.96
T I Business Park.........................................................     96,902          85%        6.16         5.17
Venture Drive Tech Center.................................................    128,322         100%        4.80         3.62
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average...........................................    493,382          95%        5.85         4.54
                                                                            ---------         ---   -----------  -----------
    Subtotal / Weighted Average Suburban Dallas, TX.......................  1,334,833          93%       10.80         6.84
                                                                            ---------         ---   -----------  -----------
    Total / Weighted Average Properties and Pending Acquisition...........  3,476,072          91%   $   14.70    $   10.86
                                                                            ---------         ---   -----------  -----------
                                                                            ---------         ---   -----------  -----------
</TABLE>


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

(1) Pending Acquisition appears in italics.


(2) Currently being offered for sale, see "Recent Developments."



                                       36

<PAGE>

LEASE EXPIRATIONS--ALL PROPERTIES AND PENDING ACQUISITION



    The following table sets forth lease expirations (in square feet) for each
of our Properties and the Pending Acquisition.


<TABLE>
<CAPTION>
PROPERTY/PENDING        4/1-12/31
  ACQUISITION             1999       2000       2001       2002       2003       2004       2005       2006       2007       2008
- ----------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                     <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
SOUTH BOSTON, MA
FORT POINT PLACE (A)
- ----------------------
square feet (b).......      3,843     94,749      4,737      9,893          0          0          0     27,399          0          0
% sq. ft. (c).........       2.6%      65.2%       3.3%       6.8%       0.0%       0.0%       0.0%      18.9%       0.0%       0.0%
annual rent (d).......     62,128  1,329,945     80.494    224,605          0          0          0    541,952          0          0
% annual rent (e).....       2.8%      59.4%       3.6%      10.0%       0.0%       0.0%       0.0%      24.2%       0.0%       0.0%
tenants (f)...........          4          4          2          2          0          0          0          1          0          0
                        ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
CAMBRIDGE, MA
THE ATHENAUEM
  PORTFOLIO
215 FIRST STREET
- ----------------------
square feet (b).......     17,259     10,080     44,277     41,910    146,035     43,291          0          0          0          0
% sq. ft. (c).........       5.6%       3.3%      14.5%      13.7%      47.7%      14.1%       0.0%       0.0%       0.0%       0.0%
annual rent (d).......    265,301    139,486    841,040    753,218  2,989,339  1,014,142          0          0          0          0
% annual rent (e).....       4.4%       2.3%      14.0%      12.5%      49.8%      16.9%       0.0%       0.0%       0.0%       0.0%
tenants (f)...........          4          3          4          4          8          4          0          0          0          0
ONE KENDALL SQUARE
  CINEMA
- ----------------------
square feet (b).......          0          0          0          0          0          0          0          0          0          0
% sq. ft. (c).........       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d).......          0          0          0          0          0          0          0          0          0          0
% annual rent (e).....       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)...........          0          0          0          0          0          0          0          0          0          0
BUILDINGS 100--500
- ----------------------
square feet (b).......     19,594     33,138     25,369     30,062     86,545      4,224     21,200          0          0          0
% sq. ft. (c).........       8.8%      14.9%      11.4%      13.5%      38.9%       1.9%       9.5%       0.0%       0.0%       0.0%
annual rent (d).......    484,327    898,723    618,967    732,840  2,384,063    140,955    521,904          0          0          0
% annual rent (e).....       8.2%      15.2%      10.5%      12.4%      40.4%       2.4%       8.8%       0.0%       0.0%       0.0%
tenants (f)...........          7          7         10         12          8          1          5          0          0          0
BUILDINGS 600/650/700
- ----------------------
square feet (b).......     10,851     71,738      6,385     37,665        161          0    103,760          0          0          0
% sq. ft. (c).........       4.6%      30.3%       2.7%      15.9%       0.1%       0.0%      43.8%       0.0%       0.0%       0.0%
annual rent (d).......    177,247  2,442,338    183,070  1,470,204      1,932          0  3,295,214          0          0          0
% annual rent (e).....       2.3%      32.3%       2.4%      19.4%       0.0%       0.0%      43.5%       0.0%       0.0%       0.0%
tenants (f)...........         10          3          2          2          1          0          2          0          0          0
BUILDINGS 1500 & 1700
- ----------------------
square feet (b).......        275          0     15,707      4,709          0          0          0          0          0          0
% sq. ft. (c).........       0.7%       0.0%      39.6%      11.9%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d).......      2,196          0    393,462    103,598          0          0          0          0          0          0
% annual rent (e).....       0.4%       0.0%      64.6%      17.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)...........          1          0          1          1          0          0          0          0          0          0
BUILDING 1400
- ----------------------
square feet (b).......     24,541          0      7,868          0          0          0    100,802          0          0          0
% sq. ft. (c).........      18.4%       0.0%       5.9%       0.0%       0.0%       0.0%      75.7%       0.0%       0.0%       0.0%
annual rent (d).......    784,336          0    197,959          0          0          0  2,768,988          0          0          0
% annual rent (e).....      20.9%       0.0%       5.3%       0.0%       0.0%       0.0%      73.8%       0.0%       0.0%       0.0%
tenants (f)...........          1          0          1          0          0          0          8          0          0          0
                        ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
TOTAL THE ATHENAEUM
  PORTFOLIO
- ----------------------
square feet (b).......     72,520    114,956     99,606    114,346    232,741     47,515    225,762          0          0          0
% sq. ft. (c).........       7.5%      11.9%      10.3%      11.8%      24.0%       4.9%      23.3%       0.0%       0.0%       0.0%
annual rent (d).......  1,713,406  3,480,547  2,234,497  3,059,860  5,375,335  1,155,097  6,586,106          0          0          0
% annual rent (e).....       7.0%      14.3%       9.2%      12.5%      22.0%       4.7%      27.0%       0.0%       0.0%       0.0%
tenants (f)...........         23         13         18         19         17          5         15          0          0          0

<CAPTION>
PROPERTY/PENDING         2009 &
  ACQUISITION            BEYOND
- ----------------------  ---------
<S>                     <C>
SOUTH BOSTON, MA
FORT POINT PLACE (A)
- ----------------------
square feet (b).......          0
% sq. ft. (c).........       0.0%
annual rent (d).......          0
% annual rent (e).....       0.0%
tenants (f)...........          0
                        ---------
CAMBRIDGE, MA
THE ATHENAUEM
  PORTFOLIO
215 FIRST STREET
- ----------------------
square feet (b).......          0
% sq. ft. (c).........       0.0%
annual rent (d).......          0
% annual rent (e).....       0.0%
tenants (f)...........          0
ONE KENDALL SQUARE
  CINEMA
- ----------------------
square feet (b).......     31,641
% sq. ft. (c).........     100.0%
annual rent (d).......    578,802
% annual rent (e).....     100.0%
tenants (f)...........          1
BUILDINGS 100--500
- ----------------------
square feet (b).......      3,003
% sq. ft. (c).........       1.4%
annual rent (d).......    115,616
% annual rent (e).....       2.0%
tenants (f)...........          1
BUILDINGS 600/650/700
- ----------------------
square feet (b).......          0
% sq. ft. (c).........       0.0%
annual rent (d).......          0
% annual rent (e).....       0.0%
tenants (f)...........          0
BUILDINGS 1500 & 1700
- ----------------------
square feet (b).......     15,186
% sq. ft. (c).........      38.2%
annual rent (d).......    109,488
% annual rent (e).....      18.0%
tenants (f)...........          3
BUILDING 1400
- ----------------------
square feet (b).......          0
% sq. ft. (c).........       0.0%
annual rent (d).......          0
% annual rent (e).....       0.0%
tenants (f)...........          0
                        ---------
TOTAL THE ATHENAEUM
  PORTFOLIO
- ----------------------
square feet (b).......     49,830
% sq. ft. (c).........       5.1%
annual rent (d).......    803,906
% annual rent (e).....       3.3%
tenants (f)...........          5
</TABLE>


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

                                       37
<PAGE>

<TABLE>
<CAPTION>
                                             4/1-12/31
PROPERTY                                       1999       2000       2001       2002       2003       2004       2005       2006
- -------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                          <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>

545 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................    144,123          0          0          0          0          0          0          0
% sq. ft. (c)..............................     100.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)............................  3,149,241          0          0          0          0          0          0          0
% annual rent (e)..........................     100.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)................................          2          0          0          0          0          0          0          0
549 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................     14,000          0          0          0          0          0          0          0
% sq. ft. (c)..............................      34.7%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)............................    200,060          0          0          0          0          0          0          0
% annual rent (e)..........................     100.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)................................          1          0          0          0          0          0          0          0
565 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................     61,473          0          0          0          0          0          0          0
% sq. ft. (c)..............................      30.5%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)............................    405,722          0          0          0          0          0          0          0
% annual rent (e)..........................     100.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)................................          1          0          0          0          0          0          0          0
575 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................    114,697          0          0          0          0          0          0          0
% sq. ft. (c)..............................      69.4%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)............................    829,069          0          0          0          0          0          0          0
% annual rent (e)..........................     100.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)................................          1          0          0          0          0          0          0          0
THE DRAPER BUILDING (G)
- -------------------------------------------
square feet (b)............................          0          0          0          0          0          0          0          0
% sq. ft. (c)..............................       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)............................          0          0          0          0          0          0          0          0
% annual rent (e)..........................       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)................................          0          0          0          0          0          0          0          0
                                             ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
TOTAL TECHNOLOGY SQUARE &
THE DRAPER BUILDING
- -------------------------------------------
square feet (b)............................    334,293          0          0          0          0          0          0          0
% sq. ft. (c)..............................      32.6%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)............................  4,584,091          0          0          0          0          0          0          0
% annual rent (e)..........................      46.7%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)................................          5          0          0          0          0          0          0          0

<CAPTION>
                                                                    2009 &
PROPERTY                                       2007       2008      BEYOND
- -------------------------------------------  ---------  ---------  ---------
<S>                                          <C>        <C>        <C>
545 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................          0          0          0
% sq. ft. (c)..............................       0.0%       0.0%       0.0%
annual rent (d)............................          0          0          0
% annual rent (e)..........................       0.0%       0.0%       0.0%
tenants (f)................................          0          0          0
549 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................          0          0          0
% sq. ft. (c)..............................       0.0%       0.0%       0.0%
annual rent (d)............................          0          0          0
% annual rent (e)..........................       0.0%       0.0%       0.0%
tenants (f)................................          0          0          0
565 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................          0          0          0
% sq. ft. (c)..............................       0.0%       0.0%       0.0%
annual rent (d)............................          0          0          0
% annual rent (e)..........................       0.0%       0.0%       0.0%
tenants (f)................................          0          0          0
575 TECHNOLOGY SQUARE
- -------------------------------------------
square feet (b)............................          0          0          0
% sq. ft. (c)..............................       0.0%       0.0%       0.0%
annual rent (d)............................          0          0          0
% annual rent (e)..........................       0.0%       0.0%       0.0%
tenants (f)................................          0          0          0
THE DRAPER BUILDING (G)
- -------------------------------------------
square feet (b)............................          0          0    474,817
% sq. ft. (c)..............................       0.0%       0.0%     100.0%
annual rent (d)............................          0          0  5,232,483
% annual rent (e)..........................       0.0%       0.0%     100.0%
tenants (f)................................          0          0          1
                                             ---------  ---------  ---------
TOTAL TECHNOLOGY SQUARE &
THE DRAPER BUILDING
- -------------------------------------------
square feet (b)............................          0          0    474,817
% sq. ft. (c)..............................       0.0%       0.0%      46.3%
annual rent (d)............................          0          0  5,232,483
% annual rent (e)..........................       0.0%       0.0%      53.3%
tenants (f)................................          0          0          1
</TABLE>


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

                                       38
<PAGE>

<TABLE>
<CAPTION>
                                 4/1-12/31
PROPERTY                           1999       2000       2001       2002       2003       2004       2005       2006       2007
- -------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                              <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>

DALLAS, TX
- -------------------------------

BANK ONE LBJ
- -------------------------------
square feet (b)................        896      3,597     13,561          0     12,357        350          0          0          0
% sq. ft. (c)..................       2.1%       8.6%      32.3%       0.0%      29.4%       0.8%       0.0%       0.0%       0.0%
annual rent (d)................     11,200     43,265    175,476          0    179,000     13,801          0          0          0
% annual rent (e)..............       2.6%      10.2%      41.5%       0.0%      42.3%       3.3%       0.0%       0.0%       0.0%
tenants (f)....................          1          2          4          0          3          1          0          0          0

BRANDYWINE PLACE
- -------------------------------
square feet (b)................      6,772     16,441     26,838     12,850      2,530          0          0          0          0
% sq. ft. (c)..................      10.2%      24.8%      40.5%      19.4%       3.8%       0.0%       0.0%       0.0%       0.0%
annual rent (d)................     81,775    200,846    374,318    182,065     35,420          0          0          0          0
% annual rent (e)..............       9.4%      23.0%      42.8%      20.8%       4.1%       0.0%       0.0%       0.0%       0.0%
tenants (f)....................          4          8         10          7          1          0          0          0          0

CROSSPOINT ATRIUM
- -------------------------------
square feet (b)................     40,052     27,046     13,135     21,811     58,299      8,347          0          0          0
% sq. ft. (c)..................      18.2%      12.3%       6.0%       9.9%      26.5%       3.8%       0.0%       0.0%       0.0%
annual rent (d)................    513,274    385,394    219,828    357,930  1,029,530    161,369          0          0          0
% annual rent (e)..............      15.3%      11.5%       6.5%      10.6%      30.6%       4.8%       0.0%       0.0%       0.0%
tenants (f)....................         12          9          4          4         10          3          0          0          0

FOREST ABRAMS PLACE
- -------------------------------
square feet (b)................     30,174     11,403      5,951      4,618      6,611      2,784          0          0          0
% sq. ft. (c)..................      43.8%      16.6%       8.6%       6.7%       9.6%       4.0%       0.0%       0.0%       0.0%
annual rent (d)................    391,785    158,610     80,138     71,083     90,628     40,492          0          0          0
% annual rent (e)..............      47.0%      19.0%       9.6%       8.5%      10.9%       4.9%       0.0%       0.0%       0.0%
tenants (f)....................         10         12          7          4          2          2          0          0          0

6500 GREENVILLE AVENUE
- -------------------------------
square feet (b)................      8,926     30,096     20,323     29,274     13,285          0          0          0          0
% sq. ft. (c)..................       7.8%      26.3%      17.7%      25.5%      11.6%       0.0%       0.0%       0.0%       0.0%
annual rent (d)................    112,839    386,789    298,750    493,115    216,364          0          0          0          0
% annual rent (e)..............       7.3%      25.1%      19.4%      31.9%      14.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)....................          8          9          6          9          3          0          0          0          0

NORTHCREEK PLACE II
- -------------------------------
square feet (b)................     49,230     19,820      9,599     55,566      4,916     11,993          0          0          0
% sq. ft. (c)..................      30.1%      12.1%       5.9%      34.0%       3.0%       7.3%       0.0%       0.0%       0.0%
annual rent (d)................    813,800    291,218    161,353    792,950     81,521    220,032          0          0          0
% annual rent (e)..............      34.5%      12.3%       6.8%      33.6%       3.5%       9.3%       0.0%       0.0%       0.0%
tenants (f)....................         12          6          6          7          2          2          0          0          0

ONE GLEN LAKES
- -------------------------------
square feet (b)................     16,347     32,062     30,498     44,809     10,825     19,693          0          0          0
% sq. ft. (c)..................       9.8%      19.3%      18.3%      26.9%       6.5%      11.8%       0.0%       0.0%       0.0%
annual rent (d)................    239,343    526,417    561,346    797,745    219,120    367,688          0          0          0
% annual rent (e)..............       8.8%      19.4%      20.7%      29.4%       8.1%      13.6%       0.0%       0.0%       0.0%
tenants (f)....................          5          8          7          6          3          3          0          0          0
                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------

TOTAL DALLAS OFFICE
- -------------------------------
square feet (b)................    152,397    140,465    119,905    168,928    108,823     43,167          0          0          0
% sq. ft. (c)..................      18.1%      16.7%      14.2%      20.1%      12.9%       5.1%       0.0%       0.0%       0.0%
annual rent (d)................  2,164,016  1,992,538  1,871,209  2,694,888  1,851,583    803,381          0          0          0
% annual rent (e)..............      17.9%      16.5%      15.5%      22.3%      15.3%       6.6%       0.0%       0.0%       0.0%
tenants (f)....................         52         54         44         37         24         11          0          0          0

<CAPTION>
                                             2009 &
PROPERTY                           2008      BEYOND
- -------------------------------  ---------  ---------
<S>                              <C>        <C>
DALLAS, TX
- -------------------------------
BANK ONE LBJ
- -------------------------------
square feet (b)................          0          0
% sq. ft. (c)..................       0.0%       0.0%
annual rent (d)................          0          0
% annual rent (e)..............       0.0%       0.0%
tenants (f)....................          0          0
BRANDYWINE PLACE
- -------------------------------
square feet (b)................          0          0
% sq. ft. (c)..................       0.0%       0.0%
annual rent (d)................          0          0
% annual rent (e)..............       0.0%       0.0%
tenants (f)....................          0          0
CROSSPOINT ATRIUM
- -------------------------------
square feet (b)................     42,694          0
% sq. ft. (c)..................      19.4%       0.0%
annual rent (d)................    696,286          0
% annual rent (e)..............      20.7%       0.0%
tenants (f)....................          2          0
FOREST ABRAMS PLACE
- -------------------------------
square feet (b)................          0          0
% sq. ft. (c)..................       0.0%       0.0%
annual rent (d)................          0          0
% annual rent (e)..............       0.0%       0.0%
tenants (f)....................          0          0
6500 GREENVILLE AVENUE
- -------------------------------
square feet (b)................          0      1,890
% sq. ft. (c)..................       0.0%       1.6%
annual rent (d)................          0     35,910
% annual rent (e)..............       0.0%       2.3%
tenants (f)....................          0          1
NORTHCREEK PLACE II
- -------------------------------
square feet (b)................          0          0
% sq. ft. (c)..................       0.0%       0.0%
annual rent (d)................          0          0
% annual rent (e)..............       0.0%       0.0%
tenants (f)....................          0          0
ONE GLEN LAKES
- -------------------------------
square feet (b)................          0          0
% sq. ft. (c)..................       0.0%       0.0%
annual rent (d)................          0          0
% annual rent (e)..............       0.0%       0.0%
tenants (f)....................          0          0
                                 ---------  ---------
TOTAL DALLAS OFFICE
- -------------------------------
square feet (b)................     42,694      1,890
% sq. ft. (c)..................       5.1%       0.2%
annual rent (d)................    696,286     35,910
% annual rent (e)..............       5.7%       0.3%
tenants (f)....................          2          1
</TABLE>


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

                                       39
<PAGE>

<TABLE>
<CAPTION>
                     4/1-12/31
PROPERTY               1999       2000       2001       2002       2003       2004       2005       2006       2007       2008
- -------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                  <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
PARK NORTH BUSINESS CENTER
- ------------------------------
square feet (b)....     12,437     15,813      4,083          0          0          0          0          0          0          0
% sq. ft. (c)......      33.7%      42.9%      11.1%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....     93,004     94,257     34,706          0          0          0          0          0          0          0
% annual rent
  (e)..............      41.9%      42.5%      15.6%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          2          2          1          0          0          0          0          0          0          0
PLAZA AT WALNUT HILL
- ------------------------------
square feet (b)....     12,338     24,133     29,258     14,221      4,134          0          0          0          0          0
% sq. ft. (c)......      14.0%      27.3%      33.1%      16.1%       4.7%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....    100,409    174,164    219,528     95,992     26,871          0          0          0          0          0
% annual rent
  (e)..............      16.3%      28.2%      35.6%      15.6%       4.4%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          5          7          6          1          1          0          0          0          0          0
RICHARDSON BUSINESS CENTER
- ------------------------------
square feet (b)....          0     58,425      7,875          0          0          0          0          0          0          0
% sq. ft. (c)......       0.0%      88.1%      11.9%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....          0    336,002     56,858          0          0          0          0          0          0          0
% annual rent
  (e)..............       0.0%      85.5%      14.5%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          0          2          1          0          0          0          0          0          0          0
RICHARDSON COMMERCE CENTRE
- ------------------------------
square feet (b)....          0        840      4,944      8,000     35,961     10,772          0          0          0          0
% sq. ft. (c)......       0.0%       1.4%       8.2%      13.2%      59.4%      17.8%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....          0      7,216     39,799     54,320    278,058     82,255          0          0          0          0
% annual rent
  (e)..............       0.0%       1.6%       8.6%      11.8%      60.2%      17.8%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          0          1          1          1          5          2          0          0          0          0
SHERMAN TECH
- ------------------------------
square feet (b)....          0     11,777      4,399          0          0          0          0          0          0          0
% sq. ft. (c)......       0.0%      72.8%      27.2%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....          0     85,146     31,893          0          0          0          0          0          0          0
% annual rent
  (e)..............       0.0%      72.8%      27.2%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          0          3          1          0          0          0          0          0          0          0
T I BUSINESS PARK
- ------------------------------
square feet (b)....      9,793     26,689     23,682          0     11,763     10,023          0          0          0          0
% sq. ft. (c)......      10.1%      27.5%      24.4%       0.0%      12.1%      10.3%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....     70,786    138,597    175,649          0     92,467     85,196          0          0          0          0
% annual rent
  (e)..............      12.6%      24.6%      31.2%       0.0%      16.4%      15.1%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          3          5          3          0          2          2          0          0          0          0
VENTURE DRIVE TECH CENTER
- ------------------------------
square feet (b)....          0     55,177     20,379      6,525     46,241          0          0          0          0          0
% sq. ft. (c)......       0.0%      43.0%      15.9%       5.1%      36.0%       0.0%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....          0    299,935    103,118     39,150    213,803          0          0          0          0          0
% annual rent
  (e)..............       0.0%      45.7%      15.7%       6.0%      32.6%       0.0%       0.0%       0.0%       0.0%       0.0%
tenants (f)........          0          5          1          1          2          0          0          0          0          0
                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
TOTAL DALLAS R & D/INDUSTRIAL
- ------------------------------
square feet (b)....     34,568    192,854     94,620     28,746     98,099     20,795          0          0          0          0
% sq. ft. (c)......       7.0%      39.1%      19.2%       5.8%      19.9%       4.2%       0.0%       0.0%       0.0%       0.0%
annual rent (d)....    264,199  1,135,316    661,550    189,462    611,200    167,451          0          0          0          0
% annual rent
  (e)..............       8.7%      37.5%      21.8%       6.3%      20.2%       5.5%       0.0%       0.0%       0.0%       0.0%
tenants (f)........         10         25         14          3         10          4          0          0          0          0
                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
TOTAL PROPERTIES AND
PENDING ACQUISITION
- ------------------------------
square feet (b)....    597,621    543,024    318,868    321,913    439,663    111,477    225,762     27,399          0     42,694
% sq. ft. (c)......      17.2%      15.6%       9.2%       9.3%      12.6%       3.2%       6.5%       0.8%       0.0%       1.2%
annual rent (d)....  8,787,840  7,938,346  4,847,750  6,168,814  7,838,117  2,125,929  6,586,106    541,952          0    696,286
% annual rent
  (e)..............      17.0%      15.4%       9.4%      12.0%      15.2%       4.1%      12.8%       1.1%       0.0%       1.3%
tenants (f)........         94         96         78         61         51         20         15          1          0          2

<CAPTION>
                      2009 &
PROPERTY              BEYOND
- -------------------  ---------
<S>                  <C>
PARK NORTH BUSINESS
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
PLAZA AT WALNUT HIL
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
RICHARDSON BUSINESS
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
RICHARDSON COMMERCE
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
SHERMAN TECH
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
T I BUSINESS PARK
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
VENTURE DRIVE TECH
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
                     ---------
TOTAL DALLAS R & D/
- -------------------
square feet (b)....          0
% sq. ft. (c)......       0.0%
annual rent (d)....          0
% annual rent
  (e)..............       0.0%
tenants (f)........          0
                     ---------
TOTAL PROPERTIES AN
PENDING ACQUISITION
- -------------------
square feet (b)....    526,537
% sq. ft. (c)......      15.1%
annual rent (d)....  6,072,299
% annual rent
  (e)..............      11.8%
tenants (f)........          7
</TABLE>


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

(a) The Pending Acquisition appears in italics.


(b) Total area in square feet covered by such leases.


(c) Percentage of total square feet of the Property.


(d) Annualized expiring base rental income represented by such leases in the
    year of expiration plus the current tenant payments on account of real
    estate tax and operating escalations (amounts in dollars).


(e) Calculated as annual rent divided by the total annual rent.


(f) The number of tenants whose leases will expire.


(g) The Draper Building is reflected as a 2008 and beyond expiration; although
    the current lease term expires in 2001, the tenant has options to extend
    through October 2051 at rents that are significantly below market.


                                       40
<PAGE>
HISTORICAL OPERATING INFORMATION


    The following charts set forth the Historical Occupancy, Historical Base
Rent and Historical Net Rent (as defined below) per square foot for each of the
Properties and the Pending Acquisition. Historical Net Rent is Base Rent plus
tenant payments on account of real estate tax and operating expense escalation,
less total operating expenses and real estate taxes.



<TABLE>
<CAPTION>
                                                                           HISTORICAL OCCUPANCY
                                                  TOTAL    -----------------------------------------------------
         PROPERTY/PENDING ACQUISITION             AREA       1994       1995       1996       1997       1998
- ----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
FORT POINT PLACE(A)(B)........................    145,222       100%       100%       100%       100%       100%
                                                ---------  ---------  ---------  ---------  ---------  ---------
South Boston, MA..............................    145,222       100%       100%       100%       100%       100%
                                                ---------  ---------  ---------  ---------  ---------  ---------
215 First Street..............................    306,084        86%        97%        96%       100%       100%
One Kendall Square Cinema (c).................     31,641     --           100%       100%       100%       100%
Buildings 100-500.............................    222,372        91%        75%        84%        84%        99%
Buildings 600/650/700.........................    236,661        95%        95%        97%        99%       100%
Buildings 1500 & 1700.........................     39,707        87%        82%        87%        87%        97%
Building 1400.................................    133,211        96%        90%       100%       100%       100%
                                                ---------  ---------  ---------  ---------  ---------  ---------
The Athenaeum Portfolio.......................    969,676        91%        90%        94%        95%        99%
                                                ---------  ---------  ---------  ---------  ---------  ---------
545 Technology Square.........................    144,123       100%       100%       100%       100%       100%
549 Technology Square.........................     40,377       100%       100%       100%       100%       100%
565 Technology Square.........................    201,816       100%       100%       100%       100%        97%
575 Technology Square.........................    165,208       100%       100%       100%       100%       100%
The Draper Building...........................    474,817       100%       100%       100%       100%       100%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Technology Square & The Draper Building.......  1,026,341       100%       100%       100%       100%        99%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Bank One LBJ (d)..............................     42,000     --         --         --         --            76%
Brandywine Place..............................     66,237        96%        94%        92%        99%        99%
Crosspoint Atrium.............................    220,212        79%        87%        94%        95%        95%
Forest Abrams Place (d).......................     68,827     --         --         --            76%        89%
6500 Greenville Avenue (d)....................    114,600     --         --            78%        83%        91%
Northcreek Place II...........................    163,303        95%        91%        98%        95%        96%
One Glen Lakes (d)............................    166,272     --            94%        96%        95%        93%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas Office.................................    841,451        87%        91%        93%        92%        93%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Park North Business Center (d)................     36,885     --         --           100%       100%        84%
Plaza at Walnut Hill..........................     88,280        71%        78%        81%        84%        94%
Richardson Business Center (d)................     66,300     --         --           100%        92%       100%
Richardson Commerce Centre....................     60,517        90%        94%        99%        90%       100%
Sherman Tech..................................     16,176       100%        96%        98%       100%       100%
T I Business Park (d).........................     96,902     --            85%        97%        99%        93%
Venture Drive Tech Center.....................    128,322        87%        94%        94%        92%       100%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas R&D/Industrial.........................    493,382        84%        88%        94%        93%        96%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas Office and R&D/Industrial Portfolio....  1,334,833        86%        90%        93%        92%        94%
                                                ---------  ---------  ---------  ---------  ---------  ---------
Total/Weighted Average........................  3,476,072        93%        94%        96%        96%        98%
                                                ---------  ---------  ---------  ---------  ---------  ---------
                                                ---------  ---------  ---------  ---------  ---------  ---------
</TABLE>



<TABLE>
<CAPTION>
                                                                           HISTORICAL BASE RENT
                                                  TOTAL    -----------------------------------------------------
         PROPERTY/PENDING ACQUISITION             AREA       1994       1995       1996       1997       1998
- ----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
FORT POINT PLACE(A)(B)........................    145,222  $    7.15  $    7.35  $    7.42  $    8.70  $    9.53
                                                ---------  ---------  ---------  ---------  ---------  ---------
South Boston, MA..............................    145,222       7.15       7.35       7.42       8.70       9.53
                                                ---------  ---------  ---------  ---------  ---------  ---------
215 First Street..............................    306,084      14.36      13.52      15.19      16.62      19.52
One Kendall Square Cinema (c).................     31,641     --          16.07      17.71      17.93      18.29
Buildings 100-500.............................    222,372      19.43      20.92      17.82      21.74      24.80
Buildings 600/650/700.........................    236,661      28.49      28.47      28.99      31.91      33.17
Buildings 1500 & 1700.........................     39,707       9.43      10.51      11.58      11.46      15.26
Building 1400.................................    133,211      25.67      27.96      26.95      27.30      27.09
                                                ---------  ---------  ---------  ---------  ---------  ---------
The Athenaeum Portfolio.......................    969,676      20.52      20.81      20.71      22.82      24.89
                                                ---------  ---------  ---------  ---------  ---------  ---------
545 Technology Square.........................    144,123      22.89      22.28      21.86      20.84      13.35
549 Technology Square.........................     40,377      11.61      11.12      10.42       9.88       6.51
565 Technology Square.........................    201,816       9.32       9.28       8.63       8.01       6.62
575 Technology Square.........................    165,208      10.50       9.90       9.38       8.59       7.32
The Draper Building...........................    474,817       6.16       6.16       6.16       6.16       6.16
                                                ---------  ---------  ---------  ---------  ---------  ---------
Technology Square & The Draper Building.......  1,026,341      10.05       9.84       9.54       9.12       7.46
                                                ---------  ---------  ---------  ---------  ---------  ---------
</TABLE>


                                       42
<PAGE>


<TABLE>
<CAPTION>
                                                                           HISTORICAL BASE RENT
                                                  TOTAL    -----------------------------------------------------
         PROPERTY/PENDING ACQUISITION             AREA       1994       1995       1996       1997       1998
- ----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
Bank One LBJ (d)..............................     42,000     --         --         --         --          12.56
Brandywine Place (d)..........................     66,237     --           7.64       8.81       8.81      10.55
Crosspoint Atrium.............................    220,212       7.76       8.59      10.12      10.74      12.13
Forest Abrams Place (d).......................     68,827     --         --         --         --          12.09
6500 Greenville Avenue (d)....................    114,600     --         --         --          10.84      12.36
Northcreek Place II...........................    163,303       9.41      12.06      11.26      11.17      12.21
One Glen Lakes (d)............................    166,272     --         --          11.37      12.08      15.28
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas Office.................................    841,451       8.46       9.71      10.62      10.98      12.70
                                                ---------  ---------  ---------  ---------  ---------  ---------
Park North Business Center (d)................     36,885     --         --           5.31       5.40       5.46
Plaza at Walnut Hill..........................     88,280       7.06       6.73       7.76       6.12       7.23
Richardson Business Center (d)................     66,300     --         --           2.78       3.75       4.39
Richardson Commerce Centre (d)................     60,517     --           4.94       5.22       5.84       6.79
Sherman Tech (d)..............................     16,176     --          11.21       5.36       5.58       6.60
T I Business Park (d).........................     96,902     --         --           4.34       4.27       5.15
Venture Drive Tech Center (d).................    128,322     --           3.92       3.97       4.34       4.70
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas R&D/Industrial.........................    493,382       7.06       5.38       4.86       4.87       5.57
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas Office and R&D/Industrial Portfolio....  1,334,833       8.20       8.00       8.06       8.52      10.06
                                                ---------  ---------  ---------  ---------  ---------  ---------
Total/Weighted Average........................  3,476,072  $   13.35  $   12.93  $   12.27  $   12.83  $   13.41
                                                ---------  ---------  ---------  ---------  ---------  ---------
                                                ---------  ---------  ---------  ---------  ---------  ---------
</TABLE>



<TABLE>
<CAPTION>
                                                                            HISTORICAL NET RENT
                                                  TOTAL    -----------------------------------------------------
         PROPERTY/PENDING ACQUISITION             AREA       1994       1995       1996       1997       1998
- ----------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
FORT POINT PLACE (A)(B).......................    145,222  $    4.53  $    4.99  $    4.94  $    6.18  $    6.82
                                                ---------  ---------  ---------  ---------  ---------  ---------
South Boston, MA..............................    145,222       4.53       4.99       4.94       6.18       6.82
                                                ---------  ---------  ---------  ---------  ---------  ---------
215 First Street..............................    306,084       8.06       8.63       9.64      11.18      15.06
One Kendall Square Cinema (c).................     31,641     --          13.33      14.56      13.38      13.48
Buildings 100-500.............................    222,372      14.34      16.42      13.90      13.98      16.92
Buildings 600/650/700.........................    236,661      18.79      18.56      18.27      20.75      24.58
Buildings 1500 & 1700.........................     39,707       6.75       6.47       8.70       7.93      10.82
Building 1400.................................    133,211      14.46      17.48      16.93      16.52      19.63
                                                ---------  ---------  ---------  ---------  ---------  ---------
The Athenaeum Portfolio.......................    969,676      13.11      14.12      13.85      14.83      18.21
                                                ---------  ---------  ---------  ---------  ---------  ---------
545 Technology Square.........................    144,123      12.14      12.01      12.38      11.85      13.35
549 Technology Square.........................     40,377       3.27       3.84       3.82       3.31       4.06
565 Technology Square.........................    201,816       3.16       3.14       3.19       2.71       4.08
575 Technology Square.........................    165,208       3.65       3.30       3.81       3.54       4.16
The Draper Building...........................    474,817       5.86       5.85       5.84       5.83       6.16
                                                ---------  ---------  ---------  ---------  ---------  ---------
Technology Square & The Draper Building.......  1,026,341       5.75       5.69       5.83       5.60       6.36
                                                ---------  ---------  ---------  ---------  ---------  ---------
Bank One LBJ (d)..............................     42,000     --         --         --         --           6.57
Brandywine Place (d)..........................     66,237     --           4.60       4.82       5.36       7.61
Crosspoint Atrium.............................    220,212       2.20       2.29       4.14       4.20       6.69
Forest Abrams Place (d).......................     68,827     --         --         --         --           6.71
6500 Greenville Avenue (d)....................    114,600     --         --         --           3.66       6.84
Northcreek Place II...........................    163,303       4.79       5.75       6.43       5.23       7.05
One Glen Lakes (d)............................    166,272     --         --           5.54       5.70       9.82
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas Office.................................    841,451       3.30       3.89       5.20       4.79       7.47
                                                ---------  ---------  ---------  ---------  ---------  ---------
Park North Business Center (d)................     36,885     --         --           3.96       4.01       4.34
Plaza at Walnut Hill..........................     88,280       3.45       3.66       3.54       2.12       4.56
Richardson Business Center (d)................     66,300     --         --           1.90       3.46       4.27
Richardson Commerce Centre (d)................     60,517     --           3.43       3.82       4.11       4.21
Sherman Tech (d)..............................     16,176     --           8.82       2.45       2.46       4.70
T I Business Park (d).........................     96,902     --         --           3.87       3.89       4.38
Venture Drive Tech Center (d).................    128,322     --           3.52       2.85       3.26       3.56
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas R&D/Industrial.........................    493,382       3.45       3.84       3.23       3.34       4.17
                                                ---------  ---------  ---------  ---------  ---------  ---------
Dallas Office and R&D/Industrial Portfolio....  1,334,833       3.33       3.87       4.33       4.21       6.25
                                                ---------  ---------  ---------  ---------  ---------  ---------
Total/Weighted Average........................  3,476,072  $    7.91  $    8.02  $    7.67  $    7.78  $    9.64
                                                ---------  ---------  ---------  ---------  ---------  ---------
                                                ---------  ---------  ---------  ---------  ---------  ---------
</TABLE>


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


(a) The Fort Point Place historical information includes the two office
    buildings and the two warehouse buildings. The total area of 145,227
    represents only the office buildings.



(b) Pending Acquisition appears in italics.



(c) Construction of The Cinema at Kendall Square was completed in late 1994.



(d) The previous owners did not have historical information prior to their
    ownership of these properties. Therefore, no information prior to their
    ownership is available.


                                       43
<PAGE>
MORTGAGE INDEBTEDNESS

    Our total outstanding consolidated mortgage debt and our proportionate share
of the total outstanding unconsolidated mortgage debt on the properties is
approximately $55.8 million at March 31, 1999. The following table sets forth
certain information regarding our consolidated and unconsolidated mortgage debt
obligations, including mortgage obligations relating to specific Properties. All
of the mortgage debt is nonrecourse to the Company, with certain exceptions such
as liability for fraud, misapplication of insurance proceeds and environmental
matters.

<TABLE>
<CAPTION>
                                 PRINCIPAL         COMPANY'S                                  ESTIMATED
                                  AMOUNT          PORTION OF      INTEREST     MATURITY    BALANCE DUE ON
PROPERTY                      (AS OF 3/31/99)      PRINCIPAL        RATE         DATE         MATURITY
- ---------------------------  -----------------  ---------------  -----------  -----------  ---------------
<S>                          <C>                <C>              <C>          <C>          <C>
                                                     (DOLLAR AMOUNTS IN MILLIONS)
MORTGAGE INDEBTEDNESS:

CONSOLIDATED PROPERTIES

Northcreek Place II........      $     4.3         $     4.3          7.80%      12/1/05      $     3.6
One Glen Lakes.............            5.7               5.7          7.75%       9/1/05            4.8
6500 Greenville Avenue.....            3.4               3.4          7.80%      12/1/04            3.1
Brandywine Place...........            1.5               1.5          9.00%      12/1/99            1.5
Plaza at Walnut Hill.......            1.5               1.5          9.00%       (e)               0.0
Richardson Business
  Center...................            1.5               1.5          9.00%       (g)               0.0
Park North Business
  Center...................            1.0               1.0          8.25%       (i)               0.0
T I Business Park..........            1.6               1.6          9.25%       5/1/02            1.4
Richardson Commerce
  Centre...................            1.0               1.0          9.00%       (l)               0.0
                                     -----             -----     -----------                      -----
  Subtotal/Weighted Average
    Consolidated
    Properties.............           21.5              21.5          8.22%                        14.4
                                     -----             -----     -----------                      -----

UNCONSOLIDATED PROPERTIES

The Athenaeum
  Portfolio (n)............           68.7              34.3          8.485%     1/11/27            0.0
                                     -----             -----     -----------                      -----
  Subtotal/Weighted Average
    Unconsolidated
    Properties.............           68.7              34.3          8.485%                        0.0
                                     -----             -----     -----------                      -----
  Total/Weighted Average...  $        90.2      $       55.8          8.38%                $       14.4
                                     -----             -----     -----------                      -----
                                     -----             -----     -----------                      -----

<CAPTION>
PROPERTY                        PREPAYMENT PROVISIONS
- ---------------------------  ---------------------------
<S>                          <C>
MORTGAGE INDEBTEDNESS:
CONSOLIDATED PROPERTIES
Northcreek Place II........  Prepayable subject to
                               conditions (a)
One Glen Lakes.............  Prepayable subject to
                               conditions (b)
6500 Greenville Avenue.....  Prepayable subject to
                               conditions (c)
Brandywine Place...........  Prepayable subject to
                               conditions (d)
Plaza at Walnut Hill.......  Prepayable subject to
                               conditions (f)
Richardson Business
  Center...................  Prepayable subject to
                               conditions (h)
Park North Business
  Center...................  Prepayable subject to
                               conditions (j)
T I Business Park..........  Prepayable subject to
                               conditions (k)
Richardson Commerce
  Centre...................  Prepayable subject to
                             conditions(m)
  Subtotal/Weighted Average
    Consolidated
    Properties.............
UNCONSOLIDATED PROPERTIES
The Athenaeum
  Portfolio (n)............  Prepayable subject to
                             conditions (o)
  Subtotal/Weighted Average
    Unconsolidated
    Properties.............
  Total/Weighted Average...
</TABLE>


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

(a) Prepayable after January 1, 2001 subject to a yield maintenance payment
    based on the rate of United States Treasury Notes having a term closest to
    the date of maturity but in no event less than 1% of the then balance.

(b) Prepayable after October 1, 2000 subject to a yield maintenance payment
    based on the rate of United States Treasury Notes having a term closest to
    the date of maturity but in no event less than 1% of the then balance.

(c) Prepayable after January 1, 2002 subject to a yield maintenance payment
    based on the rate of United States Treasury Notes having a term closest to
    the date of maturity but in no event less than 1% of the then balance.

                                       44
<PAGE>

(d) Prepayable subject to payments of 3% of the amount prepaid before December
    1, 1998, 2% if prepaid before June 1, 1999 and 1% thereafter. The loan was
    repaid on April 1, 1999.


(e) Plaza at Walnut Hill loan matures on July 1, 2017. The lender has the right
    to accelerate the maturity in the sixth, eleventh or sixteenth loan years,
    on six months' notice. No prepayment fees apply in that event.

(f) Prepayable after June 12, 2002 subject to payment of 5% of the amount
    prepaid, reducing by 1% per annum to a minimum prepayment of 1% of the
    amount prepaid.

(g) The Richardson Business Center loan matures on November 1, 2021. The lender
    has the right to accelerate the maturity in the sixth, eleventh, sixteenth
    or twenty-first loan years, on six months' notice. No prepayment fees apply
    in that event.

(h) Prepayable after October 24, 2001 subject to payment of 5% of the amount
    prepaid, reducing by 1% per annum to a minimum prepayment of 1% of the
    amount prepaid.

(i) The Park North Business Center loan matures on October 1, 2022. The lender
    has the right to accelerate the maturity in the sixth, eleventh, sixteenth
    or twenty-first loan years, on six months' notice. No prepayment fees apply
    in that event.

(j) Prepayable after September 8, 2002 subject to payment of 5% of the amount
    prepaid, reducing by 1% per annum to a minimum prepayment of 1% of the
    amount prepaid.

(k) Prepayable after March 1, 2000 subject to a yield maintenance payment based
    on the rate of United States Treasury Notes having a term closest to the
    date of maturity but in no event less than 2% of the then balance.

(l) The Richardson Commerce Centre loan matures on March 1, 2019. The lender has
    the right to accelerate the maturity in the sixth, eleventh, sixteenth or
    twenty-first loan years, on six months' notice. No prepayment fees apply in
    that event.


(m) Prepayable after February 24, 1999 subject to payment of 5% of the amount
    prepaid, reducing by 1% per annum to a minimum prepayment of 1% of the
    amount prepaid. The loan was repaid on June 1, 1999.


(n) The Company holds a 50% interest in the master limited liability company
    that controls the two limited liability companies that hold title to The
    Athenaeum Portfolio.

(o) Prepayable after January 11, 2007 without a fee. Prior to January 11, 2007
    but after April 11, 1999, all or a portion of the loan may be defeased;
    i.e., the amount prepaid is used to purchase U.S. Obligations with
    maturities sufficient to enable the scheduled payments on the loan to be
    met.

                                       45
<PAGE>
MANAGEMENT COMPENSATION

                             EXECUTIVE COMPENSATION

    The following section sets forth and discusses the compensation paid or
awarded during the last year to the Company's Chief Executive Officer and the
four most highly compensated executive officers at the end of Fiscal 1998 who
earned in excess of $100,000 during 1998 (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION

    SUMMARY COMPENSATION.  The following summary compensation table sets forth
information concerning compensation for services rendered in all capacities
awarded to, earned by or paid to the Named Executive Officers during the last
fiscal year.

<TABLE>
<CAPTION>
                                                                                         LONG-TERM
                                                                                       COMPENSATION
                                                                                          AWARDS
                                                                                      ---------------
                                                                                        SECURITIES
                                                                ANNUAL COMPENSATION     UNDERLYING        ALL OTHER
                                                               ---------------------      OPTIONS       COMPENSATION
NAME AND PRINCIPAL POSITION                           YEAR     SALARY($)   BONUS($)      (SHARES)            ($)
- --------------------------------------------------  ---------  ----------  ---------  ---------------  ---------------
<S>                                                 <C>        <C>         <C>        <C>              <C>

Alan M. Leventhal.................................       1998     193,173    300,000       500,000            3,109(1)
Chairman and Chief Executive Officer

Lionel P. Fortin..................................       1998     193,173    300,000       500,000            4,640(1)
President and Chief Operating Officer

Erin R. O'Boyle...................................       1998     120,733    175,000       175,000            2,271(1)
Senior Vice President and Chief Investment Officer

William A. Bonn...................................       1998     120,733    175,000       150,000            2,737(1)
Senior Vice President and General Counsel

Randy J. Parker...................................       1998     120,733    175,000       150,000            2,900(1)
Senior Vice President and Chief Financial Officer
</TABLE>

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

(1) Includes $2,000 contributed to a 401(k) plan on behalf of Messrs. Leventhal,
    Fortin and Bonn and Ms. O'Boyle, and $2,468 contributed to a 401(k) plan on
    behalf of Mr. Parker. The remainder of each amount represents premiums paid
    for life insurance on behalf of the Named Executive Officer.

                                       46
<PAGE>
    OPTION GRANTS.  The following table sets forth certain information
concerning the grant of options to purchase Common Stock of the Company to the
Named Executive Officers who received such grants during Fiscal 1998.

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                                POTENTIAL REALIZABLE
                                                                                              VALUE OF ASSUMED ANNUAL
                                                                                                RATES OF STOCK PRICE
                                                                                                  APPRECIATION FOR
                                                        INDIVIDUAL GRANTS                          OPTION TERM(1)
                                      ------------------------------------------------------  ------------------------
<S>                                   <C>          <C>            <C>            <C>          <C>         <C>
                                                      PERCENT
                                                     OF TOTAL
                                       NUMBER OF      OPTIONS
                                      SECURITIES      GRANTED
                                      UNDERLYING   TO EMPLOYEES    EXERCISE OR
                                        OPTIONS      IN FISCAL     BASE PRICE    EXPIRATION
                                      GRANTED (#)      YEAR        PER ($/SH)       DATE        5%($)        10%($)
                                      -----------  -------------  -------------  -----------  ----------  ------------

Alan M. Leventhal...................      60,000           2.5%     $      20       3/19/08      754,800     1,912,200
                                         440,000          18.7%     $      20       4/14/08    5,535,200    14,022,800

Lionel P. Fortin....................      60,000           2.5%     $      20       3/19/08      754,800     1,912,200
                                         440,000          18.7%     $      20       4/14/08    5,535,200    14,022,800

Erin R. O'Boyle.....................      50,000           2.1%     $      20       3/19/08      629,000     1,593,500
                                         125,000           5.3%     $      20       4/14/08    1,572,500     3,983,750

William A. Bonn.....................      50,000           2.1%     $      20       3/19/08      629,000     1,593,500
                                         100,000           4.2%     $      20       4/14/08    1,258,000     3,187,000

Randy J. Parker.....................      50,000           2.1%     $      20       3/19/08      629,000     1,593,500
                                         100,000           4.2%     $      20       4/14/08    1,258,000     3,187,000
</TABLE>

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

(1) This column shows the hypothetical gain or option spreads of the options
    granted based on assumed annual compound stock appreciation rates of 5% and
    10% over the full 10-year term of the options. The 5% and 10% assumed rates
    of appreciation are mandated by the rules of the Securities and Exchange
    Commission and do not represent the Company's estimate or projection of
    future Common Stock prices. The gains shown are net of the option exercise
    price, but do not include deductions for taxes or other expenses associated
    with the exercise of the option or the sale of the underlying shares, or
    reflect non-transferability, vesting or termination provisions. The actual
    gains, if any, on the exercises of stock options will depend on the future
    performance of the Common Stock.

                                       47
<PAGE>
    OPTION EXERCISES AND OPTION VALUES.  The following table sets forth
information concerning the number and value of unexercised options to purchase
Common Stock of the Company held by the Named Executive Officers who held such
options at December 31, 1998. No Named Executive Officer of the Company
exercised any options to purchase Common Stock during 1998.

AGGREGATED FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                               NUMBER OF SECURITIES
                                                              UNDERLYING UNEXERCISED       VALUE OF UNEXERCISED
                                                                     OPTIONS               IN-THE-MONEY OPTIONS
                                                             AT DECEMBER 31, 1998(#)    AT DECEMBER 31, 1998($)(1)
                                                            --------------------------  --------------------------
                                                            EXERCISABLE  UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
                                                            -----------  -------------  -----------  -------------

<S>                                                         <C>          <C>            <C>          <C>
Alan M. Leventhal.........................................          --        500,000           --             --

Lionel P. Fortin..........................................          --        500,000           --             --

Erin R. O'Boyle...........................................          --        175,000           --             --

William A. Bonn...........................................          --        150,000           --             --

Randy J. Parker...........................................          --        150,000           --             --
</TABLE>

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

(1) There is no public trading market for our common stock, therefore it is not
    possible to accurately estimate the value of outstanding options.
    Nonetheless, we believe that the value of all outstanding options held by
    the Named Executive Officers was not above the original exercise price as of
    December 31, 1998.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    The current members of the Compensation Committee are Messrs. Clark, Shulman
and Sperling. None of these individuals is an exeuctive officer of the Company.
Mr. Leventhal, the Chairman and Chief Executive Officer of the Company, serves
as an EX-OFFICIO member of the Compensation Committee.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The Company was incorporated on January 21, 1998 as a Massachusetts
corporation and was initially capitalized through loans from the Company's
founders, Messrs. Leventhal and Fortin, in the amount of $3.6 million. On May 1,
1998, the loans were repaid.


    As of June 15, 1999, Messrs. Bonn, Fletcher, Halsted, Mitchell, Parker and
Wheeler, as well as Ms. O'Boyle, each held a 3% interest in the Incentive Return
and Ms. Broderick and Mr. Ragno each held a 1% interest in the Incentive Return.
The balance of the Incentive Return is split equally between the family trusts
of Messrs. Leventhal and Fortin. See "Long-Term Incentive Plan."


                                       48
<PAGE>
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                         ESTIMATED FUTURE PAYOUTS UNDER
                                            NUMBER OF                                      NON-STOCK PRICE-BASED PLANS
                                          SHARES, UNITS      PERFORMANCE OR OTHER     -------------------------------------
                                         OR OTHER RIGHTS  PERIOD UNTIL MATURATION OF   THRESHOLD     TARGET       MAXIMUM
NAME                                           (#)                  PAYOUT             ($ OR #)     ($ OR #)     ($ OR #)
- ---------------------------------------  ---------------  --------------------------  -----------  -----------  -----------

<S>                                      <C>              <C>                         <C>          <C>          <C>
Alan M. Leventhal......................            38%           December 31, 2001        (1)          (1)          (1)

Lionel P. Fortin.......................            38%           December 31, 2001        (1)          (1)          (1)

Erin R. O'Boyle........................             3%           December 31, 2001        (1)          (1)          (1)

William A. Bonn........................             3%           December 31, 2001        (1)          (1)          (1)

Randy J. Parker........................             3%           December 31, 2001        (1)          (1)          (1)
</TABLE>

(1) The Company has established a Long-Term Incentive Plan with awards based
    upon growth of Funds from Operations above a specified benchmark over a
    three year period. Participants in this plan will receive their specified
    percentage of the total award. See "Long-Term Incentive Plan."

DIRECTORS AND EXECUTIVE OFFICERS

    We believe that we have developed an organization of real estate investment
and management professionals that is well-positioned to take advantage of
today's real estate and capital environment. The following table sets forth
certain information about our Directors and executive officers.


<TABLE>
<CAPTION>
NAME                               AGE                          POSITION(S) HELD
- -----------------------------      ---      ---------------------------------------------------------
<S>                            <C>          <C>
Alan M. Leventhal............          46   Chairman of the Board of Directors and Chief Executive
                                            Officer

Lionel P. Fortin.............          56   President, Chief Operating Officer and Director

William A. Bonn..............          47   Senior Vice President and General Counsel

Jeremy B. Fletcher...........          50   Senior Vice President of BCP and Chief Executive Beacon
                                            Capital Partners West, a division of BCP

John Halsted.................          34   Senior Vice President of BCP and Chief Investment Officer
                                            of Beacon Venture Partners, Inc.

Douglas S. Mitchell..........          57   Senior Vice President--Development

Erin R. O'Boyle..............          39   Senior Vice President and Chief Investment Officer

Randy J. Parker..............          40   Senior Vice President and Chief Financial Officer

E. Valjean Wheeler...........          54   Senior Vice President of BCP and Chief Executive Beacon
                                            Capital Partners Central, a division of BCP

Thomas Ragno.................          37   Senior Vice President--Management and Leasing

Stephen T. Clark.............          43   Director

Robert M. Melzer.............          58   Director

Steven Shulman...............          58   Director

Scott M. Sperling............          41   Director
</TABLE>


    The principal occupation for the last five years of each of our Directors
and senior managers, as well as other related information, is set forth below.

                                       49
<PAGE>

    ALAN M. LEVENTHAL.  Mr. Leventhal is co-founder of the Company and serves as
Chairman, a Class I Director with a term expiring in 1999, and Chief Executive
Officer. Prior to founding the Company, Mr. Leventhal served as President and
Chief Executive Officer of Beacon Properties Corporation ("Beacon Properties"),
one of the largest REITs in the United States. The portfolio of Beacon
Properties included 124 office properties nationwide, comprising approximately
18.8 million square feet. Beacon Properties was merged with Equity Office
Properties Trust in December 1997. Mr. Leventhal received his Bachelor's degree
in Economics from Northwestern University in 1974 and a Master of Business
Administration from the Amos Tuck School of Business Administration at Dartmouth
College in 1976. Mr. Leventhal is a Trustee of Boston University and the New
England Aquarium Corporation and recently served as First Vice Chair of the
National Association of Real Estate Investment Trusts ("NAREIT"). He is also a
member of the Visiting Committee of Northwestern University and the Board of
Overseers of WGBH, Beth Israel Deaconess Medical Center, and the Museum of
Science in Boston. Mr. Leventhal has lectured at the Amos Tuck School of
Business Administration at Dartmouth College and the Massachusetts Institute of
Technology Center for Real Estate. Mr. Leventhal has been awarded the Realty
Stock Review's "Outstanding CEO Award" for 1996, 1997 and 1998 and the
Commercial Property News' "Office Property Executive of the Year Award" for
1996.



    LIONEL P. FORTIN.  Mr. Fortin is co-founder of the Company and serves as
President, Chief Operating Officer, and a Class II Director with a term expiring
in 2000. He served as Executive Vice President, Chief Operating Officer and a
Director of Beacon Properties. From May 1994 through February 1995, Mr. Fortin
served as Chief Financial Officer of Beacon Properties. Mr. Fortin has lectured
at the Massachusetts Institute of Technology Center for Real Estate. Mr. Fortin
graduated from Bentley College in 1968 and is a member of the American Institute
of Certified Public Accountants and the Massachusetts Society of Certified
Public Accountants.



    WILLIAM A. BONN.  Mr. Bonn serves as Senior Vice President of, and General
Counsel to, the Company. Mr. Bonn served as General Counsel to Beacon Properties
prior to joining the Company. From 1987 to 1997, Mr. Bonn served as General
Counsel and Senior Vice President for Property Capital Trust, a Boston-based
REIT. From 1978 to 1987, Mr. Bonn held various positions as an attorney with The
Prudential Insurance Company of America. From 1976 to 1978, Mr. Bonn was
involved in the private practice of law in Los Angeles. Mr. Bonn currently
serves as Co-Chairman of the Government Relations Committee of NAREIT. Mr. Bonn
holds a Bachelor of Science degree from the University of California at San
Diego and a Juris Doctor degree from the University of San Diego. He is admitted
to practice law in Massachusetts, New York and California, and is a member of
the American, California and Boston Bar Associations.



    JEREMY B. FLETCHER.  Mr. Fletcher serves as Senior Vice President and Chief
Executive of Beacon Capital Partners West, a division of the Company. Mr.
Fletcher served as Senior Vice President and Chief Executive of Beacon
Properties West, a division of Beacon Properties, prior to joining the Company.
Before joining Beacon Properties,


                                       50
<PAGE>

Mr. Fletcher was a Managing Director of Insignia Commercial Group, Inc. in Los
Angeles. From 1983 to July 1996, Mr. Fletcher was with the Paragon Group, Inc.,
where he served as General Partner/Senior Vice President of the Southern
California/Arizona Region. Mr. Fletcher received his Bachelor's degree from
Albion College. He is a member of the Urban Land Institute (ULI), Real Estate
Investment Advisory Council (REIAC), and National Association of Industrial and
Office Properties (NAIOP) and is a licensed real estate broker in California.



    JOHN HALSTED.  Mr. Halsted serves as Senior Vice President of the Company
and, upon formation of a sister corporation to the company, will also serve as
the sister corporation's Chief Investment Officer. Prior to joining the Company,
Mr. Halsted was Vice President of Harvard Private Capital Group. He joined
Harvard Private Capital Group in 1993 and was responsible for the origination
and management of investments in specialty finance, retail and energy companies.
From 1991 to 1993, Mr. Halsted was an Associate with Simmons & Company, an
investment banking firm based in Houston, Texas. Mr. Halsted earned his Master
of Business Administration from The Harvard Business School and a degree in
economics from The University of California at Berkeley.



    DOUGLAS S. MITCHELL.  Mr. Mitchell serves as Senior Vice
President--Development of the Company. Mr. Mitchell served as the Senior Vice
President, Leasing/Management and Development of Beacon Properties and as
President of the Beacon Properties Management Company from 1994 until 1997. He
joined the Beacon Properties organization in 1964 and has extensive experience
in leasing, management and development. He graduated from the Wentworth
Institute in 1962 and is a member of the Greater Boston Real Estate Board. Mr.
Mitchell is also a licensed real estate broker in Massachusetts and New York.



    ERIN R. O'BOYLE.  Ms. O'Boyle serves as Senior Vice President and Chief
Investment Officer of the Company. Prior to joining the Company, Ms. O'Boyle
served as Vice President, Acquisitions for Beacon Properties, where she was
responsible for negotiating over $1.8 billion of investment opportunities. Ms.
O'Boyle joined Beacon Properties in 1986 and has held positions in asset
management and development. Ms. O'Boyle received her Bachelor of Science degree
in structural engineering from the University of Delaware and her Master of
Science degree in real estate development from the Massachusetts Institute of
Technology. Ms. O'Boyle is the past chair of the Alumni Association for the
Massachusetts Institute of Technology Center for Real Estate, is past president
of the New England Women in Real Estate ("NEWIRE"), and currently is on the
board of the Northeast chapter of REIAC.



    RANDY J. PARKER.  Mr. Parker serves as Senior Vice President and Chief
Financial Officer of the Company. Before joining the Company, Mr. Parker was
Vice President, Investor Relations for Beacon Properties, where he was
responsible for managing the relationships with institutional stockholders and
analysts. Prior to joining Beacon Properties, Mr. Parker was Senior Vice
President and Portfolio Manager at Aldrich Eastman & Waltch ("AEW"), where he
was responsible for the management of over $400 million of


                                       51
<PAGE>

investment portfolios on behalf of institutional clients. During his eight year
tenure at AEW, Mr. Parker also held positions in asset management and investment
origination. Mr. Parker was also previously associated with JMB/Federated
Realty, where he served as Project Manager for various retail development
projects. Mr. Parker holds a Master of Business Administration degree from the
Wharton School, University of Pennsylvania and a Bachelor of Architecture degree
from the University of Kentucky.



    THOMAS RAGNO.  Mr. Ragno serves as Senior Vice President--Management and
Leasing of the Company. Prior to joining the Company, Mr. Ragno served as Vice
President, Property Management of Beacon Properties where he directly supervised
property management operations in the Boston metropolitan region consisting of
approximately 8.0 million square feet and 170 employees. Prior to serving in
that position, he was responsible for the leasing of Beacon Properties' downtown
office portfolio of 5 million square feet. Mr. Ragno joined Beacon Properties in
1986 and has held various positions in leasing and project management. Mr. Ragno
holds a Master of Science degree in Civil Engineering from the Massachusetts
Institute of Technology and a Bachelor of Science degree in Civil Engineering
and Engineering & Public Policy from Carnegie-Mellon University. He is a member
of the Board of Directors of the Greater Boston Building Owners and Managers
Association (BOMA). He is a licensed real estate salesperson in Massachusetts.



    E. VALJEAN WHEELER.  Mr. Wheeler serves as Senior Vice President and Chief
Executive of Beacon Capital Partners Central, a division of the Company. Mr.
Wheeler served as Senior Vice President and Chief Executive of Beacon Properties
Midwest, a division of Beacon Properties, prior to joining the Company. Before
joining Beacon Properties, Mr. Wheeler held various senior management positions
with Equity Office Holdings, L.L.C. beginning in 1989, and served as President
and Chief Operating Officer from 1995 to 1997. He also held various senior
management positions with the Broe Companies and Williams Realty Corporation.
Mr. Wheeler graduated from Oklahoma State University with a Bachelor of Science
degree in Education. He is a member of the Urban Land Institute (ULI) and serves
on the Board of Trustees of the Center for Urban Land Economics Research at the
University of Wisconsin--Madison.



    STEPHEN T. CLARK.  Mr. Clark serves as a Class II Director with a term
expiring in 2000. Since 1995, Mr. Clark has been President of Cypress Realty,
Inc., a real estate investor and developer based in Houston, Texas. Previously,
Mr. Clark served as Managing Director of Harvard Private Capital Group where he
directed the group responsible for real estate investment and management
activities. Prior to joining Harvard Private Capital Group, Mr. Clark was a
partner in Clark-Pilgrim Limited Partnership and in Trammell Crow Company where
he was responsible for office and industrial activities in Philadelphia and
Delaware. Mr. Clark has extensive investment experience in developmental and
distressed real estate assets. He received a Masters in Business Administration
degree from Harvard Business School and received his undergraduate degree from
Duke University. Mr. Clark serves as Chairman of the Board of Abacoa Development
Company and Cypress Senior Living, Inc.


                                       52
<PAGE>

    ROBERT M. MELZER.  Mr. Melzer was appointed to the Board of Directors in May
1999 as a Class I Director. Since 1992, Mr. Melzer has been the President and
Chief Executive Officer of Property Capital Trust ("Property Capital"), a
publicly traded REIT listed on the American Stock Exchange until July 1998.
Through November 1996, Mr. Melzer was also the Chief Financial Officer of
Property Capital. Mr. Melzer serves as a director of Genesee & Wyoming Inc., a
transportation company; Trustee of MGI Properties, a publicly traded REIT; and
Trustee of Beth Israel Deaconess Medical Center. From 1997 to 1998, Mr. Melzer
served as a director of Red Lion Properties, Inc., a hotel holding company, and
he has previously served as a member of the Board of Governors of NAREIT. Mr.
Melzer received his Bachelor of Arts degree in Economics from Cornell University
in 1961 and a Masters in Business Administration from Harvard Business School in
1969.



    STEVEN SHULMAN.  Mr. Shulman serves as a Class III Director with a term
expiring in 2001. He served as a Director of Beacon Properties from 1995 to
1997. Since 1984, Mr. Shulman has been active in investment banking through his
wholly owned company, The Hampton Group, and Latona Associates, Inc. where he
serves as a Managing Director. Currently, Mr. Shulman is a shareholder and
director in a diversified group of companies, including Ermanco Incorporated,
Corinthian Directory, Terrace Food Group, Inc. and WPI Group, Inc. In addition,
he serves as Non-Executive Chairman of Terrace Food Group, Inc. Mr. Shulman is a
graduate of Stevens Institute of Technology where he received a Bachelor's
degree in Mechanical Engineering and a Master's degree in Industrial Management.
Mr. Shulman serves as Vice Chairman of the Board of Stevens Institute of
Technology.



    SCOTT M. SPERLING.  Mr. Sperling serves as a Class III Director with a term
expiring in 2001. He served as a Director of Beacon Properties from 1994 to
1997. Mr. Sperling joined Thomas H. Lee Co., a Boston-based investment firm, as
a general partner in September 1994. Previously, Mr. Sperling served as Managing
Partner and Vice Chairman of the Aeneas Group, Inc./Harvard Management Company
from 1984 through 1994. He is currently a director of Livent, Inc., The Learning
Company, Inc., GenTek Inc., Fisher Scientific International, Inc., Safelite
Glass Corp. and several private firms. He received a Master of Business
Administration degree from the Harvard Business School and received his
undergraduate degree from Purdue University.


OTHER PROFESSIONALS

    DAVID P. BENNETT.  Mr. Bennett serves as Regional Vice President of Beacon
Capital Partners Central, located in Chicago. Prior to joining the Company, Mr.
Bennett served as Regional Vice President at Beacon Properties, where he had
asset management responsibilities for the Midwest region consisting of
approximately 5.0 million square feet. Before joining Beacon Properties, Mr.
Bennett was a Vice President at The Balcor Company and held various positions
from 1987-1997. He holds a Bachelor of Science degree in Finance from the
University of Illinois.

                                       53
<PAGE>
    MICHAEL J. BOWLER.  Mr. Bowler serves as Director of Financial Analysis for
Beacon Capital Partners. Before joining the company, Mr. Bowler served as the
Director of Financial Analysis for Beacon Properties Corporation where he was
responsible for all acquisition, asset management and development financial
analysis. Prior to joining Beacon, Mr. Bowler was an Assistant Vice President at
Northland Investment Corporation where he held a variety of financial and
accounting positions from 1982 to 1994. Mr. Bowler is a graduate of Bentley
College where he received a Bachelor of Science degree in Accounting.

    NANCY J. BRODERICK.  Ms. Broderick serves as Vice President and Treasurer.
Before joining the Company, Ms. Broderick served as Vice President and Treasurer
for Beacon Properties where she was responsible for a variety of corporate
finance and treasury functions, including key banking and institutional lender
relationships as well as administration of Beacon Properties' credit facility.
Ms. Broderick holds a Bachelor of Science degree in Accounting from Stonehill
College and a Master of Science degree in Taxation from Bentley College. She is
a certified public accountant and a member of the American Institute of
Certified Public Accountants and the Massachusetts Society of Public
Accountants.


    JEFFREY D. BROWN.  Mr. Brown serves as Senior Acquisition Manager. Before
joining the Company, Mr. Brown was a Financial Analyst at Beacon Properties,
where he was responsible for the analysis and underwriting of investment
opportunities. Mr. Brown was a Consultant with E&Y Kenneth Leventhal Real Estate
Group from 1994 to 1996, where he was responsible for valuation analysis and due
diligence assignments for various clients. Mr. Brown holds a Bachelor of Science
degree from Cornell University.


    DAVID L. COHAN.  Mr. Cohan serves as Vice President. Prior to joining the
Company, Mr. Cohan served as a Senior Acquisition Manager at Beacon Properties.
Before joining Beacon Properties, Mr. Cohan held operations, planning and asset
management positions at Copley Real Estate Advisors in Boston. He has also had
project management roles for firms developing retail, resort, waterfront,
residential, and industrial projects throughout the continental United States
and Hawaii. Mr. Cohan holds a Master of Science degree in Real Estate
Development from the Massachusetts Institute of Technology Center for Real
Estate where he also served as a teaching and research assistant in recent
years. He has a Bachelor's degree in English writing from the University of
Pennsylvania.

    LISA A. MEOMARTINO.  Ms. Meomartino serves as Corporate Controller for
Beacon Capital Partners. Prior to joining the Company, Ms. Meomartino served as
Director of Property Accounting for Beacon Properties Corporation where she
managed the financial reporting, accounting systems administration and lease
administration functions for 21.3 million square feet of commercial office
buildings. She joined Beacon in 1985 and has held various corporate and property
accounting positions. Ms. Meomartino holds a BS in Business Administration from
Bryant College and a MS in Finance from Boston College.

                                       54
<PAGE>
    ROBERT J. PALUMBO.  Mr. Palumbo serves as Vice President--Development. Prior
to joining the Company, Mr. Palumbo most recently served as Senior Development
Manager for Beacon Properties Corporation and Equity Office Properties Trust.
Mr. Palumbo has twenty-five years' experience in real estate and construction,
having also previously been Vice President-Team Executive within BankBoston's
real estate group and Vice President of Development for Weston Financial Group.
He has acted in a project management capacity for office, research, industrial,
retail and residential properties located throughout New England and the
Southeastern United States. Mr. Palumbo holds a Master of Business
Administration degree from Boston University and a Bachelor of Science degree in
Mechanical Engineering from Northeastern University.

    JENNIFER L. PLUMPTON.  Ms. Plumpton serves as a Financial Analyst. Before
joining the Company, Ms. Plumpton was a Financial Analyst at Morgan Stanley
Realty Incorporated, where she was responsible for the analysis and execution of
securities offerings, mergers, acquisitions and asset sales for real estate
investment trusts and real estate operating companies. Ms. Plumpton holds a
Bachelor's degree in Mathematics from Providence College.

    STEPHEN A. STANLEY.  Mr. Stanley serves as Director of Information
Technology for Beacon Capital Partners. Prior to joining the Company, Mr.
Stanley was the Director of Technical Services for Beacon Properties Corporation
from 1994 to 1997. Prior to joining Beacon, Mr. Stanley was Manager of
Information Systems at First Winthrop Corporation. Mr. Stanley is a graduate of
the University of Maine where he received a Bachelor of Science degree with a
concentration in Finance.

    M. WISTAR WOOD.  Mr. Wood serves as Vice President, Acquisitions. Prior to
joining the Company he served as Vice President, Acquisitions for Beacon
Properties Corporation, where he managed the search and negotiations for
ownership opportunities. Prior to joining Beacon in February 1997, Mr. Wood
served as Vice President of Acquisitions for Metric Realty from 1995 to 1997 and
oversaw all acquisition activity in a 26-state territory. Prior to joining
Metric in 1995, he was with Copley Real Estate Advisors, responsible for
acquisitions and sales. Mr. Wood is a graduate of Princeton University and holds
a MBA from the Wharton School, University of Pennsylvania. He is the founder of
REIAC's Northeast Chapter, and a member of ICSC.

BOARD OF DIRECTORS AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

    The Board of Directors has three classes of directors. The initial terms of
the first, second and third classes will expire in 1999, 2000 and 2001,
respectively. Beginning in 1999, directors of each class will be chosen for
three-year terms upon the expiration of their current terms. Each year one class
of directors will be elected by the stockholders. All officers serve at the
discretion of the Board of Directors.

    Each Director who is not an employee of the Company (the "Independent
Directors") receives an annual director's fee of $20,000. Each Independent
Director also receives:

                                       55
<PAGE>
    - $1,000 for each regular quarterly or special meeting of the Board of
      Directors attended;

    - $1,000 for each committee meeting attended; and

    - $250 for each special telephonic committee meeting or meeting of the Board
      of Directors in which the Independent Director participates.

    Independent Directors are also reimbursed for reasonable expenses incurred
to attend director and committee meetings. Independent Directors may elect in
lieu of cash fees to receive either:

    - options to purchase Common Stock at a discount to fair market value; or

    - deferred stock units.


    These compensation elections must be approved by the Board's compensation
committee (the "Compensation Committee"). Independent Directors also receive
(upon initial election to the Board of Directors) an option to purchase 5,000
shares of Common Stock. Each subsequent year they will receive an option to
purchase an additional 5,000 shares of Common Stock. All options granted to
Independent Directors vest on the date of grant. Any officer of the Company who
is also a Director will not be paid the directors' fees.


    Our Charter provides that (except in the case of a vacancy) a majority of
the members of the Board of Directors will be Independent Directors. The vote of
a majority of the Directors and the vote of a majority of the Independent
Directors is required to fill any vacancies among the Independent Directors. The
Compensation Committee will consist solely of Independent Directors, except that
Mr. Leventhal (or his designee) may serve as a non-voting member of the
Compensation Committee.

    The Maryland General Corporation Law (the "MGCL") permits a corporation to
include in its charter a provision limiting the liability of directors and
officers to the corporation or its stockholders for money damages, except (i) to
the extent that it is proved that the director or officer actually received an
improper benefit or profit in money, property or services or (ii) if a judgment
or other final adjudication is entered in a proceeding based on a finding that
the director's or officer's action or failure to act was the result of active
and deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding. Our Charter limits the liability of the Board of Directors and
officers to the Company to the fullest extent permitted from time to time by
Maryland law. See "Certain Provisions of Maryland Law and BCP's Charter and of
Bylaws--Limitation of Liability and Indemnification."

    Our Charter authorizes us, (to the maximum extent permitted by Maryland law)
to obligate ourselves to indemnify and to pay or reimburse reasonable expenses
in advance of final disposition of a proceeding to (a) any present or former
director or officer or (b) any individual who, while a director of the Company
and at the request of the Company, serves or has served another corporation,
REIT, partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, partner or

                                       56
<PAGE>
trustee of such corporation, REIT, partnership, joint venture, trust, employee
benefit plan or 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 director or officer of the Company. Our
Bylaws obligate us 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 director or officer who is made a party
to the proceeding by reason of his service in that capacity or (b) any
individual who, while a director of the Company and at the request of the
Company, serves or has served another corporation, REIT, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, REIT, 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. Our Charter
and Bylaws also permit us to indemnify and advance expenses to any person who
served a predecessor of the Company in any of the capacities described above and
to any employee or agent of the Company or a predecessor of the Company.

    The MGCL requires a corporation (unless its charter provides otherwise,
which our Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its directors, officers and certain other
parties 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 to, or at the request of, the
corporation, unless it is established that (a) the act or omission of the
indemnified party was material to the matter giving rise to the proceeding and
(i) the act or omission was committed in bad faith or (ii) the act or omission
was the result of active and deliberate dishonesty, (b) the indemnified party
actually received an improper personal benefit in money, property or services or
(c) in the case of any criminal proceeding, the indemnified party had reasonable
cause to believe that the act or omission was unlawful. However, under the MGCL,
a Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the standard of conduct necessary for
indemnification by the corporation and (b) a written undertaking by him or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling BCP pursuant to the
foregoing provisions, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

                                       57
<PAGE>
LONG-TERM INCENTIVE PLAN

    Our compensation and incentive plans are designed to align the interests of
our management with the interests of our stockholders. Our Long-Term Incentive
Plan is designed to reward certain members of management for growth of our Funds
from Operations in excess of a specified benchmark as described below. If our
Funds from Operations exceed this benchmark, management will be entitled to
receive an Incentive Return determined in the manner described below (the
"Incentive Return"). This Incentive Return shall be calculated at the end of the
three year period following the completion of the first calendar year following
the date of the Original Offering of Common Stock to NationsBanc (the
"Determination Date").

    The Incentive Return shall equal the product of:

    (A) 12% of the dollar amount by which:

           (i)  the Actual Return exceeds

           (ii) the Base Return; multiplied by

    (B) the weighted average of shares of Common Stock and Units outstanding for
       the 12 months immediately preceding the Determination Date; multiplied by

    (C) the Company's Multiple as defined below.

    The Incentive Return is a function of the amount by which the Actual Return
exceeds the Base Return. If the Actual Return does not exceed the Base Return,
no Incentive Return will have been earned. Likewise, the maximum Incentive
Return is limited by the amount the Actual Return exceeds the Base Return.

    For the purposes of calculating the Incentive Return:

        "Actual Return" means our Funds from Operations (before the Incentive
    Return) per share of Common Stock and per Unit for the 12 months immediately
    preceding the Determination Date;

        "Base Return" means an amount equal to what our Funds from Operations
    would have been for the twelve month period immediately preceding the
    Determination Date assuming a benchmark cumulative rate of return on the
    Offering Price equal to 10% per annum, compounding quarterly, calculated
    since the beginning of the calendar quarter following the date of Closing.

        "Funds from Operations," as defined by NAREIT, means net income
    (computed in accordance with GAAP), excluding gains (or losses) from debt
    restructuring and sales of property, plus depreciation and amortization (in
    each case, only Real Estate-Related Assets), and after adjustments for
    unconsolidated partnerships and joint ventures; and

        "Multiple" means the price of our Common Stock (as defined below)
    divided by our Funds from Operations per share for the fiscal quarter ending
    on the Determination Date on an annualized basis.

                                       58
<PAGE>
    For the purposes of calculating the Multiple, the price of our Common Stock
will be calculated as follows:

        (1) where there exists a public market for our Common Stock, the price
    of our Common Stock will be the average of the closing bid and asked prices
    of our Common Stock quoted in the Over-The-Counter Market Summary or the
    last reported sale price of our Common Stock or the closing price quoted on
    the NASDAQ System or on any exchange on which our Common Stock is listed,
    whichever is applicable, as published in THE WALL STREET JOURNAL for the 90
    calendar days prior to the calculation of the Multiple.

        (2) if no public market for our Common Stock exists at the time of such
    exercise, the price of our Common Stock will be determined by a single,
    independent appraiser to be selected by a committee composed of Independent
    Directors, which appraiser shall appraise the fair market value of one share
    of our Common Stock within 30 days of its selection within such guidelines
    as shall be determined by the committee of Independent Directors.

    In the event of a change in control of the Company (as such term is defined
in the Operating Partnership Agreement), the right to receive the Incentive
Return shall automatically accelerate and the determination of the Incentive
Return shall be appropriately adjusted to reflect such acceleration as
determined by our Compensation Committee. We anticipate that the mechanism by
which the Incentive Return will be adjusted as a result of a change of control
shall be established by the Compensation Committee in advance of any such event.

    In order for participants to receive advantageous tax treatment on the gains
(if any) realized through our Long-Term Incentive Plan, the Long-Term Incentive
Plan consists of a Convertible Unit which was issued to the Participation Plan
on March 16, 1998. The Convertible Unit is convertible at the Determination Date
(assuming the Incentive Return has in fact been earned) into a certain number of
Incentive Units of limited partnership interest in the Operating Partnership
(the "Incentive Units") with a fair market value equal to the amount of the
Incentive Return. The Incentive Units share equally on a unit-by-unit basis with
the outstanding Units in all distributions by the Operating Partnership and are
redeemable for cash or, at the election of our Independent Directors,
exchangeable for shares of Common Stock. See "Operating Partnership Agreement."

    Certain members of our management have been, and from time to time may be,
offered the opportunity to acquire equity interests in the Participation Plan.
Messrs. Leventhal and Fortin (with the assistance and advice of the Compensation
Committee) shall decide who shall be offered equity interests in the
Participation Plan. Members of our management who become equity holders of the
Participation Plan shall be allocated an interest in:

    - the Incentive Return, subject to certain vesting restrictions; and

    - the Units held by the Participation Plan.

                                       59
<PAGE>

    As of June 15, Messrs. Bonn, Fletcher, Halsted, Mitchell, Parker and
Wheeler, as well as Ms. O'Boyle, each held a 3% interest in the Incentive Return
and Ms. Broderick and Mr. Ragno each held a 1% interest in the Incentive Return.
The balance of the Incentive Return is split equally between the family trusts
of Messrs. Leventhal and Fortin.


    On the Determination Date, 50% of each equity holder's interest in the
Incentive Return shall vest. On the first anniversary of the Determination Date,
each equity holder's interest in the Incentive Return shall be fully vested. If
the employment of an equity holder of Participation Plan terminates prior to
full vesting of his or her interest in the Incentive Return:

    - that equity holder forfeits the unvested interest; and

    - the general partner of the Participation Plan has the authority to
      reallocate the forfeited interest as he deems appropriate.

See "Risk Factors--Economic and Business Risks--Conflicts of Interest."

    We cannot assure you that the awards under the Long-Term Incentive Plan (or
the stock options or other rewards pursuant to the Stock Incentive Plan
described below) will provide an incentive to our management to enhance the
value of our Common Stock. We also cannot assure you that management's efforts
will actually enhance the value of our Common Stock. In addition, the Incentive
Return (if paid) could substantially reduce cash available for distribution to
stockholders. See "Risk Factors--Economic and Business Risks--Conflicts of
Interest."

    Funds from Operations does not represent cash generated from operating
activities in accordance with GAAP and should not be considered as an
alternative to either:

    - net income as an indication of our performance; or

    - cash flows as a measure of liquidity or ability to make distributions.

Our ability to execute successfully the investment strategies described in this
Prospectus and other factors (many of which are not within our control) will
affect:

    - our ability to generate Funds from Operations in excess of the Base Return
      described above; and

    - the ability of the Participation Plan to earn the Incentive Return
      described in the preceding paragraph.

STOCK INCENTIVE PLAN

    We have adopted a Stock Incentive Plan that provides options to purchase
shares of Common Stock. The Stock Incentive Plan authorizes the grant of options
(and other stock-based awards) to our executive officers, Directors and
employees and other key persons. The Stock Incentive Plan provides
performance-based compensation to offer an incentive for the members of our
management to enhance the value of our Common Stock.

                                       60
<PAGE>
    PLAN ADMINISTRATION; ELIGIBILITY

    The Compensation Committee of the Board of Directors (the "Administrator")
administers the Stock Incentive Plan.

    The Administrator will have full power to:

    - select (from among the persons eligible for awards) the individuals to
      whom awards will be granted;

    - make any combination of awards to participants; and

    - determine the specific terms of each award (subject to the provisions of
      the Stock Incentive Plan).

    Individuals eligible to participate in the Stock Incentive Plan are
generally:

    - executive officers;

    - Independent Directors;

    - employees of the Company; and

    - other key persons who are responsible for or contribute to the management,
      growth or profitability of the Company.

    RESERVED SHARES

    The maximum number of shares of Common Stock reserved and available for
issuance under the Stock Incentive Plan will be such aggregate number of shares
as does not exceed the sum of:

    (i)  12% of the outstanding equity interests in the Company (including
       Common Stock and Units subject to redemption rights); plus

    (ii) an additional positive number equal to 10% of any net increase of
       outstanding equity interests in the Company.

    The share calculation percentages were determined as of the date of the
Original Offering to NationsBanc.

    STOCK OPTIONS

    The Stock Incentive Plan permits the granting of:

    (i)  options to purchase Common Stock intended to qualify as incentive stock
       options ("Incentive Options") under Section 422 of the Code; and

    (ii) options that do not qualify ("Non-Qualified Options").

    Each option's exercise price will be determined by the Administrator but may
not be less than:

    - 100% of the fair market value of our Common Stock on the date of grant in
      the case of Incentive Options; and

    - 25% of the fair market value of our Common Stock on the date of grant in
      the case of Non-Qualified Options.

                                       61
<PAGE>
    Plan participants may elect (with the consent of the Administrator) to
receive discounted Non-Qualified Options in lieu of cash compensation. To
qualify as Incentive Options, options must meet additional federal tax
requirements, including limits on the value of shares subject to Incentive
Options which first become exercisable in any one calendar year, and a shorter
term and higher minimum exercise price in the case of certain large
stockholders.

    The Administrator will fix the term of each option, which may not exceed ten
years from date of grant in the case of an Incentive Option. The Administrator
will determine at what time or times each option may be exercised and (subject
to the provisions of the Stock Incentive Plan) the period of time (if any) after
retirement, death, disability or termination of employment during which options
may be exercised. Options may be made exercisable in installments. The
Administrator may accelerate the exercise of options.

    OTHER STOCK BASED GRANTS

    The Administrator may award:

    - shares of Common Stock or Units (or other interests in the Operating
      Partnership) which may or may not be subject to a risk of forfeiture;

    - deferred stock units which are ultimately payable in the form of shares of
      Common Stock;

    - performance share awards to participants entitling the participant to
      receive shares of Common Stock upon the achievement of individual or
      company performance goals;

    - dividend equivalent rights (which entitle the recipient to receive credits
      for dividends that would be paid if the recipient had held specified
      shares of Common Stock); or

    - capital stock other than Common Stock and other awards that are valued in
      whole or in part by reference to or are otherwise based on, Common Stock.

    CHANGE OF CONTROL PROVISIONS

    The Stock Incentive Plan provides that (unless otherwise provided in the
award agreement) all awards become fully vested and non-forfeitable upon a
change of control of the Company (as defined in the Stock Incentive Plan).

    AMENDMENTS AND TERMINATION

    The Board of Directors may amend or terminate the Stock Incentive Plan at
any time, except that approval by our stockholders is required for amendments or
termination to the extent the Board of Directors determines that stockholder
approval is necessary or desirable to meet certain exceptions under securities,
tax and other applicable laws.

                                       62
<PAGE>
EMPLOYMENT AGREEMENTS; COVENANTS NOT TO COMPETE

    We have executed employment agreements (the "Employment Agreements") with
Messrs. Leventhal and Fortin. They have a term of three years from the date of
the Original Offering of Common Stock to NationsBanc. They contain provisions
that are customary for senior executives of publicly-traded REITs. See
"--Management Compensation."

CREDIT FACILITY


    We are in the process of negotiating the terms of a $100 million secured
credit facility with a commercial lending institution. There can be no assurance
that we will be able to enter into an agreement on acceptable terms. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Financing Activities."


AVAILABLE INFORMATION


    We are subject to the informational requirements of the Exchange Act of
1934, as amended (the "Exchange Act"). In accordance with the Exchange Act, we
file reports, proxy and information statements and other information with the
SEC. You can inspect and copy the reports, proxy and information statements and
other information at the SEC addresses listed on page 135 of this Prospectus. We
report our financial statements on a year ended December 31. We furnish our
stockholders with annual reports containing consolidated financial statements
audited by our independent certified public accountants and make available
quarterly reports containing unaudited condensed consolidated financial
statements for each of the first three quarters of each fiscal year.


CERTAIN RELATIONSHIPS; CONFLICTS OF INTEREST

    Messrs. Leventhal and Fortin have formed Beacon Capital Participation Plan
and have offered equity interests in Beacon Capital Participation Plan to
certain members of the Company's senior management. In addition, Messrs.
Leventhal and Fortin (individually and through their family trusts and Beacon
Capital Participation Plan) have purchased (directly from the Company and the
Operating Partnership) a combination of shares of Common Stock and Units for an
aggregate purchase price of approximately $15 million, representing
approximately 3.2% of the equity interests in the Company on a fully diluted
basis. In addition, we have established the Long-Term Incentive Plan to align
the interests of management with the interests of our stockholders, pursuant to
which Beacon Capital Participation Plan has been issued (for no additional
consideration) a Convertible Unit of the Operating Partnership. Provided that
the Incentive Return has (in fact) been earned, at the end of the three year
period following the date of the first calendar year following the Closing Date
of the Original Offering, the Convertible Unit will convert into a certain
number of Incentive Units with a fair market value equal to the Incentive
Return. See "The Company--Long-Term Incentive Plan" and "Risk Factors--Economic
and Business Risks--Conflicts of Interest."

    Beacon Capital Participation Plan has been granted certain registration
rights with respect to any Common Stock issuable upon an exchange of Units and
Incentive Units

                                       63
<PAGE>

held by Beacon Capital Participation Plan. See "Description of
Securities--Registration Rights." Our management, by holding equity interests in
Beacon Capital Participation Plan, is able to participate in the Incentive
Return subject to certain vesting restrictions. See "The Company--Long-Term
Incentive Plan" and "Risk Factors--Economic and Business Risks--Conflicts
Relating to the Incentive Return."


    Although we believe that the Long-Term Incentive Plan will serve to align
the interests of management with the interests of our stockholders, the
possibility exists that conflicts of interest could arise between the interests
of management and the interests of our stockholders relating to the Long-Term
Incentive Plan and the conversion of the Convertible Unit into Incentive Units
(including for example, with respect to the timing of transactions which could
affect our Funds from Operations in the fiscal year or fiscal quarter in which
the Convertible Unit converts into the Incentive Units, if any).

    After the formation of the BCP Sister Corp. and the distribution of the BCP
Sister Corp.'s equity interests to the partners and stockholders of the Company,
the BCP Sister Corp. will rely on the Company to provide it investments. We
expect that the provisions in the BCP Sister Corp.'s formation documents will

    - provide that the BCP Sister Corp. will enter into transactions with the
      Company to the extent deemed beneficial by their respective boards of
      directors (and the Company may enter into an intercompany agreement with
      the BCP Sister Corp. with respect thereto) and

    - generally prohibit the BCP Sister Corp. from engaging in activities or
      making investments appropriate for a REIT (for a specified time period)
      unless the Company was first given the opportunity to do so but elected
      not to do so.


    While it is our intention that the Company and the BCP Sister Corp. have
separate boards of directors, to the extent that there is overlap, the Board of
Directors may be subject to various potential conflicts of interest as a result
of the relationships with the BCP Sister Corp. and the Company. See "Risk
Factors--Conflicts Relating to the BCP Sister Corp." In addition, to the extent
that the BCP Sister Corp. requires separate financing arrangements, conflicts
may arise between the BCP Sister Corp. and the Company to the extent that the
BCP Sister Corp. has difficulty obtaining or maintaining such financing. See
"Risk Factors--Economic and Business Risks--BCP Sister Corp. Will Have Separate
Financing Which May Not be Available."


    The market in which we expect to purchase assets is characterized by rapid
evolution of products and services and, thus, there may in the future be
relationships between the Company and the BCP Sister Corp. and its affiliates,
in addition to those we have already described.

                                USE OF PROCEEDS

    The Selling Stockholders will receive all of the proceeds from the sale of
the securities offered hereby. We will not receive any of the proceeds from the
sale by the Selling Stockholders of their Common Stock.

                                       64
<PAGE>

                 PRICE RANGE OF SHARES AND DISTRIBUTION POLICY



    Our Common Stock trades only in the Portal Market. There is no established
public trading market for our Common Stock. The last trade of our common stock,
on May 4, 1999, was at $15.375 per share. As of June 15, 1999, there were
approximately 314 holders of record of our common stock. The prices of our
common stock listed below are based on actual trades which occurred during the
period of time detailed below.



<TABLE>
<CAPTION>
QUARTER                                                HIGH        LOW     DISTRIBUTION
- ---------------------------------------------------  ---------  ---------  -------------
<S>                                                  <C>        <C>        <C>
Third Quarter 1998.................................  $   20.13  $   20.06       --
Fourth Quarter 1998................................      20.13      15.88    $    0.48
First Quarter 1999.................................      15.88      15.13       --
</TABLE>


    In order to avoid corporate income taxation on the earnings that we
distribute, we must distribute to our stockholders an amount at least equal to
(i) 95% of our REIT taxable income (determined before the deduction for
dividends paid and excluding any net capital gain) plus (ii) 95% of the excess
of our net income from foreclosure property over the tax imposed on such income
by the Code less (iii) any excess noncash income (as determined under the Code).
See "Federal Income Tax Considerations." The actual amount and timing of
distributions, however, will be at the discretion of the Board of Directors and
will depend upon our financial condition in addition to the requirements of the
Code.

    Subject to the distribution requirements referred to in the immediately
preceding paragraph, we intend (to the extent practicable) to invest
substantially all of the principal from repayments, sales and refinancings of
our Assets in Assets. We may, however, under certain circumstances, make a
distribution of principal or of Assets. Such distributions, if any, will be made
at the discretion of our Board of Directors.


    Distributions generally will be taxable as ordinary income to our non-tax
exempt stockholders to the extent paid out of earnings and profits, although we
may designate a portion of such distributions as long-term capital gain. We will
furnish annually to each of our stockholders a statement setting forth
distributions paid during the preceding year and their federal income tax
status. For a discussion of the federal income tax treatment of our
distributions, see "Federal Income Tax Considerations--Taxation of the Company"
and "--Taxation of Taxable U.S. Stockholders."



    The declaration and payment of dividends by any BCP Sister Corp. (if and
when formed) will be made by the BCP Sister Corp.'s board of directors from time
to time based on such considerations as the BCP Sister Corp.'s board of
directors deems relevant, will be payable only out of funds legally available
therefor under the laws of the state of formation of the BCP Sister Corp. and
will be subject to any limitations which may be contained in the debt
instruments of the BCP Sister Corp. See "Risk Factors-- Economic and Business
Risks--Conflicts of Interest Exist Between the Company and Others."



    The Company has declared a contingent dividend of shares of Series B
Preferred Stock of Wyndham International, Inc. See "The Company--Investment in
Wyndham International, Inc. and Patriot American Hospitality, Inc."


                                       65
<PAGE>
                      INVESTMENT STRATEGIES AND EXPERIENCE

INVESTMENT STRATEGIES AND EXPERIENCE

    Our investment activity is focused in the following types of real
estate-related assets: (i) value-added repositionings and discounted purchases;
(ii) development and re-development; (iii) multiple-property portfolios; (iv)
joint ventures and strategic partnerships; and (v) real estate companies and
real estate-related businesses.

    (i)  VALUE-ADDED REPOSITIONINGS AND DISCOUNTED PURCHASES. We target
investments in under-utilized or poorly capitalized single assets and portfolios
that may be recapitalized on advantageous terms and repositioned with the
expectation of returns greater than those that could be achieved by acquiring a
stabilized property. These investments may include the purchase of the property
at a discount to replacement cost or the purchase of the underlying debt thereon
often at a discount to face value. In today's dynamic real estate industry with
an ever-changing and cyclical economy and changing demographic characteristics,
there generally will be opportunities to take better advantage of well-located
and structurally sound properties. Opportunities may involve substantial
rehabilitation or re-development and ground-up development where market
conditions warrant new construction.

    (ii) DEVELOPMENT AND RE-DEVELOPMENT. On a selected basis, we target
investments requiring strategic ground-up development or re-development of
existing properties that can benefit from repositioning. We expect to seek out
opportunities where market vacancy rates and market rents justify new
construction and where job growth will support new demand for office space.

    (iii) MULTIPLE PROPERTY PORTFOLIOS. We target real estate acquisitions
resulting from corporate divestitures from users, financial institutions, and
other non-strategic and inefficient owners of real estate. We believe that the
trend from private to public ownership is motivating many institutions to
liquidate their privately-held real estate portfolios.

    (iv) JOINT VENTURES AND STRATEGIC PARTNERSHIPS. We expect to continue to
enter into, or acquire interests in, joint ventures or strategic partnerships as
a way to leverage both capital and expertise.


    (v) REAL ESTATE COMPANIES AND REAL ESTATE-RELATED BUSINESSES. We also target
investments in real estate companies and businesses with a real estate
component. Opportunities in this target area include public and private
companies, and generally fall into three types of companies: (a) real estate
ownership companies, including REITs and non-REIT ownership companies,
homebuilders and other development companies; (b) real estate service companies,
such as management or brokerage companies; and (c) businesses with a strategic
dependence on real estate. We intend to invest in private placements of common
stock or other securities convertible into common stock. When we identify strong
management teams and growth prospects, we may provide growth capital to such
companies and may recapitalize over-leveraged or other poorly-capitalized
companies. In addition, when an entity can be acquired for less than the value
of its


                                       66
<PAGE>
assets, we may acquire control of such entity, whether directly (through the
acquisition of a controlling equity interest) or indirectly (through the
acquisition of debt).

    Although we expect that our primary emphasis will be on the acquisition of
the above-described categories of Real Estate-Related Assets, future
acquisitions also may include Other Assets. We have no current plans to invest
in such Other Assets. When and if such investments are made, they will not be
the principal focus of our investment strategy. We intend to conduct all of our
investment activities, including those investments in the Other Assets, in a
manner consistent with maintaining our status as a REIT for United States
federal income tax purposes. For a description of the restrictions imposed on a
company desiring to be taxed as a REIT as to types of investments and
limitations on the amounts of such investments, see "Federal Income Tax
Considerations--Requirements for Qualification." Other than these restrictions,
we have no policy limiting the types of Other Assets in which we may invest or
limiting the amount of its investments, if any, in such Other Assets. To the
extent that we believe that any of the above-described investments may add
value, but are inconsistent with maintaining our status as a REIT, such
investments could be made by the BCP Sister Corp. In addition to making such
investments through the BCP Sister Corp., we might make such investments through
a taxable corporate subsidiary in which we would hold a majority of the economic
interest but less than 10% of the voting power. See "Federal Income Tax
Considerations--Requirements for Qualifications." However, our ability to fully
utilize either the BCP Sister Corp. structure or such taxable corporate
subsidiaries could be affected as a result of future legislation. See "Risk
Factors--Legal and Tax Risks-- Adverse Impact of Future Legislation Regarding
REITs." We intend to structure any such investments in a manner to avoid
jeopardizing our qualification as a REIT under the Code.


    We cannot anticipate with any certainty the percentage of the net proceeds
of the Original Offering, or our other Assets or funds, that will be invested in
each category of Real Estate-Related Assets or Other Assets. We have broad
discretion in the manner in which we make investments, subject to our Investment
Strategy. There can be no assurance that we will be successful in our Investment
Strategy. See "Risk Factors-- Investment Activity Risks--Appropriate Investments
May Not Be Available."


INVESTMENT MANAGEMENT

    We intend to create value in, and realize value from, our investments by
identifying advantageous investment management strategies. Our senior management
has extensive experience in a broad range of aspects of real estate investment
management, including financing, asset and property management, development and
dispositions.

    Our corporate office, located in Boston, Massachusetts is staffed by
twenty-six employees. We have regional offices located in Chicago, Illinois and
Los Angeles, California, staffed by three and two employees, respectively. We
intend to pursue investments throughout the country. In addition, we intend to
enhance and extend our internal management resources through the relationships
and contacts with third-party

                                       67
<PAGE>

property management and brokerage firms with specialized geographic and
property-type expertise and information that our management has developed as a
result of its experience in the real estate industry. Through our existing
offices and these relationships, we can gain a local presence in strategic
markets and hands-on operational knowledge of the Assets underlying our
investments, as well as better access to proprietary transactions. Our senior
management has developed a network of such parties and will expand such
relationships as they pursue our Investment Strategy. Generally, we intend to
structure relationships with parties who will make meaningful equity investments
and provide incentives to its partners to ensure that the parties' interests are
aligned, while we retain control over each investment. See "Risk
Factors--Economic and Business Risks."



    We intend to finance investments with the use of leverage in an effort to
maximize equity returns while allowing maximum flexibility and maintaining an
acceptable level of risk. Our senior management has established relationships in
the lending community, being regular users of debt financing and we expect to
benefit from such individual lending relationships. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and "Risk Factors-- Investment Activity Risks--Real Estate
Financing Risks."



    Generally, we intend to pursue a strategy of portfolio diversification in
terms of geographic location, property type, and investment type. We believe
that diversification is important to reducing potential down-side risks.
However, we will have no predetermined limitations or targets for concentration
of geographic location, property type, or investment type. Instead, we plan to
make investment decisions on a case-by-case basis. See "Risk Factors--Investment
Activity Risks--Appropriate Investments May Not Be Available" and "Risk
Factors--Investment Activity Risks."


THE BCP SISTER CORP.


    We anticipate that we may, from time to time, identify Assets that we
believe may be advantageous investments, but that may be inappropriate (whether
for REIT qualification, or other tax reasons) for investment, in whole or in
part, by a REIT, or which may otherwise be determined by us, based on general
prudent considerations, to be inappropriate, in whole or in part, for investment
by us. In order to permit stockholders to participate in the economic benefits
that may be associated with such non-qualifying REIT Assets, we may, from time
to time, cause the Operating Partnership to form one or more subsidiary
corporations, partnerships or other entities (each, a "BCP Sister Corp."), which
would not elect to be taxed as a REIT. This structure has been employed by
certain other REITs. The exact structure and formation of any particular BCP
Sister Corp. will necessarily be tailored to suit the particular circumstances
used to create such BCP Sister Corp., but, in general, we anticipate that a BCP
Sister Corp. would be organized as follows. The Operating Partnership would
initially contribute to the BCP Sister Corp. a portion of its capital together
with, on behalf of the Limited Partners, a pro rata portion of the capital of
the Operating Partnership allocable to the Limited


                                       68
<PAGE>

Partners' contributed capital, which will be sufficient to permit the BCP Sister
Corp. to make such initially identified investments, in exchange for all of the
issued and outstanding equity interests in the BCP Sister Corp. The Operating
Partnership would then distribute the equity interests pro rata to the Company
and the Limited Partners. We in turn would distribute the BCP Sister Corp.'s
equity interests to its stockholders in a taxable transaction. Concurrently with
the formation of the BCP Sister Corp., if any, or immediately subsequent
thereto, the BCP Sister Corp. will form an operating partnership (the "Sister
OP") upon substantially the same terms and conditions as the Operating
Partnership Agreement (including, without limitation, the terms respecting the
distribution of the Incentive Return to Beacon Capital Participation Plan).
Alternatively, the units of partnership of the Sister OP may be distributed
directly to the Limited Partners and our stockholders. Furthermore, to the
extent that certain synergies and efficiencies are possible between us, the BCP
Sister Corp. and the Sister OP, we intend to maximize the opportunities
presented by such synergies and efficiencies. For example, we, the BCP Sister
Corp. and the Sister OP may jointly acquire investments in Assets and
businesses, such as hotels or health care facilities, where we will acquire
title to the underlying real property and lease such property to the Sister OP,
at market rents (including rents based upon a percentage of gross revenues),
while the Sister OP acquires and operates the operating business. We anticipate
that such synergies and efficiencies will provide us with advantages in making
investments over other companies; however, no assurance can be made that we will
be successful in creating and implementing such synergies and efficiencies. See
"Risk Factors--Economic and Business Risks-- Conflicts of Interest Exist Between
the Company and Others" and "Risk Factors--Legal and Tax Risks--Adverse Impact
of Future Legislation Regarding REITs."



    The formation of the BCP Sister Corp. will permit our stockholders who
retain common stock of the BCP Sister Corp. to participate in our real estate
operations (including ownership of real property) and the BCP Sister Corp.'s
operation of operating businesses and ownership of other Assets which may not
otherwise be appropriate for a REIT. Our principal focus will be to make real
estate investments while any BCP Sister Corp.'s principal function will be to
serve as an operating company or to hold other Assets not appropriate for a
REIT. The operating activities and Assets made available to the BCP Sister Corp.
by us are designed to provide our stockholders with the long-term benefits of
ownership in an entity devoted to the conduct of operating business activities
or holding non-REIT assets in addition to their ownership interest in the
Company. A small number of REITs, operating under tax provisions that no longer
are available to newly-formed REITs, have their shares "paired" or "stapled"
with shares of a related operating company, and, therefore, cannot be owned or
transferred independently. It is our intention that our Common Stock and the
equity interests of a BCP Sister Corp. will not be paired or stapled, but rather
may be transferred separately, in a structure known as a "paper clip" which will
permit us to continue to qualify as a REIT. With respect to our Common Stock and
the equity interests of the BCP Sister Corp. that may be owned and transferred,
subject to applicable securities laws restrictions, separately and independently
of each other, we and the BCP Sister Corp. will not necessarily provide a paired


                                       69
<PAGE>

investment on an ongoing basis. After the initial formation of the BCP Sister
Corp. and the distribution of its equity interests, the BCP Sister Corp. and we
will pursue independent sources of financing and, because the stock may trade
separately, may ultimately have differing ownership. See "The Company--Certain
Relationships; Conflicts of Interest," "Federal Income Tax Considerations--BCP
Sister Corp."



    To the extent that payments of rent may be made by the BCP Sister Corp. to
us, we will be required to monitor and comply with the "related party tenant"
provisions of the Code, which provide that payments made under a lease will not
constitute qualifying income for purposes of the REIT requirements if the
Company owns, directly or indirectly or pursuant to attribution rules, 10% or
more of the ownership interests in the relevant lessee. The Aggregate Stock
Ownership Limit is designed to prevent stockholders from owning an amount of
Company shares that would cause the Company to be treated as owning a BCP Sister
Corp. However, any stockholder owning 10% or more of the Company by reason of a
waiver of the Aggregate Stock Ownership Limit or the application of the
Look-Through Ownership Limit may be required to reduce its ownership percentage
to below 10% in order to receive its pro rata share of the distribution of the
stock of the BCP Sister Corp., to ensure that rents received by the REIT are not
disqualified under the related party tenant provisions.



    Our ability to fully utilize the BCP Sister Corp. structure could be
affected as a result of future legislation. The Internal Revenue Service
Restructuring and Reform Act of 1998 included, among other things, a freeze on
the grandfathered status of REITs that are "paired" or "stapled" with a related
operating company. Unlike such "paired" or "stapled" structures, the proposed
BCP Sister Corp. structure would be a "paper clip" structure in which interests
in the BCP Sister Corp. distributed to the our stockholders could be transferred
independently from our Common Stock. Although such legislation does not affect
the "paper clip" structure, there can be no assurance that the recently enacted
legislation affecting the paired share structure will not place legislative or
judicial scrutiny on the "paper clip" structure or that legislation adversely
affecting such a structure will not be proposed and enacted.


POLICIES WITH RESPECT TO CERTAIN OTHER ACTIVITIES

    Although we have no specific policy with respect to such activities, we do
not presently anticipate that we will (i) underwrite the securities of other
unaffiliated issuers, or (ii) repurchase or reacquire our shares or, other than
through the redemption of Units in the Operating Partnership, other securities.

                                       70
<PAGE>
                         SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT


    The following table sets forth, as of June 15, 1999, the total number of
shares of Common Stock beneficially owned, and the percent so owned, by (i) each
person known by the Company to own more than 5% of the Common Stock, (ii) each
of BCP's directors and executive officers and (iii) all directors and executive
officers as a group.



<TABLE>
<CAPTION>
                                          AMOUNT AND NATURE
                                            OF BENEFICIAL
                                             OWNERSHIP(2)
                                          ------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1)    NUMBER    PERCENT
- ----------------------------------------  ---------  -------
<S>                                       <C>        <C>      <C>
Wellington Management Company...........  2,300,000    10.9%  (3)
75 State Street
Boston, MA 02109

Southeastern Asset Management...........  2,075,000     9.8%
6410 Poplar Drive
Memphis, TN 38119

RREEF Venture Capital Fund LP...........  1,650,000     7.8%
875 N. Michigan Avenue
Chicago, IL 60611

Alan M. Leventhal.......................    757,962     3.6%  (4)
Lionel P. Fortin........................    437,690     2.1%  (5)
Stephen T. Clark........................      8,258        *  (6)
Robert M. Melzer........................     10,361        *  (7)
Steven Shulman..........................     13,819        *  (8)
Scott M. Sperling.......................      8,126        *  (9)
Erin R. O'Boyle.........................     60,328        *  (10)
Randy J. Parker.........................     51,335        *  (11)
William A. Bonn.........................     50,995        *  (11)
All Directors and Executive Officers as
  a Group
  (8 persons)...........................  1,398,874     6.5%  (4)(5)(6)(7)(8)(9)(10)(11)
</TABLE>


                                       71
<PAGE>
- --------------------------

*   Less than one percent


(1) All information has been determined as of June 15, 1999. For the purposes of
    this table, a person is deemed to have "beneficial ownership" of the number
    of shares of Common Stock that person has the right to acquire within 60
    days of June 15, 1999 pursuant to the exercise of stock options or
    redemption of Operating Partnership Units (assuming the Company elects to
    issue Common Stock rather than pay cash upon such redemption) held by such
    person or an affiliate of such person. Unless otherwise noted the address of
    each Beneficial Owner is: c/o Beacon Capital Partners, Inc., One Federal
    Street, 26th Floor, Boston, MA 02110. As of March 19, 1999, 20,973,932
    shares of Common Stock were issued and outstanding.



(2) For the purpose of computing the percentage of outstanding shares of Common
    Stock held by each person, any shares of Common Stock which such person has
    the right to acquire within 60 days of June 15, 1999 pursuant to the
    exercise of a stock option or upon the redemption of Operating Partnership
    Units is deemed to be outstanding, but is not deemed to be outstanding for
    the purpose of computing the percent ownership of any other person.


(3) Includes shares held by 2 separate stockholders which the Company believes
    to be controlled by Wellington Management Company.

(4) Includes Operating Partnership Units held indirectly by a trust, of which
    Mr. Leventhal is a beneficiary and currently exercisable options to purchase
    166,650 shares of Common Stock. Excludes options to purchase 333,350 shares
    of Common Stock granted to Mr. Leventhal and subsequently transferred to a
    trust, of which Mr. Leventhal is a beneficiary, which options are not
    presently exercisable.

(5) Includes Operating Partnership Units held indirectly by a trust, of which
    Mr. Fortin's wife is a trustee and currently exercisable options to purchase
    166,650 shares of Common Stock. Excludes options to purchase 333,350 shares
    of Common Stock granted to Mr. Fortin and subsequently transferred to a
    trust, of which Mr. Fortin's wife is a beneficiary, which options are not
    presently exercisable.


(6) Includes currently exercisable options to purchase 8,258 shares of Common
    Stock.



(7) Includes currently exercisable options to purchase 5,000 shares of Common
    Stock.



(8) Includes currently exercisable options to purchase 8,458 shares of Common
    Stock.



(9) Includes currently exercisable options to purchase 8,126 shares of Common
    Stock.



(10) Includes currently exercisable options to purchase 58,328 shares of Common
    Stock and excludes options to purchase 116,672 shares of Common Stock, which
    options are not presently exercisable.



(11) Includes currently exercisable options to purchase 49,995 shares of Common
    Stock and excludes options to purchase 100,005 shares of Common Stock, which
    options are not presently exercisable.


                                       72
<PAGE>
                          PRICE RANGE OF COMMON STOCK


    There is no established market for the Common Stock, which is not listed on
any securities exchange, and trading in the Common Stock has not been quoted on
any interdealer or over-the-counter bulletin board since the Original Offering.
As of June 15, 1999, the Company believes there to be approximately 314 holders
of record of BCP's Common Stock.


                                 CAPITALIZATION


    The following table sets forth the capitalization of the Company as of March
31, 1999, and on a pro forma basis to reflect the Pro Forma Transactions (as
defined under "Selected Historical and Unaudited Pro Forma Financial Data"):



<TABLE>
<CAPTION>
                                                                          ACTUAL     PRO FORMA
                                                                        ----------  -----------
                                                                            (IN THOUSANDS)
<S>                                                                     <C>         <C>
Mortgage notes payable................................................  $   21,476   $  21,476
Minority interest.....................................................      55,317      55,317
Common stock; $.01 par value, 500,000,000 shares
  authorized, 20,973,932 shares issued and outstanding
  and adjusted pro forma..............................................         210         210
Additional paid-in capital............................................     389,520     389,520
Cumulative net income.................................................      11,595      11,595
Dividends.............................................................     (10,068)    (10,068)
                                                                        ----------  -----------
      Total...........................................................  $  468,050   $ 468,050
                                                                        ----------  -----------
                                                                        ----------  -----------
</TABLE>


                                       73
<PAGE>
           SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA


    The selected historical financial data set forth below presents our
historical financial data as of December 31, 1998 and for the period from
January 21, 1998 (Inception) through December 31, 1998 and as of March 31, 1999
and for the three months ended March 31, 1999. Our selected pro forma financial
data set forth below gives effect to (i) the pending additional funding of an
investment in a joint venture known as Mathilda Research Centre (ii) the pending
additional funding of an investment in a joint venture known as Millennium Tower
and (iii) the pending acquisition of Fort Point Place as if these transactions
had occurred as of March 31, 1999. The income statement data gives effect to
these transactions as if all transactions had occurred January 1, 1999. The
selected pro forma financial data are not necessarily indicative of what our
actual financial position or results of operations would have been as of or for
the period ended March 31, 1999, nor do they purport to be indicative of the
financial position or results of operations for future periods. The selected
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," our historical
financial statements and notes thereto and our unaudited pro forma financial
statements and notes thereto, each included elsewhere herein.



<TABLE>
<CAPTION>
                                                    AS OF AND FOR THE
                                                       PERIOD FROM
                                                    JANUARY 21, 1998      AS OF AND FOR THE
                                                     (INCEPTION) TO      THREE MONTHS ENDED
                                                    DECEMBER 31, 1998      MARCH 31, 1999
                                                    -----------------  -----------------------
                                                       HISTORICAL      HISTORICAL   PRO FORMA
                                                    -----------------  ----------  -----------
                                                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S>                                                 <C>                <C>         <C>
Income Statement Data:
  Revenues........................................     $    26,536     $    9,445   $   9,718
  Net income......................................           9,054          2,541       2,506
  Net income per common share--basic and
    diluted.......................................            0.44           0.12        0.12

Balance Sheet Data:
  Real estate.....................................     $   214,768     $  214,710   $ 239,010
  Investments in and advance to joint ventures and
    corporations..................................          90,136         92,409     109,009
  Total assets....................................         484,000        473,848     473,848
  Mortgage notes payable..........................          21,570         21,476      21,476
</TABLE>


                                       74
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

    The following should be read in conjunction with our Consolidated Financial
Statements and notes thereto and our unaudited Pro Forma Condensed Consolidated
Financial Statements, each contained elsewhere herein. Our Consolidated
Financial Statements include BCP and the Operating Partnership, our
majority-owned partnership.

RESULTS OF OPERATIONS


    COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1999 AND THE PERIOD FROM
JANUARY 21, 1998 (INCEPTION) TO MARCH 31, 1998.



    Our total revenues increased $8.8 million to $9.4 million for the three
months ended March 31, 1999 as compared to $.6 million for the period January
21, 1998 (Inception) to March 31, 1998. The increase was due to Technology
Square, The Draper Building and the Dallas Office and Industrial Portfolio
rental income and reimbursement of operating expenses and real estate taxes of
$5.2 million and $.8 million, respectively, The Athenaeum Portfolio equity
earnings of $1.2 million, interest income of $1.4 million and other income of
$.2 million. Revenues for The Athenaeum Portfolio were $7.7 million and expenses
were $5.2 million for the quarter ended March 31, 1999. We recognize 50% of its
net earnings. Interest income for the quarter ended March 31, 1999 increased
$1.4 million over the period ending March 31, 1998, primarily as the result of
cash on hand being held for the full quarter in 1999 versus only a portion of
the same period in 1998, due to the receipt of offering proceeds in March 1998.



    Our total expenses increased $5.6 million to $6.6 million for the three
months ended March 31, 1999 as compared to $1 million for the period January 21,
1998 (Inception) to March 31, 1998. The increase was due to Technology Square,
The Draper Building and the Dallas Office and Industrial Portfolio property
operating expenses, real estate taxes and interest expense of $1.4 million, $1.1
million and $.4 million, respectively, additional general and administrative
expenses of $1.6 million and depreciation and amortization expenses of $1.1
million.



    1998 RESULTS


    For the period January 21, 1998 (Inception) to December 31, 1998, we had net
income of $9 million generated from total revenues of $26.5 million offset by
expenses of $16.8 million and minority interest in consolidated partnership of
$.7 million. The revenues consist of Technology Square, The Draper Building and
the Dallas Office and Industrial Portfolio rental income and reimbursement of
operating expenses and real estate taxes of $10.7 million and $1.7 million,
respectively, The Athenaeum Portfolio equity earnings of $3.2 million, interest
income of $10.7 million and other income of $.2 million. Expenses consist of
Technology Square, The Draper Building and the Dallas

                                       75
<PAGE>
Office and Industrial Portfolio property operating and real estate taxes of $3.4
million and $1.9 million, respectively, general and administrative expenses of
$8.4 million, interest expense of $.9 million and depreciation and amortization
of $2.2 million.


    PRO FORMA



    On a pro forma basis, for the three months ended March 31, 1999, we had net
income of $2.5 million, generated from total revenues of $9.7 million offset by
expenses of $6.9 million and minority interest in consolidated partnership of
$.3 million. The revenues consist of Technology Square, The Draper Building, the
Dallas Office and Industrial Portfolio and Fort Point Place rental income and
reimbursement of operating expenses and real estate taxes of $5.9 million and
$.8 million, respectively, The Athenaeum Portfolio equity earnings of $1.3
million, interest income of $1.5 million and other income of $0.2 million.
Expenses consist of Technology Square, The Draper Building, the Dallas Office
and Industrial Portfolio and Fort Point Place property operating and real estate
taxes of $1.5 million and $1.1 million, respectively, general and administrative
expenses of $2.6 million, interest expense of $.4 million and depreciation and
amortization of $1.3 million.



    On a pro forma basis, for the year ended December 31, 1998, we had net
income of $8.7 million, generated from total revenues of $36.1 million offset by
expenses of $26.3 million and minority interest in consolidated partnership of
$1.1 million. The revenues consist of Technology Square, The Draper Building,
the Dallas Office and Industrial Portfolio and Fort Point Place rental income
and reimbursement of operating expenses and real estate taxes of $23.4 million
and $3.0 million, respectively, The Athenaeum Portfolio equity earnings of $4.6
million, interest income of $4.6 million and other income of $.5 million.
Expenses consist of Technology Square, The Draper Building, the Dallas Office
and Industrial Portfolio and Fort Point Place property operating and real estate
taxes of $7.3 million and $3.9 million, respectively, general and administrative
expenses of $8.4 million, interest expense of $1.9 million and depreciation and
amortization $4.8 million.


    The minority interest in consolidated partnership represents the portion of
the Operating Partnership that is not owned by the Company.

LIQUIDITY AND CAPITAL RESOURCES


    Cash and cash equivalents were $161.0 million at March 31, 1999 as compared
to $174.6 million at December 31, 1998. The decrease of $13.6 million was
primarily the result of the payment of (i) the January 1999 dividend to
stockholders and distribution to minority partners, (ii) Fort Point Place
deposit and acquisition costs, (iii) Technology Square redevelopment costs and
(iv) investments in Mathilda Research Centre and Millennium Tower, all offset by
cash flow from operations.


    Cash and cash equivalents were $174.6 million at December 31, 1998, which
was primarily the result of (i) private offering proceeds, (ii) cash flow from
operations, (iii) the issuance of Operating Partnership units, and (iv) a
distribution received from

                                       76
<PAGE>
The Athenaeum Portfolio offset by (i) the cost of acquiring Technology Square,
The Draper Building and the Dallas Office and Industrial Portfolio and (ii)
investments in and advance to The Athenaeum Portfolio, Mathilda Research Centre,
Millennium Tower and Cypress Communications, Inc.

SHORT AND LONG-TERM LIQUIDITY


    We have considered our short-term (up to 12 months) liquidity needs and the
adequacy of expected liquidity sources to meet these needs. We believe that our
principal short-term operating liquidity needs are to fund normal recurring
expenses, debt service requirements and the minimum distribution required to
maintain the Company's REIT qualification under the Internal Revenue Code of
1986, as amended. We believe that these needs will be funded from cash flows
provided by operating activities and the dividend to shareholders of interests
in the Voting Trust, if formed. See "--Investing Activities." We believe our
short-term investment liquidity needs are to fund current real estate
investments, developments and redevelopments, as well as securities held for
investment. We expect to fund these needs from cash on hand and through
mortgages and other debt instruments.



    We expect to meet long-term (greater than 12 months) liquidity requirements
for the costs of additional development, real estate and real estate related
investments, scheduled debt maturities, major renovations, expansions and other
non-recurring capital improvements through secured and unsecured indebtedness,
joint ventures, the issuance of additional Operating Partnership units and
equity securities and from current cash balances.


FINANCING ACTIVITIES

    The Company was incorporated on January 21, 1998 as a Massachusetts
corporation and was initially capitalized through loans from the Company's
founders, Messrs. Leventhal and Fortin, in the amount of $3.6 million. On May 1,
1998, the loans were repaid.

    On March 20, 1998, we completed an initial private offering ("Original
Offering") issuing 17,360,769 shares of Common Stock with proceeds, net of
offering costs, of $323.1 million. On April 3, 1998 and April 13, 1998, through
the exercise of the underwriter's over-allotment option, 3,613,163 additional
shares were issued with proceeds, net of offering costs, of $66.6 million.

    In connection with our reincorporation (through a merger) as a Maryland
corporation, we established Beacon Capital Partners, L.P. (the "Operating
Partnership"). As contemplated in the Original Offering, an entity controlled by
Messrs. Leventhal and Fortin was to contribute $4.2 million to the Operating
Partnership for a 1% limited partnership interest. In order to comply with the
requirements of ERISA, such contribution could only be made subsequent to the
closing of our first real estate transaction. The $4.2 million contribution was
made on May 4, 1998.

                                       77
<PAGE>

    We are currently negotiating the terms of a $100 million secured credit
facility with a commercial lending institution. We have received credit approval
subject to final due diligence and anticipate closing the facility by the end of
June, 1999.



    On June 9, 1999, Millennium Tower L.L.C., the joint venture formed to
develop Millennium Tower, obtained a $45 million construction loan from two
institutions.



    On May 21, 1999, we executed an agreement to loan $28 million to PAH
Batterymarch Realty Company, LLC, an entity wholly owned by Patriot American
Hospitality Partnership, L.P., for the development of the Wyndham Batterymarch
Hotel located in Boston, Massachusetts. The loan is secured by a first mortgage
lien on the property and is guaranteed by Wyndham International, Inc. and
Patriot American Hospitality Partnership, L.P. The loan has an interest rate of
Libor plus 250 basis points and a maturity date of July 1, 1999, subject to
acceleration or extension rights in certain circumstances, and an outside
maturity date of September 30, 1999.


INVESTING ACTIVITIES

    On May 1, 1998, we acquired The Athenaeum Portfolio, an eleven building,
970,000 square foot mixed-use portfolio located in Cambridge, Massachusetts. The
aggregate consideration for the properties was $195 million, consisting of
approximately $125.9 million in cash and the assumption of approximately $69.1
million of first mortgage debt. We used proceeds from the Original Offering for
the cash portion of the acquisition. Subsequent to the closing of the
transaction, we completed the formation of a joint venture with PW Acquisitions
IX, LLC, an affiliate of PaineWebber, in which both parties hold a 50% interest
in the master limited liability company that controls the two limited liability
companies holding title to the properties.

    On June 24, 1998, we acquired a four-building complex known as Technology
Square and an adjacent building known as The Draper Building. The properties are
located in Cambridge, Massachusetts and consist of approximately 1,026,000
square feet. The aggregate consideration for the properties was $123 million,
consisting of approximately $71.6 million in cash and the issuance of
approximately $51.4 million of units of limited partnership interest in the
Operating Partnership. We used proceeds from the Original Offering for the cash
portion of the acquisition.

    On July 1, 1998, we acquired the Dallas Office and Industrial Portfolio, a
1,335,000 square foot portfolio of seven office properties and seven research &
development properties located in suburban Dallas, Texas. The aggregate
consideration for the properties was $91.2 million, consisting of approximately
$69.5 million in cash and the assumption of approximately $21.7 million of first
mortgage debt. We used proceeds from the Original Offering for the cash portion
of the acquisition.

    On August 9, 1998, we entered into a joint venture agreement with Mathilda
Partners LLC, an affiliate of Menlo Equities, a California based developer. On
November 4, 1998, the venture acquired a twelve-acre site on Mathilda Avenue in
Sunnyvale, California, on which the venture plans to construct Mathilda Research
Centre, two

                                       78
<PAGE>

four-story Class A office/R&D buildings with surface parking. The estimated cost
of the 267,000 square foot development is approximately $57 million, of which
approximately 35% will be funded from cash contributions and the balance is
intended to be financed with a construction loan from an institutional lender.
We agreed to fund up to $19.8 million of the development and, as of March 31,
1999, we invested approximately $17.4 million using proceeds from the Original
Offering.



    On September 1, 1998 we entered into a joint venture agreement with HA
L.L.C., an affiliate of Martin Smith Real Estate Services, a Seattle based real
estate developer. The joint venture was formed to develop Millennium Tower, a
19-story office and residential tower, located at Second Avenue and Columbia
Street in downtown Seattle, Washington. The estimated cost of the 261,000 square
foot building is $71 million and will be financed with a $45 million
construction loan. See "--Financing Activities." We agreed to fund $19 million
of the development and, as of March 31, 1999, we invested approximately $4.8
million using proceeds from the Original Offering.


    On September 30, 1998, we invested $5 million to acquire preferred stock in
Cypress Communications, Inc., representing a 13.5% fully diluted ownership
position in such company. Dividends will be earned on the Company's investment
as and when dividends are declared on the preferred stock or any other class of
stock in Cypress. The preferred stock will be treated preferentially upon a
liquidation of Cypress, should a liquidation occur, and is held by both the
Operating Partnership and Tenant Communications, Inc., a Massachusetts
corporation ("Tenant Communications"). The voting common stock of Tenant
Communications is controlled by Messrs. Leventhal and Fortin. The Operating
Partnership owns 99% of the economic interests in Tenant Communications. We used
proceeds from the Original Offering for the investment.

    Cypress provides bundled communications services to tenants in multi-tenant
commercial buildings. These bundled services include Internet access, video,
voice mail and telephone service. By bundling services to multiple tenants in an
office building, Cypress can aggregate the traffic of customers and give them
the advantage of a cost-effective service with a high level of customer care.


    Effective as of February 28, 1999, the Company, along with Apollo Real
Estate Advisors, L.P., Apollo Management, L.P., Thomas H. Lee Company and
Strategic Real Estate Investments I, LLC (collectively, the "Investor Group"),
entered into a Securities Purchase Agreement with Wyndham International, Inc.
and Patriot American Hospitality, Inc. (collectively, "Wyndham") whereby the
Investor Group agreed to invest up to $1 billion in Wyndham in exchange for
preferred stock. Our commitment represents approximately 15% of the total
commitment or a maximum of $150 million, which amount may be reduced to
approximately $100 million following a rights offering to current Wyndham
shareholders. The transaction, which requires the approval of Wyndham's
shareholders, is expected to close in June, 1999. Wyndham may accept an offer
from a competing bidder and, if so, will be obligated to pay the Investor Group
a "break-up fee" ranging from $30 million to $50 million. In addition, the
Investor Group is to be


                                       79
<PAGE>

paid an equity transaction funding fee in the amount of $21 million, our portion
of which may be taken by us as a reduction in our investment.



    Because we would not be able to maintain our status as a REIT if the
Operating Partnership were to hold all of the Series B Preferred that it is
committed to purchase, our Board of Directors has elected an alternative
investment structure pursuant to which all or a portion of the shares of Series
B Preferred will be held through one or more voting trusts. In connection with
structuring this investment, we anticipate distributing interests representing
between $90 million and $150 million worth of the Series B Preferred, subject to
one or more voting trusts, to unitholders and stockholders as of June 8, 1999,
the record date for the distribution. We anticipate making this distribution
following the closing of the Securities Purchase Agreement.



    The foregoing distributions are contingent upon the closing of the
Securities Purchase Agreement, the timing of such closing, the certification by
unitholders and stockholders that they are accredited investors and our decision
to go forward with the proposed investment structure. No assurances can be given
that the proposed Wyndham investment will be consummated. In addition, we
reserve the right to increase the amount of Series B Preferred to be
distributed, to abandon the proposed distributions and pursue an alternative
investment structure or to make additional cash distributions of equivalent
value to those unitholders and stockholders who are not accredited investors.
Accordingly, the aggregate value of the proposed distributions cannot be
accurately determined at this time.



    On March 8, 1999, we entered into an agreement to purchase Fort Point Place,
a four-building, 335,000 square foot office and warehouse property located in
the Boston, Massachusetts South Boston Waterfront District for $24.3 million.
Two buildings consist of approximately 145,000 square feet of office space. The
other two buildings consist of approximately 190,000 square feet of warehouse
space which will be delivered to us vacant. We are considering various
redevelopment opportunities for the warehouse buildings, including residential
or other commercial uses.


CAPITALIZATION


    As of March 31, 1999, our total consolidated mortgage debt was approximately
$21.5 million, and our total consolidated mortgage debt plus our proportionate
share of total unconsolidated mortgage debt was approximately $55.8 million. Our
current consolidated mortgage indebtedness has a weighted average rate of 8.2%,
with maturities ranging from 1999 through 2022, and is secured by some of our
properties. Our proportionate share of the current total unconsolidated mortgage
debt on The Athenaeum Portfolio (in which we hold a 50% interest in the limited
liability company that controls the two limited liability companies that hold
title to this portfolio) is approximately $34.3 million with a rate of 8.485%.
It has a stated maturity of 2027 and may be prepaid any time after January 2007.
Prior to January 2007 but after April 1999, all or a portion of the loan may be
defeased. In the event the loan is not paid in full in 2007, the interest rate
adjusts to the greater of 13.485% or 5% over the applicable 20-year


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<PAGE>

Treasury Rate. Assuming The Anthenaeum Portfolio loan has a 2007 maturity, our
total consolidated and unconsolidated fixed rate mortgage debt has a weighted
average rate of 8.4%.


ENVIRONMENTAL MATTERS

    We believe, based upon internal reviews, environmental site assessments
performed by consultants, existing plans to mitigate and monitor the sites and
financial commitments of certain prior owners and tenants, that the future costs
relating to environmental remediation and compliance will not have a material
adverse effect on our financial condition, results of operations, or liquidity.

INFLATION


    Most of our leases require tenants to pay increases in operating expenses,
including common area charges and real estate taxes, thereby reducing our risk
of the adverse effects of inflation. Leases also generally vary in term from
three years to ten years, further reducing our risk of the adverse effects of
inflation.



RECENT DEVELOPMENTS



    We are planning to establish a new investment fund and raise approximately
$250 million under the name Beacon Capital Strategic Partners, L.P. Beacon
Capital Partners, L.P. plans to invest $50 million in the fund.



    In April 1999, we announced that we are offering for sale a portfolio of
properties located in Cambridge, Massachusetts. See "The Properties and Pending
Acquisition." The portfolio, known as The Cambridge Technology Portfolio,
consists of the entire Athenaeum Portfolio and The Draper Building. The offering
price is approximately $286 million.


YEAR 2000 READINESS DISCLOSURE

    The Year 2000 compliance issue concerns the inability of computer systems to
accurately calculate, store or use a date after 1999. The inability of a
computer to properly process dates after 1999 could result in system failures or
miscalculations. Such failures in our computers could lead to disruptions in our
activities and operations. If we fail, or our significant tenants or vendors
fail, to make necessary modifications and conversions on a timely basis to
remedy these problems, the Year 2000 issue could have a material adverse effect
on the Company and its results of operations or financial position. We believe
that our competitors face similar risks in regard to Year 2000.

    We are managing our Year 2000 initiative to minimize any adverse effect on
our business operations. We have established a Year 2000 committee to address
Year 2000 concerns. The Year 2000 committee has implemented a Year 2000
initiative with the following phases: (i) introducing Year 2000 awareness; (ii)
identifying our systems with potential Year 2000 issues; (iii) assessing and
budgeting Year 2000 compliance costs; (iv) remediation; (v) testing; (vi)
contacting material third parties to assess their Year

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<PAGE>
2000 compliance; and (vii) developing a contingency plan in case our Year 2000
initiative is not successful.


    We have completed phases (i), (ii) and (iii) of our Year 2000 initiative. We
have reviewed our corporate computer operations that consist of recent releases
of network systems, accounting, property management and desktop applications.
All such systems were installed in 1998. We have contacted the vendors for these
systems for assurance that the systems are Year 2000 compliant. We have begun
working on phase (iv) and have identified some minor Year 2000 issues that
require remediation. Currently, we are awaiting the software updates from
application vendors. All corporate and property financial records are maintained
on our corporate accounting system which is Year 2000 compliant. We anticipate
that all of our corporate software and hardware systems will be Year 2000
compliant by the end of July, 1999 and will be ready for the testing phase (v).


    We have not incurred any material costs to address our Year 2000 compliance
issue. We do not currently expect that the costs incurred in connection with the
initiative will have a material adverse impact on our results of operations or
financial position.

    We have also been working extensively on phase (vi) of our Year 2000
initiative. Included in the contractual obligations of the third party managers
who operate our properties is an undertaking by the third party managers to work
with us on our Year 2000 initiative. Our Year 2000 committee has regular
communications with our third party managers to determine their Year 2000
compliance status. From this ongoing process, based upon information received to
date, we currently believe that our third party managers have taken appropriate
steps in regards to Year 2000 compliance with respect to the building systems
and the systems of the properties' tenants and vendors.

    We have the right to approve all lease agreements and have reviewed our
standard lease form to address Year 2000 compliance issues.

    The inability of the Company, or our tenants or vendors, to be Year 2000
compliant could lead to declining occupancy rates, higher operating expenses and
other adverse effects which are not quantifiable at this time. The failure of
any of these parties to be Year 2000 compliant could have a material adverse
effect on our results of operations or financial position.

    We are currently evaluating the need to have a contingency plan in place in
the event we, or our third party property managers, tenants or vendors, do not
successfully address Year 2000 compliance issues. We expect to complete our Year
2000 initiative by the end of the third quarter of 1999, including the
development of a contingency plan, if needed.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We are exposed to certain financial market risks, the most predominant being
fluctuations in interest rates. Interest rate fluctuations are monitored by
management as an integral part of our overall risk management program, which
recognizes the unpredictability of financial markets and seeks to reduce the
potentially adverse effect on our

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<PAGE>
results of operations. The effect of interest rate fluctuations historically has
been small relative to other factors affecting operating results, such as rental
rates and occupancy.


    The following table summarizes our debt obligations outstanding as of March
31, 1999. This information should be read in conjunction with Note 4 to the
consolidated financial statements.



<TABLE>
<CAPTION>
                                                    EXPECTED MATURITY DATE
                                      1999       2000       2001       2002       2003     THEREAFTER     TOTAL    FAIR VALUE
                                    ---------  ---------  ---------  ---------  ---------  -----------  ---------  -----------
                                                               (DOLLARS IN THOUSANDS)
<S>                                 <C>        <C>        <C>        <C>        <C>        <C>          <C>        <C>
Liabilities
Long-Term Debt:
Fixed Rate........................  $   1,809  $     392  $     426  $   1,839  $     440   $  16,570   $  21,476   $  21,476
Weighted Average Interest Rate....       8.2%       8.2%       8.2%       8.1%       8.1%        8.6%        8.2%
</TABLE>


                                       83
<PAGE>
                           DESCRIPTION OF SECURITIES

    The following description of the terms of our securities is not complete.
This description is subject to and qualified in its entirety by reference to our
Charter and Bylaws, (copies of which are available upon request to the Company).
See "Certain Provisions of Maryland Law and of BCP's Charter and Bylaws."

GENERAL


    Our Charter provides that the Company has the authority to issue up to
950,000,000 shares of stock, consisting of 500,000,000 shares of Common Stock
($.01 par value per share); 250,000,000 shares of excess stock ($.01 par value
per share) ("Excess Stock"); and 200,000,000 shares of preferred stock ($.01 par
value per share) ("Preferred Stock"). As of June 15, 1999, 20,973,932 shares of
our Common Stock are issued and outstanding and no shares of Excess Stock or
Preferred Stock are issued and outstanding. Under Maryland law, stockholders
generally are not liable for the corporation's debts or obligations.


COMMON STOCK

    Subject to the preferential rights of any other class or series of stock and
to the provisions of our Charter regarding Excess Stock, holders of shares of
our Common Stock are entitled to receive dividends on such Common Stock if, as
and when authorized and declared by our Board of Directors (out of assets
legally available therefor) and to share ratably in the Company's assets legally
available for distribution to its stockholders in the event of its liquidation,
dissolution or winding-up (after payment of or adequate provision for all of the
Company's known debts and liabilities).

    Subject to the provisions of our Charter regarding Excess Stock, each
outstanding share of our Common Stock entitles the holder to one vote on all
matters submitted to a vote of stockholders (including the election of
directors). Except as otherwise required by law and except as provided with
respect to any other class or series of stock, the holders of such shares of
Common Stock will possess exclusive voting power. There is no cumulative voting
in the election of directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the directors then standing
for election and the holders of the remaining shares of Common Stock will not be
able to elect any Directors.

    Holders of shares of our Common Stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights (except as provided by
Maryland law) and have no preemptive rights to subscribe for any securities of
the Company. Subject to the provisions of our Charter regarding Excess Stock,
shares of our Common Stock will have equal dividend, liquidation and other
rights.

    Under the MGCL, a Maryland corporation generally cannot dissolve, amend its
charter, merge, sell all or substantially all of its assets, engage in a share
exchange or engage in similar transactions outside the ordinary course of
business unless approved by the affirmative vote of stockholders holding at
least two thirds of the shares entitled to vote on the matter unless a different
percentage (but not less than a majority of all of the

                                       84
<PAGE>
votes entitled to be cast on the matter) is set forth in the corporation's
charter. Our Charter does not provide for a different percentage in such
situations, except for certain amendments to our Charter. See "Certain
Provisions of Maryland Law and BCP's Charter and Bylaws--Amendment of Charter
and Bylaws."

PREFERRED STOCK

    Our Charter authorizes the Board of Directors to classify any unissued
shares of Preferred Stock and to reclassify any previously classified but
unissued shares of Preferred Stock of any series, as authorized by the Board of
Directors. Prior to issuance of shares of each class or series, the Board is
required by the MGCL and our Charter to fix, subject to the provisions of our
Charter regarding Excess Stock, the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms or conditions of redemption for each such class or
series. Such rights, powers, restrictions and limitations could include the
right to receive specified dividend payments and payments on liquidation prior
to any such payments being made to the holders of some, or a majority, of our
Common Stock. The Board of Directors could authorize the issuance of Preferred
Stock with terms and conditions that could have the effect of discouraging a
takeover or any other transaction that holders of our Common Stock might believe
to be in their best interests or in which holders of some, or a majority, of our
Common Stock might receive a premium for their shares over the then current
market price of such shares. As of the date hereof, no shares of Preferred Stock
are outstanding and we have no present plans to issue any Preferred Stock.

POWER TO ISSUE ADDITIONAL SHARES OF COMMON STOCK AND PREFERRED STOCK

    We believe that the power of the Board of Directors to issue additional
authorized but unissued shares of Common Stock or Preferred Stock and to
classify or reclassify unissued shares of Common or Preferred Stock and
thereafter to cause the Company to issue such classified or reclassified shares
of stock will provide us with increased flexibility in structuring possible
future financings and acquisitions and in meeting other needs which might arise.
The additional classes or series, as well as the Common Stock, will be available
for issuance without further action by our stockholders, unless such action is
required by applicable law or the rules of any stock exchange or automated
quotation system on which our securities may be listed or traded. Although the
Board of Directors has no intention at the present time of doing so, it could
authorize the Company to issue a class or series that could (depending upon the
terms of such class or series) delay, defer or prevent a transaction or a change
in control of the Company that might involve a premium price for holders of our
Common Stock or otherwise be in their best interest.

DIVIDEND REINVESTMENT PLAN

    We may implement a dividend reinvestment plan whereby our stockholders may
automatically reinvest their dividends in the Common Stock. Details about any
such plan would be sent to our stockholders following adoption thereof by the
Board of Directors.

                                       85
<PAGE>
TRANSFER AGENT AND REGISTRAR

    The transfer agent and registrar for the Common Stock is EquiServe (the
"Transfer Agent") in Boston, Massachusetts.

TRANSFER RESTRICTIONS

    Restrictions Under Charter

    In order for the Company to qualify as a REIT under the Code, among other
things, not more than 50% in value of its outstanding stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year (other than the
first year for which an election to be a REIT has been made) (the "Five or Fewer
Requirement"), and such shares of capital stock must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months
(other than the first year for which an election to be a REIT has been made) or
during a proportionate part of a shorter taxable year. See "Federal Income Tax
Considerations."

    In order to protect the Company against the risk of losing its status as a
REIT and to otherwise protect the Company from the consequences of a
concentration of ownership among its stockholders, our Charter (subject to
certain exceptions) provides that no single person (which may include certain
"groups" of persons) may "beneficially own" more than 9.8% (the "Aggregate Stock
Ownership Limit") of the aggregate number of outstanding shares of any class or
series of stock; provided, however, that certain mutual funds registered under
the Investment Company Act of 1940 and certain other widely-held entities (other
than pension plans as described in Section 401(a) of the Code) ("Look-Through
Entities") may "beneficially own" no more than 15% (the "Look-Through Ownership
Limit"). Under our Charter, a person generally "beneficially owns" shares if (i)
such person has direct ownership of such shares, (ii) such person has indirect
ownership of such shares taking into account the constructive ownership rules of
Section 544 of the IRS Code (as modified by Section 856(h)(1)(B) of the IRS
Code) or (iii) such person would be deemed to "beneficially own" such shares
pursuant to Rule 13d-3 under the Exchange Act. Any transfer of shares of stock
or of any security convertible into shares of stock that would create a direct
or indirect ownership of shares of stock in excess of the Aggregate Stock
Ownership Limit or the Look-Through Ownership Limit (as applicable) or that
would result in the disqualification of the Company as a REIT, including any
transfer that results in the shares of stock being owned by fewer than 100
persons or results in the Company being "closely held" within the meaning of
Section 856(h) of the Code or results in the Company constructively owning 10%
or more of the ownership interests in a tenant of the Company within the meaning
of Section 318 of the Code as modified by Section 856(d)(5) of the Code, shall
be null and void, and the intended transferee will acquire no rights to the
shares of stock.

    The foregoing restrictions on transferability and ownership will not apply
if the Board of Directors determines that it is no longer in the best interests
of the Company to attempt to qualify (or to continue to qualify) as a REIT. The
Board of Directors, upon receipt of a ruling from the IRS, or an opinion of
counsel or other evidence or

                                       86
<PAGE>
undertakings acceptable to it, may, in its sole discretion, waive the Aggregate
Stock Ownership Limit and the Look-Through Ownership Limit if evidence
satisfactory to the Board of Directors is presented that the changes in
ownership will not jeopardize the Company's REIT status or cause the Company to
be a "pension-held REIT" for federal income tax purposes and the Board of
Directors otherwise decides that such action is in the best interest of the
Company.

    If any purported transfer of stock of the Company or any other event would
otherwise result in any person violating the Aggregate Stock Ownership Limit or
the Look-Through Ownership Limit (as applicable) or our Charter, then any such
purported transfer will be void and of no force or effect with respect to the
purported transferee (the "Prohibited Transferee") as to that number of shares
in excess of the applicable limit and the Prohibited Transferee shall acquire no
right or interest (or, in the case of any event other than a purported transfer,
the person or entity holding record title to any such shares in excess of the
applicable limit (the "Prohibited Owner") shall cease to own any right or
interest) in such excess shares. Any such excess shares described above will be
converted automatically into an equal number of shares of Excess Stock (the
"Excess Shares") and transferred automatically (by operation of law) to a trust,
the beneficiary of which will be a qualified charitable organization selected by
the Company (the "Beneficiary"). Such automatic transfer shall be deemed to be
effective as of the close of business on the Trading Day (as defined in our
Charter) prior to the date of such violative transfer.

    As soon as practical after the transfer of shares to the trust but in an
orderly fashion so as not to materially adversely affect the trading price of
our Common Stock, the trustee of the trust (who we shall designate and who will
be unaffiliated with the Company and any Prohibited Transferee or Prohibited
Owner) will be required to sell such Excess Shares to a person or entity who
could own such shares without violating the applicable Limit, and distribute to
the Prohibited Transferee an amount equal to the lesser of the price paid by the
Prohibited Transferee for such Excess Shares or the sales proceeds received by
the trust for such Excess Shares. In the case of any Excess Shares resulting
from any event other than a transfer, or from a transfer for no consideration
(such as a gift or devise), the trustee will be required to sell such Excess
Shares to a qualified person or entity and distribute to the Prohibited Owner an
amount equal to the lesser of the fair market value of such Excess Shares as of
the date of such event or the sales proceeds received by the trust for such
Excess Shares. In either case, any proceeds in excess of the amount
distributable to the Prohibited Transferee or Prohibited Owner (as applicable)
will be distributed to the Beneficiary. Prior to a sale of any such Excess
Shares by the trust, the trustee will be entitled to receive in trust for the
Beneficiary, all dividends and other distributions we pay with respect to such
Excess Shares.

    The Prohibited Owner with respect to such Excess Shares shall repay to the
trust the amount of any dividends or distributions received by it that (i) are
attributable to any shares of stock that have been converted into Excess Shares
and (ii) were distributed by the Company to stockholders of record on a record
date which was on or after the date that such shares were converted into Excess
Shares. Each Excess Share shall entitle the holder to no voting rights other
than those voting rights which accompany a class of stock

                                       87
<PAGE>
under Maryland law. The trustee, as record holder of the Excess Shares, shall be
entitled to vote all Excess Shares. Any vote by a Prohibited Owner as a
purported holder of shares of stock prior to our discovery that such shares of
stock have been converted into Excess Shares shall, subject to applicable law,
(i) be rescinded and shall be void AB INITIO with respect to such Excess Shares
and (ii) be recast in accordance with the desires of the trustee acting for the
benefit of the Beneficiary; provided, however, that if we have already taken
irreversible corporate action, then the trustee shall not have the authority to
rescind and recast such vote.

    In addition, our shares of stock held in the trust shall be deemed to have
been offered for sale to the Company, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the trust (or, in the case of a devise or gift, the market
price at the time of such devise or gift) and (ii) the market price on the date
we (or our designee), accept such offer. We shall have the right to accept such
offer for a period of 90 days following the later of (a) the date of the event
which resulted in such shares of Excess Stock or (b) the date the Board of
Directors first determined that the event resulting in the shares of Excess
Stock occurred, if we do not receive notice of such event. Upon such a sale to
the Company, the interest of the Beneficiary in the shares sold shall terminate
and the trustee shall distribute the net proceeds of the sale to the Prohibited
Owner.

    Each stockholder shall upon demand be required to disclose to the Company in
writing any information with respect to the direct, indirect and constructive
ownership of capital stock as the Board of Directors deems necessary to comply
with the provisions of the Code applicable to REITs, to comply with the
requirements of any taxing authority or governmental agency or to determine any
such compliance.

    The above-described ownership limits may have the effect of precluding
acquisition of control of the Company.

REGISTRATION RIGHTS

    The Selling Stockholders of our Common Stock are entitled to the benefits of
a Registration Rights Agreement between the Company and the Initial Purchaser in
the Original offering (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, we have agreed for the benefit of the holders of
our Common Stock that it will from time to time (at its expense) (i) promptly,
but in any event within 90 days after the date of issuance of the Common Stock,
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to resales of the Common Stock, (ii) use its best
efforts to cause such Shelf Registration Statement to be declared effective by
the Commission as promptly as practicable and (iii) use its best efforts to
maintain such Shelf Registration Statement continuously effective under the
Securities Act, until the date (the "Expiration Date") which is the earliest of
the dates described in the following clauses (a), (b) and (c): (a) the second
annual anniversary of the latest date of original issuance of the Common Stock,
(b) such time as all Common Stock covered by the Shelf Registration Statement
has been sold pursuant to the Shelf Registration Statement, transferred pursuant
to Rule 144 under the Securities Act or otherwise transferred in a manner that
results in a new security not subject to transfer

                                       88
<PAGE>
restrictions under the Securities Act being delivered, and (c) such time as, in
the opinion of counsel, all of the Common Stock held by nonaffiliates of the
Company and covered by the Shelf Registration Statement are eligible for resale
pursuant to Rule 144(k) (or any successor or analogous rule) under the
Securities Act and the legend described under "Notice to Investors" has been
removed from such Common Stock. The Registration Statement of which this
Prospectus forms a part has been filed pursuant to the foregoing provisions of
the Registration Rights Agreement.

    Notwithstanding the foregoing, we will be permitted to suspend the use, from
time to time, of this prospectus that is part of the Shelf Registration
Statement for periods (any such period hereinafter referred to as a "blackout
period"), if the Company's Board of Directors shall have determined in good
faith that it is in the best interests of the Company to suspend such use and we
provide the Selling Stockholders with written notice of such suspension.

    A Selling Stockholder that sells Common Stock pursuant to the Shelf
Registration Statement, including through the use of this Prospectus, generally
will be required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to purchasers, will be subject to certain
of the civil liability provisions under the Securities Act in connection with
such sales and will be bound by the provisions of the Registration Rights
Agreement that are applicable to such a holder (including certain
indemnification rights and obligations). In addition, each holder of Common
Stock may be required to deliver information to be used in connection with the
Shelf Registration Statement in order to have such holder's Common Stock
included in the Shelf Registration Statement and to benefit from the provisions
of the succeeding paragraph.

    Each Common Stock certificate contains a legend to the effect that the
holder thereof, by its acceptance thereof, will be deemed to have agreed to be
bound by the provisions of the Registration Rights Agreement. In that regard,
each holder is deemed to have agreed that, upon receipt of notice from the
Company of the occurrence of any event which makes a statement in this
prospectus untrue in any material respect or which requires the making of any
changes in such prospectus in order to make the statements therein not
misleading, or of certain other events specified in the Registration Rights
Agreement, such holder will suspend the sale of Common Stock pursuant to this
prospectus until the Company has amended or supplemented such prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented prospectus to such holder or we have given notice that the sale of
our Common Stock may be resumed.

    We have agreed (pursuant to a registration rights agreement with Luddite
Associates, a partnership owned by The Prudential Insurance Company of America
and its affiliates) to register, on any four occasions after September 1, 1999,
at the request of Luddite Associates (or in certain other circumstances), the
shares of Common Stock which we may issue upon the redemption of 2,528,296 Units
held by Luddite Associates. We will bear all expenses incident to the
registration of securities under this agreement, except that such expenses shall
not include any underwriting discounts or commissions, or transfer taxes, if
any, relating to such shares.

                                       89
<PAGE>
                     CERTAIN PROVISIONS OF MARYLAND LAW AND
                          OF BCP'S CHARTER AND BYLAWS

    THE FOLLOWING SUMMARY OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR
CHARTER AND BYLAWS DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MARYLAND LAW AND TO OUR CHARTER AND
BYLAWS.

    Our Charter and the Bylaws contain certain provisions that could make more
difficult the acquisition of the Company by means of a tender offer, a proxy
contest or otherwise. These provisions may have the effect of delaying,
deterring or preventing certain types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of
the Company to negotiate first with the Board of Directors. We believe that the
benefits of these provisions outweigh the potential disadvantages of
discouraging such proposals because, among other things, negotiation of such
proposals might result in an improvement of their terms.

AMENDMENT OF CHARTER AND BYLAWS

    Our Charter may be amended only by the affirmative vote of the holders of a
majority of all of the votes entitled to be cast on the matter, (or, if less
than 75% of the Directors then in office approve the amendment, by the
affirmative vote of holders of two-thirds of all votes entitled to be cast on
the matter) except that amendments dealing with certain articles of our Charter
(for example, articles relating to stockholder action; the powers, election of,
removal of and classification of directors; limitation of liability; and
amendment of our Charter) shall require the affirmative vote of not less than
seventy-five percent of the outstanding votes entitled to be cast on the matter.
Unless otherwise required by law, the Board of Directors may amend our Bylaws by
the affirmative vote of a majority of the Directors then in office.

DISSOLUTION OF THE COMPANY

    The MGCL permits the dissolution of the Company by (i) the affirmative vote
of a majority of the entire Board of Directors declaring such dissolution to be
advisable and directing that the proposed dissolution be submitted for
consideration at an annual or special meeting of stockholders, and (ii) upon
proper notice, stockholder approval by the affirmative vote of two-thirds of the
votes entitled to be cast on the matter.

MEETINGS OF STOCKHOLDERS

    Under our Bylaws, annual meetings of stockholders shall be held at such date
and time as determined by the Board of Directors, the Chairman of the Board or
the President. The Bylaws establish an advance notice procedure for stockholders
to make nominations of candidates for directors or bring other business before
an annual meeting of stockholders. Special meetings of stockholders may be
called by a majority of our Directors then in office or by stockholders holding
not less than a majority of the outstanding stock entitled to vote at the
meeting and only matters set forth in the notice of the meeting may be
considered and acted upon at such a meeting.

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<PAGE>
THE BOARD OF DIRECTORS


    We currently have six Directors. The number of Directors of the Company may
be changed by the Board of Directors but may not be fewer than the minimum
number required by the MGCL nor more than nine. Subject to the rights of the
holders of any series of Preferred Stock to elect Directors and to fill
vacancies in the Board of Directors relating thereto, any vacancy will be
filled, including any vacancy created by an increase in the number of Directors,
at any regular meeting or at any special meeting called for the purpose, by a
majority of the remaining Directors. Pursuant to the terms of our Charter, the
Directors are divided into three classes. One class will hold office initially
for a term expiring at the annual meeting of stockholders to be held in 1999,
another class will hold office initially for a term expiring at the annual
meeting of stockholders to be held in 2000 and the third class will hold office
initially for a term expiring in 2001. As the term of each class expires,
Directors in that class will be elected for a term of three years and until
their successors are duly elected and qualified. The use of a classified board
may render more difficult a change in control of the Company or removal of
incumbent management. Our Charter provides that a Director may be removed from
office (a) only with cause and (b) only by the affirmative vote of the holders
of at least 75% of the shares entitled to vote at a meeting of stockholders
called for that purpose. We believe, however, that classification of the Board
of Directors will help to assure the continuity and stability of its business
strategies and policies.


    Our Charter provides that the affirmative vote of more than 75% of the
Directors then in office is required to approve certain transactions or actions
of the Board, including a change of control (as defined in the Charter) of the
Company or of the Operating Partnership, any amendment to the Operating
Partnership Agreement, any waiver of the limitations on ownership contained in
our Charter, any merger, consolidation or sale of all or substantially all of
the assets of the Company or the Operating Partnership, certain issuances of
equity securities by the Company or the termination of our status as a REIT. See
"Operating Partnership Agreement."

LIMITATION OF LIABILITY AND INDEMNIFICATION

    Our Charter limits the liability of the Board of Directors and officers to
the Company to the fullest extent permitted from time to time by Maryland law.
The MGCL permits a corporation to include in its charter a provision limiting
the liability of directors and officers to the corporation or its stockholders
for money damages, except (i) to the extent that it is proved that the director
or officer actually received an improper benefit or profit in money, property or
services or (ii) if a judgment or other final adjudication is entered in a
proceeding based on a finding that the director's or officer's action or failure
to act was the result of active and deliberate dishonesty and was material to
the cause of action adjudicated in the proceeding. This provision does not limit
our ability or our stockholders to obtain other relief, such as an injunction or
a rescission.

    Our Charter authorizes the Company, 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 director or officer or (b) any individual who, while a director of the
Company and at the request of

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the Company, serves or has served another corporation, REIT, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, REIT, partnership, joint
venture, trust, employee benefit plan or 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 director or
officer of the Company. Our Bylaws obligate the Company, 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 director or officer who is made a party to the proceeding by reason of
his service in that capacity or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served another
corporation, REIT, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, REIT, 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. Our Charter and Bylaws also permit us to indemnify and
advance expenses to any person who served a predecessor of the Company in any of
the capacities described above and to any employee or agent of the Company or a
predecessor of the Company.

    The MGCL requires a corporation (unless its charter provides otherwise,
which our Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its directors, officers and certain other
parties 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 to or at the request of the corporation,
unless it is established that (a) the act or omission of the indemnified party
was material to the matter giving rise to the proceeding and (i) the act or
omission was committed in bad faith or (ii) the act or omission was the result
of active and deliberate dishonesty, (b) the indemnified party actually received
an improper personal benefit in money, property or services or (c) in the case
of any criminal proceeding, the indemnified party had reasonable cause to
believe that the act or omission was unlawful. However, under the MGCL, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the standard of conduct necessary for
indemnification by the corporation and (b) a written undertaking by him or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.

    Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such

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indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

INDEMNIFICATION AGREEMENTS

    We have entered into indemnification agreements with each of our Directors
and executive officers which require, among other things, that we indemnify our
Directors and executive officers to the fullest extent permitted by law and
advance to the Directors and executive officers all related expenses (subject to
reimbursement if it is subsequently determined that indemnification is not
permitted). Under these agreements, we must also indemnify and advance all
expenses incurred by Directors and executive officers seeking to enforce their
rights under the indemnification agreements and may cover Directors and
executive officers under the Company's Directors' and officers' liability
insurance. Although the form of indemnification agreement offers substantially
the same scope of coverage afforded by law, it provides greater assurance to
Directors and executive officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by the
Board of Directors or the stockholders to eliminate the rights it provides.

BUSINESS COMBINATIONS

    Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting power
of the corporation's shares or an affiliate of the corporation who, at any time
within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then-outstanding voting stock of
the corporation (an "Interested Stockholder") or an affiliate of such an
Interested Stockholder are prohibited for five years after the most recent date
on which the Interested Stockholder becomes an Interested Stockholder.
Thereafter, any such business combination must be recommended by the board of
directors of such corporation and approved by the affirmative vote of at least
(a) 80% of the votes entitled to be cast by holders of outstanding shares of
voting stock of the corporation and (b) two-thirds of the votes entitled to be
cast by holders of outstanding voting stock of the corporation other than shares
held by the Interested Stockholder with whom (or with whose affiliate) the
business combination is to be effected, unless, among other conditions, the
corporation's common stockholders receive a minimum price (as defined in the
MGCL) for their shares and the consideration is received in cash or in the same
form as previously paid by the Interested Stockholder for its shares. These
provisions of the MGCL do not apply, however, to business combinations that are
approved or exempted by the board of directors of the corporation prior to the
time that the Interested Stockholder becomes an Interested Stockholder. Our
Charter exempts from the Maryland statute any business combination with Alan M.
Leventhal or Lionel P. Fortin, or current or future affiliates, associates or
other persons acting in concert as a group with either of Messrs. Leventhal or
Fortin.

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CONTROL SHARE ACQUISITIONS

    The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror, by officers or by directors who
are employees of the corporation. "Control shares" are voting shares of stock
which, if aggregated with all other shares of stock previously acquired by the
acquiror or in respect of which the acquiror is able to exercise or direct the
exercise of voting power (except solely by virtue of a revocable proxy), would
entitle the acquiror to exercise voting power in electing directors within one
of the following ranges of voting power: (i) one-fifth or more but less than
one-third, (ii) one-third or more but less than a majority, or (iii) a majority
or more of all voting power. Control shares do not include shares the acquiring
person is then entitled to vote as a result of having previously obtained
stockholder approval. A "control share acquisition" means the acquisition of
control shares, subject to certain exceptions.

    A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors of the corporation to call a special meeting
of stockholders to be held within 50 days of demand to consider the voting
rights of the shares. If no request for a meeting is made, the corporation may
itself present the question at any stockholders meeting.

    If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of stockholders at which the
voting rights of such shares are considered and not approved. If voting rights
for control shares are approved at a stockholders meeting and the acquiror
becomes entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.

    The control share acquisition statute does not apply (a) to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction or (b) to acquisitions approved or exempted by the charter or
bylaws of the corporation. Our Charter exempts from the control share
acquisition statute the purchases of Common Stock on the Closing Date of the
Original Offering and any future transactions which would otherwise be subject
to the statute by Alan M. Leventhal or Lionel P. Fortin or current or future
affiliates, associates or other persons acting in concert or as a group with
either of Messrs. Leventhal or Fortin. Consequently, the prohibition on voting
control shares will not apply to such persons.

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<PAGE>
                     COMMON STOCK AVAILABLE FOR FUTURE SALE


    As of June 15, 1999, we have outstanding 20,973,932 shares of Common Stock
and have reserved for issuance upon exercise of Stock Options or redemption of
Units 5,550,223 additional shares of Common Stock.


    Shares of Common Stock issued to holders of Units upon exercise of the
Redemption Rights, will be "restricted" securities under the meaning of Rule 144
promulgated under the Securities Act ("Rule 144") and may not be sold in the
absence of registration under the Securities Act unless an exemption from
registration is available, including exemptions contained in Rule 144. See
"Description of Securities--Transfer Restrictions" and "Operating Partnership
Agreement--Redemption of OP Units."

    In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of acquisition of restricted shares from the Company
or any "affiliate" of the Company, as defined in Rule 144 (an "Affiliate"), the
acquiror or subsequent holder thereof is entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding Common Stock or the average weekly trading volume of the Common
Stock during the four calendar weeks preceding the date on which notice of the
sale is filed with the Commission. Sales under Rule 144 also are subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about the Company which will require us to file
periodic reports under the Exchange Act. If two years have elapsed since the
date of acquisition of restricted shares from the Company or from any Affiliate
of the Company, and the acquiror or subsequent holder thereof is deemed not to
have been an Affiliate of the Company at any time during the three months
preceding a sale, such person would be entitled to sell such shares in the
public market under Rule 144(k) without regard to the volume limitations, manner
of sale provisions, public information requirements or notice requirements.

    No assurance can be given as to (i) the likelihood that an active market for
the shares will develop, (ii) the liquidity of any such market, (iii) the
ability of the stockholders to sell their Common Stock, or (iv) the prices that
stockholders may obtain for their Common Stock.

    In addition to the shares to be registered hereby, the holders of 2,528,296
Units have the right to demand, on any four occasions after September 1, 1999,
to have the common stock that they might receive upon the redemption of such
Units registered. We will bear all expenses incident to the registration under
the registration rights agreement, except that such expenses shall not include
any underwriting discounts or commissions, or transfer taxes, if any, relating
to such shares.

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                        OPERATING PARTNERSHIP AGREEMENT

    THE FOLLOWING SUMMARY OF THE OPERATING PARTNERSHIP AGREEMENT DESCRIBES THE
MATERIAL PROVISIONS OF SUCH AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE OPERATING PARTNERSHIP AGREEMENT.

CLASSES OF UNITS

    The Operating Partnership has authority to issue three classes of units of
limited partnership interests: Units; Convertible Units; and Incentive Units.
The Units, and the Incentive Units once issued (collectively, the "OP Units"),
will share equally on a unit-by-unit basis in all distributions of the Operating
Partnership. The Convertible Units will not participate in any distributions of
the Operating Partnership and represent solely the right to convert into a
certain number of Incentive Units (if any) with a fair market value equal to the
Incentive Return. See "The Company--Long-Term Incentive Plan."

MANAGEMENT

    The Operating Partnership is a Delaware limited partnership. We are the sole
general partner of, and hold approximately 88% of the economic interests in the
Operating Partnership. We hold an approximate 1% general partner interest in the
Operating Partnership and the balance is held as a limited partner interest. We
intend to conduct substantially all of its business through the Operating
Partnership and its subsidiaries.

    Pursuant to the Operating Partnership Agreement, we (as the sole general
partner of the Operating Partnership), generally have full, exclusive and
complete responsibility and discretion in the management, operation and control
of the Operating Partnership, including the ability to cause the Operating
Partnership to enter into certain major transactions, including acquisitions,
developments and dispositions of properties and refinancings of existing
indebtedness. No limited partner may take part in the operation, management or
control of the business of the Operating Partnership by virtue of being a holder
of any class of units of the Operating Partnership. Certain restrictions apply
to our ability to engage in a Business Combination, as described more fully
under "Extraordinary Transactions" below.

    The limited partner of the Operating Partnership has agreed that in the
event of any conflict in the fiduciary duties owed by the Company to its
stockholders and by the Company, (as general partner of the Operating
Partnership), to such limited partners, we may act in the best interests of our
stockholders without violating our fiduciary duties to such limited partners or
being liable for any resulting breach of our duties to the limited partners.

    The Operating Partnership Agreement provides that all business activities of
the Company, including all activities pertaining to the acquisition and
operation of properties, must be conducted through the Operating Partnership,
and that the Operating

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<PAGE>
Partnership must be operated in a manner that will enable the Company to satisfy
the requirements for being classified as a REIT.

REMOVAL OF THE GENERAL PARTNER; TRANSFER OF THE GENERAL PARTNER'S INTEREST

    The Operating Partnership Agreement provides that the limited partners may
not remove us as general partner of the Operating Partnership. We may not
transfer any of our interests as general or limited partner in the Operating
Partnership except (i) in connection with a merger or sale of all or
substantially all of its assets pursuant to a transaction for which it has
obtained the requisite approval in accordance with the terms of the Operating
Partnership Agreement, (ii) if the limited partners holding at least 66 2/3% of
the OP Units (excluding OP Units owned by BCP) consent to such transfer or (iii)
to certain affiliates of the Company.

AMENDMENTS OF THE OPERATING PARTNERSHIP AGREEMENT

    Generally, the Operating Partnership Agreement may be amended with our
approval, (as general partner), and limited partners (including us) holding a
majority of the OP Units. Certain amendments that would, among other things,
convert a limited partner's interest into a general partner's interest, modify
the limited liability of a limited partner, alter the interest of a partner in
profits or losses or the right to receive any distributions, alter or modify the
redemption right described below, or cause the termination of the Operating
Partnership at a time or on terms inconsistent with those set forth in the
Operating Partnership Agreement must be approved by us and each limited partner
that would be adversely affected by such amendment. Notwithstanding the
foregoing, we, (as general partner), have the power, (without the consent of the
limited partners), to amend the Operating Partnership Agreement as may be
required to (1) add to our obligations as general partner or surrender any right
or power granted to us as general partner, (2) reflect the admission,
substitution, termination or withdrawal of partners in accordance with the terms
of the Operating Partnership Agreement, (3) establish the rights, powers, duties
and preferences of any additional partnership interests issued in accordance
with the terms of the Operating Partnership Agreement, (4) reflect a change of
an inconsequential nature that does not materially adversely affect the limited
partners, or cure any ambiguity, correct or supplement any provisions of the
Operating Partnership Agreement not inconsistent with law or with other
provisions of the Operating Partnership Agreement, or make other changes
concerning matters under the Operating Partnership Agreement that are not
otherwise inconsistent with the Operating Partnership Agreement or law, or (5)
satisfy any requirements of federal or state law. Certain provisions affecting
our rights and duties as general partner (e.g., restrictions on our power to
conduct businesses other than owning OP Units; restrictions relating to the
issuance of our securities and related capital contributions to the Operating
Partnership; restrictions relating to certain extraordinary transactions
involving us or the Operating Partnership) may not be amended without the
approval of a majority of the OP Units not held by us.

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<PAGE>
TRANSFER OF UNITS; SUBSTITUTE LIMITED PARTNERS

    The Operating Partnership Agreement provides that limited partners generally
may transfer their OP Units and Convertible Units without the consent of any
other person, but may substitute a transferee as a limited partner only with the
prior written consent of the Company as the sole general partner of the
Operating Partnership. In addition, limited partners may not transfer OP Units
until the one-year anniversary of the closing of the Original Offering or in
violation of certain regulatory and other restrictions set forth in the
Operating Partnership Agreement. Notwithstanding the foregoing, the 2,528,296
Units issued to Luddite Associates, a partnership owned by The Prudential
Insurance Company of America and its affiliates, in connection with the
acquisition of Technology Square and The Draper Building can generally be
transferred to any direct or indirect wholly-owned subsidiary of Prudential at
any time after September 21, 1998, and such transferee shall then be admitted as
a substitute limited partner.

REDEMPTION OF OP UNITS

    The Operating Partnership will be obligated after the one-year anniversary
of the closing date of the Original Offering to redeem each OP Unit at the
request of the holder thereof for cash equal to the fair market value of such
unit at the time of such redemption (as determined in accordance with the
provisions of the Operating Partnership Agreement), provided that we may elect
to acquire any such OP Unit presented for redemption for one share of Common
Stock or an amount of cash of the same value. If Incentive Units are presented
for redemption, the election by the Company to acquire such Incentive Units for
shares of Common Stock must be approved by the Independent Directors. With each
redemption or acquisition by the Company, our percentage ownership interest in
the Operating Partnership will increase. Beacon Capital Participation Plan shall
have certain rights, pursuant to separate registration rights agreements, to
have the issuance of shares of Common Stock that may be issued to it in exchange
for its OP Units, or the resale of such shares, registered under the Securities
Act. See "Common Stock Available for Future Sale."

OPERATIONS

    The Operating Partnership Agreement requires that the Operating Partnership
be operated in a manner that will enable us to satisfy the requirements for
being classified as a REIT for federal tax purposes, to avoid any federal income
or excise tax liability imposed by the Code, and to ensure that the Operating
Partnership will not be classified as a "publicly traded partnership" for
purposes of Section 7704 of the Code. In addition, the Operating Partnership
will be operated in a manner so as to qualify it as a "real estate operating
company" under the Plan Assets Regulation, at least until such time as the
Common Stock qualifies as shares of "publicly offered securities" within the
meaning of the Plan Assets Regulation.

    In addition to the administrative and operating costs and expenses incurred
by the Operating Partnership, it is anticipated that the Operating Partnership
will pay all

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administrative costs and expenses of the Company (collectively, the "Company
Expenses") and such Company Expenses will be treated as expenses of the
Operating Partnership. The Company Expenses generally will include (i) all
expenses relating to the formation and continuity of existence of the Company,
(ii) all expenses relating to the offering and registration of securities by the
Company, (iii) all expenses associated with the preparation and filing of any
periodic reports by the Company under federal, state or local laws or
regulations, (iv) all expenses associated with compliance by the Company with
laws, rules and regulations promulgated by any regulatory body, and (v) all
other operating or administrative costs of the Company incurred in the ordinary
course of its business on behalf of the Operating Partnership.

ISSUANCE OF ADDITIONAL LIMITED PARTNERSHIP INTERESTS

    We (as general partner) are authorized (without the consent of the limited
partners), to cause the Operating Partnership to issue additional Units,
Incentive Units and Convertible Units to the Company, to the limited partners or
to other persons for such consideration and on such terms and conditions as we
(as general partner) deem appropriate. If additional OP Units are issued to the
Company, then we must (i) issue additional shares of Common Stock and must
contribute to the Operating Partnership the entire proceeds received by us from
such issuance or (ii) issue additional OP Units to all partners in proportion to
their respective interests in the Operating Partnership. In addition, we may
cause the Operating Partnership to issue to us additional partnership interests
in different series or classes, which may be senior to the OP Units, in
conjunction with an offering of our securities of having substantially similar
rights, in which the proceeds thereof are contributed to the Operating
Partnership. Consideration for additional partnership interests may be cash or
other property or assets. No limited partner has preemptive, preferential or
similar rights with respect to additional capital contributions to the Operating
Partnership or the issuance or sale of any partnership interests therein.

EXTRAORDINARY TRANSACTIONS

    The Operating Partnership Agreement provides that we may not generally
engage in any merger, consolidation or other combination with or into another
person or sale of all or substantially all of its assets, or any
reclassification, or any recapitalization or change of outstanding shares of
Common Stock (a "Business Combination"), unless the holders of OP Units will
receive, or have the opportunity to receive, the same consideration per OP Unit
as holders of Common Stock receive per share of Common Stock in the transaction;
if holders of OP Units will not be treated in such manner in connection with a
proposed Business Combination, we may not engage in such transaction unless
limited partners (other than the Company) holding at least 66 2/3% of the OP
Units held by limited partners vote to approve the Business Combination.

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EXCULPATION AND INDEMNIFICATION OF THE GENERAL PARTNER

    The Operating Partnership Agreement generally provides that we, as general
partner of the Operating Partnership, will incur no liability to the Operating
Partnership or any limited partner for losses sustained or liabilities incurred
as a result of errors in judgment or of any act or omission if we carried out
our duties in good faith. In addition, we are not responsible for any misconduct
or negligence on the part of our agents, provided we appointed such agents in
good faith. We may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisors,
and any action we take or omit to take in reliance upon the opinion of such
persons, as to matters that we reasonably believes to be within their
professional or expert competence, shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.

    The Operating Partnership Agreement also provides for the indemnification of
us, our Directors and officers, and such other persons as we may from time to
time designate against any judgments, penalties, fines, settlements and
reasonable expenses actually incurred by such person in connection with the
preceding unless it is established that: (1) the act or omission of the
indemnified person was material to the matter giving rise to the preceding and
either was committed in bad faith or was the result of active and deliberate
dishonesty; (2) the indemnified person actually received an improper personal
benefit in money, property or services; or (3) in the case of any criminal
proceeding, the indemnified person had reasonable cause to believe that the act
or omission was unlawful.

TAX MATTERS

    We are the tax matters partner of the Operating Partnership and, as such,
have the authority to make tax elections under the Code on behalf of the
Operating Partnership.

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                       FEDERAL INCOME TAX CONSIDERATIONS


    The following summary of material federal income tax considerations is based
upon current law and is for general information purposes only. The discussion
contained herein does not address all aspects of taxation that may be relevant
to particular stockholders in light of their personal investment or tax
circumstances, or to certain types of stockholders subject to special treatment
under the federal income tax laws (including, without limitation, insurance
companies, tax-exempt organizations (except as described below), financial
institutions or broker-dealers, and, except as discussed below, foreign
corporations and persons who are not citizens or residents of the United
States).


    The statements in this discussion are based on current provisions of the
Code, existing, temporary, and currently proposed Treasury Regulations
promulgated under the Code, the legislative history of the Code, existing
administrative rulings and practices of the IRS, and judicial decisions. No
assurance can be given that future legislative, judicial, or administrative
actions or decisions, which may be retroactive in effect, will not affect the
accuracy of any statements in this Prospectus with respect to the transactions
entered into or contemplated prior to the effective date of such changes.

    EACH PROSPECTIVE PURCHASER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM, HER OR IT OF THE PURCHASE,
OWNERSHIP, AND SALE OF THE COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, AND SALE, AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY

    We will elect to be taxed as a REIT under Sections 856 through 860 of the
Code, commencing with the year ending on December 31, 1998.

    The sections of the Code relating to qualification and operation as a REIT
are highly technical and complex. The following discussion sets forth only the
material aspects of the Code sections that govern the federal income tax
treatment of a REIT and its stockholders. The discussion is qualified in its
entirety by the applicable Code provisions, Treasury Regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all of
which are subject to change prospectively or retroactively.

OPINION OF TAX COUNSEL


    Goodwin, Procter & Hoar LLP acted as counsel to the Company in connection
with the Offering and BCP's election to be taxed as a REIT. Goodwin, Procter &
Hoar LLP delivered to us an Opinion dated October 16, 1998 (the "Opinion"),
which stated that, we will be organized in conformity with the requirements for
qualification as a REIT pursuant to Sections 856 through 860 of the Code, and
our proposed method of operation will enable us to continue to meet the
requirements for qualification and taxation as a REIT under the Code. Investors
should be aware, however, that opinions of


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counsel are not binding upon the IRS or any court. Moreover, the Opinion was
based on various assumptions and was conditioned upon certain representations
made by us as of the date of the Opinion as to factual matters, including
representations regarding the nature of our properties, the past and future
conduct of our business and our compliance with the various REIT requirements
discussed below. The Company's qualification and taxation as a REIT depends upon
our having met, and our ability to meet on a continuing basis, the various
qualification tests imposed under the Code discussed below. Goodwin, Procter &
Hoar LLP does not review our compliance with those tests on a continuing basis.
Accordingly, no assurance can be given that the actual results of our operations
for any particular taxable year have satisfied or will satisfy any such
requirements. Finally, investors should be aware that the Opinion has not been
updated since it was issued in October, 1998. For a discussion of the tax
consequences of failure to qualify as a REIT. See "--Failure to Qualify."


TAXATION AS A REIT


    If we qualify for taxation as a REIT, we generally will not be subject to
federal corporate income tax on our net income that is distributed currently to
our stockholders. That treatment substantially eliminates the "double taxation"
(i.e., taxation at both the corporate and stockholder levels) that generally
results from an investment in a corporation. However, we are subject to federal
income tax as follows:


    -   we will be taxed at regular corporate rates on any undistributed REIT
       taxable income, including undistributed net capital gains;

    -   under certain circumstances, we may be subject to the "alternative
       minimum tax" on our undistributed items of tax preference, if any;

    -   if we have (i) net income from the sale or other disposition of
       "foreclosure property" that is held primarily for sale to customers in
       the ordinary course of business or (ii) other nonqualifying income from
       foreclosure property, we will be subject to tax at the highest corporate
       rate on such income;

    -   if we have net income from prohibited transactions (which are, in
       general, certain sales or other dispositions of property (other than
       foreclosure property) held primarily for sale to customers in the
       ordinary course of business), such income will be subject to a 100% tax;

    -   if we should fail to satisfy the 75% gross income test or the 95% gross
       income test (as discussed below), but have maintained our qualification
       as a REIT because certain other requirements have been met, we will be
       subject to a 100% tax on the gross income attributable to the greater of
       the amount by which BCP fails the 75% or 95% gross income test,
       multiplied by a fraction intended to reflect BCP's profitability;

    -   if we should fail to distribute during each calendar year at least the
       sum of (i) 85% of our REIT ordinary income for such year, (ii) 95% of our
       REIT capital gain net income for such year (other than such capital gain
       net income

                                      102
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       which the Company elects to retain and pay tax on) , and (iii) any
       undistributed taxable income from prior periods, we would be subject to a
       4% excise tax on the excess of such required distribution over the
       amounts actually distributed;

    -   if we acquire any asset from a "C" corporation (i.e., a corporation
       generally subject to full corporate-level tax) in a merger or other
       transaction in which the basis of the asset in our hands is determined by
       reference to the basis of the asset (or any other asset) in the hands of
       a "C" corporation and we recognize gain on the disposition of such asset
       during the 10-year period beginning on the date on which we acquired such
       asset, then to the extent of such asset's "built-in-gain" (i.e., the
       excess of the fair market value of such asset at the time of acquisition
       by us over the adjusted basis in such asset at such time), we will be
       subject to tax at the highest regular corporate rate applicable (as
       provided in Treasury Regulations that have not yet been promulgated).

    The results described above with respect to the tax on "built-in-gain"
assume that we will elect pursuant to IRS Notice 88-19 to be subject to the
rules described in the preceding sentence if we were to make any such
acquisition.

REQUIREMENTS FOR QUALIFICATION

    DEFINITION OF A REIT UNDER THE CODE

    The Code defines a REIT as a corporation, trust, or association

     (i) that is managed by one or more trustees or directors;

    (ii) the beneficial ownership of which is evidenced by transferable shares,
         or by transferable certificates of beneficial interest;

    (iii) that would be taxable as a domestic corporation, but for Sections 856
       through 860 of the Code;

    (iv) that is neither a financial institution nor an insurance company
         subject to certain provisions of the Code;

    (v) the beneficial ownership of which is held by 100 or more persons;

    (vi) not more than 50% in value of the outstanding shares of which is owned,
         directly or indirectly, by five or fewer individuals (as defined in the
         Code to include certain entities) during the last half of each taxable
         year (the "5/50 Rule");

   (vii) that makes an election to be a REIT (or has made such election for a
         previous taxable year) and satisfies all relevant filing and other
         administrative requirements established by the IRS that must be met in
         order to elect and maintain REIT status;

   (viii) that uses a calendar year for federal income tax purposes; and

    (ix) that meets certain other tests, described below, regarding the nature
         of its income and assets.

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<PAGE>

    The Code provides that conditions (i) to (iv) above, inclusive, must be met
during the entire taxable year and that condition (v) above must be met during
at least 335 days of a taxable year of 12 months, or during a proportionate part
of a taxable year of less than 12 months. Conditions (v) and (vi) above will not
apply until after the first taxable year for which an election is made by the
Company to be taxed as a REIT. For purposes of determining stock ownership under
the 5/50 Rule, a supplemental unemployment compensation benefits plan, a private
foundation, or a portion of a trust permanently set aside or used exclusively
for charitable purposes generally is considered an individual. A trust that is a
qualified trust under Code Section 401(a), however, generally is not considered
an individual, and beneficiaries of such trust are treated as holding shares of
a REIT in proportion to their actuarial interests in such trust for purposes of
the 5/50 Rule. If we comply with all the requirements for ascertaining the
ownership of its outstanding stock in a taxable year and do not know or have
reason to know that we violated the 5/50 Rule, we will be deemed to have
complied with the 5/50 Rule for such taxable year.



    We believe we have issued sufficient Common Stock with sufficient diversity
of ownership to allow us to have satisfied and continue to satisfy requirements
(v) and (vi) in the preceeding paragraph. In addition, our Charter provides for
restrictions regarding the transfer of the Common Stock that are intended to
assist us in continuing to satisfy the share ownership requirements described in
clauses (v) and (vi) above. However there can be no assurance that we have met
or will continue to meet the REIT Stock Ownership Requirements. Such transfer
restrictions are described in "Description of Securities--Transfer
Restrictions."



    Code Section 856(i) provides that a corporation that is a "qualified REIT
subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "qualified REIT
subsidiary" shall be treated as assets, liabilities, and items of income,
deduction, and credit of the REIT. A "qualified REIT subsidiary" is a
corporation, all of the capital stock of which is held by the REIT. If the
Company acquired a corporation already in existence at the time of acquisition,
such corporation would be treated as liquidating on the date of acquisition and
we would be required to distribute any C corporation earnings and profits of the
corporation before the end of the taxable year. Thus, in applying these
requirements, any of the Company's "qualified REIT subsidiaries" will be
ignored, and all assets, liabilities, and items of income, deduction, and credit
of such subsidiaries will be treated as Company assets, liabilities, and items
of income, deduction, and credit.


CERTAIN TREASURY REGULATIONS RELATING TO OUR STATUS AS A REIT

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

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<PAGE>
below. Our proportionate share of the assets and gross income of the Operating
Partnership will be treated as assets and gross income for purposes of applying
these requirements.

INCOME TESTS

GROSS INCOME REQUIREMENTS

    In order for the Company to qualify and to maintain its qualification as a
REIT, two requirements relating to the Company's gross income must be satisfied
annually.

    -   At least 75% of our gross income (excluding gross income from prohibited
       transactions) for each taxable year must consist of defined types of
       income derived directly or indirectly from investments relating to real
       property or mortgages on real property (including "rents from real
       property" and interest on obligations secured by mortgages on real
       property or on interests in real property, and dividends or other
       distributions on and gain from the sale of stock in other REITs) or from
       certain types of temporary investment income.


    -   At least 95% of our gross income (excluding gross income from prohibited
       transactions) for each taxable year must be derived from such real
       property investments, mortgages on real property, or temporary
       investments, and from dividends, other types of interest, and gain from
       the sale or disposition of stock or securities, or from any combination
       of the foregoing.


RENTS FROM REAL PROPERTY

    The rents we receive from the tenants of the Real Property ("Rent") will
qualify as "rents from real property" in satisfying the gross income tests for a
REIT described above only if several conditions are met.

    -   The amount of Rent must not be based, in whole or in part, on the income
       or profits of any person. However, an amount received or accrued
       generally will not be excluded from the term "rents from real property"
       solely by reason of being based on a fixed percentage or percentages of
       receipts or sales or solely by reason of being based on the income or
       profits of a tenant if such tenant derives substantially all of its gross
       income from the related property through the sub-leasing of substantially
       all of its interest in the property to the extent the amounts received by
       such tenant would be characterized as rents from real property if
       received by the REIT.

    -   The Code provides that the Rent received from a tenant will not qualify
       as "rents from real property" in satisfying the gross income tests if we
       own, or a direct or indirect owner of 10% or more of the Company owns,
       10% or more of such tenant, either actually or constructively (a "Related
       Party Tenant").

    -   If Rent attributable to personal property, leased in connection with a
       lease of Real Property, is greater than 15% of the total Rent received
       under the lease,

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<PAGE>

       then the portion of Rent attributable to such personal property will not
       qualify as "rents from real property."


    For the Rent to qualify as "rents from real property," we generally must not
operate or manage the Real Property or furnish or render services to the tenants
of such Real Property, other than through an "independent contractor" who is
adequately compensated by the tenants and from whom we derive no revenue. The
"independent contractor" requirement, however, does not apply to the extent that
the services we provide are "usually or customarily rendered" in connection with
the rental of space for occupancy only and are not otherwise considered
"rendered to the occupant."


    We believe that the Rent generally qualifies as rents from real property,
and that any Rent that does not so qualify would not cause the Company to fail
to satisfy either the 75% or 95% gross income test.


    The Ownership Limit and the Excess Share Provisions in our Charter are
designed in part to prevent a stockholder of the Company from owning Company
stock that would cause us to own, actually or constructively, 10% or more of the
ownership interests in a tenant, including any BCP Sister Corp. However, because
the relevant constructive ownership rules are broad and it is not possible to
monitor continually direct and indirect transfers of our shares, and because our
Charter provisions referred to above may not be effective, there can be no
absolute assurance that transfers or other events will not cause us to
constructively own 10% or more of one or more tenants at some future date.

    The term "interest," as defined for purposes of the 75% and 95% gross income
tests, generally does not include any amount received or accrued (directly or
indirectly) if the determination of such amount depends in whole or in part on
the income or profits of any person. However, an amount received or accrued
generally will not be excluded from the term "interest" solely by reason of
being based on a fixed percentage or percentages of receipts or sales. In
addition, an amount received or accrued generally will not be excluded from the
term "interest" solely by reason of being based on the income or profits of a
debtor if the debtor derives substantially all of its gross income from the
related property through the leasing of substantially all of its interests in
the property, to the extent the amounts received by the debtor would be
characterized as rents from real property if received by a REIT. Furthermore, to
the extent that interest from a loan that is based on the cash proceeds from the
sale of the property securing the loan constitutes a "shared appreciation
provision" (as defined in the Code), income attributable to such participation
feature will be treated as gain from the sale of the secured property, which
generally is qualifying income for purposes of the 75% and 95% gross income
tests.

    Interest will qualify as "interest on obligations secured by mortgages on
real property or on interests in real property" if the obligation is secured by
a mortgage on real property having a fair market value, as of the date on which
the commitment to make or purchase the obligation becomes binding on us, at
least equal to the highest principal amount of the loan outstanding during the
taxable year. However, if we receive interest income with respect to a mortgage
loan that is secured by both real property and

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<PAGE>
other property and the highest principal amount of the loan outstanding during a
taxable year exceeds the fair market value of the real property on the date on
which the commitment to acquire or originate the mortgage loan becomes binding
on us, the interest income will be apportioned between the real property and the
other property, which apportionment may cause us to recognize income that is not
qualifying income for purposes of the 75% gross income test.


    We may receive income not described above that is not qualifying income for
purposes of one or both of the 75% and 95% gross income tests. For example, it
is possible that certain fees for services rendered by the Operating Partnership
will not be qualifying income for purposes of either gross income test. Upon the
anticipated distribution of interests representing the Wyndham preferred stock
subject to the voting trust to the Company's stockholders, as well as any
subsequent distribution to stockholders of Wyndham Preferred shares, or
interests relating thereto, the Company will recognize gain equal to the excess,
if any, of the then value of the preferred shares distributed over the Company's
tax basis therein. Any such gain will be nonqualifying income for purposes of
the 95% gross income test, but not the 75% gross income test. Any taxable
dividends on any Wyndham preferred shares retained by the Operating Partnership
and any other dividends received from Real Estate Companies that are C
corporations also will be qualifying income for purposes of the 95% gross income
test, but not the 75% gross income test. In addition, any other income
recognized by us with respect to any Wyndham preferred shares retained by the
Operating Partnership (including income recognized as a result of Wyndham's
exercise of its rights to redeem series B preferred shares (or as a result of
other taxable dispositions of such shares) will constitute nonqualifying income
for purposes of the 75% income test.



    We will endeavor to structure our operations so that the amount of such
nonqualifying income will not cause us to fail the two gross income tests. The
amount of such income cannot be predicted with complete certainty, however, and
may depend on factors beyond our control (such as the value of Wyndham at the
time we distribute preferred shares). If the amount of nonqualifying income
exceeded anticipated amounts the Company could lose its status as a REIT.


    REITs generally are subject to tax at the maximum corporate rate on any
income from foreclosure property (other than income that would be qualifying
income for purposes of the 75% gross income test), less expenses directly
connected with the production of such income. "Foreclosure property" is defined
as any real property (including interests in real property) and any personal
property incident to such real property

    -   that is acquired by a REIT as the result of such REIT having bid in such
       property at foreclosure, or having otherwise reduced such property to
       ownership or possession by agreement or process of law, after there was a
       default (or default was imminent) on a lease of such property or on an
       indebtedness owed to the REIT that such property secured,

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    -   for which the related loan was acquired by the REIT at a time when
       default was not imminent or anticipated, and

    -   for which such REIT makes a proper election to treat such property as
       foreclosure property.


    We do not anticipate that we will receive any income from foreclosure
property that is not qualifying income for purposes of the 75% gross income
test, but, if we do receive any such income, we likely will make an election to
treat the related property as foreclosure property.


    Property we acquire will not be eligible for the election to be treated as
foreclosure property ("Ineligible Property") if the related loan was acquired by
us at a time when default was imminent or anticipated. In addition, income
received with respect to such Ineligible Property may not be qualifying income
for purposes of the 75% or 95% gross income tests.


    Net income derived from a prohibited transaction is subject to a 100% tax.
The term "prohibited transaction" generally includes a sale or other disposition
of property (other than foreclosure property) that is held primarily for sale to
customers in the ordinary course of a trade or business. We intend to conduct
our operations so that no asset we own or owned by the Operating Partnership
will be held for sale to customers and that a sale of any such asset will not be
in the ordinary course of our business or the Operating Partnership's business.
Whether property is held "primarily for sale to customers in the ordinary course
of a trade or business" depends, however, on the facts and circumstances in
effect from time to time, including those related to a particular property,
unless we comply with the terms of safe-harbor provisions in the Code
prescribing when asset sales will not be characterized as prohibited
transactions. Complete assurance cannot be given, however, that we can comply
with the safe-harbor provisions of the Code or avoid owning property that may be
characterized as property held "primarily for sale to customers in the ordinary
course of a trade or business."


    From time to time, we may enter into hedging transactions with respect to
one or more of our assets or liabilities. Any such hedging transactions could
take a variety of forms, including, without limitation, interest rate swap
contracts, interest rate cap or floor contracts, futures or forward contracts,
and options. To the extent that we enter into such a contract to hedge against
the interest rate risks of any indebtedness incurred to acquire or carry real
estate assets, any periodic income or gain from the disposition of such contract
should be qualifying income for purposes of the 95% gross income test, but not
the 75% gross income test. To the extent that we hedge with other types of
financial instruments or in other situations, we may not be entirely clear how
the income from those transactions will be treated for purposes of the various
income tests that apply to REITs under the Code. We intend to structure any
hedging transactions in a manner that does not jeopardize our status as a REIT.

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    If we fail to satisfy one or both of the 75% and 95% gross income tests for
any taxable year, we nevertheless may qualify as a REIT for such year if we are
entitled to relief under certain provisions of the Code. Those relief provisions
generally will be available if our failure to meet such tests is due to
reasonable cause and not due to willful neglect, we attache a schedule of the
sources of our income to our return, and any incorrect information on the
schedule was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances that we would be entitled to the
benefit of those relief provisions. As discussed above in "--Taxation of the
Company," even if those relief provisions apply, a 100% tax would be imposed on
the gross income attributable to the greater of the amount by which we fail the
75% or 95% gross income test, multiplied by a fraction intended to reflect our
profitability.

ASSET TESTS

    At the close of each quarter of each taxable year, we must satisfy three
tests relating to the nature of our assets.

    - At least 75% of the value of our total assets must be represented by cash
      or cash items (including certain receivables), government securities,
      "real estate assets," or, in cases where we raise new capital through
      stock or long-term (at least five-year) debt offerings, temporary
      investments in stock or debt instruments during the one-year period
      following our receipt of such capital. The term "real estate assets"
      includes interests in real property, interests in mortgages on real
      property to the extent the principal balance of a mortgage does not exceed
      the fair market value of the associated real property, and shares of other
      REITs. For purposes of the 75% asset test, the term "interest in real
      property" includes an interest in mortgage loans or land or improvements
      thereon, such as buildings or other inherently permanent structures
      (including items that are structural components of such buildings or
      structures), a leasehold of real property, and an option to acquire real
      property (or a leasehold of real property).

    - Not more than 25% of our total assets may be represented by securities
      other than those in the 75% asset class.

    - Of the investments not included in the 75% asset class, the value of any
      one issuer's securities we own may not exceed 5% of the value of our total
      assets, and we may not own more than 10% of any one issuer's outstanding
      voting securities (except for our interests in the Operating Partnership,
      the General Partner, the Limited Partner, any qualified REIT subsidiaries,
      and other qualified REITs).

    We expect that any interests in Real Property that we acquire generally will
be qualifying assets for purposes of the 75% asset test. If we acquire any
interest in a Real Estate Company that is a C corporation, as of the relevant
testing dates, such interest may not (i) represent more than 5% of the value of
our total assets or (ii) constitute more than 10% of the Real Estate Company's
outstanding voting securities. We will monitor the status of the assets that we
acquire and manage our portfolio in order to comply with the various asset tests
on the relevant testing dates.

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    If we should fail to satisfy the asset tests at the end of a calendar
quarter, such a failure would not cause us to lose our REIT status if (i) we
satisfied the asset tests at the close of the preceding calendar quarter and
(ii) the discrepancy between the value of our assets and the asset test
requirements arose from changes in the market values of our assets and was not
wholly or partly caused by the acquisition of one or more non-qualifying assets.
If the condition described in clause (ii) of the preceding sentence were not
satisfied, we still could avoid disqualification by eliminating any discrepancy
within 30 days after the close of the calendar quarter in which it arose.


    With respect to our investment in Wyndham preferred shares, we intend to
monitor our compliance with the REIT asset tests and distribute or otherwise
dispose of sufficient amounts of such investment as necessary to comply with
those tests. In that regard, we currently anticipate distributing at least $90
million of such shares on or about June 30, 1999. See "The Company--Investment
in Wyndham International, Inc. and Patriot American Hospitality, Inc."
Nonetheless, if the IRS successfully challenges our valuations of our assets, we
could violate one or more of the REIT asset tests and fail to qualify as a REIT.


DISTRIBUTION REQUIREMENTS


    In order to avoid corporate income taxation of the earnings that we
distribute, we are required to distribute with respect to each taxable year
dividends (other than capital gain dividends) to our stockholders in an
aggregate amount at least equal to (i) the sum of (A) 95% of its "REIT taxable
income" (computed without regard to the dividends paid deduction and its net
capital gain) and (B) 95% of the net income (after tax), if any, from
foreclosure property, minus (ii) the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before we timely file our federal income
tax return for such year and if paid on or before the first regular dividend
payment date after such declaration. To the extent that we do not distribute all
of our net capital gain or distribute at least 95%, but less than 100%, of our
"REIT taxable income," as adjusted, we will be subject to tax thereon at regular
ordinary and capital gains corporate tax rates. Furthermore, if we should fail
to distribute during each calendar year (or, in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of the January immediately following such year) at least the
sum of (i) 85% of our REIT ordinary income for such year, (ii) 95% of our REIT
capital gain income for such year (other than capital gain income which we elect
to retain and pay tax on), and (iii) any undistributed taxable income from prior
periods, we would be subject to a 4% nondeductible excise tax on the excess of
such required distribution over the amounts actually distributed. We may elect
to retain, rather than distribute, all or a portion of our net long-term capital
gains pursuant to recently enacted legislation. The effect of such an election
is that


    (i) we are required to pay the tax on such gains;

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    (ii) U.S. stockholders (as defined below), while required to include their
proportionate share of the undistributed long-term capital gains in income, will
receive a credit or refund for their share of the tax paid by us; and

    (iii) the basis of a U.S. stockholder's Common Stock would be increased by
the amount of the undistributed long-term capital gains (minus the amount of
capital gains tax paid by us) included in such U.S. stockholder's long-term
capital gains.

    In certain circumstances, our investments may generate income for federal
income tax purposes without a corresponding receipt of cash ("Phantom Income").
In order for us to meet REIT qualifications and/or avoid tax at the REIT level
on such Phantom Income, we may be forced to use cash generated from other
sources, including, without limitation, asset sales and borrowings, to make
required distributions. See "Risk Factors--Legal and Tax Risks--Tax Risks."

    Under certain circumstances, we may be able to rectify a failure to meet the
distribution requirements for a year by paying "deficiency dividends" to our
stockholders in a later year, which may be included in our deduction for
dividends paid for the earlier year. Although we may be able to avoid being
taxed on amounts distributed as deficiency dividends, we will be required to pay
to the IRS interest based upon the amount of any deduction taken for deficiency
dividends.

RECORDKEEPING REQUIREMENTS


    Pursuant to applicable Treasury Regulations, we must maintain certain
records and request on an annual basis certain information from our stockholders
designed to disclose the actual ownership of our outstanding stock. Failure to
comply with such record keeping requirements could result in substantial
monetary penalties. We believe we have complied with such requirements.


EXCESS INCLUSION INCOME

    It is anticipated that we may purchase mortgage loans. If we purchase such
assets and are deemed to have issued debt obligations having two or more
maturities, the payments on which correspond to payments on such mortgage loans,
such arrangement will be treated as a "taxable mortgage pool" for federal income
tax purposes. If all or a portion of the Company is considered a "taxable
mortgage pool," our status as a REIT generally should not be impaired; however,
a portion of our taxable income may be characterized as "excess inclusion
income" and allocated to our stockholders. Any excess inclusion income (i) could
not be offset by net operating losses of a stockholder, (ii) would be subject to
tax as "unrelated business taxable income" to a tax-exempt stockholder, (iii)
would be subject to the application of federal income tax withholding (without
reduction pursuant to any otherwise applicable income tax treaty) with respect
to amounts allocable to foreign stockholders, and (iv) would be taxable (at the
highest corporate tax rate) to us, rather than our stockholders, to the extent
allocable to shares of our stock held by disqualified organizations (generally,
tax-exempt entities not subject to unrelated business income tax, including
governmental organizations).

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IMPACT OF FUTURE LEGISLATION


    Our qualification as a REIT, the benefits of so qualifying, and/or our
ability to use a BCP Sister Corp. could be affected as a result of future
legislation. See "Investment Strategies and Experience--The BCP Sister Corp."


FAILURE TO QUALIFY

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

TAXATION OF TAXABLE U.S. STOCKHOLDERS

    As used in this section, the term "U.S. stockholder" means a holder of
Common Stock that for U.S. federal income tax purposes is

    - a citizen or resident of the United States;

    - a corporation, partnership, or other entity created or organized in or
      under the laws of the United States or of any state or political
      subdivision thereof;

    - an estate whose income from sources without the United States is
      includible in gross income for U.S. federal income tax purposes regardless
      of its connection with the conduct of a trade or business within the
      United States; or

    - any trust with respect to which (A) a U.S. court is able to exercise
      primary supervision over the administration of such trust and (B) one or
      more U.S. persons have the authority to control all substantial decisions
      of the trust.


    As long as we qualify as a REIT, distributions (including distributions of
property, such as the anticipated distribution of interests relating to Wyndham
preferred shares subject to the voting trust or the distribution of interests in
a BCP Sister Corp.) made to our taxable U.S. stockholders out of current or
accumulated earnings and profits (and not designated as capital gain dividends
or retained capital gains) will be taken into account by such U.S. stockholders
as ordinary income and will not be eligible for the dividends received deduction
generally available to corporations. Distributions out of earnings and profits
that we designate as capital gain dividends will be taxed as long-term capital
gains (to the extent that they do not exceed our actual net capital gain for the


                                      112
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taxable year) without regard to the period for which the stockholder has held
its Common Stock. Pursuant to legislation enacted in 1997, in the case of a
stockholder who is an individual, an estate or a trust, long-term capital gains
and losses are separated into three tax rate groups, a 20% group, a 25% group
and a 28% group, and are subject to tax at the rate effective for each group.
Pursuant to Notice 97-64, 1997-47 IRB 1, we will designate capital gain
dividends, if any, as 20% rate gain distributions, 25% rate gain distributions
or 28% rate gain distributions and detail such designations in a manner intended
to comply with applicable requirements. Final regulations, if and when issued by
the Treasury Department, could affect the rules set forth in the Notice. In
addition, the IRS has not issued regulations or other guidance regarding the
application of the new rates to sales of interests in REITs such as the Company,
and it remains unclear how the new rules will affect such sales, if at all. The
IRS has also not yet issued guidance modifying the rules set forth in the Notice
to take into account the recent elimination of the 18-month holding period
required for individuals, estates and trusts to be eligible for the preferential
20% capital gains rate. If we elect to retain capital gains rather than
distribute them, a U.S. stockholder will be deemed to receive a capital gain
dividend equal to the amount of such retained capital gains. A U.S. stockholder
will be allowed a credit against its federal income tax liability for its
proportionate share of tax we paid on retained capital gains. See
"--Requirements for Qualification." Such gains are subject to apportionment
among the three tax rate groups as set forth above. Corporate stockholders may
be required to treat up to 20% of certain capital gain dividends as ordinary
income. Distributions in excess of current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that they do not exceed the
adjusted basis of the stockholder's Common Stock, but rather will reduce the
adjusted basis of such stock. To the extent that such distributions in excess of
current and accumulated earnings and profits exceed the adjusted basis of a
stockholder's Common Stock, such distributions will be included in income as
long-term capital gain (or short-term capital gain if the Common Stock had been
held for one year or less), provided that the Common Stock is a capital asset in
the hands of the stockholder. In addition, any distribution that we declare in
October, November, or December of any year and payable to a stockholder of
record on a specified date in any such month shall be treated as both paid by us
and received by the stockholder on December 31 of such year, provided that we
actually pay the distribution during January of the following calendar year.

    Stockholders may not include in their individual income tax returns any net
operating losses or capital losses we incur. Instead, we would carry over such
losses for potential offset against our future income (subject to certain
limitations). Taxable distributions that we make and gain from the disposition
of our Common Stock will not be treated as passive activity income and,
therefore, stockholders generally will not be able to apply any "passive
activity losses" (such as losses from certain types of limited partnerships in
which a stockholder is a limited partner) against such income. In addition,
taxable distributions that we make generally will be treated as investment
income for purposes of the investment interest limitations. Capital gains from
the disposition of Common Stock (or distributions treated as such), however,
will be treated

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as investment income only if the stockholder so elects, in which case such
capital gains will be taxed at ordinary income rates. We will notify
stockholders after the close of our taxable year as to the portions of the
distributions attributable to that year that constitute ordinary income or
capital gain dividends and in the case of capital gain dividends to
non-corporate stockholders, those designated as 20% rate gain distributions, 25%
rate gain distributions and 28% rate gain distributions.

    It is possible that we may invest in certain types of mortgage loans that
may cause us under certain circumstances to recognize taxable income in excess
of our economic income (also known as "Phantom Income") and to experience an
offsetting excess of economic income over our taxable income in later years. As
a result, stockholders may from time to time be required to pay federal income
tax on distributions that economically represent a return of capital, rather
than a dividend. Such distributions would be offset in later years by
distributions representing economic income that would be treated as returns of
capital for federal income tax purposes. Accordingly, if we receive Phantom
Income, our stockholders may be required to pay federal income tax with respect
to such income on an accelerated basis, i.e., before such income is realized by
the stockholders in an economic sense. If there is taken into account the time
value of money, such an acceleration of federal income tax liabilities would
cause stockholders to receive an after-tax rate of return on an investment in
the Company that would be less than the after-tax rate of return on an
investment with an identical before-tax rate of return that did not generate
Phantom Income. In general, as the ratio of our Phantom Income to our total
income increases, the after-tax rate of return received by a taxable stockholder
will decrease. We will consider the potential effects of Phantom Income on our
taxable stockholders in managing our investments.

TAXATION OF STOCKHOLDERS ON THE DISPOSITION OF THE COMMON STOCK

    In general, any gain or loss realized upon a taxable disposition of the
Common Stock by a U.S. stockholder who is not a dealer in securities will be
treated as capital gain or loss. Any such capital gain or loss generally will be
long-term capital gain or loss if the Common Stock has been held for more than
12 months. In general, any loss upon a sale or exchange of Common Stock by a
U.S. stockholder who has held such Common Stock for six months or less (after
applying certain holding period rules) will be treated as long-term capital loss
to the extent our distributions are required to be treated by that stockholder
as long-term capital gain.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

    We will report to our U.S. stockholders and to the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 31% with respect to distributions paid unless such
holder (i) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (ii) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with the applicable requirements of the

                                      114
<PAGE>
backup withholding rules. A stockholder who does not provide us with his correct
taxpayer identification number also may be subject to penalties imposed by the
IRS. Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability.

TAXATION OF TAX-EXEMPT STOCKHOLDERS

    Tax exempt entities, including qualified employee pension and profit sharing
trusts and individual retirement accounts ("Exempt Organizations"), generally
are exempt from federal income taxation. However, they are subject to taxation
on their unrelated business taxable income ("UBTI"), as defined in Section
512(a)(1) of the Code. While many investments in real estate generate UBTI, the
IRS has issued a published ruling that dividend distributions from a REIT to an
exempt employee pension trust do not constitute UBTI, provided that the shares
of the REIT are not otherwise used in an unrelated trade or business of the
exempt employee pension trust. Based on that ruling, amounts distributed by us
to Exempt Organizations generally should not constitute UBTI. However, if an
Exempt Organization finances its acquisition of our stock with debt, a portion
of its income from the Company will constitute UBTI pursuant to the
"debt-financed property" rules. In addition, in certain circumstances, a pension
trust that owns more than 10% of our stock is required to treat a percentage of
the dividends we pay as UBTI. This rule applies to a pension trust holding more
than 10% (by value) of our stock only if (i) the percentage of our income that
is UBTI (determined as if we were a pension trust) is at least 5% and (ii) we
are treated as a "pension-held" REIT. We will be treated as a "pension-held"
REIT if

    (i) we qualify as a REIT by reason of the modification of the 5/50 Rule that
allows the beneficiaries of the pension trust to be treated as holding our
shares in proportion to their actuarial interests in the pension trust, and

    (ii) either (A) one pension trust owns more than 25% of the value of our
stock or (B) a group of pension trusts individually holding more than 10% of the
value of our stock collectively owns more than 50% of the value of our stock.

We are unlikely to become a "pension-held" REIT because, pursuant to the
Aggregate Stock Ownership Limit and the Look-Through Ownership Limit in our
Charter, no person may beneficially own shares of Common Stock in excess of 9.8%
of the outstanding shares of our Common Stock; provided, however, that certain
Look-Through Entities may beneficially own up to 15% of such shares of Common
Stock. Although our Board of Directors has the discretion to waive the
application of the Aggregate Stock Ownership Limit or the Look-Through Ownership
Limit with respect to any person, the Board of Directors intends to grant such
waivers only in a manner that would not cause us to be or become a
"pension-held" REIT. However, there can be no assurance that we will not become
a "pension-held" REIT or that pension trusts will not be required to treat a
percentage of dividends received from us as UBTI.

                                      115
<PAGE>
TAXATION OF NON-U.S. STOCKHOLDERS

    The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
stockholders (collectively, "Non-U.S. Stockholders") are complex, and no attempt
will be made herein to provide more than a summary of such rules. PROSPECTIVE
NON-U.S. STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE
THE IMPACT OF FEDERAL, STATE, AND LOCAL INCOME TAX LAWS WITH REGARD TO AN
INVESTMENT IN THE COMMON STOCK, INCLUDING ANY REPORTING REQUIREMENTS.


    Distributions to Non-U.S. Stockholders that are not attributable to gain
from sales or exchanges by us of U.S. real property interests and are not
designated by us as capital gains dividends or retained capital gains will be
treated as dividends of ordinary income to the extent that they are made out of
our current or accumulated earnings and profits. Such distributions ordinarily
will be subject to a withholding tax equal to 30% of the gross amount of the
distribution unless an applicable tax treaty reduces or eliminates that tax.
However, if income from the investment in the Common Stock is treated as
effectively connected with the Non-U.S. Stockholder's conduct of a U.S. trade or
business, the Non-U.S. Stockholder generally will be subject to federal income
tax at graduated rates, in the same manner as U.S. stockholders are taxed with
respect to such distributions (and also may be subject to the 30% branch profits
tax in the case of a Non-U.S. Stockholder that is a non-U.S. corporation). We
expect to withhold U.S. income tax at the rate of 30% on the gross amount of any
such distributions made to a Non-U.S. Stockholder unless (i) a lower treaty rate
applies and any required form evidencing eligibility for that reduced rate is
filed with us or (ii) the Non-U.S. Stockholder files an IRS Form 4224 (or a Form
W-8ECI) with us claiming that the distribution is effectively connected income.
Furthermore, on October 6, 1997, the U.S. Treasury Department issued final
Treasury regulations governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts paid
to Non-U.S. Stockholders after December 31, 2000 (the "New Withholding
Regulations"). The New Withholding Regulations may alter the procedure for
claiming the benefits of an income tax treaty.


    Distributions in excess of our current and accumulated earnings and profits
will not be taxable to a Non-U.S. Stockholder to the extent that such
distributions do not exceed the adjusted basis of the stockholder's Common
Stock, but rather will reduce the adjusted basis of such shares. To the extent
that distributions in excess of current and accumulated earnings and profits
exceed the adjusted basis of a Non-U.S. Stockholder's Common Stock, such
distributions will give rise to tax liability if the Non-U.S. Stockholder would
otherwise be subject to tax on any gain from the sale or disposition of his
Common Stock, as described below. Because it generally cannot be determined at
the time a distribution is made whether or not such distribution will be in
excess of current and accumulated earnings and profits, the entire amount of any
distribution normally will be subject to withholding at the same rate as a
dividend. However, amounts so

                                      116
<PAGE>

withheld are refundable to the extent they exceed the resulting tax liability
from such distribution.



    For any year in which we qualify as a REIT, distributions that are
attributable to gain from our sales or exchanges of U.S. real property interests
(i.e., interests in real property located in the United States and interests in
U.S. corporations at least 50% or whose assets consist of U.S. real property
interests) will be taxed to a Non-U.S. Stockholder under the provisions of the
Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under FIRPTA,
distributions attributable to gain from sales of U.S. real property interests
are taxed to a Non-U.S. Stockholder as if such gain were effectively connected
with a U.S. trade or business. Non-U.S. Stockholders thus would be taxed at the
normal capital gain rates applicable to U.S. stockholders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). Distributions subject to FIRPTA also may be
subject to the 30% branch profits tax in the hands of a non-U.S. corporate
stockholder not entitled to treaty relief or exemption. For purposes of these
rules, the Wyndham preferred shares to be acquired by the Operating Partnership
likely will constitute a U.S. real property interest while held by us, and
distributions to Non-U.S. Stockholders attributable to gain from those shares
likely will be subject to tax under FIRPTA. We are required to withhold 35% of
any distribution that we designate as a capital gains dividend. If we designate
prior distributions as capital gain dividends, the withholding tax with respect
to the prior distribution will be withheld from subsequent distributions to
non-U.S. Stockholders. The amount withheld is creditable against the Non-U.S.
Stockholder's FIRPTA tax liability.


    Gain recognized by a Non-U.S. Stockholder upon a sale of his or her Common
Stock generally will not be taxed under FIRPTA if we are a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by non-U.S. persons. Although it is currently anticipated that we
will be a "domestically controlled REIT" and, therefore, that the sale of the
Common Stock will not be subject to taxation under FIRPTA, there can be no
assurance that we will be a "domestically-controlled REIT." Even if such gain is
not subject to FIRPTA, such gain will be taxable to a Non-U.S. Stockholder if
(i) investment in the Common Stock is effectively connected with the Non-U.S.
Stockholder's U.S. trade or business, in which case the Non-U.S. Stockholder
will be subject to the same treatment as U.S. stockholders with respect to such
gain, or (ii) the Non-U.S. Stockholder is a nonresident alien individual who was
present in the United States for 183 days or more during the taxable year and
certain other conditions apply, in which case the nonresident alien individual
will be subject to a 30% tax on the individual's capital gains. If the gain on
the sale of the Common Stock were to be subject to taxation under FIRPTA, the
Non-U.S. Stockholder would be subject to the same treatment as U.S. stockholders
with respect to such gain (subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals).
In addition, a purchaser of Common Stock subject to taxation under FIRPTA would
generally be required to deduct and withhold a tax equal to 10% of the

                                      117
<PAGE>
amount realized on the disposition by a Non-U.S. Stockholder. Any amount
withheld would be creditable against the Non-U.S. Stockholder's FIRPTA tax
liability.

    Additional issues may arise pertaining to information reporting and backup
withholding with respect to Non-U.S. Stockholders. The New Withholding
Regulations alter the application of the information reporting and backup
withholding rules to Non-U.S. Stockholders. Non-U.S. Stockholders should consult
with a tax advisor with respect to any such information reporting and backup
withholding requirements. Backup withholding with respect to a Non-U.S.
Stockholder is not an additional tax. Rather, the amount of any backup
withholding with respect to a payment to a Non-U.S. Stockholder will be allowed
as a credit against any United States federal income tax liability of such Non-
U.S. Stockholder. If withholding results in an overpayment of taxes, a refund
may be obtained, provided that the required information is furnished to the
Service.

OTHER TAX CONSEQUENCES


    The Company, our stockholders, the Operating Partnership or its General
Partner or Limited Partners may be subject to state and local tax in various
states and localities, including those states and localities in which it or they
transact business, own property, or reside. The state and local tax treatment of
the Company and its stockholders in such jurisdictions may differ from the
federal income tax treatment described above. Consequently, prospective
stockholders should consult their own tax advisors regarding the effect of state
and local tax laws upon an investment in the Common Stock. In addition, the
Taxpayer Relief Act of 1997 includes several provisions, some of which have been
described in the discussion above, that will liberalize certain of the
requirements for qualification as a REIT. However, we do not expect these
provisions to have either a material beneficial effect or a material adverse
effect on our ability to operate as a REIT.


BCP SISTER CORP.

    Each BCP Sister Corp. organized as a corporation will pay federal, state and
local income taxes on its taxable income at regular corporate rates. Any such
taxes will reduce amounts available for distribution by the BCP Sister Corp. to
its stockholders.

                                      118
<PAGE>
                              ERISA CONSIDERATIONS

    ERISA and the Code impose certain restrictions on (a) Plans, including
individual retirement accounts or Keogh plans, (b) any entities whose underlying
assets include Plan assets by reason of a Plan's investment in such entities
("Plan Assets Entities") and (c) persons who have certain specified
relationships to such Plans and Plan Assets Entities ("Parties-in-Interest"
under ERISA and "Disqualified Persons" under the Code). Moreover, based on the
reasoning of the United States Supreme Court in JOHN HANCOCK LIFE INS. CO. V.
HARRIS TRUST AND SAV. BANK, 114 S. Ct. 517 (1993), an insurance company's
general account may be deemed to include assets of the Plans investing in the
general account (e.g., through the purchase of an annuity contract), and the
insurance company might be treated as a Party-in-Interest or Disqualified Person
with respect to a Plan by virtue of such investment. ERISA also imposes certain
duties on persons who are fiduciaries of Plans subject to ERISA and prohibits
certain transactions between a Plan and Parties-in-Interest or Disqualified
Persons with respect to such Plans.

THE TREATMENT OF THE COMPANY'S UNDERLYING ASSETS UNDER ERISA

    The DOL has issued the Plan Assets Regulation which defines what constitutes
the assets of a Plan. This regulation provides that, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Plan purchases an "equity interest" will be
deemed for purposes of ERISA and the Code to be assets of the investing Plan
unless certain exceptions apply. The Plan Assets Regulation defines an "equity
interest" as any interest in an entity other than an instrument that is treated
as indebtedness under applicable local law and which has no substantial equity
features. The Common Stock offered hereby should be treated as "equity
interests" for purposes of the Plan Assets Regulation.

    One exception under the Plan Assets Regulation provides that an investing
Plan's assets will not include any of the underlying assets of an entity if at
all times less than 25% of each class of "equity" interests in the entity is
held by "benefit plan investors," which is defined to include Plans that are not
subject to ERISA such as foreign benefit plans, governmental pension plans and
individual retirement accounts as well as Plans that are subject to ERISA.
Another exception is provided for an investment in an "operating company," which
is defined in the Plan Assets Regulation to include a "real estate operating
company." To be a "real estate operating company" an entity must have, on the
date of its first long-term investment and on certain annual testing dates
thereafter, at least 50% of its assets (other than short-term investments
pending long-term commitment or distribution to investors), valued at cost,
invested in real estate that is managed or developed and with respect to which
such entity has the right to substantially participate in such management or
development activities. Another exception under the Plan Assets Regulation
provides that an investing Plan's assets will not include any of the underlying
assets of an entity if the class of "equity" interests in question is a class of
"publicly offered securities." Publicly offered securities are securities that
are (i) widely held (i.e., held by 100 or more investors who are independent of

                                      119
<PAGE>
the issuer and each other), (ii) freely transferable, and (iii) part of a class
of securities registered under Section 12(b) or 12(g) of the Exchange Act.

    The Board of Directors of the Company and any Sister Corp. will take such
steps as may be necessary to qualify for one or more of the exceptions available
under the Plan Assets Regulation and thereby prevent the assets of the Company
or any BCP Sister Corp. from being treated as assets of any investing Plan.
Specifically, we intend to qualify as a real estate operating company until at
least such time as the Common Stock qualifies as a class of publicly offered
securities. In this connection, we have obtained an opinion of counsel that, on
the date of the Operating Partnership's first long-term investment we qualified
as a real estate operating company. It is intended that, thereafter, on at least
one date during each of the Company's "annual valuation periods" (as defined in
the Plan Assets Regulation) until at least such time as the Common Stock
qualifies as publicly offered securities, at least 50% of our assets (valued at
cost and excluding certain short-term investments) will be invested, by reason
of its investment in the Operating Partnership, in real estate which is managed
or developed and as to which we will have the right to substantially participate
in the management or development of the real estate. Consequently, BCP should
qualify as a real estate operating company. In addition, with respect to any BCP
Sister Corp., we will take such steps as may be necessary to qualify such BCP
Sister Corp. as an operating company or a venture capital operating company or
for another available exception under the Plan Assets Regulation prior to
distribution of its equity interests.

    Any Plan fiduciary that proposes to cause a Plan to purchase Common Stock
should consult with its counsel with respect to the potential applicability of
ERISA and the Code to such investment and determine on its own whether any
exceptions or exemptions are applicable and whether all conditions of any such
exceptions or exemptions have been satisfied. Moreover, each Plan fiduciary
should determine whether, under the general fiduciary standards of investment
prudence and diversification, an investment in the Common Stock is appropriate
for the Plan, taking into account the overall investment policy of the Plan and
the composition of the Plan's investment portfolio.

                              SELLING STOCKHOLDERS


    The Common Stock was originally issued and sold to a predecessor of Banc of
America (the "Initial Purchaser"), in a transaction exempt from registration
requirements of the Securities Act. The securities were resold by a predecessor
of Banc of America to persons reasonably believed by the predecessor to be
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), to a limited number of institutional "accredited investors" (as defined in
Rule 501 (a) (1), (2), (3) or (7) under the Securities Act) and to individual
"accredited investors" (as defined in Rule 501 (a) (4), (5) or (6) under the
Securities Act). The Selling Stockholders may from time to time offer and sell
pursuant to this Prospectus any or all of the Common Stock. The term Selling
Stockholders includes the holders listed below and the beneficial owners of the
Common Stock and their transferees, pledgees, donees or other successors.


                                      120
<PAGE>
    The following table sets forth information with respect to the Selling
Stockholders of the Common Stock and the respective number of shares of Common
Stock beneficially owned by each Selling Stockholders that may be offered
pursuant to this Prospectus. We are obligated by the terms of a Registration
Rights Agreement to file this Registration Statement on behalf of each of the
listed stockholders. Each Selling Stockholder may offer and sell all of the
securities registered hereby. If such Stockholder sells all shares registered
hereby such stockholder will not beneficially own any securities of the Company
after this Offering. Inclusion on this list does not imply that any person or
entity will actually offer or sell any of the shares registered on his, her or
its behalf.

<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
1st Trust & Co.......................................................       5,000       *
  FBO Glenn Bennett
  FTC IRA Standard
1st Trust Co. TR.....................................................       5,000       *
  FBO Lawrence W. Gold IRA
ABKB/La Salle Securities.............................................   1,337,500     6.4%
David Abromowitz (1).................................................       2,680       *
Louis R. Adimare.....................................................      10,000       *
Richard Adler........................................................       7,500       *
Advantus Capital (MIMLIC Asset)......................................     500,000     2.4%
AETNA................................................................     400,000     1.9%
AEW Capital Management...............................................     125,000       *
Gregory L. Allcroft & (1)............................................       2,680       *
  Leah Allcroft Comm. Prop.
Bruce W. Altrock & Carolyn D. Altrock................................      12,500       *
  TR Altrock Living Trust UA 08/13/92
Adarsh K. Arora......................................................       5,000       *
Michael Ashendorf (1)................................................       5,361       *
Aslam International Inc. EBP.........................................         500       *
Steven R. Astrove & (2)..............................................       1,340       *
  David M. Astrove JT TEN
Atlantic Trust Co. Tr................................................      50,000       *
  FBO Susan R.G. Revocable Trust
  UA 06/06/96
The American Century Real Estate Fund................................     150,000       *
Tony Avila & Jacquelyn Avila JT TEN (1)..............................       1,072       *
Robert A. Baffi & Rosemary G. Baffi..................................       2,680       *
  TR Baffi Fam Rev Trust
  UA 01/17/94
Louis P. Bansbach III................................................      10,000       *
Kevin Barnes (1).....................................................       3,753       *
Ray Barshick.........................................................      25,000       *
</TABLE>

                                      121
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
David A. Baylor & Theresa L. Helmer (1)..............................       1,072       *
Bayside Development Corp. Ltd........................................      25,000       *
Douglas L. Becker....................................................       5,000       *
Jill Becker & Eric D. Becker.........................................       5,000       *
  TEN ENT
Glenn Bennett & Christina Bennett JT TEN.............................       5,000       *
John A. Berg (1).....................................................      26,809       *
Zack B. Bergreen.....................................................      10,000       *
Jon R. Berquist (1)..................................................       1,340       *
Berrard Hldgs LTD Partnership A Partnership..........................       8,750       *
John R. Bertucci.....................................................       5,000       *
Gordon M. & Adele H. Binder..........................................      25,000       *
William D. Birch.....................................................       6,250       *
William M. Birch.....................................................      10,000       *
Guarantee & Trust Co Tr..............................................       2,500       *
  FBO Myron Blackman IRA Rollover
Thomas P. Bloch (2)..................................................       1,340       *
BNP Bahrain..........................................................     590,000     2.8%
Timothy P. Brady.....................................................      15,000       *
Kathleen Higgins Braun & (1).........................................       5,361       *
  Kurt George Braun JT TEN
Steven Braverman TR..................................................      10,000       *
  Braverman Fam Trust
  UA 12/26/96
  MS Muni Bond
Rita Brightman.......................................................      20,000       *
Douglas Broyles......................................................       5,000       *
Bruce Brugler (1)....................................................       2,144       *
Lucretia A. Bryant...................................................       5,000       *
Michael Burbank & Cindy Ann Roberts Community                               1,072       *
  Property (1).......................................................
Thomas C. Byrne......................................................       3,750       *
Vincent J. Campobasso &..............................................       5,000       *
  Colleen M. Campobasso JT TEN
J. Robert Casey (2)..................................................       5,361       *
Douglas A. Catalano..................................................      10,000       *
Chafetz Group LLC....................................................       5,000       *
Robert B. Champagne..................................................       5,000       *
Dominic K. Chan & Marsha Chan JT TEN.................................      10,000       *
Chase Asset Management...............................................     750,000     3.6%
Cole A. Chevalier & Katherine Chevalier..............................      15,000       *
  TR Chevalier Trust UA 06/02/94
</TABLE>

                                      122
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Matthew-Luc Clark (1)................................................       1,072       *
Closefire Limited....................................................       5,000       *
Howard E. Cohen &....................................................       5,361       *
  Myra Muskant JT TEN
Robert & Eileen Coltun JT TEN........................................       5,000       *
Geary Cotton.........................................................      10,000       *
Robert Currie & Linda Currie JT Ten..................................       5,000       *
Carl Curtis..........................................................       5,000       *
  DBA Pacific Auto
Cutler Group LLC.....................................................       5,000       *
John H. Dailey III & Beth B. Dailey TR...............................      25,000       *
  John H Dailey Trust
  UA 05/17/89
Raju P. Dantuluri & Devi P. Dantuluri JT TEN.........................      10,000       *
Nancy M. Davids (2)..................................................       1,340       *
DC Investment Partners...............................................      40,000       *
Allen Deary..........................................................       5,000       *
Christel Dehaan Tr...................................................      50,000       *
  Christel Dehaan Trust
  UA 12/31/92
C.A. Delaney Capital Management......................................     150,000       *
  FBO Spectrum United Canadien Growth Fund
Tom Denomme..........................................................       5,000       *
Desert Mutual Benefit Realty Fund....................................     100,000       *
Barbara Devorzon Tr..................................................       5,000       *
  Devorzon Fam Trust
  UA 11/07/90
Timothy Dibble &.....................................................       5,000       *
  Maureen Dibble JT Ten
  A/C 2
Daniel J. Doherty III................................................      15,000       *
  Atlantic Retail Properties
Neal M. Douglas......................................................       5,000       *
Gary L. Downey.......................................................       5,000       *
Stichting Bedrijfspensioenfonds voor de Metaalnijverheid.............     750,000     3.6%
EAG Enterprises Limited..............................................       5,000       *
Daniel H. Eakins.....................................................       5,000       *
Elizabeth H. Edmunds.................................................       2,680       *
Jeffrey Elder........................................................      12,500       *
Merrick M. Elfman....................................................       7,500       *
Matthew E. Epstein & (1).............................................       1,340       *
  Deborah L. Hiatt JT TEN
</TABLE>

                                      123
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Dwight Evans.........................................................       7,500       *
Lester J. Fagen (2)..................................................       1,875       *
Edward J. Faneuil & Eric Slifka &....................................       5,361       *
  Alfred Slifka Ten Com
FLM Partnership/A Partnership........................................       8,042       *
First American Asset Management......................................      33,750       *
Fisher Group LTD Partnership--Fisher, Jerome.........................      25,000       *
John P. Fowler.......................................................       5,361       *
Mary Lou Fox.........................................................       5,000       *
Joseph Friscia &.....................................................       5,000       *
  Laura J. Friscia JT TEN
Lee Geiger (1).......................................................       1,072       *
General Electric Pension Trust.......................................     750,000     3.6%
Robert H. Gersky & (1)...............................................      14,745       *
  Sue A. Gersky Community Property
John W. Gildea                                                              5,500       *
Barry Ginsburg &.....................................................       2,500       *
  Paul Lukoff Tr Merle Z. Gross
William Shedd Glassmeyer (1).........................................       1,072       *
Martin A. Glazer & (2)...............................................       1,340       *
  Carol A. Glazer JT TEN
Glenmeade Trust......................................................     500,000     2.4%
Global Property Advisors.............................................     125,000       *
  FBO North American Property Securities Trust
Ernest C. Goggio.....................................................       5,000       *
Bruce Goldman........................................................       5,000       *
William J. Goldsborough..............................................      10,000       *
Carol B. Good........................................................       1,787       *
Julian H. Good.......................................................       1,787       *
Louis K. Good III &..................................................       1,787       *
  Susan Good TEN COM
Goodman & Co. Ltd....................................................     750,000     3.6%
Barry R. Gorsun......................................................       5,000       *
1998 GPH Fund LLC (2)................................................       1,876       *
E.C. Grayson.........................................................       5,000       *
Green Beacon LP......................................................       5,000       *
James B. Greenfield (1)..............................................       1,072       *
Lee B. Griffith......................................................       5,000       *
Grisanti, Inc........................................................      10,000       *
Merle Z. Gross-Ginsburg &............................................       2,500       *
  Paul Lukoff TR Barry M. Ginsburg
  1993 Fam Trust UA 09/30/93
</TABLE>

                                      124
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Guarantee & Trust Co. TR.............................................       5,000       *
  FBO Michael P. Last GTC IRA
Guarantee & Trust Co. TR.............................................      10,000       *
  FBO Barry R. Devorzon GTC IRA
Guarantee & Trust Co. TR.............................................       5,361       *
  FBO Dana C. Djerf
Guarantee & Trust Co. TR.............................................       7,238       *
  FBO M. Allen Chozen
  GTC IRA Rollover
Guarantee & Trust Co. TR.............................................      15,000       *
  FBO Linda Lee Harper
Guarantee & Trust Co. TR.............................................       5,000       *
  FBO Fred Backer GTC IRA Rollover
Guarantee & Trust Co. TR.............................................       5,000       *
  FBO Jack G. Bryant GTC IRA Rollover
Guarantee & Trust Co Tr..............................................       5,000       *
  FBO Thomas A. Okulski GTC IRA
Guarantee & Trust Co Tr..............................................       1,608       *
  FBO Peter R. Pendergast GTC
  IRA Sep
Guarantee & Trust Co Tr..............................................       5,000       *
  FBO Stephen A. Vogel GTC IRA
  Rollover
Sammy Hagar..........................................................       5,000       *
Michael A. Hammer (2)................................................       1,340       *
Hartford Capital Appreciation Fund...................................     300,000     1.4%
Hartford Capital Appreciation Fund, Inc..............................   2,000,000     9.5%
K. Stephen Haskins...................................................      10,000       *
Peter P. Healy & Virginia Healy JT TEN...............................       6,166       *
H. David Henken (2)..................................................       1,340       *
Bernard and Jerome Herskowitz........................................      10,000       *
Wilson T. Hileman, Jr. (1)...........................................       1,072       *
Rudolf C. Hoehn-Saric................................................       5,000       *
Revell Horsey & (1)..................................................       1,072       *
  Carrie S. Horsey JT TEN
M. Benjamin Howe & (1)...............................................       5,361       *
  Janet L. Howe JT TEN
Jimmy C.M. Hsu.......................................................       5,000       *
Tommy C. Hsu.........................................................       5,000       *
Douglas M. Husid (2).................................................       1,340       *
Thomas J. Hynes, Jr..................................................       5,361       *
Invesco Realty Advisors, Inc.........................................     115,000       *
</TABLE>

                                      125
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Naveen Jain &........................................................      10,000       *
  Anuradha Jain JT TEN
JJ Newport...........................................................       5,000       *
Craig R. Johnson & (1)...............................................      13,404       *
  Nichola Jo Johnson TR
  Johnson Revocable Trust
  UA 07/02/97
Gary Johnson.........................................................       5,000       *
Donald G. Jones......................................................      15,000       *
  Spirit Enterprise LLP
Jerry V. Jorge & Susan N. Jorge JT TEN...............................       5,000       *
John A. Jurenko......................................................      25,000       *
George S. Karas......................................................       5,000       *
Bruce Katzen &.......................................................       5,000       *
  Diane Katzen JT TEN
Kempen/lbus..........................................................      40,000       *
John Bradford King & Pamela J. King JT TEN...........................       5,000       *
Gary C. Klein........................................................      12,500       *
Matt Klein (1).......................................................       8,041       *
William C. Klein & Virginia A. Klein JT ENT..........................      12,500       *
Gustav Koven.........................................................       5,000       *
Jordon P. Krasnow &..................................................       5,361       *
  Jean H. Krasnow JT TEN (2)
Kresevich Capital Mgmt LLC...........................................      25,000       *
E. Floyd Kvamme &....................................................      25,000       *
  Jean Kvamme Comm Prop
Raymond Kwasnick & (2)...............................................       2,680       *
  Paul Kwasnick TEN COM
Guy & Rita Lammle JT TEN.............................................       5,000       *
Richard Langerman....................................................       2,680       *
Leede Investments LLC................................................     100,000       *
David Lehmann & (1)..................................................       1,340       *
  Dawn Lehmann JT TEN
Mark Lehman (1)......................................................       2,680       *
James W. Lewis.......................................................       5,000       *
Doug Liman...........................................................       5,000       *
Ron & Susanne Lissak JT WROS (1).....................................       2,000       *
Elaine C. Lloyd......................................................       5,000       *
Donald A. Lobo.......................................................      15,000       *
Longleaf Partners Realty Fund........................................   2,075,000     9.8%
Richard E. Lucas.....................................................      10,000       *
William Maidman Family LP............................................       5,000       *
</TABLE>

                                      126
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Paul Malnati--Trans National.........................................       5,000       *
Kathleen M. Malo TR (1)..............................................       1,072       *
  Kathleen M. Malo Trust
  UA 12/14/95
Sophia A. Mann.......................................................       5,361       *
Burt Manning.........................................................       5,000       *
Steve Marcie.........................................................       5,000       *
Irwin M. Marcus......................................................       5,361       *
Randall E. Marcus....................................................       5,361       *
  Univeristy Orthopedic Assoc
Richard A. Marks & (2)...............................................       5,361       *
  Jennifer E. Morrison JT TEN
Bharat K. Marya &....................................................      10,000       *
  Radhesh Marya TR
  Marya Revocable Trust
  UA 09/03/86
Bharat K. Marya &....................................................      15,000       *
  Radhesh Marya TR B & R Marya Charitable
  RMDR Trust UA 08/28/95
Mass Financial Services Company......................................     292,925     1.4%
Karl L. Matthies (1).................................................      10,723       *
Karl Matthies & Deborah Matthies (1).................................       8,042       *
  Community Property
Dan Maydan &.........................................................       7,500       *
  Dalia Maydan TR
  Dan Maydan & Dalia Maydan Trust
  UA 03/26/81
James F. McCaffrey...................................................       5,361       *
McGlinn Capital Management, Inc. ....................................     175,000       *
Mary E. McGoldrick...................................................      10,000       *
Mees Pierson/Fortis Investments......................................     100,000       *
James L. Melsa &.....................................................       5,000       *
  Katherine Melsa JT TEN
Robert M. Melzer.....................................................       5,361       *
Gilbert G. Menna & Janet L. Remien JT TEN (2)........................       4,021       *
Warren T. Mills &....................................................       5,000       *
  Gayle S. Mills TR
  Warren T. Mills & Gayle S. Mills
  Revocable Fam Trust UA 02/12/93
James Minchello & (1)................................................       5,361       *
  Linda Minchello JT TEN
Robert V. Minchello, Jr. (1).........................................       1,340       *
</TABLE>

                                      127
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Monte Toole TR.......................................................      10,000       *
  Monte M. Toole Gasonics Revocable Trust
  UA 04/06/94
Peter Moore & Christina Moore JT TEN.................................      35,000       *
Morgan Stanley Asset Management......................................   1,000,000     4.8%
Dennis R. Morin......................................................       5,000       *
Robert S. Morris.....................................................       5,000       *
Alvin Murstein & Amie Murstein TR....................................       5,000       *
  Alvin Murstein 2nd Fam Trust
  UA 10/01/95
John P. Murtagh &....................................................      17,500       *
  Geraldine M. Murtagh JT TEN
Joseph Nadel &.......................................................       5,000       *
  Ann Nadel Tr
  Joseph & Ann Nadel Revocable Living Trust
  UA 08/23/95
NationsBank Collateral Account.......................................      25,000       *
  FBO Central Florida Investments
Stephen Newberry &...................................................      12,500       *
  Shelley Newberry Tr
  The Newberry Living Trust
  UA 06/18/90
Bernard A. Newcomb TR................................................      12,500       *
  Bernard A. Newcomb 1997 Living Trust
  UA 01/29/97
Anna F. Ng TR........................................................      12,500       *
  Anna F. Ng 1996 Trust
  UA 07/02/96
Steven Nielsen &.....................................................       5,000       *
  Elizabeth Nielsen JT TEN
Northwestern Mutual Life.............................................     500,000     2.4%
Alfred J. Novak &....................................................       5,000       *
  Carol Novak JT TEN
Joseph W. O'Connor...................................................      25,000       *
Orchid Management Corporation........................................      10,723       *
Kenneth Olson &......................................................       5,000       *
  Ellen Berger JT TEN
Jason Pedersen (1)...................................................       2,680       *
Kent Ryan Penwell (1)................................................       1,340       *
Robert S. Pepper & Star Pepper TR....................................      10,000       *
  Robert S. & Star Pepper Trust
  UA 04/25/86
David L. Pergola.....................................................       5,361       *
Sandra J. Perkins....................................................       5,000       *
</TABLE>

                                      128
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Robert J. Perriello..................................................       5,361       *
Robert Y. Pick Tr....................................................       5,361       *
  Robert Y. Pick Self-Employed Profit
  Sharing Plan
  UA 01/01/85
Rudolph F. Pierce (2)................................................       1,340       *
Guy C. Pinkerton &...................................................      12,500       *
  Nancy J. Pinkerton JT TEN
Points West INTL INVSTMTS LTD........................................      31,063       *
Bruce Pollock & Carol Pollock JT TEN.................................       5,000       *
Ponte Vedra Partners LTD.............................................      50,000       *
Bruce Potter (1).....................................................      13,000       *
Bruce G. Potter TR (1)...............................................       1,341       *
  Alexandra Kelly Matthies
  1997 Trust B UA 10/03/97
Bruce G. Potter TR (1)...............................................       1,341       *
  Casey Elizabeth Matthies
  1997 Trust UA
  10/03/97
Franck Prissert (1)..................................................       1,340       *
Putnam Investment Management.........................................     500,000     2.4%
Safi U. Qureshey & Anita Sue Qureshey TR.............................       5,000       *
  Qureshey Fam Trust UA 05/21/84
Rainbow Partners, L.P................................................     150,000       *
Rand Rosenberg (1)...................................................       5,361       *
Sol Rosenberg &......................................................       5,000       *
  Susan Rosenberg JT TEN
Sol Rosenberg & Susan Rosenberg Tr...................................      10,000       *
  Rosenberg Fam Charitable Trust
  UA 10/11/96
Franklin Reider & Michelle Reider JT TEN.............................       5,000       *
James P. Reilly......................................................       5,000       *
Dana F. Rodin (2)....................................................       1,340       *
Edwin R. Rodriguez Jr. Tr............................................       5,361       *
  Edwin R. Rodriguez Jr Revocable Trust
  UA 08/29/85
John R. Rollins & Cynthia A. Rollins TR..............................      20,000       *
  Thomas B. & Rita Brightman Charitable
  Remainder Trust
  UA 05/12/93
Alan W. Rottenberg (2)...............................................       1,340       *
RREEF Venture Capital Fund, L.P......................................   1,500,000     7.2%
Eli Rubenstein (2)...................................................       1,340       *
</TABLE>

                                      129
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Michael B. Rukin TR TTEE FBO.........................................      10,000       *
  The Concord Hill Group Trust
  DTD 02/23/93
William Rutter.......................................................      50,000       *
Burton M. Sack.......................................................       5,000       *
William J. Sales.....................................................       5,040       *
Sandler O'Neill Asset Management.....................................      62,500       *
Thomas J. Sartory (2)................................................       1,340       *
John R. Sasso........................................................       5,361       *
Sharam I. & Fariba S. Sasson, TR.....................................      25,000       *
Ori Sasson & Susan Sasson Tr.........................................      25,000       *
  Sasson Trust UA 03/31/94
Donald L. Saunders...................................................       5,000       *
John Schnugg (1).....................................................       5,361       *
Jack Schwartz........................................................      15,000       *
Edward H. Schweitzer & (1)...........................................       1,072       *
  Chris A. Schweitzer TR
  Schweitzer Fam Rev Trust
  UA 02/13/95
Shawn Sedaghat.......................................................      25,000       *
Fred A. Seigel.......................................................       5,361       *
Uday Sengupta........................................................       5,000       *
  Asia Quest
Richard Sherman......................................................       5,000       *
Donald L. Shulman (2)................................................       1,340       *
Robert J. Siedlecki..................................................       5,000       *
John R. Silber.......................................................       5,361       *
Victoria Simms.......................................................      15,000       *
Michael Singer (1)...................................................       1,072       *
Vassilios Sirpolaidis & Lynne Sirpolaidis JT TEN.....................      25,000       *
Jeffrey S. Slowgrove &...............................................       7,500       *
  Toni A. Slowgrove TEN ENT
Slyman International LLC.............................................       5,000       *
Richard A. Smith & Mary Ellen Zweifel Smith TR.......................      13,404       *
  Smith Family Trust UA 04/03/96
Mark C. Smith........................................................      25,000       *
Alan B. Snyder & Susan R. Katz-Snyder................................      50,000       *
Jure Sola & Michelle Sola TR.........................................      12,500       *
  Jure & Michelle Sola Trust
  UA 12/18/92
Alan D. Solomont.....................................................       5,000       *
Sasson R. & Eta Somekh TR............................................       5,000       *
</TABLE>

                                      130
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Marvin Sparrow.......................................................       2,680       *
Harold Stahler &.....................................................       2,680       *
  Dale I. Stahler JT TEN
Standard Pacific Capital.............................................     750,000     3.6%
State Board of Administration of Florida.............................     500,000     2.4%
State Street Research Aurora Fund....................................     120,000       *
Stephens Inc. .......................................................      20,000       *
John G. Stewart......................................................      25,000       *
Marilyn L. Sticklor..................................................       2,680       *
Michael E. Tacelosky TR..............................................       5,000       *
  Michael E. Tacelosky 1994 Trust Fund
  UA 12/20/94
Richard W. Talkov & Susan P. Davis JT TEN............................       1,340       *
Andrew R. Tang (1)...................................................       1,072       *
Lester J. Tanner.....................................................       5,000       *
Steven Taslitz.......................................................       5,000       *
Third Point Partners LP..............................................      67,315       *
Third Point Offshore Fund LTD........................................      45,877       *
Robert Tishman (1)...................................................       8,042       *
Daniel D. Tompkins...................................................       5,000       *
Chester Tomsick......................................................      10,000       *
David Toole..........................................................       5,000       *
Trans National Grp Svcs LLC..........................................       5,000       *
Norvald L. Ulvestad TR...............................................       5,000       *
  Norvald L. Ulvestad Trust
  UA 09/28/82
William V. Urone &...................................................      15,000       *
  Joyce A. Urone TR Urone Trust
  UA 10/26/93
US Die Casting & Development Company Inc.............................      10,000       *
E. Vittoria, J. Vittoria & A Vittoria................................      25,000       *
  J Vittoria TR
  Joseph Vittoria Irrevocable Trust
  UA 12/19/97
Ian Wallace..........................................................       5,000       *
James F. Wallack & Rebecca Matthews JT TEN...........................       1,340       *
David N. K. Wang.....................................................      10,000       *
Robert S. Washburn TR................................................      10,000       *
Robert S. Washburn Money                                                                *
  Purchase Pension & Profit Keogh Plan
  UA 01/01/88
Craig Stephen & Jocelyn Weingart JT TEN..............................       1,072       *
</TABLE>

                                      131
<PAGE>
<TABLE>
<CAPTION>
                                                                         SHARES BENEFICIALLY
                                                                                OWNED
                                                                       PRIOR TO THIS OFFERING
                                                                       -----------------------
SELLING STOCKHOLDER                                                      NUMBER    PERCENTAGE
- ---------------------------------------------------------------------  ----------  -----------
<S>                                                                    <C>         <C>
Harris Weinstein Tr..................................................      12,500       *
  Harris Weinstein Revocable Trust
  UA 01/26/94
  Frenchmans Creek
Mark Weinstein.......................................................       5,000       *
Thomas W. Weisel.....................................................      23,215       *
Welch & Forbes Inc...................................................      66,000       *
Wendelin White & Paul Feinberg JT TEN................................       5,000       *
Lisa Mashihara Westley...............................................       1,072       *
Wigold Partners......................................................       5,000       *
Robert L. Williamson &...............................................       5,000       *
  Rebecca A. Williamson TEN COM
Fred Winograd (1)....................................................       1,340       *
Frederic E. Wittmann.................................................       5,361       *
Geoffrey Y. Yang.....................................................       5,000       *
Lewis Yarborough &...................................................       5,000       *
  Paula M. Yarborough TR
  Yarborough Family Annual Gift Trust
  UA 01/17/94
Robin C. Yoshimura &.................................................       5,000       *
  Randy Yoshimura JT TEN
ZPG Securities LLC...................................................       5,745       *
</TABLE>

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

* Less than 1%


(1) Such Selling Stockholder is affiliated with Banc of America Securities, LLC
    a predecessor of which was the Initial Purchaser in the Original Offering.


(2) Such Selling Stockholder is affiliated with Goodwin, Procter & Hoar LLP or
    Goulston & Storrs, PC, law firms that provide professional services to the
    Registrant.

    Except as shown above, none of the Selling Stockholders has, or within the
past three years has had, any position, office or other material relationship
with the Company or any of its predecessors or affiliates. Because the Selling
Stockholders may, pursuant to this Prospectus, offer all or some portion of the
Common Stock, no estimate can be given as to the amount of the Common Stock that
will be held by the Selling Stockholders upon termination of any such sales. In
addition, the Selling Stockholders identified above may have sold, transferred
or otherwise disposed of all or a portion of their Common Stock since the date
on which they provided the information regarding their Common Stock, in
transactions exempt from the registration requirements of the Securities Act,
including transactions pursuant to Rule 144 under the Securities Act.

                                      132
<PAGE>
                              PLAN OF DISTRIBUTION

    The Offered Securities may be sold from time to time to purchasers directly
by the Selling Stockholders. As used herein, Selling Stockholders includes
donees and pledgees selling shares received from a named Selling Stockholder
after the date of this prospectus. Alternatively, the Selling Stockholders may
from time to time offer the Offered Securities to or through underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
or the purchasers of such securities for whom they may act as agents. The
Selling Stockholders and any underwriters, broker/dealers or agents that
participate in the distribution of Offered Securities may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of such securities and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.

    The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
sale of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions)

    - on any national securities exchange or quotation service on which the
      Offered Securities may be listed or quoted at the time of sale;

    - in the over-the-counter market;

    - in transactions otherwise than on such exchanges or in the
      over-the-counter market; or

    - through the writing of options.

    At the time a particular offering of the Offered Securities is made, a
Prospectus Supplement, if required, will be distributed which will set forth the
aggregate amount and type of Offered Securities being offered and the terms of
the offering, including the name or names of any underwriters, broker/dealers or
agents, any discounts, commissions and other terms constituting compensation
from the Selling Stockholders and any discounts, commissions or concessions
allowed or reallowed or paid to broker/ dealers.

    Each Common Stock certificate contains a legend to the effect that the
holder thereof, by its acceptance thereof, will be deemed to have agreed to be
bound by the provisions of the Registration Rights Agreement. In that regard,
each holder is deemed to have agreed that, upon receipt of notice from the
Company of the occurrence of any event which makes a statement in this
prospectus untrue in any material respect or which requires the making of any
changes in such prospectus in order to make the statements therein not
misleading, or of certain other events specified in the Registration Rights
Agreement, such holder will suspend the sale of Common Stock pursuant to this
prospectus until the Company has amended or supplemented such prospectus to
correct

                                      133
<PAGE>
such misstatement or omission and has furnished copies of the amended or
supplemented prospectus to such holder or the Company has given notice that the
sale of the Common Stock may be resumed.

    To comply with the securities laws of certain jurisdictions, if applicable,
the Offered Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or any exemption
from registration or qualification is available and is complied with.

    The Selling Stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of the purchases and sales of any of the Offered Securities by
the Selling Stockholders. The foregoing may affect the marketability of such
securities.

    All expenses of the registration of the Offered Securities will be paid by
the Company, including, without limitation, Commission filing fees and expenses
of compliance with state securities or "blue sky" laws; provided, however, that
the Selling Stockholders will pay all the underwriting discounts and selling
commissions, if any. The Selling Stockholders will be indemnified by the Company
against certain civil liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in connection therewith. We
will be indemnified by the Selling Stockholders severally against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.

                                 LEGAL MATTERS

    Certain legal matters will be passed upon for the Company by Goodwin,
Procter & Hoar LLP, Boston, Massachusetts. Certain partners of Goodwin, Procter
& Hoar LLP directly or indirectly own an aggregate of 7,237 shares of Common
Stock of the Company.

                                    EXPERTS


    The (i) consolidated financial statements of Beacon Capital Partners, Inc.
at December 31, l998 and for the period from January 21, l998 (inception)
through December 31, l998, (ii) the consolidated financial statements of
Beacon/PW Kendall LLC at December 31, 1998 and for the period from April 16,
1998 (inception) to December 31, 1998, (iii) the combined historical summary of
gross income and direct operating expenses for Fort Point Place for the year
ended December 31, 1998, (iv) the combined historical summary of gross income
and direct operating expenses for The Athenaeum Portfolio for the year ended
December 31, l997, (v) the historical summary of gross income and direct
operating expenses for Technology Square and The Draper Building for the year
ended December 31, 1997, and (vi) the combined historical summary of gross
income and direct operating expenses for The Bruenig Portfolio (referred to
elsewhere herein as the Dallas Office and Industrial Portfolio) for the year
ended December 31, 1997, all appearing in this Prospectus and Registration
Statement have been audited by Ernst &


                                      134
<PAGE>
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.

                             AVAILABLE INFORMATION

    We have filed with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-11 under the Securities Act of 1933, as amended
(the "Securities Act"), for the Common Stock offered in this Prospectus. This
Prospectus is one part of the Registration Statement and does not contain all of
the information in the Registration Statement. Any statements made in this
Prospectus referring to any contract, agreement or other document are a summary
of the material terms of such contract, agreement or other document. Our
Registration Statement may be inspected and copied at the SEC's public reference
facilities at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Our Registration Statement will also be available for inspection and
copying at the SEC's regional offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and at Citicorp Center, 500 West Madison Street,
(Suite 1400), Chicago, Illinois 60661. You may also obtain copies of the
Registration Statement from the SEC's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC also maintains
a website that contains reports, proxy and information statements and other
information at http://www.sec.gov.

                                      135
<PAGE>
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


<TABLE>
<S>                                                                                    <C>
Pro Forma Financial Information (Unaudited):

  Beacon Capital Partners, Inc.
    Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1999..............        F-4
    Notes to Pro Forma Condensed Consolidated Balance Sheet..........................        F-5
    Pro Forma Condensed Consolidated Statements of Operations for the Three Months
     Ended March 31, 1999............................................................        F-6
    Pro Forma Condensed Consolidated Statements of Operations for the Year Ended
     December 31, 1998...............................................................        F-7
    Notes to Pro Forma Condensed Consolidated Statements of Operations...............        F-8

Historical Financial Information:

  Beacon Capital Partners, Inc.
    Consolidated Balance Sheets as of March 31, 1999 (Unaudited) and December 31,
     1998............................................................................        F-9
    Consolidated Statements of Operations for the Three Months Ended March 31, 1999
     (Unaudited) and the period January 21, 1998 (Inception) to March 31, 1998.......       F-10
    Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999
     (Unaudited) and the period January 21, 1998 (Inception) to March 31, 1998.......       F-11
    Notes to Consolidated Financial Statements.......................................       F-12
    Report of Independent Auditors...................................................       F-15
    Consolidated Balance Sheet as of December 31, 1998...............................       F-16
    Consolidated Statement of Operations from January 21, 1998 (Inception) to
     December 31, 1998...............................................................       F-17
    Consolidated Statement of Stockholders' Equity from January 21, 1998 (Inception)
     to December 31, 1998............................................................       F-18
    Consolidated Statement of Cash Flows from January 21, 1998 (Inception) to
     December 31, 1998...............................................................       F-19
    Notes to Consolidated Financial Statements.......................................       F-20
  Beacon/PW Kendall LLC
    Report of Independent Auditors...................................................       F-28
    Consolidated Balance Sheet as of December 31, 1998...............................       F-29
    Consolidated Statement of Operations from April 16, 1998 (Inception) to December
     31, 1998........................................................................       F-30
    Consolidated Statement of Members' Equity from April 16, 1998 (Inception) to
     December 31, 1998...............................................................       F-31
    Consolidated Statement of Cash Flows from April 16, 1998 (Inception) to December
     31, 1998........................................................................       F-32
    Notes to Consolidated Financial Statements.......................................       F-33

  Fort Point Place
    Report of Independent Auditors...................................................       F-37
    Combined Historical Summary of Gross Income and Direct Operating Expenses for the
     Three Months Ended March 31, 1999 (Unaudited) and the Year Ended December 31,
     1998............................................................................       F-38
    Notes to Combined Historical Summary of Gross Income and Direct Operating
     Expenses........................................................................       F-39

  The Athenaeum Portfolio
</TABLE>


                                      F-1
<PAGE>
            INDEX TO FINANCIAL STATEMENTS AND SCHEDULES (CONTINUED)


<TABLE>
<S>                                                                                    <C>
    Report of Independent Auditors...................................................       F-40
    Combined Historical Summary of Gross Income and Direct Operating Expenses for the
     period January 1, 1998 to April 30, 1998 (Unaudited) and the Year Ended December
     31, 1997........................................................................       F-41
    Notes to Combined Historical Summary of Gross Income and Direct Operating
     Expenses........................................................................       F-42

  Technology Square and The Draper Building
    Report of Independent Auditors...................................................       F-43
    Historical Summary of Gross Income and Direct Operating Expenses for the period
     January 1, 1998 to June 23, 1998 (Unaudited) and the Year Ended December 31,
     1997............................................................................       F-44
    Notes to Historical Summary of Gross Income and Direct Operating Expenses........       F-45

  The Bruenig Portfolio (referred to elsewhere herein as the Dallas Office and
    Industrial Portfolio)
    Report of Independent Auditors...................................................       F-46
    Combined Historical Summary of Gross Income and Direct Operating Expenses for the
     Six Months Ended June 30, 1998 (Unaudited) and the Year Ended December 31,
     1997............................................................................       F-47
    Notes to Combined Historical Summary of Gross Income and Direct Operating
     Expenses........................................................................       F-48

Financial Statement Schedules
  Beacon Capital Partners, Inc.
    Schedule III--Real Estate and Accumulated Depreciation as of December 31, 1998...        S-1
  Beacon/PW Kendall LLC
    Schedule III--Real Estate and Accumulated Depreciation as of December 31, 1998...        S-2
</TABLE>


    Other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements, including the notes thereto.

                                      F-2
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.


             PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

                                  (UNAUDITED)


    The accompanying unaudited pro forma condensed consolidated balance sheet as
of March 31, 1999 has been prepared to reflect the pending property acquisition
and additional fundings of joint venture investments subsequent to March 31,
1999, as if such transactions had occurred on March 31, 1999. The accompanying
unaudited pro forma condensed consolidated statements of operations have been
prepared to reflect the acquisition and pending acquisition of properties and
the funding and pending funding of joint venture investments as if such
transactions had occurred at the beginning of the periods presented.



    The pro forma information is unaudited and is not necessarily indicative of
the consolidated results that would have occurred if the transactions and
adjustments reflected therein had been consummated in the period or on the date
presented, or on any particular date in the future, nor does it purport to
represent the financial position, results of operations or changes in cash flows
for future periods. The pro forma information should be read in conjunction with
all of the financial statements and notes thereto and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.


                                      F-3
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.



                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET



                                 MARCH 31, 1999



                                  (UNAUDITED)



                             (DOLLARS IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                       HISTORICAL       PRO FORMA     CONSOLIDATED
                                                                           (A)       ADJUSTMENTS (B)   PRO FORMA
                                                                      -------------  ---------------  ------------
<S>                                                                   <C>            <C>              <C>
ASSETS:
Total real estate, net..............................................   $   214,710     $    24,300     $  239,010
Deferred financing and leasing costs, net...........................           580              --            580
Cash and cash equivalents...........................................       161,338         (40,900)       120,438
Accounts receivable.................................................         1,944              --          1,944
Other assets........................................................         2,867              --          2,867
Investments in joint ventures and corporations......................        92,409          16,600        109,009
                                                                      -------------  ---------------  ------------
      Total assets..................................................   $   473,848     $        --     $  473,848
                                                                      -------------  ---------------  ------------
                                                                      -------------  ---------------  ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Mortgage notes payable............................................   $    21,476     $        --     $   21,476
  Accounts payable and accrued expenses.............................         5,798              --          5,798
                                                                      -------------  ---------------  ------------
      Total liabilities.............................................        27,274              --         27,274

Minority interest in consolidated partnership (C)...................        55,317              --         55,317
Stockholders' equity................................................       391,257              --        391,257
                                                                      -------------  ---------------  ------------
      Total liabilities and stockholders' equity....................   $   473,848     $        --     $  473,848
                                                                      -------------  ---------------  ------------
                                                                      -------------  ---------------  ------------
</TABLE>



SEE ACCOMPANYING NOTES.


                                      F-4
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.



            NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET



                                 MARCH 31, 1999



                                  (UNAUDITED)



                             (DOLLARS IN THOUSANDS)



(A) Reflects the historical consolidated balance sheet of Beacon Capital
    Partners, Inc. as of March 31, 1999. Beacon Capital Partners, Inc. and its
    majority-owned subsidiary, Beacon Capital Partners, L.P., are collectively
    referred to as the "Company".



(B) Reflects (1) the pending additional funding of an investment in a joint
    venture known as Mathilda Research Centre, (2) the pending additional
    funding of an investment in a joint venture known as Millennium Tower, and
    (3) the pending acquisition of Fort Point Place all subsequent to March 31,
    1999. The Company funded or will fund these investments and acquisition with
    existing cash. The following is a summary of the pro forma as if they
    occurred on March 31, 1999:



<TABLE>
<CAPTION>
                                                               MATHILDA
                                                               RESEARCH    MILLENNIUM   FORT POINT
                                                                CENTRE        TOWER        PLACE       TOTAL
                                                              -----------  -----------  -----------  ----------
<S>                                                           <C>          <C>          <C>          <C>
ASSETS
Total real estate, net......................................   $      --    $      --   $    24,300  $   24,300
Cash and cash equivalents...................................      (2,400)     (14,200)      (24,300)    (40,900)
Investments in joint ventures and corporations..............       2,400       14,200            --      16,600
                                                              -----------  -----------  -----------  ----------
    Total assets............................................   $      --    $      --   $        --  $       --
                                                              -----------  -----------  -----------  ----------
                                                              -----------  -----------  -----------  ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities.................................................   $      --    $      --   $        --  $       --
Minority interest in consolidated partnership...............          --           --            --          --
Stockholders' equity........................................          --           --            --          --
                                                              -----------  -----------  -----------  ----------
    Total liabilities and stockholders' equity..............   $      --    $      --   $        --  $       --
                                                              -----------  -----------  -----------  ----------
                                                              -----------  -----------  -----------  ----------
</TABLE>



(C) Minority interest in consolidated partnership represents an 11.6% minority
    interest in the Operating Partnership.


                                      F-5
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.


           PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                   FOR THE THREE MONTHS ENDED MARCH 31, 1999

                                  (UNAUDITED)

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                          PRO FORMA ADJUSTMENTS
                                                                    ----------------------------------
                                                      HISTORICAL       PROPERTY            OTHER        CONSOLIDATED
                                                          (A)       ACQUISITION (B)   ADJUSTMENTS (C)    PRO FORMA
                                                     -------------  ---------------  -----------------  ------------
<S>                                                  <C>            <C>              <C>                <C>
Revenues:
  Rental income....................................    $   5,162       $     762         $      --       $    5,924
  Reimbursement of operating expenses and real
    estate taxes...................................          802              --                --              802
  Equity in earnings of joint venture..............        1,254              --                --            1,254
  Interest income..................................        1,986              --              (511)           1,475
  Other income.....................................          241              22                --              263
                                                     -------------         -----             -----      ------------
      Total revenues...............................        9,445             784              (511)           9,718
                                                     -------------         -----             -----      ------------

Expenses:
  Property operating...............................        1,359             108                --            1,467
  Real estate taxes................................        1,063              76                --            1,139
  General and administrative.......................        2,582              --                --            2,582
  Interest expense.................................          442              --                --              442
  Depreciation and amortization....................        1,124             129                --            1,253
                                                     -------------         -----             -----      ------------
      Total expenses...............................        6,570             313                --            6,883
                                                     -------------         -----             -----      ------------

Income before minority interest....................        2,875             471              (511)           2,835
Minority interest in consolidated partnership
  (D)..............................................         (334)            (55)               60             (329)
                                                     -------------         -----             -----      ------------
Net income.........................................    $   2,541       $     416         $    (451)      $    2,506
                                                     -------------         -----             -----      ------------
                                                     -------------         -----             -----      ------------
Net income per share-basic and diluted.............    $    0.12                                         $     0.12
                                                     -------------                                      ------------
                                                     -------------                                      ------------
Weighted average number of common shares
  outstanding (in thousands).......................       20,974                                             20,974
                                                     -------------                                      ------------
                                                     -------------                                      ------------
</TABLE>


SEE ACCOMPANYING NOTES.

                                      F-6
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.



           PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



                      FOR THE YEAR ENDED DECEMBER 31, 1998



                                  (UNAUDITED)



              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                        PRO FORMA ADJUSTMENTS
                                                                       PROPERTY         OTHER       CONSOLIDATED
                                                      HISTORICAL(A) ACQUISITIONS(B) ADJUSTMENTS(C)   PRO FORMA
                                                      ------------  --------------  --------------  ------------
<S>                                                   <C>           <C>             <C>             <C>
Revenues:
  Rental income.....................................   $   10,643     $   12,736      $       --     $   23,379
  Reimbursement of operating expenses and real
    estate taxes....................................        1,721          1,320              --          3,041
  Equity in earnings of joint venture...............        3,203          1,414              --          4,617
  Interest income...................................       10,736             --          (6,170)         4,566
  Other income......................................          233            233              --            466
                                                      ------------       -------         -------    ------------
      Total revenues................................       26,536         15,703          (6,170)        36,069
                                                      ------------       -------         -------    ------------
Expenses:
  Property operating................................        3,366          3,895              --          7,261
  Real estate taxes.................................        1,863          2,070              --          3,933
  General and administrative........................        8,419             --              --          8,419
  Interest expense..................................          906            979              --          1,885
  Depreciation and amortization.....................        2,210          2,537              --          4,747
                                                      ------------       -------         -------    ------------
      Total expenses................................       16,764          9,481              --         26,245
                                                      ------------       -------         -------    ------------
Income before minority interest.....................        9,772          6,222          (6,170)         9,824
Minority interest in consolidated
  partnership (D)...................................         (718)          (722)            300         (1,140)
                                                      ------------       -------         -------    ------------
Net income..........................................   $    9,054     $    5,500      $   (5,870)    $    8,684
                                                      ------------       -------         -------    ------------
                                                      ------------       -------         -------    ------------
Net income per share-basic and diluted..............   $     0.44                                    $     0.41
                                                      ------------                                  ------------
                                                      ------------                                  ------------
Weighted average number of common shares outstanding
  (in thousands)....................................       20,766                                        20,974
                                                      ------------                                  ------------
                                                      ------------                                  ------------
</TABLE>



    SEE ACCOMPANYING NOTES.


                                      F-7
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.



       NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



                   FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                      AND



                      FOR THE YEAR ENDED DECEMBER 31, 1998



                                  (UNAUDITED)
              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)



(A) Reflects the historical condensed consolidated statement of operations of
    the Company for the three months ended March 31, 1999 and the period January
    21, 1998 (inception) through December 31, 1998. The Company was not in
    existence prior to January 21, 1998. See the historical consolidated
    financial statements and notes thereto of the Company included elsewhere in
    this prospectus.



(B) Reflects the acquisitions of The Athenaeum Portfolio, Technology Square and
    The Draper Building, and Dallas Office and Industrial Portfolio and the
    pending acquisition of Fort Point Place based on the historical operations
    of such properties for periods prior to acquisition by the Company. The
    Athenaeum Portfolio acquisition reflects the formation by the Company of a
    50% joint venture with PW Acquisitions IX, LLC, an affiliate of PaineWebber,
    subsequent to the closing of the acquisition of The Athenaeum Portfolio as
    if the formation of the joint venture had occurred on January 1, 1998. The
    joint venture is being accounted for using the equity method of accounting
    and, accordingly, 50% of the historical operations of The Athenaeum
    Portfolio, adjusted for depreciation using an asset life of 40 years, and an
    allocation between land and buildings of $35,773 and $159,756, respectively,
    has been reflected in equity in earnings of joint venture. The other
    acquired properties and pending acquisition are owned or planned to be owned
    by the Company. The Technology Square and The Draper Building acquisition
    also reflects estimated depreciation based upon an asset life of 40 years,
    and an allocation between land and buildings of $36,162 and $87,150,
    respectively. Dallas Office and Industrial Portfolio acquisition also
    reflects estimated depreciation based upon an asset life of 40 years, and an
    allocation between land and buildings of $14,932 and $77,250, respectively.
    The Fort Point Place pending acquisition also reflects estimated
    depreciation based upon an asset life of 40 years, and an allocation between
    land and buildings of $3,645 and $20,665, respectively. See the Combined
    Historical Summary of Gross Income and Direct Operating Expenses and notes
    thereto for each of the properties included elsewhere in this prospectus.



(C) Reflects interest income reduction attributed to cash used to fund the
    acquisitions and investments in The Athenaeum Portfolio, Technology Square
    and The Draper Building, Dallas Office and Industrial Portfolio, Mathilda
    Research Centre, Millennium Tower and Fort Point Place and the interest
    earned from the loan receivable from the joint venture which holds The
    Athenaeum Portfolio properties.



(D) Minority interest in consolidated partnership represents an 11.6% minority
    interest in the Operating Partnership.


                                      F-8
<PAGE>

                         BEACON CAPITAL PARTNERS, INC.


                          CONSOLIDATED BALANCE SHEETS

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                         MARCH 31,   DECEMBER 31,
                                                                                           1999          1998
                                                                                        -----------  ------------
                                                                                        (UNAUDITED)    (NOTE 1)
<S>                                                                                     <C>          <C>
ASSETS
Real Estate:
  Land................................................................................   $  51,094    $   51,094
  Buildings, improvements and equipment...............................................     166,872       165,842
                                                                                        -----------  ------------
                                                                                           217,966       216,936
  Less accumulated depreciation.......................................................       3,256         2,168
                                                                                        -----------  ------------
                                                                                           214,710       214,768

Deferred financing and leasing costs, net of accumulated amortization of $78 and $42,
  respectively........................................................................         580           414
Cash and cash equivalents.............................................................     161,010       174,647
Restricted cash.......................................................................         328           697
Accounts receivable, net..............................................................       1,629         2,464
Accrued rent receivable...............................................................         315           233
Other assets..........................................................................       2,867           641
Investments in joint ventures and corporations........................................      92,409        90,136
                                                                                        -----------  ------------
    Total assets......................................................................   $ 473,848    $  484,000
                                                                                        -----------  ------------
                                                                                        -----------  ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Mortgage notes payable..............................................................   $  21,476    $   21,570
  Accounts payable and accrued expenses...............................................       5,798        18,731
                                                                                        -----------  ------------
    Total liabilities.................................................................      27,274        40,301
                                                                                        -----------  ------------

Commitments and contingencies.........................................................          --            --

Minority interest in consolidated partnership.........................................      55,317        54,983
                                                                                        -----------  ------------
Stockholders' equity:
  Preferred stock; $.01 par value, 200,000,000 shares authorized, none issued or
    outstanding.......................................................................          --            --
  Excess stock; $.01 par value, 250,000,000 shares authorized, none issued or
    outstanding.......................................................................          --            --
  Common stock; $.01 par value, 500,000,000 shares authorized, 20,973,932 shares
    issued and outstanding............................................................         210           210
  Additional paid-in capital..........................................................     389,520       389,520
  Cumulative net income...............................................................      11,595         9,054
  Cumulative dividends................................................................     (10,068)      (10,068)
                                                                                        -----------  ------------
    Total stockholders' equity........................................................     391,257       388,716
                                                                                        -----------  ------------
    Total liabilities and stockholders' equity........................................   $ 473,848    $  484,000
                                                                                        -----------  ------------
                                                                                        -----------  ------------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-9
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED   FOR THE PERIOD
                                                                               MARCH 31, 1999          FROM
                                                                             -------------------    JANUARY 21,
                                                                                                       1998
                                                                                 (UNAUDITED)      (INCEPTION) TO
                                                                                                  MARCH 31, 1998
                                                                                                  ---------------
                                                                                                     (NOTE 1)
<S>                                                                          <C>                  <C>
Revenues:
  Rental income............................................................       $   5,162          $      --
  Reimbursement of operating expenses and real estate taxes................             802                 --
  Equity in earnings of joint venture......................................           1,254                 --
  Interest income..........................................................           1,986                576
  Other income.............................................................             241                  8
                                                                                    -------            -------
    Total revenues.........................................................           9,445                584
                                                                                    -------            -------
Expenses:
  Property operating.......................................................           1,359                 --
  Real estate taxes........................................................           1,063                 --
  General and administrative...............................................           2,582                968
  Interest expense.........................................................             442                 --
  Depreciation and amortization............................................           1,124                  3
                                                                                    -------            -------
    Total expenses.........................................................           6,570                971
                                                                                    -------            -------
Income (loss) before minority interest.....................................           2,875               (387)
Minority interest in consolidated partnership..............................            (334)                --
                                                                                    -------            -------
    Net income (loss)......................................................       $   2,541          $    (387)
                                                                                    -------            -------
                                                                                    -------            -------
Income (loss) per common share--basic and diluted..........................       $    0.12          $   (0.02)
                                                                                    -------            -------
                                                                                    -------            -------
Weighted average number of common shares outstanding (in thousands)........          20,974             17,361
                                                                                    -------            -------
                                                                                    -------            -------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-10
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED   FOR THE PERIOD
                                                                               MARCH 31, 1999          FROM
                                                                             -------------------    JANUARY 21,
                                                                                                       1998
                                                                                 (UNAUDITED)      (INCEPTION) TO
                                                                                                  MARCH 31, 1998
                                                                                                  ---------------
                                                                                                     (NOTE 1)
<S>                                                                          <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)........................................................      $     2,541        $      (387)
  Adjustments to reconcile net income (loss) to net cash provided by
    operating activities:
    Depreciation...........................................................            1,088                  3
    Amortization...........................................................               36                 --
    Equity in earnings of joint venture....................................           (1,254)                --
    Minority interest in consolidated partnership..........................              334                 --
  Increase (decrease) in cash arising from changes in operating assets and
    liabilities:
    Restricted cash........................................................              369                 --
    Accounts receivable....................................................              835                 --
    Accrued rent receivable................................................              (82)                --
    Other assets...........................................................           (1,128)              (617)
    Accounts payable and accrued expenses..................................           (1,544)             1,387
                                                                                    --------      ---------------
      Net cash provided by operating activities............................            1,195                386
                                                                                    --------      ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Real estate asset acquisitions and improvements..........................           (1,030)               (44)
  Payment of deferred leasing costs........................................             (202)                --
  Acquisition deposits and deferred costs..................................           (1,098)            (3,119)
  Investments in joint ventures and corporations...........................           (1,019)                --
                                                                                    --------      ---------------
      Net cash used in investing activities................................           (3,349)            (3,163)
                                                                                    --------      ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments on mortgage notes.............................................              (94)                --
  Proceeds from loans payable--affiliate...................................               --              3,560
  Sale of common stock.....................................................               --            345,800
  Offering costs...........................................................               --            (22,690)
  Distribution payment to minority interests...............................           (1,321)                --
  Dividend payment to stockholders.........................................          (10,068)                --
                                                                                    --------      ---------------
      Net cash (used in) provided by financing activities..................          (11,483)           326,670
                                                                                    --------      ---------------
  Net (decrease) increase in cash and cash equivalents.....................          (13,637)           323,893
  Cash and cash equivalents, beginning of period...........................          174,647                 --
                                                                                    --------      ---------------
  Cash and cash equivalents, end of period.................................      $   161,010        $   323,893
                                                                                    --------      ---------------
                                                                                    --------      ---------------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-11
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999

                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

1. BASIS OF PRESENTATION


    The financial statements of Beacon Capital Partners, Inc. ("BCP") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form S-11 and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the full year.



    The balance sheet at December 31, 1998 and the statements of operations and
cash flows for the period from January 21, 1998 (inception) to March 31, 1998
have been derived from the audited financial statements at that date or for that
period but do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.


    For further information, refer to the consolidated financial statements and
footnotes thereto included in BCP's annual report on Form 10-K for the period
ended December 31, 1998.

2. ORGANIZATION

    Beacon Capital Partners, Inc. was incorporated on January 21, 1998 as a
Massachusetts corporation (the "Formation"), and was initially capitalized
through loans from the two founders of BCP, Messrs. Leventhal and Fortin. The
loans were repaid in May 1998. BCP intends to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended. BCP was
established to conduct real estate investment and development activities and
currently operates in one segment.

    On March 17, 1998, BCP was reincorporated as a Maryland corporation and on
March 20, 1998 it completed an initial private offering (the "Original
Offering") in accordance with Section 4(2) of the Securities Act. BCP initially
issued 17,360,769 common shares with proceeds, net of expenses, of $323,110. In
April, 1998, 3,613,163 additional shares were issued through the exercise of the
underwriter's over-allotment, with proceeds, net of expenses, of $66,620.

    In connection with the reincorporation of BCP in Maryland, BCP established
Beacon Capital Partners, L.P. (the "Operating Partnership"). BCP and the
Operating Partnership are collectively referred to as the "Company". The
Operating Partnership is a Delaware limited partnership. BCP is the sole general
partner of, and, as of March 31, 1999, holds approximately 88% of the economic
interest in the Operating Partnership. BCP holds an approximate 1% general
partnership interest in the Operating Partnership and the balance is held as a
limited partnership interest. The limited partnership interests not held by BCP
are presented as minority interest in the accompanying consolidated financial
statements. The term of the Operating Partnership commenced on March 16, 1998
and shall continue until January 1, 2056 or until such time as a Liquidating
Event, as defined, has occurred.

3. INVESTMENTS IN JOINT VENTURES AND CORPORATIONS

    The investments in joint ventures and corporations represents the Company's
interest in (i) a joint venture known as "Beacon/PW Kendall LLC", (ii) a joint
venture with Mathilda Partners LLC ("Mathilda

                                      F-12
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 1999 (CONTINUED)

                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

3. INVESTMENTS IN JOINT VENTURES AND CORPORATIONS (CONTINUED)
Research Centre"), (iii) a joint venture with HA L.L.C. ("Millennium Tower"),
and (iv) an investment in preferred stock of Cypress Communications, Inc.
("Cypress").

    A reconciliation of the underlying net assets to the Company's carrying
value of investments in joint ventures and corporations is as follows:

<TABLE>
<CAPTION>
                                           MATHILDA                     CYPRESS
                               BEACON/PW   RESEARCH   MILLENNIUM    COMMUNICATIONS,
                              KENDALL LLC   CENTRE       TOWER           INC.           TOTAL
                              -----------  ---------  -----------  -----------------  ---------
<S>                           <C>          <C>        <C>          <C>                <C>
BCP, L.P. equity interest
  (including accumulated
  earnings, net of
  distributions)............   $  65,045   $  17,383   $   4,667                      $  87,095
Investments in preferred
  stock.....................                                           $   5,000          5,000
Other costs.................          41          61         153              59            314
                              -----------  ---------  -----------         ------      ---------
Carrying value of
  investments in joint
  ventures and
  corporations..............   $  65,086   $  17,444   $   4,820       $   5,059      $  92,409
                              -----------  ---------  -----------         ------      ---------
                              -----------  ---------  -----------         ------      ---------
</TABLE>

THE ATHENAEUM PORTFOLIO

    Beacon/PW Kendall LLC was formed on April 16, 1998 and is jointly owned by
the Company and PW Acquisitions IX, LLC, an affiliate of PaineWebber. Initially
each member made a $5,000 contribution and the Company provided a loan to the
joint venture of approximately $117,000. The joint venture acquired The
Athenaeum Portfolio, an eleven building, 970,000 square foot mixed-use portfolio
located in Cambridge, Massachusetts. In August 1998, the Company and PW
Acquisitions IX, LLC each made equity contributions of approximately $58,500,
which were used to repay the Company's loan receivable.

MATHILDA RESEARCH CENTRE

    On August 9, 1998, the Company entered into a joint venture with Mathilda
Partners LLC, an affiliate of Menlo Equities, a California based developer, to
develop two four-story Class A office/R&D buildings with surface parking, known
as Mathilda Research Centre. The Company and Mathilda Partners LLC have agreed
to fund 87.5% and 12.5% of the equity required, respectively. On November 4,
1998, the venture acquired a twelve-acre site on Mathilda Avenue in Sunnyvale,
California, on which the venture plans to construct Mathilda Research Centre.
The estimated cost of the 267,000 square foot development is approximately
$57,000. In addition to funding approximately 35% of the development costs
(including the acquisition of the land) from cash contributions, the venture
intends to finance the balance with a construction loan from an institutional
lender.

                                      F-13
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 1999 (CONTINUED)

                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

3. INVESTMENTS IN JOINT VENTURES AND CORPORATIONS (CONTINUED)
MILLENNIUM TOWER


    On September 1, 1998, the Company entered into a joint venture agreement
with HA L.L.C., an affiliate of Martin Smith Real Estate Services, to develop a
high-rise building in downtown Seattle, Washington, known as Millennium Tower.
The Company and HA L.L.C. have agreed to fund 66 2/3% and 33 1/3% of the equity
required, respectively. Land has been contributed to the joint venture by HA
L.L.C. at an agreed value of $10,500, and the Company has agreed to fund the
first $19,000 of cash requirements for the venture. The venture will finance the
balance of development costs with a $45,000 construction loan from an
institutional lender. The loan closed on June 9, 1999. The estimated cost of the
project is $71,000, including the value of the land.


CYPRESS COMMUNICATIONS, INC.

    On September 30, 1998, the Company invested $5,000 to acquire preferred
stock in Cypress Communications, Inc., representing a 13.5% fully diluted
ownership position in such company. Dividends will be earned on the Company's
investment as and when dividends are declared on the preferred stock or any
other class of stock in Cypress Communications, Inc. The preferred stock will be
treated preferentially upon a liquidation of Cypress, should a liquidation
occur, and is held by both the Operating Partnership and Tenant Communications,
Inc., a Massachusetts corporation ("Tenant Communications"). The voting common
stock of Tenant Communications is controlled by Messrs. Leventhal and Fortin.
The Operating Partnership owns 99% of the economic interests in Tenant
Communications.

4. MORTGAGE NOTES PAYABLE

    The mortgage notes payable, collateralized by certain properties and
assignment of leases total $21,476. The mortgage notes payable have fixed
interest rates ranging from 7.75% to 9.25% and maturities ranging from December
1999 to October 2022. The net book value of the mortgaged assets is $60,752 at
March 31, 1999. Cash paid for interest approximates $443 for the three months
ended March 31, 1999.

    Future minimum principal payments due during the next five years and
thereafter are as follows:

<TABLE>
<S>                                                  <C>
1999...............................................  $   1,809
2000...............................................        392
2001...............................................        426
2002...............................................      1,839
2003...............................................        440
Thereafter.........................................     16,570
                                                     ---------
Total..............................................  $  21,476
                                                     ---------
                                                     ---------
</TABLE>

                                      F-14
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
  Beacon Capital Partners, Inc.

    We have audited the accompanying consolidated balance sheet of Beacon
Capital Partners, Inc. as of December 31, 1998, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the period
from January 21, 1998 (inception) to December 31, 1998. Our audit also included
the financial statement schedule listed in the Index on page F-1. 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 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 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 audit provides 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 Beacon Capital
Partners, Inc. at December 31, 1998, and the consolidated results of its
operations and its cash flows for the period from January 21, 1998 (inception)
to December 31, 1998, 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

Boston, Massachusetts
January 21, 1999

                                      F-15
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<S>                                                                                 <C>
ASSETS
Real Estate:
  Land............................................................................  $  51,094
  Buildings, improvements and equipment...........................................    165,842
                                                                                    ---------
                                                                                      216,936
  Less accumulated depreciation...................................................      2,168
                                                                                    ---------
                                                                                      214,768

Deferred financing and leasing costs, net of accumulated amortization of $42......        414
Cash and cash equivalents.........................................................    174,647
Restricted cash...................................................................        697
Accounts receivable, net..........................................................      2,697
Other assets......................................................................        641
Investments in and advance to joint ventures and corporations.....................     90,136
                                                                                    ---------
    Total assets..................................................................  $ 484,000
                                                                                    ---------
                                                                                    ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Mortgage notes payable..........................................................  $  21,570
  Accounts payable and accrued expenses...........................................     18,731
                                                                                    ---------
    Total liabilities.............................................................     40,301
                                                                                    ---------

Commitments and contingencies.....................................................         --

Minority interest in consolidated partnership.....................................     54,983
                                                                                    ---------

Stockholders' Equity:
  Preferred stock; $.01 par value, 200,000,000 shares authorized, none issued or
    outstanding...................................................................         --
  Excess stock; $.01 par value, 250,000,000 shares authorized, none issued or
    outstanding...................................................................         --
  Common stock; $.01 par value, 500,000,000 shares authorized, 20,973,932 shares
    issued and outstanding........................................................        210
  Additional paid-in capital......................................................    389,520
  Cumulative net income...........................................................      9,054
  Dividends.......................................................................    (10,068)
                                                                                    ---------
    Total stockholders' equity....................................................    388,716
                                                                                    ---------
    Total liabilities and stockholders' equity....................................  $ 484,000
                                                                                    ---------
                                                                                    ---------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-16
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS
     FOR THE PERIOD FROM JANUARY 21, 1998 (INCEPTION) TO DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<S>                                                                                  <C>
Revenues:
  Rental income....................................................................  $  10,643
  Reimbursement of operating expenses and real estate taxes........................      1,721
  Equity in earnings of joint venture..............................................      3,203
  Interest income, including affiliated interest of $1,462.........................     10,736
  Other income.....................................................................        233
                                                                                     ---------
      Total revenues...............................................................     26,536
                                                                                     ---------
Expenses:
  Property operating...............................................................      3,366
  Real estate taxes................................................................      1,863
  General and administrative.......................................................      8,419
  Interest expense.................................................................        906
  Depreciation and amortization....................................................      2,210
                                                                                     ---------
      Total expenses...............................................................     16,764
                                                                                     ---------
Income before minority interest....................................................      9,772
Minority interest in consolidated partnership......................................       (718)
                                                                                     ---------
        Net income.................................................................  $   9,054
                                                                                     ---------
                                                                                     ---------
Income per common share--basic and diluted.........................................  $    0.44
                                                                                     ---------
                                                                                     ---------
Weighted average number of common shares outstanding (in thousands)................     20,766
                                                                                     ---------
                                                                                     ---------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-17
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
     FOR THE PERIOD FROM JANUARY 21, 1998 (INCEPTION) TO DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                              ADDITIONAL
                                                    NUMBER OF      COMMON      PAID-IN    CUMULATIVE
                                                      SHARES        STOCK      CAPITAL    NET INCOME   DIVIDENDS     TOTAL
                                                   ------------  -----------  ----------  -----------  ----------  ----------
<S>                                                <C>           <C>          <C>         <C>          <C>         <C>
Issuance of common stock, net....................    20,973,932   $     210   $  389,520   $  --       $   --      $  389,730
Net income.......................................       --           --           --           9,054       --           9,054
Dividends declared ($.48/share)..................       --           --           --          --          (10,068)    (10,068)
                                                   ------------       -----   ----------  -----------  ----------  ----------
Balance at December 31, 1998.....................    20,973,932   $     210   $  389,520   $   9,054   $  (10,068) $  388,716
                                                   ------------       -----   ----------  -----------  ----------  ----------
                                                   ------------       -----   ----------  -----------  ----------  ----------
</TABLE>


SEE ACCOMPANYING NOTES.

                                      F-18
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
     FOR THE PERIOD FROM JANUARY 21, 1998 (INCEPTION) TO DECEMBER 31, 1998

                             (DOLLARS IN THOUSANDS)

<TABLE>
<S>                                                                                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income......................................................................  $   9,054
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation..................................................................      2,168
    Amortization..................................................................         42
    Equity in earnings of joint venture...........................................     (3,203)
    Distribution from joint venture...............................................        900
    Minority interest in consolidated partnership.................................        718
  Increase (decrease) in cash arising from changes in operating assets and
    liabilities:
    Restricted cash...............................................................       (697)
    Accounts receivable...........................................................     (2,697)
    Other assets..................................................................       (641)
    Accounts payable and accrued expenses.........................................      7,341
                                                                                    ---------
      Net cash provided by operating activities...................................     12,985
                                                                                    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Real estate asset acquisitions and improvements.................................   (143,855)
  Payment of deferred leasing costs...............................................       (353)
  Investments in and advance to joint ventures and corporations...................    (87,833)
                                                                                    ---------
      Net cash used in investing activities.......................................   (232,041)
                                                                                    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments on mortgage notes....................................................       (152)
  Payment of deferred financing costs.............................................       (103)
  Proceeds from loans payable--affiliate..........................................      3,560
  Payment of loans payable--affiliate.............................................     (3,560)
  Sale of Operating Partnership units.............................................      4,228
  Sale of common stock............................................................    417,871
  Offering costs..................................................................    (28,141)
                                                                                    ---------
      Net cash provided by financing activities...................................    393,703
                                                                                    ---------
  Net increase in cash and cash equivalents and balance at end of period..........  $ 174,647
                                                                                    ---------
                                                                                    ---------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of Operating Partnership units to acquire property.......................  $  51,359
Assumption of mortgage debt to acquire property...................................     21,722
                                                                                    ---------
                                                                                    $  73,081
                                                                                    ---------
                                                                                    ---------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-19
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

1. ORGANIZATION

    Beacon Capital Partners, Inc. ("BCP") was incorporated on January 21, 1998
as a Massachusetts corporation (the "Formation"), and was initially capitalized
through loans from the two founders of BCP, Messrs. Leventhal and Fortin. The
loans were repaid in May 1998. BCP intends to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended. BCP was
established to conduct real estate investment and development activities and
currently operates in one segment.

    On March 17, 1998, BCP was reincorporated as a Maryland corporation and on
March 20, 1998 it completed an initial private offering (the "Original
Offering") in accordance with Section 4(2) of the Securities Act. BCP initially
issued 17,360,769 common shares with proceeds, net of expenses, of $323,110. In
April, 1998, 3,613,163 additional shares were issued through the exercise of the
underwriter's over-allotment, with proceeds, net of expenses, of $66,620.

    In connection with the reincorporation of BCP in Maryland, BCP established
Beacon Capital Partners, L.P. (the "Operating Partnership"). BCP and the
Operating Partnership are collectively referred to as the "Company". The
Operating Partnership is a Delaware limited partnership. BCP is the sole general
partner of, and, as of December 31, 1998, holds approximately 88% of the
economic interest in the Operating Partnership. BCP holds an approximate 1%
general partnership interest in the Operating Partnership and the balance is
held as a limited partnership interest. The limited partnership interests not
held by BCP are presented as minority interest in the accompanying consolidated
financial statements. The term of the Operating Partnership commenced on March
16, 1998 and shall continue until January 1, 2056 or until such time as a
Liquidating Event, as defined, has occurred.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

    The accompanying consolidated financial statements are prepared in
accordance with generally accepted accounting principles and include the
accounts of BCP and its majority-owned subsidiary, Beacon Capital Partners, L.P.
BCP consolidates all wholly-owned subsidiaries and those majority-owned
subsidiaries in which it exercises control. BCP uses the equity method of
accounting for its investments and earnings in joint ventures and corporations
in which BCP shares influence over, but does not control, operating and
financial policy. BCP uses the cost method of accounting to account for its
investments and earnings in entities in which BCP does not influence operating
and financial policy. Losses in excess of investments are not recorded where BCP
is under no legal obligation and has neither guaranteed nor intends to provide
any future financial support to the respective investment. All significant
intercompany transactions and balances have been eliminated in consolidation.

    Minority interest in consolidated partnership represents Operating
Partnership units not held by BCP. As of December 31, 1998, $51,359 in units had
been issued in connection with the purchase of the property known as Technology
Square and The Draper Building, and $4,228 in units had been issued to Messrs.
Leventhal's and Fortin's family trusts for cash.

USE OF ESTIMATES

    The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and

                                      F-20
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements. Actual results could differ from those estimates.

REAL ESTATE

    Buildings are recorded at cost and are depreciated on the straight-line
method over their estimated useful life of forty years. The cost of buildings
includes the purchase price of the property, legal fees, and other acquisition
and development costs. Acquisition and development costs generally consist of
third party costs and internal direct costs. Internal costs relating to the
acquisition of operating properties are expensed as incurred.

    BCP measures impairment in accordance with FASB Statement No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF, which requires impairment losses to be recorded on specific
long-lived assets used in operations where indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount.

    Furniture, fixtures and equipment are depreciated using the straight-line
method over their expected useful lives of three to ten years.

DEFERRED FINANCING AND LEASING COSTS

    Deferred financing costs are fees and costs incurred to obtain long-term
financing and are being amortized over the terms of the respective loans.
Deferred leasing costs are fees and costs incurred in the successful negotiation
of leases, including brokerage, legal and other costs, and are being amortized
on a straight-line basis over the terms of the respective leases.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents consist of short-term, highly liquid assets with
original maturities of three months or less from the date of purchase.

RESTRICTED CASH

    Restricted cash consists of cash held in escrow as required by lenders to
satisfy real estate taxes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

    BCP is required to disclose the fair values of financial instruments for
which it is practicable to estimate such fair value. The fair values of
financial instruments are estimates based upon market conditions and perceived
risks at December 31, 1998 and require varying degrees of management judgment.
The fair values of financial instruments presented may not be indicative of
amounts BCP could realize on the disposition of the financial instruments.

    Cash, cash equivalents and restricted cash are carried at an amount, which
due to their nature, approximates fair value.

                                      F-21
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    BCP computes the fair value of its mortgage notes payable based upon the
discounted cash flows at a discount rate that approximates BCP's effective
borrowing rate. BCP has determined that the fair value of its mortgage notes
approximates their carrying value.

REVENUE RECOGNITION

    Revenues are recognized when earned and the amounts can be reasonably
estimated on the accrual basis of accounting. Rental income from operating
leases is recognized on a straight-line basis over the life of the lease
agreements.

INCOME TAXES

    BCP intends to elect to be taxed as a real estate investment trust ("REIT")
under the Internal Revenue Code. BCP will make such election on its initial
Federal return for the taxable year ended December 31, 1998. As a result of such
election, BCP will generally not be subject to Federal income taxes to the
extent that it makes timely distributions to its shareholders at least equal to
its taxable income and meets certain other requirements for qualification as a
real estate investment trust.

    BCP has indicated that it may acquire and operate businesses that do not
satisfy the REIT qualification tests prescribed by the Internal Revenue Code.
Transactions that give rise to such assets and income are expected to be owned
through a C corporation known as a "paper clip", the shares of which entity
would be distributed to BCP's stockholders, or through a taxable corporate
subsidiary in which BCP would hold the majority of economic interest but less
than 10% of the voting power. Such C corporations, if formed, will be subject to
Federal, state and local taxation.

STOCK OPTIONS AND OTHER AWARDS

    BCP has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related Interpretations
in accounting for its employee stock options because the alternative fair value
accounting provided for under FASB Statement No. 123, "Accounting for Stock-
Based Compensation," requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of BCP's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

    Compensation attributable to the Company's Long-Term Incentive Plan will be
charged to expense over the period covered by the Long-Term Incentive Plan.

EARNINGS PER COMMON SHARE

    The computation of earnings per common share is based upon the weighted
average number of shares of common stock outstanding during the periods
subsequent to the Original Offering. As BCP has no dilutive securities, there is
no difference between basic and diluted earnings per share of common stock.

                                      F-22
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS

    The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"). FAS 133 is effective for years beginning after June 15,
1999. BCP does not believe that the adoption of FAS 133 will have a material
impact on BCP's financial position or results of operations.

3. INVESTMENTS IN AND ADVANCE TO JOINT VENTURES AND CORPORATIONS

    The investments in and advance to joint ventures and corporations represents
the Company's interest in (i) a joint venture known as "Beacon/PW Kendall LLC",
(ii) a joint venture with Mathilda Partners LLC ("Mathilda Research Centre"),
(iii) a joint venture with HA L.L.C. ("Millennium Tower"), and (iv) an
investment in preferred stock of Cypress Communications, Inc. ("Cypress").

    A reconciliation of the underlying net assets to the Company's carrying
value of property investments in and advance to joint ventures and corporations
is as follows:

<TABLE>
<CAPTION>
                                                   BEACON/PW   MATHILDA                     CYPRESS
                                                    KENDALL    RESEARCH   MILLENNIUM    COMMUNICATIONS,
                                                      LLC       CENTRE       TOWER           INC.           TOTAL
                                                  -----------  ---------  -----------  -----------------  ---------
<S>                                               <C>          <C>        <C>          <C>                <C>
BCP, L.P. equity interest (including accumulated
  earnings, net of distributions)...............   $  63,791   $  17,079   $   4,018                      $  84,888
Investments in preferred stock..................                                           $   5,000          5,000
Acquisition costs...............................          42          41         112              53            248
                                                  -----------  ---------  -----------         ------      ---------
Carrying value of investments in and advance to
  joint ventures and corporations...............   $  63,833   $  17,120   $   4,130       $   5,053      $  90,136
                                                  -----------  ---------  -----------         ------      ---------
                                                  -----------  ---------  -----------         ------      ---------
</TABLE>

THE ATHENAEUM PORTFOLIO

    Beacon/PW Kendall LLC was formed on April 16, 1998 and is jointly owned by
the Company and PW Acquisitions IX, LLC, an affiliate of PaineWebber. Initially
each member made a $5,000 contribution and the Company provided a loan to the
joint venture of approximately $117,000. The joint venture acquired The
Athenaeum Portfolio, an eleven building, 970,000 square foot mixed-use portfolio
located in Cambridge, Massachusetts. In August 1998, the Company and PW
Acquisitions IX, LLC each made equity

                                      F-23
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

3. INVESTMENTS IN AND ADVANCE TO JOINT VENTURES AND CORPORATIONS (CONTINUED)
contributions of approximately $58,500, which were used to repay the Company's
loan receivable. Summarized financial information for this joint venture
follows:

<TABLE>
<CAPTION>
                                                                                                 FOR THE PERIOD
                                                                                               ENDED DECEMBER 31,
                                                                                                      1998
                                                                                               -------------------
<S>                                                                                            <C>
Gross revenue................................................................................      $    19,130
Expenses.....................................................................................           13,983
                                                                                                       -------
Income before depreciation and amortization..................................................            5,147
Depreciation and amortization................................................................            2,675
                                                                                                       -------
Net income...................................................................................      $     2,472
                                                                                                       -------
                                                                                                       -------
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31, 1998
                                                                                                 -----------------
<S>                                                                                   <C>        <C>
Real estate and equipment, net......................................................                $   193,148
Cash and cash equivalents...........................................................                      4,916
Other assets........................................................................                      2,317
                                                                                                       --------
Total assets........................................................................                $   200,381
                                                                                                       --------
                                                                                                       --------
Mortgage note payable...............................................................                $    68,804
Accounts payable and accrued expenses...............................................                      3,885
Minority interest...................................................................                          6
Members' equity (including accumulated earnings of $2,472):
  Company's share of equity.........................................................  $  63,791
  Other member's share of equity....................................................     63,895
                                                                                      ---------
Total members' equity...............................................................                    127,686
                                                                                                       --------
Total liabilities and members' equity...............................................                $   200,381
                                                                                                       --------
                                                                                                       --------
</TABLE>

MATHILDA RESEARCH CENTRE

    On August 9, 1998, the Company entered into a joint venture agreement with
Mathilda Partners LLC, an affiliate of Menlo Equities, a California based
developer, to develop two four-story Class A office/R&D buildings with surface
parking, known as Mathilda Research Centre. The Company and Mathilda Partners
LLC have agreed to fund 87.5% and 12.5% of the equity required, respectively. On
November 4, 1998, the venture acquired a twelve-acre site on Mathilda Avenue in
Sunnyvale, California, on which the venture plans to construct Mathilda Research
Centre. The estimated cost of the 267,000 square foot development is
approximately $57,000. In addition to funding approximately 35% of the
development costs (including the acquisition of the land) from cash
contributions, the venture intends to finance the balance with a construction
loan from an institutional lender.

MILLENNIUM TOWER

    On September 1, 1998 the Company entered into a joint venture agreement with
HA L.L.C., an affiliate of Martin Smith Real Estate Services, to develop a
high-rise building in downtown Seattle, Washington, known as Millennium Tower.
The Company and HA L.L.C. have agreed to fund 66 2/3% and

                                      F-24
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

3. INVESTMENTS IN AND ADVANCE TO JOINT VENTURES AND CORPORATIONS (CONTINUED)
33 1/3% of the equity required, respectively. Land has been contributed to the
joint venture by HA L.L.C. at an agreed value of $10,500, and the Company has
agreed to fund the first $19,000 of cash requirements for the venture. The
venture intends to finance the balance of development costs from a construction
loan with an institutional lender. The estimated cost of the project is $71,000,
including the value of the land.

CYPRESS COMMUNICATIONS, INC.

    On September 30, 1998, the Company invested $5,000 to acquire preferred
stock in Cypress Communications, Inc., representing a 13.5% fully diluted
ownership position in such company. Dividends will be earned on the Company's
investment as and when dividends are declared on the preferred stock or any
other class of stock in Cypress Communications, Inc. The preferred stock will be
treated preferentially upon a liquidation of Cypress, should a liquidation
occur, and is held by both the Operating Partnership and Tenant Communications,
Inc., a Massachusetts corporation ("Tenant Communications"). The voting common
stock of Tenant Communications is controlled by Messrs. Leventhal and Fortin.
The Operating Partnership owns 99% of the economic interests in Tenant
Communications.

4. MORTGAGE NOTES PAYABLE

    The mortgage notes payable, collateralized by certain properties and
assignment of leases total $21,570. The mortgage notes payable have fixed
interest rates ranging from 7.75% to 9.25% and maturities ranging from December
1999 to October 2022. The net book value of the mortgaged assets is $60,953 at
December 31, 1998. Cash paid for interest approximates $742 for the period ended
December 31, 1998. Future minimum principal payments due during the next five
years and thereafter are as follows:

<TABLE>
<S>                                                                  <C>
1999...............................................................  $   1,903
2000...............................................................        392
2001...............................................................        426
2002...............................................................      1,839
2003...............................................................        440
Thereafter.........................................................     16,570
                                                                     ---------
Total..............................................................  $  21,570
                                                                     ---------
                                                                     ---------
</TABLE>

5. STOCK INCENTIVE PLAN

    The Company has adopted a Stock Incentive Plan, which authorizes the grant
of options to purchase shares of common stock and other stock-based awards to
the Company's executive officers, independent directors, employees and other key
persons. The Stock Incentive Plan is administered by the Compensation Committee
of the Board of Directors (the "Administrator").

    The maximum number of shares of common stock reserved and available for
issuance under the Stock Incentive Plan is such aggregate number of shares as
does not exceed the sum of (i) 12% of the outstanding equity interests in the
Company (including common stock and units subject to redemption rights) as
determined as of the final original offering closing date plus (ii) as of the
last business day of each calendar quarter ending after the final original
offering closing date, an additional positive number

                                      F-25
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

5. STOCK INCENTIVE PLAN (CONTINUED)
equal to 10% of any net increase of outstanding equity interests in the Company.
As of December 31, 1998 2,796,726 shares of common stock has been reserved.

    The Stock Incentive Plan permits the granting of (i) options to purchase
common stock intended to qualify as incentive stock options ("Incentive
Options") under Section 422 of the Internal Revenue Code and (ii) options that
do not so qualify ("Non-Qualified Options"). The option exercise price of each
option may not be less than 100% of the fair market value of the common stock on
the date of grant in the case of Incentive Options, and may not be less than 25%
of the fair market value of the common stock on the date of grant in the case of
Non-Qualified Options. The term of each option will be fixed and may not exceed
ten years from date of grant in the case of an Incentive Option. The
Administrator will determine at what time or times each option may be exercised
and, subject to the provisions of the Stock Incentive Plan, the period of time,
if any, after retirement, death, disability or termination of employment during
which options may be exercised. Options may be made exercisable in installments,
and the exercisability of options may be accelerated by the Administrator.

    Changes in options outstanding under the Stock Incentive Plan during the
period were as follows:

<TABLE>
<CAPTION>
                                                                                     NUMBER OF
                                                                                   SHARES UNDER
                                                                                      OPTION      PER SHARE OPTION
                                                                                   -------------  -----------------
<S>                                                                                <C>            <C>
Granted at Initial Private Offering..............................................       649,500       $   20.00
Granted March 20--December 31, 1998..............................................     1,730,250           19.96
Canceled March 20--December 31, 1998.............................................       --               --
                                                                                   -------------
Shares under option at December 31, 1998.........................................     2,379,750           19.97
                                                                                   -------------
                                                                                   -------------
Options available for grant at end of period.....................................       416,976
                                                                                   -------------
                                                                                   -------------
</TABLE>

    The Company has adopted SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 requires the recognition of, or disclosure of,
compensation expense for grants of stock options or other equity instruments
issued to employees based on the fair value at the date of grant. Although SFAS
No. 123 requires the presentation of pro forma information to reflect the fair
value method of accounting for employee stock option grants, such information
has not been presented because the pro forma effects are not material.

6. LONG-TERM INCENTIVE PLAN

    The Company has adopted a Long-Term Incentive Plan which is designed to
reward certain members of management for growth of the Company's Funds from
Operations, as defined by the National Association of Real Estate Investment
Trusts, in excess of a specified benchmark. If the Company's Funds from
Operations exceeds the specified benchmark, management will be entitled to
receive an incentive return which shall be calculated on December 31, 2001 (the
"Determination Date").

    The incentive return shall equal the product of (A) 12% of the dollar amount
by which (i) the Actual Return, as defined, exceeds (ii) the Base Return, as
defined, multiplied by (B) the weighted average of shares of common stock and
units outstanding for the 12 months immediately preceding the Determination Date
multiplied by (C) the Company's Multiple, as defined.

                                      F-26
<PAGE>
                         BEACON CAPITAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

              (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

6. LONG-TERM INCENTIVE PLAN (CONTINUED)
    The Long-Term Incentive Plan has taken the form of a convertible unit which
was issued on March 16, 1998 to an affiliated organization in connection with
the closing of the original offering. The convertible unit is convertible at the
Determination Date into a certain number of incentive units in the Operating
Partnership with a fair market value equal to the amount of the incentive
return. No amount has been earned with respect to the Long-Term Incentive Plan.

7. LEASES

    Minimum future rentals under operating leases in effect at December 31, 1998
are summarized as follows:

<TABLE>
<S>                                                                  <C>
1999...............................................................  $  16,826
2000...............................................................     12,627
2001...............................................................     10,082
2002...............................................................      5,842
2003...............................................................      2,733
Thereafter.........................................................      3,781
                                                                     ---------
Total..............................................................  $  51,891
                                                                     ---------
                                                                     ---------
</TABLE>

    Terms of leases range from one to fifteen years and in certain cases provide
for operating expense reimbursement, real estate tax escalations and increases
in minimum rents.

8. RENTAL EXPENSE

    The Company leases office space under operating leases which expire on June
30, 2000 and March 31, 2003. Rental expense under the leases was $523 for the
period ended December 31, 1998. Future minimum payments will be $2,960.

9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

    The following is a summary of unaudited quarterly results of operations of
the Company for the period from January 21, 1998 (Inception) to December 31,
1998.

<TABLE>
<CAPTION>
                                                                              FIRST       SECOND       THIRD      FOURTH
                                                                             QUARTER      QUARTER     QUARTER     QUARTER
                                                                           -----------  -----------  ---------  -----------
<S>                                                                        <C>          <C>          <C>        <C>
Revenues.................................................................   $     584    $   6,211   $  10,000   $   9,741
Income (loss) before minority interest...................................        (387)       4,422       2,903       2,834
Net income (loss)........................................................        (387)       4,355       2,581       2,505
Income (loss) per common share--basic and diluted........................        (.02)         .21         .12         .12
</TABLE>

                                      F-27
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

To the Members of Beacon/PW Kendall LLC

    We have audited the accompanying consolidated balance sheet of Beacon/PW
Kendall LLC as of December 31, 1998 and the related consolidated statements of
operations, members' equity and cash flows for the period from April 16, 1998
(inception) to December 31, 1998. Our audit also included the financial
statement schedule listed in the Index on page F-1. 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 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 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 audit provides 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 Beacon/PW
Kendall LLC at December 31, 1998, and the consolidated results of its operations
and its cash flows for the period from April 16, 1998 (inception) to December
31, 1998, 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

Boston, Massachusetts
January 8, 1999

                                      F-28
<PAGE>
                             BEACON/PW KENDALL LLC

                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 1998

                             (DOLLARS IN THOUSANDS)

<TABLE>
<S>                                                                                 <C>
ASSETS
Real Estate
  Land............................................................................  $  35,773
  Buildings, improvements and equipment...........................................    160,043
                                                                                    ---------
                                                                                      195,816
Less accumulated depreciation.....................................................      2,668
                                                                                    ---------
                                                                                      193,148

Deferred financing and leasing costs, net of accumulated amortization of $7.......        252
Cash and cash equivalents.........................................................        425
Restricted cash...................................................................      4,491
Accounts receivable, net..........................................................      1,949
Other assets......................................................................        116
                                                                                    ---------
      Total assets................................................................  $ 200,381
                                                                                    ---------
                                                                                    ---------

LIABILITIES AND MEMBERS' EQUITY
Liabilities:
  Mortgage note payable...........................................................  $  68,804
  Accounts payable and accrued expenses...........................................      3,885
                                                                                    ---------
      Total liabilities...........................................................     72,689
                                                                                    ---------
Commitments and contingencies.....................................................         --

Minority interest.................................................................          6
                                                                                    ---------
Members' Equity:
  Members' equity.................................................................    125,214
  Cumulative net income...........................................................      2,472
                                                                                    ---------
      Total members' equity.......................................................    127,686
                                                                                    ---------
      Total liabilities and members' equity.......................................  $ 200,381
                                                                                    ---------
                                                                                    ---------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-29
<PAGE>
                             BEACON/PW KENDALL LLC

                      CONSOLIDATED STATEMENT OF OPERATIONS
      FOR THE PERIOD FROM APRIL 16, 1998 (INCEPTION) TO DECEMBER 31, 1998

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
<S>                                                                                  <C>
Revenues:
  Rental income....................................................................  $  13,368
  Reimbursement of operating expenses and real estate taxes........................      4,997
  Interest and other income........................................................        765
                                                                                     ---------
      Total revenues...............................................................     19,130
                                                                                     ---------
Expenses:
  Property operating...............................................................      3,990
  Real estate taxes................................................................      2,559
  Interest expense, including affiliated interest of $3,481........................      7,434
  Depreciation and amortization....................................................      2,675
                                                                                     ---------
      Total expenses...............................................................     16,658
                                                                                     ---------
      Net income...................................................................  $   2,472
                                                                                     ---------
                                                                                     ---------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-30
<PAGE>
                             BEACON/PW KENDALL LLC

                   CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
      FOR THE PERIOD FROM APRIL 16, 1998 (INCEPTION) TO DECEMBER 31, 1998

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           BEACON           PW
                                                                          CAPITAL      ACQUISITIONS
                                                                         PARTNERS,          IX,
                                                                            L.P.            LLC          TOTAL
                                                                        ------------  ---------------  ----------
<S>                                                                     <C>           <C>              <C>
Contribution of members' equity.......................................   $   63,507     $    63,507    $  127,014
Net income............................................................        1,184           1,288         2,472
Distribution..........................................................         (900)           (900)       (1,800)
                                                                        ------------        -------    ----------
Balance at December 31, 1998..........................................   $   63,791     $    63,895    $  127,686
                                                                        ------------        -------    ----------
                                                                        ------------        -------    ----------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-31
<PAGE>
                             BEACON/PW KENDALL LLC

                      CONSOLIDATED STATEMENT OF CASH FLOWS
      FOR THE PERIOD FROM APRIL 16, 1998 (INCEPTION) TO DECEMBER 31, 1998

                             (DOLLARS IN THOUSANDS)

<TABLE>
<S>                                                                                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.....................................................................  $   2,472
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation.................................................................      2,668
    Amortization.................................................................          7
  Increase (decrease) in cash arising from changes in operating assets and
    liabilities:
    Restricted cash..............................................................     (4,491)
    Accounts receivable..........................................................     (1,949)
    Other assets.................................................................       (116)
    Accounts payable and accrued expenses........................................      3,885
                                                                                   ---------
      Net cash provided by operating activities..................................      2,476
                                                                                   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Real estate asset acquisitions and improvements................................   (126,698)
  Payment of deferred leasing costs..............................................       (228)
                                                                                   ---------
      Net cash used in investing activities......................................   (126,926)
                                                                                   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Advances from BCP, L.P.........................................................    117,014
  Repayment of advances from BCP, L.P............................................   (117,014)
  Repayments on mortgage note....................................................       (314)
  Payment of deferred financing costs............................................        (31)
  Contributions from members.....................................................    127,014
  Contributions from minority interests..........................................          6
  Distribution to members........................................................     (1,800)
                                                                                   ---------
      Net cash provided by financing activities..................................    124,875
                                                                                   ---------
  Net increase in cash and cash equivalents and balance at end of period.........  $     425
                                                                                   ---------
                                                                                   ---------
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest...........................................................  $   7,126
                                                                                   ---------
                                                                                   ---------
NONCASH ITEMS:
Mortgage note assumed in connection with real estate acquisition.................  $  69,118
                                                                                   ---------
                                                                                   ---------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-32
<PAGE>
                             BEACON/PW KENDALL LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

                             (DOLLARS IN THOUSANDS)

1. ORGANIZATION

    Beacon/PW Kendall LLC (the "Company") was formed on April 16, 1998 as a
Delaware limited liability company. The members of the Company are Beacon
Capital Partners, L.P. and PW Acquisitions IX, LLC (the "Members"). Each of the
Members holds a fifty percent economic interest in the Company and each has made
a $63,507 equity contribution. Beacon Capital Partners, L.P. is the managing
member of the Company. Beacon Capital Partners, L.P. and PW Acquisitions IX, LLC
made their initial equity contributions on May 1, 1998 and May 20, 1998,
respectively. Net operating activity for the period May 1, 1998 through May 20,
1998 has been allocated one hundred percent to Beacon Capital Partners, L.P.

    The Company is the sole member of One Kendall LLC. One Kendall LLC has
invested in certain land, buildings, and improvements in Cambridge,
Massachusetts.

    The Company is the managing member of Kendall Athenaeum LLC, holding a 99%
economic interest. Kendall Athenaeum LLC and the Company are the members of
Cambridge Athenaeum LLC, holding 1% and 99% economic interests, respectively.
Kendall Athenaeum LLC is the managing member of Cambridge Athenaeum LLC.
Cambridge Athenaeum LLC has invested in certain other land, buildings and
improvements in Cambridge, Massachusetts.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

    The accompanying consolidated financial statements are prepared in
accordance with generally accepted accounting principles and include the
accounts of the Company, its wholly-owned subsidiary One Kendall LLC and its
direct and indirect majority-owned subsidiaries, Kendall Athenaeum LLC, and
Cambridge Athenaeum LLC. The Company consolidates all wholly-owned subsidiaries
and those majority-owned subsidiaries in which it exercises control. All
significant intercompany transactions and balances have been eliminated in
consolidation.

USE OF ESTIMATES

    The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.

REAL ESTATE

    Buildings are recorded at cost and are depreciated on the straight-line
method over their estimated useful life of forty years. The cost of buildings
includes the purchase price of the property, legal fees, and other acquisition
costs. Acquisition costs associated with the purchase of new property consist of
third party costs and have been capitalized to the appropriate assets.

    The Company measures impairment in accordance with FASB Statement No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF, which requires impairment losses to be recorded on specific
long-lived assets used in operations where indicators of impairment are

                                      F-33
<PAGE>
                             BEACON/PW KENDALL LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31, 1998 (CONTINUED)

                             (DOLLARS IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount.

    Equipment is depreciated using the straight-line method over their expected
useful lives of three to ten years.

DEFERRED FINANCING AND LEASING COSTS

    Deferred financing costs are fees and costs incurred to obtain long-term
financing and are being amortized over the term of the respective loan. Deferred
leasing costs are fees and costs incurred in the successful negotiation of
leases, including brokerage, legal and other costs and are being amortized on a
straight-line basis over the terms of the respective leases.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents consist of short-term, highly liquid assets with
original maturities of three months or less from the date of purchase.

RESTRICTED CASH

    Restricted cash consists of funds held in escrow as required by lenders to
settle real estate taxes and various other expenses associated with the
operations of the properties.

FAIR VALUE OF FINANCIAL INSTRUMENTS

    The Company is required to disclose the fair values of financial instruments
for which it is practicable to estimate such fair value. The fair values of
financial instruments are estimates based upon market conditions and perceived
risks at December 31, 1998 and require varying degrees of management judgment.
The fair values of financial instruments presented may not be indicative of
amounts the Company could realize on the disposition of the financial
instruments.

    Cash, cash equivalents and restricted cash are carried at an amount, which
due to their nature, approximates fair value.

    The Company computes the fair value of its mortgage note payable based upon
the discounted cash flows at a discount rate that approximates the Company's
effective borrowing rate. The Company has determined that the fair value of its
mortgage note approximates its carrying value.

REVENUE RECOGNITION

    Revenues are recognized when earned and the amounts can be reasonably
estimated on the accrual basis of accounting. Rental income from operating
leases is recognized on a straight-line basis over the life of the lease
agreements.

                                      F-34
<PAGE>
                             BEACON/PW KENDALL LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31, 1998 (CONTINUED)

                             (DOLLARS IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES

    As limited liability companies, the Company and its consolidated
subsidiaries are deemed to be partnerships for federal and state income tax
purposes. As such, no provision or credit has been made in the accompanying
financial statements for federal or state income taxes since the Members are
required to include their respective share of profits or losses in their own tax
returns.

3. MORTGAGE NOTE PAYABLE

    The mortgage note payable represents a first mortgage note assumed with the
purchase of certain land, buildings and improvements by Cambridge Athenaeum LLC.
The first mortgage note is due January 11, 2027, with principal and interest
payments due monthly. The interest rate on the mortgage note is 8.485%. The net
book value of the mortgaged assets is $128,126 at December 31, 1998. Future
minimum principal payments due during the next five years and thereafter are as
follows:

<TABLE>
<S>                                                                  <C>
1999...............................................................  $     524
2000...............................................................        554
2001...............................................................        620
2002...............................................................        676
2003...............................................................        736
Thereafter.........................................................     65,694
                                                                     ---------
Total..............................................................  $  68,804
                                                                     ---------
                                                                     ---------
</TABLE>

4. TRANSACTIONS WITH RELATED PARTIES

    Beacon Capital Partners, L.P. advanced $117,014 to the Company to fund the
acquisition of the certain land and buildings in Cambridge, Massachusetts owned
by One Kendall LLC and Cambridge Athenaeum LLC. On August 28, 1998, this advance
was repaid with equity contributions by the Members.

5. LEASES

    Minimum future rentals under operating leases in effect at December 31, 1998
are summarized as follows:

<TABLE>
<S>                                                                  <C>
1999...............................................................  $  17,138
2000...............................................................     14,861
2001...............................................................     13,200
2002...............................................................     11,711
2003...............................................................      7,667
Thereafter.........................................................     15,774
                                                                     ---------
Total..............................................................  $  80,351
                                                                     ---------
                                                                     ---------
</TABLE>

                                      F-35
<PAGE>
                             BEACON/PW KENDALL LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31, 1998 (CONTINUED)

                             (DOLLARS IN THOUSANDS)

5. LEASES (CONTINUED)
    Terms of the leases range from one to twenty years and provide for operating
expense reimbursement, real estate tax escalations, and in certain cases,
percentage rent and increases in minimum rent. For the year ended December 31,
1998, three tenants represented approximately 13%, 20%, and 13%, respectively,
of total rental income.

                                      F-36
<PAGE>
   COMBINED HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
                              FOR FORT POINT PLACE
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED       YEAR ENDED
                                                                              MARCH 31, 1999      DECEMBER 31, 1998
                                                                           ---------------------  -----------------
<S>                                                                        <C>                    <C>
                                                                                (UNAUDITED)
Gross income
  Rental income..........................................................        $     762            $   3,049
  Other income...........................................................               22                   87
                                                                                     -----               ------
        Total gross income...............................................              784                3,136
                                                                                     -----               ------
Direct operating expenses
  Property operating.....................................................              108                  431
  Real estate taxes......................................................               76                  306
                                                                                     -----               ------
        Total direct operating expenses..................................              184                  737
                                                                                     -----               ------
  Gross income in excess of direct operating expenses....................        $     600            $   2,399
                                                                                     -----               ------
                                                                                     -----               ------
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-38
<PAGE>
              NOTES TO COMBINED HISTORICAL SUMMARY OF GROSS INCOME
                         AND DIRECT OPERATING EXPENSES
                              FOR FORT POINT PLACE
                             (DOLLARS IN THOUSANDS)

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


    Presented herein is the combined historical summary of gross income and
direct operating expenses (the "Historical Summary") of Fort Point Place. Fort
Point Place, currently owned by Wormwood Realty Trust (the "Seller"), is
comprised of four office and warehouse buildings located in the Boston,
Massachusetts South Boston Waterfront District with gross rentable area of
approximately 335,000 square feet. The mixed-use properties are expected to be
acquired by Beacon Capital Partners, L.P. (the "Purchaser").


    The accompanying Historical Summary has been prepared in accordance with
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for
inclusion in the Registration Statement on Form S-11 of Beacon Capital Partners,
Inc. Accordingly, certain historical expenses which may not be comparable to the
expenses expected to be incurred in the proposed future operations of Fort Point
Place have been excluded. Excluded expenses consist of depreciation,
amortization, corporate and interest expense not directly related to the future
operations of Fort Point Place.

    Rental income is recognized on a straight line basis over the term of the
related leases.

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

2. LEASES

    Minimum future rentals under operating leases with Fort Point Place in
effect at December 31, 1998 are summarized as follows:

<TABLE>
<CAPTION>
YEAR
- -----------------------------------------------------------------
<S>                                                                <C>
1999.............................................................  $   2,168
2000.............................................................      1,828
2001.............................................................        830
2002.............................................................        782
2003.............................................................        636
Thereafter.......................................................      1,744
                                                                   ---------
Total                                                              $   7,988
                                                                   ---------
                                                                   ---------
</TABLE>

    The leases at Fort Point Place are generally for a term greater than one
year and no more than five years. Certain leases provide for operating expense
reimbursement, real estate tax escalations and increases in minimum rent.

    Included in rental income is $660,000 of rent paid by Hub Folding Box,
Incorporated ("Hub"), an affiliate of the Seller. Hub occupies approximately 49%
of the gross rentable area of Fort Point Place. The Hub lease will be terminated
as of the date of the closing. Hub will, however, be permitted to continue to
occupy the space for a period after the closing not to exceed ninety days. As a
result, future minimum rents attributable to Hub have been excluded from the
table.

                                      F-39
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of

Beacon Capital Partners, Inc.

    We have audited the accompanying Combined Historical Summary of Gross Income
and Direct Operating Expenses (the "Historical Summary") for One Kendall Square
Buildings 100-500, One Kendall Square Buildings 600/650/700, One Kendall Square
Building 1400, One Kendall Square Building 1500, One Kendall Square Building
1700, 215 First Street, the One Kendall Square Cinema, the One Kendall Square
Parking Garage, and 195 First Street Parking Lot (collectively, known as "The
Athenaeum Portfolio") for the year ended December 31, 1997. This Historical
Summary is the responsibility of The Athenaeum Portfolio's management. Our
responsibility is to express an opinion on the Historical Summary 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 Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Historical Summary. 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 Historical
Summary. We believe that our audit provides a reasonable basis for our opinion.

    The accompanying Historical Summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Registration Statement on Form S-11 of Beacon
Capital Partners, Inc. as described in Note 1, and is not intended to be a
complete presentation of The Athenaeum Portfolio's revenues and expenses.

    In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in Note 1 of The Athenaeum Portfolio for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

Boston, Massachusetts
May 22, 1998

                                      F-40
<PAGE>
   COMBINED HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
                          FOR THE ATHENAEUM PORTFOLIO

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               FOR THE PERIOD
                                                                               JANUARY 1, 1998
                                                                                     TO             YEAR ENDED
                                                                               APRIL 30, 1998    DECEMBER 31, 1997
                                                                              -----------------  -----------------
<S>                                                                           <C>                <C>
                                                                                 (UNAUDITED)
Gross income
  Rental income.............................................................      $   6,513          $  19,593
  Reimbursement of operating expenses and taxes.............................          1,277              5,238
  Other income..............................................................            106                213
                                                                                     ------            -------
      Total gross income....................................................          7,896             25,044
                                                                                     ------            -------
Direct operating expenses
  Property operating........................................................          1,784              5,514
  Real estate taxes.........................................................          1,288              3,740
                                                                                     ------            -------
      Total direct operating expenses.......................................          3,072              9,254
                                                                                     ------            -------
  Gross income in excess of direct operating expenses.......................      $   4,824          $  15,790
                                                                                     ------            -------
                                                                                     ------            -------
</TABLE>

                            See accompanying notes.

                                      F-41
<PAGE>
              NOTES TO COMBINED HISTORICAL SUMMARY OF GROSS INCOME
                         AND DIRECT OPERATING EXPENSES
                          FOR THE ATHENAEUM PORTFOLIO

                             (DOLLARS IN THOUSANDS)

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Presented herein is the combined historical summary ("Historical Summary")
of gross income and direct operating expenses of the following properties, held
under common control (collectively, "The Athenaeum Portfolio"):

<TABLE>
<S>                                        <C>
One Kendall Square Buildings 100-500       One Kendall Square Cinema
One Kendall Square Buildings 600/650/700   195 First Street Parking Lot
One Kendall Square Building 1400           215 First Street
One Kendall Square Building 1500           One Kendall Square Parking Garage
One Kendall Square Building 1700
</TABLE>

    The mixed-use properties were acquired by Beacon Capital Partners, Inc. on
May 1, 1998.

    The accompanying Historical Summary has been prepared in accordance with
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for
inclusion in the Registration Statement on Form S-11 of Beacon Capital Partners,
Inc. Accordingly, certain historical expenses which may not be comparable to the
expenses expected to be incurred in the proposed future operations of The
Athenaeum Portfolio have been excluded. Excluded expenses consist of
depreciation and amortization, and interest not directly related to the future
operations of The Athenaeum Portfolio.

    Rental income is recognized on a straight line basis over the term of the
related leases.

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

    Minimum future rentals under operating leases with The Athenaeum Portfolio
in effect at December 31, 1997 are summarized as follows:

<TABLE>
<CAPTION>
YEAR
- -----------------------------------------------------------------------------------
<S>                                                                                  <C>
1998...............................................................................  $  16,711
1999...............................................................................     16,195
2000...............................................................................     13,833
2001...............................................................................     12,090
2002...............................................................................      9,876
Thereafter.........................................................................     20,633
                                                                                     ---------
                                                                                     $  89,338
                                                                                     ---------
                                                                                     ---------
</TABLE>

    Terms of the leases range from one to twenty years and provide for operating
expense reimbursement, real estate tax escalations and, in certain cases,
percentage rent and increases in minimum rent. Approximately 26% of The
Athenaeum Portfolio's revenue for the year ended December 31, 1997 was derived
from one tenant.

                                      F-42
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of

Beacon Capital Partners, Inc.

    We have audited the accompanying Historical Summary of Gross Income and
Direct Operating Expenses (the "Historical Summary") for Technology Square and
The Draper Building owned by Asahi Seimei-Prudential Associates, Number Three
for the year ended December 31, 1997. This Historical Summary is the
responsibility of Technology Square and The Draper Building's management. Our
responsibility is to express an opinion on the Historical Summary 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 Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Historical Summary. 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 Historical
Summary. We believe that our audit provides a reasonable basis for our opinion.

    The accompanying Historical Summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Registration Statement on Form S-11 of Beacon
Capital Partners, Inc. as described in Note 1, and is not intended to be a
complete presentation of Technology Square and The Draper Building's revenues
and expenses.

    In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in Note 1 of Technology Square and The Draper Building for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

Boston, Massachusetts
May 22, 1998

                                      F-43
<PAGE>
        HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
                 FOR TECHNOLOGY SQUARE AND THE DRAPER BUILDING

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               FOR THE PERIOD
                                                                               JANUARY 1, 1998
                                                                                     TO
                                                                                JUNE 23, 1998       YEAR ENDED
                                                                                 (UNAUDITED)     DECEMBER 31, 1997
                                                                              -----------------  -----------------
<S>                                                                           <C>                <C>
Gross income
  Rental income.............................................................      $   3,992          $   8,164
  Reimbursement of operating expenses and taxes.............................            954              2,077
  Other income..............................................................         --                     58
                                                                                     ------             ------
Total gross income..........................................................          4,946             10,299
                                                                                     ------             ------
Direct operating expenses
  Property operating........................................................            943              1,962
  Real estate taxes.........................................................            955              1,929
                                                                                     ------             ------
Total direct operating expenses.............................................          1,898              3,891
                                                                                     ------             ------
  Gross income in excess of direct operating expenses.......................      $   3,048          $   6,408
                                                                                     ------             ------
                                                                                     ------             ------
</TABLE>

                            See accompanying notes.

                                      F-44
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of

Beacon Capital Partners, Inc.

    We have audited the accompanying Combined Historical Summary of Gross Income
and Direct Operating Expenses (the "Historical Summary") for Brandywine Place,
Crosspoint Atrium, Forest Abrams Place, 6500 Greenville Avenue, Northcreek Place
II, One Glen Lakes, Park North Business Center, Plaza at Walnut Hill, Richardson
Business Center, Richardson Commerce Centre, Sherman Tech, T. I. Business Park,
and Venture Drive Tech Center (collectively, known as "The Breunig Portfolio")
for the year ended December 31, 1997. This Historical Summary is the
responsibility of The Breunig Portfolio's management. Our responsibility is to
express an opinion on the Historical Summary 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 Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Historical Summary. 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 Historical
Summary. We believe that our audit provides a reasonable basis for our opinion.

    The accompanying Historical Summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Registration Statement on Form S-11 of Beacon
Capital Partners, Inc. as described in Note 1, and is not intended to be a
complete presentation of The Breunig Portfolio's revenues and expenses.

    In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in Note 1 of The Breunig Portfolio for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

Boston, Massachusetts
July 1, 1998

                                      F-46
<PAGE>
   COMBINED HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
                           FOR THE BREUNIG PORTFOLIO

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED      YEAR ENDED
                                                                                JUNE 30, 1998    DECEMBER 31, 1997
                                                                              -----------------  -----------------
<S>                                                                           <C>                <C>
                                                                                 (UNAUDITED)
Gross income
  Rental income.............................................................      $   5,695          $   9,843
  Reimbursement of operating expenses and taxes.............................            366                658
  Other income..............................................................            146                279
                                                                                     ------             ------
Total gross income..........................................................          6,207             10,780
                                                                                     ------             ------
Direct operating expenses
  Property operating........................................................          2,521              4,584
  Real estate taxes.........................................................            809              1,470
                                                                                     ------             ------
Total direct operating expenses.............................................          3,330              6,054
                                                                                     ------             ------
Gross income in excess of direct operating expenses.........................      $   2,877          $   4,726
                                                                                     ------             ------
                                                                                     ------             ------
</TABLE>

                            See accompanying notes.

                                      F-47
<PAGE>
              NOTES TO COMBINED HISTORICAL SUMMARY OF GROSS INCOME
                         AND DIRECT OPERATING EXPENSES
                           FOR THE BREUNIG PORTFOLIO

                             (DOLLARS IN THOUSANDS)

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Presented herein is the combined historical summary ("Historical Summary")
of gross income and direct operating expenses of the following properties,
(collectively, "The Breunig Portfolio") all of which are located in or near
Dallas, Texas:

<TABLE>
<S>                                    <C>
Brandywine Place                       Plaza at Walnut Hill
Crosspoint Atrium                      Richardson Business Center
Forest Abrams Place                    Richardson Commerce Centre
6500 Greenville Avenue                 Sherman Tech
Northcreek Place II                    T I Business Park
One Glen Lakes                         Venture Drive Tech Center
Park North Business Center
</TABLE>

    The mixed-use properties were acquired by Beacon Capital Partners, Inc. on
July 1, 1998.

    The accompanying Historical Summary has been prepared in accordance with
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission for
inclusion in the Registration Statement on Form S-11 of Beacon Capital Partners,
Inc. Accordingly, certain historical expenses which may not be comparable to the
expenses expected to be incurred in the proposed future operations of The
Breunig Portfolio have been excluded. Excluded expenses consist of depreciation
and amortization, and interest not directly related to the future operations of
The Breunig Portfolio.

    During 1997, Breunig Commercial purchased Park North Business Center and
Forest Abrams Place. These properties were owned for three months and six months
of 1997, respectively. Partial year financial information is presented within
the Historical Summary for the two properties. In addition, on July 1, 1998,
Breunig acquired one additional property referred to as Bank One LBJ. No
financial information with respect to this property is presented within the
accompanying Historical Summary. Inclusion of these three properties for the
months prior to their acquisition in the accompanying Historical Summary would
not have resulted in a material change to the amounts presented.

    Rental income is recognized on a straight line basis over the term of the
related leases.

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

                                      F-48
<PAGE>
              NOTES TO COMBINED HISTORICAL SUMMARY OF GROSS INCOME
                         AND DIRECT OPERATING EXPENSES
                           FOR THE BREUNIG PORTFOLIO

                             (DOLLARS IN THOUSANDS)

2. LEASES

    Minimum future rentals under operating leases with The Breunig Portfolio in
effect at December 31, 1997 are summarized as follows:

<TABLE>
<CAPTION>
YEAR
- -----------------------------------------------------------------------------------
<S>                                                                                  <C>
1998...............................................................................  $  10,848
1999...............................................................................      8,967
2000...............................................................................      6,634
2001...............................................................................      4,661
2002...............................................................................      3,255
Thereafter.........................................................................      5,502
                                                                                     ---------
                                                                                     $  39,867
                                                                                     ---------
                                                                                     ---------
</TABLE>

    Terms of the leases range from one to fifteen years and provide for
operating expense reimbursement, real estate tax escalations and, in certain
cases, increases in minimum rent.

                                      F-49
<PAGE>
                                  SCHEDULE III
                         BEACON CAPITAL PARTNERS, INC.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1998
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                   GROSS AMOUNT AT WHICH
                                                                     SUBSEQUENT TO ACQUISITION            CARRIED
                                                INITIAL COST                                         AT CLOSE OF PERIOD
                                          ------------------------  ----------------------------  ------------------------
                                                     BUILDINGS AND                BUILDINGS AND              BUILDINGS AND
DESCRIPTION               ENCUMBRANCES      LAND     IMPROVEMENTS      LAND       IMPROVEMENTS      LAND     IMPROVEMENTS
- -----------------------  ---------------  ---------  -------------     -----     ---------------  ---------  -------------
<S>                      <C>              <C>        <C>            <C>          <C>              <C>        <C>
COMMERCIAL AND
  INDUSTRIAL PROPERTIES
Technology Square & The
  Draper Building,
  Cambridge, MA........     $      --     $  36,162    $  87,172     $      --      $     796     $  36,162    $  87,968
Dallas Office and
  Industrial Portfolio,
  Dallas, TX...........        21,570        14,932       77,083            --            329        14,932       77,412
                              -------     ---------  -------------         ---         ------     ---------  -------------
Total..................     $  21,570     $  51,094    $ 164,255     $      --      $   1,125     $  51,094    $ 165,380
                              -------     ---------  -------------         ---         ------     ---------  -------------
                              -------     ---------  -------------         ---         ------     ---------  -------------

<CAPTION>

                                                                                 LIFE ON WHICH
                                                                                DEPRECIATION IN
                                                     DATE OF                     LATEST INCOME
                                     ACCUMULATED   CONSTRUCTION/    DATE           STATEMENT
DESCRIPTION                TOTAL    DEPRECIATION    RENOVATION    ACQUIRED        IS COMPUTED
- -----------------------  ---------  -------------  ------------  -----------  -------------------
<S>                      <C>        <C>            <C>           <C>          <C>
COMMERCIAL AND
  INDUSTRIAL PROPERTIES
Technology Square & The
  Draper Building,
  Cambridge, MA........  $ 124,130    $   1,131      1962-1976      6/24/98              (1)
Dallas Office and
  Industrial Portfolio,
  Dallas, TX...........     92,344          985      1975-1996       7/1/98              (1)
                         ---------       ------
Total..................  $ 216,474    $   2,116
                         ---------       ------
                         ---------       ------
                                (2)          (2)
</TABLE>

(1) Depreciaton of building, improvements and personal property is calculated
    over the following useful lives using the straight-line method.

   Buildings and improvements--40 years

   Tenant improvements--over the terms of the related leases

   Personal property--3 to 10 years

(2) Included in the BCP financial statements are corporate equipment and
    improvements which are not included in this schedule.

The aggregate cost for federal income tax purposes was approximately $155,154 at
December 31, 1998.

The changes in total real estate assets and accumulated depreciation for the
period January 21, 1998 (Inception) to December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                       REAL ESTATE ASSETS                                             ACCUMULATED DEPRECIATION
- ----------------------------------------------------------------  ----------------------------------------------------------------
<S>                                            <C>                <C>                                            <C>
Balance, beginning of period.................      $      --      Balance, beginning of period.................      $      --
Acquisitions, construction costs and
  improvements...............................        216,474      Depreciation for period......................          2,116
                                                    --------                                                          --------
Balance, end of period.......................      $ 216,474      Balance, end of period.......................      $   2,116
                                                    --------                                                          --------
                                                    --------                                                          --------
</TABLE>

                                      S-1
<PAGE>
                                  SCHEDULE III
                             BEACON/PW KENDALL LLC
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1998
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                   GROSS AMOUNT AT WHICH
                                                                     SUBSEQUENT TO ACQUISITION            CARRIED
                                                INITIAL COST                                         AT CLOSE OF PERIOD
                                          ------------------------  ----------------------------  ------------------------
                                                     BUILDINGS AND                BUILDINGS AND              BUILDINGS AND
DESCRIPTION               ENCUMBRANCES      LAND     IMPROVEMENTS      LAND       IMPROVEMENTS      LAND     IMPROVEMENTS
- -----------------------  ---------------  ---------  -------------     -----     ---------------  ---------  -------------
<S>                      <C>              <C>        <C>            <C>          <C>              <C>        <C>
COMMERCIAL PROPERTIES
The Athenaeum
  Portfolio, Cambridge,
  MA...................     $  68,804     $  35,773    $ 159,729     $      --      $     314     $  35,773    $ 160,043
                              -------     ---------  -------------         ---         ------     ---------  -------------
                              -------     ---------  -------------         ---         ------     ---------  -------------

<CAPTION>

                                                                                 LIFE ON WHICH
                                                                                DEPRECIATION IN
                                                     DATE OF                     LATEST INCOME
                                     ACCUMULATED   CONSTRUCTION/    DATE           STATEMENT
DESCRIPTION                TOTAL    DEPRECIATION    RENOVATION    ACQUIRED        IS COMPUTED
- -----------------------  ---------  -------------  ------------  -----------  -------------------
<S>                      <C>        <C>            <C>           <C>          <C>
COMMERCIAL PROPERTIES
The Athenaeum
  Portfolio, Cambridge,
  MA...................  $ 195,816    $   2,668      1885-1994       5/1/98              (1)
                         ---------       ------
                         ---------       ------
</TABLE>

(1) Depreciaton of building, improvements and personal property is calculated
    over the following useful lives using the straight line method.

   Buildings and improvements--40 years

   Tenant improvements--over the terms of the related leases

   Personal property--3 to 10 years

The aggregate cost for federal income tax purposes was approximately $195,816 at
December 31, 1998.

The changes in total real estate assets and accumulated depreciation for the
period April 16, 1998 (Inception) to December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                       REAL ESTATE ASSETS                                             ACCUMULATED DEPRECIATION
- ----------------------------------------------------------------  ----------------------------------------------------------------
<S>                                            <C>                <C>                                            <C>
Balance, beginning of period.................      $      --      Balance, beginning of period.................      $      --
Acquisitions, construction costs and
  improvements...............................        195,816      Depreciation for period......................          2,668
                                                    --------                                                          --------
Balance, end of period.......................      $ 195,816      Balance, end of period.......................      $   2,668
                                                    --------                                                          --------
                                                    --------                                                          --------
</TABLE>

                                      S-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

    PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. BEACON CAPITAL PARTNERS, INC. HAS NOT AUTHORIZED ANYONE TO PROVIDE
PROSPECTIVE INVESTORS WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER
TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE SECURITIES.

    NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE SECURITIES OR POSSESSION OR DISTRIBUTION OF THIS
PROSPECTUS IN ANY SUCH JURISDICTION. PERSONS WHO COME INTO POSSESSION OF THIS
PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO INFORM
THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND THE
DISTRIBUTION OF THIS PROSPECTUS APPLICABLE IN THAT JURISDICTION.
                            ------------------------

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                      PAGE
                                                      -----
<S>                                                <C>
FORWARD-LOOKING STATEMENTS.......................           i
PROSPECTUS SUMMARY...............................           1
RISK FACTORS.....................................           7
THE COMPANY......................................          27
USE OF PROCEEDS..................................          64
DISTRIBUTION POLICY..............................          66
INVESTMENT STRATEGIES AND EXPERIENCE.............          67
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
  AND MANAGEMENT.................................          71
PRICE RANGE OF COMMON STOCK......................          73
CAPITALIZATION...................................          73
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
  FINANCIAL DATA.................................          74
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS............          75
DESCRIPTION OF SECURITIES........................          84
CERTAIN PROVISIONS OF MARYLAND LAW AND OF BCP'S
  CHARTER AND BYLAWS.............................          90
COMMON STOCK AVAILABLE FOR FUTURE SALE...........          95
OPERATING PARTNERSHIP AGREEMENT..................          96
FEDERAL INCOME TAX CONSIDERATIONS................         101
ERISA CONSIDERATIONS.............................         119
SELLING STOCKHOLDERS.............................         120
PLAN OF DISTRIBUTION.............................         133
LEGAL MATTERS....................................         134
EXPERTS..........................................         134
AVAILABLE INFORMATION............................         135
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES......         F-1
</TABLE>


                               20,394,843 SHARES

                                 BEACON CAPITAL
                                 PARTNERS, INC.

                                  COMMON STOCK

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

                                   PROSPECTUS

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


                                 JUNE   , 1999


- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1)

    The following table sets forth the estimated expenses payable by the Company
in connection with this offering (excluding underwriting discounts and
commissions):

<TABLE>
<CAPTION>
NATURE OF EXPENSE                                                                     AMOUNT
- ----------------------------------------------------------------------------------  ----------
<S>                                                                                 <C>
SEC Registration Fee..............................................................  $  120,330
Accounting Fees and Expenses......................................................     200,000
Legal Fees and Expenses...........................................................     250,000
Printing Expenses.................................................................      75,000
Miscellaneous.....................................................................      75,000
                                                                                    ----------
      Total.......................................................................  $  720,330
                                                                                    ----------
                                                                                    ----------
</TABLE>

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

(1) The amounts set forth above, except for the SEC Registration fee, are in
    each case estimated.

ITEM 32. SALES TO SPECIAL PARTIES.

    See Item 33.

ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES

    Set forth in chronological order below is information regarding the number
of unregistered shares of capital stock issued by the Registrant since its
incorporation in 1998. Further included is the consideration, if any, received
by the Registrant for such shares, and information relating to the section of
the Securities Act of 1933, as amended (the "Securities Act"), or rule of the
Securities and Exchange Commission under which exemption from registration was
claimed.

        (1) In March 1998, BCP issued 1,000 shares of its Common Stock for an
    aggregate purchase price of $10.00 to Beacon Capital Partners, Inc., a
    Massachusetts corporation, in reliance upon the exemption from registration
    under Section 4(2) of the Securities Act.

        (2) In March 1998, BCP issued 200 shares of its Common Stock to the
    stockholders of Beacon Capital Partners, Inc., a Massachusetts corporation,
    in exchange for all of the outstanding capital stock of Beacon Capital
    Partners, Inc., a Massachusetts corporation, pursuant to a merger agreement
    and in reliance upon the exemption from registration under Section 4(2) of
    the Securities Act.


        (3) On March 20, 1998, BCP issued an aggregate of 16,781,680 shares of
    Common Stock to NationsBanc Montgomery Securities LLC, a predecessor of Banc
    of America Securities, LLC, in reliance upon the exemption from registration
    provided by Section 4(2) of the Securities Act. NationsBanc subsequently
    resold the securities they had purchased to Qualified Institutional Buyers
    (as defined in Rule 144A under the Securities Act) in reliance upon the
    exemption from registration requirements provided by Rule 144A under the
    Securities Act and to a limited number of "accredited investors" (as defined
    in Rule 501 under the Securities Act) in reliance upon the exemptions from
    registration provided by Sections 4(1) and 4(2) under the Securities Act.
    The aggregate proceeds to BCP from such offering and the aggregate initial
    purchaser's discount were $312,969,332 and $22,021,651, respectively.


        (4) On March 20, 1998, the Company issued an aggregate of 579,089 shares
    of Common Stock and 225,201 Units to two trusts established by Alan M.
    Leventhal and Lionel P. Fortin for an aggregate cash purchase price of
    approximately $15,000,000 in reliance upon the exemption from registration
    under Section 4(2) of the Securities Act.

                                      II-1
<PAGE>
        (5) On April 3, 1998, BCP issued an aggregate of 2,707,213 shares of
    Common Stock pursuant to an over-allotment option granted to NationsBanc
    Montgomery Securities LLC in connection with the offering on March 20, 1998,
    to NationsBanc Montgomery Securities LLC in reliance upon the exemption from
    registration provided by Section 4(2) of the Securities Act. NationsBanc
    subsequently resold the shares they purchased to Qualified Institutional
    Buyers (as defined in Rule 144A under the Securities Act) in reliance upon
    the exemption from registration requirements provided by Rule 144A under the
    Securities Act and to a limited number of "accredited investors" (as defined
    in Rule 501 under the Securities Act) in reliance upon the exemptions from
    registration provided by Sections 4(1) and 4(2) under the Securities Act.
    The aggregate proceeds to BCP from such offering and the aggregate initial
    purchaser's discount were $50,489,522 and $3,510,503, respectively.

        (6) On April 13, 1998, BCP issued an aggregate of 905,950 shares of
    Common Stock pursuant to an over-allotment option granted to NationsBanc
    Montgomery Securities LLC in connection with the offering on March 20, 1998,
    to NationsBanc Montgomery Securities LLC in reliance upon the exemption from
    registration provided by Section 4(2) of the Securities Act. NationsBanc
    subsequently resold the shares they purchased to Qualified Institutional
    Buyers (as defined in Rule 144A under the Securities Act) in reliance upon
    the exemption from registration requirements provided by Rule 144A under the
    Securities Act and to a limited number of "accredited investors" (as defined
    in Rule 501 under the Securities Act) in reliance upon the exemptions from
    registration provided by Sections 4(1) and 4(2) under the Securities Act.
    The aggregate proceeds to BCP from such offering and the aggregate initial
    purchaser's discount were $16,895,968 and $1,174,904, respectively.

ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS

    The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability result
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 Charter contains such a provision
which eliminates such liability to the maximum extent permitted by the MGCL.

    The Charter authorizes BCP, 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
director or officer or (b) any individual who, while a director of BCP and at
the request of BCP serves or has served another corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or 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 director or officer of
BCP. The Bylaws obligate BCP, to the maximum extent permitted by Maryland law,
to indemnify and, without requiring a preliminary determination of the ultimate
entitlement to indemnification, to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any present or former
director or officer who is made a party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a director of BCP and
at the request of BCP, serves or has served another corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, 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. The Charter and Bylaws
also permit BCP to indemnify and advance expenses to any person who served a
predecessor of BCP in any of the capacities described above. Under the Bylaws,
if a claim for indemnification or advancement of expenses by a director or
officer is not paid in full by BCP within (a) 60 days after the receipt by BCP
of a written claim for indemnification or (b) in the case of a director, 10 days
after the receipt by BCP of documentation of expenses and the required
undertaking, such director or officer may at any time thereafter bring suit
against BCP to recover the

                                      II-2
<PAGE>
unpaid amount of the claim, and if successful in whole or in part, such director
or officer is also entitled to be paid the expenses of prosecuting such claim.
The Bylaws permit BCP to maintain (and it does maintain) insurance, at its
expense, to protect itself and any director, officer, or non-officer employee
against any liability of any character asserted against or incurred by BCP or
any such director, officer, or non-officer employee, or arising out of any such
person's corporate status, whether or not BCP would have the power to indemnify
such person against such liability under the MGCL or the Bylaws.

    The MGCL requires a corporation (unless its charter provides otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which his is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and deliberate
dishonesty, (b) the director or officer actually received an improper personal
benefit in money, property or services or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful. However, under the MGCL, a Maryland corporation may
not indemnify for an adverse judgment in a suit by or in the right of the
corporation or for a judgment of liability on the basis that personal benefit
was improperly received, whether or not received in the director's or officer's
official capacity, unless in either case a court orders indemnification and then
only for expenses. In addition, the MGCL permits a corporation to advance
reasonable expenses to a director or officer upon the corporation's receipt of
(a) a written affirmation by the director or officer of his good belief that he
has met the standard of conduct necessary for indemnification by the corporation
and (b) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or
persons controlling BCP pursuant to the foregoing provisions, BCP has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.

    BCP has entered into indemnification agreements with each of its directors
and senior officers. The indemnification agreements require, among other
matters, that BCP indemnify its directors and officers, as well as their spouses
and children, to the fullest extent permitted by Maryland law and advance to the
directors and officers all related expenses, subject to reimbursement if it is
subsequently determined that indemnification is not permitted. Under these
agreements, BCP must also indemnify and advance all expenses incurred by
directors and officers seeking to enforce their rights under the indemnification
agreements or recovery under any directors' and officers' liability insurance
policies maintained by BCP.. BCP is not required to indemnify the director or
officer for amounts paid or to be paid in settlement unless such settlement is
approved in advance by BCP. The agreements also require BCP to provide to the
directors or officers the maximum amount of directors' and officers' liability
insurance available under any insurance policy or policies maintained by BCP,
and to continue such coverage for seven years after the directors or officers no
longer serve as directors or officers of BCP for events occurring during their
service with BCP.

    Under Section 8 of the Purchase Agreement filed as Exhibit 1.1 hereto, the
Initial Purchaser has agreed to indemnify, under certain conditions, BCP, its
directors, officers, employees and persons who control BCP within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against
certain losses, claims, damages, liabilities or expenses.

ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.

    Not applicable.

                                      II-3
<PAGE>
ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS

    (a) The following financial statements are being filed as part of this
Registration Statement:


<TABLE>
<S>                                                                                    <C>
Pro Forma Financial Information (Unaudited):

  Beacon Capital Partners, Inc.
    Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1999
    Notes to Pro Forma Condensed Consolidated Balance Sheet
    Pro Forma Condensed Consolidated Statements of Operations for the Three Months
     Ended March 31, 1999 and the Year Ended December 31, 1998
    Notes to Pro Forma Condensed Consolidated Statements of Operations

Historical Financial Information:

  Beacon Capital Partners, Inc.
    Consolidated Balance Sheets as of March 31, 1999 (Unaudited) and December 31,
     1998
    Consolidated Statements of Operations for the Three Months Ended March 31, 1999
     (Unaudited) and the period January 21, 1998 (Inception) to March 31, 1998
    Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999
     (Unaudited) and the period January 21, 1998 (Inception) to March 31, 1998
    Notes to Consolidated Financial Statements
    Consolidated Balance Sheet as of December 31, 1998
    Consolidated Statement of Operations from January 21, 1998 (Inception) to
     December 31, 1998
    Consolidated Statement of Stockholders' Equity from January 21, 1998 (Inception)
     to December 31, 1998
    Consolidated Statement of Cash Flows from January 21, 1998 (Inception) to
     December 31, 1998
    Notes to Consolidated Financial Statements
  Beacon/PW Kendall LLC
    Consolidated Balance Sheet as of December 31, 1998
    Consolidated Statement of Operations from April 16, 1998 (Inception) to December
     31, 1998
    Consolidated Statement of Members' Equity from April 16, 1998 (Inception) to
     December 31, 1998
    Consolidated Statement of Cash Flows from April 16, 1998 (Inception) to December
     31, 1998
    Notes to Consolidated Financial Statements
  Fort Point Place
    Combined Historical Summary of Gross Income and Direct Operating Expenses for the
     Three Months Ended March 31, 1999 (Unaudited) and the Year Ended December 31,
     1998
    Notes to Combined Historical Summary of Gross Income and Direct Operating
     Expenses

  The Athenaeum Portfolio
    Combined Historical Summary of Gross Income and Direct Operating Expenses for the
     period January 1, 1998 to April 30, 1998 (Unaudited) and the Year Ended December
     31, 1997
    Notes to Combined Historical Summary of Gross Income and Direct Operating
     Expenses

  Technology Square and The Draper Building
    Historical Summary of Gross Income and Direct Operating Expenses for the period
     January 1, 1998 to June 23, 1998 (Unaudited) and the Year Ended December 31,
     1997
    Notes to Historical Summary of Gross Income and Direct Operating Expenses

  The Bruenig Portfolio (referred to elsewhere herein as the Dallas Office and
    Industrial Portfolio)
    Combined Historical Summary of Gross Income and Direct Operating Expenses for the
     Six Months Ended June 30, 1998 (Unaudited) and the Year Ended December 31, 1997
</TABLE>


                                      II-4
<PAGE>

<TABLE>
<S>                                                                                    <C>
    Notes to Combined Historical Summary of Gross Income and Direct Operating
     Expenses

  Financial Statement Schedules

    Beacon Capital Partners, Inc.

      Schedule III--Real Estate and Accumulated Depreciation as of December 31, 1998

    Beacon/PW Kendall LLC

      Schedule III--Real Estate and Accumulated Depreciation as of December 31, 1998
</TABLE>


    (b) Exhibits. The following is a complete list of Exhibits filed or
incorporated by reference as part of this Registration Statement.


<TABLE>
<C>          <S>
       1.1   Placement Agent Agreement between NationsBanc Montgomery Securities LLC and the
               Company, as amended.(1)
       2.1   Agreement and Plan of Merger by and between the Predecessor and the Company.(1)
       3.1   Articles of Incorporation.(1)
       3.2   Certificate of Correction to Articles of Incorporation.(1)
       3.3   Amended and Restated By-laws.(1)
       3.4   Agreement of Limited Partnership of Beacon Capital Partners, L.P.(2)
       3.5   First Amendment to Agreement of Limited Partnership.(2)
       4.1   Specimen certificate for shares of Common Stock, $.01 par value, of the Company.(1)
       5.1   Opinion of Goodwin, Procter & Hoar LLP as to the validity of the securities being
               offered.(3)
       8.1   Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.(4)
      10.1   Employment and Non-Competition Agreement for Alan M. Leventhal.(1)
      10.2   Employment and Non-Competition Agreement for Lionel P. Fortin.(1)
      10.3   Beacon Capital Partners 1998 Stock Option and Incentive Plan.(1)
      10.4   Form of Indemnification Agreement between the Registrant and its directors and
               executive officers.(1)
      10.5   Purchase and Sale Contract between Eastern Properties Master LLC and the
               Registrant.(1)
      10.6   Contract of Sale for Bank One Building.(2)
      10.7   Contract of Sale for 6500 Greenville Building.(2)
      10.8   Contract of Sale for North Creek II Building.(2)
      10.9   Contract of Sale for One Glen Lakes Building.(2)
      10.10  Contract of Sale for Crosspoint Atrium Building.(2)
      10.11  Contract of Sale for Brandywine Place Building.(2)
      10.12  Contract of Sale for Forest Abrams Building.(2)
      10.13  Contract of Sale for Sherman Tech Building.(2)
      10.14  Contract of Sale for Venture Tech Building.(2)
      10.15  Contract of Sale for Plaza at Walnut Building.(2)
      10.16  Contract of Sale for Richardson BC Building.(2)
      10.17  Contract of Sale for Park North SC Building.(2)
      10.18  Contract of Sale for TI Business Center.(2)
      10.19  Contract of Sale for Richardson CC Building.(2)
      10.20  Contribution Agreement by and between Luddite Associates and Beacon Capital
               Partners, L.P.
      21.1   Subsidiaries of the Registrant.(5)
      23.1   Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).(3)
      23.2   Consent of Ernst & Young LLP.
      24.1   Power of Attorney.(1)
      24.2   Power of Attorney of Robert M. Melzer.
      99.1   Press release relating to contingent distribution.(6)
</TABLE>


                                      II-5
<PAGE>
- ------------------------

(1) Previously filed as an exhibit to the Company's Registration Statement on
    Form S-11 (SEC File No. 333-56937) filed with the Commission on June 16,
    1998.

(2) Previously filed as an exhibit to Pre-effective Amendment No. 1 to the
    Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
    with the Commission on August 21, 1998.

(3) Previously filed as an exhibit to Amendment Pre-effective No. 2 to the
    Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
    with the Commission on September 22, 1998.

(4) Previously filed as an exhibit to Pre-effective Amendment No. 3 to the
    Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
    with Commission on October 16, 1998.

(5) Previously filed as an exhibit to the Company's Annual Report on Form 10-K,
    filed with the Commission on March 29, 1999.


(6) Previously filed as an exhibit to the Company's Current Report on Form 8-K,
    filed with the Commission on June 12, 1999.


                                      II-6
<PAGE>
ITEM 37. UNDERTAKINGS

    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.

    The undersigned registrant hereby undertakes:

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

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

       (3) 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, the changes in volume and price represent no more than
           20 percent change in the maximum aggregate offering price set forth
           in the "Calculation of Registration Fee" table in the effective
           registration statement; and

       (iii) To include any material information with respect to the plan of
           distribution not previously disclosed in the registration statement
           or any material change to such information in the registration
           statement.

       (4) 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.

                                      II-7
<PAGE>
                                   SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Post-Effective Amendment No. 4 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Boston, Massachusetts, on June 21, 1999.


<TABLE>
<S>                                     <C>        <C>
                                        BEACON CAPITAL PARTNERS, INC.

                                        By:                     /s/ LIONEL P. FORTIN
                                                   ---------------------------------------------
                                                                  Lionel P. Fortin
                                                       PRESIDENT AND CHIEF OPERATING OFFICER
</TABLE>


    Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 4 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.



<TABLE>
<CAPTION>
                   SIGNATURE                                       TITLE                           DATE
- -----------------------------------------------  ------------------------------------------  -----------------
<C>                                              <S>                                         <C>

                       *                         Chairman of the Board and Chief               June 21, 1999
     -------------------------------------       Executive Officer and
               Alan M. Leventhal                 Director (Principal Executive Officer)

             /s/ LIONEL P. FORTIN                President, Chief Operating Officer            June 21, 1999
     -------------------------------------       and Director
               Lionel P. Fortin

                       *                         Senior Vice President and Chief               June 21, 1999
     -------------------------------------       Financial Officer (Principal Financial
                Randy J. Parker                  and Accounting Officer)

                       *                         Director                                      June 21, 1999
     -------------------------------------
               Stephen T. Clark

             /s/ ROBERT M. MELZER                Director                                      June 21, 1999
     -------------------------------------
               Robert M. Melzer

                       *                         Director                                      June 21, 1999
     -------------------------------------
                Steven Shulman

                       *                         Director                                      June 21, 1999
     -------------------------------------
               Scott M. Sperling
</TABLE>


<TABLE>
<S>        <C>                                 <C>
*By:              /s/ LIONEL P. FORTIN
           ---------------------------------
           Lionel P. Fortin, ATTORNEY-IN-FACT
</TABLE>

                                      II-8
<PAGE>
                                 EXHIBIT INDEX


<TABLE>
<S>        <C>
      1.1  Placement Agent Agreement between NationsBanc Montgomery Securities LLC and the
             Company, as amended.(1)
      2.1  Agreement and Plan of Merger by and between the Predecessor and the Company.(1)
      3.1  Articles of Incorporation.(1)
      3.2  Certificate of Correction to Articles of Incorporation.(1)
      3.3  Amended and Restated By-laws.(1)
      3.4  Agreement of Limited Partnership of Beacon Capital Partners, L.P.(2)
      3.5  First Amendment to Agreement of Limited Partnership.(2)
      4.1  Specimen certificate for shares of Common Stock, $.01 par value, of the Company.(1)
      5.1  Opinion of Goodwin, Procter & Hoar LLP as to the validity of the securities being
             offered.(3)
      8.1  Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.(4)
     10.1  Employment and Non-Competition Agreement for Alan M. Leventhal.(1)
     10.2  Employment and Non-Competition Agreement for Lionel P. Fortin.(1)
     10.3  Beacon Capital Partners 1998 Stock Option and Incentive Plan.(1)
     10.4  Form of Indemnification Agreement between the Registrant and its directors and
             executive officers.(1)
     10.5  Purchase and Sale Contract between Eastern Properties Master LLC and the
             Registrant.(1)
     10.6  Contract of Sale for Bank One Building.(2)
     10.7  Contract of Sale for 6500 Greenville Building.(2)
     10.8  Contract of Sale for North Creek II Building.(2)
     10.9  Contract of Sale for One Glen Lakes Building.(2)
    10.10  Contract of Sale for Crosspoint Atrium Building.(2)
    10.11  Contract of Sale for Brandywine Place Building.(2)
    10.12  Contract of Sale for Forest Abrams Building.(2)
    10.13  Contract of Sale for Sherman Tech Building.(2)
    10.14  Contract of Sale for Venture Tech Building.(2)
    10.15  Contract of Sale for Plaza at Walnut Building.(2)
    10.16  Contract of Sale for Richardson BC Building.(2)
    10.17  Contract of Sale for Park North SC Building.(2)
    10.18  Contract of Sale for TI Business Center.(2)
    10.19  Contract of Sale for Richardson CC Building.(2)
    10.20  Contribution Agreement by and between Luddite Associates and Beacon Capital Partners,
             L.P.
     21.1  Subsidiaries of the Registrant.(5)
     23.1  Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).(3)
     23.2  Consent of Ernst & Young LLP.
     24.1  Power of Attorney.(1)
     24.2  Power of Attorney of Robert M. Melzer.
     99.1  Press release related to contingent distribution. (6)
</TABLE>


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

(1) Previously filed as an exhibit to the Company's Registration Statement on
    Form S-11 (SEC File No. 333-56937) filed with the Commission on June 16,
    1998.

(2) Previously filed as an exhibit to Pre-effective Amendment No. 1 to the
    Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
    with the Commission on August 21, 1998.

(3) Previously filed as an exhibit to Pre-effective Amendment No. 2 to the
    Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
    with the Commission on September 22, 1998.
<PAGE>
(4) Previously filed as an exhibit to Pre-Effective Amendment No. 3 to the
    Company's Registration Statement on Form S-11 (SEC File No. 335-56937) filed
    with the Commission on October 16, 1998.

(5) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
    filed with the Commission on March 29, 1999.


(6) Previously filed as an exhibit to the Company's Current Report on Form 8-K,
    filed with the Commission on June 12, 1999.


<PAGE>

                                                                  Exhibit 23.2

                       Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to
the use of (i) our report dated January 21, 1999, with respect to the
consolidated financial statements of Beacon Capital Partners, Inc., (ii) our
report dated January 8, 1999, with respect to the consolidated financial
statements of Beacon/PW Kendall LLC, (iii) our report dated May 22, 1998,
with respect to the combined historical summary of gross income and direct
operating expenses of The Athenaeum Portfolio, (iv) our report dated May 22,
1998, with the respect to the historical summary of gross income and direct
operating expenses of Technology Square and The Draper Building, (v) our
report dated July 1, 1998, with respect to the historical summary of gross
income and direct operating expenses of The Breunig Portfolio, and (vi) our
report dated March 26, 1999, with respect to the combined historical summary
of gross income and direct operating expenses of Fort Point Place, all
included in post-effective amendment No. 4 to the Registration Statement
(Form S-11) and related Prospectus of Beacon Capital Partners, Inc. for the
registration of 20,394,843 shares of its common stock.

                                             /s/ ERNST & YOUNG LLP

Boston, Massachusetts
June 11, 1999

<PAGE>

                                                                Exhibit 24.2


                             POWER OF ATTORNEY

     KNOWN ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints each of Alan M. Leventhal and Lionel
P. Fortin such person's true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement (or to any other registration statement for the same offering that
is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act), and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that any
said attorney-in-fact and agent, or any substitute or substitutes of any of
them, may lawfully do or cause to be done by virtue hereof.



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