<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                                  FORM 10-K/A
 
                       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, 1998
 
                                       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/
 
                                EXPLANATORY NOTE
 
    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 31, 1999, to add the financial statement schedule required by Item 14
of Form 10-K.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                    PART III
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
    See the Financial Statements included as a part hereof.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 
    The following documents are filed as part of this annual report:
 
(A) FINANCIAL STATEMENTS:
 
<TABLE>
<CAPTION>
                                                                                 PAGE NUMBER
                                                                                --------------
<S>                                                                             <C>
(i) The Company:                                                                           F-1
 
  The following financial statements and report of independent accountants are
    filed herewith at the pages indicated:
  Report of Independent Accountants...........................................             F-2
  Consolidated Balance Sheets at December 31, 1998 and 1997...................             F-3
  Consolidated Statements of Income for the years ended December 31, 1998,
    1997 and 1996.............................................................             F-4
  Consolidated Statements of Stockholders' Equity for the years ended December
    31, 1998, 1997 and 1996...................................................             F-5
  Consolidated Statements of Cash Flows for the years ended December 31, 1998,
    1997 and 1996.............................................................             F-6
  Notes to Consolidated Financial Statements..................................     F-7 to F-26
  Schedule III................................................................    F-27 to F-30
</TABLE>
 
(B) REPORTS ON FORM 8-K:
 
           1. Form 8-K dated December 1, 1998
 
               Item 5-- Other Events. Cornerstone Properties Inc. closes $550.0
                       million Revolving Credit Facility.
 
               Item 7-- Financial Statements and Exhibits. Press release
                       announcing the closing of the $550.0 Revolving Credit
                       Facility. Second Amended and Restated Revolving Credit
                       Guaranty Agreement dated November 3, 1998.
 
           2. Form 8-K dated December 16, 1998
 
               Item 2-- Acquisition or Disposition of Assets. Cornerstone
                       Properties Inc. completes its acquisition of William
                       Wilson & Associates and its related entities.
 
               Item 5-- Other Events. Matters related to the Wilson Acquisition.
 
               Item 7-- Financial Statements, Pro Forma Financial Information
                       and Exhibits. The required pro forma financial statements
                       will be filed on Form 8-K/A within 60 days of this
                       filing.
 
           3. Form 8-K/A filed March 1, 1999
 
               Item 7-- Financial Statements, Pro Forma Financial Information
                       and Exhibits. Pro forma financial statements regarding
                       the Wilson Acquisition as of and for the period ending
                       September 30, 1998.
 
                                       52
<PAGE>
(C) EXHIBITS:
 
<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                                   DESCRIPTION
-----------  -----------------------------------------------------------------------------------------------------
<C>          <S>
       2.4   Contribution Agreement and Agreement and Plan of Merger, dated as of June 22, 1998, as amended, by
             and among Cornerstone Properties Inc., Cornerstone Properties Limited Partnership, William Wilson &
             Associates and the entities listed on Schedule 1 thereto, incorporated by reference to Annex A of the
             Company's definitive Proxy Statement on Schedule 14A dated November 13, 1998.
 
       3.1(a) Restated Articles of Incorporation of Cornerstone Properties, Inc., as of March 12, 1996,
             incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the year
             ended December 31, 1996.
 
       3.1(b) Certificate of Amendment of Restated Articles of Incorporation of the Company, dated October 27,
             1997, incorporated by reference to Exhibit 4.2(b) of the Company's Registration Statement on Form S-3
             filed March 2, 1998 (Registration Statement No. 333-47149).
 
       3.5   Amended and Restated Bylaws of Cornerstone Properties Inc., incorporated by reference to Exhibit 3.1
             of the Company's Current Report on Form 8-K dated December 16, 1998.
 
       4.1   Specimen Common Stock Certificate, incorporated by reference to Exhibit 4.1 of the Company's
             Registration Statement on Form S-3 filed March 2, 1998 (Registration Statement No. 333-47149).
 
       4.2   Certificate of Voting Powers, Designations, Preferences, Limitations, Restrictions and Relative
             Rights of 7% Cumulative Convertible Preferred Stock of the Company, incorporated by reference to
             Exhibit 10.57 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
 
      10.1   Loan Sale Agreement, dated as of November 21, 1995, between The Sakura Bank, LTD. and Cornerstone
             Properties Inc., incorporated by reference to Exhibit 10.56 of the Company's Annual Report on Form
             10-K for the year ended December 31, 1995.
 
      10.2   Convertible Promissory Note dated January 1, 1996 made by Cornerstone Properties Inc., with Hines
             Colorado Limited in the amount of $12,925,976.48, incorporated by reference to Exhibit 10.63 of the
             Company's Annual Report on Form 10-K for the year ended December 31, 1996.
 
      10.3   Stock Purchase Agreement between DIHC, as seller, and Cornerstone Properties Inc., as purchaser,
             dated as of August 18, 1997, incorporated by reference to Annex I to the Company's definitive Proxy
             Statement on Schedule 14A, filed September 23, 1997.
 
      10.4   Loan Purchase Agreement between PGGM, as seller, and Cornerstone Properties Inc., as purchaser, dated
             August 18, 1997, incorporated by reference to Annex II to the Company's definitive Proxy Statement on
             Schedule 14A, filed September 23, 1997.
</TABLE>
 
                                       53
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                                   DESCRIPTION
-----------  -----------------------------------------------------------------------------------------------------
<C>          <S>
      10.5   Agreement of Limited Partnership of Cornerstone Properties Limited Partnership dated as of December
             23, 1997, incorporated by reference to Exhibit 10.118 of the Company's Annual Report on Form 10-K for
             the year ended December 31, 1997.
 
      10.6*  First Amendment to Agreement of Limited Partnership of Cornerstone Properties Limited Partnership.
 
      10.7*  Second Amendment to Agreement of Limited Partnership of Cornerstone Properties Limited Partnership.
 
      10.8*  Third Amendment to Agreement of Limited Partnership of Cornerstone Properties Limited Partnership.
 
      10.9*  Fourth Amendment to Agreement of Limited Partnership of Cornerstone Properties Limited Partnership.
 
     10.10*  Employment Agreement dated December 16, 1998 between Cornerstone Properties Inc. and Cornerstone
             Properties Limited Partnership and William Wilson III.
 
     10.11*  Employment Agreement dated December 16, 1998 between Cornerstone Properties Inc. and Cornerstone
             Properties Limited Partnership and John S. Moody.
 
     10.12   Amended and Restated Cornerstone Properties Inc. 1998 Long-Term Incentive Plan, incorporated by
             reference to Annex D of the Company's definitive Proxy Statement on Schedule 14A dated November 13,
             1998.
 
     10.13*  Form of Retention Agreement for executive officers of the Company.
 
     10.14   Second Amended and Restated Revolving Credit and Guaranty Agreement dated November 3, 1998 among
             Cornerstone Properties Inc. and Cornerstone Properties Limited Partnership (the "Borrowers"), the
             subsidiaries of the Borrowers (the "Guarantors"), the Lenders, Bankers Trust Company and The Chase
             Manhattan Bank and NationsBank, N.A., incorporated by reference to Exhibit 99.2 of the Company's
             Current Report on Form 8-K dated December 1, 1998.
 
     10.15   Stockholders' Agreement, dated as of November 22, 1996, by and among Cornerstone Properties Inc., and
             the New York State Teachers' Retirement System together with any other purchasers of 8% Preferred
             Stock, incorporated by reference to Exhibit 20.1 of the Company's Report on Form 8-K as of December
             12, 1996, incorporated by reference to Exhibit 20.1 of the Company's Annual Report on Form 10-K for
             the year ended December 31, 1996.
 
     10.16   Stockholders' Agreement, dated as of November 7, 1996, by and between Cornerstone Properties Inc. and
             Hexalon Real Estate, Inc., and together with any other purchasers of 8% Preferred Stock, Series A,
             incorporated by reference to Exhibit 20.2 of the Company's Report on Form 8-K as of December 12,
             1996, incorporated by reference to Exhibit 20.2 of the Company's Annual Report on Form 10-K for the
             year ended December 31, 1996.
 
     10.17*  Amended and Restated Registration Rights and Voting Agreement dated as of December 16, 1998 among
             PGGM, DIHC and Cornerstone Properties Inc.
 
     10.18   Registration Rights and Lockup Agreement dated as of December 16, 1998 by and among Cornerstone
             Properties Inc. and the investors listed therein, incorporated by reference to Annex B of the
             Company's definitive Proxy Statement on Schedule 14A dated November 13, 1998.
</TABLE>
 
                                       54
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                                   DESCRIPTION
-----------  -----------------------------------------------------------------------------------------------------
<C>          <S>
      12.1*  Statement of Computation of Earnings to Fixed Charges and Preferred Stock Dividend Requirements.
 
        21*  List of Subsidiaries.
 
      23 .   Consent of PricewaterhouseCoopers LLP.
 
      24.1*  Powers of Attorney.
 
        27*  For EDGAR filing purposes only, this report contains Exhibit 27, Financial Data Schedule.
</TABLE>
 
------------------------
 
*   Previously filed.
 
 . Filed herewith.
 
    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.
 
                                        CORNERSTONE PROPERTIES INC.
                                        (Registrant)
 
                                        /s/ JOHN S. MOODY
                ----------------------------------------------------------------
                                        John S. Moody, President & CEO
 
DATED: April 29, 1999
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
<TABLE>
<C>                             <S>
    /s/ WILLIAM WILSON III
------------------------------  Chairman of the Board and
      William Wilson III          Director
 
                                Chief Executive Officer,
      /s/ JOHN S. MOODY           President and Director
------------------------------    (Principal Executive
        John S. Moody             Officer)
 
     /s/ RODNEY C. DIMOCK
------------------------------  Executive Vice President
       Rodney C. Dimock           and Director
 
                                Senior Vice President and
     /s/ KEVIN P. MAHONEY         Chief Financial Officer
------------------------------    (Principal Financial and
       Kevin P. Mahoney           Accounting Officer)
 
     */s/ CECIL D. CONLEE
------------------------------  Director
       Cecil D. Conlee
 
       */s/ BLAKE EAGLE
------------------------------  Director
         Blake Eagle
 
------------------------------  Director
   Dr. Karl-Ludwig Hermann
 
     */s/ HANS C. MAUTNER
------------------------------  Director
       Hans C. Mautner
</TABLE>
 
                                       55
<PAGE>
<TABLE>
<C>                             <S>
   */s/ DR. LUTZ MELLINGER
------------------------------  Director
      Dr. Lutz Mellinger
 
   */s/ CRAIG R. STAPLETON
------------------------------  Director
      Craig R. Stapleton
 
------------------------------  Director
     Michael J.G. Topham
 
------------------------------  Director
       Dick van den Bos
 
------------------------------  Director
      Jan van der Vlist
 
    */s/ DONALD G. FISHER
------------------------------  Director
       Donald G. Fisher
 
     */s/ RANDALL A. HACK
------------------------------  Director
       Randall A. Hack
</TABLE>
 
<TABLE>
<C>                             <S>
         /s/ JOHN S.
            MOODY
------------------------------
*  By John S. Moody, as Attorney-in-Fact for the persons
indicated
</TABLE>
 
DATED: April 29, 1999
 
                                       56
<PAGE>
                          CORNERSTONE PROPERTIES INC.
                                AND SUBSIDIARIES
 
                       CONSOLIDATED FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 1998 AND 1997
                            AND FOR THE YEARS ENDED
                        DECEMBER 31, 1998, 1997 AND 1996
 
                                      F-1
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders of
Cornerstone Properties Inc.
 
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(i) of this Form 10-K/A present fairly, in all
material respects, the financial position of Cornerstone Properties Inc. and
subsidiaries (the "Company") at December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule listed
in the index appearing under Item 14(a)(i) of this Form 10-K/A presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company'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 of these statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
 
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
 
New York, New York
February 24, 1999, except for Notes 8 and 20 for which the
  date is February 26, 1999
 
                                      F-2
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                           DECEMBER 31, 1998 AND 1997
 
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                              1998       1997
                                                                                            ---------  ---------
<S>                                                                                         <C>        <C>
ASSETS
Investments, at cost:
  Land....................................................................................  $ 729,323  $ 260,542
  Buildings, leasehold interests and improvements.........................................  3,466,288  1,559,085
  Investment in real estate joint ventures................................................     31,500    240,253
  Deferred lease costs....................................................................    144,838    127,645
                                                                                            ---------  ---------
                                                                                            4,371,949  2,187,525
  Less: Accumulated depreciation and amortization.........................................    288,448    229,652
                                                                                            ---------  ---------
    Total investments.....................................................................  4,083,501  1,957,873
 
Cash and cash equivalents.................................................................     61,869     24,730
Restricted cash...........................................................................      9,114      1,903
Other deferred costs, net of accumulated amortization of $762 and $1,998..................      6,153      5,728
Deferred tenant receivables...............................................................     53,802     38,531
Tenant and other receivables, net.........................................................     10,557      7,584
Note receivable...........................................................................        134      1,652
Other assets, net.........................................................................     56,854     13,480
                                                                                            ---------  ---------
TOTAL ASSETS..............................................................................  $4,281,984 $2,051,481
                                                                                            ---------  ---------
                                                                                            ---------  ---------
 
LIABILITIES
Long-term debt, inclusive of $25,031 and $11,209 of unamortized premium...................  $1,532,474 $ 706,178
Credit facility...........................................................................    465,000    187,000
Accrued interest..........................................................................     10,933      4,134
Accrued real estate taxes.................................................................     16,395     13,401
Accounts payable and accrued expenses.....................................................     51,454     18,363
Common stockholders' distributions payable................................................     38,163         --
Unearned revenue and other liabilities....................................................     23,890     10,986
                                                                                            ---------  ---------
TOTAL LIABILITIES.........................................................................  2,138,309    940,062
                                                                                            ---------  ---------
 
MINORITY INTEREST
Minority interest in operating partnership................................................    283,388         --
Minority interest in real estate joint ventures...........................................     23,420     15,420
                                                                                            ---------  ---------
TOTAL MINORITY INTEREST...................................................................    306,808     15,420
                                                                                            ---------  ---------
 
Commitments and contingencies
 
Redeemable preferred stock; 344,828 shares authorized;
  0 shares issued and outstanding.........................................................         --         --
 
STOCKHOLDERS' EQUITY
7% Cumulative convertible preferred stock, $16.50 stated value; 65,000,000 shares
  authorized; 3,030,303 shares issued and outstanding.....................................     50,000     50,000
Common stock, no par value; 250,000,000 shares authorized; (1998-128,210,784;
  1997-83,191,819) shares issued and outstanding
Paid-in capital...........................................................................  1,788,567  1,048,187
Retained earnings (deficit)...............................................................         --         --
Deferred compensation.....................................................................     (1,700)    (2,188)
                                                                                            ---------  ---------
TOTAL STOCKHOLDERS' EQUITY................................................................  1,836,867  1,095,999
                                                                                            ---------  ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................................  $4,281,984 $2,051,481
                                                                                            ---------  ---------
                                                                                            ---------  ---------
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3
<PAGE>
                  CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
 
            (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
REVENUES
  Office and parking rentals.................................................  $  338,515  $  159,828  $  111,494
  Earnings in real estate joint ventures.....................................      11,420          --          --
  Interest and other income..................................................       9,551      14,083       5,414
                                                                               ----------  ----------  ----------
    TOTAL REVENUES...........................................................     359,486     173,911     116,908
                                                                               ----------  ----------  ----------
EXPENSES
  Building operating expenses................................................      75,663      35,962      24,578
  Real estate taxes..........................................................      46,760      25,560      19,610
  Interest expense...........................................................      67,533      33,977      31,734
  Depreciation and amortization..............................................      59,278      30,978      24,317
  General and administrative.................................................      12,939       7,564       6,407
                                                                               ----------  ----------  ----------
    TOTAL EXPENSES...........................................................     262,173     134,041     106,646
                                                                               ----------  ----------  ----------
                                                                                   97,313      39,870      10,262
                                                                               ----------  ----------  ----------
OTHER INCOME (EXPENSES)
  Loss on sale of real estate assets.........................................      (2,076)         --          --
  Minority interest..........................................................      (7,469)     (2,368)     (1,519)
  Net gain on interest rate swaps............................................          --          99       4,278
                                                                               ----------  ----------  ----------
Income before extraordinary item.............................................      87,768      37,601      13,021
Extraordinary loss...........................................................      (4,303)        (54)     (3,925)
                                                                               ----------  ----------  ----------
NET INCOME...................................................................  $   83,465  $   37,547  $    9,096
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
INCOME APPLICABLE TO PREFERRED STOCK.........................................  $   (3,500) $  (10,160) $   (5,153)
                                                                               ----------  ----------  ----------
INCOME APPLICABLE TO COMMON STOCK............................................  $   79,965  $   27,387  $    3,943
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
INCOME BEFORE EXTRAORDINARY ITEM PER COMMON SHARE............................  $     0.84  $     0.63  $     0.39
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
EXTRAORDINARY LOSS PER COMMON SHARE..........................................  $    (0.04) $       --  $    (0.20)
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
BASIC NET INCOME PER COMMON SHARE............................................  $     0.80  $     0.63  $     0.19
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
DILUTED NET INCOME PER COMMON SHARE..........................................  $     0.80  $     0.63  $     0.19
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</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' EQUITY
 
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
 
            (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                COMMON STOCK          PREFERRED STOCK
                                           ----------------------  ----------------------   RETAINED
                                           OUTSTANDING   PAID-IN   OUTSTANDING   PAID-IN    EARNINGS       DEFERRED
                                             SHARES      CAPITAL     SHARES      CAPITAL    (DEFICIT)    COMPENSATION      TOTAL
                                           -----------  ---------  -----------  ---------  -----------  ---------------  ---------
<S>                                        <C>          <C>        <C>          <C>        <C>          <C>              <C>
BALANCE, JANUARY 1, 1996.................  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 $296 in
  stock issuance costs...................     696,013      10,808          --          --          --             --        10,808
PGGM stock...............................  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............          --      (3,402)         --          --      (6,758)            --       (10,160)
Common stock distributions ($1.04/shr)...          --     (39,418)         --          --          --             --       (39,418)
                                           -----------  ---------  -----------  ---------  -----------       -------     ---------
BALANCE, DECEMBER 31, 1997...............  83,191,819   $1,048,187  3,030,303   $  50,000   $      --      $  (2,188)    $1,095,999
Common stock proceeds, net of $14,463 in
  stock issuance costs...................  25,969,203     447,881          --          --          --             --       447,881
Dividend reinvestment, net of $410 in
  stock issuance costs...................     397,404       6,294          --          --          --             --         6,294
Tower 56 residual purchase...............     307,692       5,500          --          --          --             --         5,500
Restricted stock grants..................      31,678         577          --          --          --           (577)           --
Restricted stock grant vesting...........          --          --          --          --          --          1,065         1,065
Net income...............................          --          --          --          --      83,465             --        83,465
Minority adjustment......................          --      49,219          --          --          --             --        49,219
Preferred stock distributions............          --          --          --                  (3,500)            --        (3,500)
Common stock distributions ($1.50/shr)...          --     (70,963)         --          --     (79,965)            --      (150,928)
One Memorial acquisition.................   3,428,571      60,000          --          --          --             --        60,000
Wilson Acquisition.......................  14,884,417     241,872          --          --          --             --       241,872
                                           -----------  ---------  -----------  ---------  -----------       -------     ---------
BALANCE, DECEMBER 31, 1998...............  128,210,784  $1,788,567  3,030,303   $  50,000   $      --      $  (1,700)    $1,836,867
                                           -----------  ---------  -----------  ---------  -----------       -------     ---------
                                           -----------  ---------  -----------  ---------  -----------       -------     ---------
</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, 1998, 1997 AND 1996
 
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                1998         1997         1996
                                                                             -----------  -----------  ----------
<S>                                                                          <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income...............................................................  $    83,465  $    37,547  $    9,096
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation and amortization..........................................       58,980       31,826      24,801
    Deferred compensation amortization.....................................        1,065          928         988
    Share of net loss in real estate joint ventures........................        5,670           --          --
    Net gain on interest rate swap.........................................           --          (99)     (4,278)
    Extraordinary loss.....................................................        4,303           54       3,925
    Unbilled rental revenue................................................      (13,712)      (3,015)     (1,408)
    Increase (decrease) in accrued interest................................        6,799        3,052      (3,245)
    Minority interest share of income......................................        7,469        2,368       1,519
    Loss on sale of real estate assets.....................................        2,076           --          --
    Increase in tenant and other receivables and other assets..............       (6,833)     (16,920)     (2,461)
    Increase in accounts payable, accrued expenses and other liabilities...       33,515       10,181       5,585
                                                                             -----------  -----------  ----------
    Total adjustments......................................................       99,332       28,375      25,426
                                                                             -----------  -----------  ----------
    Net cash provided by operating activities..............................      182,797       65,922      34,522
                                                                             -----------  -----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to investment property.........................................     (797,181)    (464,096)    (58,501)
  Other investments........................................................      (41,893)          --          --
  Repayment of note receivable.............................................        1,518        1,259       1,242
  Investments in real estate joint ventures................................      (31,391)          --          --
  Proceeds from sale of real estate assets.................................       45,865           --          --
                                                                             -----------  -----------  ----------
    Net cash used in investing activities..................................     (823,082)    (462,837)    (57,259)
                                                                             -----------  -----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock offering......................................      462,344      225,400          --
  Proceeds from preferred stock offering...................................           --           --     140,000
  Borrowings under mortgage loans..........................................       92,377           --     116,000
  Borrowings under credit facility.........................................      567,500      187,000          --
  Repayments under credit facility.........................................     (289,500)          --          --
  Repayment of term loan...................................................           --      (32,500)         --
  Repayments under mortgage loans..........................................       (3,426)      (1,094)    (98,384)
  Proceeds from dividend reinvestment plan.................................        6,704       11,104       4,016
  Net payments for swap terminations and debt prepayment costs.............       (1,762)        (216)     (6,804)
  (Increase) decrease in restricted cash...................................       (7,211)       2,524         (33)
  Stock and debt issuance costs............................................      (20,813)     (20,715)     (5,154)
  Distributions to minority partners.......................................      (12,524)      (2,717)     (2,503)
  Distributions to preferred stockholders..................................       (3,500)     (10,160)     (5,153)
  Distributions to common stockholders.....................................     (112,765)     (51,784)    (12,185)
                                                                             -----------  -----------  ----------
    Net cash provided by financing activities..............................      677,424      306,842     129,800
                                                                             -----------  -----------  ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...........................       37,139      (90,073)    107,063
CASH AND CASH EQUIVALENTS, beginning of period.............................       24,730      114,803       7,740
                                                                             -----------  -----------  ----------
CASH AND CASH EQUIVALENTS, end of period...................................  $    61,869  $    24,730  $  114,803
                                                                             -----------  -----------  ----------
                                                                             -----------  -----------  ----------
</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, 1998, 1997 AND 1996
 
1. NATURE OF COMPANY'S BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
NATURE OF THE COMPANY'S BUSINESS
 
    Cornerstone Properties Inc. (together with its subsidiaries, "Cornerstone"
or the "Company") is a self-administered equity real estate investment trust
("REIT") which owns, through subsidiaries, interests in 96 Class A office
buildings comprising nearly 21 million rentable square feet, a shopping center,
a hotel and developable land (collectively, the "Properties," and each interest,
a "Property"). The Properties are primarily located in twelve major metropolitan
areas throughout the United States: Atlanta, Boston, Charlotte, suburban
Chicago, Denver, Minneapolis, New York City, Phoenix, San Francisco Bay Area,
Seattle, Southern California and Washington, D.C. and surrounding suburbs. The
Company's strategy is to own Class A office properties in prime Central Business
District locations and major suburban office markets in U.S. metropolitan areas.
Class A office properties are generally considered to be those that have the
most favorable locations and physical attributes, command premium rents and
experience the highest tenant retention rates within their markets. In January
1998, Cornerstone converted its corporate structure into an umbrella limited
partnership REIT ("UPREIT"). Under the UPREIT structure, Cornerstone owns all of
its properties and conducts all of its business through Cornerstone Properties
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), of which the Company is the sole general partner. As of December
31, 1998, Cornerstone owned, directly or indirectly, approximately 86.3% of the
common units of partnership interest ("UPREIT Units") in the Operating
Partnership.
 
PRINCIPLES OF CONSOLIDATION
 
    The accompanying financial statements include the accounts of Cornerstone,
its wholly-owned qualified REIT subsidiary, the Operating Partnership and
controlled partnerships. The Company has consolidated the following partnerships
because it has a majority interest in the economic benefits and is or has the
right to become the managing general partner at its sole discretion: the
Operating Partnership; 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"); One Ninety One
Peachtree Associates ("191 Peachtree"); Avenue Associates Limited Partnership
("Market Square"); and 120 Montgomery Associates, LLC ("120 Montgomery"). The
Company's investments in the One Post Property and WCP Services, Inc. are
accounted for as equity investments (see Note 4). 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 using 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
 
                                      F-7
<PAGE>
impairment in value of the property. No significant adjustments have been made
in the accompanying financial statements.
 
    Costs directly related to the acquisition and development of rental
properties are capitalized. Capitalized development costs include interest,
property taxes, insurance and other project costs incurred during the period of
construction. Ordinary repairs and maintenance are expensed as incurred; major
replacements and betterments, which improve or extend the life of the asset, are
capitalized and depreciated over their estimated useful lives.
 
REAL ESTATE HELD FOR SALE
 
    Included in Investments is Charlotte Plaza, which was held for sale by the
Company as of November 1, 1998. The Property is valued at approximately $77.6
million, the lower of the carrying amount or the fair value less estimated cost
to sell. Beginning on November 1, 1998, the Company discontinued the recognition
of depreciation on Charlotte Plaza.
 
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, 1998 and 1997, Cornerstone had on deposit with major
financial institutions substantially all of its cash and cash equivalents which
balances at times exceed federally insurable limits. 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.
 
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.
 
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. As part of the acquisition of the
PGGM Portfolio (see Note 2), the Company purchased several management contracts
to which Stichting Pensioenfonds Voor de Gezondheid Geestelijke en
Maatschappelijke Belangen ("PGGM") was a party. The price paid for these
contracts is being amortized over four years.
 
OTHER ASSETS
 
    Included in Other Assets is the purchase price for the intangible management
and development company assets that were acquired as part of the Wilson
Acquisition (see Note 2). These assets are being amortized over 10 years.
Accumulated amortization was $170,000 and $0 as of December 31, 1998 and 1997,
respectively.
 
    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, the Company expenses all internal acquisition costs.
 
                                      F-8
<PAGE>
MINORITY INTEREST
 
    Minority interest in the Operating Partnership relates to the interest in
the Operating Partnership that the Company does not own, which as of December
31, 1998 amounted to 13.7%. The Company allocates income to the minority
interest in the Operating Partnership based on the weighted-average percentage
ownership in the Operating Partnership through the year. Persons who contributed
assets to the Operating Partnership received UPREIT Units, shares of
Cornerstone's common stock (the "Common Stock"), cash or a combination thereof.
At the request of a unitholder, the Company will be obligated to redeem each
UPREIT Unit held by such unitholder for one share of Common Stock or, at the
option of the Company, cash equal to the fair market value of one share of
Common Stock at the time of redemption. Such redemptions will cause the
Company's percentage ownership in the Operating Partnership to increase. As of
December 31, 1998, the number of issued and outstanding UPREIT Units held by
unitholders other than the Company was 20,333,607 and as of such date, no UPREIT
Units have been exchanged for shares of Common Stock.
 
    Minority interest in real estate joint ventures represents the minority
partner's or venturer's capital account balances in NWC, Third Partnership, 222
Berkeley, 500 Boylston, 191 Peachtree, Market Square and 120 Montgomery. 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 and joint venture agreements.
Realizability of the debit balances is continually monitored by calculating pro
forma sales proceeds under the respective agreements.
 
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. Deferred tenant receivables were
approximately $53,802,000 and $38,531,000 at December 31, 1998 and 1997,
respectively. Expense reimbursement and escalation income for the years ended
December 31, 1998, 1997 and 1996 was approximately $77,821,000, $36,990,000 and
$28,230,000, respectively.
 
    An allowance for doubtful accounts of approximately $253,000 and $268,000
has been recorded at December 31, 1998 and 1997, respectively, relating to
tenant and other receivables. Bad debt expense totaled approximately $232,000
and $221,000 during 1998 and 1997, 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 Company's exposure to
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.
 
                                      F-9
<PAGE>
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 856-859 of the United States Internal Revenue Code (the "Code").
Under these sections of the 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 1998
financial statement presentation.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
    During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999. SFAS 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. In addition, the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5") and
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"), which are effective for
fiscal years beginning after December 15, 1998. SOP 98-5 requires that certain
costs incurred in conjunction with start-up and organizational activities be
expensed. SOP 98-1 provides guidance on whether the costs of computer software
developed or obtained for internal use should be capitalized or expensed.
Management believes that when adopted, SFAS 133, SOP 98-5 and SOP 98-1 will not
have a significant effect on the Company's financial statements.
 
    During the first quarter of 1998, the Company adopted the FASB's Emerging
Issues Task Force's release Issue No. 97-11, "Accounting for Internal Costs
Relating to Real Estate Property Acquisitions" ("EITF 97-11"). EITF 97-11
requires that the internal pre-acquisition costs of identifying and acquiring
operating property be expensed as incurred. The adoption of EITF 97-11 did not
have a material effect on the Company's financial statements.
 
    During the first quarter of 1998, the Company also adopted the FASB's
Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 specifies the presentation and disclosure
requirements for comprehensive income which includes those items which have been
formerly reported as a component of stockholders' equity. The adoption of SFAS
130 did not have a significant effect on the Company's financial statements.
 
ESTIMATES AND RISKS
 
    The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") 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 risks, estimates and assumptions are
related to the recoverability and depreciable lives of investment property, the
recoverability of deferred tenant receivables, unforeseen Year 2000 risks and
the qualification of the Company as a REIT. Actual results could differ from
those estimates.
 
                                      F-10
<PAGE>
2. PROPERTIES
 
    The following table summarizes Cornerstone's interest in real estate
investments at December 31, 1998:
 
<TABLE>
<CAPTION>
                                                           TOTAL      CORNERSTONE
MARKET NAME                                              RENTABLE      INTEREST
  PROPERTY                                              SQUARE FEET       (A)      YEAR CONSTRUCTED   OCCUPANCY     NOTES
-----------------------------------------------------  -------------  -----------  ----------------  -----------  ---------
<S>                                                    <C>            <C>          <C>               <C>          <C>
                                                        (UNAUDITED)                  (UNAUDITED)     (UNAUDITED)
BOSTON, MASSACHUSETTS
  Sixty State Street.................................       823,014        100.0%        1978                99%          B
  500 Boylston Street................................       714,636         91.5%        1988               100%          D
  222 Berkeley Street................................       531,184         91.5%        1991               100%          D
  125 Summer Street..................................       463,691        100.0%        1989                97%
  One Memorial Drive.................................       352,764        100.0%        1985               100%          C
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     2,885,289                                          99%
 
SAN MATEO COUNTY, CALIFORNIA
  Bayhill (4 buildings)..............................       513,910        100.0%     1982-1987              88%          E
  Peninsula Office Park (7 buildings)................       493,214        100.0%     1971-1998              98%          E
  Seaport Centre.....................................       463,142        100.0%        1988                65%          E
  Bay Park Plaza (2 buildings).......................       257,058        100.0%     1985-1998              97%          E
  One Bay Plaza......................................       176,533        100.0%        1979                93%          E
  Belmont Shores.....................................       141,643        100.0%        1983                97%          E
  1300 South El Camino...............................        84,441        100.0%        1986               100%          E
  66 Bovet...........................................        43,968        100.0%        1968                87%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     2,173,909                                          88%
 
EAST BAY, CALIFORNIA
  Corporate Centre (2 buildings).....................       329,604        100.0%     1985-1987              97%          E
  ADP Plaza (2 buildings)............................       299,591        100.0%     1987-1989              93%          E
  PeopleSoft Plaza...................................       279,931        100.0%        1984                99%          E
  Norris Tech Center (3 buildings)...................       260,513        100.0%     1984-1998              96%          E
  Golden Bear Center.................................       160,587        100.0%        1986                96%          E
  2700 Ygnacio Valley Road...........................       103,214        100.0%        1984                96%          E
  Park Plaza.........................................        87,040        100.0%        1986                86%          E
  1600 South Main....................................        83,277        100.0%        1983                95%          E
  Foothill Corporate Center..........................        70,355        100.0%        1982                98%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     1,674,112                                          96%
 
ATLANTA, GEORGIA
  191 Peachtree Street...............................     1,215,288         80.0%        1991                98%        D,F
  200 Galleria.......................................       432,698        100.0%        1985                95%          D
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     1,647,986                                          97%
 
SEATTLE, WASHINGTON
  Washington Mutual Tower (3 buildings)..............     1,154,560         50.0%        1988                99%          G
  110 Atrium Place...................................       213,854        100.0%        1981                97%          E
  Island Corporate Center............................       100,075        100.0%        1987                96%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     1,468,489                                          99%
</TABLE>
 
                                      F-11
<PAGE>
<TABLE>
<CAPTION>
                                                           TOTAL      CORNERSTONE
MARKET NAME                                              RENTABLE      INTEREST
  PROPERTY                                              SQUARE FEET       (A)      YEAR CONSTRUCTED   OCCUPANCY     NOTES
-----------------------------------------------------  -------------  -----------  ----------------  -----------  ---------
                                                        (UNAUDITED)                  (UNAUDITED)     (UNAUDITED)
<S>                                                    <C>            <C>          <C>               <C>          <C>
SANTA CLARA COUNTY, CALIFORNIA
  Pruneyard Office (3 buildings).....................       354,005        100.0%     1971-1999              99%        E,H
  10 Almaden.........................................       293,685        100.0%        1989               100%          E
  Pruneyard Shopping Center..........................       252,210        100.0%       1970s                95%          E
  Embarcadero Place (4 buildings)....................       192,108        100.0%        1984               100%          E
  Pruneyard Inn......................................        90,000        100.0%        1989                           E,I
  First American Plaza...............................        82,596        100.0%        1971                98%          E
  490 California.....................................        24,539        100.0%        1985               100%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     1,289,143                                          99%
 
DENVER, COLORADO
  One Norwest Center.................................     1,187,752        100.0%        1983                97%
                                                       -------------                                 -----------
MARKET TOTAL.........................................     1,187,752                                          97%
 
SAN FRANCISCO, CALIFORNIA
  120 Montgomery Street..............................       410,902         66.7%        1955                95%          E
  One Post...........................................       389,660         50.0%        1969                99%          E
  201 California Street..............................       240,230        100.0%        1980               100%          J
  188 Embarcadero....................................        85,209        100.0%        1985                99%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     1,126,001                                          98%
 
MINNEAPOLIS, MINNESOTA
  Norwest Center.....................................     1,118,062         50.0%        1988               100%          K
                                                       -------------                                 -----------
  MARKET TOTAL.......................................     1,118,062                                         100%
 
WASHINGTON, D.C./ALEXANDRIA, VIRGINIA
  Market Square (2 buildings)........................       688,709         70.0%        1990                96%        D,L
  99 Canal Center....................................       137,945        100.0%        1986                98%          D
  TransPotomac Plaza 5...............................        92,980        100.0%        1983                96%          D
  11 Canal Center....................................        70,365        100.0%        1986                95%          D
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       989,999                                          96%
 
SUBURBAN CHICAGO, ILLINOIS
  Corporate 500 Centre (4 buildings).................       678,885        100.0%     1986/1990              97%          M
  One Lincoln Centre.................................       297,067        100.0%        1986                90%
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       975,952                                          95%
 
SANTA MONICA/WEST LOS ANGELES, CALIFORNIA
  West Wilshire (2 buildings)........................       235,781        100.0%     1960-1976              90%          E
  Wilshire Palisades.................................       186,714        100.0%        1981                99%          J
  Janss Court........................................       125,556        100.0%        1989                97%        E,N
  Searise Office Tower...............................       122,292        100.0%        1975                94%          E
  Commerce Park......................................        94,252        100.0%        1977                79%        E,O
  429 Santa Monica...................................        81,414        100.0%        1982                81%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       846,009                                          92%
</TABLE>
 
                                      F-12
<PAGE>
<TABLE>
<CAPTION>
                                                           TOTAL      CORNERSTONE
MARKET NAME                                              RENTABLE      INTEREST
  PROPERTY                                              SQUARE FEET       (A)      YEAR CONSTRUCTED   OCCUPANCY     NOTES
-----------------------------------------------------  -------------  -----------  ----------------  -----------  ---------
                                                        (UNAUDITED)                  (UNAUDITED)     (UNAUDITED)
<S>                                                    <C>            <C>          <C>               <C>          <C>
ORANGE COUNTY, CALIFORNIA
  Bixby Ranch........................................       277,289        100.0%        1987                98%          E
  18301 Von Karman...................................       219,537        100.0%        1991                64%          E
  2677 North Main....................................       212,542        100.0%        1987                81%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       709.368                                          82%
 
CHARLOTTE, NORTH CAROLINA
  Charlotte Plaza....................................       612,728        100.0%        1982                99%          D
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       612,728                                          99%
 
ARIZONA
  Gateway (2 buildings)..............................       212,222        100.0%     1984-1985              92%          E
  Scottsdale Centre..................................       164,469        100.0%        1985                94%          E
  Biltmore Lakes.....................................       207,489        100.0%        1982                96%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       584,180                                          94%
 
SAN DIEGO, CALIFORNIA
  Centerside II......................................       286,941        100.0%        1987                94%          E
  Crossroads.........................................       133,950        100.0%        1983                99%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       420,891                                          95%
 
LOS ANGELES, CALIFORNIA
  700 North Brand....................................       202,785        100.0%        1981                94%          E
  Tri-Center Plaza...................................       141,946        100.0%        1990                96%          E
  Warner Park Center.................................        58,798        100.0%        1986                98%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       403,529                                          95%
 
NEW YORK CITY, NEW YORK
  527 Madison Avenue.................................       215,332        100.0%        1986                94%
  Tower 56...........................................       163,633        100.0%        1983                99%          P
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       378,965                                          96%
 
CONEJO VALLEY (VENTURA), CALIFORNIA
  Westlake Spectrum (2 buildings)....................       118,990        100.0%        1990               100%          E
  Agoura Hills.......................................       115,265        100.0%        1987                88%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       234,255                                          94%
 
OTHER REGIONS
  U.S. West (Murray, Utah)...........................       136,608        100.0%        1985                86%          E
  Exposition Centre (Sacramento, California).........        72,547        100.0%        1984                65%          E
                                                       -------------                                 -----------
  MARKET TOTAL.......................................       209,155                                          79%
                                                       -------------                                 -----------
  TOTAL PORTFOLIO....................................    20,935,774                                          96%
  Minority Interest Adjustment (Q)...................      (684,784)
                                                       -------------                                 -----------
  CORNERSTONE PORTFOLIO..............................    20,250,990                                          95%
                                                       -------------                                 -----------
                                                       -------------                                 -----------
</TABLE>
 
------------------------
 
(A) Unless noted below, cash flow and residual proceeds will be distributed to
    Cornerstone according to its percentage interest.
 
                                      F-13
<PAGE>
(B) On December 31, 1997, the Company purchased the second mortgage on Sixty
    State Street. The mortgage is a cash flow mortgage through which all the
    economic benefits/risks (subject to the first mortgage) inure to the
    Company. The Company controls all major decisions regarding management and
    leasing. The total purchase price for the second mortgage was $131.5 million
    and is consolidated in buildings due to the above factors. The $78.4 million
    first mortgage on the Property was originally recorded by the Company as an
    $89.6 million liability due to its above-market interest rate.
 
    The second mortgage, which the Company holds, is collateralized only by the
    improvements on Sixty State Street. Title to the improvements is owned by
    Sixty State Street Trust, the ground lessee under a ground lease that
    expires on December 28, 2067. The lease payments on the ground lease are
    $398,896 per annum throughout the term.
 
(C) On April 28, 1998, the Company purchased One Memorial Drive in Cambridge,
    Massachusetts. The total purchase price for the Property was approximately
    $112.5 million, approximately $23.5 million of which was paid in cash,
    approximately $29.0 million of which was paid in UPREIT Units valued at
    $17.50 per unit and approximately $60.0 million of which was paid in Common
    Stock valued at $17.50 per share.
 
(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 PGGM Portfolio"). The Company
    acquired the PGGM Portfolio for a purchase price of approximately $1.06
    billion, consisting of approximately 34.2 million shares of Common Stock
    valued and recorded at $16.00 per share, approximately $260.0 million in
    cash and $250.0 million in promissory notes. The cash portion of the
    acquisition was financed with proceeds from the Company's Initial Public
    Offering in April 1997 and $54.0 million from its Revolving Credit Facility.
 
(E) Property was acquired as a result of the Wilson Acquisition in December
    1998. After receiving stockholder approval on December 14, 1998, the Company
    acquired substantially all of the properties and real estate operations of
    William Wilson & Associates and related entities ("WW&A") (the "Wilson
    Acquisition"). As part of the Wilson Acquisition, the Company acquired
    interests in 69 Class A office Properties, comprising approximately 9.2
    million rentable square feet primarily in the San Francisco Bay Area and in
    Southern California, a shopping center consisting of approximately 252,000
    rentable square feet in Santa Clara, California, a hotel consisting of
    90,000 square feet in Santa Clara, California and 12.8 acres of developable
    land.
 
    The Company acquired WW&A for a purchase price of approximately $1.8
    billion, consisting of approximately 14.9 million shares of Common Stock
    valued at $17.25 per share (recorded at $16.25 per share for GAAP purposes),
    approximately 16.2 million UPREIT Units valued at $17.25 per unit (recorded
    at $16.25 per unit for GAAP purposes), approximately $465.0 million in cash
    and the assumption of approximately $760.0 million of property and
    construction related debt (recorded at $773.7 million for GAAP purposes).
    The price of $16.25 represents the fair value based upon the market price
    for a reasonable period before and after the date the terms of the
    acquisition were agreed to and announced. The cash portion of the
    transaction was financed primarily from the Company's Revolving Credit
    Facility and the sale of $200.0 million of Common Stock to PGGM, an
    approximate 33.6% stockholder prior to the Wilson Acquisition, priced at
    $17.25 per share.
 
(F) While the Company's stated interest in the partnership that owns 191
    Peachtree Street is 80.0%, its economic interest is significantly larger
    since it has acquired the first mortgage note on the Property in the amount
    of $145.0 million, which earns interest at 9.375% and will receive a
    priority distribution on its acquired capital base. In 1997 and 1998, the
    partner in the transaction, CH Associates, Ltd., received an annual
    Incentive Distribution (as defined) 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-14
<PAGE>
    The partnership that owns 191 Peachtree Street leases a portion of the land
    upon which the project is located pursuant to a ground lease agreement. The
    agreement requires annual payments of $5,000 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) While the Company's stated interest in the partnership that owns Washington
    Mutual Tower is 50.0%, its economic interest in the Property is
    significantly larger due to priority distributions it receives on its
    invested capital base. For the year ended December 31, 1998, the Company
    received 100% of the cash distributions from the partnership that owns
    Washington Mutual Tower.
 
(H) Pruneyard Place is under construction with an expected completion date of
    April 1999. The building is 100% pre-leased. The building will be six
    stories and contain approximately 120,000 square feet of net rentable area.
    The Company has commitments for approximately $8.2 million related to this
    construction.
 
(I) The Pruneyard Inn is a 118-room, three-story hotel. The Property is
    currently undergoing a 25,000-square foot expansion, which will add 54 new
    rooms. The Company has commitments for approximately $3.2 million related to
    this construction.
 
(J) On June 3, 1998, the Company purchased 201 California Street and Wilshire
    Palisades. The total purchase price for the Properties was approximately
    $121.5 million, approximately $29.5 million of which was paid in cash,
    approximately $29.1 million of which was paid in UPREIT Units valued at
    $17.50 per unit and approximately $62.9 million of assumed debt (recorded at
    $64.6 million for GAAP purposes).
 
(K) While the Company's stated interest in the partnership that owns Norwest
    Center is 50.0%, its economic interest in the Property is significantly
    larger due to priority distributions it receives on its invested capital
    base. For the year ended December 31, 1998, the Company's share of earnings
    and cash distributions from the partnership that owns Norwest Center was
    77.9%.
 
(L) During 1998, through a series of transactions, the Company acquired
    partnership interests with a stated interest of approximately 70.0% in the
    partnerships that own Market Square. The Company's economic interest is
    significantly larger since it has acquired the first mortgage note on the
    Property in the amount of $181.0 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 $49.0 million at purchase, which accrues interest at a rate of
    Prime plus 1.25% and is payable from cash flow, refinancing or sales
    proceeds in excess of the first mortgage. During the year ended December 31,
    1998, the Company received 100% of the cash flow from the Property. On
    November 4, 1998, the Company purchased an additional interest in the
    partnerships that own Market Square which enabled it to gain sufficient
    control in order to consolidate the investment.
 
(M) On January 28, 1998, the Company purchased Corporate 500 Centre in
    Deerfield, Illinois. This Property consists of four Class A office buildings
    with approximately 679,000 rentable square feet. The consideration paid for
    this Property was approximately $135.0 million in cash and approximately
    $15.0 million in UPREIT Units valued at $18.50 per unit, for a total
    purchase price of approximately $150.0 million. The Company financed a
    portion of the purchase price with an $80.0 million mortgage loan from
    Bankers Trust Company; this mortgage was subsequently refinanced in October
    1998.
 
(N) Janss Court is a seven-story, 125,000-square foot Class A mixed-use
    building. In addition to 92,000 square feet of retail and office space,
    Janss Court offers 32 apartments for a total of 33,000 rentable square feet
    of residential space.
 
                                      F-15
<PAGE>
(O) The Property is subject to a ground lease agreement. The agreement requires
    annual payments of $115,000 through March 31, 2002 and $121,000 from April
    1, 2002 through March 31, 2007. The lease payment increases every ten years
    thereafter according to a formula based on the Consumer Price Index. The
    ground lease expires on March 31, 2041.
 
(P) On January 5, 1998, the Company purchased for approximately $5.5 million,
    the remaining participation rights in the cash flow and residual value of
    Tower 56 from the former participants for 307,692 shares of Common Stock. As
    a result, all of the cash flow and the residual value of Tower 56 inure to
    the Company.
 
(Q) Rentable square feet includes an adjustment for the interest of a joint
    venture or minority partner. Calculations are based on the partners'
    percentage interest in the cash flows of the property.
 
    On March 31, 1998, the Company sold the Dearborn Land (an undeveloped parcel
of land in Chicago that was acquired as part of the acquisition of the PGGM
Portfolio in October 1997) for gross proceeds of approximately $19,000,000,
resulting in a loss of $212,228.
 
    On April 29, 1998, the Company sold the Frick Building, located in
Pittsburgh, Pennsylvania, for gross proceeds of approximately $26,748,000,
resulting in a loss of $2,111,540.
 
    On December 29, 1998, Avenue Associates Limited Partnership sold a
condominium unit in Market Square, located in Washington D.C., for gross
proceeds of $326,154, resulting in a gain of $247,972.
 
    The future minimum lease payments to be received by the Company under
noncancellable operating leases as of December 31, 1998 are as follows (Dollar
amounts in thousands):
 
<TABLE>
<S>                                                               <C>
1999............................................................  $ 399,589
2000............................................................    376,413
2001............................................................    352,484
2002............................................................    302,511
2003............................................................    242,140
Thereafter......................................................    957,109
                                                                  ---------
Total...........................................................  $2,630,246
                                                                  ---------
                                                                  ---------
</TABLE>
 
3. RESTRICTED CASH
 
    Restricted cash includes security deposits for some of the Company's office
properties and escrow and reserve funds for real estate taxes, property
insurance, capital improvements, tenant improvements and leasing costs. These
funds were established pursuant to certain mortgage and construction financing
arrangements.
 
4. INVESTMENT IN REAL ESTATE JOINT VENTURES
 
    Investment in real estate joint ventures represents the Company's two
investments that are accounted for using the equity method of accounting. The
first investment is the Company's 50.0% interest in a co-tenancy agreement with
Crocker Plaza Company for One Post, a 38-story, Class A office tower in San
Francisco, California. The Company and Crocker co-manage and lease the Property.
The second equity investment is the Company's 5.0% interest in WCP Services,
Inc., which provides property management and tenant construction supervision
services to third parties. WCP Services, Inc. also provides tenant construction
supervision services to tenants in Properties owned by Cornerstone.
 
                                      F-16
<PAGE>
5. LONG-TERM DEBT
 
    The following table sets forth certain information regarding the
consolidated debt obligations of the Company as of December 31, 1998, including
mortgage obligations relating to the Company's 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 (Dollar amounts in thousands).
 
<TABLE>
<CAPTION>
                                                                                  MATURITY
PROPERTY                                AMORTIZATION        INTEREST RATE (A)       DATE     12/31/98   12/31/97
-----------------------------------  -------------------  ----------------------  ---------  ---------  ---------
<S>                                  <C>                  <C>                     <C>        <C>        <C>
188 Embarcadero....................  25 year                               6.90%   Jun-1999  $   9,135  $      --
One and Two Gateway................  25 year                               6.90%   Dec-1999      8,679         --
Seaport Centre.....................  Interest only              LIBOR plus 1.50%   Dec-1999     58,000         --
The Pruneyard......................  24 year                    LIBOR plus 2.00%   Mar-2000     49,384         --
18301 Von Karman...................  25 year                               6.90%   Apr-2000     10,647         --
Centerside II......................  25 year                               6.90%   Jun-2000     13,818         --
Scottsdale Centre..................  25 year                               6.90%   Jul-2000      7,745         --
TransPotomac Plaza 5 and Charlotte
  Plaza (B)........................  Interest only                         7.28%   Oct-2000     65,000     65,000
1600 South Main....................  25 year                               6.90%   Dec-2000      5,038         --
Convertible Promissory Note due
  2001 (C).........................  Interest only                  8.11%max (D)   Jan-2001     12,926     12,926
Biltmore Lakes.....................  25 year                               6.90%   Apr-2001     11,468         --
Belmont Shores.....................  25 year                               6.90%   Apr-2001      9,839         --
700 North Brand....................  25 year                               6.90%   May-2001     18,108         --
2677 North Main....................  25 year                               6.90%   May-2001     10,774         --
2700 Ygnacio Valley Road...........  25 year                               6.90%   Aug-2001      5,035         --
Westlake Spectrum..................  25 year                               6.90%   Aug-2001      3,993         --
Park Plaza.........................  25 year                               6.90%   Oct-2001      4,940         --
Warner Park Center.................  25 year                               6.90%   Dec-2001      5,213         --
West Wilshire Office and Medical...  25 year                               6.90%   Jan-2002     17,301         --
Searise Office Tower...............  25 year                               6.90%   Jan-2002     11,864         --
Golden Bear Center.................  25 year                               6.90%   Mar-2002     15,753         --
Exposition Centre..................  25 year                               6.90%   May-2002      5,200         --
Bixby Ranch........................  25 year                               6.90%   May-2002     20,243         --
Wilshire Palisades.................  22 year                               6.70%   Jul-2002     29,902         --
120 Montgomery Street..............  24 year                    LIBOR plus 1.40%   Nov-2002     46,930         --
1300 South El Camino...............  23 year                               6.90%   Dec-2002      4,007         --
125 Summer Street..................  Interest only (E)                     7.20%   Jan-2003     50,000     50,000
429 Santa Monica...................  25 year                               6.90%   Mar-2003     10,176         --
Crossroads.........................  25 year                               6.90%   Mar-2003      7,339         --
Westlake Spectrum II...............  25 year                               6.90%   Mar-2003      5,284         --
Tower 56...........................  30 year                               7.67%   May-2003     17,548     17,742
Two ADP Plaza......................  Interest only                         6.90%   Dec-2003     13,400         --
Two Corporate Centre...............  Interest only                         6.90%   Dec-2003     18,600         --
Norris Tech Center.................  25 year                    LIBOR plus 1.65%   Dec-2003     16,392         --
Peninsula Office Park 4............  25 year                               6.90%   Feb-2004      5,436         --
Peninsula Office Park 1,3,5,6,8 &
  9................................  25 year                               6.90%   Feb-2004     54,806         --
110 Atrium Place...................  30 year                               6.90%   Mar-2004     21,838         --
10 Almaden.........................  25 year                               6.90%   Apr-2004     33,885         --
Embarcadero Place..................  20 year                               6.90%   Apr-2004     26,061         --
527 Madison Avenue and One Lincoln
  Centre (B).......................  Interest only                         7.47%   Oct-2004     65,000     65,000
Sixty State Street.................  30 year                               6.84%   Jan-2005     87,627     89,630
201 California Street..............  30 year                               6.70%   Mar-2005     33,071         --
Island Corporate Center............  30 year                               6.90%   Apr-2005     13,294         --
Washington Mutual Tower............  Interest only                         7.53%   Nov-2005     79,100     79,100
Norwest Center.....................  Interest only                         8.74%   Dec-2005    110,000    110,000
Agoura Hills.......................  25 year                               6.90%   Dec-2005     12,328         --
Janss Court........................  30 year                               6.90%   Dec-2005     18,723         --
Bayhill 4,5,6 & 7..................  25 year                               6.90%   Dec-2006     59,071         --
66 Bovet...........................  22 year                               6.90%   Apr-2007      3,939         --
Market Square (F) and 200 Galleria
  (B)..............................  Interest only                         7.54%   Oct-2007    120,000    120,000
</TABLE>
 
                                      F-17
<PAGE>
<TABLE>
<CAPTION>
                                                                                  MATURITY
PROPERTY                                AMORTIZATION        INTEREST RATE (A)       DATE     12/31/98   12/31/97
-----------------------------------  -------------------  ----------------------  ---------  ---------  ---------
<S>                                  <C>                  <C>                     <C>        <C>        <C>
One Norwest Center (G).............  30 year                               6.90%   Oct-2008     98,252     96,780
Corporate 500 Centre (H)...........  25 year                               6.66%   Nov-2008     89,765         --
Other loans........................  Various                             Various    Various        597         --
                                                          ----------------------  ---------  ---------  ---------
Total Debt.........................                                         7.20(I)  6.7 yrs.(I) $1,532,474 $ 706,178
                                                          ----------------------  ---------  ---------  ---------
                                                          ----------------------  ---------  ---------  ---------
</TABLE>
 
------------------------------
(A) The interest rate is the stated interest rate (for Cornerstone originated
    debt) or the prevailing market rate at the time of acquisition (for debt
    assumed as part of an acquisition).
 
(B) The three notes arising from the acquisition of several properties from PGGM
    (a major stockholder and related party) are cross-collateralized, having the
    effect of forming a "collateral pool" for the underlying notes.
 
(C) The lender, Hines Colorado Limited, 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.
 
(D) Lesser of 30-day LIBOR plus 0.5% or 8.11%.
 
(E) Interest only payments through January 1, 2001, with a 25-year amortization
    schedule thereafter.
 
(F) The collateral for this loan is a pledge of the $181.0 million first
    mortgage loan on Market Square that the Company purchased from PGGM.
 
(G) On September 25, 1998, the Company completed the refinancing of the $96.1
    million mortgage on One Norwest Center with Connecticut General Life
    Insurance Company and Massachusetts Mutual Life Insurance Company. As a
    result of the refinancing, the principal balance was increased to $98.5
    million, the term of the loan was extended from three years to ten years and
    the interest rate was reduced from 7.50% to 6.90%.
 
(H) On October 9, 1998, the Company completed the refinancing of the $80.0
    million mortgage on Corporate 500 Centre with Teachers Insurance and Annuity
    Association. As a result of the refinancing, the principal balance was
    increased to $90.0 million, the term of the loan was extended from 4.5 years
    to ten years and the interest rate was increased by three basis points to
    6.66%.
 
(I) Weighted-average interest rate and maturity of the Company's long-term debt.
 
    The combined aggregate amount of maturities for all long-term borrowings for
1999 through 2003 are $75,814,000, $151,632,000, $82,296,000, $151,200,000 and
$138,739,000, 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.
 
6. REVOLVING CREDIT FACILITY
 
    The Company has a $550.0 million Revolving Credit Facility with a syndicate
of 17 banks led by Bankers Trust Company, The Chase Manhattan Bank and
NationsBank for acquisitions and general working capital purposes as well as the
issuance of letters of credit (the "Revolving Credit Facility"). The interest
rate on the facility depends on the Company's ratio of total debt to asset value
(as defined) at the time of borrowing and will be at a spread of 1.10% to 1.40%
over the applicable LIBOR rate or the Prime Rate at the borrower's option. The
letters of credit will be priced at the applicable Eurodollar credit spread. The
Revolving Credit Facility expires on November 3, 2001. As of December 31, 1998,
$465.0 million of the facility was outstanding at a rate of approximately 6.9%.
In addition, at December 31, 1998 there was a $5.0 million letter of credit
outstanding at a rate of 1.40%. The Revolving Credit Facility contains certain
restrictive covenants including: (i) a limitation on the Company's dividend to
90.0% of funds from operations and 110.0% of cash available for distribution,
both as defined in the agreement; (ii) the percentage of total liabilities to
total property asset value (as defined) cannot exceed 55.0%; (iii) the ratio of
adjusted EBITDA to interest expense may not be less than 2.00 to 1.00 through
July 1, 1999 and 2.25 to 1.00 thereafter; (iv) the fixed charge coverage ratio
may not be less than 1.75 to 1.00; and (v) the ratio of total property asset
value (as defined) to secured indebtedness may not be less than 2.50 to 1.00.
Through an amendment and restatement, this Revolving Credit Facility replaces
the Company's $350.0 million facility entered into during 1997.
 
                                      F-18
<PAGE>
7. STOCKHOLDERS' EQUITY
 
    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 21, 1997, Cornerstone completed its initial public offering in the
United States of 16,100,000 shares of Common Stock at a price of $14.00 per
share. The shares were listed on the New York Stock Exchange through
underwriters led by Merrill Lynch & Co.
 
    On February 6, 1998, Cornerstone completed a secondary public offering of
14,375,000 shares of Common Stock at a price of $18.25 per share. The shares
were placed in the U.S. through a syndicate of seven investment banks led by
Merrill Lynch & Co. Net proceeds to the Company were approximately $247.9
million (approximately $262.3 million gross proceeds less an underwriting
discount of approximately $13.7 million and expenses of approximately $0.7
million). The net proceeds were used to repay outstanding borrowings under the
Revolving Credit Facility and for working capital purposes.
 
    The following tables summarize the stock options and restricted stock grants
for certain officers of the Company as of December 31, 1998:
 
STOCK OPTIONS
 
<TABLE>
<CAPTION>
                                                     EXERCISE
                                  OPTIONS GRANTED      PRICE                                 OPTIONS      OPTIONS
         DATE OF GRANT            (NO. OF SHARES)   (PER SHARE)         VESTING (A)        EXERCISABLE   EXERCISED
--------------------------------  ---------------  -------------  -----------------------  -----------  -----------
<S>                               <C>              <C>            <C>                      <C>          <C>
August, 1995....................        637,500      $   14.30        33.3%/yr, 10yr term     637,500            0
October, 1995...................        150,000      $   14.30        33.3%/yr, 10yr term     150,000       10,500
March, 1997.....................        880,000      $   14.50        33.3%/yr, 10yr term     293,333            0
November, 1997..................         70,000      $   18.44        33.3%/yr, 10yr term      23,333            0
February, 1998..................         70,000      $   18.13        33.3%/yr, 10yr term           0            0
February, 1998..................        595,000      $   18.25        33.3%/yr, 10yr term           0            0
March, 1998.....................        200,000      $   18.25        33.3%/yr, 10yr term           0            0
December, 1998..................      3,000,000      $   17.25        33.3%/yr, 10yr term           0            0
</TABLE>
 
    The weighted average fair value of options granted during 1998 and 1997 was
$0.28 per share and $2.00 per share, respectively. There were no options granted
during 1996. The weighted average life of options outstanding at December 31,
1998 was approximately 9.1 years.
 
RESTRICTED STOCK GRANTS
 
<TABLE>
<CAPTION>
                    SHARES GRANTED
                       (NO. OF      VALUE AT GRANT DATE
DATE OF GRANT          SHARES)          (PER SHARE)                             VESTING (B)
------------------  --------------  -------------------  ---------------------------------------------------------
<S>                 <C>             <C>                  <C>
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.
March, 1998.......        12,500         $   18.13       The grant will fully vest with respect to 13.333% on
                                                             March 15, 1999, 2000, 2001, 2002 and with respect to
                                                             46.668% on March 15, 2003.
March, 1998.......        19,178         $   18.25       The grant will fully vest with respect to 13.333% on
                                                             March 15, 1999, 2000, 2001, 2002 and with respect to
                                                             46.668% on March 15, 2003.
</TABLE>
 
------------------------
    (A) The vesting schedule for the options was amended from 20%/yr, 10yr term
       to 33.3%/yr, 10yr term on February 4, 1998.
 
    (B) Deferred compensation of approximately $4,842,000 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' equity. Regular distributions are paid on restricted stock.
 
                                      F-19
<PAGE>
    The Company has adopted the disclosure-only provision of Statement of
Financial Accounting Standard 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 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>
                                                                                                   BASIC AND DILUTED
                                                                                                    NET INCOME PER
                                                                                     NET INCOME      COMMON SHARE
                                                                                     -----------  -------------------
<S>                                                                                  <C>          <C>
Year ended December 31, 1998.......................................................   $  81,561        $    0.78
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>
ASSUMPTIONS                                                                1998       1997       1996
-----------------------------------------------------------------------  ---------  ---------  ---------
<S>                                                                      <C>        <C>        <C>
Risk-free interest rate................................................       5.31%      6.56%      6.31%
Assumed dividend yield.................................................       7.50%      7.50%      7.50%
Expected term..........................................................    6 years    6 years    6 years
Assumed volatility.....................................................      10.00%     10.00%     10.00%
</TABLE>
 
8. STOCKHOLDERS' AND UNITHOLDERS' DISTRIBUTIONS
 
    A cash dividend and unitholder distribution of $0.30 per share/unit was
declared for the first quarter of 1998 and paid on February 27, 1998, to
stockholders and unitholders of record as of January 30, 1998. A cash dividend
and unitholder distribution of $0.30 per share/unit was declared for the second
quarter of 1998 and paid on May 29, 1998, to stockholders and unitholders of
record as of April 30, 1998. A cash dividend and unitholder distribution of
$0.30 per share/unit was declared for the third quarter of 1998 and paid on
August 31, 1998, to stockholders and unitholders of record as of July 31, 1998.
A cash dividend and unitholder distribution of $0.30 per share/unit was declared
for the fourth quarter of 1998 and paid on November 30, 1998, to stockholders
and unitholders of record as of October 30, 1998.
 
    On December 7, 1998, in connection with the Wilson Acquisition, the Company
declared a distribution of $0.15 per share/unit to all stockholders and
unitholders of record as of December 15, 1998 and a distribution of $0.15 per
share/unit to all stockholders and unitholders of record as of January 29, 1999.
Both dividends were paid on February 26, 1999.
 
9. EXTRAORDINARY LOSS
 
    Extraordinary loss represents the write off of the unamortized deferred
financing costs and prepayment fees paid in connection with the refinancing of
the One Norwest Center mortgage in the amount of approximately $2,269,000; the
write off of the unamortized balance of Corporate 500 Centre mortgage deferred
financing costs at the time of the refinancing of that Property's mortgage in
the amount of approximately $354,000; and the write off of the unamortized
balance of deferred financing costs related to the $350.0 million Revolving
Credit Facility at the time that the new $550.0 million Revolving Credit
Facility was entered into in the amount of approximately $1,680,000. See Notes 5
and 17 for more information about the two mortgage refinancings.
 
                                      F-20
<PAGE>
10. NET INCOME PER COMMON SHARE
 
    The table below sets forth the calculation of income per common share for
1998, 1997 and 1996 (Dollar amounts in thousands, except per share amounts):
 
<TABLE>
<CAPTION>
                                                                1998                    1997                   1996
                                                       ----------------------  ----------------------  --------------------
                                                         BASIC      DILUTED      BASIC      DILUTED      BASIC     DILUTED
                                                       ----------  ----------  ----------  ----------  ---------  ---------
<S>                                                    <C>         <C>         <C>         <C>         <C>        <C>
Proceeds upon exercise of options....................      --      $   23,871      --      $   25,162     --      $  12,334
Market price of shares average for the respective
  year...............................................      --      $    16.80      --      $    17.13     --      $   14.36
Treasury shares that could be repurchased
  (options)..........................................      --           1,421      --           1,469     --            859
Option shares outstanding............................      --           1,657      --           1,727     --            863
Weighted common stock equivalent shares (excess
  shares under option over treasury shares that could
  be repurchased)....................................      --             236      --             236     --              4
Weighted average common shares outstanding...........     100,319     100,319      43,572      43,572     20,411     20,411
                                                       ----------  ----------  ----------  ----------  ---------  ---------
Adjusted weighted average common shares
  outstanding........................................     100,319     100,555      43,572      43,808     20,411     20,415
Net income for the period............................  $   83,465  $   83,465  $   37,547  $   37,547  $   9,096  $   9,096
Income applicable to preferred stock.................  $   (3,500) $   (3,500) $  (10,160) $  (10,160) $  (5,153) $  (5,153)
                                                       ----------  ----------  ----------  ----------  ---------  ---------
Net income applicable to common stock................  $   79,965  $   79,965  $   27,387  $   27,387  $   3,943  $   3,943
Net income per common share..........................  $     0.80  $     0.80  $     0.63  $     0.63  $    0.19  $    0.19
</TABLE>
 
    The stock options issued in November 1997, February 1998, March 1998 and
December 1998 were not included in the calculation of diluted earnings per share
as such options were anti-dilutive during the period. The 7% Cumulative
Preferred Stock issued in August 1995 and the Convertible Promissory Note due
2001 entered into January 1996 were not included in the calculation of diluted
earnings per share as such instruments were anti-dilutive during the period. In
addition, the Company will be obligated to redeem each UPREIT Unit held by such
unitholder for one share of Common Stock or, at the option of the Company, cash
equal to the fair market value of one share of Common Stock at the time of
redemption.
 
11. RETIREMENT PLANS
 
    Effective July 1, 1995, the eligible employees of the Company participate in
a noncontributory age-weighted profit sharing plan. The Company's cash
contribution to such plan was approximately $100,000 and $91,400 for the years
ended December 31, 1998 and 1997, respectively.
 
    Effective July 1, 1995, the eligible employees of the Company also
participate in a 401(k) contributory savings plan. 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 5.0% of
such employee's salary with an annual maximum matching contribution of $4,000
per employee. The Company's matching contribution was approximately $69,600 and
$52,600 for the years ended December 31, 1998 and 1997, respectively.
 
    The Company has adopted the Cornerstone Properties Inc. 1998 Long-Term
Incentive Plan (the "Incentive Plan") to provide incentives to attract and
retain officers and key employees. Under the Incentive Plan as amended and
restated on December 14, 1998, the number of shares available for option grant
are approximately 7,400,000. As of December 31, 1998, options on approximately
3,000,000 shares of Common Stock at an exercise price of $17.25 per share have
been granted under the plan.
 
                                      F-21
<PAGE>
12. CONCENTRATION OF RISK
 
    Approximately 6.3 million of the Company's 20.9 million rentable square feet
is located in the San Francisco metropolitan market, accounting for
approximately 30% of the Company's total assets at December 31, 1998. In
addition, five of the Company's 96 office Properties are located in the Downtown
Boston market, accounting for approximately 31.9% of the Company's office and
parking revenues for the year ended December 31, 1998. This concentration of
assets makes the Company particularly vulnerable to adverse changes in economic
conditions in the San Francisco and Boston metropolitan areas. A significant
decline in these economic conditions could have a material adverse effect on the
Company.
 
    Norwest Corporation and its subsidiary, Norwest Bank Denver N.A., tenants of
the Company, provided approximately 9.5%, 20.0% and 26.0% of office and parking
rental income for the years ended December 31, 1998, 1997 and 1996,
respectively. Included in deferred tenant receivables is approximately $33.9
million and $31.3 million due from Norwest Corporation at December 31, 1998 and
1997, respectively.
 
13. RELATED PARTY TRANSACTIONS
 
    The Company has entered into $250.0 million of mortgage debt with one of its
major stockholders, PGGM, as further described in Note 5. Certain key employees
of the Company own an interest in third-party properties for which WCP Services,
Inc. provides property management, development and tenant construction services.
 
14. COMMITMENTS AND CONTINGENCIES
 
    In the ordinary course of business, the Company is subject to tenant and
property related claims and other litigation. 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 statements of the Company.
 
    The Company has entered into an agreement to purchase a 927,000 square-foot
Class A office building, currently under development, in downtown Minneapolis,
Minnesota. Approximately $36.9 million has been spent on the construction. The
project is scheduled to be completed in the year 2000 and is approximately 50.0%
pre-leased. The development is being financed through a construction loan by
U.S. Bank. Upon completion, the Company will retire the construction loan and
acquire the property from the developer for an amount to be determined by
applying a negotiated formula to in-place net operating income.
 
15. 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, 1998 and 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%.
 
                                      F-22
<PAGE>
LONG-TERM DEBT
 
    The Company determines the fair value based on discounting future cash flows
at a rate that approximates the Company's effective current borrowing rate (see
also Note 5) (Dollar amounts in thousands):
 
<TABLE>
<CAPTION>
                                                            12/31/98      12/31/98      12/31/97      12/31/97
                                                           FAIR VALUE  CARRYING VALUE  FAIR VALUE  CARRYING VALUE
                                                           ----------  --------------  ----------  --------------
<S>                                                        <C>         <C>             <C>         <C>
TransPotomac Plaza 5 and Charlotte Plaza.................  $   65,775   $     65,000   $   66,671   $     65,000
Wilshire Palisades.......................................      29,722         29,902           --             --
125 Summer Street........................................      50,529         50,000       50,842         50,000
Tower 56.................................................      18,046         17,548       18,507         17,742
527 Madison Avenue and One Lincoln Centre................      67,057         65,000       68,070         65,000
Sixty State Street.......................................      87,495         87,627       89,630         89,630
201 California Street....................................      32,751         33,171           --             --
Washington Mutual Tower..................................      81,834         79,100       82,423         79,100
Norwest Center...........................................     121,986        110,000      123,701        110,000
Market Square and 200 Galleria...........................     125,500        120,000      127,915        120,000
One Norwest Center.......................................      98,335         98,252       99,504         96,780
Corporate 500 Centre.....................................      88,468         89,765           --             --
</TABLE>
 
16. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
 
    The following consolidated pro forma financial information of the Company
shown below gives effect to (i) the Wilson Acquisition; (ii) the acquisition of
the PGGM Portfolio; (iii) the public offerings of Common Stock in April 1997 and
February 1998; (iv) the conversion of 8% Preferred Stock into Common Stock in
July 1997; (v) the Company's repayment of a $32.5 million term loan from
Deutsche Bank in March 1997; and (vi) the acquisition of 527 Madison, Tower 56,
Corporate 500 Centre, One Memorial Drive, 201 California Street and Wilshire
Palisades and sale of the Frick building in 1997 and 1998 as if they occurred on
January 1, 1998 and 1997, respectively. 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 dates indicated. Also, they may not be indicative of the
results that may be achieved in the future.
 
<TABLE>
<CAPTION>
DECEMBER 31,                                                        1998            1997
-------------------------------------------------------------  --------------  --------------
<S>                                                            <C>             <C>
Pro forma total revenues.....................................  $  580,905,000  $  544,753,000
Pro forma net income before extraordinary items..............      96,616,000      83,986,000
Pro forma net income.........................................      92,313,000      83,932,000
Pro forma basic and diluted net income per common share......  $         0.69  $         0.63
</TABLE>
 
                                      F-23
<PAGE>
17. SUPPLEMENTAL CASH FLOW INFORMATION
 
    Cash paid for interest was approximately $60,992,000, $30,204,000 and
$34,590,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
 
NON-CASH INVESTING AND FINANCING ACTIVITIES
 
    On October 27, 1997, the Company acquired the PGGM Portfolio for a purchase
price of approximately $1.06 billion, consisting of approximately 34.2 million
shares of Common Stock valued and recorded at $16.00 per share, approximately
$260.0 million in cash and $250.0 million in promissory notes. The Company also
recorded a minority interest of $33.2 million in connection with this
acquisition.
 
    On January 5, 1998, the Company purchased for approximately $5.5 million,
the participation rights in the cash flow and residual value of Tower 56 from
the former participants for 307,692 shares of Common Stock.
 
    On January 28, 1998, the Company purchased Corporate 500 Centre. As part of
the total purchase price of approximately $150.0 million, the Company issued
822,794 UPREIT Units valued at $18.50 per unit.
 
    On April 28, 1998, the Company purchased One Memorial Drive. As part of the
total purchase price of approximately $112.5 million, the Company issued
3,428,571 shares of common stock and 1,657,426 UPREIT Units, both valued at
$17.50.
 
    On June 3, 1998, the Company purchased 201 California Street and Wilshire
Palisades. As part of the total purchase price for the Properties of
approximately $121.5 million, the Company assumed $64.6 million in debt and
issued 1,665,663 UPREIT Units valued at $17.50 per unit.
 
    On September 25, 1998, in conjunction with the refinancing of the One
Norwest Center mortgage, the Company incurred an extraordinary loss of
approximately $2,269,000, which represents the unamortized deferred financing
costs and prepayment fees on the previous One Norwest Center mortgage at the
time of the refinancing.
 
    On October 9, 1998, in conjunction with the refinancing of the Corporate 500
Centre mortgage, the Company incurred an extraordinary loss of $354,717, which
represents the unamortized deferred financing costs on the previous Corporate
500 Centre mortgage at the time of the refinancing.
 
    On November 3, 1998, the Company obtained a $550.0 million Revolving Credit
Facility from a syndicate of 17 banks led by Bankers Trust Company, The Chase
Manhattan Bank and NationsBank. In conjunction with obtaining this new Revolving
Credit Facility, the Company incurred an extraordinary loss of $1,680,016, which
represents the unamortized deferred financing costs related to the previous
$350.0 million facility, which was extinguished at the time that the new
Revolving Credit Facility was obtained.
 
    On December 16, 1998, the Company consummated the Wilson Acquisition for a
purchase price of approximately $1.8 billion, consisting of approximately 14.9
million shares of Common Stock valued at $17.25 per share (recorded at $16.25
per share for GAAP purposes), approximately 16.2 million UPREIT Units valued at
$17.25 per unit (recorded at $16.25 for GAAP purposes), approximately $465.0
million in cash and the assumption of approximately $760.0 million of property
and construction related debt (recorded at $773.7 million for GAAP purposes).
The Company also recorded a minority interest of $241.0 million in connection
with this acquisition.
 
                                      F-24
<PAGE>
18. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 
    (Dollar amounts in thousands except per share amounts):
 
<TABLE>
<CAPTION>
                                                                                   QUARTER ENDED
                                                                 --------------------------------------------------
                                                                 DECEMBER 31   SEPTEMBER 30   JUNE 30    MARCH 31
                                                                 ------------  ------------  ---------  -----------
<S>                                                              <C>           <C>           <C>        <C>
1998
Revenues.......................................................   $  102,402    $   89,038   $  86,490   $  81,556
Income before extraordinary item...............................       24,535        21,227      19,252      22,754
Extraordinary loss.............................................       (2,034)       (2,269)         --          --
Net income.....................................................       22,501        18,958      19,252      22,754
Per share data:
  Income before extraordinary item.............................         0.22          0.20        0.18        0.24
  Basic and diluted net income per common share................         0.20          0.18        0.18        0.24
 
1997
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 and diluted net income per common share................         0.26          0.18        0.12        0.07
</TABLE>
 
19. SEGMENT REPORTING
 
    The Company has adopted Statement of Financial Accounting Standard No. 131
("SFAS 131"), which establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to stockholders.
 
    The Company has one reportable segment--real estate. The Company provides
leasing, management, acquisition, development, construction and tenant-related
services for its portfolio. The Company does not have any foreign operations.
The accounting policies of the segment are the same as those described in Note
1. See Note 12 for information regarding concentration of risk.
 
                                      F-25
<PAGE>
    The Company evaluates performance based on net operating income from the
individual properties in the segment (Dollar amounts in thousands).
 
<TABLE>
<CAPTION>
                                                                    CORPORATE &     COMPANY
                                                     TOTAL SEGMENT    OTHER(A)       TOTAL
                                                     -------------  ------------  ------------
<S>                                                  <C>            <C>           <C>
Total revenues (B):
1998...............................................   $   354,145    $    5,341   $    359,486
1997...............................................       160,490        13,421        173,911
1996...............................................       112,109         4,799        116,908
Total operating and interest expense (C):
1998...............................................   $   122,423    $   80,472   $    202,895
1997...............................................        61,522        41,541        103,063
1996...............................................        44,188        38,141         82,329
Net operating income (D):
1998...............................................   $   231,722    $  (75,131)  $    156,591
1997...............................................        98,968       (28,120)        70,848
1996...............................................        67,921       (33,342)        34,579
Total long-lived assets (E):
1998...............................................   $ 4,137,302    $   54,782   $  4,192,084
1997...............................................     1,996,404         9,147      2,005,551
1996...............................................       635,723         3,819        639,542
Total assets:
1998...............................................   $ 4,198,099    $   83,885   $  4,281,984
1997...............................................     1,757,372       294,109      2,051,481
1996...............................................       623,934       142,245        766,179
</TABLE>
 
------------------------------
(A) Corporate and Other represents all corporate-level items (including interest
    income, interest expense and general and administrative expenses) as well as
    intercompany eliminations necessary to reconcile to consolidated Company
    totals.
 
(B) Total revenues represents all revenues during the period (including the
    Company's earnings in real estate joint ventures). All interest income is
    excluded from the segment amounts and is classified in Corporate and Other
    for all periods.
 
(C) Total operating and interest expense represents the sum of building
    operating expenses, real estate taxes, interest expense and general and
    administrative expenses. All interest expense (including property level
    mortgages) is excluded from the segment amounts and is classified in
    Corporate and Other for all periods. Amounts presented exclude depreciation
    and amortization of $59,278,000, $30,978,000 and $24,317,000 in 1998, 1997
    and 1996, respectively.
 
(D) Net operating income represents total revenues (as defined in note (B)
    above) less total operating and interest expense (as defined in note (C)
    above) for the period.
 
(E) Long-lived assets is composed of total investments, other deferred costs,
    deferred tenant receivables and certain other assets.
 
20. SUBSEQUENT EVENTS
 
    On January 4, 1999, in connection with the Wilson Acquisition, the Company
prepaid the notes on Two ADP Plaza and Two Corporate Centre. The balances of the
two loans at the time of prepayment were $13.4 million and $18.6 million,
respectively.
 
    During January 1999, the Company entered into four interest rate swap
agreements with major financial institutions. The swaps effectively fix the
LIBOR rate on $250.0 million of the amount outstanding on the Company's credit
facility at approximately 5.1%. The swap agreements expire on November 3, 2001
coterminous with the Revolving Credit Facility.
 
    A cash dividend and unitholder distribution of $0.15 per share/unit was
declared for the first half of the fourth quarter of 1998 and paid on February
26, 1999, to common stockholders and unitholders of record as of December 15,
1998. A cash dividend and unitholder distribution of $0.15 per share/unit was
declared for the second half of the fourth quarter of 1998 and paid on February
26, 1999, to common stockholders and unitholders of record as of January 29,
1999.
 
                                      F-26
<PAGE>
                          CORNERSTONE PROPERTIES INC.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
 
                                  SCHEDULE III
 
                               DECEMBER 31, 1998
<TABLE>
<CAPTION>
               COLUMN A                   COLUMN B             COLUMN C            COLUMN D                  COLUMN E
--------------------------------------  -------------  ------------------------  -------------  -----------------------------------
<S>                                     <C>            <C>        <C>            <C>            <C>        <C>            <C>
                                                                                     COST
                                                                                  CAPITALIZED
                                                                                 SUBSEQUENT TO     GROSS AMOUNT AT WHICH CARRIED
                                                       INITIAL COST TO COMPANY    ACQUISITION           AT CLOSE OF PERIOD
                                                       ------------------------  -------------  -----------------------------------
    (DOLLAR AMOUNTS IN THOUSANDS)                                  BUILDING &       LAND &                  BUILDING &
DESCRIPTION                             ENCUMBRANCES     LAND     IMPROVEMENTS   IMPROVEMENTS     LAND     IMPROVEMENTS     TOTAL
--------------------------------------  -------------  ---------  -------------  -------------  ---------  -------------  ---------
Boston, Massachusetts
  Sixty State Street..................   $    87,627   $      --   $   221,568     $   5,842    $      --   $   227,410   $ 227,410
  500 Boylston Street.................                    45,132       181,574            62       45,132       181,636     226,768
  222 Berkeley Street.................                    29,262       118,180           438       29,262       118,618     147,880
  125 Summer Street...................        50,000      15,750        89,250         6,037       15,750        95,287     111,037
  One Memorial Drive..................                    22,500        90,873           (96)      22,500        90,777     113,277
 
San Mateo County, California
  Bayhill (4 buildings)...............        59,071      26,353       105,412            --       26,353       105,412     131,765
  Peninsula Office Park (7
    buildings)........................        60,242      25,426       101,705             4       25,426       101,709     127,135
  Seaport Centre......................        58,000      23,530        94,119            82       23,530        94,201     117,731
  Seaport Plaza land..................                    10,720            --            --       10,720            --      10,720
  Bay Park Plaza (2 buildings)........                    13,139        52,556            --       13,139        52,556      65,695
  One Bay Plaza.......................                     9,125        36,499            29        9,125        36,528      45,653
  Belmont Shores......................         9,839       6,459        25,838            --        6,459        25,838      32,297
  1300 South El Camino................         4,007       4,351        17,406            --        4,351        17,406      21,757
  66 Bovet............................         3,939       1,626         6,505            --        1,626         6,505       8,131
 
East Bay, California
  Corporate Centre (2 buildings)......        18,600       9,808        39,233            --        9,808        39,233      49,041
  ADP Plaza (2 buildings).............        13,400      10,278        41,110            --       10,278        41,110      51,388
  PeopleSoft Plaza....................                    10,025        40,100            36       10,025        40,136      50,161
  Norris Tech Center (3 buildings)....        16,392       7,223        28,893            --        7,223        28,893      36,116
  Golden Bear Center..................        15,753       6,426        25,705            --        6,426        25,705      32,131
  2700 Ygnacio Valley Road............         5,035       2,375         9,498            23        2,375         9,521      11,896
  Park Plaza..........................         4,940       2,673        10,693            --        2,673        10,693      13,366
  1600 South Main.....................         5,038       2,501        10,003            --        2,501        10,003      12,504
  Foothill Corporate Center...........                     1,967         7,867            --        1,967         7,867       9,834
 
Atlanta, Georgia
  191 Peachtree Street................                    40,110       228,962         3,580       40,110       232,542     272,652
  200 Galleria........................       120,000(B)    11,994       48,443         2,193       12,727        49,903      62,630
 
<CAPTION>
               COLUMN A                   COLUMN F     COLUMN G     COLUMN H       COLUMN I
--------------------------------------  ------------  -----------  -----------  --------------
<S>                                     <C>           <C>          <C>          <C>
 
                                                                                LIFE ON WHICH
                                                                                 DEPRECIATION
                                                                                      IN
                                                      (UNAUDITED)  (UNAUDITED)  LATEST INCOME
    (DOLLAR AMOUNTS IN THOUSANDS)       ACCUMULATED      YEAR         DATE      STATEMENTS IS
DESCRIPTION                             DEPRECIATION  CONSTRUCTED   ACQUIRED     COMPUTED (A)
--------------------------------------  ------------  -----------  -----------  --------------
Boston, Massachusetts
  Sixty State Street..................   $   (5,653)        1979     12/31/97         40
  500 Boylston Street.................       (5,339)        1988     10/27/97         40
  222 Berkeley Street.................       (3,490)        1991     10/27/97         40
  125 Summer Street...................       (9,345)        1989      11/1/95         40
  One Memorial Drive..................       (1,570)        1985      4/28/98         40
San Mateo County, California
  Bayhill (4 buildings)...............         (110)   1982-1987     12/16/98         40
  Peninsula Office Park (7
    buildings)........................         (105)   1971-1998     12/16/98         40
  Seaport Centre......................          (98)        1988     12/16/98         40
  Seaport Plaza land..................           --          N/A     12/16/98        N/A
  Bay Park Plaza (2 buildings)........          (54)   1985-1998     12/16/98         40
  One Bay Plaza.......................          (38)        1979     12/16/98         40
  Belmont Shores......................          (26)        1983     12/16/98         40
  1300 South El Camino................          (18)        1986     12/16/98         40
  66 Bovet............................           (7)        1968     12/16/98         40
East Bay, California
  Corporate Centre (2 buildings)......          (41)   1985-1987     12/16/98         40
  ADP Plaza (2 buildings).............          (43)   1987-1989     12/16/98         40
  PeopleSoft Plaza....................          (42)        1984     12/16/98         40
  Norris Tech Center (3 buildings)....          (30)   1984-1998     12/16/98         40
  Golden Bear Center..................          (27)        1986     12/16/98         40
  2700 Ygnacio Valley Road............          (10)        1984     12/16/98         40
  Park Plaza..........................          (11)        1986     12/16/98         40
  1600 South Main.....................          (10)        1983     12/16/98         40
  Foothill Corporate Center...........           (8)        1982     12/16/98         40
Atlanta, Georgia
  191 Peachtree Street................       (7,176)        1991     10/27/97         40
  200 Galleria........................       (1,590)        1985     10/27/97         40
</TABLE>
 
                                      F-27
<PAGE>
                          CORNERSTONE PROPERTIES INC.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
 
                            SCHEDULE III (CONTINUED)
 
                               DECEMBER 31, 1998
<TABLE>
<CAPTION>
               COLUMN A                   COLUMN B             COLUMN C            COLUMN D                  COLUMN E
--------------------------------------  -------------  ------------------------  -------------  -----------------------------------
<S>                                     <C>            <C>        <C>            <C>            <C>        <C>            <C>
                                                                                     COST
                                                                                  CAPITALIZED
                                                                                 SUBSEQUENT TO     GROSS AMOUNT AT WHICH CARRIED
                                                       INITIAL COST TO COMPANY    ACQUISITION           AT CLOSE OF PERIOD
                                                       ------------------------  -------------  -----------------------------------
    (DOLLAR AMOUNTS IN THOUSANDS)                                  BUILDING &       LAND &                  BUILDING &
DESCRIPTION                             ENCUMBRANCES     LAND     IMPROVEMENTS   IMPROVEMENTS     LAND     IMPROVEMENTS     TOTAL
--------------------------------------  -------------  ---------  -------------  -------------  ---------  -------------  ---------
Seattle, Washington
  Washington Mutual Tower (3
    buildings)........................   $    79,100   $  21,167   $    43,153     $ 153,578    $  21,173   $   196,725   $ 217,898
  110 Atrium Place....................        21,838       7,810        31,242            --        7,810        31,242      39,052
  Island Corporate Center.............        13,294       3,751        15,004             3        3,751        15,007      18,758
 
Santa Clara, California
  Pruneyard Office (3 buildings)......        49,384      11,896        47,583           198       11,896        47,781      59,677
  10 Almaden..........................        33,885      14,306        57,223             1       14,306        57,224      71,530
  Pruneyard Shopping Center...........                     8,491        33,966            --        8,491        33,966      42,457
  Embarcadero Place (4 buildings).....        26,061      11,728        46,913            --       11,728        46,913      58,641
  Pruneyard Inn (C)...................                     3,057        12,228            --        3,057        12,228      15,285
  First American Plaza................                     3,415        13,658             7        3,415        13,665      17,080
  490 California......................                     1,562         6,248            --        1,562         6,248       7,810
 
Denver, Colorado
  One Norwest Center..................        98,252       2,900        15,486       147,564        3,211       162,739     165,950
 
San Francisco, California
  120 Montgomery Street...............        46,930      16,427        65,709           155       16,427        65,864      82,291
  201 California Street...............        33,071      11,350        46,040            --       11,350        46,040      57,390
  188 Embarcadero.....................         9,135       4,718        18,871            --        4,718        18,871      23,589
 
Minneapolis, Minnesota
  Norwest Center......................       110,000      18,000        33,613       154,733       18,000       188,346     206,346
 
Washington, D.C./Alexandria, Virginia
  Market Square (2 buildings).........              (B)    50,199      201,084           420       50,199       201,504     251,703
  99 Canal Center.....................                     4,551        18,380           291        4,551        18,671      23,222
  TransPotomac Plaza 5................        65,000(B)     2,124        8,577           292        2,124         8,869      10,993
  11 Canal Center.....................                     2,326         9,394           303        2,326         9,697      12,023
 
Suburban Chicago, Illinois
  Corporate 500 Centre (4
    buildings)........................        89,765      30,000       120,163           603       30,000       120,766     150,766
  One Lincoln Centre..................        65,000(B)     2,192       47,758         1,717        2,192        49,475      51,667
 
Santa Monica/West Los Angeles,
  California
  West Wilshire (2 buildings).........        17,301       7,492        29,970            --        7,492        29,970      37,462
  Wilshire Palisades..................        29,902      12,650        52,247           414       12,650        52,661      65,311
  Janss Court (D).....................        18,723       7,274        29,098            --        7,274        29,098      36,372
  Searise Office Tower................        11,864       6,043        24,172             7        6,043        24,179      30,222
  Commerce Park.......................                     2,653        10,613            --        2,653        10,613      13,266
  429 Santa Monica....................        10,176       3,899        15,595             6        3,899        15,601      19,500
 
<CAPTION>
               COLUMN A                   COLUMN F     COLUMN G     COLUMN H         COLUMN I
--------------------------------------  ------------  -----------  -----------  -------------------
<S>                                     <C>           <C>          <C>          <C>
 
                                                                                   LIFE ON WHICH
                                                                                  DEPRECIATION IN
                                                      (UNAUDITED)  (UNAUDITED)     LATEST INCOME
    (DOLLAR AMOUNTS IN THOUSANDS)       ACCUMULATED      YEAR         DATE         STATEMENTS IS
DESCRIPTION                             DEPRECIATION  CONSTRUCTED   ACQUIRED       COMPUTED (A)
--------------------------------------  ------------  -----------  -----------  -------------------
Seattle, Washington
  Washington Mutual Tower (3
    buildings)........................   $  (80,601)        1988       5/1/88               40
  110 Atrium Place....................          (33)        1981     12/16/98               40
  Island Corporate Center.............          (16)        1987     12/16/98               40
Santa Clara, California
  Pruneyard Office (3 buildings)......          (50)   1971-1999     12/16/98               40
  10 Almaden..........................          (60)        1989     12/16/98               40
  Pruneyard Shopping Center...........          (35)       1970s     12/16/98               40
  Embarcadero Place (4 buildings).....          (49)        1984     12/16/98               40
  Pruneyard Inn (C)...................          (13)        1989     12/16/98               40
  First American Plaza................          (14)        1971     12/16/98               40
  490 California......................           (7)        1985     12/16/98               40
Denver, Colorado
  One Norwest Center..................      (76,410)        1983       1/1/84               40
San Francisco, California
  120 Montgomery Street...............          (71)        1955     12/16/98               40
  201 California Street...............         (671)        1969       6/3/98               40
  188 Embarcadero.....................          (20)        1980     12/16/98               40
Minneapolis, Minnesota
  Norwest Center......................      (80,241)        1988       7/1/88               40
Washington, D.C./Alexandria, Virginia
  Market Square (2 buildings).........         (855)        1990      11/1/98               40
  99 Canal Center.....................         (560)        1986     10/27/97               40
  TransPotomac Plaza 5................         (280)        1983     10/27/97               40
  11 Canal Center.....................         (301)        1986     10/27/97               40
Suburban Chicago, Illinois
  Corporate 500 Centre (4
    buildings)........................       (2,826)   1986/1990      1/28/98               40
  One Lincoln Centre..................       (2,862)        1986      11/8/96               40
Santa Monica/West Los Angeles,
  California
  West Wilshire (2 buildings).........          (31)   1960-1976     12/16/98               40
  Wilshire Palisades..................         (773)        1981       6/3/98               40
  Janss Court (D).....................          (30)        1989     12/16/98               40
  Searise Office Tower................          (25)        1975     12/16/98               40
  Commerce Park.......................          (11)        1977     12/16/98               40
  429 Santa Monica....................          (16)        1982     12/16/98               40
</TABLE>
 
                                      F-28
<PAGE>
                          CORNERSTONE PROPERTIES INC.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
 
                            SCHEDULE III (CONTINUED)
 
                               DECEMBER 31, 1998
<TABLE>
<CAPTION>
               COLUMN A                   COLUMN B             COLUMN C            COLUMN D                  COLUMN E
--------------------------------------  -------------  ------------------------  -------------  -----------------------------------
<S>                                     <C>            <C>        <C>            <C>            <C>        <C>            <C>
                                                                                     COST
                                                                                  CAPITALIZED
                                                                                 SUBSEQUENT TO     GROSS AMOUNT AT WHICH CARRIED
                                                       INITIAL COST TO COMPANY    ACQUISITION           AT CLOSE OF PERIOD
                                                       ------------------------  -------------  -----------------------------------
    (DOLLAR AMOUNTS IN THOUSANDS)                                  BUILDING &       LAND &                  BUILDING &
DESCRIPTION                             ENCUMBRANCES     LAND     IMPROVEMENTS   IMPROVEMENTS     LAND     IMPROVEMENTS     TOTAL
--------------------------------------  -------------  ---------  -------------  -------------  ---------  -------------  ---------
Orange County, California
  Bixby Ranch.........................   $    20,243   $   9,681   $    38,723     $      10    $   9,681   $    38,733   $  48,414
  18301 Von Karman....................        10,647       8,052        32,206             7        8,052        32,213      40,265
  2677 South Main.....................        10,774       5,696        22,786            --        5,696        22,786      28,482
 
Charlotte, North Carolina
  Charlotte Plaza.....................              (B)    15,474       62,495         1,969       15,474        64,464      79,938
 
Arizona
  Gateway (2 buildings)...............         8,679       4,811        19,243            --        4,811        19,243      24,054
  Scottsdale Centre...................         7,745       4,992        19,969             1        4,992        19,970      24,962
  Biltmore Lakes......................        11,468       4,586        18,342            --        4,586        18,342      22,928
 
San Diego, California
  Centerside II.......................        13,818       7,524        30,094            --        7,524        30,094      37,618
  Crossroads..........................         7,339       3,207        12,828           105        3,207        12,933      16,140
 
Los Angeles, California
  700 North Brand.....................        18,108       8,112        32,450            --        8,112        32,450      40,562
  Tri-Center Plaza....................                     4,276        17,104            --        4,276        17,104      21,380
  Warner Park Center..................         5,213       1,746         6,986             8        1,746         6,994       8,740
 
New York City, New York
  527 Madison Avenue..................              (B)    21,440       46,643         1,612       21,440        48,255      69,695
  Tower 56............................        17,548       5,528        25,203         9,234        5,528        34,437      39,965
 
Conejo Valley (Ventura), California
  Westlake Spectrum (2 buildings).....         9,277       3,510        14,038            --        3,510        14,038      17,548
  Agoura Hills........................        12,328       3,821        15,284            --        3,821        15,284      19,105
 
Other
  U.S. West (Murray, Utah)............                     3,311        13,245            --        3,311        13,245      16,556
  Exposition Centre (Sacramento,
    CA)...............................         5,200       1,772         7,089            --        1,772         7,089       8,861
                                        -------------  ---------  -------------  -------------  ---------  -------------  ---------
Grand Total...........................   $ 1,518,951   $ 728,273   $ 3,120,708     $ 490,418    $ 729,323   $ 3,611,126   $4,340,449
                                        -------------  ---------  -------------  -------------  ---------  -------------  ---------
                                        -------------  ---------  -------------  -------------  ---------  -------------  ---------
 
<CAPTION>
               COLUMN A                   COLUMN F     COLUMN G     COLUMN H         COLUMN I
--------------------------------------  ------------  -----------  -----------  -------------------
<S>                                     <C>           <C>          <C>          <C>
 
                                                                                   LIFE ON WHICH
                                                                                  DEPRECIATION IN
                                                      (UNAUDITED)  (UNAUDITED)     LATEST INCOME
    (DOLLAR AMOUNTS IN THOUSANDS)       ACCUMULATED      YEAR         DATE         STATEMENTS IS
DESCRIPTION                             DEPRECIATION  CONSTRUCTED   ACQUIRED       COMPUTED (A)
--------------------------------------  ------------  -----------  -----------  -------------------
Orange County, California
  Bixby Ranch.........................   $      (40)        1987     12/16/98               40
  18301 Von Karman....................          (34)        1991     12/16/98               40
  2677 South Main.....................          (24)        1987     12/16/98               40
Charlotte, North Carolina
  Charlotte Plaza.....................       (1,787)        1982     10/27/97               40
Arizona
  Gateway (2 buildings)...............          (20)   1984-1985     12/16/98               40
  Scottsdale Centre...................          (21)        1985     12/16/98               40
  Biltmore Lakes......................          (19)        1982     12/16/98               40
San Diego, California
  Centerside II.......................          (32)        1987     12/16/98               40
  Crossroads..........................          (13)        1983     12/16/98               40
Los Angeles, California
  700 North Brand.....................          (34)        1981     12/16/98               40
  Tri-Center Plaza....................          (18)        1990     12/16/98               40
  Warner Park Center..................           (7)        1986     12/16/98               40
New York City, New York
  527 Madison Avenue..................       (2,310)        1986      2/14/97               40
  Tower 56............................       (2,335)        1983      4/24/96               40
Conejo Valley (Ventura), California
  Westlake Spectrum (2 buildings).....          (15)        1990     12/16/98               40
  Agoura Hills........................          (16)        1987     12/16/98               40
Other
  U.S. West (Murray, Utah)............          (14)        1985     12/16/98               40
  Exposition Centre (Sacramento,
    CA)...............................           (7)        1984     12/16/98               40
                                        ------------
Grand Total...........................   $ (288,448)
                                        ------------
                                        ------------
</TABLE>
 
----------------------------------
 
(A) The life to compute depreciation on Buildings is 40 years. The life to
    compute depreciation on Building Improvements is 3 to 40 years.
 
(B) The three notes arising from the acquisition of several properties from PGGM
    (a major stockholder and related party) are cross-collateralized, having the
    effect of forming a "collateral pool" for the underlying notes. In addition,
    the $181.0 million first mortgage loan on Market Square, which the Company
    purchased from PGGM in 1997, has been pledged as collateral for the $120.0
    million 200 Galleria loan.
 
(C) The Pruneyard Inn is a 118-room hotel. The Property is currently undergoing
    a 25,000-square foot expansion, which will create 54 new rooms.
 
(D) In addition to 92,000 square feet of retail and office space, Janss Court
    contains 32 apartments comprising 33,000 rentable square feet of residential
    space.
 
                                      F-29
<PAGE>
                          CORNERSTONE PROPERTIES INC.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                  SCHEDULE III
                               DECEMBER 31, 1998
                                  (CONTINUED)
 
Reconciliation of "Real Estate and Accumulated Depreciation"
 
<TABLE>
<CAPTION>
                                                                    1998              1997             1996
                                                              ----------------  ----------------  --------------
<S>                                                           <C>               <C>               <C>
INVESTMENT IN REAL ESTATE
Balance, beginning of period................................  $      1,947,272  $        799,662  $      676,258
  Additions during period:
    Acquisitions............................................         2,410,427         1,135,629          80,681
    Improvements............................................            30,690            12,468          44,032
  Deductions during period:
    Properties disposed of..................................           (47,940)               --              --
    Retirements and writeoffs...............................                --              (487)         (1,309)
                                                              ----------------  ----------------  --------------
Balance, end of period......................................  $      4,340,449  $      1,947,272  $      799,662
                                                              ----------------  ----------------  --------------
                                                              ----------------  ----------------  --------------
 
ACCUMULATED DEPRECIATION
Balance, beginning of period................................  $        229,652  $        198,686  $      175,167
  Additions during period:
    Depreciation............................................            59,278            30,978          24,317
  Deductions during period:
    Properties disposed of..................................              (478)               --              --
    Retirements and writeoffs...............................                (4)              (12)           (798)
                                                              ----------------  ----------------  --------------
Balance, end of period......................................  $        288,448  $        229,652  $      198,686
                                                              ----------------  ----------------  --------------
                                                              ----------------  ----------------  --------------
</TABLE>
 
                                      F-30