<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                              Financial Statements

                 For the years ended December 31, 1998 and 1997

                          Independent Auditors' Report
<PAGE>
 
Independent Auditors' Report

To the Partners of
     GCGA Limited Partnership

We have audited the accompanying balance sheets of GCGA Limited Partnership (the
"Partnership") as of December 31, 1998 and 1997 and the related statements of
operations, partners' capital deficiency, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements present fairly, in all material
respects, the financial position of GCGA Limited Partnership as of December 31,
1998 and 1997 and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.


                                                   Deloitte & Touche, LLP
                                                   /s/ Deloitte & Touche, LLP

New York, New York
March 18, 1999
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                                 Balance Sheets

                           December 31, 1998 and 1997

                                                     1998              1997
--------------------------------------------------------------------------------
                                  Assets

Real estate, at cost:
   Land                                        $  4,892,336        $  4,892,336
   Building and improvements                     73,624,779          70,951,977
--------------------------------------------------------------------------------
                                                 78,517,115          75,844,313
   Accumulated depreciation                     (17,818,235)        (15,923,007)
--------------------------------------------------------------------------------
                                                 60,698,880          59,921,306

Cash                                                385,172           2,117,296
Escrow deposits                                     808,617             772,378
Accounts receivable                               4,761,502           4,975,179
Deferred expenses, net                              325,806             258,342
Other assets                                        113,784             210,190
--------------------------------------------------------------------------------
                                               $ 67,093,761        $ 68,254,691
===============================================================================

                  Liabilities and Partners' Capital Deficiency

Liabilities:
   First mortgage loan                           $  37,750,000    $  37,750,000
   Second mortgage loan and accrued interest        79,023,308       72,148,266
   Note payable                                      2,446,428        2,514,255
   Accounts payable and other liabilities              744,386          521,762
--------------------------------------------------------------------------------
                                                   119,964,122      112,934,283

Partners' capital deficiency                       (52,870,361)     (44,679,592)
--------------------------------------------------------------------------------

                                                 $  67,093,761    $  68,254,691
===============================================================================

                 See accompanying notes to financial statements.


                                       2
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                            Statements of Operations

                     Years ended December 31, 1998 and 1997

                                                     1998             1997
--------------------------------------------------------------------------------
Revenue:
   Rental                                      $ 11,513,818        $ 11,498,722
   Interest and other                                79,390             238,937
--------------------------------------------------------------------------------
                                                 11,593,208          11,737,659
--------------------------------------------------------------------------------

Expenses:
   Interest                                      11,876,782          11,805,253
   Property operating                             4,996,224           4,393,023 
   Depreciation                                   1,895,228           1,774,048
   Amortization                                      65,398             166,095
   General and administrative                       950,345             682,653

--------------------------------------------------------------------------------
                                                 19,783,977          18,821,072
--------------------------------------------------------------------------------

Net loss                                       $ (8,190,769)       $ (7,083,413)
================================================================================


                 See accompanying notes to financial statements.


                                       3
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

              Statements of Changes in Partners' Capital Deficiency

                     Years ended December 31, 1998 and 1997

                                                                         Total
--------------------------------------------------------------------------------
Partners' capital deficiency at
  January 1, 1997                                                  $(37,719,179)

Contributions                                                           200,000

Distributions                                                           (77,000)

Net loss                                                             (7,083,413)
--------------------------------------------------------------------------------

Partners' capital deficiency
   at December 31, 1997                                             (44,679,592)

Net loss                                                             (8,190,769)
--------------------------------------------------------------------------------

Partners' capital deficiency at December 31, 1998                  $(52,870,361)
================================================================================

                 See accompanying notes to financial statements.


                                       4
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                            Statements of Cash Flows

                     Years ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                    1998            1997
-------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>         
Cash flows from operating activities:                                           $(8,190,769)   $(7,083,413)
  Net loss
  Adjustments to reconcile net loss to net cash (used in) provided by
   operating activities:
     Interest accrual on second mortgage loan in excess                           
       of payments                                                                4,154,099      6,856,266  
     Depreciation and amortization                                                1,960,626      1,940,143  
     (Increase) decrease in operating assets:                                      
        Escrow deposits                                                             (36,239)      (188,802)
        Accounts receivable                                                         213,677        (36,403)
        Deferred expenses                                                          (132,862)       (29,417)
        Other assets                                                                 96,406        (98,627)
     Increase (decrease) in accounts payable and
       other liabilities                                                            222,624        (92,377)
-------------------------------------------------------------------------------------------------------------
         Net cash (used in) provided by operating activities                     (1,712,438)     1,267,370
-------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Additions to building and improvements                                         (2,672,802)            --
-------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Borrowings under second mortgage loan                                           2,720,943             --
  Repayment of note payable                                                         (67,827)       (80,571)
  Partner contributions                                                                  --        200,000
  Partner distributions                                                                  --        (77,000)
-------------------------------------------------------------------------------------------------------------

         Net cash  provided by financing
           activities                                                             2,653,116         42,429
-------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash                                                      (1,732,124)     1,309,799

Cash at beginning of year                                                         2,117,296        807,497
-------------------------------------------------------------------------------------------------------------
Cash at end of year                                                             $   385,172    $ 2,117,296
=============================================================================================================

Supplemental disclosure of cash paid during the year
  for interest                                                                  $ 7,752,794    $ 4,948,987
=============================================================================================================
</TABLE>

                 See accompanying notes to financial statements.

                                       5
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

                           December 31, 1998 and 1997

1. Organization

GCGA Limited Partnership (the "Partnership") is a limited partnership organized
under the laws of the Commonwealth of Massachusetts. The Partnership is the sole
beneficiary of the Government Center Garage Realty Trust (the "Trust") which
owns One Congress Street (the "Property"), an 11-story structure containing
approximately 283,000 square feet of office and retail space and a 2,200-space
parking garage, located in Boston, Massachusetts.

Prior to October 27, 1997, the partners of the Partnership were Government
Center Garage Associates Limited Partnership ("GCA"), which owned a 1% general
partnership interest and a 98% limited partnership interest, and an individual
affiliated with the developer of the property who owned a 1% limited partnership
interest (the "Affiliate").

In October 1996, the Partnership defaulted on its second mortgage loan by
failing to timely pay its debt service. Thereafter, the second mortgage lenders
(Dean Witter Yield Plus, L.P. ("Yield Plus") and Dean Witter Yield Plus II, L.P.
("Yield Plus II"), collectively, (the "Lender")) accelerated the loan and
attempted to take possession of the property. On October 15, 1996, the
Partnership and the Trust filed a voluntary petition for relief under Chapter 11
of Title 11 of the United States Code in the United States Bankruptcy Court for
the District of Maryland (the "Bankruptcy Court"). While in bankruptcy, the
Partnership operated as a debtor-in-possession, whereby the Partnership could
not engage in transactions outside of the ordinary course of business without
approval of the Bankruptcy Court, after notice and hearing.

On October 27, 1997, the Partnership entered into a settlement agreement with
the Lender (the "Agreement"). As part of the Agreement, two new corporations
each of which are jointly owned by Yield Plus (58%) and Yield Plus II (42%),
became the sole general partners (the "New General Partners") of the Partnership
(with an aggregate 19% ownership interest) and GCA (with an aggregate 1%
ownership interest). Yield Plus and Yield Plus II have agreed to make all
decisions concerning the Partnership and its property jointly, and retained an
affiliate of the Partnership's


                                       6
<PAGE>
 
                             CGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

1. Organization (continued)

original general partner as property manager. As part of the Agreement, the
second mortgage loan was also restructured (see Note 4).

Pursuant to the Agreement, GCA's limited partnership interest in the Partnership
was reduced to 81% and the Affiliate's 1% interest in the Partnership was
eliminated.

2. Summary of Significant Accounting Policies

The Partnership's records are maintained on the accrual basis of accounting for
financial reporting and tax purposes. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Real estate is recorded at cost less accumulated depreciation. Cost includes
land, improvements, direct construction costs, indirect project costs, and
carrying costs, including real estate taxes, interest and loan costs incurred
during the construction period. Depreciation is recorded on the straight-line
method. Repairs are expensed.

Cash and cash equivalents consist of cash and highly liquid investments with
maturities, when purchased, of three months or less.

At least annually, and more often if circumstances dictate, the Partnership
evaluates the recoverability of the net carrying value of the Property and any
related assets. As part of this evaluation, the Partnership assesses, among
other things, whether there has been a significant decrease in the market value
of the Property. If events or circumstances indicate that the net carrying value
of the Property may not be recoverable, the expected future net cash flows from
the Property are estimated for a period of approximately five years (or a
shorter period if the Partnership expects that the Property may be disposed of



                                       7
<PAGE>
 
sooner), along with estimated sales proceeds at the end of the period.


                                       8
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

2. Summary of Significant Accounting Policies (continued)

If the total of these future undiscounted cash flows were less than the carrying
amount of the Property, the Property would be written down to its fair value as
determined (in some cases with the assistance of outside real estate
consultants) based on discounted cash flows, and a loss on impairment recognized
by a charge to earnings.

Because the determination of fair value is based upon projections of future
economic events such as property occupancy rates, rental rates, operating cost
inflation and market capitalization rates which are inherently subjective, the
amounts ultimately realized at disposition may differ materially from the net
carrying value as of December 31, 1998. The cash flows used to evaluate the
recoverability of the assets and to determine fair value are based on good faith
estimates and assumptions developed by the New General Partners. Unanticipated
events and circumstances may occur and some assumptions may not materialize;
therefore actual results may vary from the estimates and the variances may be
material. The Partnership may provide additional write-downs, which could be
material, in subsequent years if real estate markets or local economic
conditions change.

Deferred expenses consist of origination fees in connection with the mortgage
loans and leasing commissions. Origination fees are amortized over the
applicable loan terms. Leasing Commissions are amortized over the applicable
lease terms. In 1997, fully amortized deferred expenses (with an original cost
of $2,300,762) were written off.

Rental income is accrued on a straight-line basis over the terms of the leases.
Accruals in excess of amounts payable by tenants pursuant to their leases
(resulting from rent concessions or rents which periodically increase over the
term of a lease) are recorded as receivables and included in other assets.

No provision for income taxes has been made in the financial statements, since
the liability for such taxes is that of the partners rather than the
Partnership.


                                       9
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

2. Summary of Significant Accounting Policies (continued)

The accounting policies used for tax reporting purposes differ from those used
for financial reporting as follows: (a) depreciation is calculated using
accelerated methods and (b) rental income is recognized based on the payment
terms in the applicable leases. The tax basis of the Partnership's assets and
liabilities is approximately $11.7 million lower than the amounts reported for
financial statement purposes at December 31, 1998.

The implementation in 1998 of the Financial Accounting Standards Board Statement
No. 130, "Reporting Comprehensive Income" and Statement NO. 131, "Disclosures
about Segments of an Enterprise and Related Information" effective for the
Partnership's 1998 year-end financial statements did not have any impact on the
Partnership's financial statements.

3. Partnership Agreement

The Partnership Agreement and subsequent amendments (the "Agreement") provide
that net cash flow, as defined in the Agreement, generally will be paid to the
partners pro rata, in accordance with their partnership interests.

Net capital proceeds arising from a transaction involving the disposition of all
or substantially all the beneficial interest in the Trust or the Property or
involving the liquidation of the Partnership shall be distributed in accordance
with the partners capital accounts, as adjusted, pursuant to the Agreement.


                                       10
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

4. Mortgage Loans Payable

The Trust has a $37,750,000 first mortgage loan payable to a major insurance
company. The loan requires monthly payments of interest only, payable at 9.39%
and matures November 1, 2001. For each of the years ended December 31, 1998 and
1997, the Partnership incurred interest expense of $3,544,725 on this loan.

The Trust also has a participating second mortgage loan payable to the Lender
which is due in 2001. Prior to October 27, 1997, principal of the loan was
$59,200,000, base interest was payable monthly at 8% and the first $250,000 of
net revenues in any calendar year from the property was payable as additional
interest. The Lender also owned a 58% interest in adjusted net revenues and
capital proceeds generated by the property.

The second mortgage loan was restructured as follows:

(a)   any New Loans (the "New Loans") made by the New General Partners will bear
      interest at 12%, payable monthly from available cash flow generated by the
      property after payment of debt service on the first mortgage loan and
      certain operating escrows;

(b)   the interest rate on the principal and past due interest on the second
      mortgage loan (aggregating approximately $12.3 million at October 27,
      1997) has been increased to 10%, payable monthly from available cash flow
      generated by the property after payment of debt service on the New Loans;

(c)   any future unpaid debt service will accrue interest at 10%; and


                                       11
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

4. Mortgage Loans Payable (continued)

(d)   Yield Plus' and Yield Plus II's interest in adjusted net revenue and
      capital proceeds generated by the property was increased to 80%.

In 1998, the Partnership borrowed $2,720,943 as a New Loan.

The Partnership incurred interest expense on the second mortgage loan of
$8,078,420 and $8,036,377 in 1998 and 1997, respectively.

5. Note Payable

At the inception of the parking garage lease with Kinney System of Sudbury St.,
Inc., a wholly owned subsidiary of Kinney System, Inc., the lessee granted a
$3,000,000 loan to the Partnership, which is payable in monthly payments of
$26,350, which include interest at 10 percent per annum. The lease provides for
supplemental rental payments to the Partnership of $26,350 per month to cover
loan principal and interest payments. These amounts are included in rental
income. The lease also provides that the unpaid principal of the loan may be
forgiven if certain conditions described in the note agreement are met. Interest
expense incurred on this loan in 1998 and 1997 were approximately $248,000 and
$224,000, respectively.


                                       12
<PAGE>
 
                            GCGA LIMITED PARTNERSHIP

                          Notes to Financial Statements

6. Leases

Minimum future rental income under noncancelable operating leases as of December
31, 1998 is as follows:

           Year ended December 31            Future minimum rentals
--------------------------------------------------------------------------------

                      1999                          $10,647,316
                      2000                           10,911,285
                      2001                           11,130,690
                      2002                           11,413,015
                      2003                            8,570,642
                                                    -----------
                                                    $52,672,948
                                                    ===========

The Partnership has determined that all leases relating to its properties are
operating leases. Lease terms range from six to twenty one years.

7. Related-Party Transactions

The Property is managed by an affiliate of the Partnership. For the years ended
December 31, 1998 and 1997, the affiliate earned management fees of
approximately $105,000 and $124,000, respectively. These amounts are included in
property operating expenses.


                                       13