RECKSON OPERATING PARTNERSHIP LP, 10-K, 2000-03-23

RECKSON OPERATING PARTNERSHIP LP
10-K, 2000-03-23
REAL ESTATE INVESTMENT TRUSTS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1999

OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the
transition period from to
Commission File Number 1-13762

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RECKSON OPERATING PARTNERSHIP, L. P.
(Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
MARYLAND 11-3233647
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

<TABLE>
<CAPTION>
225 BROADHOLLOW ROAD,
MELVILLE, NY 11747
<S> <C>
(Address of principal (Zip Code)
executive offices)
</TABLE>

Registrant's telephone number, including area code: (631) 694-6900
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Securities registered pursuant to Section 12(b) of the Act: None

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Securities registered pursuant to Section 12(g) of the Act: None

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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K. [X]

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement of Reckson Associates Realty Corp.
relating to its Annual Shareholder's Meeting to be held May 18, 2000 are
incorporated by reference into Part III.

As of March 22, 2000, 3,671,352 common units of limited partnership interest
were held by non-affiliates of the Registrant. There is no established trading
market for such units.
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<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM
NO. PAGE
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<S> <C> <C>
PART I
1. Business .................................................................... I-1
2. Properties .................................................................. I-8
3. Legal Proceedings ........................................................... I-17
4. Submission of Matters to a Vote of Security Holders ......................... I-17
PART II
5. Market for Registrant's Common Equity and Related Security Matters .......... II-1
6. Selected Financial Data ..................................................... II-2
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................. ... II-3
7(a). Quantitative and Qualitative Disclosures about Market Risk .................. II-12
8. Financial Statements and Supplementary Data ................................. II-12
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................. II-12
PART III
10. Directors and Executive Officers of the Registrant .......................... III-1
11. Executive Compensation ...................................................... III-1
12. Security Ownership of Certain Beneficial Owners and Management .............. III-1
13. Certain Relationships and Related Transactions .............................. III-1
PART IV
14. Financial Statements and Schedules, Exhibits and Reports on Form 8-K ........ IV-1
</TABLE>

<PAGE>
PART I

ITEM 1. BUSINESS

GENERAL

Reckson Operating Partnership, L. P. (the "Operating Partnership")
commenced operations on June 2, 1995. Reckson Associates Realty Corp. (the
"Company"), which serves as the sole general partner of the Operating
Partnership, is a fully integrated, self administered and self managed real
estate investment trust ("REIT"). The Operating Partnership and the Company
were formed for the purpose of continuing the commercial real estate business
of Reckson Associates, its affiliated partnerships and other entities
("Reckson").

For more than 40 years, Reckson has been engaged in the business of owning,
developing, acquiring, constructing, managing and leasing office and industrial
properties in the New York tri-state area (the "Tri-State Area"). Based on
industry surveys, management believes that the Operating Partnership is one of
the largest owners and operators of Class A office properties and industrial
properties in the Tri-State Area. As of December 31, 1999, the Operating
Partnership owned 189 properties (the "Properties") (including two joint venture
properties) in the Tri-State Area encompassing approximately 21.4 million
rentable square feet, all of which are managed by the Operating Partnership. The
Properties consist of 77 Class A office properties (the "Office Properties")
encompassing approximately 13.1 million square feet, 110 industrial properties
(the "Industrial Properties") encompassing approximately 8.3 million square feet
and two 10,000 square foot retail properties. The Operating Partnership also
owns a 357,000 square foot office building located in Orlando, Florida. In
addition, as of December 31, 1999, the Operating Partnership had approximately
$315.6 million invested in certain mortgage indebtedness encumbering three Class
A Office Properties encompassing approximately 1.6 million square feet,
approximately 472 acres of land located in New Jersey and in a note receivable
secured by a partnership interest in Omni Partners, L. P., owner of the Omni, a
575,000 square foot Class A Office Property located in Uniondale, New York (the
"Mortgage Note Investments"). As of December 31, 1999, the Operating Partnership
also owned approximately 346 acres of land in 16 separate parcels of which the
Operating Partnership can develop approximately 1.9 million square feet of
office space and approximately 300,000 square feet of industrial space. During
1998 and 1999, the Operating Partnership made investments in joint ventures with
Reckson Strategic Venture Partners, LLC ("RSVP"), a venture capital fund created
as a research and development vehicle for the Operating Partnership to invest in
alternative real estate sectors (see Corporate Strategies and Growth
Opportunities). RSVP is managed by an affiliate of Reckson Service Industries,
Inc. currently D/B/A FrontLine Capital Group ("FrontLine"). The Operating
Partnership has committed up to $100 million for investments in the form of
either (i) joint ventures with RSVP or (ii) loans to FrontLine for FrontLine's
investment in RSVP. To date, the Operating Partnership has invested $24.8
million in RSVP joint venture investments. During 1998, the Operating
Partnership spun off FrontLine, its commercial service business, to its
shareholders and has provided FrontLine with a $100 million line of credit. As
of December 31, 1999, $79.5 million had been drawn and is outstanding on this
line.

The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes or have been modernized to successfully compete with
newer buildings and achieve among the highest rent, occupancy and tenant
retention rates within their markets. The majority of the Office Properties are
located in twelve planned office parks and are tenanted by a diverse industry
group of national firms which include consumer products, telecommunication,
health care, insurance and professional service firms such as accounting firms
and securities brokerage houses. The Industrial Properties are utilized for
distribution, warehousing, research and development and light manufacturing /
assembly activities and are located primarily in three planned industrial parks
developed by Reckson.

All of the interests in the Properties, the Mortgage Note Investments and
land are held directly or indirectly by, and all of its operations are
conducted through, the Operating Partnership. Reckson Associates Realty Corp.
controls the Operating Partnership as the sole general partner and as of

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December 31, 1999, owned approximately 87% of the Operating Partnership's
outstanding common units of limited partnership ("Units") and Class B common
units of limited partnership ("Class B Common Units").

The Operating Partnership seeks to maintain cash reserves for normal
repairs, replacements, improvements, working capital and other contingencies.
The Operating Partnership has established an unsecured credit facility (the
"Credit Facility") with a maximum borrowing amount of $500 million scheduled to
mature on July 23, 2001 and an unsecured term loan ("the "Term Loan") with a
maximum borrowing capacity of $75 million scheduled to mature on June 16, 2001.
The Credit Facility and the Term Loan require the Operating Partnership to
comply with a number of financial and other covenants on an ongoing basis.

During 1999, the Operating Partnership issued $300 million of five year and
ten year senior unsecured notes and in connection with the Company's issuance of
Series B convertible cumulative preferred stock, the Operating Partnership
issued six million Series E convertible cumulative preferred units of general
partnership interest to the Company for proceeds of $150 million. The combined
net proceeds of approximately $447.4 million were used to repay outstanding
borrowings under the Credit Facility and as partial consideration in the
acquisition of the first mortgage note secured by 919 Third Avenue located in
New York City.

On May 24, 1999, in conjunction with the Tower portfolio acquisition (see
Corporate Strategies and Growth Opportunities below), the Operating Partnership
issued 11,694,567 Class B Common Units to the Company which were valued for
purposes under generally accepted accounting principals ("GAAP") at $26 per
share for total consideration of approximately $304.1 million.

There are numerous commercial properties that compete with the Operating
Partnership in attracting tenants and numerous companies that compete in
selecting land for development and properties for acquisition.

The Operating Partnership's executive offices are located at 225
Broadhollow Road, Melville, New York 11747 and its telephone number at that
location is (631) 694-6900. At December 31, 1999, the Operating Partnership had
approximately 300 employees.

RECENT DEVELOPMENTS

Acquisition Activity.

Set forth below is a brief description of the Operating Partnership's major
acquisition activity during 1999.

On May 24, 1999, the Tower portfolio acquisition was completed with the
Operating Partnership obtaining title to all of Tower's real estate assets.
Simultaneously with the closing of the Tower portfolio acquisition the Operating
Partnership arranged for the sale of four of Tower's Class B New York City
office properties. In addition, the Operating Partnership sold, with the
exception of one Class A, 357,000 square foot office building located in
Orlando, Florida, all of the assets located outside of the Tri-State Area. In
addition to the aforementioned property in Orlando, Florida, the Operating
Partnership's remaining assets from the Tower portfolio acquisition include
three Class A New York City Office Properties encompassing approximately 1.6
million square feet and one Class A Office Property on Long Island encompassing
approximately 101,000 square feet.

On June 15, 1999, the Operating Partnership acquired the first mortgage
note secured by 919 Third Avenue, a 47 story, 1.4 million square foot Class A
Office Property located in New York City for approximately $277.5 million. The
first mortgage note entitles the Operating Partnership to all the net cash flow
of the property and to substantial rights regarding the operations of the
property.

In addition, as of December 31, 1999, the Operating Partnership has
invested approximately $15.7 million in certain mortgage indebtedness
encumbering one Class A Office Property encompassing approximately 177,000
square feet and approximately 472 acres of land located in New Jersey. The

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Operating Partnership has also loaned approximately $17 million to its minority
partner in Omni, its 575,000 square foot flagship Long Island Office Property,
and effectively increased its economic interest in the property owning
partnership.

On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the
Americas, a 540,000 square foot, 35 story, Class A office property, located in
New York City, for a purchase price of approximately $126.5 million. This
acquisition was financed through a $70 million secured debt financing and a draw
under the Operating Partnership's Credit Facility.

On January 6, 1998, the Operating Partnership made an initial investment in
the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse
facilities. In connection with the transaction the Morris Companies contributed
100% of their interests in certain industrial properties to Reckson Morris
Operating Partnership, L.P. ("RMI") in exchange for operating partnership units
in RMI.

During 1999, the Operating Partnership executed a contract for the sale,
which will take place in three stages, of its interest in RMI which consisted of
28 properties, comprising approximately 6.1 million square feet and three other
big box Industrial Properties. The combined total sale price is approximately
$298 million (approximately $42 million of which is payable to the Morris
Companies and its affiliates).

During 1999, the first stage of the RMI closing occurred and stages two and
three are scheduled for April 2000.

Leasing Activity

During the year ended December 31, 1999, the Operating Partnership leased
1.7 million square feet at the Office Properties at an average effective rent
(i.e. base rent adjusted on a straight-line basis for free rent periods, tenant
improvements and leasing commissions) of $24.14 per square foot and 1.3 million
square feet at the Industrial Properties at an average effective rent of $6.71
per square foot. Included in this leasing data is 388,531 square feet at the
Long Island Office Properties at an average effective rent of $24.87; 707,731
square feet at the Westchester Office Properties at an average effective rent of
$22.04; 109,006 square feet at the Connecticut Office Properties at an average
effective rent of $26.57; 413,072 square feet at the New Jersey Office
Properties at an average effective rent of $22.63 and 86,476 square feet of the
New York City Office Properties at an average effective rent of $42.27. Also
included in this leasing data is 940,315 square feet at the Long Island
Industrial Properties at an average effective rent of $7.16 and 373,497 square
feet at the New Jersey Industrial Properties at an average effective rent of
$5.60.

Financing Activities

On July 23, 1998, the Operating Partnership obtained its three year $500
million unsecured revolving Credit Facility from Chase Manhattan Bank, Union
Bank of Switzerland and PNC Bank as co-managers of the Credit Facility bank
group. Interest rates on borrowings under the Credit Facility are priced off of
LIBOR plus a sliding scale ranging from 65 basis points to 90 basis points based
on the Operating Partnership's investment grade rating on its senior unsecured
debt. On March 16, 1999, the Operating Partnership received its investment grade
rating on its senior unsecured debt. As a result, the pricing under the Credit
Facility was adjusted to LIBOR plus 90 basis points.

The Operating Partnership utilizes the Credit Facility primarily to finance
the acquisitions of Properties and other real estate investments, fund its
development activities and for working capital purposes. At December 31, 1999,
the Operating Partnership had availability under the Credit Facility to borrow
an additional $150.1 million (net of $52.3 million of outstanding undrawn
letters of credit).

As of December 31, 1999, the Operating Partnership had outstanding its 18
month, $75 million unsecured Term Loan from Chase Manhattan Bank. Interest rates
on borrowings under the Term Loan are priced off of LIBOR plus 150 basis points.
The Term Loan replaced the Operating Partnership's previous term loan which
matured on December 17, 1999.

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Other Financing Activities

On March 26, 1999, the Operating Partnership issued $100 million of 7.4%
senior unsecured notes due March 15, 2004 and $200 million of 7.75% senior
unsecured notes due March 15, 2009. Net proceeds of approximately $297.4 million
were used to repay outstanding borrowings under the Operating Partnership's
Credit Facility.

On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Operating Partnership obtained a $130 million unsecured bridge facility (The
"Bridge Facility") from USB AG. Interest rates on borrowings under the Bridge
Facility were priced off of LIBOR plus approximately 214 basis points. On July
23, 1999, the Bridge Facility was repaid through a long term fixed rate secured
borrowing and an advance under the Credit Facility. The new mortgage note, in
the amount of $125 million, is secured by two Office Properties with an
aggregate carrying value of approximately $261 million, is for a term of ten
years and bears interest at the rate of 7.73% per annum.

Unit Issuances

On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Operating Partnership issued 11,694,567 Class B Common Units to the Company
which were valued for GAAP purposes at $26 per share for total consideration of
approximately $304.1 million. The Class B Common Units are entitled to receive
an initial annual distribution of $2.24 per share, which distribution is subject
to adjustment annually commencing on July 1, 2000. The Class B Common Units are
exchangeable at any time, at the option of the holder, into an equal number of
Units of the Operating Partnership subject to customary antidilution
adjustments. The Class B Common Units will be exchanged for an equal number of
Units upon the exchange, if any, by the Company of common stock for Class B
Common Stock at any time following the four year, six-month anniversary of the
issuance of the Class B Common Stock.

On June 2, 1999, the Operating Partnership issued six million Series E
preferred units of general partnership interests to the Company in exchange for
approximately $150 million. The Series E preferred units have a liquidation
preference of $25 per unit, and an initial distribution rate of 7.85% per annum
with such rate increasing to 8.35% per annum on April 30, 2000 and to 8.85% per
annum from and after April 30, 2001. The Series E preferred units are
convertible into common units at a price of $26.05 per unit and are redeemable
by the Operating Partnership on or after March 2, 2002. Proceeds from the
issuance of the Series E preferred units were used as partial consideration in
the acquisition of the first mortgage note secured by 919 Third Avenue located
in New York City.

Operating Strategies and Growth Opportunities

The Operating Partnership's primary business objectives are to maximize
current return to its partners through increases in distributable cash flow and
to increase partner's long-term total return through the appreciation in the
value of its Units and Class B Common Units. The Operating Partnership plans to
achieve these objectives by continuing Reckson's operating strategies and
capitalizing on the internal and external growth opportunities as described
below.

Operating Strategies. Management believes that throughout its 40-year
operating history, Reckson has created value in its properties through a variety
of market cycles by implementing the operating strategies described below. These
operating strategies include the implementation of: (i) a multidisciplinary
leasing approach that involves architectural design and construction personnel
as well as leasing professionals, (ii) innovative property marketing programs
such as the broker frequent leasing points program which was established by the
Operating Partnership to enhance relationships with the brokerage community and
which allows brokers to accumulate points for leasing space in the Operating
Partnership's portfolio which can be redeemed for luxurious prizes, (iii) a
comprehensive tenant service program and property amenities designed to maximize
tenant satisfaction and retention, (iv) cost control management and systems that
take advantage of economies of scale that arise from the Operating Partnership's
market position and efficiencies attributable to the state-of-the-art energy
control systems at many of the Office Properties and (v) an acquisition and
development strategy that is continuously adjusted in light of anticipated
changes in market conditions and that seeks to capitalize on management's
multidisciplinary expertise and market knowledge to modify, upgrade and
reposition a property in its marketplace in order to maximize value.

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The Operating Partnership also intends to adhere to a policy of maintaining
a debt ratio (defined as the total debt of the Operating Partnership as a
percentage of the sum of the Operating Partnership's total debt and the value of
its equity) of less than 50%. As of December 31, 1999, the Operating
Partnership's debt ratio was approximately 42.3%. This calculation is net of
minority partners' proportionate share of debt and including the Operating
Partnership's share of unconsolidated joint venture debt. This debt ratio is
intended to provide the Operating Partnership with financial flexibility to
select the optimal source of capital (whether through debt or partners
contributions) with which to finance external growth.

Growth Opportunities. The Operating Partnership intends to achieve its
primary business objectives by applying its operating strategies to the internal
and external growth opportunities described below.

Internal Growth. To the extent Long Island, Westchester, New Jersey and
Southern Connecticut suburban office and industrial markets continue to improve,
management believes the Operating Partnership is well positioned to benefit from
rental revenue growth through: (i) contractual annual compounding 4% Base Rent
increases (defined as fixed gross rental amounts that excludes payments on
account of real estate tax, operating expense escalations and base electrical
charges) on approximately 85% of existing leases at the Long Island Properties,
(ii) periodic contractual increases in Base Rent on existing leases at the
Westchester Properties, the New Jersey Properties and the Southern Connecticut
Properties and (iii) the potential for increases to Base Rents as leases expire
as a result of continued tightening of the office and industrial markets with
limited new supply.

In connection with the Operating Partnership's acquisition and merger
transaction with Tower Realty Trust, Inc. (see External Growth below) the
Operating Partnership entered the New York City office market. The Manhattan
office market is currently experiencing favorable supply and demand
characteristics similar to those currently in the Operating Partnership's
suburban markets and also is characterized by its similar lack of available land
supply and other barriers to entry that limit our competition. The Tower
portfolio includes Manhattan office buildings that offer similar potential for
increase in Base Rents as described in (iii) above.

External Growth. The Operating Partnership seeks to acquire multi-tenant
suburban Class A office and industrial properties located in the Tri-State Area.
Management believes that the Tri-State Area presents opportunities to acquire or
invest in properties at attractive yields. The Operating Partnership believes
that its (i) capital structure, in particular its Credit Facility providing for
a maximum borrowing amount of up to $500 million, (ii) ability to acquire a
property for Units and thereby defer the seller's income tax on gain, (iii)
operating economies of scale, (iv) relationships with financial institutions and
private real estate owners, (v) fully integrated operations in its five existing
divisions and (vi) its dominant position and franchise in the submarkets in
which it owns properties will enhance the Company's ability to identify and
capitalize on acquisition opportunities. The Operating Partnership also intends
to selectively develop new Class A suburban office and industrial properties and
to continue to redevelop existing Office and Industrial Properties as these
opportunities arise. In the near future, the Operating Partnership will
concentrate its development activities on industrial and Class A office
properties within the Tri-State Area. The Operating Partnership's expansion into
the Manhattan office market and the opening of its New York City division
provides it with additional opportunities to acquire an interest in properties
at attractive yields. The Operating Partnership also believes that the addition
of its New York City division provides additional leasing and operational
facilities and enhances its overall franchise value by being the only real
estate operating company in the Tri-State Area with significant presence in both
Manhattan and each of the surrounding sub-markets.

During 1997, the Company formed FrontLine and RSVP. On June 11, 1998, the
Operating Partnership distributed its 95% common stock interest in FrontLine of
approximately $3 million to its owners, including the Company which, in turn,
distributed the common stock of FrontLine received from the Operating
Partnership to its stockholders. Additionally, during June 1998, the Operating
Partnership established a credit facility with FrontLine (the "FrontLine
Facility") in the amount of $100 million for FrontLine's e-commerce and
e-services operations and other general corporate purposes. As of December 31,
1999, the Company had advanced $79.5 million under the FrontLine Facility. In
addition,

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the Operating Partnership has approved the funding of investments of up to $100
million with or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint
venture REIT-qualified investments or advances made to FrontLine under terms
similar to the FrontLine Facility. As of December 31, 1999, approximately $67.2
million had been invested through the RSVP Commitment, of which $24.8 million
represents RSVP-controlled joint venture REIT-qualified investments and $42.4
million represents advances to FrontLine under the RSVP Commitment.

FrontLine identifies, acquires interests in and develops a network of
business to business e-commerce and e-services companies that service small to
medium sized enterprises, independent professionals and entrepreneurs and the
mobile workforce of larger companies. FrontLine serves as the managing member of
RSVP. RSVP was formed to provide the Company with a research and development
vehicle to invest in alternative real estate sectors. RSVP invests primarily in
real estate and real estate related operating companies generally outside of the
Company's core office and industrial focus. RSVP's strategy is to identify and
acquire interests in established entrepreneurial enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique circumstances for attractive investments as well as a
platform for future growth.

On August 27, 1998 the Operating Partnership announced the formation of a
joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"),
is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating
Partnership. The Dominion Venture is primarily engaged in acquiring, developing
and/or owning government-occupied office buildings and privately operated
correctional facilities. Under the Dominion Venture's operating agreement, RSVP
is to invest up to $100 million, some of which may be invested by the Operating
Partnership (the "RSVP Capital"). The initial contribution of RSVP Capital was
approximately $39 million of which approximately $10.1 million was invested by a
subsidiary of the Operating Partnership. The Operating Partnership's investment
was funded through the RSVP Commitment. In addition, the Operating Partnership
advanced approximately $2.9 million to FrontLine through the RSVP Commitment for
an investment in RSVP which was then invested on a joint venture basis with the
Dominion Group in certain service business activities related to the real estate
activities. As of December 31, 1999, the Operating Partnership had invested
approximately $17.6 million in the Dominion Venture which had investments in 13
government office buildings and three correctional facilities.

In 1999, the Operating Partnership invested approximately $7.2 million,
through a subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a
company that engages primarily in the acquisition and development of off-campus
student housing projects. The Operating Partnership's investment was funded
through the RSVP Commitment. In addition, the Operating Partnership has advanced
approximately $3.2 million to FrontLine through the RSVP Commitment for an
additional investment in RSVP which was invested in certain service business
activities related to student housing. As of December 31, 1999, RAP - SHP had
investments in four off - campus student housing projects.

In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real
Estate Equities Company, a Texas real estate investment trust.

On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger") into Metropolitan, with Metropolitan surviving the Merger.
Concurrently with the Merger, Tower Realty Operating Partnership, L.P. was
merged with and into a subsidiary of Metropolitan. The consideration issued in
the mergers was comprised of (i) 25% cash (approximately $107.2 million) and
(ii) 75% of shares of Class B Common Stock (valued for GAAP purposes at
approximately $304.1 million).

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internal rate of return. If Metropolitan does not redeem the preferred interest,
upon the expiration of the two-year period, Crescent must convert its $85
million preferred interest into either (i) a common membership interest in
Metropolitan or (ii) shares of the Company's common stock at a conversion price
of $24.61 per share.

The Tower portfolio acquired in the Merger consists of three Office
Properties comprising approximately 1.6 million square feet located in New York
City, one Office Property located on Long Island and certain office properties
and other real estate assets located outside the Tri-State Area.

Prior to the closing of the Merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the Merger, the Company has sold a real estate joint venture interest and all
of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Credit Facility. As a result
of incurring certain sales and closing costs in connection with the sale of the
assets located outside the Tri-State Area, the Company has incurred a loss of
approximately $4.4 million which has been included in gain on sales of real
estate on the accompanying consolidated statements of income.

ENVIRONMENTAL MATTERS

Under various Federal, state and local laws, ordinances and regulations, an
owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. These laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or toxic substances. The cost of
any required remediation and the owner's liability therefore as to any property
is generally not limited under such enactments and could exceed the value of the
property and/or the aggregate assets of the owner. The presence of such
substances, or the failure to properly remediate such substances, may adversely
affect the owner's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at a disposal or treatment facility, whether or
not such facility is owned or operated by such person. Certain environmental
laws govern the removal, encapsulation or disturbance of asbestos-containing
materials ("ACMs") when such materials are in poor condition, or in the event of
renovation or demolition. Such laws impose liability for release of ACMs into
the air and third parties may seek recovery from owners or operators of real
properties for personal injury associated with ACMs. In connection with the
ownership (direct or indirect), operation, management and development of real
properties, the Operating Partnership may be considered an owner or operator of
such properties or as having arranged for the disposal or treatment of hazardous
or toxic substances and, therefore, potentially liable for removal or
remediation costs, as well as certain other related costs, including
governmental fines and injuries to persons and property.

All of the Office Properties and all of the Industrial Properties have been
subjected to a Phase I or similar environmental audit after April 1, 1994 (which
involved general inspections without soil sampling, ground water analysis or
radon testing and, for the Properties constructed in 1978 or earlier, survey
inspections to ascertain the existence of ACMs were conducted) completed by
independent environmental consultant companies (except for 35 Pinelawn Road
which was originally developed by Reckson and subjected to a Phase 1 in April
1992). These environmental audits have not revealed any environmental liability
that would have a material adverse effect on the Operating Partnership's
business.

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ITEM 2. PROPERTIES

GENERAL

As of December 31, 1999, the Operating Partnership owned and operated 189
Properties (including two joint venture office properties but excluding the RSVP
- -- controlled joint ventures) in the Tri-State Area encompassing approximately
21.4 million square feet. These properties consist of 77 Class A Office
Properties encompassing approximately 13.1 million rentable square feet, 110
Industrial Properties encompassing approximately 8.3 million rentable square
feet and two free-standing 10,000 square foot retail properties. The Operating
Partnership also owns a 357,000 square foot Class A office building in Orlando,
Florida. The rentable square feet of each property has been determined for these
purposes based on the aggregate leased square footage specified in currently
effective leases and, with respect to vacant space, management's estimate. In
addition, as of December 31, 1999, the Operating Partnership owned approximately
346 acres of land in 16 separate parcels of which the Operating Partnership can
develop approximately 1.9 million square feet of office space and approximately
300,000 square feet of industrial space.

Reckson has historically emphasized the development and acquisition of
properties that are part of large scale office and industrial parks and
approximately 54% of the Office Properties and approximately 46% of the
Industrial Properties are located in such parks (measured by rentable square
footage). The Operating Partnership believes that owning properties in planned
office and industrial parks provides certain strategic advantages, including the
following: (i) certain tenants prefer being located in a park with other high
quality companies to enhance their corporate image, (ii) parks afford tenants
certain aesthetic amenities such as a common landscaping plan, standardization
of signage and common dining and recreational facilities, (iii) tenants may
expand (or contract) their business within a park, enabling them to centralize
business functions and (iv) a park provides tenants with access to other tenants
and may facilitate business relationships between tenants.

Also, as of December 31, 1999, the Operating Partnership had invested
approximately $298.6 million in certain mortgage indebtedness encumbering three
Class A Office Properties encompassing approximately 1.6 million square feet and
approximately 472 acres of land located in New Jersey. In addition, the
Operating Partnership has loaned approximately $17 million to its minority
partner in Omni, its flagship Long Island Office Property and effectively
increased its economic interest in the property owning partnership.

Set forth below is a summary of certain information relating to the
Properties, categorized by Office and Industrial Properties, as of December 31,
1999.

OFFICE PROPERTIES

General

As of December 31, 1999, the Operating Partnership owned or had an interest
in 77 Tri-State Area Class A Office Properties encompassing approximately 13.1
million rentable square feet. As of December 31, 1999, these Office Properties
were approximately 95% leased to approximately 1,000 tenants.

The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes and achieve among the highest rent, occupancy and
tenant retention rates within their sub-markets. Forty-nine of the 73 suburban
Office Properties are located in the following twelve planned office parks: the
North Shore Atrium, the Huntington Melville Corporate Center, the Nassau West
Corporate Center, the Tarrytown Corporate Center, the Landmark Square Office
Complex, the Executive Hill Office Park, the Reckson Executive Park, the
University Square Office Complex, the Summit at Valhalla, the Mt. Pleasant
Corporate Center, the Stamford Towers Office Center, and the Short Hills Office
Complex. The buildings in these office parks offer a full array of amenities
including health clubs, racquetball courts, sun decks, restaurants, computer
controlled HVAC access systems and conference centers. Management believes that
the location, quality of construction and amenities as well as the Operating
Partnership's reputation

I-8
<PAGE>

for providing a high level of tenant service have enabled the Operating
Partnership to attract and retain a national tenant base. The office tenants
include national service companies, such as telecommunications firms, "Big Five"
accounting firms, securities brokerage houses, insurance companies and health
care providers.

The Office Properties are leased to both national and local tenants. Leases
on the Office Properties are typically written for terms ranging from five to
ten years and require: (i) payment of a fixed gross rental amount that excludes
payments on account of real estate tax, operating expense escalations and base
electrical charges ("Base Rent"), (ii) payment of a base electrical charge,
(iii) payment of real estate tax escalations over a base year, (iv) payment of
compounded annual increases to Base Rent and/or payment of operating expense
escalations over a base year, (v) payment of overtime HVAC and electric and (vi)
payment of electric escalations over a base year. In virtually all leases, the
landlord is responsible for structural repairs. Renewal provisions typically
provide for renewal rates at market rates or a percentage thereof, provided that
such rates are not less than the most recent renewal rates.

The following table sets forth certain information as of December 31, 1999
for each of the Office Properties.

<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- ------------------------------------- ------------ ------------ --------------- ---------
<S> <C> <C> <C> <C>
Office Properties:
Huntington Melville Corporate
Center, Melville, NY
Leasehold
395 North Service Rd ................ 100% (2081) 1988 7.5
200 Broadhollow Rd. ................. 100% Fee 1981 4.6
48 South Service Rd. ................ 100% Fee 1986 7.3
35 Pinelawn Rd ...................... 100% Fee 1980 6.0
275 Broadhollow Rd .................. 100% Fee 1970 5.8
1305 Old Walt Whitman Rd (3) ........ 100% Fee 1998 (5) 18.1
----
Total--Huntington Melville
Corporate Center (4) ............... 49.3
----
North Shore Atrium, Syosset, NY
6800 Jericho Turnpike (North
Shore Atrium I) .................... 100% Fee 1977 13.0
6900 Jericho Turnpike (North
Shore Atrium II) ................... 100% Fee 1982 5.0
----
Total--North Shore Atrium ........... 18.0
----
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate Center Leasehold
II) ................................ 100% (2082) 1984 9.1
60 Charles Lindbergh Blvd. (Nassau Leasehold
West Corporate Center I) ........... 100% (2082) 1989 7.8
Leasehold
51 Charles Lindbergh Blvd. .......... 100% (2084) 1989 6.6
Leasehold
55 Charles Lindbergh Blvd. .......... 100% (2082) 1982 10.0
Leasehold
333 Earl Ovington Blvd. (The Omni) 60% (2088) 1991 30.6
Leasehold
90 Merrick Ave. ..................... 100% (2084) 1985 13.2
----
Total--Nassau West Corporate
Center ............................. 77.3
----
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road ............... 100% Fee 1974 1.4
520 White Plains Road ............... 60% Fee (6) 1981 6.8
555 White Plains Road ............... 100% Fee 1972 4.2
560 White Plains Road ............... 100% Fee 1980 4.0
580 White Plains Road ............... 100% Fee 1977 6.1
660 White Plains Road ............... 100% Fee 1983 10.9
----
Total--Tarrytown Corporate Center 33.4
----
Reckson Executive Park
Rye Brook, NY
1 International Dr. ................. 100% Fee 1983 N/A
2 International Dr. ................. 100% Fee 1983 N/A
3 International Dr. ................. 100% Fee 1983 N/A
4 International Dr. ................. 100% Fee 1986 N/A
5 International Dr. ................. 100% Fee 1986 N/A
6 International Dr. ................. 100% Fee 1986 N/A
Total--Reckson Executive Park ....... 44.4
----
</TABLE>

<TABLE>
<CAPTION>
ANNUAL
BASE
RENT NUMBER
NUMBER RENTABLE PER OF
OF SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------------- -------- ------------ ----------- ------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Office Properties:
Huntington Melville Corporate
Center, Melville, NY
395 North Service Rd ................ 4 187,393 100.0% $ 4,620,998 $ 24.66 5
200 Broadhollow Rd. ................. 4 67,432 88.8% $ 1,298,934 $ 21.68 11
48 South Service Rd. ................ 4 125,372 95.1% $ 2,850,902 $ 23.91 7
35 Pinelawn Rd ...................... 2 105,241 94.3% $ 2,088,736 $ 21.05 26
275 Broadhollow Rd .................. 4 124,441 100.0% $ 2,764,076 $ 21.39 17
1305 Old Walt Whitman Rd (3) ........ 3 167,400 92.7% $ 3,649,827 $ 23.52 5
------- ----------- --
Total--Huntington Melville
Corporate Center (4) ............... 777,279 96.5% $17,273,473 $ 23.03 71
------- ----------- --
North Shore Atrium, Syosset, NY
6800 Jericho Turnpike (North
Shore Atrium I) .................... 2 209,028 79.0% $ 3,355,388 $ 20.31 37
6900 Jericho Turnpike (North
Shore Atrium II) ................... 4 101,036 92.2% $ 2,054,157 $ 22.05 13
------- ----------- --
Total--North Shore Atrium ........... 310,064 83.3% $ 5,409,545 $ 20.94 50
------- ----------- --
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate Center
II) ................................ 6 211,845 100.0% $ 4,831,982 $ 22.64 22
60 Charles Lindbergh Blvd. (Nassau
West Corporate Center I) ........... 2 186,889 100.0% $ 4,004,079 $ 21.37 7
51 Charles Lindbergh Blvd. .......... 1 108,000 100.0% $ 2,167,285 $ 20.07 1
55 Charles Lindbergh Blvd. .......... 2 214,581 100.0% $ 2,535,051 $ 11,81 2
333 Earl Ovington Blvd. (The Omni) 10 575,000 87.8% $14,987,850 $ 29.68 28
90 Merrick Ave. ..................... 9 221,839 96.4% $ 4,859,277 $ 22.73 21
------- ----------- --
Total--Nassau West Corporate
Center ............................. 1,518,154 95.0% $33,385,524 $ 23.15 81
--------- ----------- --
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road ............... 2 26,468 91.5% $ 461,589 $ 19.05 20
520 White Plains Road ............... 6 171,761 100.0% $ 3,192,362 $ 18.59 1
555 White Plains Road ............... 5 121,585 86.5% $ 2,274,121 $ 21.62 6
560 White Plains Road ............... 6 126,471 100.0% $ 1,758,933 $ 13.89 16
580 White Plains Road ............... 6 170,726 100.0% $ 3,236,652 $ 18.92 19
660 White Plains Road ............... 6 258,715 94.7% $ 4,728,353 $ 19.29 45
--------- ----------- --
Total--Tarrytown Corporate Center 875,726 96.4% $15,652,010 $ 18.55 107
--------- ----------- ---
Reckson Executive Park
Rye Brook, NY
1 International Dr. ................. 3 90,000 100.0% $ 1,170,000 $ 13.00 1
2 International Dr. ................. 3 90,000 100.0% $ 1,170,000 $ 13.00 1
3 International Dr. ................. 3 91,174 100.0% $ 1,718,469 $ 18.84 5
4 International Dr. ................. 3 86,694 83.8% $ 1,572,288 $ 21.65 9
5 International Dr. ................. 3 90,000 100.0% $ 2,416,482 $ 26.85 1
6 International Dr. ................. 3 94,016 100.0% $ 1,423,951 $ 15.15 8
--------- ----------- ---
Total--Reckson Executive Park ....... 541,884 97.4% $ 9,471,190 $ 17.94 25
--------- ----------- ---
</TABLE>

I-9
<PAGE>

<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- ------------------------------------ ------------ ------------ --------------- ---------
<S> <C> <C> <C> <C>
Summit at Valhalla
Valhalla, NY
100 Summit Dr. ..................... 100% Fee 1988 11.3
200 Summit Dr. ..................... 100% Fee 1990 18.0
500 Summit Dr. ..................... 100% Fee 1986 29.1
----
Total--Summit at Valhalla .......... 58.4
----
Mt. Pleasant Corporate Center
115/117 Stevens Ave. ............... 100% Fee 1984 5.0
----
Total--Mt Pleasant Corporate
Center ............................ 5.0
----
Landmark Square
Stamford, CT
One Landmark Square ................ 100% Fee 1973 N/A
Two Landmark Square ................ 100% Fee 1976 N/A
Three Landmark Square .............. 100% Fee 1978 N/A
Four Landmark Square ............... 100% Fee 1977 N/A
Five Landmark Square ............... 100% Fee 1976 N/A
Six Landmark Square ................ 100% Fee 1984 N/A
Total--Landmark Square ............. 7.2
-----
Stamford Towers
Stamford, CT
680 Washington Blvd. ............... 100% Fee 1989 1.3
750 Washington Blvd. ............... 100% Fee 1989 2.4
-----
Total--Stamford Towers ............. 3.7
-----
Stand-alone Long Island Properties
400 Garden City Plaza
Garden City, NY ................... 100% Fee 1989 5.7
88 Duryea Rd.
Melville, NY ...................... 100% Fee 1986 1.5
310 East Shore Rd.
Great Neck, NY .................... 100% Fee 1981 1.5
333 East Shore Rd. Leasehold
Great Neck, NY .................... 100% (2030) 1976 1.5
520 Broadhollow Rd
Melville, NY ...................... 100% Fee 1978 7.0
1660 Walt Whitman Rd.
Melville, NY ...................... 100% Fee 1980 6.5
125 Baylis Rd.
Melville, NY ...................... 100% Fee 1980 8.2
150 Motor Parkway
Hauppauge, NY ..................... 100% Fee 1984 11.3
1979 Marcus Ave.
Lake Success, NY .................. 100% Fee 1987 8.6
120 Mineola Blvd
Mineola, New York ................. 100% Fee 1989 0.7
-----
Total--Stand-alone Long Island
Properties ........................ 52.5
-----
Stand-alone
Westchester Properties ............
155 White Plains Road,
Tarrytown, NY ..................... 100% Fee 1963 13.2
235 Main Street,
White Plains, NY .................. 100% Fee 1974 (5) .4
245 Main Street
White Plains, NY .................. 100% Fee 1983 .4
120 White Plains Rd.
Tarrytown, NY ..................... 100% Fee 1984 9.7
80 Grasslands
Elmsford, NY ...................... 100% Fee 1989 4.9
360 Hamilton Avenue
White Plains, NY (3) .............. 100% Fee 1977 1.5
140 Grand Street
White Plains, NY .................. 100% Fee 1991 2.2
-----
Total--Stand-alone Westchester
Properties(4) ..................... 32.3
-----
Executive Hill Office Park
West Orange, NJ
100 Executive Dr ................... 100% Fee 1978 10.1
200 Executive Dr ................... 100% Fee 1980 8.2
300 Executive Dr ................... 100% Fee 1984 8.7
10 Rooney Circle ................... 100% Fee 1971 5.2
-----
Total--Executive Hill Office Park .. 32.2
-----
</TABLE>

<TABLE>
<CAPTION>
ANNUAL
BASE
RENT NUMBER
NUMBER RENTABLE PER OF
OF SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------------ -------- ------------ --------- ------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Summit at Valhalla
Valhalla, NY
100 Summit Dr. ..................... 4 249,551 72.0% $ 1,745,495 $ 9.72 8
200 Summit Dr. ..................... 4 240,834 84.9% $ 4,890,463 $ 23.92 12
500 Summit Dr. ..................... 4 208,660 100.0% $ 5,633,820 $ 27.00 1
------- ----------- --
Total--Summit at Valhalla .......... 699,045 84.8% $12,269,778 $ 20.70 21
------- ----------- --
Mt. Pleasant Corporate Center
115/117 Stevens Ave. ............... 3 162,004 97.7% $ 3,029,965 $ 19.14 17
------- ----------- --
Total--Mt Pleasant Corporate
Center ............................ 162,004 97.7% $ 3,029,965 $ 19.14 17
------- ----------- --
Landmark Square
Stamford, CT
One Landmark Square ................ 22 296,716 85.5% $ 5,248,069 $ 20.69 62
Two Landmark Square ................ 3 39,701 69.4% $ 588,845 $ 21.38 7
Three Landmark Square .............. 6 128,286 96.5% $ 2,119,202 $ 17.12 22
Four Landmark Square ............... 5 104,446 91.5% $ 2,243,662 $ 23.48 15
Five Landmark Square ............... 3 57,273 92.9% $ 230,185 $ 4.32 2
Six Landmark Square ................ 10 171,899 91.3% $ 3,895,234 $ 24.81 6
------- ----------- --
Total--Landmark Square ............. 798,321 89.0% $14,325,197 $ 20.15 114
------- ----------- ---
Stamford Towers
Stamford, CT
680 Washington Blvd. ............... 11 132,759 99.5% $ 3,634,757 $ 27.52 6
750 Washington Blvd. ............... 11 192,108 99.6% $ 4,565,587 $ 23.87 11
------- ----------- ---
Total--Stamford Towers ............. 324,867 99.5% $ 8,200,344 $ 25.36 17
------- ----------- ---
Stand-alone Long Island Properties
400 Garden City Plaza
Garden City, NY ................... 5 176,073 98.3% $ 3,805,459 $ 21.99 25
88 Duryea Rd.
Melville, NY ...................... 2 25,061 96.2% $ 489,154 $ 20.29 4
310 East Shore Rd.
Great Neck, NY .................... 4 50,000 100.0% $ 1,265,128 $ 25.25 21
333 East Shore Rd.
Great Neck, NY .................... 2 17,715 99.6% $ 483,504 $ 27.39 9
520 Broadhollow Rd
Melville, NY ...................... 1 83,176 87.3% $ 1,486,300 $ 20.48 3
1660 Walt Whitman Rd.
Melville, NY ...................... 1 73,115 99.9% $ 1,420,754 $ 19.45 5
125 Baylis Rd.
Melville, NY ...................... 2 98,329 68.5% $ 1,285,253 $ 19.08 11
150 Motor Parkway
Hauppauge, NY ..................... 4 191,447 96.0% $ 4,028,593 $ 21.92 23
1979 Marcus Ave.
Lake Success, NY .................. 4 326,612 98.0% $ 6,313,637 $ 19.73 28
120 Mineola Blvd
Mineola, New York ................. 6 101,000 88.0% $ 1,826,277 $ 20.54 14
------- ----------- ---
Total--Stand-alone Long Island
Properties ........................ 1,142,528 93.7% $22,404,059 $ 20.93 143
--------- ----------- ---
Stand-alone
Westchester Properties ............
155 White Plains Road,
Tarrytown, NY ..................... 2 60,909 99.6% $ 1,073,536 $ 17.70 5
235 Main Street,
White Plains, NY .................. 6 83,237 89.2% $ 1,310,846 $ 17.66 28
245 Main Street
White Plains, NY .................. 6 73,543 92.0% $ 1,275,897 $ 18.85 17
120 White Plains Rd.
Tarrytown, NY ..................... 6 197,785 100.0% $ 4,404,079 $ 22.25 10
80 Grasslands
Elmsford, NY ...................... 3 85,104 92.9% $ 1,649,669 $ 20.87 5
360 Hamilton Avenue
White Plains, NY (3) .............. 12 382,000 120% $ 1,054,477 $ 22.96 2
140 Grand Street
White Plains, NY .................. 9 130,136 90.9% $ 2,690,489 $ 22.74 16
--------- ----------- ---
Total--Stand-alone Westchester
Properties(4) ..................... 1,012,714 94.8% $13,458,993 $ 20.91 83
--------- ----------- ---
Executive Hill Office Park
West Orange, NJ
100 Executive Dr ................... 3 92,872 97.1% $ 1,609,173 $ 17.85 10
200 Executive Dr ................... 4 102,630 99.3% $ 1,974,468 $ 19.37 17
300 Executive Dr ................... 4 126,196 100.0% $ 2,409,573 $ 19.07 11
10 Rooney Circle ................... 3 69,684 100.0% $ 1,367,232 $ 19.62 2
--------- ----------- ---
Total--Executive Hill Office Park .. 391,382 99.2% $ 7,360,446 $ 18.96 40
--------- ----------- ---
</TABLE>

I-10
<PAGE>

- ------------------
(1) Ground lease expirations assume exercise of renewal options by the lessee.
(2) Represents Base Rent of signed leases at December 31, 1999 adjusted for
scheduled contractual increases during the 12 months ending December 31,
2000. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31, 2000.
Amounts included in rental revenue for financial reporting purposes have
been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.
(3) Property is currently under redevelopment.
(4) Percent leases excludes properties under development.
(5) Year renovated.
(6) The actual fee interest in 520 White Plains Road is held by the County of
Westchester Industrial Development Agency. The fee interest in 520 White
Plains Road may be acquired if the outstanding principal under certain loan
agreements and annual basic installments are prepaid in full.
(7) The Operating Partnership currently holds the first mortgage note secured by
this property. There is a ground lease in place on a small portion of the
land which expires in 2066.

I-11
<PAGE>

INDUSTRIAL PROPERTIES

General.

As of December 31, 1999, the Operating Partnership owned or had an interest
in 110 Industrial Properties that encompass approximately 8.3 million rentable
square feet. As of December 31, 1999, the Industrial Properties were
approximately 98% leased to approximately 250 tenants. Many of the Industrial
Properties have been constructed with high ceiling heights (i.e., above 18
feet), upscale office building facades, parking in excess of zoning
requirements, drive-in and/or loading dock facilities and other features which
permit them to be leased for industrial and/or office purposes.

The Industrial Properties are leased to both national and local tenants.
These tenants utilize the Industrial Properties for distribution, warehousing,
research and development and light manufacturing/assembly activities. Leases on
the Industrial Properties are typically written for terms ranging from three to
seven years and require: (i) payment of a Base Rent, (ii) payments of real
estate tax escalations over a base year, (iii) payments of compounded annual
increases to Base Rent and (iv) reimbursement of all operating expenses.
Electric costs are borne and paid directly by the tenant. Certain leases are
"triple net" (i.e., the tenant is required to pay in addition to annual Base
Rent, all operating expenses and real estate taxes). In virtually all leases,
the landlord is responsible for structural repairs. Renewal provisions typically
provide for renewal rents at market rates, provided that such rates are not less
than the most recent rental rates.

Approximately 71% of the Industrial Properties measured by square footage
are located on Long Island. Sixty five percent of these properties as measured
by square footage were located in the following three Industrial Parks developed
by Reckson: (i) Vanderbilt Industrial Park, (ii) Airport International Plaza and
(iii) County Line Industrial Center.

In addition to the Industrial Properties on Long Island, the Operating
Partnership owns 15 Industrial Properties in the other suburban markets. These
properties encompass approximately 2.4 million square feet and were
approximately 97% leased (excluding properties under redevelopment) as of
December 31, 1999.

The following table sets forth certain information as of December 31, 1999
for each of the Industrial Properties.

</TABLE>

I-12
<PAGE>

<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1)
- ------------------------------ ------------ ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
65 Oser Ave. .................. 100% Fee 1975 1.2 18
73 Oser Ave. .................. 100% Fee 1974 1.2 20
80 Oser Ave. .................. 100% Fee 1974 1.1 18
85 Nicon Ct. .................. 100% Fee 1978 6.1 30
90 Oser Ave. .................. 100% Fee 1973 1.1 16
104 Parkway Dr. ............... 100% Fee 1985 1.8 15
110 Ricefield Ln. ............. 100% Fee 1980 2.0 15
120 Ricefield Ln. ............. 100% Fee 1983 2.0 15
125 Ricefield Ln. ............. 100% Fee 1973 2.0 14
135 Ricefield Ln. ............. 100% Fee 1981 2.1 15
85 Adams Dr. .................. 100% Fee 1980 1.8 15
395 Oser Ave .................. 100% Fee 1980 6.1 14
185 Oser Ave .................. 100% Fee 1974 2.0 18
25 Davids Dr. ................. 100% Fee 1975 3.2 20
45 Adams Ave .................. 100% Fee 1979 2.1 18
225 Oser Ave .................. 100% Fee 1977 1.2 14
180 Oser Ave .................. 100% Fee 1978 3.4 16
360 Oser Ave .................. 100% Fee 1981 1.3 18
400 Oser Ave .................. 100% Fee 1982 9.5 16
375 Oser Ave .................. 100% Fee 1981 1.2 18
425 Rabro Drive ............... 100% Fee 1980 4.0 16
390 Motor Parkway (3) ......... 100% Fee 1980 10.0 14
600 Old Willets Path .......... 100% Fee 1965 4.5 14
400 Moreland Road(3) .......... 100% Fee 1967 6.3 17
-----
Total--Vanderbilt
Industrial Park (4) .......... 160.4
-----
Airport International Plaza
Islip, NY
20 Orville Dr. ................ 100% Fee 1978 1.0 16
25 Orville Dr. ................ 100% Fee 1970 2.2 16
50 Orville Dr. ................ 100% Fee 1976 1.6 15
65 Orville Dr. ................ 100% Fee 1971 2.2 14
70 Orville Dr. ................ 100% Fee 1975 2.3 22
80 Orville Dr. ................ 100% Fee 1988 6.5 16
85 Orville Dr. ................ 100% Fee 1974 1.9 14
95 Orville Dr. ................ 100% Fee 1974 1.8 14
110 Orville Dr. ............... 100% Fee 1979 6.4 24
180 Orville Dr. ............... 100% Fee 1982 2.3 16
1101 Lakeland Ave. ............ 100% Fee 1983 4.9 20
1385 Lakeland Ave. ............ 100% Fee 1973 2.4 16
125 Wilbur Place .............. 100% Fee 1977 4.0 16
140 Wilbur Place .............. 100% Fee 1973 3.1 20
160 Wilbur Place .............. 100% Fee 1978 3.9 16
170 Wilbur Place .............. 100% Fee 1979 4.9 16
4040 Veterans Highway ......... 100% Fee 1972 1.0 14
120 Wilbur Place .............. 100% Fee 1972 2.8 16
2004 Orville Dr ............... 100% Fee 1998 7.4 24
2005 Orville Drive ............ 100% Fee 1999 8.7 24
-----
Total--Airport
International Plaza .......... 71.3
-----
County Line Industrial
Center
Melville, NY
5 Hub Dr. ..................... 100% Fee 1979 6.9 20
10 Hub Dr. .................... 100% Fee 1975 6.6 20
30 Hub Drive .................. 100% Fee 1976 5.1 20
265 Spagnoli Rd. .............. 100% Fee 1978 6.0 20
-----
Total--County Line
Industrial Center ............ 24.6
-----
Standalone Long Island
Properties
32 Windsor Pl.
Islip, NY .................... 100% Fee 1971 2.5 18
42 Windsor Pl.
Islip, NY .................... 100% Fee 1972 2.4 18
208 Blydenburgh Rd.
Islandia, NY ................. 100% Fee 1969 2.4 14
210 Blydenburgh Rd.
Islandia, NY ................. 100% Fee 1969 1.2 14
71 Hoffman Ln.
Islandia, NY ................. 100% Fee 1970 5.8 16
135 Fell Ct.
Islip, NY .................... 100% Fee 1965 3.2 16
-----
Subtotal Islip/Islandia ...... 17.5
-----
</TABLE>

<TABLE>
<CAPTION>
PERCENTAGE ANNUAL
OFFICE/ BASE
RESEARCH RENT NUMBER
AND RENTABLE PER OF
DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------- ------------- ------------ ----------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
65 Oser Ave. .................. 10% 20,000 100.0% $ 105,263 $ 5.26 1
73 Oser Ave. .................. 15% 20,000 100.0% $ 113,463 $ 5.67 1
80 Oser Ave. .................. 25% 19,500 100.0% $ 64,599 $ 3.31 1
85 Nicon Ct. .................. 10% 104,000 100.0% $ 500,189 $ 4.81 1
90 Oser Ave. .................. 26% 37,500 100.0% $ 125,160 $ 3.34 1
104 Parkway Dr. ............... 50% 27,600 100.0% $ 199,091 $ 7.21 1
110 Ricefield Ln. ............. 25% 32,264 100.0% $ 160,599 $ 4.98 1
120 Ricefield Ln. ............. 24% 33,060 100.0% $ 112,000 $ 3.39 1
125 Ricefield Ln. ............. 20% 30,495 100.0% $ 199,983 $ 6.56 1
135 Ricefield Ln. ............. 10% 32,340 100.0% $ 204,037 $ 6.31 1
85 Adams Dr. .................. 90% 20,000 100.0% $ 260,000 $ 13.00 1
395 Oser Ave .................. 100% 50,000 99.0% $ 429,165 $ 8.67 1
185 Oser Ave .................. 40% 30,000 100.0% $ 190,021 $ 6.33 1
25 Davids Dr. ................. 90% 40,000 100.0% $ 340,000 $ 8.50 1
45 Adams Ave .................. 90% 28,000 100.0% $ 212,333 $ 7.58 1
225 Oser Ave .................. 80% 10,000 99.6% $ 111,706 $ 11.22 1
180 Oser Ave .................. 35% 61,868 89.9% $ 379,208 $ 6.82 8
360 Oser Ave .................. 35% 23,000 100.0% $ 128,800 $ 5.60 1
400 Oser Ave .................. 30% 164,936 97.0% $ 1,090,261 $ 6.82 25
375 Oser Ave .................. 40% 20,000 100.0% $ 148,450 $ 7.42 1
425 Rabro Drive ............... 25% 65,641 99.2% $ 586,080 $ 9.00 1
390 Motor Parkway (3) ......... 4% 181,155 27.7% $ 173,916 $ 3.47 1
600 Old Willets Path .......... 25% 69,627 100.0% $ 394,590 $ 5.67 1
400 Moreland Road(3) .......... 10% 56,875 0.0% $ 0 $ 0.00 0
------- ----------- --
Total--Vanderbilt
Industrial Park (4) .......... 2,379,895 97.0% $11,876,976 $ 5.72 111
--------- ----------- ---
Airport International Plaza
Islip, NY
20 Orville Dr. ................ 50% 12,852 100.0% $ 174,731 $ 13.55 1
25 Orville Dr. ................ 100% 32,300 100.0% $ 475,065 $ 14.12 2
50 Orville Dr. ................ 20% 28,000 99.8% $ 244,538 $ 8.75 3
65 Orville Dr. ................ 13% 32,000 96.9% $ 145,018 $ 4.68 2
70 Orville Dr. ................ 7% 41,508 100.0% $ 301,684 $ 7.27 2
80 Orville Dr. ................ 21% 92,544 100.0% $ 678,929 $ 7.34 9
85 Orville Dr. ................ 20% 25,000 100.0% $ 154,393 $ 6.15 2
95 Orville Dr. ................ 10% 25,000 100.0% $ 120,875 $ 4.84 1
110 Orville Dr. ............... 15% 110,000 100.0% $ 627,733 $ 5.71 1
180 Orville Dr. ............... 18% 37,612 100.0% $ 233,291 $ 6.20 2
1101 Lakeland Ave. ............ 8% 90,411 100.0% $ 515,945 $ 5.71 1
1385 Lakeland Ave. ............ 18% 35,000 100.0% $ 178,398 $ 5.10 3
125 Wilbur Place .............. 31% 62,686 87.1% $ 279,880 $ 5.13 12
140 Wilbur Place .............. 37% 48,500 100.0% $ 290,747 $ 5.99 2
160 Wilbur Place .............. 30% 62,710 100.0% $ 501,034 $ 7.99 2
170 Wilbur Place .............. 28% 72,062 96.5% $ 230,971 $ 3.32 8
4040 Veterans Highway ......... 100% 2,800 100.0% $ 54,061 $ 19.31 1
120 Wilbur Place .............. 15% 35,000 100.0% $ 269,608 $ 7.70 4
2004 Orville Dr ............... 20% 106,515 100.0% $ 703,887 $ 6.61 1
2005 Orville Drive ............ 20% 130,010 100.0% $ 909,593 $ 7.00 1
--------- ----------- ---
Total--Airport
International Plaza .......... 1,082,510 99.1% $ 7,090,381 6.61 60
--------- ----------- ---
County Line Industrial
Center
Melville, NY
5 Hub Dr. ..................... 20% 88,001 100.0% $ 403,596 $ 4.59 2
10 Hub Dr. .................... 15% 95,546 100.0% $ 585,288 $ 6.12 4
30 Hub Drive .................. 18% 73,127 100.0% $ 467,684 $ 6.40 2
265 Spagnoli Rd. .............. 28% 85,500 100.0% $ 647,702 $ 7.57 3
--------- ----------- ---
Total--County Line
Industrial Center ............ 342,174 100.0% $ 2,104,270 $ 6.15 11
--------- ----------- ---
Standalone Long Island
Properties
32 Windsor Pl.
Islip, NY .................... 10% 43,000 100.0% $ 138,583 $ 3.22 1
42 Windsor Pl.
Islip, NY .................... 8% 65,000 100.0% $ 230,315 $ 3.54 1
208 Blydenburgh Rd.
Islandia, NY ................. 17% 24,000 100.0% $ 102,302 $ 4.26 4
210 Blydenburgh Rd.
Islandia, NY ................. 16% 20,000 100.0% $ 110,922 $ 5.55 2
71 Hoffman Ln.
Islandia, NY ................. 10% 30,400 100.0% $ 182,293 $ 6.00 1
135 Fell Ct.
Islip, NY .................... 20% 30,000 100.0% $ 222,750 $ 7.43 1
--------- ----------- ---
Subtotal Islip/Islandia ...... 212,400 100.0% $ 987,165 $ 4.65 10
--------- ----------- ---
</TABLE>

I-13
<PAGE>

<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1)
- ------------------------------ ------------ -------------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
70 Schmitt Boulevard,
Farmingdale, NY ............. 100% Fee 1975 4.4 18
105 Price Parkway,
Farmingdale, NY ............. 100% Fee 1969 12.0 26
110 Bi County Blvd.
Farmingdale, L.I, ........... 100% Fee 1984 9.5 19
-----
Subtotal Farmingdale ........ 25.9
-----
70 Maxess Rd,
Melville, NY ................ 100% Fee 1969 9.3 15
20 Melville Park Rd,
Melville, NY ................ 100% Fee 1965 4.0 23
45 Melville Park Drive,
Melville, NY ................ 100% Fee 1998 4.2 24
65 Marcus Drive.
Melville, L.I., ............. 100% Fee 1968 5.0 16
50 Marcus Drive, (3)
Melville, NY ................ 100% Fee 1967 7.1 22
-----
Subtotal Melville(4) ........ 29.6
-----
300 Motor Parkway,
Hauppauge, NY ............... 100% Fee 1979 4.2 14
1516 Motor Parkway,
Hauppauge, NY ............... 100% Fee 1981 7.9 24
-----
Subtotal Hauppauge .......... 12.1
-----
933 Motor Parkway
Smithtown, NY ............... 100% Fee 1973 5.6 20
65 S. Service Rd. ,
Plainview, NY(5) ............ 100% Fee 1961 1.6 14
85 S. Service Rd.
Plainview, NY ............... 100% Fee 1961 1.6 14
19 Nicholas Dr.,
Yaphank, NY (6) ............. 100% Fee 1989 29.6 24
48 Harbor Park Dr.,
Port Washington, NY ......... 100% Fee 1976 2.7 16
110 Marcus Dr.,
Huntington, NY .............. 100% Fee 1980 6.1 20
35 Engle St., (3)
Hicksville, NY .............. 100% Leasehold(7) 1966 4.0 24
100 Andrews Rd.,
Hicksville, L.I.,(1) ........ 100% Fee 1954 11.7 25
-----
Subtotal other (4) .......... 62.9
-----
Total Standalone Long
Island Properties (4) ...... 148.0
-----
Standalone Westchester
Properties ..................
100 Grasslands Rd., (3)
Elmsford, NY ................ 100% Fee 1964 3.6 16
2 Macy Rd.,
Harrison, NY ................ 100% Fee 1962 5.7 16
500 Saw Mill Rd.,
Elmsford, NY ................ 100% Fee 1968 7.3 22
-----
Total--Standalone
Westchester Industrial
Properties (4) .............. 16.6
-----
Standalone New Jersey
Industrial Properties
40 Cragwood Rd,
South Plainfield, NJ ........ 100% Fee 1965 13.5 16
400 Cabot Dr.,
Hamilton Township, NJ........ 100% Fee 1989 44.8 30
100 Forge Way,
Rockaway, NJ ................ 100% Fee 1986 3.5 24
200 Forge Way,
Rockaway, NJ ................ 100% Fee 1989 12.7 28
300 Forge Way,
Rockaway, NJ ................ 100% Fee 1989 4.2 24
400 Forge Way,
Rockaway, NJ ................ 100% Fee 1989 12.8 28
5 Henderson Dr.,,
West Caldwell, NJ ........... 100% Fee 1967 15.2 14
492 River Rd,
Nutley, NJ (3) .............. 100% Fee 1952 17.3 13
4 Applegate Drive
Robbinsville, New Jersey 100% Fee 1999 10.0 30
30 Stultz Rd
So. Brunswick, NJ ........... 71.8% Fee 1978 12.6 18
6 Johanna Ct.,(3)
East Brunswick, NJ .......... 71.8% Fee 1978 18.4 18
-----
Total New Jersey
Standalone Industrial
Properties (4) .............. 165.0
-----
</TABLE>

<TABLE>
<CAPTION>
PERCENTAGE ANNUAL
OFFICE/ BASE
RESEARCH RENT NUMBER
AND RENTABLE PER OF
DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------ ------------- ------------ ----------- ------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
70 Schmitt Boulevard,
Farmingdale, NY ............. 10% 76,312 100.0% $ 538,147 $ 7.05 1
105 Price Parkway,
Farmingdale, NY ............. 8.5% 297,000 100.0% $ 1,388,515 $ 4.68 1
110 Bi County Blvd.
Farmingdale, L.I, ........... 45% 147,303 96.3% $ 1,285,683 $ 9.07 11
------- ----------- --
Subtotal Farmingdale ........ 520,615 98.9% $ 3,212,345 $ 6.24 13
------- ----------- --
70 Maxess Rd,
Melville, NY ................ 38% 78,000 100.0% $ 666,214 $ 8.48 1
20 Melville Park Rd,
Melville, NY ................ 66% 67,922 100.0% $ 385,625 $ 5.68 1
45 Melville Park Drive,
Melville, NY ................ 22% 40,247 100.0% $ 540,442 $ 13.43 1
65 Marcus Drive.
Melville, L.I., ............. 50% 60,000 100.0% $ 596,328 $ 9.94 1
50 Marcus Drive, (3)
Melville, NY ................ 95% 165,000 0.0% $ 0 $ 0 0
------- ----------- --
Subtotal Melville(4) ........ 411,169 100.0% $ 2,188,609 $ 8.87 4
------- ----------- --
300 Motor Parkway,
Hauppauge, NY ............... 100% 55,942 96.9% $ 856,895 $ 15.81 10
1516 Motor Parkway,
Hauppauge, NY ............... 5% 140,000 100.0% $ 863,800 $ 6.17 1
------- ----------- --
Subtotal Hauppauge .......... 195,942 99.1% $ 1,720,695 $ 8.86 11
------- ----------- --
933 Motor Parkway
Smithtown, NY ............... 26% 48,000 100.0% $ 32,153 $ 0.67 1
65 S. Service Rd. ,
Plainview, NY(5) ............ 10% 10,000 100.0% $ 69,911 $ 6.99 1
85 S. Service Rd.
Plainview, NY ............... 60% 20,000 100.0% $ 79,526 $ 3.98 2
19 Nicholas Dr.,
Yaphank, NY (6) ............. 5% 230,000 100.0% $ 1,222,649 $ 5.32 1
48 Harbor Park Dr.,
Port Washington, NY ......... 100% 35,000 100.0% $ 707,352 $ 20.21 1
110 Marcus Dr.,
Huntington, NY .............. 39% 78,240 100.0% $ 486,653 $ 6.22 1
35 Engle St., (3)
Hicksville, NY .............. 8% 120,000 0.0% $ 0 $ 0.00 0
100 Andrews Rd.,
Hicksville, L.I.,(1) ........ 12% 167,500 100.0% $ 1,105,727 $ 6.59 2
------- ----------- --
Subtotal other (4) .......... 708,740 100.0% $ 3,703,971 $ 6.29 9
------- ----------- --
Total Standalone Long
Island Properties (4) ...... 2,048,866 99.6% $11,812,785 $ 6.29 47
--------- ----------- --
Standalone Westchester
Properties ..................
100 Grasslands Rd., (3)
Elmsford, NY ................ 100% 45,000 0.0% $ 0 $ 0.00 0
2 Macy Rd.,
Harrison, NY ................ 100% 26,000 100.0% $ 422,500 $ 16.25 1
500 Saw Mill Rd.,
Elmsford, NY ................ 17% 92,000 100.0% $ 846,400 $ 9.20 1
--------- ----------- --
Total--Standalone
Westchester Industrial
Properties (4) .............. 163,000 100.0% $ 1,268,900 $ 10.75 2
--------- ----------- --
Standalone New Jersey
Industrial Properties
40 Cragwood Rd,
South Plainfield, NJ ........ 49% 135,000 57.5% $ 1,265,304 $ 16.30 3
400 Cabot Dr.,
Hamilton Township, NJ........ 10% 585,510 100.0% $ 2,739,377 $ 4.68 1
100 Forge Way,
Rockaway, NJ ................ 12% 20,136 100.0% $ 166,775 $ 8.28 5
200 Forge Way,
Rockaway, NJ ................ 23% 72,118 100.0% $ 453,367 $ 6.29 2
300 Forge Way,
Rockaway, NJ ................ 37% 24,000 100.0% $ 180,050 $ 7.44 2
400 Forge Way,
Rockaway, NJ ................ 20% 73,000 100.0% $ 407,666 $ 5.58 2
5 Henderson Dr.,,
West Caldwell, NJ ........... 10% 210,000 100.0% $ 1,324,234 $ 6.29 1
492 River Rd,
Nutley, NJ (3) .............. 100% 128,000 0.00% $ 0 $ 0 0
4 Applegate Drive
Robbinsville, New Jersey 10% 265,000 100.0% $ 1,364,750 $ 5.15 1
30 Stultz Rd
So. Brunswick, NJ ........... 10% 60,617 100.0% $ 200,248 $ 3.12 1
6 Johanna Ct.,(3)
East Brunswick, NJ .......... 10% 214,000 0.0% $ 0 $ 0.00 0
--------- ----------- --
Total New Jersey
Standalone Industrial
Properties (4) .............. 1,787,381 94.9% $ 8,101,771 $ 5.95 18
--------- ----------- --
</TABLE>

I-14
<PAGE>

</TABLE>

- ----------------
(1) Calculated as the difference from the lowest beam to floor.

(2) Represents Base Rent of signed leases at December 31, 1999 adjusted for
scheduled contractual increases during the 12 months ending December 31,
2000. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12 month period ending December 31, 2000.
Amounts included in rental revenue for financial reporting purposes have
been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.

(3) Property under redevelopment.

(4) Percent leased excludes properties under redevelopment.

(5) A tenant has been granted an option exercisable after April 30, 1997 and
prior to October 31, 2002 to purchase this property for $600,000.

(6) The actual fee interest in 19 Nicholas Drive is currently held by the Town
of Brookhaven Industrial Development Agency. The Operating Partnership may
acquire such fee interest by making a nominal payment to the Town of
Brookhaven Industrial Development Agency.

(7) The Operating Partnership has entered into a 20 year lease agreement in
which it has the right to sublease the premises.

RETAIL PROPERTIES

As of December 31, 1999, the Operating Partnership owned two free-standing
10,000 square foot retail properties located in Great Neck and Huntington, New
York and were 100% leased as of December 31, 1999.

DEVELOPMENTS IN PROGRESS

As of December 31, 1999, the Operating Partnership had invested
approximately $130 million in developments in progress. This amount includes
approximately $64 million relating to existing buildings encompassing
approximately 1.1 million square feet. The Operating Partnership estimates that
if these projects were to be completed, total additional development costs would
be approximately $25.3 million. In addition, the Operating Partnership has also
invested approximately $66 million relating to approximately 346 acres of land
which it can develop approximately 2.2 million square feet. The Operating
Partnership estimates that if these projects were to be completed, total
additional development costs would be approximately $270 million.

THE OPTION PROPERTIES

In connection with the IPO, the Operating Partnership was granted a ten
year option to acquire ten properties (the "Option Properties") which were not
contributed to the Operating Partnership and are either owned by Reckson or in
which Reckson owns a non controlling minority interest.

As of December 31, 1999, the Operating Partnership has acquired four of the
Option Properties for an aggregate purchase price of approximately $35 million
and the issuance of approximately 475,000 Units. In addition, during 1998, one
of the Option Properties was sold by Reckson to a third party.

The remaining Option Properties consist of three Class A office properties
encompassing approximately 311,000 square feet and two industrial properties
encompassing approximately 69,000 square feet.

I-15
<PAGE>

HISTORICAL NON-INCREMENTAL REVENUE-GENERATING CAPITAL EXPENDITURES, TENANT
IMPROVEMENT COSTS AND LEASING COMMISSIONS

The following table sets forth annual and per square foot recurring,
non-incremental revenue-generating capital expenditures and non-incremental
revenue-generating tenant improvement costs and leasing commissions incurred by
the Operating Partnership to retain revenues attributable to existing leased
space for the period 1995 through 1999 for the Office Properties and the
Industrial Properties. As noted, incremental revenue-generating tenant
improvement costs and leasing commissions are excluded from the table set forth
immediately below. The historical capital expenditures, tenant improvement costs
and leasing commissions set forth below are not necessarily indicative of future
recurring, non-incremental revenue-generating capital expenditures or
non-incremental revenue-generating tenant improvement costs and leasing
commissions.

<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
CAPITAL EXPENDITURES
Office Properties
Total .................................... $ 364,545 $ 375,026 $ 1,108,675 $ 2,004,976 $ 2,298,899
Per square foot .......................... $ .19 $ .13 $ .22 $ .23 $ .23
Industrial Properties
Total .................................... $ 290,457 $ 670,751 $ 733,233 $ 1,205,266 $ 1,048,688
Per square foot .......................... $ .08 $ .18 $ .15 $ .12 $ .11
NON-INCREMENTAL REVENUE-GENERATING TENANT
IMPROVEMENT COSTS AND LEASING COMMISSIONS
Long Island Office Properties
Annual Tenant Improvement Costs ......... $ 452,057 $ 523,574 $ 784,044 $ 1,140,251 $ 1,009,357
Per square foot improved ................ 4.44 4.28 7.00 3.98 4.73
Annual Leasing Commissions .............. 144,925 119,047 415,822 418,191 551,762
Per square foot leased .................. 1.42 .97 4.83 1.46 2.59
Total per square foot ................... $ 5.86 $ 5.25 $ 11.83 $ 5.44 $ 7.32
Westchester Office Properties
Annual Tenant Improvement Costs ......... N/A $ 834,764 $ 1,211,665 $ 711,160 $ 1,316,611
Per square foot improved ................ N/A 6.33 8.90 4.45 5.62
Annual Leasing Commissions .............. N/A 264,388 366,257 286,150 457,730
Per square foot leased .................. N/A 2.00 2.69 1.79 1.96
Total per square foot ................... N/A $ 8.33 $ 11.59 $ 6.24 $ 7.58
Connecticut Office Properties
Annual Tenant Improvement Costs ......... N/A $ 58,000 $ 1,022,421 $ 202,880 $ 179,043
Per square foot improved ................ N/A 12.45 13.39 5.92 4.88
Annual Leasing Commissions .............. N/A 0 256,615 151,063 110,252
Per square foot leased .................. N/A 0 3.36 4.41 3.00
Total per square foot ................... N/A $ 12.45 $ 16.75 $ 10.33 $ 7.88
New Jersey Office Properties
Annual Tenant Improvement Costs ......... N/A N/A N/A $ 654,877 $ 454,054
Per square foot improved ................ N/A N/A N/A 3.78 2.29
Annual Leasing Commissions .............. N/A N/A N/A 396,127 787,065
Per square foot leased .................. N/A N/A N/A 2.08 3.96
Total per square foot ................... N/A N/A N/A $ 5.86 $ 6.25
Industrial Properties
Annual Tenant Improvement Costs ......... $ 210,496 $ 380,334 $ 230,466 $ 283,842 $ 375,646
Per square foot improved ................ .90 .72 .55 .76 .25
Annual Leasing Commissions .............. 107,351 436,213 81,013 200,154 835,108
Per square foot leased .................. .46 .82 .19 .44 .56
Total per square foot ................... $ 1.36 $ 1.54 $ .74 $ 1.20 $ .81
</TABLE>

I-16
<PAGE>

MORTGAGE INDEBTEDNESS

The following table sets forth certain information regarding the mortgage
debt of the Operating Partnership, as of December 31, 1999.

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AMORTIZATION
PROPERTY OUTSTANDING INTEREST RATE MATURITY DATE SCHEDULE
- ----------------------------------- ------------------ --------------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
6800 Jericho Turnpike
(North Shore Atrium I) ........... $ 15,001 7.25% 6/10/00 --
6900 Jericho Turnpike
(North Shore Atrium II) .......... 5,279 7.25% 6/10/00 --
200 Broadhollow Road. ............. 6,560 7.75% 6/02/02 30 year
395 North Service Road ............ 20,933 6.45% 10/26/05 (3)
50 Charles Lindbergh Blvd ......... 15,479 7.50% 7/10/01 --
333 Earl Ovington Blvd.
(The Omni) (1) ................... 56,367 7.72% 08/14/07 25 year
310 East Shore Road ............... 2,322 8.00% 7/01/02 --
80 Orville Drive .................. 2,616 7.50%(2) 2/01/04 --
580 White Plains Road ............. 8,172 7.375% 9/01/00 20 year
Landmark Square ................... 47,809 8.02% 10/07/06 25 year
110 Bi-County Blvd. ............... 4,221 9.125% 11/30/12 20 year
100 Summit Lake Drive ............. 22,614 8.50% 4/01/07 15 year
200 Summit Lake Drive ............. 20,463 9.25% 1/01/06 25 year
120 West 45th Street .............. 66,933 6.82% 11/01/27 28 year
810 7th Avenue .................... 86,822 7.73% 8/1/09 25 year
100 Wall Street ................... 37,623 7.73% 8/1/09 25 year
One Orlando Center ................ 39,960 6.82% 11/01/27 28 year
---------
TOTAL ............................. $ 459,174
=========
</TABLE>

- ----------
(1) The Operating Partnership has a 60% general partnership interest in the Omni
Partnership. The Operating Partnership's proportionate share of the
aggregate principal amount of the mortgage debt on the Omni is approximately
$33.8 million.

(2) Interest rate increases to 10.1% at June 2000.

(3) Principal payments of $34,000 per month.

ITEM 3. LEGAL PROCEEDINGS

The Operating Partnership is not presently subject to any material
litigation nor, to the Operating Partnership's knowledge, is any litigation
threatened against the Operating Partnership, other than routine actions for
negligence or other claims and administrative proceedings arising in the
ordinary course of business, some of which are expected to be covered by
liability insurance and all of which collectively are not expected to have a
material adverse effect on the liquidity, results of operations, business or
financial condition of the Operating Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS

None.

I-17
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY MATTERS

There is no established trading market for the Registrant's common equity.
As of March 22, 2000, there were 95 holders of the Registrant's common equity.

The following tables set forth, for the periods indicated, the
distributions declared on the common units and the Class B Common Units.

COMMON UNITS

<TABLE>
<CAPTION>
QUARTER ENDED DISTRIBUTION
- ------------------------------------ ------------------
<S> <C>
March 31, 1998 .............. $ 0.3125
June 30, 1998 ............... $ 0.4199 (1)
September 30, 1998 .......... $ 0.3375
December 31, 1998 ........... $ 0.3375

March 31, 1999 .............. $ .33750
June 30, 1999 ............... $ .37125 (2)
September 30, 1999 .......... $ .37125
December 31, 1999 ........... $ .37125

</TABLE>

- ----------
(1) Commencing with the distribution for the quarter ending June 30, 1998, the
Operating Partnership increased the quarterly distribution to $.3375 per
unit, which is equivalent to an annual distribution of $1.35 per unit. In
addition, on June 11, 1998, the Operating Partnership paid a stock dividend
equivalent to $.0824 per unit relating to the Operating Partnership's
distribution of its common stock interest in Reckson Service Industries,
Inc. currently D/B/A FrontLine Capital Group to the Company.

(2) Commencing with the distribution for the quarter ending June 30, 1999, the
Operating Partnership increased the quarterly distribution to $.37125 per
unit, which is equivalent to an annual distribution of $1.485 per unit.

CLASS B COMMON UNITS

<TABLE>
<CAPTION>
QUARTER ENDED DISTRIBUTION
- ------------------------------------ -----------------
<S> <C>
March 31, 1999 .............. N/A
June 30, 1999 ............... $ .2364 (1)
September 30, 1999 .......... $ .5600
December 31, 1999 ........... $ .5600

</TABLE>

- ----------
(1) Represents the period May 24, 1999 through June 30, 1999

UNREGISTERED SALES OF EQUITY SECURITIES

II-1
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS EXCEPT UNIT AND PROPERTIES DATA)

<TABLE>
<CAPTION>
RECKSON OPERATING PARTNERSHIP, L. P.
-----------------------------------------------------------
FOR THE YEAR ENDED
-----------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATING DATA:
Revenues ................................................. $ 403,142 $ 266,312 $ 153,348 $ 96,030
Total expenses ........................................... 297,476 201,003 107,639 70,935
Income before distribution to preferred unit holders,
minority interests and extraordinary loss ............... 105,666 65,309 45,709 25,095
Minority interests ....................................... 6,802 2,819 920 915
Extraordinary items -- loss .............................. (629) (1,993) (2,808) (1,259)
Preferred distributions .................................. 27,001 14,244 -- ---
Net income available to common unitholders ............... 71,234 46,253 41,981 22,921
Per Unit Data: (2)
Net income per common unit:
General Partner -- common units .......................... $ 1.21 $ .98 $ 1.06 $ .87
General Partner -- Class B Common Units .................. $ 1.94 $ -- $ -- $ --
Limited Partners' ........................................ $ 1.21 $ .98 $ 1.03 $ .86
Weighted average common units outstanding:
General Partner -- common units 40,270,000 39,473,000 32,727,000 19,928,000
General Partner -- Class B Common Units .................. 6,744,000 -- -- --
Limited Partners' ........................................ 7,705,000 7,728,000 7,016,000 6,503,000
BALANCE SHEET DATA: (PERIOD END)
Real estate, before accumulated depreciation ............. $ 2,214,872 $ 1,743,223 $ 1,015,282 $ 519,504
Total assets ............................................. 2,724,934 1,854,520 1,113,105 543,391
Mortgage notes payable ................................... 459,174 253,463 180,023 161,513
Unsecured credit facility ................................ 297,600 465,850 210,250 108,500
Unsecured term loan ...................................... 75,000 20,000 -- --
Senior unsecured notes ................................... 449,313 150,000 150,000 --
Market value of equity (3) ............................... 1,726,845 1,332,882 1,141,592 653,606
Total market capitalization including debt (3 and 4) ..... 2,993,756 2,119,936 1,668,800 921,423
OTHER DATA:
Funds from operations (5) ................................ $ 132,444 $ 98,501 $ 69,619 $ 40,938
Total square feet (at end of period) ..................... 21,385 21,000 13,645 8,800
Number of properties (at end of period) .................. 189 204 155 110

</TABLE>

<TABLE>
<CAPTION>
RECKSON OPERATING
PARTNERSHIP,
L. P. RECKSON GROUP
----------------- -----------------
FOR THE PERIOD
JUNE 3, 1995 TO FOR THE PERIOD
DECEMBER 31, JUNE 1, 1995 TO
1995 (1) JUNE 2, 1995 (1)
----------------- -----------------
<S> <C> <C>
OPERATING DATA:
Revenues ................................................. $ 38,455 $ 20,889
Total expenses ........................................... 27,892 20,695
Income before distribution to preferred unit holders,
minority interests and extraordinary loss ............... 10,563 194
Minority interests ....................................... 246 --
Extraordinary items -- loss .............................. (6,022) --
Preferred distributions .................................. -- --
Net income available to common unitholders ............... 4,295 194
Per Unit Data: (2)
Net income per common unit:
General Partner -- common units .......................... $ .22 --
General Partner -- Class B Common Units .................. $ -- --
Limited Partners' ........................................ $ .19 --
Weighted average common units outstanding:
General Partner -- common units 14,678,000 --
General Partner -- Class B Common Units .................. -- --
Limited Partners' ........................................ 5,648,000 --
BALANCE SHEET DATA: (PERIOD END)
Real estate, before accumulated depreciation ............. $ 290,712 --
Total assets ............................................. 242,540 --
Mortgage notes payable ................................... 98,126 --
Unsecured credit facility ................................ 40,000 --
Unsecured term loan ...................................... -- --
Senior unsecured notes ................................... -- --
Market value of equity (3) ............................... 303,943 --
Total market capitalization including debt (3 and 4) ..... 426,798 --
OTHER DATA:
Funds from operations (5) ................................ $ 17,190 --
Total square feet (at end of period) ..................... 5,430 4,529
Number of properties (at end of period) .................. 81 72
</TABLE>

- ----------
(1) Represents certain financial information on a consolidated historical basis
for Reckson Operating Partnership, L. P., and on a combined historical
basis for the Reckson Group.

(2) Based on the weighted average units outstanding for the period then ended.

(3) Based on the market value of the Operating Partnership's common units, the
stated value of the Operating Partnership's preferred units and the number
of units outstanding at the end of the period.

(4) Debt amount is net of minority partners' proportionate share of Omni debt
plus the Company's share of joint venture debt.

(5) See "Management's Discussion and Analysis" for a discussion of funds from
operations.

II-2
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the historical
financial statements of Reckson Operating Partnership, L.P. (the "Operating
Partnership") and related notes.

The Operating Partnership considers certain statements set forth herein to
be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, with respect to the Operating Partnership's
expectations for future periods. Certain forward-looking statements, including,
without limitation, statements relating to the timing and success of
acquisitions, the financing of the Operating Partnership's operations, the
ability to lease vacant space and the ability to renew or relet space under
expiring leases, involve certain risks and uncertainties. Although the Operating
Partnership believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, the actual results may differ
materially from those set forth in the forward-looking statements and the
Operating Partnership can give no assurance that its expectation will be
achieved. Certain factors that might cause the results of the Operating
Partnership to differ materially from those indicated by such forward-looking
statements include, among other factors, general economic conditions, general
real estate industry risks, tenant default and bankruptcies, loss of major
tenants, the impact of competition and acquisition, redevelopment and
development risks, the ability to finance business opportunities and local real
estate risks such as an oversupply of space or a reduction in demand for real
estate in the Operating Partnership's real estate markets. Consequently, such
forward-looking statements should be regarded solely as reflections of the
Operating Partnership's current operating and development plans and estimates.
These plans and estimates are subject to revisions from time to time as
additional information becomes available, and actual results may differ from
those indicated in the referenced statements.

OVERVIEW AND BACKGROUND

The Operating Partnership, which commenced operations on June 2 1995, is
engaged in the ownership, management, operation, leasing and development of
commercial real estate properties, principally office and industrial buildings,
and also owns certain undeveloped land located in the New York tri-state area
(the "Tri-State Area"). Reckson Associates Realty Corp. (the "Company"), is a
self administered and self managed real estate investment trust ("REIT"), and
serves as the sole general partner in the Operating Partnership.

The Operating Partnership owns all of the interests in its real estate
properties. At December 31, 1999, the Operating Partnership owned and operated
189 properties (the "Properties"), (including two joint venture properties)
encompassing approximately 21.4 million square feet in the Tri-State Area. The
Properties include 77 office properties (the "Office Properties") containing
approximately 13.1 million square feet, 110 industrial properties (the
"Industrial Properties") containing approximately 8.3 million square feet and
two retail properties containing approximately 20,000 square feet. The Operating
Partnership also owns and operates a 357,000 square foot office property located
in Orlando Florida. In addition, the Operating Partnership owned approximately
346 acres of land in 16 separate parcels of which the Operating Partnership can
develop approximately 1.9 million square feet of office space and approximately
300,000 square feet of industrial space. The Operating Partnership also has
invested approximately $315.6 million in mortgage notes encumbering three Class
A Office Properties encompassing approximately 1.6 million square feet,
approximately 472 acres of land located in New Jersey and in a note receivable
secured by a partnership interest in Omni Partners, L.P., owner of the Omni, a
575,000 square foot Class A Office Property located in Uniondale, New York.

II-3
<PAGE>

(formerly American Real Estate Investment Corporation). In addition, the
Operating Partnership also entered into a sale agreement with the Matrix
Development Group ("Matrix") relating to a first mortgage note and certain
industrial land holdings (the "Matrix Sale"). The combined total sale price is
$310 million (approximately $42 million of which is payable to the Morris
Companies and its affiliates) and consists of a combination of (i) cash, (ii)
convertible preferred and common stock of KTR, (iii) preferred units of KTR's
operating partnership, (iv) relief of debt and (v) a purchase money mortgage
note secured by certain land that is being sold to Matrix.

During September 1999, the Matrix Sale and the first stage of the RMI
closing occurred whereby the Operating Partnership sold its interest in RMI to
KTR for a combined sales price of approximately $164.7 million (net of minority
partner's interest). The combined consideration consisted of approximately (i)
$86.3 million in cash, (ii) $40 million of preferred stock of KTR, (iii) $1.5
million in common stock of KTR, (iv) approximately $26.7 million of debt relief
and (v) approximately $10.2 million in purchase money mortgages. As a result,
the Operating Partnership incurred a gain of approximately $10.1 million which
has been included in gain on sales of real estate on the Operating Partnership's
consolidated statements of income. Cash proceeds from the sales were used
primarily to repay borrowings under the Credit Facility.

The second and third stages of the RMI closing are scheduled to be
completed in April 2000. The remaining stages consist of six industrial
buildings and are being sold for total consideration of approximately $98
million.

On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger") into Metropolitan, with Metropolitan surviving the Merger.
Concurrently with the Merger, Tower Realty Operating Partnership, L.P. was
merged with and into a subsidiary of Metropolitan. The consideration issued in
the mergers was comprised of (i) 25% cash (approximately $107.2 million) and
(ii) 75% of shares of Class B Exchangeable Common Stock, par value $.01 per
share, of the Company (the "Class B Common Stock") (valued for generally
accepted accounting principles ("GAAP") purposes at approximately $304.1
million).

Prior to the closing of the Merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the Merger, the Company has sold a real estate joint venture interest and all
of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Operating Partnership's
unsecured credit facility. As a result of incurring certain sales and closing
costs in connection with the sale of the assets located outside the Tri-State
Area, the Company has incurred a loss of approximately $4.4 million which has
been included in gain on sales of real estate on the Operating Partnership's
consolidated statements of income.

II-4
<PAGE>

corporate purposes. As of December 31, 1999, the Company had advanced $79.5
million under the FrontLine Facility. In addition, the Operating Partnership has
approved the funding of investments of up to $100 million with or in RSVP (the
"RSVP Commitment"), through RSVP-controlled joint venture REIT-qualified
investments or advances made to FrontLine under terms similar to the FrontLine
Facility. As of December 31, 1999, approximately $67.2 million had been invested
through the RSVP Commitment, of which $24.8 million represents RSVP-controlled
joint venture REIT-qualified investments and $42.4 million represents advances
to FrontLine under the RSVP Commitment.

During November 1999, the Board of Directors of FrontLine and the Operating
Partnership approved an amendment to the FrontLine Facility and the RSVP
Commitment to permit FrontLine to incur secured debt and to pay interest
thereon. In consideration of the amendments, FrontLine has paid the Operating
Partnership a fee of approximately $3.6 million in the form of shares of
FrontLine common stock. Such fee is being amortized in income over an estimated
nine month benefit period.

FrontLine identifies, acquires interests in and develops a network of
business to business e-commerce and e-services companies that service small to
medium sized enterprises, independent professionals and entrepreneurs and the
mobile workforce of larger companies. FrontLine serves as the managing member of
RSVP. RSVP was formed to provide the Operating Partnership with a research and
development vehicle to invest in alternative real estate sectors. RSVP invests
primarily in real estate and real estate related operating companies generally
outside of the Operating Partnership's core office and industrial focus. RSVP's
strategy is to identify and acquire interests in established entrepreneurial
enterprises with experienced management teams in market sectors which are in the
early stages of their growth cycle or offer unique circumstances for attractive
investments as well as a platform for future growth.

The Operating Partnership and FrontLine have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their relationship
and to limit conflicts of interest. Under the Reckson Intercompany Agreement,
FrontLine granted the Operating Partnership a right of first opportunity to make
any REIT -qualified investment that becomes available to FrontLine. In addition,
if a REIT-qualified investment opportunity becomes available to an affiliate of
FrontLine, including RSVP, the Reckson Intercompany Agreement requires such
affiliate to allow the Operating Partnership to participate in such opportunity
to the extent of FrontLine's interest.

Under the Reckson Intercompany Agreement, the Operating Partnership granted
FrontLine a right of first opportunity to provide commercial services to the
Operating Partnership and its tenants. FrontLine will provide services to the
Operating Partnership at rates and on terms as attractive as either the best
available for comparable services in the market or those offered by FrontLine to
third parties. In addition, the Operating Partnership will give FrontLine access
to its tenants with respect to commercial services that may be provided to such
tenants and, under the Reckson Intercompany Agreement, subject to certain
conditions, the Operating Partnership granted FrontLine a right of first refusal
to become the lessee of any real property acquired by the Operating Partnership
if the Operating Partnership determines that, consistent with the Company's
status as a REIT, it is required to enter into a "master" lease agreement.

On August 27, 1998 the Operating Partnership announced the formation of a
joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"),
is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating
Partnership. The Dominion Venture is primarily engaged in acquiring, developing
and/or owning government-occupied office buildings and privately operated
correctional facilities. Under the Dominion Venture's operating agreement, RSVP
is to invest up to $100 million, some of which may be invested by the Operating
Partnership ( the "RSVP Capital"). The initial contribution of RSVP Capital was
approximately $39 million of which approximately $10.1 million was invested by a
subsidiary of the Operating Partnership. The Operating Partnership's investment
was funded through the RSVP Commitment. In addition, the Operating Partnership
advanced approximately $2.9 million to FrontLine through the RSVP

II-5
<PAGE>

Commitment for an investment in RSVP which was then invested on a joint venture
basis with the Dominion Group in certain service business activities related to
the real estate activities. As of December 31, 1999, the Operating Partnership
had invested approximately $17.6 million in the Dominion Venture which had
investments in 13 government office buildings and three correctional facilities.

In 1999, the Operating Partnership invested approximately $7.2 million,
through a subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a
company that engages primarily in the acquisition and development of off-campus
student housing projects. The Operating Partnership investment was funded
through the RSVP Commitment. In addition, the Operating Partnership has advanced
approximately $3.2 million to FrontLine through the RSVP Commitment for an
additional investment in RSVP which was invested in certain service business
activities related to student housing. As of December 31, 1999, RAP - SHP had
investments in four off - campus student housing projects

The market capitalization of the Operating Partnership at December 31, 1999
was approximately $3 billion. The Operating Partnership's market capitalization
is calculated based on the sum of (i) the value of the Operating Partnership's
common units and Class B Common Units (which, for this purpose, is assumed to be
the same per unit as the value of a share of the Company's common stock and
Class B Common Stock), (ii) the liquidation preference values of the Operating
Partnership's preferred units, (iii) the contributed value of Metropolitan's
preferred interest of $85 million and (iv) the $1.3 billion (including its share
of joint venture debt and net of minority partners' interest) of debt
outstanding at December 31, 1999. As a result, the Operating Partnership's total
debt to total market capitalization ratio at December 31, 1999 equaled
approximately 42.3%.

RESULTS OF OPERATIONS

The Operating Partnership's total revenues increased by $136.8 million or
51.4% from 1998 to 1999 and $113 million or 73.7% from 1997 to 1998. Property
operating revenues, which include base rents and tenant escalations and
reimbursements ("Property Operating Revenues") increased by $116.7 million or
46.2% from 1998 to 1999 and $108.7 million or 75.6% from 1997 to 1998. The 1999
increase in Property Operating Revenues is substantially attributable to the
Tower portfolio acquisition on May 24, 1999. The revenue generated from these
assets generated approximately $47.5 million of revenue in 1999. Additionally,
approximately $29.1 million of revenue was generated from the Operating
Partnership's acquisition of the first mortgage note secured by 919 Third
Avenue. Property Operating Revenues were also positively effected by
approximately $9.9 million from increases in occupancies and rental rates in our
"same store" properties and approximately $27.2 million in additional revenue
generated from properties acquired during 1998 and new development activity. The
remaining balance of the increase in total revenues in 1999 is primarily
attributable to the gain on sales of real estate of $10.1 million and
approximately $8.7 million in other income related to interest earned on
advances made to FrontLine through the FrontLine Facility and to RSVP through
the RSVP Commitment. The 1998 increase in Property Operating Revenues is
comprised of $2.1 million attributable to increases in rental rates and changes
in occupancies and $106.6 million attributable to acquisitions of properties.
The remaining balance of the increase in total revenues in 1998 is primarily
attributable to increases in interest income on the Operating Partnership's
investments in mortgage notes and notes receivable and income related to the
Operating Partnership's interest in its service companies. The Operating
Partnership's base rent reflects the positive impact of the straight-line rent
adjustment of $ 10.7 million in 1999, $7.7 million in 1998 and $4.5 million in
1997.

Property operating expenses, real estate taxes and ground rents ("Property
Expenses") increased by $41.7 million or 49.5% from 1998 to 1999 and by $34.0
million or 67.5% from 1997 to 1998. These increases are primarily due to the
acquisition of the properties included in the Tower portfolio acquisition on May
24, 1999 and the acquisition of the first mortgage note secured by 919 Third
Avenue. Gross operating margins (defined as Property Operating Revenues less
Property Expenses, taken as a percentage of Property Operating Revenues) for
1999, 1998 and 1997 were 65.9%, 66.6% and 65.0%, respectively. The slight
decrease in the gross operating margin percentage from 1998 to 1999 resulted
from a larger proportionate share of gross operating margin derived from office
properties, which has a lower gross margin percentage, in 1999 compared to 1998.
The higher proportionate share of the gross

II-6
<PAGE>

operating margin attributable to the office properties was a result of the
office properties acquired in the Tower portfolio acquisition and the
disposition of net leased industrial properties in the "Big Box" industrial
transaction. This shift in the composition of the portfolio was offset by
increases in rental rates and operating efficiencies realized as a result of
operating a larger portfolio of properties with concentration on properties in
office and industrial parks or in its established sub-markets. The increase from
1997 to 1998 in the gross operating margin percentage resulted from increases
realized in rental rates, the Operating Partnership's ability to realize certain
operating efficiencies as a result of operating a larger portfolio of properties
with concentrations of properties in office and industrial parks or in its
established sub-markets, a stable operating cost environment and the increased
ownership of net leased properties.

Marketing, general and administrative expenses were $22.3 million in 1999,
$16.0 million in 1998 and $8.5 million in 1997. The increase in marketing,
general and administrative expenses is due to the increased costs of opening and
maintaining the Company's New York City division and the increase in corporate
management and administrative costs associated with the growth of the Operating
Partnership. The Operating Partnership's business strategy has been to expand
further into the Tri-State Area suburban markets and the New York City market by
applying its standards for high quality office and industrial space and premier
tenant service to its New Jersey, Westchester, Southern Connecticut and New York
City divisions. In doing this, the Operating Partnership seeks to create a
superior franchise value that it enjoys in its home base of Long Island. Over
the past three years the Operating Partnership has supported this effort by
increasing the marketing programs in the other divisions and strengthening the
resources and operating systems in these divisions. The cost of these efforts
are reflected in both marketing, general and administrative expenses as well as
the revenue growth of the Operating Partnership. Marketing, general and
administrative expense as a percentage of total revenues were 5.5% in 1999, 6.0%
in 1998 and 5.5% in 1997.

Interest expense was $74.7 million in 1999, $47.8 million in 1998 and $21.6
million in 1997. The increase of $26.9 million from 1998 to 1999 is attributable
to (i)an increase in mortgage debt including approximately $232 million relating
to the Tower portfolio acquisition (ii) the issuance of $300 million of senior
unsecured notes in March 1999 and (iii) an increased average balance on the
Operating Partnership's credit facilities and term loan. The weighted average
balance outstanding on the Operating Partnership's credit facilities and term
loan was $423.8 million for 1999, $377.9 million for 1998 and $103.2 million for
1997.

Included in amortization expense is amortized financing costs of $3.4
million in 1999, $1.6 million in 1998 and $.8 million in 1997. The increase of
$1.8 million from 1998 to 1999 is primarily attributable to the increased loan
costs incurred in connection with the Operating Partnership increasing its
unsecured term loan in January 1999 to $75 million, the issuance of $300 million
of senior unsecured notes in March 1999 and the Operating Partnership's $130
million unsecured bridge facility obtained in connection with the Tower
portfolio acquisition in May 1999. The increase of $.8 million from 1997 to 1998
is primarily attributable to loan costs incurred in connection with the
Operating Partnership's obtaining a $500 million unsecured credit facility and a
$50 million unsecured term loan.

Extraordinary losses resulted in a $629,000 loss in 1999, $2.0 million loss
in 1998 and a $2.8 million loss in 1997. The extraordinary losses were all
attributed to the write-offs of certain deferred loan costs incurred in
connection with the Operating Partnership's restructuring of its credit
facilities.

LIQUIDITY AND CAPITAL RESOURCES

Summary of Cash Flows

Net cash provided by operating activities totaled $155.7 million in 1999,
$118.5 million in 1998 and $75.8 million in 1997. Increases for each year were
primarily attributable to the growth in cash flow provided by the acquisition of
properties and to a lesser extent from interest income from mortgage notes and
notes receivable.

Net cash used in investing activities totaled $392.9 million in 1999,
$612.6 million in 1998 and $549.3 million in 1997. Cash used in investing
activities related primarily to investments in real estate properties

II-7
<PAGE>

including development costs and investments in mortgage notes and notes
receivable. In addition, during 1998, the Operating Partnership purchased $40
million of preferred stock of Tower Realty Trust, Inc. in connection with the
Tower portfolio acquisition.

Net cash provided by financing activities totaled $256.1 million in 1999,
$474.6 million in 1998 and $482.9 million in 1997. Cash provided by financing
activities during 1999, 1998 and 1997 was primarily attributable to proceeds
from partner contributions, the issuance of senior unsecured notes and advances
under the Company's credit facilities and term loan. Additionally, during 1999,
approximately $126 million in proceeds from secured borrowings was provided by
financing activities.

Investing Activities

On May 24, 1999, the Tower portfolio acquisition was completed with the
Operating Partnership obtaining title to all of Tower's real estate assets.
Simultaneously with the closing of the Tower acquisition the Operating
Partnership arranged for the sale of four of Tower's Class B New York City
office properties. In addition, the Operating Partnership sold, with the
exception of one Class A, 357,000 square foot office building located in
Orlando, Florida, all of the assets located outside of the Tri-State Area. In
addition to the aforementioned property in Orlando, Florida, the Operating
Partnership's remaining assets from the Tower acquisition include three Class A
New York City office properties encompassing approximately 1.6 million square
feet and one Class A office property on Long Island encompassing approximately
101,000 square feet.

On June 15, 1999, the Operating Partnership acquired the first mortgage
note secured by 919 Third Avenue, a 47 story, 1.4 million square foot Class A
office property located in New York City. The first mortgage note entitles the
Operating Partnership to all the net cash flow of the property and to
substantial rights regarding the operations of the property.

In June 1998, the Operating Partnership established the FrontLine Facility
in the amount of $100 million for FrontLine's e-commerce and e-services
operations and for other general corporate purposes. As of December 31, 1999,
approximately $79.5 million had been advanced to FrontLine under this facility.
In addition, the Operating Partnership approved the commitment to fund
investments of up to $100 million with or in RSVP. As of December 31, 1999, the
Company has invested approximately $67.2 million under this commitment, of which
$24.8 million represents RSVP - controlled joint venture REIT - qualified
investments and $42.4 million represents advances to FrontLine under the RSVP
Commitment.

Financing Activities

On May 24, 1999, in conjunction with the Tower acquisition, the Operating
Partnership issued 11,694,567 Class B Common Units of general partnership
interest to the Company which were valued for GAAP purposes at $26 per unit for
total consideration of approximately $304.1 million. The Class B Common Units
are entitled to receive an initial annual distribution of $2.24 per unit, which
distribution is subject to adjustment annually. The Class B Common Units are
exchangeable at any time, at the option of the holder, into an equal number of
common units subject to customary antidilution adjustments. The Class B Common
Units will be exchanged for an equal number of common units upon exchange, if
any, by the Company of common stock for Class B Common Stock at any time
following the four year, six-month anniversary of the issuance of the Class B
Common Stock.

II-8
<PAGE>

As of December 31, 1999, in conjunction with the Company's Class B Common
Stock buy back program, the Operating Partnership purchased and retired
1,410,804 Class B Common Units for approximately $30.3 million.

On June 2, 1999, in connection with the Company's issuance of Series B
convertible cumulative preferred stock, the Operating Partnership issued six
million Series E convertible cumulative preferred units of general partnership
interests to the Company in exchange for approximately $150 million. The Series
E preferred units have a liquidation preference of $25 per unit, and an initial
distribution rate of 7.85% per annum with such rate increasing to 8.35% per
annum on April 30, 2000 and to 8.85% per annum from and after April 30, 2001.
The Series E preferred units are convertible into common units at a price of
$26.05 per unit and are redeemable by the Operating Partnership on or after
March 2, 2002. Proceeds from the issuance of the Series E preferred units were
used as partial consideration in the acquisition of the first mortgage note
secured by 919 Third Avenue located in New York City.

As of December 31, 1999 the Operating Partnership had a three year $500
million unsecured revolving credit facility (the "Credit Facility") with Chase
Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the
Credit Facility bank group. Interest rates on borrowings under the Credit
Facility are priced off of LIBOR plus a sliding scale ranging from 65 basis
points to 90 basis points based on the Operating Partnership's investment grade
rating on its senior unsecured debt. On March 16, 1999, the Operating
Partnership received its investment grade rating on its senior unsecured debt.
As a result, the pricing under the Credit Facility was adjusted to LIBOR plus 90
basis points.

The Operating Partnership utilizes the Credit Facility primarily to finance
the acquisitions of properties and other real estate investments, fund its
development activities and for working capital purposes. At December 31, 1999,
the Operating Partnership had availability under the Credit Facility to borrow
an additional $150.1 million (net of $52.3 million of outstanding undrawn
letters of credit).

As of December 31, 1999, the Operating Partnership had outstanding an 18
month, $75 million unsecured term loan (the "Term Loan') from Chase Manhattan
Bank. Interest rates on borrowings under the Term Loan are priced off of LIBOR
plus 150 basis points. The Term Loan replaced the Operating Partnership's
previous term loan which matured on December 17, 1999.

On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Operating Partnership obtained a $130 million unsecured bridge facility (The
"Bridge Facility") from UBS AG. Interest rates on borrowings under the Bridge
Facility were priced off of LIBOR plus approximately 214 basis points. On July
23, 1999, the Bridge Facility was repaid through a long term fixed rate secured
borrowing and an advance under the Credit Facility. As a result, certain
deferred loan costs incurred in connection with the Bridge Facility were written
off. Such amount is reflected as an extraordinary loss in the Operating
Partnership's consolidated statements of income. The new mortgage note, in the
amount of $125 million, is secured by two office properties with an aggregate
carrying value of approximately $261 million, is for a term of ten years and
bears interest at the rate of 7.73% per annum.

Capitalization

The Operating Partnership's indebtedness at December 31, 1999 totaled $1.3
billion (including its share of joint venture debt and net of the minority
partners' interests) and was comprised of $297.6 million outstanding under the
Credit Facility, $75 million outstanding under the Term Loan, approximately
$449.3 million of Senior Unsecured Notes and approximately $445 million of
mortgage indebtedness. Based on the Operating Partnership's total market
capitalization of approximately $3 billion at December 31, 1999, (calculated
based on the value of the Operating Partnership's common units and Class B
Common Units (which, for this purpose, is assumed to be the same per unit as the
value of a share of the Company's common stock and Class B Common Stock), the
liquidation preference value of the Operating Partnership's preferred units, the
contributed value of Metropolitan's preferred interest of $85 million and the
$1.3 billion of debt), the Operating Partnership's debt represented
approximately 42.3% of its total market capitalization.

Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures of the Operating Partnership. The Operating
Partnership's investments in mortgage notes, RSVP and advances under the

II-9
<PAGE>

FrontLine Facility are expected to produce cash flows. The Operating Partnership
expects to meet its short term liquidity requirements generally through its net
cash provided by operating activities along with the Credit Facility and Term
Loan previously discussed. The Operating Partnership expects to meet certain of
its financing requirements through long-term secured and unsecured borrowings
and the issuance of debt securities and additional equity securities of the
Operating Partnership. The Operating Partnership also expects certain strategic
dispositions of assets or interests in assets to generate cash flows. The
Operating Partnership will refinance existing mortgage indebtedness or
indebtedness under the Credit Facility at maturity or retire such debt through
the issuance of additional debt securities or additional equity securities. The
Operating Partnership anticipates that the current balance of cash and cash
equivalents and cash flows from operating activities, together with cash
available from borrowings and debt and equity offerings, will be adequate to
meet the capital and liquidity requirements of the Operating Partnership in both
the short and long-term.

INFLATION

Certain office leases provide for fixed base rent increases or indexed
escalations. In addition, certain office leases provide for separate escalations
of real estate taxes and electric costs over a base amount. The industrial
leases also generally provide for fixed base rent increases, direct pass through
of certain operating expenses and separate real estate tax escalation over a
base amount. The Operating Partnership believes that inflationary increases in
expenses will generally be offset by contractual rent increases and expense
escalations described above.

The Credit Facility and the Term Loan bear interest at a variable rate,
which will be influenced by changes in short-term interest rates, and are
sensitive to inflation.

IMPACT OF YEAR 2000

During 1999, the Operating Partnership discussed the nature and progress of
its plans to become Year 2000 ready. In that regard, the Operating Partnership
has completed its assessment, remediation and testing of its systems in order
for those systems to function properly with respect to dates occurring in the
Year 2000 and thereafter. As a result of those efforts, the Operating
Partnership experienced no significant disruptions in connection with its
building management, mechanical and computer systems and believes that those
systems successfully responded to the Year 2000 date change. The Operating
Partnership has expended approximately one million dollars with upgrading,
replacing or remediating its systems and is not aware of any material problems
resulting from Year 2000 issues. Further, the Operating Partnership will
continue to monitor its critical building management, mechanical and computer
systems throughout the year 2000 to ensure that any latent Year 2000 matters
that may arise are addressed promptly.

II-10
<PAGE>

FUNDS FROM OPERATIONS

Management believes that funds from operations ("FFO") is an appropriate
measure of performance of an operating partnership which is a general partner of
an equity REIT. FFO is defined by the National Association of Real Estate
Investment Trusts (NAREIT) as net income or loss, excluding gains or losses from
debt restructurings and sales of properties, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures. FFO
does not represent cash generated from operating activities in accordance with
GAAP and is not indicative of cash available to fund cash needs. FFO should not
be considered as an alternative to net income as an indicator of the Operating
Partnership's operating performance or as an alternative to cash flow as a
measure of liquidity. (See Selected Financial Data). In March 1995, NAREIT
issued a "White Paper" analysis to address certain interpretive issues under its
definition of FFO. The White Paper provides that amortization of deferred
financing costs and depreciation of non-rental real estate assets are no longer
to be added back to net income to arrive at FFO. In October 1999, NAREIT revised
the definition of FFO to include gains and losses from sales of properties and
non-recurring events. This revised definition is effective for all periods
beginning on or after January 1, 2000.

Since all companies and analysts do not calculate FFO in a similar fashion,
the Operating Partnership's calculation of FFO presented herein may not be
comparable to similarly titled measures as reported by other companies.

The following table presents the Operating Partnership's FFO calculation
(in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Income before extraordinary loss ..................................... $ 71,863 $ 48,246 $ 44,789
Less:
Extraordinary loss .................................................. 629 1,993 2,808
--------- -------- --------
Net Income ........................................................... 71,234 46,253 41,981
Adjustment for Funds From Operations:
Add:
Real estate depreciation and amortization ........................... 72,124 51,424 26,834
Minority interests' in consolidated partnerships .................... 6,802 2,819 920
Extraordinary loss .................................................. 629 1,993 2,808
Less:
Gain on sales of real estate ........................................ 10,052 -- 672
Amount distributed to minority partners in consolidated partnerships 8,293 3,988 2,252
--------- -------- --------
Funds From Operations ................................................ $ 132,444 $ 98,501 $ 69,619
========= ======== ========
Weighted average units outstanding ................................... 54,719 47,201 39,743
========= ======== ========
</TABLE>

II-11
<PAGE>

ITEM 7 (A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The primary market risk facing the Operating Partnership is interest rate
risk on its long term debt, mortgage notes and notes receivable. The Operating
Partnership does not hedge interest rate risk using financial instruments nor is
the Operating Partnership subject to foreign currency risk.

The Operating Partnership manages its exposure to interest rate risk on its
variable rate indebtedness by borrowing on a short-term basis under its Credit
Facility until such time as it is able to retire the short-term variable rate
debt with a long-term fixed rate debt offering on terms that are advantages to
the Operating Partnership or through general partner contributions.

The following table sets forth the Operating Partnership's long term debt
obligations by scheduled principal cash flow payments and maturity date,
weighted average interest rates and estimated fair market value ("FMV") at
December 31, 1999 (dollars in thousands):

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2000 2001 2002 2003 2004
------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Long term debt:
Fixed rate .............. $ 35,145 $ 22,751 $ 16,499 $ 8,350 $ 11,769
Weighted average interest
rate ................... 7.37% 7.58% 7.79% 7.77% 7.73%
Variable rate ........... $ -- $ 372,600 $ -- $ -- $ --
Weighted average interest
rate ................... -- 7.27% -- -- --
</TABLE>

<TABLE>
<CAPTION>
THEREAFTER TOTAL (1) FMV
-------------- -------------- ------------
<S> <C> <C> <C>
Long term debt:
Fixed rate .............. $ 814,660 $ 909,174 $ 909,174
Weighted average interest
rate ................... 7.53% 7.53% --
Variable rate ........... $ -- $ 372,600 $ 372,600
Weighted average interest
rate ................... -- 7.27% --

</TABLE>

- ----------
(1) Includes unamortized issuance discounts of $687,000 on the 5 and 10 year
senior unsecured notes issued on March 26, 1999 which are due at maturity.

In addition, the Operating Partnership has assessed the market risk for its
variable rate debt, which is based upon LIBOR, and believes that a one percent
increase in the LIBOR rate would have an approximate $3.7 million annual
increase in interest expense based on approximately $372.6 million outstanding
at December 31, 1999.

The following table sets forth the Operating Partnership's mortgage notes
and note receivables by scheduled maturity date, weighted average interest rates
and estimated FMV at December 31, 1999 (dollars in thousands):

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER TOTAL (2) FMV
-------------- ---------- ------------- ------ ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage notes and notes
receivable:
Fixed rate .............. $ 282,857 $ 15 $ 11,306 $ -- $ 36,500 $ 16,990 $ 347,668 $ 347,668
Weighted average interest
rate ................... 9.42% 9.00% 10.35% $ -- 10.23% 11.65% 9.64% --
</TABLE>

- ----------
(2) Excludes mortgage note receivable acquisition costs and interest receivables
aggregating approximately $4.8 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is included in a separate section of this Form
10-K

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

II-12
<PAGE>

PART III

ITEMS 10, 11, 12, AND 13.

The Company is the sole managing general partner of the Operating
Partnership. All of the Company's business is conducted through the Operating
Partnership. As a result, the information required by items 10, 11, 12, and 13
is identical to the information contained in Items 10, 11, 12 and 13 of the
Company's Form 10-K, which incorporates by reference information appearing in
the Company's Proxy Statement furnished to shareholders in connection with the
Company's 2000 Annual Meeting. Such information is incorporated by reference in
this Form 10-K.

III-1
<PAGE>

PART IV

ITEM 14. FINANCIAL STATEMENTS AND SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K

(a)(1 and 2) Financial Statements and Schedules

The following consolidated financial information is included as a separate
section of this annual report on Form 10-K:

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
RECKSON OPERATING PARTNERSHIP, L. P.
Report of Independent Auditors ........................................... IV-5
Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998 IV-6
Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997 ....................................... IV-7
Consolidated Statement of Partners' Capital for the years ended
December 31, 1999, 1998 and 1997. ...................................... IV-8
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 ....................................... IV-9
Notes to Financial Statements ............................................ IV-10
Schedule III- Real Estate and Accumulated Depreciation ................... IV-26

</TABLE>

IV-1
<PAGE>

All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the financial statements and notes
thereto.

(3) Exhibits

EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- --------- --------- -----------
3.1 a Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P.
3.2 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating
Partnership,
L.P. Establishing Series A Preferred Units of Limited Partnership Interest
3.3 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating
Partnership,
L.P. Establishing Series B Preferred Units of Limited Partnership Interest
3.4 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating
Partnership,
L.P. Establishing Series C Preferred Units of LimitedPartnership Interest
3.5 g Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating
Partnership, L.P. Establishing Series D Preferred Units of Limited Partnership Interest
3.6 o Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating
Partnership, L.P. Establishing Series B Common Units of Limited Partnership Interest
3.7 o Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating
Partnership, L.P. Establishing Series E Preferred Partnership Units of Limited Partnership
4.1 i Form of 7.40% Notes due 2004 of Reckson Operating Partnership, L.P.
4.2 i Form of 7.75% Notes due 2009 of Reckson Operating Partnership, L.P.
4.3 i Indenture, dated March 26, 1999, among Reckson Operating Partnership, L.P., the Company, and
The Bank of New York, as trustee
10.1 e Third Amended and Restated Agreement of Limited Partnership of Omni Partners, L.P.
10.2 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson
Associates Realty Corp. and Donald Rechler
10.3 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson
Associates Realty Corp. and Scott Rechler
10.4 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson
Associates Realty Corp. and Mitchell Rechler
10.5 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson
Associates Realty Corp. and Gregg Rechler
10.6 h Amendment and Restatement of Employment and Non-Competition Agreement between Reckson
Associates Realty Corp. and Roger Rechler
10.7 h Amendmentand Restatement of Employment and Non-Competition Agreement between Reckson
Associates Realty Corp. and J. Michael Maturo
10.8 a Purchase Option Agreements relating to the Reckson Option Properties
10.9 a Purchase Option Agreements relating to the Other Option Properties
10.10 c Amended 1995 Stock Option Plan
10.11 c 1996 Employee Stock Option Plan
10.12 b Ground Leases for certain of the properties
10.13 h Third Amended and Restated Agreement of Limited Partnership of Reckson FS Limited Partnership
10.14 a Indemnity Agreement relating to 100 Oser Avenue
10.15 e Amended and Restated 1997 Stock Option Plan
10.16 e 1998 Stock Option Plan
10.17 e Note Purchase Agreement for the Senior Unsecured Notes
10.18 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Donald Rechler
10.19 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Scott Rechler
10.20 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Mitchell Rechler
10.21 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Gregg Rechler
10.22 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and Roger Rechler
10.23 h Amended and Restated Severance Agreement between Reckson Associates Realty Corp. and J. Michael Maturo
10.24 d $500 million Credit Agreement dated July 23, 1998 among Reckson Operating Partnership, L.P. and Reckson
Morris Operating Partnership, L.P. and the Chase Manhattan Bank, UBS AG and PNC Bank and other
lenders party thereto
10.25 f Agreement and Plan of Merger by and among Tower Realty Trust, Inc., Reckson Associates Realty Corp.,
Reckson Operating Partnership, L.P. and Metropolitan Partners LLC, dated December 8, 1998
10.26 f Stock Purchase Agreement by and between Tower Realty Trust, Inc. and Metropolitan Partners LLC,
dated December 8, 1998
10.27 f Amended and Restated Operating Agreement of Metropolitan Partners LLC, dated December 8, 1998
10.28 h Intercompany Agreement by and between Reckson Operating Partnership, L.P. and Reckson Service Industries,
Inc., dated May 13, 1998
10.29 o Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service Industries,
Inc., as borrower and Reckson Operating Partnership, L.P., as Lender relating to Reckson Strategic
Venture Partners, LLC ("RSVP Credit Agreement")
10.30 o Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service Industries, Inc.,
as borrower and Reckson Operating Partnership, L.P., as Lender relating to the operations of Reckson
Service Industries, Inc. ("RSI Credit Agreement")
10.31 o Letter Agreement, dated November 30, 1999, amending the RSVP Credit Agreement and the RSI Credit Agreement
10.32 k Consolidated, Amended and Restated Fee and Leasehold Mortgage Note relating to 919 Third Avenue
10.33 m Agreement of Purchase and Sale, between NBBRE 919 Third Avenue Associates, L.P., as Seller, and
Reckson Operating Partnership, L.P., as Purchaser
10.34 l Contribution and Exchange Agreement by and between Reckson Morris Industrial Trust, Reckson
Morris Industrial Interim GP, LLC, Reckson Operating Partnership, L.P., Robert Morris, Joseph D. Morris,
Ronald Schram, Mark M. Bava, The Drew Morris Trust, The Justin Morris Trust, The Keith Morris Trust,
Joseph D. Morris Family Limited Partnership and Robert Morris Family Limited Partnership, and American
Real Estate Investment L.P. and American Real Estate Corporation
10.35 n $75 million Second Amended and Restated Credit Facility Agreement dated as of December 17, 1999
12.1 Statement of Ratios of Earnings to Fixed Charges
21.1 Statement of Subsidiaries
23.0 Consent of Independent Auditors
24.1 Power of Attorney (included in Part IV of the Form 10-K)
27.0 Financial Data Schedule
</TABLE>

IV-2
<PAGE>

- --------

(a) Previously filed as an exhibit to Registration Statement Form S-11 (No.
333-1280) and incorporated herein by reference.

(b) Previously filed as an exhibit to Registration Statement Form S-11 (No.
33-84324) and incorporated herein by reference.

(c) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on November 25, 1996 and incorporated herein by reference.

(d) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on August 14, 1998 and incorporated herein by reference.

(e) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 26, 1998 and incorporated herein by reference.

(f) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on December 22, 1998 and incorporated herein by reference.

(g) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on March 1, 1999 and incorporated herein by reference.

(h) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 16, 1999 and incorporated herein by reference.

(i) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
March 26, 1999 and incorporated herein by reference.

(j) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
June 7, 1999 and incorporated herein by reference.

(k) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
June 25, 1999 and incorporated herein by reference.

(l) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
August 25, 1999 and incorporated herein by reference.

(m) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
January 14, 2000 and incorporated herein by reference.

(n) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
February 8, 2000 and incorporated herein by reference.

(o) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 17, 2000 and incorporated herein by reference.

(B) REPORTS ON FORM 8-K

On October 25, 1999, the Operating Partnership filed reports on Form 8-K
relating to:

1. the completion of the first stage of the RMI closing and the sale of
certain industrial properties to Matrix,

2. the Company's Board of Directors authorizing the repurchase of up to three
million shares of Class B Common Stock,

3. the Company's sale and disposition of the Tower assets located outside the
Tri-State Area other than one Class A office property located in Orlando,
Florida and

4. the Operating Partnership entering into a contract to acquire 1350 Avenue
of the Americas, a 540,000 square foot, 35 story, Class A office property
located in New York City for a purchase price of approximately $126.5
million.

IV-3
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 22, 2000.

RECKSON OPERATING PARTNERSHIP, L.P.

By: RECKSON ASSOCIATES REALTY CORP.,
its general partner

By: /s/ Donald J. Rechler
---------------------------
Donald J. Rechler,
Chairman of the Board and Co-Chief
Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Reckson Associates Realty Corp., the corporate general partner of
the registrant, hereby severally constitutes and appoints Scott H. Rechler,
Michael Maturo and Mitchell D. Rechler, and each of them, his attorney-in-fact
and agent, with full power of substitution and resubstitution for him in any and
all capacities, to sign any or all amendments to this annual report on Form 10-K
for the fiscal year ended December 31, 1999, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary in connection with such matters and hereby ratifying and confirming
all that such attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 22, 2000.

<TABLE>
<CAPTION>
SIGNATURE TITLE SIGNATURE TITLE
- -------------------------- --------------------------- ------------------------ --------------------------
<S> <C> <C> <C>
/s/ Donald J. Rechler Chairman of the Board, /s/ Scott H. Rechler President, Co-Chief
- ---------------- Co-Chief Executive ---------------- Executive Officer and
Donald J. Rechler Officer and Director Scott H. Rechler Director
(principal executive
officer)
/s/ Roger M. Rechler Vice-Chairman of the /s/ Michael Maturo Executive Vice President,
- ---------------- Board, Executive Vice ---------------- Treasurer and Chief
Roger M. Rechler President and Director Michael Maturo Financial Officer
(principal financial
officer and principal
accounting officer)
/s/ Mitchell D. Rechler Executive Vice President,
- ---------------- Co-Chief Operating ---------------- Director
Mitchell D. Rechler Officer and Director Harvey R. Blau

/s/ Leonard Feinstein Director /s/ Herve A. Kevenides Director
- ---------------- ----------------
Leonard Feinstein Herve A. Kevenides
/s/ John V. Klein Director /s/ Lewis S. Ranieri Director
- ---------------- ----------------
John V. N. Klein Lewis S. Ranieri
/s/ Conrad D. Stephensen Director
- ----------------
Conrad D. Stephensen

</TABLE>

IV-4
<PAGE>

REPORT OF INDEPENDENT AUDITORS

To the Partners
Reckson Operating Partnership, L. P.

We have audited the accompanying consolidated balance sheets of Reckson
Operating Partnership, L. P. (the "Operating Partnership") as of December 31,
1999 and 1998, and the related consolidated statements of income, partners'
capital, and cash flows for each of the three years in the period ended December
31 1999. We have also audited the financial statement schedule listed in the
index at item 14 (a). These financial statements and financial statement
schedule are the responsibility of the Operating Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Reckson
Operating Partnership, L. P. at December 31, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

ERNST & YOUNG LLP

New York, New York
February 15, 2000

IV-5
<PAGE>

RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS
Commercial real estate properties, at cost (Notes 2, 3, 5, 6, and 8) ..................
Land .................................................................................. $ 276,204 $ 212,540
Buildings and improvements ............................................................ 1,802,611 1,372,549
Developments in progress:
Land .................................................................................. 60,894 69,143
Development costs ..................................................................... 68,690 82,901
Furniture, fixtures and equipment ..................................................... 6,473 6,090
----------- -----------
2,214,872 1,743,223
Less accumulated depreciation ......................................................... (218,385) (159,049)
----------- -----------
1,996,487 1,584,174
Investments in real estate joint ventures (Note 8) .................................... 31,531 15,104
Investment in mortgage notes and notes receivable (Note 6) ............................ 352,466 99,268
Cash and cash equivalents (Note 12) ................................................... 21,122 2,228
Tenant receivables .................................................................... 5,117 5,159
Investments in and advances to affiliates (Note 8) .................................... 179,762 53,154
Deferred rents receivable ............................................................. 22,489 22,526
Prepaid expenses and other assets (Note 6) ............................................ 66,855 46,372
Contract and land deposits and pre-acquisition costs .................................. 9,585 2,253
Deferred lease and loan costs, less accumulated amortization of $24,484 and
$18,170, respectively................................................................. 39,520 24,282
----------- -----------
Total Assets .......................................................................... $ 2,724,934 $ 1,854,520
=========== ===========
LIABILITIES
Mortgage notes payable (Note 2) ....................................................... $ 459,174 $ 253,463
Unsecured credit facility (Note 3) .................................................... 297,600 465,850
Unsecured term loan (Note 3) .......................................................... 75,000 20,000
Senior unsecured notes (Note 4) ....................................................... 449,313 150,000
Accrued expenses and other liabilities (Note 5) ....................................... 71,622 50,779
Distributions payable ................................................................. 27,166 19,663
----------- -----------
Total Liabilities ..................................................................... 1,379,875 959,755
----------- -----------
Commitments and other comments (Notes 9, 10, and 13) .................................. -- --
Minority interests' in consolidated partnerships ...................................... 93,086 52,173
----------- -----------
PARTNERS' CAPITAL (Note 7)
Preferred Capital, 15,234,518 and 9,234,518 units outstanding, respectively ........... 413,126 263,126
General Partner's Capital:
Common Units, 40,375,506 and 40,035,419 units outstanding, respectively .............. 477,172 485,341
Class B Common Units, 10,283,763 and 0 units outstanding, respectively ............... 270,689 --
Limited Partners' Capital, 7,701,142 and 7,764,630 units outstanding, respectively 90,986 94,125
----------- -----------
Total Partners' Capital ............................................................... 1,251,973 842,592
----------- -----------
Total Liabilities and Partners' Capital ............................................... $ 2,724,934 $ 1,854,520
=========== ===========
</TABLE>

(see accompanying notes to financial statements)

IV-6
<PAGE>

RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES (Note 10):
Base rents ........................................................ $ 324,146 $ 224,703 $ 128,778
Tenant escalations and reimbursements ............................. 44,989 27,744 14,981
Equity in earnings of service companies and real estate joint
ventures ......................................................... 2,148 1,836 514
Interest income on mortgage notes and notes receivable ............ 7,944 7,739 5,437
Gain on sales of real estate (Note 6) ............................. 10,052 -- 672
Investment and other income ....................................... 13,863 4,290 2,966
----------- ----------- -----------
Total Revenues .................................................... 403,142 266,312 153,348
----------- ----------- -----------
EXPENSES:
Property operating expenses ....................................... 125,994 84,280 50,316
Marketing, general and administrative ............................. 22,269 15,971 8,501
Interest .......................................................... 74,709 47,795 21,585
Depreciation and amortization ..................................... 74,504 52,957 27,237
----------- ----------- -----------
Total Expenses .................................................... 297,476 201,003 107,639
----------- ----------- -----------
Income before distributions to preferred unit holders, minority
interests and extraordinary loss ................................. 105,666 65,309 45,709
Preferred unit distributions ...................................... (27,001) (14,244) --
Minority partners' interest in consolidated partnerships .......... (6,802) (2,819) (920)
----------- ----------- -----------
Income before extraordinary loss .................................. 71,863 48,246 44,789
Extraordinary loss on extinguishment of debts (Note 3) ............ (629) (1,993) (2,808)
----------- ----------- -----------
NET INCOME AVAILABLE TO COMMON UNIT HOLDERS ....................... $ 71,234 $ 46,253 $ 41,981
=========== =========== ===========
Net income available to:
General Partner -- common units .................................. $ 48,791 $ 38,667 $ 34,742
General Partner -- Class B Common Units .......................... 13,110 -- --
Limited Partners' ................................................ 9,333 7,586 7,239
----------- ----------- -----------
Total ............................................................. $ 71,234 $ 46,253 $ 41,981
=========== =========== ===========
Net income per weighted average units:
General Partner -- per common unit before extraordinary loss. $ 1.22 $ 1.02 $ 1.13
Extraordinary loss per general partnership common unit ........... (.01) (.04) (.07)
----------- ----------- -----------
Net income per weighted average general partnership common
unit ........................................................... $ 1.21 $ .98 $ 1.06
=========== =========== ===========
General Partner -- per Class B Common Unit before
extraordinary loss ............................................. $ 1.96 $ -- $ --
Extraordinary loss per Class B general partnership unit .......... (.02) -- --
----------- ----------- -----------
Net income per weighted average Class B general partnership
unit ........................................................... $ 1.94 $ -- $ --
=========== =========== ===========
Limited Partners' -- per common unit before extraordinary
loss ........................................................... $ 1.22 $ 1.02 $ 1.11
Extraordinary loss per limited partnership unit .................. (.01) (.04) (.08)
----------- ----------- -----------
Net income per weighted average limited partnership unit ......... $ 1.21 $ .98 $ 1.03
=========== =========== ===========
Weighted average common units outstanding:
General Partner -- common units .................................. 40,270,000 39,473,000 32,727,000
General Partner -- Class B Common Units .......................... 6,744,000 -- --
Limited Partners' ................................................ 7,705,000 7,728,000 7,016,000

</TABLE>

(see accompanying notes to financial statements)

IV-7
<PAGE>

RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(IN THOUSANDS)

<TABLE>
<CAPTION>
GENERAL PARTNER'S CAPITAL
-----------------------------
PREFERRED CLASS B LIMITED PARTNERS' TOTAL
CAPITAL COMMON UNITS COMMON UNITS CAPITAL PARTNERS' CAPITAL
----------- -------------- -------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1997 ................. $ -- $ -- $ 184,798 $ 51,879 $ 236,677
Net Income .............................. -- -- 34,742 7,239 41,981
Contributions ........................... -- -- 267,827 35,339 303,166
Distributions ........................... -- -- (40,665) (8,707) (49,372)
--------- --------- --------- --------- -----------
BALANCE DECEMBER 31, 1997 ............... -- -- 446,702 85,750 532,452
Net Income .............................. -- -- 38,667 7,586 46,253
Contributions ........................... 263,126 -- 54,089 11,484 328,699
Distributions ........................... -- -- (55,193) (10,695) (65,888)
Contribution of a 1% interest in
Reckson FS Limited Partnership ......... -- -- 1,076 -- 1,076
--------- --------- --------- --------- -----------
BALANCE DECEMBER 31, 1998 263,126 -- 485,341 94,125 842,592
Net Income .............................. -- 13,110 48,791 9,333 71,234
Contributions ........................... 150,000 302,653 1,601 -- 454,254
Distributions ........................... -- (14,787) (58,561) (10,987) (84,335)
Retirement of units ..................... -- (30,287) -- (1,485) (31,772)
--------- --------- --------- --------- -----------
BALANCE DECEMBER 31, 1999 ............... $ 413,126 $ 270,689 $ 477,172 $ 90,986 $ 1,251,973
========= ========= ========= ========= ===========
</TABLE>

(see accompanying notes to financial statements)

IV-8
<PAGE>

RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
Net Income available to common unitholders .................................. $ 71,234 $ 46,253 $ 41,981
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ............................................... 74,504 52,957 27,237
Extraordinary loss on extinguishment of debts ............................... 629 1,993 2,808
Minority partners' interests in consolidated partnerships ................... 6,802 2,819 920
Gain on sale of interest in Reckson Executive Centers, LLC .................. -- (9) --
Gain on sales of real estate, securities and mortgage repayment ............. (9,657) (43) (672)
Distribution from investments in real estate joint ventures ................. 442 470 408
Equity in earnings of service companies and real estate joint ventures ...... (2,148) (1,836) (514)
Changes in operating assets and liabilities: increase (decrease)
Prepaid expenses and other assets ........................................... (23,600) (7,199) (1,931)
Tenant and affiliate receivables ............................................ 42 (184) (1,183)
Deferred rents receivable ................................................... (2,158) (7,553) (4,500)
Accrued expenses and other liabilities ...................................... 39,619 30,849 11,240
---------- ----------- ----------
Net cash provided by operating activities ................................... 155,709 118,517 75,794
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of commercial real estate properties .............................. (284,741) (449,241) (429,379)
Interest receivables ........................................................ (692) 2,602 (2,392)
Investment in mortgage notes and notes receivable ........................... (295,048) 4,072 (50,282)
Contract deposits and preacquisition costs .................................. (12,650) 8,839 (1,303)
Additions to developments in progress ....................................... (9,615) (97,570) (40,367)
Additions to commercial real estate properties .............................. (28,135) (21,181) (12,038)
Payment of leasing costs .................................................... (16,467) (8,802) (5,417)
Investments in securities ................................................... -- (42,299) (1,756)
Additions to furniture, fixtures and equipment .............................. (461) (2,071) (1,159)
Investments in real estate joint ventures ................................... (15,033) (7,773) (1,734)
Investment in and distributions from service companies ...................... -- 15 (4,241)
Proceeds from sales of real estate, securities and mortgage repayment ....... 269,916 809 725
---------- ----------- ----------
Net cash (used in) investing activities ..................................... (392,926) (612,600) (549,343)
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from secured borrowings ............................................ 125,548 -- --
Principal payments on secured borrowings .................................... (4,714) (4,735) (1,624)
Proceeds from issuance of senior unsecured notes, net of issuance costs ..... 299,262 -- 150,000
Proceeds from mortgage refinancing's, net of refinancing costs .............. -- 11,458 20,134
Payment of loan costs and prepayment penalties .............................. (8,264) (4,738) (4,983)
Investments in and advances to affiliates ................................... (126,249) (24,409) (20,182)
Proceeds from unsecured credit facilities and term loans .................... 397,500 413,100 421,000
Principal payments on unsecured credit facilities ........................... (510,750) (137,500) (319,250)
Contributions ............................................................... 149,512 272,734 299,991
Distributions ............................................................... (102,761) (57,683) (53,327)
Retirement of units ......................................................... (31,772) -- --
Contributions by minority partners' in consolidated partnerships ............ 75,500 10,000 --
Distributions to minority partners' in consolidated partnerships ............ (6,701) (3,592) (8,855)
---------- ----------- ----------
Net cash provided by financing activities ................................... 256,111 474,635 482,904
---------- ----------- ----------
Net increase (decrease) in cash and cash equivalents ........................ 18,894 (19,448) 9,355
Cash and cash equivalents at beginning of period ............................ 2,228 21,676 12,321
---------- ----------- ----------
Cash and cash equivalents at end of period .................................. $ 21,122 $ 2,228 $ 21,676
========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest .................................... $ 77,014 $ 52,622 $ 20,246
========== =========== ==========
</TABLE>

(see accompanying notes to financial statements)

IV-9
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Reckson Operating Partnership, L. P. (the "Operating Partnership") is
engaged in the ownership, management, operation, leasing and development of
commercial real estate properties, principally office and industrial buildings
and also own certain undeveloped land (collectively, the "Properties") located
in the New York tri-state area (the "Tri-State Area").

ORGANIZATION AND FORMATION OF THE OPERATING PARTNERSHIP

The Operating Partnership commenced operations on June 2, 1995. The sole
general partner in the Operating Partnership, Reckson Associates Realty Corp.
(the "Company") is a self administered and self managed real estate investment
trust ("REIT"). During June, 1995, the Company contributed approximately $162
million in cash to the Operating Partnership in exchange for an approximate 73%
general partnership interest.

The Operating Partnership executed various option and purchase agreements
whereby it issued units in the Operating Partnership ("Units") to the continuing
investors and assumed certain indebtedness in exchange for interests in certain
property partnerships, fee simple and leasehold interests in properties and
development land, certain business assets of the executive center entities and
100% of the non-voting preferred stock of the management and construction
companies.

During 1997, the Company formed Reckson Service Industries, Inc. currently
D/B/A FrontLine Capital Group ("FrontLine") and Reckson Strategic Venture
Partners, LLC ("RSVP"). On June 11, 1998, the Operating Partnership distributed
its 95% common stock interest in FrontLine of approximately $3 million to its
owners, including the Company which, in turn, distributed the common stock of
FrontLine received from the Operating Partnership to its stockholders.
Additionally, during June 1998, the Operating Partnership established a credit
facility with FrontLine (the "FrontLine Facility") in the amount of $100 million
for FrontLine's e-commerce and e-services operations and other general corporate
purposes. As of December 31, 1999, the Company had advanced $79.5 million under
the FrontLine Facility. In addition, the Operating Partnership has approved the
funding of investments of up to $100 million with or in RSVP (the "RSVP
Commitment"), through RSVP-controlled joint venture REIT-qualified investments
or advances made to FrontLine under terms similar to the FrontLine Facility. As
of December 31, 1999, approximately $67.2 million had been invested through the
RSVP Commitment, of which $24.8 million represents RSVP-controlled joint venture
REIT-qualified investments and $42.4 million represents advances to FrontLine
under the RSVP Commitment.

During November 1999, the Board of Directors of FrontLine and the Operating
Partnership approved an amendment to the FrontLine Facility and the RSVP
Commitment to permit FrontLine to incur secured debt and to pay interest
thereon. In consideration of the amendments, FrontLine has paid the Operating
Partnership a fee of approximately $3.6 million in the form of shares of
FrontLine common stock. Such fee is being recognized in income over an estimated
nine month benefit period.

FrontLine identifies, acquires interests in and develops a network of
business to business e-commerce and e-services companies that service small to
medium sized enterprises, independent professionals and entrepreneurs and the
mobile workforce of larger companies. FrontLine serves as the managing member of
RSVP. RSVP was formed to provide the Operating Partnership with a research and
development vehicle to invest in alternative real estate sectors. RSVP invests
primarily in real estate and real estate related operating companies generally
outside of the Operating Partnership's core office and industrial focus. RSVP's
strategy is to identify and acquire interests in established entrepreneurial
enterprises with experienced management teams in market sectors which are in the
early stages of their growth cycle or offer unique circumstances for attractive
investments as well as a platform for future growth.

IV-10
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On January 6, 1998, the Operating Partnership made its initial investment
in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse
facilities. In connection with the transaction the Morris Companies contributed
100% of their interests in certain industrial properties to Reckson Morris
Operating Partnership, L. P. ("RMI") in exchange for operating partnership units
in RMI. On September 27, 1999, the Operating Partnership sold its interest in
RMI to Keystone Property Trust ("KTR") (formerly American Real Estate Investment
Corporation) (see Note 6).

During July 1998, the Company formed Metropolitan Partners, LLC
("Metropolitan") for the purpose of acquiring Tower Realty Trust, Inc.
("Tower"). On May 24, 1999 the Company completed the merger with Tower and
acquired three Class A office properties located in New York City totaling 1.6
million square feet and one office property located on Long Island totaling
approximately 101,000 square feet. In addition, pursuant to the merger, the
Company also acquired certain office properties, a property under development
and land located outside of the Tri-State Area. All of the assets acquired in
the merger, located outside the Tri-State Area, other than a 357,000 square foot
office property located in Orlando, Florida, have been sold (see note 6).

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries as at
December 31, 1999 and 1998 and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999. The
Operating Partnership's investments in Metropolitan and Omni Partners, L. P.
("Omni"), are reflected in the accompanying financial statements on a
consolidated basis with a reduction for minority partners' interest. The
Operating Partnership's investment in RMI was reflected in the accompanying
financial statements on a consolidated basis with a reduction for minority
partners interest through September 26, 1999. On September 27, 1999, the
Operating Partnership sold its interest in RMI to KTR (see note 6). The
operating results of the service businesses currently conducted by Reckson
Management Group, Inc., ("RMG"), and Reckson Construction Group, Inc., ("RCG")
are reflected in the accompanying financial statements on the equity method of
accounting. The operating results of Reckson Executive Centers, L.L.C., ("REC"),
a service business of the Operating Partnership were reflected in the
accompanying financial statements on the equity method of accounting through
March 31, 1998. On April 1, 1998, the Operating Partnership sold its 9.9%
interest in REC to FrontLine. Additionally, the operating results of FrontLine
were reflected in the accompanying financial statements on the equity method of
accounting through June 10, 1998. On June 11, 1998 the Operating Partnership
distributed its 95% common stock interest in FrontLine to its owners, including
the Company which, in turn, distributed the common stock of FrontLine to its
stockholders. The Operating Partnership also invests in real estate joint
ventures where it may own less than a controlling interest, such investments are
also reflected in the accompanying financial statements on the equity method of
accounting. All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.

The minority interests at December 31, 1999 represents an approximate 28%
interest in certain industrial joint venture properties formerly owned by RMI, a
convertible preferred interest in Metropolitan and a 40% interest in Omni.

The minority interests at December 31, 1998 represents an approximately 28%
interest in RMI, a convertible preferred interest in Metropolitan and a 40%
interest in Omni.

The merger with Tower (see note 6) was accounted for as a purchase in
accordance with Accounting Principles Board Opinion No. 16. Accordingly, the
fair value of the consideration given by the Operating Partnership, in
accordance with generally accepted accounting principles ("GAAP"), was used as
the valuation basis for the merger. The assets acquired and liabilities assumed
by the Operating Partnership

IV-11
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

were recorded at the fair value as of the closing date of the merger and the
excess of the purchase price over the historical basis of the net assets
acquired was allocated primarily to operating real estate properties and real
estate properties which have been sold.

Comprehensive Income

During 1997 the Financial Accounting Standards Board ("FASB") issued
statement No. 130, "Reporting Comprehensive Income" ("SFAS 130") which is
effective for fiscal years beginning after December 15, 1997. SFAS 130
established standards for reporting comprehensive income and its components in a
full set of general-purpose financial statements. SFAS 130 requires that all
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The adoption
of this standard had no impact on the Operating Partnership's financial position
or results of operations.

Segment Reporting

In 1997, the FASB issued Statement No. 131 "Disclosures about segments of
an Enterprise and Related Information" ("Statement 131") which is effective for
fiscal years beginning after December 15, 1997. Statement 131 establishes
standards for reporting information about operating segments in annual financial
statements and in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The adoption of this standard had no impact on the Operating
Partnership's financial position or results of operations but did affect the
disclosure of segment information. (See Note 11).

Recent Pronouncements

In June 1999, the Financial Accounting Standards Board issued Statement No.
137, amending Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities", which extended the required date of adoption to the years
beginning after June 15, 2000. The Statement permits early adoption as of the
beginning of any fiscal quarter after its issuance. The Operating Partnership
expects to adopt the new Statement effective January 1, 2001. The Operating
Partnership does not anticipate that the adoption of this Statement will have
any effect on its results of operations or financial position.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Real Estate

Depreciation is computed utilizing the straight-line method over the
estimated useful lives of ten to thirty years for buildings and improvements and
five to ten years for furniture, fixtures and equipment. Tenant improvements,
which are included in buildings and improvements, are amortized on a
straight-line basis over the term of the related leases.

Cash Equivalents

The Operating Partnership considers highly liquid investments with a
maturity of three months or less when purchased, to be cash equivalents.

Deferred Costs

Tenant leasing commissions and related costs incurred in connection with
leasing tenant space are capitalized and amortized over the life of the related
lease. In addition, loan costs incurred are capitalized and amortized over the
term of the related loan.

IV-12
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

No provision has been made for income taxes in the accompanying
consolidated financial statements since such taxes, if any, are the
responsibility of the individual partners.

Revenue Recognition

Minimum rental income is recognized on a straight-line basis over the term
of the lease. The excess of rents recognized over amounts contractually due are
included in deferred rents receivable on the accompanying balance sheets.
Contractually due but unpaid rents are included in tenant receivables on the
accompanying balance sheets. Certain lease agreements provide for reimbursement
of real estate taxes, insurance, common area maintenance costs and indexed
rental increases, which are recorded on an accrual basis.

The Operating Partnership records interest income on investments in
mortgage notes and notes receivable on an accrual basis of accounting. The
Operating Partnership does not accrue interest on impaired loans where, in the
judgment of management, collection of interest according to the contractual
terms is considered doubtful. Among the factors the Operating Partnership
considers in making an evaluation of the collectibility of interest are: the
status of the loan, the value of the underlying collateral, the financial
condition of the borrower and anticipated future events. Loan discounts are
amortized over the life of the real estate using the constant interest method.

Gains from sales of real estate are recorded when title is conveyed to the
buyer, subject to the buyer's financial commitment being sufficient to provide
economic substance to the sale.

Net Income Per Common Partnership Unit

Net income per common partnership unit and Class B Common partnership unit
is determined by allocating net income after preferred distributions and
minority partners' interest in consolidated partnerships income to the general
and limited partners' based on their weighted average distribution per common
partnership units outstanding during the respective periods presented.

Distributions to Preferred Unit Holders

Holders of preferred units of limited and general partnership interest are
entitled to distributions based on the stated rates of return (subject to
adjustment) for those units.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current
year presentation.

2. MORTGAGE NOTES PAYABLE

At December 31, 1999, there were 17 mortgage notes payable with an
aggregate outstanding principal amount of approximately $459.2 million.
Properties with an aggregate carrying value at December 31, 1999 of
approximately $808 million are pledged as collateral against the mortgage notes
payable. In addition, $47.8 million of the $459.2 million are recourse to the
Operating Partnership. The mortgage notes bear interest at rates ranging from
6.45% to 9.25%, and mature between 2000 and 2027. The weighted average interest
rates on the outstanding mortgage notes payable at December 31, 1999, 1998 and
1997 were 7.6%, 7.8% and 7.7%, respectively. Certain of the mortgage notes
payable are guaranteed by certain minority partners in the Operating
Partnership.

IV-13
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. MORTGAGE NOTES PAYABLE - (CONTINUED)

Scheduled principal repayments during the next five years and thereafter
are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
<S> <C>
2000 ......................... $ 35,145
2001 ......................... 22,751
2002 ......................... 16,499
2003 ......................... 8,350
2004 ......................... 11,769
Thereafter ................... 364,660
---------
$ 459,174
=========

</TABLE>

3. UNSECURED CREDIT FACILITIES AND UNSECURED TERM LOAN

As of December 31, 1999, the Operating Partnership had a three year $500
million unsecured revolving credit facility (the "Credit Facility") from Chase
Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the
Credit Facility bank group. Interest rates on borrowings under the Credit
Facility are priced off of LIBOR plus a sliding scale ranging from 65 basis
points to 90 basis points based on the Operating Partnership's investment grade
rating on its senior unsecured debt. On March 16, 1999, the Operating
Partnership received its investment grade rating on its senior unsecured debt.
As a result, the pricing under the Credit Facility was adjusted to LIBOR plus 90
basis points.

As of December 31 1999, the Operating Partnership had outstanding an 18
month, $75 million unsecured term loan (the "Term Loan") from Chase Manhattan
Bank. Interest rates on borrowings under the Term Loan are priced off of LIBOR
plus 150 basis points. The Term Loan replaced the Operating Partnership's
previous term loan which matured on December 17, 1999.

On May 24, 1999, in conjunction with the acquisition of Tower (see Note 6),
the Operating Partnership obtained a $130 million unsecured bridge facility (The
"Bridge Facility") from UBS AG. Interest rates on borrowings under the Bridge
Facility were priced off of LIBOR plus approximately 214 basis points. On July
23, 1999, the Bridge Facility was repaid through a long term fixed rate secured
borrowing and an advance under the Credit Facility. As a result, certain
deferred loan costs incurred in connection with the Bridge Facility were written
off. Such amount is reflected as an extraordinary loss in the accompanying
consolidated statements of income.

The Operating Partnership capitalized interest incurred on borrowings to
fund certain development costs in the amount of $9.8 million, $7.3 million and
$2.4 million for the years ended December 31, 1999, 1998 and 1997, respectively.

4. SENIOR UNSECURED NOTES

As of December 31, 1999, the Operating Partnership had outstanding
approximately $449.3 million (net of issuance discounts) of senior unsecured
notes (the "Senior Unsecured Notes").

IV-14
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the Operating Partnership's Senior Unsecured
Notes and other related disclosures (dollars in thousands):

<TABLE>
<CAPTION>
FACE COUPON
ISSUANCE AMOUNT RATE TERM MATURITY
- ------------------------------- ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
August 27, 1997 ......... $ 150,000 7.20% 10 years August 28, 2007
March 26, 1999 .......... $ 100,000 7.40% 5 years March 15, 2004
March 26, 1999 .......... $ 200,000 7.75% 10 years March 15, 2009

</TABLE>

Interest on the Senior Unsecured Notes is payable semiannually with
principal and unpaid interest due on the scheduled maturity dates. In addition,
the Senior Unsecured Notes issued on March 26, 1999 were issued at an aggregate
discount of $738,000.

Net proceeds of approximately $297.4 million received from the issuance of
the March 26, 1999 Senior Unsecured Notes were used to repay outstanding
borrowings under the Operating Partnership's Credit Facility.

5. LAND LEASES

The Operating Partnership leases, pursuant to noncancellable operating
leases, the land on which ten of its buildings were constructed. The leases,
which contain renewal options, expire between 2018 and 2080. The leases either
contain provisions for scheduled increases in the minimum rent at specified
intervals or for adjustments to rent based upon the fair market value of the
underlying land or other indexes at specified intervals. Minimum ground rent is
recognized on a straight-line basis over the terms of the leases. The excess of
amounts recognized over amounts contractually due is approximately $2.6 million
and $2.3 million at December 31, 1999 and 1998, respectively. These amounts are
included in accrued expenses and other liabilities on the accompanying balance
sheets.

Future minimum lease commitments relating to the land leases during the
next five years and thereafter are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
<S> <C>
2000 ......................... $ 1,833
2001 ......................... 1,850
2002 ......................... 1,869
2003 ......................... 1,818
2004 ......................... 1,942
Thereafter ................... 48,232
--------
$ 57,544
========

</TABLE>

6. COMMERCIAL REAL ESTATE INVESTMENTS

The Tower Merger

IV-15
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)

Partnership, L.P. ("Tower OP") was merged with and into a subsidiary of
Metropolitan. The consideration issued in the mergers was comprised of (i) 25%
cash (approximately $107.2 million) and (ii) 75% of shares of Class B
Exchangeable Common Stock, par value $.01 per share, of the Company (the "Class
B Common Stock") (valued for GAAP purposes at approximately $304.1 million).

Under the terms of the transaction, Metropolitan effectively paid for each
share of Tower common stock and each unit of limited partnership interest of
Tower OP the sum of (i) $5.75 in cash, and (ii) 0.6273 of a share of Class B
Common Stock. The shares of Class B Common Stock are entitled to receive an
initial annual dividend of $2.24 per share, which dividend is subject to
adjustment annually commencing on July 1, 2000. The shares of Class B Common
Stock are exchangeable at any time, at the option of the holder, into an equal
number of shares of common stock, par value $.01 per share, of the Company
subject to customary antidilution adjustments. The Company, at its option, may
redeem any or all of the Class B Common Stock in exchange for an equal number of
shares of the Company's common stock at any time following the four year,
six-month anniversary of the issuance of the Class B Common Stock.

The Board of Directors of the Company has authorized a purchase buy back
program for the Company's Class B Common Stock (see note 7).

The Company controls Metropolitan and owns 100% of the common equity;
Crescent owns a $85 million preferred equity interest in Metropolitan.
Crescent's interest accrues distributions at a rate of 7.5% per annum for a
two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by
Metropolitan at any time during that period for $85 million, plus an amount
sufficient to provide a 9.5% internal rate of return. If Metropolitan does not
redeem the preferred interest, upon the expiration of the two-year period,
Crescent must convert its $85 million preferred interest into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's
common stock at a conversion price of $24.61 per share.

The Tower portfolio acquired in the Merger consists of three office
properties comprising approximately 1.6 million square feet located in New York
City, one office property located on Long Island and certain office properties
and other real estate assets located outside the Tri-State Area.

"Big Box" Industrial Investment Activity

On January 6, 1998, the Operating Partnership made an initial investment in
the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse
facilities. In connection with the transaction the Morris Companies contributed
100% of their interests in certain industrial properties to RMI in exchange for
operating partnership units in RMI.

During 1999, the Operating Partnership purchased approximately 68.1 acres
of vacant land in Northern New Jersey for approximately $2.6 million. In
addition, RMI purchased 74.6 acres of vacant land for approximately $3.7 million
and a 846,000 square foot industrial property located in Cranbury, New Jersey
for approximately $34 million. These assets were sold to KTR and the Matrix
Development Group ("Matrix") as discussed below.

IV-16
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On August 9, 1999, the Operating Partnership executed a contract for the
sale, which will take place in three stages, of its interest in RMI which
consisted of 28 properties, comprising approximately 6.1 million square feet and
three other big box industrial properties to KTR. In addition, the Operating
Partnership also entered into a sale agreement with Matrix relating to a first
mortgage note and certain industrial land holdings (the "Matrix Sale"). The
combined total sale price is $310 million (approximately $42 million of which is
payable to the Morris Companies and its affiliates) and consists of a
combination of (i) cash, (ii) convertible preferred and common stock of KTR,
(iii) preferred units of KTR's operating partnership, (iv) relief of debt and
(v) a purchase money mortgage note secured by certain land that is being sold to
Matrix.

During September 1999, the Matrix Sale and the first stage of the RMI
closing occurred whereby the Operating Partnership sold its interest in RMI to
KTR for a combined sales price of approximately $164.7 million (net of minority
partner's interest). The combined consideration consisted of approximately (i)
$86.3 million in cash, (ii) $40 million of preferred stock of KTR, (iii) $1.5
million in common stock of KTR, (iv) approximately $26.7 million of debt relief
and (v) approximately $10.2 million in purchase money mortgages. As a result,
the Operating Partnership incurred a gain of approximately $10.1 million which
has been included in gain on sales of real estate on the accompanying
consolidated statements of income. In addition, the $41.5 million of common and
preferred stock of KTR has been included in prepaid expenses and other assets on
the accompanying consolidated balance sheet. Cash proceeds from the sales were
used primarily to repay borrowings under the Credit Facility.

Other Real Estate Investment Activities

During 1998, the Operating Partnership acquired three office properties
encompassing approximately 674,000 square feet, two industrial properties
encompassing approximately 200,000 square feet and approximately 79.9 acres of
vacant land which allows for approximately 816,000 square feet of future
development opportunities on Long Island for an aggregate purchase price of
approximately $82.8 million.

During 1998, the Operating Partnership acquired four office properties
encompassing approximately 522,000 square feet, six industrial properties
encompassing approximately 985,000 square feet and approximately 112.2 acres of
vacant land which allows for approximately 815,000 square feet of future
development opportunities in New Jersey for an aggregate purchase price of
approximately $138.1 million.

During 1998, the Operating Partnership acquired Stamford Towers located in
Stamford, Connecticut for approximately $61.3 million. Stamford Towers is a
Class A office complex consisting of two eleven story towers totaling
approximately 325,000 square feet.

During 1998, the Operating Partnership acquired a portfolio of six office
properties encompassing approximately 980,000 square feet in Westchester County,
New York from Cappelli Enterprises and affiliated entities ("Cappelli") for a
purchase price of approximately $173 million. The Cappelli acquisition includes
a five building, 850,000 square foot Class A office park in Valhalla and Court
House Square, a 130,000 square foot Class A office building located in White
Plains. The Operating Partnership also obtained from Cappelli the remaining 50%
interest in 360 Hamilton Avenue, a 365,000 square foot vacant office tower in
downtown White Plains for $10 million plus the return of his capital
contributions of approximately $1.5 million. In addition, the Operating
Partnership received an option from Cappelli to acquire the remaining
development parcels within the Valhalla office park on which up to 875,000

IV-17
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)

square feet of office space can be developed. These acquisitions were financed
in part through proceeds from a draw under the credit facilities, the issuance
of 42,518 (approximately $42.5 million) preferred operating partnership units
(the "Cappelli Preferred Units"), and the assumption of approximately $47.1
million of mortgage debt. Additionally, as of December 31, 1999, the Operating
Partnership issued and advanced to Cappelli $36.5 million under three liquidity
loans (the "Cappelli Liquidity Loans"). The Cappelli Liquidity Loans bear
interest at rates ranging from 10% to 10.5% per annum and are secured by
Cappelli's right, title and interest in the Cappelli Preferred Units. Such
amounts have been included in investments in mortgage notes and notes receivable
on the accompanying balance sheet.

On April 13, 1999, the Operating Partnership received approximately $25.8
million from the redemption of a mortgage note receivable which secured three
office properties located in Garden City, Long Island, encompassing
approximately 400,000 square feet. As a result, the Operating Partnership
recognized a gain of approximately $4.3 million. Such gain has been included in
gain on sales of real estate on the accompanying consolidated statements of
income.

On June 7, 1999, the Operating Partnership sold a 24,000 square foot office
property located in Ossining, New York for approximately $1.5 million. As
partial consideration for the sale, the Operating Partnership obtained a $1.2
million, three year purchase money mortgage.

On June 15, 1999, the Operating Partnership acquired the first mortgage
note secured by a 47 story, 1.4 million square foot Class A office property
located at 919 Third Avenue in New York City for approximately $277.5 million.
The first mortgage note entitles the Operating Partnership to all the net cash
flow of the property and to substantial rights regarding the operations of the
property, with the Operating Partnership anticipating to ultimately obtain title
to the property. This acquisition was financed with proceeds from the issuance
of six million Series B preferred units of general partnership interest (see
note 7) and through an advance under the Credit Facility. Current financial
accounting guidelines provide that where a lender has virtually the same risks
and potential rewards as those of a real estate owner it should recognize the
full economics associated with the operations of the property. As such, the
Operating Partnership has recognized the real estate operations of the 919 Third
Avenue in the accompanying consolidated statement of income for the period from
the date of acquisition.

In addition, as of December 31, 1999, the Operating Partnership has
invested approximately $15.7 million in certain mortgage indebtedness
encumbering one Class A office property encompassing approximately 177,000
square feet and approximately 472 acres of land located in New Jersey. The
Operating Partnership has also loaned approximately $17 million to its minority
partner in Omni, its 575,000 square foot flagship Long Island office property,
and effectively increased its economic interest in the property owning
partnership.

7. PARTNERS' CAPITAL

On April 21, 1998, the Operating Partnership issued 25,000 Series B
preferred units of limited partnership interest at a stated value of $1,000 per
unit and 11,518 Series C preferred units of limited partnership interest at a
stated valued of $1,000 per unit in connection with the acquisition of the
Cappelli portfolio. The Series B preferred units have a current distribution
rate of 6.25% and are convertible to common units at a conversion price of
approximately $32.51 for each preferred unit. The Series C preferred units have
a current distribution rate of 6.25% and are convertible to common units at a
conversion price of approximately $29.39 for each preferred unit.

During the year ended December 31, 1998, the Operating Partnership issued
2,265,261 units of general partnership interest to the Company in exchange for
approximately $53 million. The proceeds were used to repay borrowings under the
credit facilities.

IV-18
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Additionally, the Operating Partnership issued 9,200,000 Series A preferred
units of general partnership interest to the Company in exchange for
approximately $221 million. The Series A preferred units have a liquidation
preference of $25 per unit, a distribution rate of 7.625% and are convertible to
common units at a conversion rate of .8769 common units for each preferred unit.
As of December 31, 1999, 8,000 Series A preferred units were converted to common
units.

On July 2, 1998, the Operating Partnership issued 6,000 Series D preferred
units of limited partnership interest at a stated value of $1,000 per unit in
connection wit the acquisition of the remaining 50% interest in 360 Hamilton
Avenue located in White Plains, New York. The Series D preferred units have a
current distribution rate of 6.25% and are convertible to common units at a
conversion price of approximately $29.12 for each preferred unit.

On May 24, 1999, in conjunction with the Tower acquisition, the Operating
Partnership issued 11,694,567 Class B Common Units of general partnership
interest to the Company which were valued for GAAP purposes at $26 per unit for
total consideration of approximately $304.1 million. The Class B Common Units
are entitled to receive an initial annual distribution of $2.24 per unit which
distribution is subject to adjustment annually. The Class B Common Units are
exchangeable at any time, at the option of the holder, into an equal number of
common units subject to customary antidilution adjustments. The Class B Common
Units will be exchanged for an equal number of common units upon the exchange,
if any, by the Company of common stock for Class B Common Stock at any time
following the four year, six-month anniversary of the issuance of the Class B
Common Stock.

On June 2, 1999, in connection with the Company's issuance of Series B
convertible preferred stock, the Operating Partnership issued six million Series
E preferred units of general partnership interests to the Company in exchange
for approximately $150 million. The Series E preferred units have a liquidation
preference of $25 per unit, and an initial distribution rate of 7.85% per annum
with such rate increasing to 8.35% per annum on April 30, 2000 and to 8.85% per
annum from and after April 30, 2001. The Series E preferred units are
convertible into common units at a price of $26.05 per unit and are redeemable
by the Operating Partnership on or after March 2, 2002. Proceeds from the
issuance of the Series E preferred units were used as partial consideration in
the acquisition of the first mortgage note secured by 919 Third Avenue located
in New York City.

8. RELATED PARTY TRANSACTIONS

The Operating Partnership, through its subsidiaries and affiliates,
provides management, leasing and other tenant related services to the
Properties. Certain executive officers of the Company have continuing ownership
interests in the unconsolidated service companies.

The Operating Partnership in connection with its formation was granted a
ten year option period to acquire ten properties which are either owned by the
Reckson Group, the predecessor to the Company, or in which the Reckson Group
owns a non-controlling minority interest. During 1998, one of these properties
was sold by the Reckson Group to a third party. In addition, as of December 31,
1999, the Company has acquired four of these properties for a aggregate purchase
price of approximately $35 million, which included the issuance of approximately
475,000 Units valued at approximately $8.8 million.

IV-19
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8. RELATED PARTY TRANSACTIONS - (CONTINUED)

addition, if a REIT-qualified investment opportunity becomes available to an
affiliate of FrontLine, including RSVP, the Reckson Intercompany Agreement
requires such affiliate to allow the Operating Partnership to participate in
such opportunity to the extent of FrontLine's interest.

On March 23, 1998, the Company sold approximately $5.9 million of common
stock to FrontLine at the market closing price of $25 per share. The Operating
Partnership loaned FrontLine the $5.9 million to execute this transaction. Such
amount was repaid to the Operating Partnership by FrontLine during August 1998.

On August 27, 1998 the Operating Partnership announced the formation of a
joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"),
is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating
Partnership. The Dominion Venture is primarily engaged in acquiring, developing
and/or owning government-occupied office buildings and privately operated
correctional facilities. Under the Dominion Venture's operating agreement, RSVP
is to invest up to $100 million, some of which may be invested by the Operating
Partnership ( the "RSVP Capital"). The initial contribution of RSVP Capital was
approximately $39 million of which approximately $10.1 million was invested by a
subsidiary of the Operating Partnership. The Operating Partnership's investment
was funded through the RSVP Commitment. In addition, the Operating Partnership
advanced approximately $2.9 million to FrontLine through the RSVP Commitment for
an investment in RSVP which was then invested on a joint venture basis with the
Dominion Group in certain service business activities related to the real estate
activities. As of December 31, 1999, the Dominion Venture had investments in 13
government office buildings and three correctional facilities.

During 1998, the Operating Partnership made investments in and advances to
RMG of approximately $29.5 million. Such investments and advances were used by
RMG in connection with RMG's acquisition of an approximate 64% ownership
interest in an executive office suite business. Concurrently with RMG's
investment, FrontLine received an option to purchase RMG's interest at cost plus
8%. RMG is owned 97% by the Operating Partnership and 3% by an entity owned by
certain officers of the Company. On November 9, 1998, FrontLine exercised its
option and, as a result, RMG earned income during the period of ownership of
approximately $707,000. In addition, FrontLine assumed the outstanding debt plus
accrued interest owing to the Operating Partnership.

During July 1999, the Operating Partnership sold its interest in a 852,000
square foot development property to RCG in exchange for a $12.3 million note.
The note accrues interest annually at the rate of 12%, has a five year maturity
and is prepayable in whole or in part. During October 1999, RCG made a payment
to the Operating Partnership, in the form of 97 shares of its preferred stock,
valued at approximately $4.0 million, towards accrued interest and principal due
under the note.

IV-20
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In 1999 the Operating Partnership invested approximately $7.2 million,
through a subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a
company that engages primarily in the acquisition and development of off-campus
student housing projects. The Operating Partnership's investment was funded
through the RSVP Commitment. In addition, the Operating Partnership has advanced
approximately $3.2 million to FrontLine through the RSVP Commitment for an
additional investment in RSVP which was invested in certain service business
activities related to student housing. As of December 31, 1999, RAP - SHP had
investments in 4 off - campus student housing projects.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with FASB Statement No. 107, "Disclosures About Fair Value of
Financial Instruments", management has made the following disclosures of
estimated fair value at December 31, 1999 as required by FASB Statement No. 107.

Cash equivalents and variable rate debt are carried at amounts which
reasonably approximate their fair values.

The fair value of the Operating Partnership's long term debt, mortgage
notes and notes receivable is estimated based on discounting future cash flows
at interest rates that management believes reflects the risks associated with
long term debt, mortgage notes and notes receivable of similar risk and
duration. In addition, management believes that the estimated aggregate fair
value of these assets and liabilities approximates their carrying values.

Considerable judgment is necessary to interpret market data and develop
estimated fair value. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

10. RENTAL INCOME

The Properties are being leased to tenants under operating leases. The
minimum rental amount due under certain leases are generally either subject to
scheduled fixed increases or indexed escalations. In addition, the leases
generally also require that the tenants reimburse the Operating Partnership for
increases in certain operating costs and real estate taxes above base year
costs.

Included in base rents and tenant escalations and reimbursements in the
accompanying statements of operations are amounts from Reckson Executive
Centers, LLC, a service business of the Operating Partnership through March 31,
1998 and, a related party as follows (in thousands):

<TABLE>
<CAPTION>
TENANT
ESCALATIONS AND
FOR THE PERIODS BASE RENTS REIMBURSEMENTS
- ------------------------------------------------- ------------ ----------------
<S> <C> <C>
January 1 through March 31, 1998 ......... $ 597 $ 149
Year ended December 31, 1997 ............. $ 2,154 $ 441
</TABLE>

IV-21
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

10. RENTAL INCOME - (CONTINUED)

Expected future minimum rents to be received over the next five years and
thereafter from leases in effect at December 31, 1999 are as follows (in
thousands):

<TABLE>
<S> <C>
2000 ......................... $ 312,654
2001 ......................... 295,862
2002 ......................... 293,714
2003 ......................... 257,655
2004 ......................... 230,477
Thereafter ................... 1,286,533
----------
$2,676,895
==========
</TABLE>

11. SEGMENT DISCLOSURE

The Operating Partnership's portfolio consists of Class A office properties
located within the New York City metropolitan area and Class A suburban office
and industrial properties located and operated within the Tri-State Area (the
"Core Portfolio"). In addition the Operating Partnership's portfolio also
includes one office property located in Orlando, Florida and for the period
commencing January 6, 1998 and ending September 26, 1999, industrial properties
which were owned by RMI. The Operating Partnership has managing directors who
report directly to the Chief Operating Officer and Chief Financial Officer who
have been identified as the Chief Operating Decision Makers because of their
final authority over resource allocation decisions and performance assessment.

In addition, as the Operating Partnership expects to meet its short term
liquidity requirements in part through the Credit Facility and Term Loan,
interest incurred on borrowings under the Credit Facility and Term Loan is not
considered as part of property operating performance. Further, the Operating
Partnership does not consider the property operating performance of the office
property located in Orlando, Florida as a part of its Core Portfolio.

The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies.

The following table sets forth the components of the Operating
Partnership's revenues and expenses and other related disclosures for the years
ended December 31, 1999 and 1998, respectively (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------
DECEMBER 31, 1999
----------------------------------------------------------
CONSOLIDATED
CORE PORTFOLIO RMI OTHER TOTALS
---------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Base rents, tenant escalations
and reimbursements ............... $ 340,293 $ 15,394 $ 13,448 $ 369,135
Equity in earnings of real
estate joint ventures and
service companies ................ -- -- 2,148 2,148
Other income ...................... 448 9 31,402 31,859
----------- -------- ---------- -----------
Total Revenues ..................... 340,741 15,403 46,998 403,142
----------- -------- ---------- -----------
EXPENSES:
Property expenses ................. 119,270 2,406 4,318 125,994
Marketing, general and
administrative ................... 16,981 548 4,740 22,269
Interest .......................... 25,167 445 49,097 74,709
Depreciation and amortization. 64,097 3,663 6,744 74,504
----------- -------- ---------- -----------
Total Expenses ..................... 225,515 7,062 64,899 297,476
----------- -------- ---------- -----------
Income before distributions to
preferred unitholders,
minority interests and
extraordinary loss ................ $ 115,226 $ 8,341 $ (17,901) $ 105,666
=========== ======== ========== ===========
Total Assets ....................... $ 2,142,696 $ 0 $ 582,238 $ 2,724,934
=========== ======== ========== ===========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------
DECEMBER 31, 1998
------------------------------------------------------
CORE CONSOLIDATED
PORTFOLIO RMI OTHER TOTALS
------------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Base rents, tenant escalations
and reimbursements ............... $ 237,105 $ 15,137 $ 205 $ 252,447
Equity in earnings of real
estate joint ventures and
service companies ................ -- -- 1,836 1,836
Other income ...................... 460 -- 11,569 12,029
---------- -------- ---------- ----------
Total Revenues ..................... 237,565 15,137 13,610 266,312
---------- -------- ---------- ----------
EXPENSES:
Property expenses ................. 80,489 2,587 1,204 84,280
Marketing, general and
administrative ................... 11,699 456 3,816 15,971
Interest .......................... 16,651 1,101 30,043 47,795
Depreciation and amortization. 43,701 3,491 5,765 52,957
---------- -------- ---------- ----------
Total Expenses ..................... 152,540 7,635 40,828 201,003
---------- -------- ---------- ----------
Income before distributions to
preferred unitholders,
minority interests and
extraordinary loss ................ $ 85,025 $ 7,502 $ (27,218) $ 65,309
========== ======== ========== ==========
Total Assets ....................... $1,424,472 $156,430 $ 273,618 $1,854,520
========== ======== ========== ==========
</TABLE>

IV-22
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. NON-CASH INVESTING AND FINANCING ACTIVITIES

Additional supplemental disclosures of non-cash investing and financing
activities are as follows:

During 1998, the Operating Partnership issued 584,062 Units in connection
with the acquisition of three office and two industrial properties encompassing
approximately 580,000 square feet for a total non cash investment of
approximately $13.7 million. In addition, in connection with the acquisitions of
the Cappelli portfolio and 360 Hamilton Avenue located in White Plains, New
York, the Operating Partnership assumed approximately $47.1 million of
indebtedness and issued 42,518 preferred units with a stated value of
approximately $42.5 million for a total non cash investment of approximately
$89.6 million.

On June 11, 1998, the Operating Partnership distributed its 95% common
stock interest in FrontLine of approximately $3 million to its partners.

During 1998, in connection with the Operating Partnership's investment in
the Morris Companies, the Operating Partnership assumed approximately $23
million of indebtedness ($16.9 million net of minority partners interest). In
addition, the Morris Companies contributed net assets of approximately $36
million to the Operating Partnership in exchange for an approximate 28.2%
minority partners interest in RMI.

On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Operating Partnership issued 11,694,567 shares of Class B Common Units which
were valued for GAAP purposes at approximately $304.1 million and assumed
approximately $133.4 million of indebtedness for a total non cash investment of
approximately $437.5 million.

During June 1999, in connection with the sale of an office property, the
Operating Partnership obtained a $1.2 million purchase money mortgage as partial
consideration for the sale.

During July 1999, the Operating Partnership sold its interest in a 852,000
square foot development property to RCG in exchange for a $12.3 million note.
During October 1999, the Operating Partnership accepted 97 shares of preferred
stock of RCG as payment of $4.0 million of principal and interest due under the
note.

During September 1999, in connection with the Matrix Sale and the first
stage closing of RMI, the Operating Partnership received as partial
consideration for the sale $41.5 million of common and preferred stock of KTR
and approximately $10.2 million in purchase money mortgages from Matrix. In
addition, the Operating Partnership was also relieved of approximately $26.7
million of secured indebtedness.

During November 1999, the Operating Partnership received approximately $3.6
million of common stock of FrontLine as consideration for amending the FrontLine
Facility and the RSVP Commitment.

13. COMMITMENTS AND OTHER COMMENTS

The Operating Partnership had outstanding undrawn letters of credit against
its Credit Facility of approximately $52.3 million and $26.1 million at December
31, 1999 and 1998, respectively.

IV-23
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following summary represents the Operating Partnership's results of
operations for each quarter during 1999 and 1998 (in thousands, except unit
data):

<TABLE>
<CAPTION>
1999
----------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues .............................. $ 76,107 $ 90,846 $ 125,731 $ 110,458
=========== =========== =========== ===========
Income before distributions to preferred unit
holders, minority interests and
extraordinary loss ......................... $ 20,091 $ 20,728 $ 35,709 $ 29,138
Preferred unit distributions ................ (5,041) (5,989) (7,985) (7,986)
Minority partners' interest in consolidated
partnerships ............................... (1,168) (1,615) (2,150) (1,869)
Extraordinary loss .......................... -- -- (629) --
----------- ----------- ----------- -----------
Net income available to common unit holders. $ 13,882 $ 13,124 $ 24,945 $ 19,283
=========== =========== =========== ===========
Net income available to:
General Partner -- common units ............ $ 11,641 $ 9,550 $ 15,409 $ 12,191
General Partner -- Class B Common Units. -- 1,747 6,596 4,767
Limited Partners' .......................... 2,241 1,827 2,940 2,325
----------- ----------- ----------- -----------
Total ....................................... $ 13,882 $ 13,124 $ 24,945 $ 19,283
=========== =========== =========== ===========
Net income per common unit:
General Partner -- common units ............ $ .29 $ .24 $ .38 $ .30
General Partner -- Class B Common Units. $ -- $ .36 $ .58 $ .46
Limited Partners' .......................... $ .29 $ .24 $ .38 $ .30
Weighted average common units outstanding:
General Partner -- common units ............ 40,049,000 40,285,000 40,367,000 40,375,000
General Partner -- Class B Common Units. -- 4,883,000 11,457,000 10,469,000
Limited Partners' .......................... 7,710,000 7,705,000 7,702,000 7,701,000
</TABLE>

<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues .............................. $ 55,062 $ 66,267 $ 71,595 $ 73,388
=========== =========== =========== ===========
Income before distributions to preferred unit
holders, minority interests and
extraordinary loss ......................... $ 12,387 $ 17,664 $ 17,348 $ 17,910
Preferred unit distributions ................ -- (4,168) (5,034) (5,042)
Minority partners' interest in consolidated
partnerships ............................... (561) (712) (665) (881)
Extraordinary loss .......................... -- -- (1,993) --
----------- ----------- ----------- -----------
Net income available to common unit holders. $ 11,826 $ 12,784 $ 9,656 $ 11,987
=========== =========== =========== ===========
Net income available to:
General Partner -- common units ............ $ 9,835 $ 10,022 $ 8,770 $ 10,040
Limited Partners' .......................... 1,991 2,762 886 1,947
----------- ----------- ----------- -----------
Total ....................................... $ 11,826 $ 12,784 $ 9,656 $ 11,987
=========== =========== =========== ===========
Net income per common unit:
General Partner ............................ $ .26 $ .25 $ .22 $ .25
Limited Partners' .......................... $ .26 $ .36 $ .11 $ .25
Weighted average common units outstanding:
General Partner ............................ 38,183,000 39,637,000 40,012,000 40,035,000
Limited Partners' .......................... 7,709,000 7,694,000 7,741,000 7,765,000
</TABLE>

IV-24
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. PRO FORMA RESULTS (UNAUDITED)

The following unaudited pro forma operating results of the Operating
Partnership for the year ended December 31, 1999 have been prepared as if the
property acquisitions made during 1999 had occurred on January 1, 1999.
Unaudited pro forma financial information is presented for informational
purposes only and may not be indicative of what the actual results of operations
of the Operating Partnership would have been had the events occurred as of
January 1, 1999, nor does it purport to represent the results of operations for
future periods (in thousands except per unit data):

<TABLE>
<CAPTION>
<S> <C>
Total Revenues ................................................... $ 455,650
==========
Income before distributions to preferred unit holders, minority
interests and extraordinary loss ................................ $ 119,943
==========
Net income available to General Partner -- common units .......... $ 55,847
==========
Net Income per weighted average general partnership
common unit ..................................................... $ 1.39
==========
Net Income available to General Partner --
Class B Common Units ............................................ $ 15,001
==========
Net Income per weighted average Class B general partnership
common unit ..................................................... $ 2.22
==========
Net Income available to Limited Partners' ........................ $ 10,680
==========
Net income per weighted average limited partnership unit ......... $ 1.39
==========

</TABLE>

16. SUBSEQUENT EVENT

IV-25
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- ------------------------------------------------------ ---------------- ------------------------- ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------- ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------------------------------ ---------------- --------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park, Hauppauge, New York
(27 buildings in an industrial park) ................ B $1,940 $ 9,955 -- 10,082
Airport International Plaza, Islip, New York (17
buildings in an industrial park) .................... 2,616 (C) 1,263 13,608 -- 10,895
County Line Industrial Center, Huntington, New
York (3 buildings in an industrial park) ............ B 628 3,686 -- 2,693
32 Windsor Place, Islip, New York .................... B 32 321 -- 46
42 Windsor Place, Islip, New York .................... B 48 327 -- 548
505 Walt Whitman Rd., Huntington, New York ........... B 140 42 -- 59
1170 Northern Blvd., N. Great Neck, New York ......... B 30 99 -- 34
50 Charles Lindbergh Blvd., Mitchel Field, New
York ................................................ 15,479 A 12,089 -- 5,286
200 Broadhollow Road, Melville, New York ............. 6,560 338 3,354 -- 3,057
48 South Service Road, Melville, New York ............ B 1,652 10,245 -- 4,733
395 North Service Road, Melville, New York ........... 20,933 A 15,551 -- 6,852
6800 Jericho Turnpike, Syosset, New York ............. 15,001 582 6,566 -- 8,126
6900 Jericho Turnpike, Syosset, New York ............. 5,279 385 4,228 -- 3,359
300 Motor Parkway, Hauppauge, New York ............... B 276 1,136 -- 1,510
88 Duryea Road, Melville, New York ................... B 200 1,565 -- 690
210 Blydenburgh Road, Islandia, New York ............. B 11 158 -- 156
208 Blydenburgh Road, Islandia, New York ............. B 12 192 -- 147
71 Hoffman Lane, Islandia, New York .................. B 19 260 -- 172
933 Motor Parkway, Hauppauge, New York ............... B 106 375 -- 356
65 and 85 South Service Road Plainview, New York ..... B 40 218 -- 17
333 Earl Ovington Blvd., Mitchel Field, New York
(Omni) .............................................. 56,367 A 67,221 -- 18,521
135 Fell Court Islip, New York ....................... B 462 1,265 -- 52
40 Cragwood Road, South Plainfield, New Jersey ....... B 725 7,131 -- 5,593
110 Marcus Drive, Huntington, New York ............... B 390 1,499 -- 107
333 East Shore Road, Great Neck, New York ............ B A 564 -- 200
310 East Shore Road, Great Neck, New York ............ 2,322 485 2,009 -- 1,458
70 Schmitt Blvd., Farmingdale, New York .............. B 727 3,408 -- 33

</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G
- ------------------------------------------------------ ---------------------------------- -------------- --------------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------
BUILDINGS AND ACCUMULATED DATE OF
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION
- ------------------------------------------------------ --------- --------------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park, Hauppauge, New York
(27 buildings in an industrial park) ................ $1,940 20,037 21,977 13,495 1961-1979
Airport International Plaza, Islip, New York (17
buildings in an industrial park) .................... 1,263 24,503 25,766 14,637 1970-1988
County Line Industrial Center, Huntington, New
York (3 buildings in an industrial park) ............ 628 6,379 7,007 4,333 1975-1979
32 Windsor Place, Islip, New York .................... 32 367 399 336 1971
42 Windsor Place, Islip, New York .................... 48 875 923 717 1972
505 Walt Whitman Rd., Huntington, New York ........... 140 101 241 81 1950
1170 Northern Blvd., N. Great Neck, New York ......... 30 133 163 127 1947
50 Charles Lindbergh Blvd., Mitchel Field, New
York ................................................ 0 17,375 17,375 9,110 1984
200 Broadhollow Road, Melville, New York ............. 338 6,411 6,749 3,774 1981
48 South Service Road, Melville, New York ............ 1,652 14,978 16,630 7,277 1986
395 North Service Road, Melville, New York ........... 0 22,403 22,403 11,094 1988
6800 Jericho Turnpike, Syosset, New York ............. 582 14,692 15,274 8,631 1977
6900 Jericho Turnpike, Syosset, New York ............. 385 7,587 7,972 3,699 1982
300 Motor Parkway, Hauppauge, New York ............... 276 2,646 2,922 1,381 1979
88 Duryea Road, Melville, New York ................... 200 2,255 2,455 1,261 1980
210 Blydenburgh Road, Islandia, New York ............. 11 314 325 297 1969
208 Blydenburgh Road, Islandia, New York ............. 12 339 351 337 1969
71 Hoffman Lane, Islandia, New York .................. 19 432 451 414 1970
933 Motor Parkway, Hauppauge, New York ............... 106 731 837 592 1973
65 and 85 South Service Road Plainview, New York ..... 40 235 275 224 1961
333 Earl Ovington Blvd., Mitchel Field, New York
(Omni) .............................................. 0 85,742 85,742 19,681 1990
135 Fell Court Islip, New York ....................... 462 1,317 1,779 330 1965
40 Cragwood Road, South Plainfield, New Jersey ....... 725 12,724 13,449 6,839 1970
110 Marcus Drive, Huntington, New York ............... 390 1,606 1,996 1,190 1980
333 East Shore Road, Great Neck, New York ............ 0 764 764 525 1976
310 East Shore Road, Great Neck, New York ............ 485 3,467 3,952 1,527 1981
70 Schmitt Blvd., Farmingdale, New York .............. 727 3,441 4,168 497 1965

</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN H COLUMN I
- ------------------------------------------------------ ------------ --------------
LIFE ON WHICH
DATE DEPRECIATION
DESCRIPTION ACQUIRED IS COMPUTED
- ------------------------------------------------------ ------------ --------------
<S> <C> <C>
Vanderbilt Industrial Park, Hauppauge, New York
(27 buildings in an industrial park) ................ 1961-1979 10-30 Years
Airport International Plaza, Islip, New York (17
buildings in an industrial park) .................... 1970-1988 10-30 Years
County Line Industrial Center, Huntington, New
York (3 buildings in an industrial park) ............ 1975-1979 10-30 Years
32 Windsor Place, Islip, New York .................... 1971 10-30 Years
42 Windsor Place, Islip, New York .................... 1972 10-30 Years
505 Walt Whitman Rd., Huntington, New York ........... 1968 10-30 Years
1170 Northern Blvd., N. Great Neck, New York ......... 1962 10-30 Years
50 Charles Lindbergh Blvd., Mitchel Field, New
York ................................................ 1984 10-30 Years
200 Broadhollow Road, Melville, New York ............. 1981 10-30 Years
48 South Service Road, Melville, New York ............ 1986 10-30 Years
395 North Service Road, Melville, New York ........... 1988 10-30 Years
6800 Jericho Turnpike, Syosset, New York ............. 1978 10-30 Years
6900 Jericho Turnpike, Syosset, New York ............. 1982 10-30 Years
300 Motor Parkway, Hauppauge, New York ............... 1979 10-30 Years
88 Duryea Road, Melville, New York ................... 1980 10-30 Years
210 Blydenburgh Road, Islandia, New York ............. 1969 10-30 Years
208 Blydenburgh Road, Islandia, New York ............. 1969 10-30 Years
71 Hoffman Lane, Islandia, New York .................. 1970 10-30 Years
933 Motor Parkway, Hauppauge, New York ............... 1973 10-30 Years
65 and 85 South Service Road Plainview, New York ..... 1961 10-30 Years
333 Earl Ovington Blvd., Mitchel Field, New York
(Omni) .............................................. 1995 10-30 Years
135 Fell Court Islip, New York ....................... 1992 10-30 Years
40 Cragwood Road, South Plainfield, New Jersey ....... 1983 10-30 Years
110 Marcus Drive, Huntington, New York ............... 1980 10-30 Years
333 East Shore Road, Great Neck, New York ............ 1976 10-30 Years
310 East Shore Road, Great Neck, New York ............ 1981 10-30 Years
70 Schmitt Blvd., Farmingdale, New York .............. 1995 10-30 Years
</TABLE>

Continued

IV-26
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999 (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- ------------------------------------------------------- ------------- ------------------------ ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------ ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------------------------------- ------------- -------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
19 Nicholas Drive, Yaphank, New York .................. B 160 7,399 -- 4,731
1516 Motor Parkway, Hauppauge, New York ............... B 603 6,722 -- 127
125 Baylis Road, Melville, New York ................... B 1,601 8,626 -- 1,443
35 Pinelawn Road, Melville, New York .................. B 999 7,073 -- 2,067
520 Broadhollow Road, Melville, New York .............. B 457 5,572 -- 1,574
1660 Walt Whitman Road, Melville, New York ............ B 370 5,072 -- 350
70 Maxess Road, Melville, New York .................... B 367 1,859 95 2,879
85 Nicon Court, Hauppauge, New York ................... B 797 2,818 -- 64
104 Parkway Drive So., Hauppauge, New York ............ B 54 804 -- 136
20 Melville Park Rd., Melville, New York .............. B 391 2,650 -- 202
105 Price Parkway, Hauppauge, New York ................ B 2,030 6,327 -- 469
48 Harbor Park Drive, Hauppauge, New York ............ B 1,304 2,247 -- 89
125 Ricefield Lane, Hauppauge, New York ............... B 13 852 -- 330
110 Ricefield Lane, Hauppauge, New York ............... B 33 1,043 -- 57
120 Ricefield Lane, Hauppauge, New York ............... B 16 1,051 -- 74
135 Ricefield Lane, Hauppauge, New York ............... B 24 906 -- 473
30 Hub Drive, Huntington, New York .................... B 469 1,571 -- 312
60 Charles Lindbergh, Mitchel Field, New York ......... B A 20,800 -- 1,654
155 White Plains Rod., Tarrytown, New York ............ B 1,613 2,542 -- 874
235 Main Street, Tarrytown, New York .................. B 933 5,375 -- 881
245 Main Street, Tarrytown, New York .................. B 1,235 7,284 -- 614
505 White Plains Road, Tarrytown, New York ............ B 210 1,332 -- 209
555 White Plains Road, Tarrytown, New York ............ B 712 4,133 51 4,233
560 White Plains Road, Tarrytown, New York ............ B 1,521 8,756 -- 1,788
580 White Plains Road, Tarrytown, New York ............ 8,172 2,414 14,595 -- 2,203
660 White Plains Road, Tarrytown, New York ............ B 3,929 22,640 45 3,447
Landmark Square, Stamford, Connecticut ................ 47,809 11,603 64,466 769 20,723
110 Bi-County Blvd., Farmingdale, New York ............ 4,221 2,342 6,665 -- 170
RREEF Portfolio, Hauppauge, New York (10
additional buildings in Vanderbuilt Industrial Park) B 930 20,619 -- 2,845
275 Broadhollow Road, Melville, New York .............. B 5,250 11,761 -- 594
One Eagle Rock, East Hanover, New Jersey .............. B 803 7,563 -- 2,099

</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
- ------------------------------------------------------- --------------------------------- -------------- -------------- ----------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
---------------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
- ------------------------------------------------------- -------- --------------- -------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
19 Nicholas Drive, Yaphank, New York .................. 160 12,130 12,290 1,147 1989 1995
1516 Motor Parkway, Hauppauge, New York ............... 603 6,849 7,452 1,012 1981 1995
125 Baylis Road, Melville, New York ................... 1,601 10,069 11,670 1,353 1980 1995
35 Pinelawn Road, Melville, New York .................. 999 9,140 10,139 1,508 1980 1995
520 Broadhollow Road, Melville, New York .............. 457 7,146 7,603 1,461 1978 1995
1660 Walt Whitman Road, Melville, New York ............ 370 5,422 5,792 802 1980 1995
70 Maxess Road, Melville, New York .................... 462 4,738 5,200 585 1967 1995
85 Nicon Court, Hauppauge, New York ................... 797 2,882 3,679 383 1984 1995
104 Parkway Drive So., Hauppauge, New York ............ 54 940 994 124 1985 1996
20 Melville Park Rd., Melville, New York .............. 391 2,852 3,243 316 1965 1996
105 Price Parkway, Hauppauge, New York ................ 2,030 6,796 8,826 871 1969 1996
48 Harbor Park Drive, Hauppauge, New York ............ 1,304 2,336 3,640 299 1976 1996
125 Ricefield Lane, Hauppauge, New York ............... 13 1,182 1,195 229 1973 1996
110 Ricefield Lane, Hauppauge, New York ............... 33 1,100 1,133 150 1980 1996
120 Ricefield Lane, Hauppauge, New York ............... 16 1,125 1,141 125 1983 1996
135 Ricefield Lane, Hauppauge, New York ............... 24 1,379 1,403 284 1981 1996
30 Hub Drive, Huntington, New York .................... 469 1,883 2,352 269 1976 1996
60 Charles Lindbergh, Mitchel Field, New York ......... 0 22,454 22,454 3,041 1989 1996
155 White Plains Rod., Tarrytown, New York ............ 1,613 3,416 5,029 390 1963 1996
235 Main Street, Tarrytown, New York .................. 933 6,256 7,189 868 1974 1996
245 Main Street, Tarrytown, New York .................. 1,235 7,898 9,133 1,163 1983 1996
505 White Plains Road, Tarrytown, New York ............ 210 1,541 1,751 270 1974 1996
555 White Plains Road, Tarrytown, New York ............ 763 8,366 9,129 1,551 1972 1996
560 White Plains Road, Tarrytown, New York ............ 1,521 10,544 12,065 2,155 1980 1996
580 White Plains Road, Tarrytown, New York ............ 2,414 16,798 19,212 2,618 1997 1996
660 White Plains Road, Tarrytown, New York ............ 3,974 26,087 30,061 3,974 1983 1996
Landmark Square, Stamford, Connecticut ................ 12,372 85,189 97,561 8,489 1973-1984 1996
110 Bi-County Blvd., Farmingdale, New York ............ 2,342 6,835 9,177 723 1984 1997
RREEF Portfolio, Hauppauge, New York (10
additional buildings in Vanderbuilt Industrial Park) 930 23,464 24,394 2,358 1974-1982 1997
275 Broadhollow Road, Melville, New York .............. 5,250 12,355 17,605 1,191 1970 1997
One Eagle Rock, East Hanover, New Jersey .............. 803 9,662 10,465 1,077 1986 1997

</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN I
- ------------------------------------------------------- --------------
LIFE ON WHICH
DEPRECIATION
DESCRIPTION IS COMPUTED
- ------------------------------------------------------- --------------
<S> <C>
19 Nicholas Drive, Yaphank, New York .................. 10-30 Years
1516 Motor Parkway, Hauppauge, New York ............... 10-30 Years
125 Baylis Road, Melville, New York ................... 10-30 Years
35 Pinelawn Road, Melville, New York .................. 10-30 Years
520 Broadhollow Road, Melville, New York .............. 10-30 Years
1660 Walt Whitman Road, Melville, New York ............ 10-30 Years
70 Maxess Road, Melville, New York .................... 10-30 Years
85 Nicon Court, Hauppauge, New York ................... 10-30 Years
104 Parkway Drive So., Hauppauge, New York ............ 10-30 Years
20 Melville Park Rd., Melville, New York .............. 10-30 Years
105 Price Parkway, Hauppauge, New York ................ 10-30 Years
48 Harbor Park Drive, Hauppauge, New York ............ 10-30 Years
125 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
110 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
120 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
135 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
30 Hub Drive, Huntington, New York .................... 10-30 Years
60 Charles Lindbergh, Mitchel Field, New York ......... 10-30 Years
155 White Plains Rod., Tarrytown, New York ............ 10-30 Years
235 Main Street, Tarrytown, New York .................. 10-30 Years
245 Main Street, Tarrytown, New York .................. 10-30 Years
505 White Plains Road, Tarrytown, New York ............ 10-30 Years
555 White Plains Road, Tarrytown, New York ............ 10-30 Years
560 White Plains Road, Tarrytown, New York ............ 10-30 Years
580 White Plains Road, Tarrytown, New York ............ 10-30 Years
660 White Plains Road, Tarrytown, New York ............ 10-30 Years
Landmark Square, Stamford, Connecticut ................ 10-30 Years
110 Bi-County Blvd., Farmingdale, New York ............ 10-30 Years
RREEF Portfolio, Hauppauge, New York (10
additional buildings in Vanderbuilt Industrial Park) 10-30 Years
275 Broadhollow Road, Melville, New York .............. 10-30 Years
One Eagle Rock, East Hanover, New Jersey .............. 10-30 Years
</TABLE>

Continued

IV-27
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999 (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- --------------------------------------------- ------------- ------------------------ ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------ ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- --------------------------------------------- ------------- -------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
710 Bridgeport Avenue, Shelton, Connecticut . B 5,405 21,620 7 623
101 JFK Expressway, Short Hills, New Jersey . B 7,745 43,889 -- 1,134
10 Rooney Circle, West Orange, New Jersey ... B 1,302 4,615 1 421
Executive Hill Office Park, West Orange, New
Jersey ..................................... B 7,629 31,288 4 1,073
3 University Plaza, Hackensack, New Jersey .. B 7,894 11,846 -- 1,068
400 Garden City Plaza, Garden City, New York B 13,986 10,127 -- 1,275
425 Rabro Drive, Hauppauge, New York ........ B 665 3,489 -- 71
One Paragon Drive, Montvale, New Jersey ..... B 2,773 9,901 -- 533
90 Merrick Avenue, East Meadow, New York .... B A 19,193 -- 3,350
150 Motor Parkway, Hauppauge, New York ...... B 1,114 20,430 -- 2,588
390 Motor Parkway, Hauppauge, New York ...... B 240 4,459 -- 249
Reckson Executive Park, Ryebrook, New York .. B 18,343 55,028 -- 1,299
120 White Plains Road, Tarrytown, New York .. B 3,355 24,605 -- 182
University Square, Princeton, New Jersey .... B 3,288 8,888 -- 111
100 Andrews Road Hicksville, New York ....... B 2,337 1,711 155 5,707
2 Macy Road, Harrison, New York ............. B 642 2,131 -- 47
80 Grasslands, Elmsford, New York ........... B 1,208 6,728 -- 242
65 Marcus Drive, Melville, New York ......... B 295 1,966 57 885
400 Cabot Drive, Hamilton, New Jersey ....... B 2,068 18,614 -- 71
51 JFK Parkway, Short Hills, New York ....... B 8,732 58,437 -- 874
Triad V -- 1979 Marcus Ave. Lake Success, New
York ....................................... B 3,528 31,786 -- 5,897
100 Forge Way, Rockaway, New Jersey ......... B 315 902 -- 89
200 Forge Way, Rockaway, New Jersey ......... B 1,128 3,228 -- 178
300 Forge Way, Rockaway, New Jersey ......... B 376 1,075 -- 254
400 Forge Way, Rockaway, New Jersey ......... B 1,142 3,267 -- 179
51-55 Charles Lindergh Blvd., Uniondale, New
York ....................................... B A 27,975 -- 4,174
155 Passaic Avenue, Fairfield, New Jersey ... B 3 3,538 -- 1,418
100 Summit Drive Vahalla, New York .......... 22,614 3,007 41,351 -- 2,769

</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
- --------------------------------------------- --------------------------------- -------------- -------------- ----------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
---------------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
- --------------------------------------------- -------- --------------- -------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
710 Bridgeport Avenue, Shelton, Connecticut . 5,412 22,243 27,655 2,091 1971-1979 1997
101 JFK Expressway, Short Hills, New Jersey . 7,745 45,023 52,768 3,970 1981 1997
10 Rooney Circle, West Orange, New Jersey ... 1,303 5,036 6,339 505 1971 1997
Executive Hill Office Park, West Orange, New
Jersey ..................................... 7,633 32,361 39,994 2,782 1978-1984 1997
3 University Plaza, Hackensack, New Jersey .. 7,894 12,914 20,808 1,157 1985 1997
400 Garden City Plaza, Garden City, New York 13,986 11,402 25,388 938 1989 1997
425 Rabro Drive, Hauppauge, New York ........ 665 3,560 4,225 305 1980 1997
One Paragon Drive, Montvale, New Jersey ..... 2,773 10,434 13,207 870 1980 1997
90 Merrick Avenue, East Meadow, New York .... 0 22,543 22,543 1,817 1985 1997
150 Motor Parkway, Hauppauge, New York ...... 1,114 23,018 24,132 1,999 1984 1997
390 Motor Parkway, Hauppauge, New York ...... 240 4,708 4,948 386 1980 1997
Reckson Executive Park, Ryebrook, New York .. 18,343 56,327 74,670 4,140 1983-1986 1997
120 White Plains Road, Tarrytown, New York .. 3,355 24,787 28,142 1,717 1984 1997
University Square, Princeton, New Jersey .... 3,288 8,999 12,287 625 1987 1997
100 Andrews Road Hicksville, New York ....... 2,492 7,418 9,910 826 1954 1996
2 Macy Road, Harrison, New York ............. 642 2,178 2,820 158 1962 1997
80 Grasslands, Elmsford, New York ........... 1,208 6,970 8,178 516 1989/1964 1997
65 Marcus Drive, Melville, New York ......... 352 2,851 3,203 310 1968 1996
400 Cabot Drive, Hamilton, New Jersey ....... 2,068 18,685 20,753 1,255 1989 1998
51 JFK Parkway, Short Hills, New York ....... 8,732 59,311 68,043 3,643 1988 1998
Triad V -- 1979 Marcus Ave. Lake Success, New
York ....................................... 3,528 37,683 41,211 2,669 1987 1998
100 Forge Way, Rockaway, New Jersey ......... 315 991 1,306 67 1986 1998
200 Forge Way, Rockaway, New Jersey ......... 1,128 3,406 4,534 227 1989 1998
300 Forge Way, Rockaway, New Jersey ......... 376 1,329 1,705 101 1989 1998
400 Forge Way, Rockaway, New Jersey ......... 1,142 3,446 4,588 230 1989 1998
51-55 Charles Lindergh Blvd., Uniondale, New
York ....................................... 0 32,149 32,149 3,232 1981 1998
155 Passaic Avenue, Fairfield, New Jersey ... 3 4,956 4,959 296 1984 1998
100 Summit Drive Vahalla, New York .......... 3,007 44,120 47,127 2,614 1988 1998

</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN I
- --------------------------------------------- --------------
LIFE ON WHICH
DEPRECIATION
DESCRIPTION IS COMPUTED
- --------------------------------------------- --------------
<S> <C>
710 Bridgeport Avenue, Shelton, Connecticut. 10-30 Years
101 JFK Expressway, Short Hills, New Jersey.. 10-30 Years
10 Rooney Circle, West Orange, New Jersey ... 10-30 Years
Executive Hill Office Park, West Orange, New
Jersey ..................................... 10-30 Years
3 University Plaza, Hackensack, New Jersey .. 10-30 Years
400 Garden City Plaza, Garden City, New York 10-30 Years
425 Rabro Drive, Hauppauge, New York ........ 10-30 Years
One Paragon Drive, Montvale, New Jersey ..... 10-30 Years
90 Merrick Avenue, East Meadow, New York .... 10-30 Years
150 Motor Parkway, Hauppauge, New York ...... 10-30 Years
390 Motor Parkway, Hauppauge, New York ...... 10-30 Years
Reckson Executive Park, Ryebrook, New York .. 10-30 Years
120 White Plains Road, Tarrytown, New York .. 10-30 Years
University Square, Princeton, New Jersey .... 10-30 Years
100 Andrews Road Hicksville, New York ....... 10-30 Years
2 Macy Road, Harrison, New York ............. 10-30 Years
80 Grasslands, Elmsford, New York ........... 10-30 Years
65 Marcus Drive, Melville, New York ......... 10-30 Years
400 Cabot Drive, Hamilton, New Jersey ....... 10-30 Years
51 JFK Parkway, Short Hills, New York ....... 10-30 Years
Triad V -- 1979 Marcus Ave. Lake Success, New
York ....................................... 10-30 Years
100 Forge Way, Rockaway, New Jersey ......... 10-30 Years
200 Forge Way, Rockaway, New Jersey ......... 10-30 Years
300 Forge Way, Rockaway, New Jersey ......... 10-30 Years
400 Forge Way, Rockaway, New Jersey ......... 10-30 Years
51-55 Charles Lindergh Blvd., Uniondale, New
York ....................................... 10-30 Years
155 Passaic Avenue, Fairfield, New Jersey ... 10-30 Years
100 Summit Drive Vahalla, New York .......... 10-30 Years
</TABLE>

Continued

IV-28
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999 (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- -------------------------------------------------- ------------- --------------------------- -------------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
--------------------------- -------------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- -------------------------------------------------- ------------- ----------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
115/117 Stevens Avenue, Valhalla, New York ....... B 1,094 22,490 -- 628
200 Summit Lake Drive, Valhalla, New York ........ 20,463 4,343 37,305 -- 541
140 Grand Street., Valhalla, New York ............ B 1,932 18,744 -- 153
500 Summit Lake Drive, Valhalla, New York ........ B 7,052 37,309 -- 7,547
5 Henderson Drive, West Caldwell, New Jersey ..... B 2,450 6,984 4 690
Stamford Towers, Stamford, Connecticut ........... B 13,557 47,916 -- 3,377
99 Cherry Hill Road, Parsippany, New Jersey ...... B 2,360 7,508 -- 339
119 Cherry Hill Road, Parsipanny, New Jersey ..... B 2,512 7,622 -- 577
120 Wilbur Place, Bohemia, New York .............. B 202 1,154 8 114
45 Melville Park Road, Melville, New York ........ B 355 1,487 -- 1,813
500 Saw Mill River Road, Elmsford, New York ...... B 1,542 3,796 -- 178
2004 Orville Drive, No. Bohemia, New York ........ B 633 4,226 -- 1,407
2005 Orville Drive North Bohemia, New York ....... B 984 5,410 -- 489
120 W. 45th Street New York, New York ............ 66,933 28,757 162,809 -- 338
4 Appelgate Drive Robbinsville, New Jersey ....... B 544 7,623 -- 1,503
1305 Walt Whitman Road Melville, New York ........ B 2,885 15,029 -- 3,448
600 Old Willets Path Hauppauge, New York ......... B 295 3,521 -- 723
1255 Broad Street Clifton, New Jersey ............ B 1,329 15,869 -- 2,806
810 Seventh Avenue New York, New York ............ 86,822 26,984 152,767 -- 2,036
120 Mineola Blvd. Mineola, New York .............. B 1,869 10,603 -- 41
100 Wall Street, New York, New York .............. 37,623 11,749 66,517 -- 1,020
One Orlando, Orlando, Florida .................... 39,960 9,386 51,136 -- 0
Land held for development ........................ B 60,894 -- -- 0
Developments in progress ......................... -- -- 68,690 -- --
Other property ................................... B -- -- -- 5,482
------ ------ ------- ------ -----
Total ............................................ $459,174 $335,902 $1,656,797 $1,196 214,504
======== ======== ========== ====== =======
</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G
- -------------------------------------------------- ---------------------------------------- -------------- --------------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------------
BUILDINGS AND ACCUMULATED DATE OF
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION
- -------------------------------------------------- ----------- --------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
115/117 Stevens Avenue, Valhalla, New York ....... 1,094 23,118 24,212 1,309 1984
200 Summit Lake Drive, Valhalla, New York ........ 4,343 37,846 42,189 2,133 1990
140 Grand Street., Valhalla, New York ............ 1,932 18,897 20,829 1,059 1991
500 Summit Lake Drive, Valhalla, New York ........ 7,052 44,856 51,908 1,779 1986
5 Henderson Drive, West Caldwell, New Jersey ..... 2,454 7,674 10,128 363 1967
Stamford Towers, Stamford, Connecticut ........... 13,557 51,293 64,850 2,686 1989
99 Cherry Hill Road, Parsippany, New Jersey ...... 2,360 7,847 10,207 375 1982
119 Cherry Hill Road, Parsipanny, New Jersey ..... 2,512 8,199 10,711 385 1982
120 Wilbur Place, Bohemia, New York .............. 210 1,268 1,478 64 1972
45 Melville Park Road, Melville, New York ........ 355 3,300 3,655 229 1998
500 Saw Mill River Road, Elmsford, New York ...... 1,542 3,974 5,516 264 1968
2004 Orville Drive, No. Bohemia, New York ........ 633 5,633 6,266 522 1998
2005 Orville Drive North Bohemia, New York ....... 984 5,899 6,883 58 1999
120 W. 45th Street New York, New York ............ 28,757 163,147 191,904 3,603 1998
4 Appelgate Drive Robbinsville, New Jersey ....... 544 9,126 9,670 300 1999
1305 Walt Whitman Road Melville, New York ........ 2,885 18,477 21,362 579 1999
600 Old Willets Path Hauppauge, New York ......... 295 4,244 4,539 143 1999
1255 Broad Street Clifton, New Jersey ............ 1,329 18,675 20,004 175 1999
810 Seventh Avenue New York, New York ............ 26,984 154,803 181,787 3,398 1970
120 Mineola Blvd. Mineola, New York .............. 1,869 10,644 12,513 234 1977
100 Wall Street, New York, New York .............. 11,749 67,537 79,286 1,477 1969
One Orlando, Orlando, Florida .................... 9,386 51,136 60,522 702 1987
Land held for development ........................ 60,894 0 60,894 0 N/A
Developments in progress ......................... -- 68,690 68,690 0
Other property ................................... -- 5,482 5,482 637
------ ------- ------- -----
Total ............................................ $337,098 1,871,301 2,208,399 215,112
======== ========= ========= =======
</TABLE>

<TABLE>
<CAPTION>
COLUMN A COLUMN H COLUMN I
- -------------------------------------------------- ---------- --------------
LIFE ON WHICH
DATE DEPRECIATION
DESCRIPTION ACQUIRED IS COMPUTED
- -------------------------------------------------- ---------- --------------
<S> <C> <C>
115/117 Stevens Avenue, Valhalla, New York ....... 1998 10-30 Years
200 Summit Lake Drive, Valhalla, New York ........ 1998 10-30 Years
140 Grand Street., Valhalla, New York ............ 1998 10-30 Years
500 Summit Lake Drive, Valhalla, New York ........ 1998 10-30 Years
5 Henderson Drive, West Caldwell, New Jersey ..... 1998 10-30 Years
Stamford Towers, Stamford, Connecticut ........... 1998 10-30 Years
99 Cherry Hill Road, Parsippany, New Jersey ...... 1998 10-30 Years
119 Cherry Hill Road, Parsipanny, New Jersey ..... 1998 10-30 Years
120 Wilbur Place, Bohemia, New York .............. 1998 10-30 Years
45 Melville Park Road, Melville, New York ........ 1998 10-30 Years
500 Saw Mill River Road, Elmsford, New York ...... 1998 10-30 Years
2004 Orville Drive, No. Bohemia, New York ........ 1998 10-30 Years
2005 Orville Drive North Bohemia, New York ....... 1999 10-30 Years
120 W. 45th Street New York, New York ............ 1999 10-30 Years
4 Appelgate Drive Robbinsville, New Jersey ....... 1999 10-30 Years
1305 Walt Whitman Road Melville, New York ........ 1999 10-30 Years
600 Old Willets Path Hauppauge, New York ......... 1999 10-30 Years
1255 Broad Street Clifton, New Jersey ............ 1999 10-30 Years
810 Seventh Avenue New York, New York ............ 1999 10-30 Years
120 Mineola Blvd. Mineola, New York .............. 1999 10-30 Years
100 Wall Street, New York, New York .............. 1999 10-30 Years
One Orlando, Orlando, Florida .................... 1999 10-30 Years
Land held for development ........................ Various N/A
Developments in progress .........................
Other property ...................................
Total ............................................
</TABLE>

- ------
A These land parcels are leased (see Note 4).

B There are no encumbrances on these properties.

C The Encumbrance of $2,616 is related to one property. The aggregate cost for
Federal Income Tax purposes was approximately $1,728 million at December 31,
1999.

IV-29
<PAGE>

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(IN THOUSANDS)

The changes in real estate for each of the periods in the three years ended
December 31, 1999 are as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Real estate balance at beginning
of period ........................ $1,737,133 $1,011,228 $ 516,768
Improvements ..................... 57,571 134,582 37,778
Disposal, including write-off of
fully depreciated building
improvements ..................... (317,864) -- (154)
Acquisitions ..................... 731,559 591,323 456,836
---------- ---------- ----------
Balance at end of period ......... $2,208,399 $1,737,133 $1,011,228
========== ========== ==========
</TABLE>

The changes in accumulated depreciation, exclusive of amounts relating to
equipment, autos, furniture and fixtures, for each of the periods in the three
years ended December 31, 1999 are as follows:

<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Balance at beginning of period ...... $156,231 $108,652 $ 86,344
Depreciation for period ............. 65,471 47,579 22,442
Disposal, including write-off of
fully depreciated building
improvements ........................ (6,590) -- (134)
-------- -------- --------
Balance at end of period ............ $215,112 $156,231 $108,652
======== ======== ========

</TABLE>

IV-30

EXHIBIT 12.1
RECKSON OPERATING PARTNERSHIP, L. P.
RATIOS OF EARNINGS TO FIXED CHARGES

The following table sets forth the Operating Partnership's consolidated
ratios of earnings to fixed charges for the periods shown:

<TABLE>
<CAPTION>
For the years ended December 31, June 3, 1995 January 1, 1995
-------------------------------- to to
1999 1998 1997 1996 December 31, 1995 June 2, 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2.07x 2.00x 2.69x 2.71x 2.71x 1.02x (1)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Prior to June 2, 1995, the Operating Partnership's predecessors operated in
a manner as to minimize net taxable income to the owners. As a result of
the Operating Partnership commencing operations and the related formation
transactions, the Operating Partnership deleveraged its properties
significantly which resulted in a significantly improved ratio of earnings
to fixed charges.

The Operating Partnership's consolidated ratio of earnings to fixed charges
and preferred distributions for the year ended December 31, 1999 and 1998 was
1.54x and 1.60x, respectively. The Operating Partnership had no preferred
capital outstanding prior to April 1998.

EXHIBIT 21.1
RECKSON OPERATING PARTNERSHIP, L. P.
STATEMENT OF SUBSIDIARIES

NAME STATE OF ORGANIZATION
- ------------------------------- --------------------=
OMNI PARTNERS, L.P. DELAWARE
RECKSON FS LIMITED PARTNERSHIP DELAWARE
METROPOLITAN PARTNERS, LLC DELAWARE
RECKSON MANAGEMENT GROUP, INC. NEW YORK
RECKSON CONSTRUCTION GROUP, INC NEW YORK
RECKSON SHORT HILLS, LLC DELAWARE
RECKSON / STAMFORD TOWERS, LLC DELAWARE

<PAGE>

EXHIBIT 23.0
RECKSON OPERATING PARTNERSHIP, L. P.
CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement Form
S-3 (No. 333-67129) and in the related Prospectus of Reckson Operating
Partnership, L. P., of our report dated February 15, 2000, with respect to the
consolidated financial statements and schedule of Reckson Operating Partnership,
L. P., included in this Annual Report Form 10-K for the year ended December 31,
1999.

Ernst & Young, LLP

New York, New York
March 17, 2000

EXHIBIT 27
FINANCIAL DATA SCHEDULE
RECKSON OPERATING PARTNERSHIP, L. P.
(in thousands except EPS data)
</LEGEND>
<CIK> 0000930810
<NAME> RECKSON OPERATING PARTNERSHIP, L. P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 21,122
<SECURITIES> 0
<RECEIVABLES> 207,368
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 228,490
<PP&E> 2,214,872
<DEPRECIATION> (218,385)
<TOTAL-ASSETS> 2,724,934
<CURRENT-LIABILITIES> 98,788
<BONDS> 1,281,087
0
413,126
<COMMON> 838,847
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,724,934
<SALES> 369,135
<TOTAL-REVENUES> 403,142
<CGS> 0
<TOTAL-COSTS> 148,263
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,709
<INCOME-PRETAX> 105,666
<INCOME-TAX> 0
<INCOME-CONTINUING> 105,666
<DISCONTINUED> 0
<EXTRAORDINARY> (629)
<CHANGES> 0
<NET-INCOME> 71,234
<EPS-BASIC> 1.21
<EPS-DILUTED> 0

</TABLE>