<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                   FORM 10-K/A
                                AMENDMENT NO. 1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
 
  /X/    Annual report pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934 for the fiscal year ended
         December 31, 1997
 
                                       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 1-12861
                            ------------------------
 
                          CORNERSTONE PROPERTIES INC.
 
             (Exact name of Registrant as specified in its Charter)
 
                   NEVADA                              74-2170858
      (State or other jurisdiction of       (IRS Employer Identification No.)
      incorporation and organization)
 
                              126 EAST 56TH STREET
                               NEW YORK, NEW YORK
                    (Address of principal executive offices)
 
                                     10022
                                   (Zip Code)
 
                                 (212) 605-7100
              (Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS:                                    NAME OF EACH EXCHANGE ON WHICH REGISTERED:
------------------------------------------------------  ------------------------------------------------------
<S>                                                     <C>
Common Stock, no par value                              New York Stock Exchange
                                                        Dusseldorf Stock Exchange
                                                        Frankfurt Stock Exchange
</TABLE>
     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 amendments to
this Form 10-K. [X]
 
    Aggregate market value of registrant's voting Common Stock held by
non-affiliates as of March 26, 1998: $1,794,658,239.
 
Number of shares of Common Stock outstanding as of March 26, 1998: 98,015,196.
 
Index of Exhibits: See Item 14(c) page 52.
 
                      DOCUMENTS INCORPORATED BY REFERENCE:
<TABLE>
<CAPTION>
                                                                                                     Part of Form 10-K
                                                                                                        into which
                                                                                                       incorporated
                                                                                                   ---------------------
<S>                                                                                                <C>
Proxy Statement for Annual Meeting of Stockholders to be held May 20, 1998.......................         Part III
</TABLE>

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

    Pursuant to Rule 12b-5 under the Securities Exchange Act of 1934, as
amended, Cornerstone Properties Inc. (the "Company") hereby amends the
Company's annual report on Form 10-K as filed with the Securities and Exchange
Commission on March 30, 1998 (the "Annual Report"). This Amendment No. 1 to the
Annual Report ("Amendment No. 1") revises Item 8 of the Annual Report to add
certain disclosure to Note 1 of the Notes to Consolidated Financial Statements
of the Company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
    See the Financial Statements included as a part hereof.
 
 
                                       2

<PAGE>

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment to be 
signed on its behalf by the undersigned, thereunto duly authorized.
 
<TABLE>
<S>                             <C>  <C>
                                CORNERSTONE PROPERTIES INC.
                                (Registrant)
 
                                /s/ JOHN S. MOODY
                                ---------------------------------------------
                                John S. Moody
                                CEO, DIRECTOR AND CHAIRMAN OF THE BOARD
</TABLE>
 
Dated: November 12, 1998
  

                                       3

<PAGE>
                          CORNERSTONE PROPERTIES INC.
 
                                AND SUBSIDIARIES
 
                       CONSOLIDATED FINANCIAL STATEMENTS
 
                        AS OF DECEMBER 31, 1997 AND 1996
 
                            AND FOR THE YEARS ENDED
 
                        DECEMBER 31, 1997, 1996 AND 1995
 
                                      F-1
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders of
Cornerstone Properties Inc.
 
    We have audited the consolidated financial statements and financial
statement schedules of Cornerstone Properties Inc. and Subsidiaries (the
"Company") as of December 31, 1997 and 1996, and for each of the three years in
the period ended December 31, 1997, listed in item 14(a)(i) of this Form 10-K.
These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financing 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 Cornerstone
Properties Inc. and Subsidiaries as of December 31, 1997 and 1996 and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
 
New York, New York                                      Coopers & Lybrand L.L.P.
 
February 24, 1998
 
                                      F-2
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                           DECEMBER 31, 1997 AND 1996
 
<TABLE>
<CAPTION>
                                                                                         1997         1996
                                                                                     ------------  ----------
<S>                                                                                  <C>           <C>
                                                                                        (DOLLAR AMOUNTS IN
                                                                                            THOUSANDS)
ASSETS
Investments, at cost: (Notes 1, 2 and 4)
  Land.............................................................................  $    260,542  $   68,395
  Buildings, leasehold interests and improvements..................................     1,559,085     612,567
  Mortgage notes receivable, inclusive of $13,065,000 unamortized premium..........       240,253      --
  Deferred lease costs.............................................................       127,645     118,700
                                                                                     ------------  ----------
                                                                                        2,187,525     799,662
  Less: Accumulated depreciation and amortization..................................       229,652     198,686
                                                                                     ------------  ----------
 
    Total investments..............................................................     1,957,873     600,976
 
Cash and cash equivalents (Note 1).................................................        24,730     114,803
Restricted cash (Note 3)...........................................................         1,903       4,426
Other deferred costs, net of accumulated amortization of $1,998,000 and
  $1,140,000.......................................................................         5,728       3,562
Deferred tenant receivables (Notes 1 and 11).......................................        38,531      34,747
Tenant and other receivables, net (Note 1).........................................         7,584       2,405
Notes receivable...................................................................         1,652       2,911
Other assets.......................................................................        13,480       2,350
                                                                                     ------------  ----------
TOTAL ASSETS.......................................................................  $  2,051,481  $  766,180
                                                                                     ------------  ----------
                                                                                     ------------  ----------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Long-term debt, inclusive of $11,209,000 unamortized premium (Note 4)..............  $    706,178  $  400,142
Credit facility (Note 5)...........................................................       187,000      --
Accrued interest payable...........................................................         4,134       1,082
Accrued real estate taxes payable..................................................        13,401      13,222
Common Stockholders' distribution payable..........................................       --           12,366
Accounts payable and accrued expenses..............................................        18,363       6,468
Unearned revenue and other liabilities.............................................        10,986       9,095
                                                                                     ------------  ----------
TOTAL LIABILITIES..................................................................       940,062     442,375
                                                                                     ------------  ----------
Minority Interest (Note 1).........................................................        15,420     (17,478)
                                                                                     ------------  ----------
Commitments and Contingencies (Notes 2, 4, 5, 7 and 13)
Redeemable Preferred Stock; (1997-344,828; 1996-1,493,104) shares authorized;
  (1997-0; 1996-1,148,276) shares issued and outstanding; $166,500,000 redemption
  value (Note 6)...................................................................       --          162,743
                                                                                     ------------  ----------
Stockholders' Investment (Note 7)
  7% Cumulative Convertible Preferred Stock, $16.50 stated value; 15,000,000 shares
    authorized; 3,030,303 shares issued and outstanding............................        50,000      50,000
  Common Stock, no par value; 250,000,000 shares authorized; (1997-83,191,819;
    1996-20,609,754) shares issued and outstanding
Paid-in capital....................................................................     1,048,187     160,577
Accumulated deficit................................................................       --          (30,789)
Deferred compensation..............................................................        (2,188)     (1,248)
                                                                                     ------------  ----------
TOTAL STOCKHOLDERS' INVESTMENT.....................................................     1,095,999     178,540
                                                                                     ------------  ----------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT.....................................  $  2,051,481  $  766,180
                                                                                     ------------  ----------
                                                                                     ------------  ----------
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
            (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                   1997        1996        1995
                                                                                ----------  ----------  ----------
<S>                                                                             <C>         <C>         <C>
REVENUES
  Office and parking rentals..................................................  $  159,828  $  111,494  $   88,548
  Interest and other income...................................................      14,083       5,414       3,839
                                                                                ----------  ----------  ----------
      TOTAL REVENUES..........................................................     173,911     116,908      92,387
                                                                                ----------  ----------  ----------
EXPENSES
  Building operating expenses.................................................      35,962      24,578      19,233
  Real estate taxes...........................................................      25,560      19,610      12,297
  Interest expense............................................................      33,977      31,734      30,722
  Depreciation and amortization...............................................      30,978      24,317      22,572
  General and administrative..................................................       7,564       6,407       5,603
                                                                                ----------  ----------  ----------
      TOTAL EXPENSES..........................................................     134,041     106,646      90,427
                                                                                ----------  ----------  ----------
                                                                                    39,870      10,262       1,960
                                                                                ----------  ----------  ----------
OTHER INCOME (EXPENSES)
  Net gain (loss) on interest rate swaps (Note 8).............................          99       4,278      (7,672)
  Minority Interest...........................................................      (2,368)     (1,519)     (3,417)
                                                                                ----------  ----------  ----------
Income (loss) before extraordinary item.......................................      37,601      13,021      (9,129)
Extraordinary loss............................................................         (54)     (3,925)     (4,445)
                                                                                ----------  ----------  ----------
NET INCOME (LOSS).............................................................  $   37,547  $    9,096  $  (13,574)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
 
INCOME APPLICABLE TO PREFERRED STOCK..........................................  $  (10,160) $   (5,153) $   (1,449)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
 
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK..................................  $   27,387  $    3,943  $  (15,023)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
 
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM PER COMMON SHARE......................  $     0.63  $     0.39  $    (0.67)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
 
EXTRAORDINARY LOSS PER COMMON SHARE...........................................  $   --      $    (0.20) $    (0.27)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
 
BASIC NET INCOME (LOSS) PER COMMON SHARE (NOTES 1 AND 9)......................  $     0.63  $     0.19  $    (0.94)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
 
DILUTED NET INCOME (LOSS) PER COMMON SHARE (NOTES 1 AND 9)....................  $     0.63  $     0.19  $    (0.94)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-4
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
 
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                           COMMON STOCK          PREFERRED STOCK
                                      ----------------------  ----------------------
<S>                                   <C>          <C>        <C>          <C>        <C>           <C>            <C>
                                      OUTSTANDING   PAID-IN   OUTSTANDING   PAID-IN   ACCUMULATED     DEFERRED
                                        SHARES      CAPITAL     SHARES      CAPITAL     DEFICIT     COMPENSATION     TOTAL
                                      -----------  ---------  -----------  ---------  ------------  -------------  ---------
Balance, January 1, 1995............  13,240,500   $ 110,237      --       $  --       $  (26,311)    $  --        $  83,926
Common Stock Proceeds, net of $6,083
  in stock issuance costs...........   6,325,000      84,365      --          --           --            --           84,365
Preferred Stock Proceeds............      --          --       3,030,303      50,000       --            --           50,000
Restricted Stock Grants.............     186,713       2,670      --          --           --            (2,670)      --
Restricted Stock Grant Vesting......      --          --          --          --           --               434          434
Net Loss............................      --          --          --          --          (13,574)       --          (13,574)
Dividend Reinvestment,..............
  net of $150 in stock issuance
    costs...........................     207,302       2,690      --          --           --            --            2,690
Common Stock Distributions
  ($1.16/shr).......................      --         (18,485)     --          --           --            --          (18,485)
                                      -----------  ---------  -----------  ---------  ------------  -------------  ---------
BALANCE, DECEMBER 31, 1995..........  19,959,515   $ 181,477   3,030,303   $  50,000   $  (39,885)    $  (2,236)   $ 189,356
Common Stock issued for 10%
  Partnership purchase..............     349,650       5,000      --          --           --            --            5,000
Restricted Stock Grant Vesting......      --          --          --          --           --               988          988
Net Income..........................      --          --          --          --            9,096        --            9,096
Dividend Reinvestment, net of $212
  in stock issuance costs...........     300,589       3,804      --          --           --            --            3,804
Preferred Stock Distributions.......      --          (5,153)     --          --           --            --           (5,153)
Common Stock Distributions
  ($1.20/shr).......................      --         (24,551)     --          --           --            --          (24,551)
                                      -----------  ---------  -----------  ---------  ------------  -------------  ---------
BALANCE, DECEMBER 31, 1996..........  20,609,754   $ 160,577   3,030,303   $  50,000   $  (30,789)    $  (1,248)   $ 178,540
Common Stock Proceeds, net of
  $17,204 in stock issuance costs...  16,100,000     208,196      --          --           --            --          208,196
Preferred Stock Conversion..........  11,482,760     162,515      --          --           --            --          162,515
Dividend Reinvestment, net of $295
  in stock issuance costs...........     696,013      10,808      --          --           --            --           10,808
PGGM and DIHC Stock (Note 2)........  34,185,500     547,000      --          --           --            --          547,000
Restricted Stock Grants.............     107,292       1,761      --          --           --            (1,868)        (107)
Restricted Stock Grant Vesting......      --          --          --          --           --               928          928
Net Income..........................      --          --          --          --           37,547        --           37,547
Option Exercise.....................      10,500         150      --          --           --            --              150
Preferred Stock Distributions.......      --         (10,160)     --          --           --            --          (10,160)
Common Stock Distributions
  ($1.04/shr).......................      --         (32,660)     --          --           (6,758)       --          (39,418)
                                      -----------  ---------  -----------  ---------  ------------  -------------  ---------
BALANCE, DECEMBER 31, 1997..........  83,191,819   $1,048,187  3,030,303   $  50,000   $   --         $  (2,188)   $1,095,999
                                      -----------  ---------  -----------  ---------  ------------  -------------  ---------
                                      -----------  ---------  -----------  ---------  ------------  -------------  ---------
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-5
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
                         (DOLLAR AMOUNTS IN THOUSANDS)
                                   (NOTE 16)
 
<TABLE>
<CAPTION>
                                                                                   1997        1996        1995
                                                                                ----------  ----------  ----------
<S>                                                                             <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)...........................................................  $   37,547  $    9,096  $  (13,574)
  Adjustments to reconcile net income (loss) to net cash provided by operating
    activities:
    Depreciation and amortization.............................................      31,826      24,801      23,877
    Deferred compensation amortization........................................         928         988         434
    Unrealized (gain) loss on interest rate swaps.............................      --          (4,278)      7,672
    Net gain on interest rate swaps...........................................         (99)     --          --
    Extraordinary loss........................................................          54       3,925       4,446
    Unbilled rental revenue...................................................      (3,015)     (1,408)     (3,088)
    Increase (decrease) in accrued interest payable...........................       3,052      (3,245)     (3,142)
    Minority interest share of income.........................................       2,368       1,519       3,417
    Increase in tenant and other receivables and other assets.................     (16,920)     (2,461)       (564)
    Increase in accounts payable, accrued expenses and other liabilities......      10,181       5,585         558
                                                                                ----------  ----------  ----------
    Total adjustments.........................................................      28,375      25,426      33,610
                                                                                ----------  ----------  ----------
    Net cash provided by operating activities.................................      65,922      34,522      20,036
                                                                                ----------  ----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to investment property............................................    (464,096)    (58,501)   (137,403)
  Repayment of notes receivable...............................................       1,259       1,242       2,068
  Loan to a property manager..................................................      --          --            (192)
                                                                                ----------  ----------  ----------
    Net cash used in investing activities.....................................    (462,837)    (57,259)   (135,527)
                                                                                ----------  ----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock offering.........................................     225,400      --          90,448
  Proceeds from preferred stock offering......................................      --         140,000      50,000
  Borrowings under mortgage loans.............................................      --         116,000     239,100
  Borrowings (repayments) under credit facility...............................     187,000      --        (236,467)
  Repayment of term loan......................................................     (32,500)     --          --
  Repayments under mortgage loans.............................................      (1,094)    (98,384)     --
  Proceeds from dividend reinvestment plan....................................      11,104       4,016       2,840
  Net payments for swap terminations and prepayment costs.....................        (216)     (6,804)     (2,453)
  Decrease (increase) in restricted cash......................................       2,524         (33)        339
  Stock and debt issuance costs...............................................     (20,715)     (5,154)     (6,788)
  Distributions to minority partners..........................................      (2,717)     (2,503)     (3,970)
  Distributions to preferred stockholders.....................................     (10,160)     (5,153)     --
  Distributions to common stockholders........................................     (51,784)    (12,185)    (22,324)
                                                                                ----------  ----------  ----------
    Net cash provided by financing activities.................................     306,842     129,800     110,725
                                                                                ----------  ----------  ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS..............................     (90,073)    107,063      (4,766)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..................................     114,803       7,740      12,506
                                                                                ----------  ----------  ----------
CASH AND CASH EQUIVALENTS, END OF YEAR........................................  $   24,730  $  114,803  $    7,740
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-6
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                        DECEMBER 31, 1997, 1996 AND 1995
 
1. NATURE OF COMPANY'S BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
NATURE OF THE COMPANY'S BUSINESS
 
    Cornerstone Properties Inc. ("Cornerstone" or the "Company") is a
self-advised equity real estate investment trust ("REIT") which owns, through
subsidiaries, interests in 18 Class A office properties ("Properties")
encompassing approximately 10.3 million rentable square feet. The Company was
formed in May 1981 as ARICO America Realestate Investment Company, a Nevada
corporation, to invest in major commercial real estate projects in North
America.
 
PRINCIPLES OF CONSOLIDATION
 
    The accompanying financial statements include the accounts of Cornerstone,
its wholly-owned qualified REIT subsidiaries and controlled partnerships. NWC
Limited Partnership ("NWC"), Third and University Limited Partnership ("Third
Partnership"), Two Twenty Two Berkeley Venture ("222 Berkeley"), Five Hundred
Boylston West Venture ("500 Boylston") and One Ninety One Peachtree Associates
("191 Peachtree") have been consolidated since Cornerstone has a majority
interest in the economic benefits and is or has the right to become managing
general partner at its sole discretion. All significant intercompany balances
and transactions have been eliminated in consolidation.
 
INVESTMENT PROPERTY
 
    The costs of the buildings, garages, leasehold interests and improvements
are being depreciated on the straight-line method over their estimated useful
lives, ranging from 20 years for electrical and mechanical installations to 40
years for structural components. Tenant improvements are being amortized over
the terms of the related leases.
 
    Cornerstone and the controlled partnerships hold the Properties for
long-term investment and such investments are carried at cost less accumulated
depreciation. Whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable (such as a significant adverse
action by a regulator or a significant physical change in the property), the
Company's policy is to assess any impairment in value by making a comparison of
the current and projected cash flows of each property over its remaining useful
life (undiscounted and without interest charges) to the carrying amount of each
property. Such carrying amount would be adjusted, if necessary, to estimated
fair value to reflect the impairment in value of the property. No significant
adjustments have been made in the accompanying financial statements.
 
DEFERRED LEASE COSTS
 
    As an inducement to execute a lease, incentives are sometimes offered which
may include cash and/or other allowances. These incentives and other lease
costs, such as commissions, which are directly related to specific leases, are
deferred and amortized over the terms of the related leases. Marketing costs
(which include sales facility costs, model office costs, building models, etc.)
and leasing costs not related to specific leases, which were incurred during the
buildings' development stage, were deferred and are being amortized over their
expected benefit period of 10 years.
 
                                      F-7
<PAGE>
OTHER DEFERRED COSTS
 
    Costs incurred in the underwriting and issuance of long-term debt, revolving
lines of credit and investigating investments in real estate partnerships have
been deferred. The costs incurred in connection with the long-term debt are
being amortized over the term of the debt. Deferred organization and start-up
costs consisting of legal and accounting fees and expenses related to 
investments in real estate partnerships are being amortized over a period of 60
months. As part of the October 27, 1997 acquisition (see Note 2), the Company 
purchased several management contracts to which Dutch Institutional Holding 
Company, Inc. ("DIHC") was a party. The price paid for these contracts is being 
amortized over four years.

    The Company records costs incurred for potential investments as Other
Assets. Upon consummation of an investment, the Company capitalizes all such
costs as an adjustment to the purchase price and depreciates these costs over
the useful life of the asset. All such costs are expensed at the time it is
determined that a potential investment will not be consummated. In addition,
during the first quarter of 1998, the Company adopted EITF 97-11 and in
accordance therewith expenses all internal acquisition costs.
 
PREMIUM ON MORTGAGE NOTES
 
    The premium on mortgage notes is amortized using the effective interest
method over the life of the related mortgage note.
 
REVENUE RECOGNITION
 
    Rental revenue is recognized ratably as earned over the terms of the leases.
Deferred tenant receivables result from rental revenues which have been earned
but will be received in future periods as a result of rent concessions provided
to tenants and scheduled future rent increases. Expense reimbursement and
escalation income for the years ended December 31, 1997, 1996 and 1995 was
approximately $36,990,000, $28,230,000 and $20,716,000, respectively.
 
    An allowance for doubtful accounts of approximately $268,000 and $105,000
has been recorded at December 31, 1997 and 1996, respectively, relating to
tenant and other receivables. Bad debt expense totaled approximately $221,000
and $40,000 during 1997 and 1996, respectively.
 
INTEREST RATE SWAP AGREEMENTS
 
    The Company accounts for its interest rate swap agreements as hedges if the
swap is designated as a hedge and effectively reduces the exposure to the
Company of market interest rate changes. Changes in the market value of these
interest rate swap agreements are deferred and recognized in income at the
expiration or termination of the underlying debt. Forward interest rate swap
agreements that do not meet hedge criteria are accounted for using
mark-to-market accounting, recognizing any unrealized gain or loss on the
instrument in the period in which it is outstanding. When swaps are extinguished
at the same time as the underlying debt instrument, the cost to extinguish the
swap is treated as extraordinary gain or loss. When a swap remains in place
after the underlying instrument matures, it is accounted for on a mark-to-market
basis. The swap termination is accounted for as ordinary gain or loss when it is
extinguished with no underlying debt instrument in place.
 
FEDERAL INCOME TAXES
 
    No provision for United States Federal income taxes has been made in the
accompanying financial statements. Cornerstone has elected to be taxed as a REIT
under Sections 856-860 of the United States Internal Revenue Code. Under these
sections of the Internal Revenue Code, Cornerstone is permitted to deduct
dividends paid to stockholders in computing its taxable income. All taxable
earnings and profits of Cornerstone since inception have been distributed to the
stockholders.
 
RECLASSIFICATIONS
 
    Certain prior year amounts have been reclassified to conform to the 1997
financial statement presentation.
 
                                      F-8
<PAGE>
INCOME (LOSS) PER COMMON SHARE
 
    During the fourth quarter of 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS
128"). SFAS 128 specifies the computation, presentation and disclosure
requirements for earnings per share.
 
CASH AND CASH EQUIVALENTS
 
    For purposes of reporting cash flows, cash and cash equivalents include
investments with original maturities of three months or less from the date of
purchase. At December 31, 1997 and 1996, Cornerstone had on deposit with major
financial institutions substantially all of its cash and cash equivalents.
Cornerstone believes it mitigates its risk by investing in or through major
financial institutions. Recoverability of investments is dependent upon the
performance of the issuer.
 
MINORITY INTEREST
 
    Minority Interest represents the Company's partner's capital account
balances in NWC, Third Partnership, 222 Berkeley, 500 Boylston and 191
Peachtree. Debit balances in certain of these capital accounts originated
through special cash distributions in excess of the partner's share of income in
accordance with certain provisions of the respective partnership agreements.
Realizability of the debit balances is continually monitored by analyzing pro
forma sales proceeds calculations, whose terms are specified in the respective
partnership agreements.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
    During 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS
130"), No. 131 "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131") and No. 132 "Employers' Disclosures About Pensions and
Other Postretirement Benefits" ("SFAS 132"), which are effective for fiscal
years beginning after December 15, 1997.
 
    SFAS 130 specifies the presentation and disclosure requirements for
reporting comprehensive income which includes those items which have been
formerly reported as a component of stockholders' equity. SFAS 131 establishes
the disclosure requirements for reporting segment information. SFAS 132 changes
the financial statement disclosure requirements for pensions and other
postretirement benefits.
 
    Management believes that, when adopted, SFAS 130, 131 and 132 will not have
a significant impact on the Company's financial statements.
 
ESTIMATES AND RISKS
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The most significant estimates and assumptions are related to
the recoverability and depreciable lives of investment property and the
recoverability of deferred tenant receivables. Actual results could differ from
those estimates.
 
    In the ordinary course of business, the Company is in the process of
acquiring new accounting and property management software that will eliminate
year 2000 software concerns at the corporate level. The new software is expected
to be installed by the fourth quarter of 1998. Management is in the process of
completing a survey with all of its property managers to make sure there are no
year 2000 issues at any of the property management firms that manage its
properties. Currently, Cornerstone is not aware of any year 2000 issues that
would have a material effect on the financial position or results of operations
of the Company.
 
                                      F-9
<PAGE>
2. PROPERTIES
 
    The following table summarizes Cornerstone's interest in real estate
investments at December 31, 1997:
 
<TABLE>
<CAPTION>
                                                                COMPLETED/   NET RENTABLE                   OWNERSHIP
PROPERTY                                   LOCATION              ACQUIRED    SQUARE FEET     % LEASED       INTEREST       NOTES
------------------------------  ------------------------------  -----------  ------------  -------------  -------------  ---------
<S>                             <C>                             <C>          <C>           <C>            <C>            <C>
One Norwest Center............  Denver, Colorado                      1983     1,188,000            99%           100%
Norwest Center................  Minneapolis, Minnesota                1988     1,118,000            98%            50%           A
Washington Mutual Tower.......  Seattle, Washington                   1988     1,155,000            97%            50%           B
125 Summer Street.............  Boston, Massachusetts            1989/1995       464,000            99%           100%
Tower 56......................  New York, New York               1983/1996       162,000            98%           100%
One Lincoln Centre............  Oakbrook Terrace, Illinois       1986/1996       297,000            96%           100%
The Frick Building............  Pittsburgh, Pennsylvania         1902/1996       341,000            89%           100%
527 Madison Avenue............  New York, New York               1986/1997       216,000           100%           100%           C
191 Peachtree Street..........  Atlanta, Georgia                 1991/1997     1,221,000            95%            80%       D,E,F
Market Square.................  Washington, D.C.                 1990/1997       689,000            95%            59%         D,G
500 Boylston Street...........  Boston, Massachussetts           1988/1997       715,000           100%          91.5%         D,H
222 Berkeley Street...........  Boston, Massachusetts            1991/1997       531,000           100%          91.5%         D,H
Charlotte Plaza...............  Charlotte, North Carolina        1982/1997       613,000            94%           100%           D
200 Galleria..................  Atlanta, Georgia                 1985/1997       433,000            91%           100%           D
11 Canal Center...............  Alexandria, Virginia             1986/1997        70,000            84%           100%           D
99 Canal Center...............  Alexandria, Virginia             1986/1997       138,000            99%           100%           D
TransPotomac Plaza 5..........  Alexandria, Virginia             1983/1997        96,000            99%           100%           D
Sixty State Street............  Boston, Massachusetts            1979/1997       823,000            98%           100%         I,J
</TABLE>
 
(A) While the Company's stated interest in the partnership which owns Norwest
    Center is 50%, its economic interest in the Property is significantly larger
    due to priority distributions it receives on its invested capital base. For
    the twelve months ended December 31, 1997, the Company's share of earnings
    and cash distributions from the partnership which owns Norwest Center was
    79.3%.
 
(B) While the Company's stated interest in the partnership which owns Washington
    Mutual Tower is 50%, its economic interest in the Property is significantly
    larger due to priority distributions it receives on its invested capital
    base. For the twelve months ended December 31, 1997, the Company received
    100% of the cash distributions from the partnership which owns Washington
    Mutual Tower.
 
(C) On February 14, 1997, Cornerstone, through its wholly-owned subsidiary,
    CStone-527 Madison, Inc., purchased 527 Madison Avenue in Midtown Manhattan,
    New York for approximately $67 million. The acquisition was financed with
    the proceeds from the Company's offering of Preferred Stock, completed in
    November 1996.
 
(D) On October 27, 1997, the Company acquired interests in nine Class A office
    properties comprising approximately 4.5 million rentable square feet in
    Alexandria, Virginia (3 properties), Atlanta (2 properties), Boston (2
    properties), Charlotte and Washington, D.C., as well as an undeveloped
    parcel of land in Chicago (collectively, the "DIHC Properties"). The Company
    acquired the DIHC Properties for a purchase price of approximately $1.06
    billion, consisting of approximately 34 million shares of Common Stock,
    approximately $260 million in cash and $250 million in promissory notes. The
    cash portion of the acquisition was financed with proceeds from the
    Company's IPO and $54 million from its Revolving Credit Facility. Financial
    results from October 27, 1997 through December 31, 1997 for the DIHC
    Properties are included in the accompanying consolidated financial
    statements.
 
(E) While the Company's stated interest in the partnership which owns 191
    Peachtree Street is 80%, its economic interest is significantly larger since
    it has acquired the first mortgage note on the property in the amount of
    $145 million which earns interest at 9.375% and will receive a priority
    distribution on its acquired capital base. In addition, in 1996 and 1997,
    the partner in the transaction, CH Associates, Ltd., received an annual
    incentive distribution of $250,000, which, the Company expects, it will
    continue to receive under the partnership agreement through February 28,
    2000, with the Company receiving the remainder of the cash flow of the
    property.
 
(F) The partnership which owns 191 Peachtree Street has a ground lease agreement
    for a portion of the land upon which the project has been constructed. The
    agreement requires annual payments of $5,000
 
                                      F-10
<PAGE>
    through January 31, 1998, $45,000 through January 31, 2002 and $75,000
    through January 31, 2008. Thereafter, the annual rent increases $2,500 per
    year until the expiration date of January 31, 2087. The partnership records
    ground rental expense relating to this agreement on a straight-line basis.
    The ground lease is renewable for an additional 99 years.
 
(G) At December 31, 1997, the Company owned the two loans on Market Square. In
    January 1998, the Company acquired partnership interests with a stated
    interest of approximately 59% in the partnerships which own Market Square
    with the option to purchase an additional 1%. The Company's economic
    interest is significantly larger since it has acquired the first mortgage
    note on the property in the amount of $181 million which earns interest at
    9.75% and will receive a priority distribution on its acquired capital base.
    In addition, the Company acquired a "buffer loan", with accrued principal
    and interest of $46.2 million, which accrues interest at a rate of 11% per
    annum and is payable from cash flow, refinancing or sales proceeds from
    Market Square in excess of the first mortgage. During 1996, the Company
    received 100% of the cash flow from the property.
 
(H) Distributions of cash flow and sales and refinancing proceeds are shared in
    proportion to the Company's 91.5% partnership interest and Hines Interest
    Limited Partnership and/or its affiliates' ("Hines") 8.5% partnership
    interest.
 
(I) On December 31, 1997, Cornerstone purchased the second mortgage on Sixty
    State Street located in the heart of Boston's Central Business District. The
    mortgage is a cash flow mortgage through which all the economic
    benefits/risks (subject to the first mortgage) will inure to the Company.
    The Company will control all major decisions regarding management and
    leasing. The total purchase price for the second mortgage was $131.5
    million. The $78.4 million first mortgage on the property has been recorded
    by the Company as an $89.6 million liability as a result of its above-market
    interest rate. Cornerstone will account for the transaction as an equity
    investment in real estate.
 
(J) The second mortgage, which the Company holds, relates only to the
    improvements on Sixty State Street in Boston. The ground under Sixty State
    Street is leased to the leasehold owner, Marshall Field, through December
    28, 2067. The lease payments on the ground lease are $398,896 per annum
    throughout the term.
 
    The future minimum lease payments to be received by the Company under
noncancellable operating leases as of December 31, 1997 are as follows (Dollar
amounts in thousands):
 
<TABLE>
<CAPTION>
<S>                                                               <C>
1998............................................................  $ 178,979
1999............................................................    172,376
2000............................................................    162,125
2001............................................................    150,950
2002............................................................    133,018
Thereafter......................................................    642,082
                                                                  ---------
Total...........................................................  $1,439,530
                                                                  ---------
                                                                  ---------
</TABLE>
 
3. RESTRICTED CASH
 
    Restricted cash is being held by escrow agents for real estate taxes and
insurance on certain mortgage loans.
 
                                      F-11
<PAGE>
4. LONG-TERM DEBT
 
    The following table sets forth certain information regarding the
consolidated debt obligations of the Company as of December 31, 1997, including
mortgage obligations relating to the Properties. All of this debt, with the
exception of the Convertible Promissory Note due 2001, is nonrecourse to the
Company. However, notwithstanding the nonrecourse indebtedness, the lender may
have the right to recover deficiencies from the Company in certain
circumstances, including fraud, misappropriation of funds and environmental
liabilities.
 
<TABLE>
<CAPTION>
                                                      INTEREST    MATURITY     PREPAYMENT
PROPERTY                             AMORTIZATION       RATE        DATE       PROVISIONS     12/31/97     12/31/96
----------------------------------  --------------  ------------  ---------  --------------  -----------  -----------
<S>                                 <C>             <C>           <C>        <C>             <C>          <C>
Convertible Promissory Note due     Interest only
  2001(A).........................                  8.11%max(B)   Jan-2001   Not prepayable  $12,926,000  $12,926,000
One Norwest Center................  30 year         7.50          Aug-2001   (C)              96,780,000   97,706,000
Norwest Center....................  Interest only   8.74          Dec-2005   Not prepayable  110,000,000  110,000,000
Washington Mutual Tower...........  Interest only   7.53          Nov-2005   (D)              79,100,000   79,100,000
                                    Interest
125 Summer Street.................  only(E)         7.20          Jan-2003   (F)              50,000,000   50,000,000
Tower 56..........................  30 year         7.67          May-2003   (G)              17,742,000   17,910,000
Dearborn Land(H)..................  Interest only   0.00(I)       Oct-2000   Not prepayable   10,000,000      --
TransPotomac Plaza 5 and Charlotte  Interest only
  Plaza(H)........................                  7.28          Oct-2000   Not prepayable   55,000,000      --
527 Madison Avenue and One Lincoln  Interest only
  Centre(H).......................                  7.47          Oct-2004   Not prepayable   65,000,000      --
Market Square(J) and 200            Interest only
  Galleria(H).....................                  7.54          Oct-2007   Not prepayable  120,000,000      --
Sixty State Street(K).............  30 year         6.84          Jan-2005   (L)              89,630,000      --
Corporate(M)......................  Interest only   5.00                                         --        32,500,000
                                                                                             -----------  -----------
                                                                                             $706,178,000 $400,142,000
                                                                                             -----------  -----------
</TABLE>
 
------------------------
 
(A) The lender, Hines, has the right to convert the note into common stock at a
    conversion price of $14.30 per share. At maturity, the Company is entitled
    to repay the principal of the note with common stock priced at the lesser of
    $14.30 per share or the then existing share price.
 
(B) Lesser of 30-day LIBOR plus 0.5% or 8.11%.
 
(C) No prepayment until July 24, 1998. From July 24, 1998 through July 23, 2000,
    prepayment fee is greater of 1% of outstanding principal balance or Treasury
    Yield Maintenance (as defined). Beginning July 24, 2000, prepayment fee is
    Treasury Yield Maintenance. The loan may be repaid at par during last 90
    days of loan.
 
(D) No prepayment rights through September 30, 1998, prepayable thereafter, with
    a prepayment fee of the greater of: (1) 1.0% of the outstanding principal
    balance or (2) Treasury Yield Maintenance (as defined). Prepayment without
    fee for the six months prior to the maturity date.
 
(E) Interest only payments through January 1, 2001, with a 25-year amortization
    schedule thereafter.
 
(F) Beginning July 1, 1999, prepayment fee is greater of Treasury Yield
    Maintenance or 1% of outstanding principal balance. Prepayment without fee
    on or after three months prior to maturity date.
 
(G) Open to prepayment after December 31, 1999 with a prepayment fee of greater
    of 1.0% of principal balance or Treasury Yield Maintenance (as defined).
    Prepayment without fee during the three months prior to the maturity date.
 
(H) The four notes arising from the acquisition of DIHC are cross-collateralized
    having the effect of forming a "collateral pool" for the underlying notes.
 
(I) The interest rate on the loan will increase to 7.28% upon the sale of the
    Dearborn Land.
 
(J) The collateral for this loan is a pledge of the $181 million first mortgage
    loan on Market Square which the Company purchased from Stichting
    Pensioenfonds Voor de Gezondheid Geestelijke en Maatschappelijke Belangen
    ("PGGM").
 
(K) While the face amount of the loan is $78,420,000, since the interest rate is
    9.5%, the Company has recorded the debt at $89,630,000, which is the market
    value of the loan at the time of the closing based upon a market interest
    rate for similar quality loans of 6.84%.
 
(L) Beginning February 1, 2000, the prepayment fee is equal to the greater of 2%
    or Treasury Yield Maintenance (as defined). The 2% maximum is reduced by
    0.25% per annum thereafter until it reaches 1%. The loan is prepayable
    during the last 90 days.
 
(M) On March 19, 1997, as required under the terms of the agreement, this term
    loan was repaid with proceeds from the Company's IPO.
 
                                      F-12
<PAGE>
    The combined aggregate amount of maturities for all long-term borrowings for
1998 through 2002 are $0, $0, $65,000,000, $105,651,000 and $0, respectively.
 
    Since most of the long term debt is property related, there are restrictive
covenants that limit the total amount of indebtedness that can be placed on
individual properties.
 
5. CREDIT FACILITY
 
    The Company has a $350 million Revolving Credit Facility with Bankers Trust
Company and The Chase Manhattan Bank for acquisitions and general working
capital purposes as well as the issuance of letters of credit. The interest rate
on the line of credit depends on the Company's leverage ratio at the time of
borrowing and will be at a spread of 1.10% to 1.40% over LIBOR or the Prime Rate
at the borrowers option. The letters of credit will be priced at the applicable
Eurodollar credit spread. The line of credit expires on October 27, 2000. As of
December 31, 1997, $187 million of the credit line was outstanding at a rate of
approximately 8.12%. The line of credit contains certain restrictive covenants
including; (i) a limitation on the Company's dividend to 90% of funds from
operations and 110% of cash available for distribution; (ii) total liabilities
to total property asset value cannot exceed 55%; (iii) adjusted EBITDA to
interest expense may not be less than 2.25 to 1.00; (iv) fixed charge coverage
may not be less than 1.75 to 1.00; and (v) total property asset value to secured
indebtedness may not be less than 2.50 to 1.00.
 
6. REDEEMABLE PREFERRED STOCK
 
    On July 25, 1997, the Redeemable Preferred shares were converted into
11,482,760 shares of common stock. The contractual conversion was based upon
exceeding a $16.00 average common share price for a period of twenty days.
 
7. STOCKHOLDERS' INVESTMENT
 
    The 7% Cumulative Convertible Preferred Stock is convertible into common
stock at $16.50 per share at any time after August 4, 2000.
 
    On April 22, 1997, Cornerstone completed its initial U.S. public offering
("IPO") of 16.1 million shares of common stock at a price of $14 per share for
gross proceeds of $225.4 million.
 
    The following tables summarize the stock options and restricted stock grants
for certain officers of the Company as of December 31, 1997:
 
<TABLE>
<CAPTION>
STOCK OPTIONS
<S>                     <C>            <C>            <C>                     <C>          <C>
                           OPTIONS
                           GRANTED       EXERCISE
                           (NO. OF         PRICE                                OPTIONS      OPTIONS
    DATE OF GRANT          SHARES)      (PER SHARE)          VESTING          EXERCISABLE   EXERCISED
----------------------  -------------  -------------  ----------------------  -----------  -----------
June, 1995............      787,500      $   14.30    20%/yr, 10yr term          304,500       10,500
March, 1997...........      880,000      $   14.50    20%/yr, 10yr term                0            0
November, 1997........       70,000      $   18.44    20%/yr, 10yr term                0            0
</TABLE>
 
                                      F-13
<PAGE>
 
<TABLE>
<CAPTION>
RESTRICTED STOCK GRANTS
<S>              <C>            <C>              <C>
                    SHARES
                    GRANTED     VALUE AT GRANT
                    (NO. OF        DATE (PER
 DATE OF GRANT      SHARES)         SHARE)                         VESTING (A)
---------------  -------------  ---------------  ------------------------------------------------
 
August, 1995         167,622       $   14.30     The grant will fully vest with respect to
                                                 13.333% on June 30, 1996, 1997, 1998, 1999 and
                                                 with respect to 46.668% on June 30, 2000.
 
March, 1997          100,000       $   16.40     The grant will fully vest with respect to
                                                 13.333% on June 30, 1998, 1999, 2000, 2001 and
                                                 with respect to 46.668% on June 30, 2002.
 
November, 1997        12,500       $   18.44     The grant will fully vest with respect to
                                                 13.333% on June 30, 1998, 1999, 2000, 2001 and
                                                 with respect to 46.668% on June 30, 2002.
</TABLE>
 
------------------------
 
(A) Deferred compensation of approximately $4,265,000 is being amortized
    according to the respective amortization schedule for each vesting period
    noted above, with the unamortized balance shown as a deduction from
    stockholders' investment. Regular dividends are paid on restricted stock.
 
    The Company has adopted the disclosure-only provision of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Accordingly, no compensation cost has been
recognized for the options described above since the exercise price equaled the
fair value at the grant date. Had compensation cost for these options been
determined based on the fair value at the grant date consistent with the
provisions of SFAS No. 123, the Company's net income and net income per common
share would have been reduced to the following pro forma amounts (Dollar amounts
in thousands, except per share amounts):
 
<TABLE>
<CAPTION>
                                                                                                     NET INCOME PER
                                                                                       NET INCOME     COMMON SHARE
                                                                                       -----------  -----------------
<S>                                                                                    <C>          <C>
 
Year ended December 31, 1997.........................................................   $  36,887       $    0.61
 
Year ended December 31, 1996.........................................................   $   8,673       $    0.17
</TABLE>
 
    The Company has computed the value of all stock options using the
Black-Scholes option pricing model with the following weighted average
assumptions:
 
<TABLE>
<CAPTION>
                                                                                                 1997       1996
                                                                                               ---------  ---------
 
<S>                                                                                            <C>        <C>
ASSUMPTIONS
---------------------------------------------------------------------------------------------
 
Risk-free interest rate......................................................................  6.56%      6.31%
 
Assumed dividend yield.......................................................................  7.50%      7.50%
 
Expected term................................................................................  6 years    6 years
 
Assumed volatility...........................................................................  10.0%      10.0%
</TABLE>
 
8. NET GAIN ON INTEREST RATE SWAPS
 
    The Company had an outstanding swap agreement that was terminated on January
16, 1997 for a total cost of $170,000 resulting in a realized gain of $99,000.
 
                                      F-14
<PAGE>
9. NET INCOME (LOSS) PER COMMON SHARE
 
    Net income (loss) per common share for 1995 and 1996 was restated to reflect
the adoption of SFAS 128. The table sets forth the calculation of income (loss)
per common share for 1997, 1996 and 1995 (Dollar amounts in thousands, except
per share amounts):
 
<TABLE>
<CAPTION>
                                                                1997                   1996                   1995
                                                       ----------------------  --------------------  ----------------------
 
<S>                                                    <C>         <C>         <C>        <C>        <C>         <C>
                                                         BASIC      DILUTED      BASIC     DILUTED     BASIC      DILUTED
                                                       ----------  ----------  ---------  ---------  ----------  ----------
 
Proceeds upon exercise of options....................  $   --      $   25,162  $  --      $  12,334  $   --      $   12,334
 
Market price of shares average for the respective
  year...............................................  $   --      $    17.13  $  --      $   14.36  $   --      $    15.26
 
Treasury shares that could be repurchased
  (options)..........................................      --           1,469     --            859      --             808
 
Option shares outstanding............................      --           1,727     --            863      --             863
 
Weighted common stock equivalent shares (Excess
  shares under option over Treasury shares that could
  be repurchased)....................................      --             236     --              4      --              54
 
Weighted average common shares outstanding...........      43,572      43,572     20,411     20,411      15,910      15,910
                                                       ----------  ----------  ---------  ---------  ----------  ----------
 
Adjusted weighted average common shares
  outstanding........................................      43,572      43,808     20,411     20,415      15,910      15,964
 
Net income (loss) for the period.....................  $   37,547  $   37,547  $   9,096  $   9,096  $  (13,574) $  (13,574)
 
Income applicable to preferred stock.................  $  (10,160) $  (10,160) $  (5,153) $  (5,153) $   (1,449) $   (1,449)
                                                       ----------  ----------  ---------  ---------  ----------  ----------
 
Net income (loss) available to common shares.........  $   27,387  $   27,387  $   3,943  $   3,943  $  (15,023) $  (15,023)
 
Income (loss) per common share.......................  $     0.63  $     0.63  $    0.19  $    0.19  $    (0.94) $    (0.94)
</TABLE>
 
10. RETIREMENT PLANS
 
    Effective July 1, 1995, the eligible employees of the Company participate in
a noncontributory age-weighted profit sharing plan. The Company's contribution
to such plan was approximately $190,200 and $91,200 for the years ended December
31, 1997 and 1996, respectively.
 
    Effective July 1, 1995, the eligible employees of the Company also
participate in a contributory savings plan 401(k). Under the plan, the Company
matches contributions made by eligible employees based on a percentage of the
employee's salary. The Company will match 100% of contributions up to 5% of such
employee's salary with an annual maximum matching contribution of $4,000 per
employee. The Company's matching contribution was approximately $52,600 and
$46,000 for the years ended December 31, 1997 and 1996, respectively.
 
                                      F-15
<PAGE>
11. CONCENTRATION
 
    Norwest Corporation and its subsidiary, Norwest Bank Denver N.A., tenants of
the Company, provided approximately 20%, 26% and 31% of office and parking
rentals for the years ended December 31, 1997, 1996 and 1995, respectively.
Included in deferred tenant receivables is approximately $31,349,000 and
$28,014,000 due from Norwest Corporation at December 31, 1997 and 1996,
respectively.
 
    Four of the Company's 18 Properties are located in the Downtown Boston
market and account for approximately 29% of the Company's office and parking
revenues as of December 31, 1997. This concentration of assets makes the Company
particularly vulnerable to adverse changes in economic conditions in the Boston
metropolitan area. A significant decline in these economic conditions could have
a material adverse effect on the Company.
 
12. RELATED PARTY TRANSACTIONS
 
    The Company has entered into $250 million of mortgage debt with two of its
major stockholders, DIHC and PGGM, as further described in Note 4.
 
13. COMMITMENTS AND CONTINGENCIES
 
    In the ordinary course of business, the Company is subject to tenant and
property related claims. It is the opinion of management, after consultation
with outside counsel, that the resolution of these claims will not have a
material effect on the financial position or results of operations of the
Company.
 
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    Cornerstone is required to disclose the fair value of financial instruments
for which it is practicable to estimate that value. Except for the items noted
below, the fair value of the Company's financial instruments approximates their
carrying values at December 31, 1997:
 
NOTES RECEIVABLE
 
    The fair value of the note receivable at December 31, 1997 is approximately
$1,564,000 based on the present value of expected future note payments using a
market discount rate of 6.57%.
 
LONG-TERM DEBT
 
    The Company determines the fair value based on the discounted future cash
flows at a discount rate that approximates the Company's effective current
borrowing rate:
 
<TABLE>
<CAPTION>
                                                                             12/31/97        12/31/97
                                                                            FAIR VALUE    CARRYING VALUE
                                                                           -------------  --------------
<S>                                                                        <C>            <C>
One Norwest Center.......................................................  $  99,504,000   $ 96,780,000
Norwest Center...........................................................    123,701,000    110,000,000
Washington Mutual Tower..................................................     82,423,000     79,100,000
125 Summer Street........................................................     50,842,000     50,000,000
Tower 56.................................................................     18,507,000     17,742,000
TransPotomac Plaza 5 and Charlotte Plaza.................................     56,671,000     55,000,000
527 Madison Avenue and One Lincoln Centre................................     68,070,000     65,000,000
Market Square and 200 Galleria...........................................    127,915,000    120,000,000
</TABLE>
 
                                      F-16
<PAGE>
15. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
 
    The following selected pro forma operating data is presented as if the
offerings, sales and conversions of the various securities sold by the Company
(and the application of the proceeds thereof) and the various acquisitions of
the Company that occurred after January 1 of the respective fiscal year had
occurred at January 1 of the respective fiscal year. The pro forma financial
information is presented for informational purposes only and may not be
indicative of results that would have actually occurred had the aforementioned
transactions been consummated at the date indicated. Also, they may not be
indicative of the results that may be achieved in the future.
 
<TABLE>
<CAPTION>
DECEMBER 31,                                                                  1997            1996
-----------------------------------------------------------------------  --------------  --------------
<S>                                                                      <C>             <C>
Pro forma total revenues...............................................  $  322,276,000  $  315,940,000
Pro forma net income before extraordinary items........................      85,158,000      81,687,000
Pro forma net income...................................................      85,104,000      77,762,000
Pro forma basic and diluted net income per common share................            0.83            0.78
</TABLE>
 
16. SUPPLEMENTAL CASH FLOW INFORMATION
 
    Cash paid for interest was approximately $30,204,000, $34,590,000 and
$32,609,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
 
NON-CASH INVESTING AND FINANCING ACTIVITIES
 
    On October 27, 1997, the Company acquired the DIHC Properties for a purchase
price of approximately $1.06 billion, consisting of approximately 34 million
shares of Common Stock at $16.00 per share, approximately $260 million in cash
and $250 million in promissory notes. The Company also recorded a minority
interest of $33 million in connection with this acquisition.
 
17. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 
    (Dollar amounts in thousands except per share amounts):
 
<TABLE>
<CAPTION>
                                                                         QUARTER ENDED
                                                       --------------------------------------------------
<S>                                                    <C>           <C>           <C>        <C>
1997                                                   DECEMBER 31   SEPTEMBER 30   JUNE 30    MARCH 31
                                                       ------------  ------------  ---------  -----------
Revenues.............................................   $   62,242    $   38,414   $  38,268   $  34,987
Income before extraordinary item.....................       15,881         8,076       8,008       5,636
Extraordinary loss...................................       --            --             (28)        (26)
Net income...........................................       15,881         8,076       7,980       5,610
Per share data:
  Income before extraordinary item...................         0.26          0.18        0.12        0.07
  Basic net income per common share..................         0.26          0.18        0.12        0.07
  Diluted net income per common share................         0.26          0.18        0.12        0.07
 
1996
Revenues.............................................   $   32,145    $   29,001   $  28,338   $  27,424
Income before extraordinary item.....................        2,185         1,979       1,876       6,981
Extraordinary loss...................................         (139)       (3,786)     --          --
Net income (loss)....................................        2,046        (1,807)      1,876       6,981
Per share data:
  Income before extraordinary item...................        (0.01)         0.05        0.05        0.30
  Extraordinary loss.................................        (0.02)        (0.18)     --          --
  Basic net income per common share..................        (0.03)        (0.13)       0.05        0.30
  Diluted net income per common share................        (0.03)        (0.13)       0.05        0.30
</TABLE>
 
                                      F-17
<PAGE>
18. SUBSEQUENT EVENTS
 
    On January 5, 1998, the Company purchased the participation rights in the
cash flow and residual value of Tower 56 from the former participants for
307,692 shares of Common Stock. All cash flow and the residual value of Tower 56
will now inure to the Company.
 
    On January 13, 1998, the Company declared a dividend of $0.30 per common
share, payable on February 27, 1998 to all stockholders of record as of January
30, 1998.
 
    On January 20, 1998, the Company converted to an umbrella partnership real
estate investment trust ("UPREIT"). The Company and its subsidiaries transferred
to the operating partnership, or entities wholly-owned by the operating
partnership, substantially all of the Company's Properties. The Company is the
sole general partner of the operating partnership and also holds limited
partnership interests therein. The purpose of forming an UPREIT structure is to
create an acquisition vehicle attractive to sellers whose sale of properties to
the Company in exchange for UPREIT units may be characterized as a
tax-deferrable capital contribution rather than a taxable sale.
 
    On January 28, 1998, the Company purchased Corporate 500 Centre in
Deerfield, Illinois. Constructed between 1986 and 1990, Corporate 500 Centre
consists of four Class A office buildings, comprising approximately 680,000
rentable square feet. The total purchase price of the Property was approximately
$150 million, approximately $15 million of which was paid in UPREIT units priced
at $18.50 per unit. The Company financed a portion of the costs to acquire the
Property with $51 million drawn under its Revolving Credit Facility and an $80
million mortgage loan from Bankers Trust Company at an interest rate of LIBOR
plus 100 basis points. The mortgage loan will mature on July 20, 2002. The
Company has also entered into an interest rate swap agreement with Bankers Trust
Company that has effectively fixed the interest rate on the mortgage loan at
6.63%.
 
    On February 6, 1998, the Company completed a secondary public offering of
14,375,000 shares of Common Stock at $18.25 per share. The shares were placed in
the United States through a syndicate of seven investment banks led by Merrill
Lynch & Co. Net proceeds to the Company were approximately $247.9 million
($262,344,000 gross proceeds less an underwriting discount of $13,728,125 and
expenses of approximately $750,000). The net proceeds were used to repay the
Company's acquisition line of credit and for working capital purposes.
 
                                      F-18