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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



Quarterly Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934



For the Quarter Ended: December 31, 2002





Commission File Number:
1-14979



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CABOT INDUSTRIAL PROPERTIES, L.P.

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(Exact name of registrant as specified in its charter)





|Delaware                                                       |  | 04-3397874                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                              
|875 North Michigan Avenue, 41st Floor, Chicago, Illinois       |  | 60611                                  
|(Address of principal executive offices)                       |  | (Zip code)                             





(312) 266-9300

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(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days./1/

YES x    NO ̈



Indicate the number of shares outstanding of each of the registrants classes of Common Stock, as of the latest practicable date: As of February 10, 2003, 52,979,886 Limited Partnership Units;
1,300,000 Series B Cumulative Redeemable Perpetual Preferred Units, $50 Liquidation Value; 2,600,000 Series C Cumulative Redeemable Perpetual Preferred Units, $25 Liquidation Value; 200,000 Series D Cumulative Redeemable Perpetual
Preferred Units, $50 Liquidation Value; 200,000 Series E Cumulative Redeemable Perpetual Preferred Units, $50 Liquidation Value; 1,800,000 Series F Cumulative Redeemable Perpetual Preferred Units, $25 Liquidation Value; 600,000 Series G
Cumulative Redeemable Perpetual Preferred Units, $25 Liquidation Value; and 1,400,000 Series H Cumulative Redeemable Perpetual Preferred Units, $25 Liquidation Value.



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|/1/ |  | The registrant files reports required to be filed by Section 13 and 15(d) of the Securities and Exchange Act of 1934 in compliance with a covenant in the Indenture
dated as of April 30, 1999, as supplemented on May 4, 1999 and September 7, 2000, by and among the registrant, Cabot Industrial Trust and Bank of New York as trustee, requiring it to do so.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART
I.    FINANCIAL INFORMATION



ITEM
1.    CONSOLIDATED FINANCIAL STATEMENTS





CABOT INDUSTRIAL PROPERTIES, L.P.



CONSOLIDATED CONDENSED BALANCE SHEETS

As of December 31, 2002 and June 30, 2002

(unaudited, in thousands)



|                                                                                                                                                  |  | December 31, 2002 |           |   | June 30, 2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ------------- | -
|ASSETS:                                                                                                                                           |  |                   |           |   |               |  
|INVESTMENT IN REAL ESTATE:                                                                                                                        |  |                   |           |   |               |  
|Land                                                                                                                                              |  | $                 | 358,323   |   |               | $
|Buildings                                                                                                                                         |  |                   | 1,287,516 |   |               |  
|Accumulated Depreciation                                                                                                                          |  |                   | (34,265   | ) |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|Net Rental Properties                                                                                                                             |  |                   | 1,611,574 |   |               |  
|Properties under Development                                                                                                                      |  |                   | 39,552    |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|TOTAL INVESTMENT IN REAL ESTATE:                                                                                                                  |  |                   | 1,651,126 |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|OTHER ASSETS:                                                                                                                                     |  |                   |           |   |               |  
|Cash and Cash Equivalents                                                                                                                         |  |                   | 24,712    |   |               |  
|Rent and Other Receivables, net of allowance for uncollectible accounts of $3,306 and
$3,761 at December 31, 2002 and June 30, 2002, respectively |  |                   | 8,514     |   |               |  
|Deferred Rent Receivable                                                                                                                          |  |                   | 6,688     |   |               |  
|Deferred Lease Acquisition Costs, net                                                                                                             |  |                   | 17,884    |   |               |  
|Deferred Financing Cost, net                                                                                                                      |  |                   | 1,554     |   |               |  
|Investment in Joint Ventures                                                                                                                      |  |                   | 18,117    |   |               |  
|Assets Held for Sale                                                                                                                              |  |                   |          |   |               |  
|Other Assets                                                                                                                                      |  |                   | 6,354     |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|TOTAL ASSETS:                                                                                                                                     |  | $                 | 1,734,949 |   |               | $
|                                                                                                                                                  |  |                   |           |   |               |  
|LIABILITIES AND PARTNERS EQUITY:                                                                                                                 |  |                   |           |   |               |  
|LIABILITIES:                                                                                                                                      |  |                   |           |   |               |  
|Mortgage Debt                                                                                                                                     |  | $                 | 154,260   |   |               | $
|Mortgage Debt held for Sale                                                                                                                       |  |                   |          |   |               |  
|Unsecured Debt                                                                                                                                    |  |                   | 261,351   |   |               |  
|Line of Credit Borrowings                                                                                                                         |  |                   | 271,000   |   |               |  
|Accounts Payable                                                                                                                                  |  |                   | 743       |   |               |  
|Amounts Payable to Related Parties                                                                                                                |  |                   | 2,404     |   |               |  
|Accrued Real Estate Taxes                                                                                                                         |  |                   | 7,960     |   |               |  
|Distributions Payable                                                                                                                             |  |                   | 567       |   |               |  
|Tenant Security Deposits and Prepaid Rents                                                                                                        |  |                   | 12,511    |   |               |  
|Accrued Severance Expense                                                                                                                         |  |                   | 124       |   |               |  
|Other Liabilities                                                                                                                                 |  |                   | 8,131     |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|TOTAL LIABILITIES:                                                                                                                                |  |                   | 719,051   |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|PARTNERS EQUITY:                                                                                                                                 |  |                   |           |   |               |  
|General Partners Equity                                                                                                                          |  |                   | 776,898   |   |               |  
|Preferred Unitholders Equity                                                                                                                     |  |                   | 239,000   |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|TOTAL PARTNERS EQUITY                                                                                                                            |  |                   | 1,015,898 |   |               |  
|                                                                                                                                                  |  |                   |           |   |               |  
|TOTAL LIABILITIES AND PARTNERS EQUITY                                                                                                            |  | $                 | 1,734,949 |   |               | $
|                                                                                                                                                  |  |                   |           |   |               |  



The accompanying notes
are an integral part of these unaudited consolidated condensed financial statements.



2



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CABOT
INDUSTRIAL PROPERTIES, L.P.



CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended December 31, 2002 and for the periods

December 7, 2001 to December 31, 2001, and October 1, 2001 to December 6, 2001

(unaudited, in thousands)



|                                                           |  | Three Months Ended December 31, 2002 |        |   | December 7, 2001 December 31, 2001 |   |        | October 1, 2001 December 6, 2001 | 
|---------------------------------------------------------- |  | ------------------------------------ | ------ | - | ----------------------------------- | - | ------ | --------------------------------- | 
|REVENUES:                                                  |  |                                      |        |   |                                     |   |        |                                   | 
|Rental Income                                              |  | $                                    | 38,229 |   |                                     | $ | 13,402 |                                   | 
|Tenant Reimbursements                                      |  |                                      | 7,133  |   |                                     |   | 2,360  |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|Total Revenues                                             |  |                                      | 45,362 |   |                                     |   | 15,762 |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|EXPENSES:                                                  |  |                                      |        |   |                                     |   |        |                                   | 
|Property Operating                                         |  |                                      | 6,429  |   |                                     |   | 1,673  |                                   | 
|Property Taxes                                             |  |                                      | 5,227  |   |                                     |   | 1,415  |                                   | 
|Depreciation and Amortization                              |  |                                      | 9,350  |   |                                     |   | 2,344  |                                   | 
|General and Administrative                                 |  |                                      | 2,089  |   |                                     |   | 517    |                                   | 
|Severance and Merger Expenses                              |  |                                      |       |   |                                     |   |       |                                   | 
|Interest Expense                                           |  |                                      | 8,657  |   |                                     |   | 3,048  |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|Total Expenses                                             |  |                                      | 31,752 |   |                                     |   | 8,997  |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|OTHER INCOME:                                              |  |                                      |        |   |                                     |   |        |                                   | 
|Interest and Other Income                                  |  |                                      | 138    |   |                                     |   | 196    |                                   | 
|Earnings and Fees from Joint Ventures and Advisory Clients |  |                                      | 264    |   |                                     |   | 93     |                                   | 
|Net Gain on Sale of Real Estate                            |  |                                      |       |   |                                     |   |       |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|Total Other Income                                         |  |                                      | 402    |   |                                     |   | 289    |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|Income from Continuing Operations                          |  |                                      | 14,012 |   |                                     |   | 7,054  |                                   | 
|                                                          
|DISCONTINUED OPERATIONS:                                   |  |                                      |        |   |                                     |   |        |                                   | 
|Income from Discontinued Operations                        |  |                                      | 1,972  |   |                                     |   | 1,013  |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|Net Income                                                 |  |                                      | 15,984 |   |                                     |   | 8,067  |                                   | 
|Net Income Allocable to Preferred Unitholders              |  |                                      | (5,294 | ) |                                     |   | (1,423 | )                                 | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 
|Net Income Allocable to Partnership Units                  |  | $                                    | 10,690 |   |                                     | $ | 6,644  |                                   | 
|                                                           |  |                                      |        |   |                                     |   |        |                                   | 



The accompanying notes
are an integral part of these unaudited consolidated condensed financial statements.



3



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CABOT
INDUSTRIAL PROPERTIES, L.P.



CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS

For the Six Months Ended December 31, 2002 and for the periods

December 7, 2001 to December 31, 2001, and July 1, 2001 to December 6, 2001

(unaudited, in thousands)



|                                                           |  | Six Months Ended December 31, 2002 |         |   | December 7, 2001 December 31, 2001 |   |        | July 1, 2001 December 6, 2001 | 
|---------------------------------------------------------- |  | ---------------------------------- | ------- | - | ----------------------------------- | - | ------ | ------------------------------ | 
|REVENUES:                                                  |  |                                    |         |   |                                     |   |        |                                | 
|Rental Income                                              |  | $                                  | 76,801  |   |                                     | $ | 13,402 |                                | 
|Tenant Reimbursements                                      |  |                                    | 15,099  |   |                                     |   | 2,360  |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|Total Revenues                                             |  |                                    | 91,900  |   |                                     |   | 15,762 |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|EXPENSES:                                                  |  |                                    |         |   |                                     |   |        |                                | 
|Property Operating                                         |  |                                    | 12,312  |   |                                     |   | 1,673  |                                | 
|Property Taxes                                             |  |                                    | 10,667  |   |                                     |   | 1,415  |                                | 
|Depreciation and Amortization                              |  |                                    | 18,301  |   |                                     |   | 2,344  |                                | 
|General and Administrative                                 |  |                                    | 3,962   |   |                                     |   | 517    |                                | 
|Severance and Merger Expenses                              |  |                                    |        |   |                                     |   |       |                                | 
|Interest Expense                                           |  |                                    | 17,450  |   |                                     |   | 3,048  |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|Total Expenses                                             |  |                                    | 62,692  |   |                                     |   | 8,997  |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|OTHER INCOME:                                              |  |                                    |         |   |                                     |   |        |                                | 
|Interest and Other Income                                  |  |                                    | 536     |   |                                     |   | 196    |                                | 
|Earnings and Fees from Joint Ventures and Advisory Clients |  |                                    | 452     |   |                                     |   | 93     |                                | 
|Net Gain on Sale of Real Estate                            |  |                                    |        |   |                                     |   |       |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|Total Other Income                                         |  |                                    | 988     |   |                                     |   | 289    |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|Income (Loss) from Continuing Operations                   |  |                                    | 30,196  |   |                                     |   | 7,054  |                                | 
|                                                          
|DISCONTINUED OPERATIONS:                                   |  |                                    |         |   |                                     |   |        |                                | 
|Income from Discontinued Operations                        |  |                                    | 3,649   |   |                                     |   | 1,013  |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|Net Income (Loss)                                          |  |                                    | 33,845  |   |                                     |   | 8,067  |                                | 
|Net Income Allocable to Preferred Unitholders              |  |                                    | (10,588 | ) |                                     |   | (1,423 | )                              | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 
|Net Income (Loss) Allocable to Partnership Units           |  | $                                  | 23,257  |   |                                     | $ | 6,644  |                                | 
|                                                           |  |                                    |         |   |                                     |   |        |                                | 



The accompanying notes
are an integral part of these unaudited consolidated condensed financial statements.



4



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CABOT
INDUSTRIAL PROPERTIES, L.P.



CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS

For the Six Months Ended December 31, 2002 and for the periods

December 7, 2001 to December 31, 2001, and July 1, 2001 to December 6, 2001

(unaudited, in thousands)



|                                                                                                   |  | Six Months Ended December 31, 2002 |          |   | December 7, 2001 December 31, 2001 |   |          | July 1, 2001 December 6, 2001 | 
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------- | -------- | - | ----------------------------------- | - | -------- | ------------------------------ | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                               |  |                                    |          |   |                                     |   |          |                                | 
|Net Income (Loss) from Continuing Operations                                                       |  | $                                  | 30,196   |   |                                     | $ | 7,054    |                                | 
|Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating
Activities:     |  |                                    |          |   |                                     |   |          |                                | 
|Depreciation and Amortization                                                                      |  |                                    | 18,301   |   |                                     |   | 2,344    |                                | 
|Amortization of Deferred Financing Costs                                                           |  |                                    | 373      |   |                                     |   | 376      |                                | 
|Straight Line Rent                                                                                 |  |                                    | (3,271   | ) |                                     |   | (506     | )                              | 
|Cabot L.P.s Share of Net Income from Equity Investments, net of Distributions
from Joint Ventures |  |                                    | (103     | ) |                                     |   | (69      | )                              | 
|Net Gain on Sale of Real Estate                                                                    |  |                                    |         |   |                                     |   |         |                                | 
|Decrease (increase) in Rents and Other Receivables                                                 |  |                                    | (2,836   | ) |                                     |   | (144     | )                              | 
|(Decrease) Increase in Accounts Payable                                                            |  |                                    | (157     | ) |                                     |   | (438     | )                              | 
|Decrease (Increase) in Other Assets                                                                |  |                                    | 5,989    |   |                                     |   | 2,173    |                                | 
|(Decrease) Increase in Accrued Real Estate Taxes                                                   |  |                                    | (6,163   | ) |                                     |   | 1,264    |                                | 
|(Decrease) Increase in Tenant Security Deposits and Prepaid Rents                                  |  |                                    | 67       |   |                                     |   | (7,449   | )                              | 
|(Decrease) Increase in Other Liabilities                                                           |  |                                    | (8,919   | ) |                                     |   | (10,991  | )                              | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|Net Cash Provided by (Used in) Continuing Operating Activities                                     |  |                                    | 33,477   |   |                                     |   | (6,386   | )                              | 
|Net Cash Provided by Discontinued Operating Activities                                             |  |                                    | 3,415    |   |                                     |   | 1,514    |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|Net Cash Provided by (Used in) Operating Activities                                                |  |                                    | 36,892   |   |                                     |   | (4,872   | )                              | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|CASH FLOW FROM INVESTING ACTIVITIES                                                                |  |                                    |          |   |                                     |   |          |                                | 
|Purchases of Investments in Real Estate                                                            |  |                                    | (1,477   | ) |                                     |   | (1,221   | )                              | 
|Properties under development                                                                       |  |                                    |         |   |                                     |   |         |                                | 
|Proceeds from Sale of Real Estate                                                                  |  |                                    | 343,682  |   |                                     |   | 7,406    |                                | 
|Proceeds from contributions of real estate to Joint Venture                                        |  |                                    |         |   |                                     |   |         |                                | 
|Purchases of and increases in Lease Acquisition Costs                                              |  |                                    | (7,847   | ) |                                     |   | (372     | )                              | 
|Improvements to Real Estate                                                                        |  |                                    |         |   |                                     |   | (619     | )                              | 
|Notes Receivable from Joint Venture                                                                |  |                                    |         |   |                                     |   |         |                                | 
|Investment in Joint Venture                                                                        |  |                                    |         |   |                                     |   | 27       |                                | 
|Acquisition Deposits, net                                                                          |  |                                    |         |   |                                     |   |         |                                | 
|Advances to Cabot Advisors, net                                                                    |  |                                    |         |   |                                     |   |         |                                | 
|Proceeds from Consolidation of Cabot Advisors                                                      |  |                                    |         |   |                                     |   | 3,697    |                                | 
|Purchases of furniture, fixtures and equipment                                                     |  |                                    |         |   |                                     |   |         |                                | 
|Other                                                                                              |  |                                    |         |   |                                     |   |         |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|Net Cash Provided by (Used in) Investing Activities                                                |  |                                    | 334,358  |   |                                     |   | 8,918    |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|CASH FLOWS FROM FINANCING ACTIVITIES                                                               |  |                                    |          |   |                                     |   |          |                                | 
|Proceeds from the Issuance of Bridge Financing                                                     |  |                                    |         |   |                                     |   | 500,000  |                                | 
|Distribution Paid to Common Unitholders                                                            |  |                                    | (316,336 | ) |                                     |   |         |                                | 
|Line of Credit (Repayments) Borrowing, net                                                         |  |                                    | (19,000  | ) |                                     |   | (260,600 | )                              | 
|Distributions Paid to Preferred Unitholders                                                        |  |                                    | (10,588  | ) |                                     |   | (3,893   | )                              | 
|Mortgage Debt Principal Repayments                                                                 |  |                                    | (9,161   | ) |                                     |   | (372     | )                              | 
|Increase in Deferred Financing Costs                                                               |  |                                    |         |   |                                     |   | (2,739   | )                              | 
|Settlement of Interest Rate Swap Agreements                                                        |  |                                    |         |   |                                     |   | (2,558   | )                              | 
|Repurchase Partnership Units                                                                       |  |                                    |         |   |                                     |   | (158,516 | )                              | 
|Employee Stock Options/DEU and Other Merger Transaction Costs                                      |  |                                    | (278     | ) |                                     |   | (44,595  | )                              | 
|Other                                                                                              |  |                                    |         |   |                                     |   |         |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|Net Cash (Used in) Provided by Financing Activities                                                |  |                                    | (355,363 | ) |                                     |   | 26,727   |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|Net Increase in Cash and Cash Equivalents                                                          |  |                                    | 15,887   |   |                                     |   | 30,773   |                                | 
|CASH AND CASH EQUIVALENTSBEGINNING OF PERIOD                                                      |  |                                    | 8,825    |   |                                     |   | 69,778   |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|CASH AND CASH EQUIVALENTSEND OF PERIOD                                                            |  | $                                  | 24,712   |   |                                     | $ | 100,551  |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 
|Cash paid for interest, net of amounts capitalized                                                 |  | $                                  | 19,762   |   |                                     | $ | 1,246    |                                | 
|                                                                                                   |  |                                    |          |   |                                     |   |          |                                | 



The accompanying notes
are an integral part of these unaudited consolidated condensed financial statements.



5



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CABOT
INDUSTRIAL PROPERTIES, L.P.



CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS (continued)

For the Six Months Ended December 31, 2002 and for the periods

December 7, 2001 to December 31, 2001, and July 1, 2001 to December 6, 2001

(unaudited, in thousands)





DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:



On August 1, 2002, Cabot Trust sold its interest in Cabot
Acquisition, LLC, a wholly-owned subsidiary of Cabot L.P., which owned 46 properties, to CalEast Industrial Investors, LLC for $375.5 million, of which $300.5 million was paid in cash and $75 million was paid by the assumption of mortgage loans.



At December 31, 2002, accrued capital expenditures totaled
$2,626.



On December 6, 2001, employee stock options and DEU
Transactions of $22,444 were payable to employees.



In
conjunction with the Merger Transactions (as defined under Note 1), Cabot L.P. assumed indebtedness of $1,010,927 and other net assets of $25,730.



At December 31, 2001, accrued capital expenditures totaled $2,410 and accrued development costs totaled $10,838.



The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.



6



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CABOT
INDUSTRIAL PROPERTIES, L.P.



NOTES TO
CONSOLIDATED CONDENSED UNAUDITED FINANCIAL STATEMENTS

December 31, 2002



|1. |  | GENERAL
|-- |  | -------



The accompanying unaudited consolidated condensed financial statements should be read in conjunction with the Form 10-K for the fiscal year ended June 30,
2002 of the registrant Cabot Industrial Properties, L.P. These consolidated condensed statements have been prepared in accordance with the instructions of the Securities and Exchange Commission for Form 10-Q and do not include all the information
and footnotes required by generally accepted accounting principles for complete financial statements.



In the opinion of Cabot Industrial Properties, L.P.s management, all material adjustments (consisting solely of items of a normal, recurring nature) considered necessary for a fair presentation
of results of operations for the interim period have been included. The results of consolidated operations for the period from July 1, 2002 through December 31, 2002 are not necessarily indicative of the results that may be expected for the period
from July 1, 2002 through June 30, 2003.



Organization



Cabot Industrial Properties, L.P. (Cabot L.P.), a Delaware
limited partnership, was formed on October 10, 1997. The general partner of Cabot L.P. is Cabot Industrial Trust (Cabot Trust), a Maryland real estate investment trust which was also formed on October 10, 1997. As the general partner of Cabot L.P.,
Cabot Trust has the exclusive power under the agreement of limited partnership to manage and conduct the business of Cabot L.P. Cabot Trust is an externally-managed real estate company which qualifies as a real estate investment trust (a REIT) for
federal income tax purposes.



As of December 31, 2002, Cabot L.P.
owned a geographically diversified portfolio of 331 industrial properties having an aggregate of approximately 35 million square feet, which was approximately 88% leased to 677 tenants.



The Merger Transactions



On December 7, 2001, pursuant to an Agreement and Plan of Merger, dated as of October 28, 2001, among Cabot Trust, Calwest Industrial Properties, LLC, a
California limited liability company (Calwest) and Rooster Acquisition Corp., a Maryland corporation and wholly-owned subsidiary of Calwest (Rooster), Cabot Trust and Rooster effected a merger (the Merger Transactions) whereby Rooster merged with
and into Cabot Trust, with Cabot Trust being the surviving entity. As part of the Merger Agreement, (i) the trustees and executive officers of Cabot Trust and their affiliates entered into shareholder agreements with Calwest, Rooster, Cabot Trust
and Cabot L.P., under which they agreed to tender their shares, and in some instances, to sell their common units of limited partner interest in Cabot L.P. to Calwest; and (ii) certain holders of limited partnership units entered into unitholder
agreements with Calwest, Rooster, Cabot Trust and Cabot L.P., under which they agreed to convert their common units of limited partner interest (Partnership Units) into Cabot Trust common shares of beneficial interest (Common Shares) and tender such
Common Shares. Upon consummation of the Merger Transactions, (i) Cabot Trust became a wholly-owned subsidiary of Calwest and (ii) the then outstanding Common Shares were converted into the right to receive a cash payment of $24.00 per Common Share.
As a result of the Merger and related transactions, all Partnership Units in Cabot L.P. are owned by Cabot Trust.



Immediately subsequent to the Merger Transactions, Calwest, Cabot Trust and Cabot L.P. (collectively, the Borrowers) entered into a bridge financing
arrangement (the Bridge Financing) with several lenders. Under the terms of the Bridge Financing, Cabot L.P. borrowed $500 million in cash due on June 6, 2002, bearing interest at LIBOR plus 125 basis points. The obligations of the Bridge Financing
were fully recoursed to the Borrowers and were secured by a perfected first priority security interest in the equity interests of Calwest, including Calwests equity interest in Cabot Trust and Cabot L.P., and were guaranteed by Calwest. The
proceeds from the Bridge Financing were used to repay the $260.6 million outstanding balance as of December 6, 2001 of Cabot L.P.s LIBOR-based facility. The Bridge Financing was repaid in February 2002.



In conjunction with the Merger Transactions, Cabot L.P. acquired all the
outstanding common stock of Cabot Advisors, Inc. (Cabot Advisors) and as a result, Cabot L.P.s financial statements include Cabot Advisors financial position and results of operations on a consolidated basis beginning December 7, 2001.
Prior to that date, Cabot L.P. accounted for its investment in Cabot Advisors on the equity method.



7



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CABOT INDUSTRIAL PROPERTIES, L.P.



NOTES TO CONSOLIDATED CONDENSED UNAUDITED FINANCIAL
STATEMENTS (continued)

December 31, 2002





Other Transactions



In January 2002, Cabot Trust contributed 62,156 Partnership
Units to Cabot L.P., thereby decreasing Cabot L.P.s outstanding Partnership Units to 43,617,995, and then issued an additional 7,300 Partnership Units which resulted in proceeds of approximately $149,000. In February 2002, Cabot L.P. also
issued 9,354,591 Partnership Units which resulted in proceeds of $192.9 million. These proceeds, combined with the proceeds from the Revolving Credit Agreement and proceeds from a sale of real estate, were used to repay the outstanding balance on
the Bridge Financing.



|2. |  | SIGNIFICANT ACCOUNTING POLICIES:
|-- |  | --------------------------------



Effect of Merger Transactions on Presentation



The Merger Transactions have been accounted for under the purchase method of accounting. As allowed under SEC Staff Accounting Bulletin (SAB) No. 54, Push
Down Basis of Accounting Required in Certain Limited Circumstances, Cabot L.P. has elected to record the effect of the purchase accounting (push down accounting) in its financial position as of December 7, 2001. Push down accounting requires an
entity to establish a new basis for its assets and liabilities based on the amount paid for its ownership. The acquiring entitys (Calwests) basis is reflected in the acquired entities (Cabot L.P.s and Cabot Trusts)
financial statements. In order to apply push down accounting, Calwests purchase price of $2.1 billion was allocated to the assets and liabilities of Cabot L.P. based on their relative fair values. For Cabot L.P., the new basis primarily
impacts investments in real estate and related depreciation, debt and associated deferred financing costs and interest expense, as well as recognition of rental revenue.



Prior to December 7, 2001, although Cabot L.P. owned 100% of the nonvoting preferred stock of Cabot Advisors, control did not
rest with Cabot L.P. as 100% of the common stock was owned by an officer of Cabot Trust. Therefore, Cabot L.P.s investment in Cabot Advisors had been accounted for under the equity method of accounting. In conjunction with the Merger
Transactions, Cabot L.P. acquired such controlling interest and owns 100% of all capital stock of Cabot Advisors. As a result, the results of operations and the financial position of Cabot Advisors is reflected on a consolidated basis prospectively,
beginning December 7, 2001.



Cabot L.P.s consolidated
results of operations for the periods ended December 6, 2001 reflect the historical operating results prior to the Merger Transactions. Cabot L.P.s consolidated results of operations for the three and six months ended December 31, 2002, and
for the period from December 7, 2001 through December 31, 2001, reflect the operations of Cabot L.P. subsequent to the Merger Transactions and the impact of the purchase accounting adjustments.



Recent Accounting Pronouncements



On January 1, 2002, Cabot L.P. adopted Statement of Financial Accounting
Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, but retains its fundamental provisions relating to the recognition and measurement of the impairment of long-lived assets
to be held and used, and the measurement of long-lived assets to be disposed of by sale.



Adoption of this standard has resulted in Cabot L.P. reclassifying certain assets to Assets Held for Sale in the Consolidated Condensed Balance Sheets and reclassifying certain revenue and expense amounts related to the
Assets Held for Sale or to properties sold during 2002 from Income from Continuing Operations to Income from Discontinued Operations within the Consolidated Condensed Statements of Operations. All periods have been adjusted to reflect this
classification.



Reclassifications



Certain amounts from the prior periods have been reclassified to conform to
the current period financial statement presentation.



8



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CABOT INDUSTRIAL PROPERTIES, L.P.



NOTES TO CONSOLIDATED CONDENSED UNAUDITED FINANCIAL
STATEMENTS (continued)

December 31, 2002





|3. |  | DISPOSITIONS OF REAL ESTATE INVESTMENTS
|-- |  | ---------------------------------------



On August 1, 2002, Cabot L.P. sold its interest in Cabot Acquisition, LLC, its wholly-owned subsidiary, which owned 46 properties, to CalEast Industrial
Investors, LLC for $375.5 million, of which $300.5 million was paid in cash and $75 million was paid by the assumption of Mortgage Loans. Ninety-eight percent (98%) of the membership interest of CalEast is owned by CalPERS.



On September 20, 2002, Cabot L.P. sold two properties located in
California. The properties were sold for an aggregate sales price of $15.9 million. A loss of $452,000 was recognized and is included with discontinued operations for the six months ended December 31, 2002.



On October 15, 2002, Cabot L.P. sold two properties located in Ohio. The
properties were sold for an aggregate sales price of $14.8 million. A gain of $2.2 million was recognized and is included with discontinued operations for the three and six months ended December 31, 2002.



On December 20, 2002, Cabot L.P. sold two properties located in Texas
and California. The properties were sold for an aggregate sales price of $14.7 million. A loss of $1.4 million was recognized and is included with discontinued operations for the three and six months ended December 31, 2002.



|4. |  | DEBT ACTIVITY
|-- |  | -------------



Cabot L.P.s debt balances were adjusted as of December 7, 2001, the date of the Merger Transactions, to fair value to reflect the present value of
amounts to be paid using market interest rates for obligations with similar terms. These adjustments, resulting in an aggregate, net premium of $17.2 million, are amortized as a reduction of interest expense over the remaining term of the loans to
reflect an estimated market interest rate as of the date of the Merger Transactions. In conjunction with the disposition of Cabots interest in Cabot Acquisition, LLC, $3.9 million of net premium was eliminated and an additional $265,000 was
eliminated with the payoff of three loans.



|5. |  | RELATED PARTY TRANSACTIONS
|-- |  | --------------------------



RREEF America LLC, and its affiliates (RREEF) is engaged by Calwest to provide investment advisory services to Calwest and all of its related
subsidiaries. During the quarter ended December 31, 2002, Cabot L.P. and RREEF also entered into a property management agreement that engaged RREEF as the property manager of the properties for one year periods ending on December 8th. The agreement
is automatically extended for one year periods unless terminated by either party. Under these agreements, RREEF is to provide asset and property management, development, acquisition and disposition services to Cabot L.P.



During the quarter ended December 31, 2002, Cabot L.P. incurred asset
management fees of $1.4 million, property management fees of $1.1 million, leasing commission fees of $518,000, construction administration fees of $52,000, disposition fees of $112,000 and reimbursements of $280,000 under these agreements. During
the six months ended December 31, 2002, Cabot L.P. incurred asset management fees of $3.0 million, property management fees of $2.3 million, leasing commission fees of $1.0 million, construction administration fees of $52,000, disposition fees of
$112,000, development fees of $408,000 and reimbursements of $322,000 under these agreements.



During the period December 7, 2001 through December 31, 2001, Cabot L.P. incurred acquisition fees of $6.4 million, asset management fees of $517,000, property management fees of $309,000, disposition
fees of $19,000 and development fees of $211,000 under these agreements.



During the quarter ended December 31, 2002, RREEF earned $215,000 in management and other fees for services required to be performed by Cabot L.P. under the Joint Venture agreements. During the six months ended December 31, 2002,
RREEF earned $406,000 in management and other fees for services required to be performed by Cabot L.P. under the Joint Venture agreements.



9



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CABOT INDUSTRIAL PROPERTIES, L.P.



NOTES TO CONSOLIDATED CONDENSED UNAUDITED FINANCIAL
STATEMENTS (continued)

December 31, 2002





On December 7, 2001, RREEF
entered into an agreement with Cabot L.P. and Cabot Advisors under which (i) Cabot L.P. and Cabot Advisors agreed to permit RREEF to occupy certain premises that were leased by Cabot L.P. and Cabot Advisors, and RREEF agreed to reimburse Cabot L.P.
and Cabot Advisors for rent payable under such leases, (ii) Cabot L.P. and Cabot Advisors transferred to RREEF all of its right, title and interest in all furniture, fixtures and equipment located in such premises, (iii) Cabot L.P. agreed to
reimburse RREEF for any severance amounts paid by RREEF to the former employees of Cabot L.P. and Cabot Advisors who were hired by RREEF in connection with the Merger Transactions, (iv) Cabot L.P. agreed to reimburse RREEF for payments made by RREEF
for a Cabot L.P. property in connection with a development agreement and (v) Cabot L.P. agreed to pay RREEF the management and other fees otherwise payable to Cabot L.P. for performing the management services required to be performed by Cabot L.P.
under the Joint Venture agreements.



During the quarter ended
December 31, 2002 and the six months ended December 31, 2002, Cabot L.P. reimbursed RREEF $745,000 for severance and related costs paid by RREEF.



The current trustees and executive officers of Cabot Trust are all employees of RREEF, are compensated by RREEF and receive no remuneration or other
compensation from Cabot L.P.



In conjunction with obtaining the
Revolving Credit Facility, Cabot Trust and Calwest provided a guarantee of the debt. Calwest is also required to maintain certain financial ratios.



|6. |  | SUBSEQUENT EVENT
|-- |  | ----------------



On February 14, 2003, Cabot L.P. entered into a loan agreement in the amount of $274,000,000. Proceeds of $272,413,773 were used to purchase 98.13% of its
outstanding 7.125% Redeemable Notes Due 2004 (the 7.125% Notes), 100% of its outstanding 8.200% Series A Medium Term Notes Due 2005 (the 8.200% Notes) and 86.95% of its outstanding 8.500% Series A Medium Term Notes Due 2010
(the 8.500% Notes and together with the 7.125% Notes and the 8.200% Notes the Securities), representing an aggregate principal amount of $246,047,000, pursuant to the terms and conditions of Cabot L.P.s Offer to
Purchase and Consent Solicitation Statement dated January 15, 2003 and the related Letter of Transmittal. In connection with its purchase of the Securities, Cabot paid a premium of $20,633,155 and accrued interest of $5,733,618.



10



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|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



The statements contained in this discussion and elsewhere in this report that
are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current expectations,
estimates and projections about the industry and markets in which Cabot L.P. operates, managements beliefs and assumptions made by management. Words such as expects, anticipates, intends, plans,
believes, seeks, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to various known and unknown
risks and uncertainties and are not guarantees of future performance and involve risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or suggested by such forward-looking statements and readers of this
document should not rely on them. Cabot L.P.s operating results depend primarily on income from industrial properties, which may be affected by various factors, including changes in national and local economic conditions, competitive market
conditions, uncertainties and costs related to and the imposition of conditions on receipt of governmental approvals and costs of material and labor, all of which may cause actual results to differ materially from what is expressed herein. Capital
and credit market conditions that affect Cabot L.P.s cost of capital also influence operating results. All such forward-looking statements are current only as of the date on which such statements are made. Cabot L.P. does not undertake any
obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.



Introduction



On December 4, 2001, pursuant to a previously announced Merger Agreement, all outstanding common limited partnership units in
Cabot L.P., other than those held by Cabot Trust, were exchanged for shares of beneficial interest of Cabot Trust and such shares were tendered to Rooster and Calwest pursuant to a tender offer. As a result, Cabot Trust became the sole holder of
common units of limited partnership interest in Cabot L.P. After the expiration of the tender offer on December 4, 2001, Rooster and Calwest announced that they had accepted all 42,388,440 common shares of beneficial interest of Cabot Trust that
were tendered pursuant to the tender offer. Such shares constituted 97% of Cabot Trusts outstanding common shares of beneficial interest. On December 7, 2001, Calwest acquired all Cabot Trusts remaining outstanding common shares of
beneficial interest pursuant to the merger of Rooster with and into Cabot Trust, with Cabot Trust surviving as a wholly-owned subsidiary of Calwest through December 31, 2002.



The Merger Transactions were accounted for as a purchase of Cabot L.P. by Calwest and therefore the balance sheet of Cabot
L.P. on December 7, 2001 was adjusted to reflect the purchase price and recorded at Cabot L.P. in accordance with the SECs Staff Accounting Bulletin Push Down Basis of Accounting in Certain Limited Circumstances. The purchase price
was approximately $2.1 billion, which included the outstanding Preferred Units and the assumption of debt of Cabot L.P. This purchase price was allocated to the assets and liabilities of Cabot L.P. based on their relative fair values and resulted in
no allocation to goodwill.



Results of operations for the periods
ended December 6, 2001 represent the historical basis of Cabot L.P.s operations prior to the date of the Merger Transactions. Results of operations for the three and six months ended December 31, 2002, and for the period December 7, 2001
through December 31, 2001, reflect the operations of Cabot L.P. after the Merger Transactions and therefore reflect the operating impact of purchase accounting adjustments made to the assets and liabilities as previously described. In general, the
recognition of straight-line rental revenue and depreciation, amortization and interest expense has been impacted by the new cost basis of the corresponding assets and liabilities on the balance sheet.



The combined 2001 pre- and post-merger periods have been compared to the three
and six months ended December 31, 2002 for purposes of managements discussion and analysis of the results of operations. Any references below to the periods ended December 31, 2001 shall refer to the combined periods. Material
fluctuations in operations resulting from the effect of purchase accounting have been highlighted.



11



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Results of Operations



Quarter Ended December 31, 2002 compared with Quarter Ended
December 31, 2001



Net income allocable to partnership units for
the three months ended December 31, 2002 totaled $10.7 million compared to a loss of $33.6 million for the three months ended December 31, 2001. The increase in net income allocable to partnership units in 2002 is primarily attributable to $51.3
million of Severance and Merger Expenses incurred in 2001 which were not incurred in 2002 and offset by decreased property operations reflective of property sales in 2002.



Rental revenues were $45.4 million, including tenant reimbursements of $7.1 million, for the three months ended December 31,
2002, compared to $49.9 million, including tenant reimbursements of $7.6 million, for the three months ended December 31, 2001. This decrease is reflective of a decrease in occupancy from 93% to 88% as of December 31, 2001 and 2002, respectively.



Cabot L.P.s operating margin (the ratio of total revenues
minus property operating and property tax expenses to total revenues) decreased to approximately 74% for the three months ended December 31, 2002 compared with 80% for the three months ended December 31, 2001. The decrease is primarily due to a
change in the composition of leases (primarily as a result of the acquisition of multitenant and workspace properties) to include more leases where Cabot L.P. pays property and operating expenses and is reimbursed by the tenants compared to leases
where the tenant pays these expenses directly. In addition, occupancy for the entire property portfolio (including properties included within Discontinued Operations) decreased to 88% as of December 31, 2002 from 93% as of December 31, 2001.



Property operating expenses increased $1.4 million from $5.0
million for the three months ended December 31, 2001 to $6.4 million for the three months ended December 31, 2002. This increase is primarily due to increased insurance coverage and significant increases in insurance costs and increased professional
fees.



Depreciation and amortization expense related to real
estate investments increased $300,000 from $9.1 million for the three months ended December 31, 2001 to $9.4 million for the three months ended December 31, 2002. The increased depreciation and amortization expense is reflective of a full quarter of
depreciation and amortization in 2002 on properties acquired and developed after October 1, 2001.



General and administrative expense decreased by $1.6 million from $3.7 million for the three months ended December 31, 2001 to $2.1 million for the three months ended December 31, 2002. The decrease is
primarily due to decreased compensation and rental expenses. In conjunction with the Merger, all employees were terminated and all general and administrative duties subsequent to the Merger are performed by RREEF, Cabot L.P.s investment
manager.



Cabot L.P. incurred expenses of $51.3 million related
to the Merger during the quarter ended December 31, 2001. Severance expense payable to certain senior executives pursuant to employment agreements was $21.7 million and severance expense payable to other employees pursuant to the Cabot Trust
Severance Plan was $6.0 million. Expense recognized from distribution equivalent units (DEU) payable to employees due to the change of control was $14.6 million and other compensation expenses total $1.4 million. Other merger expenses incurred by
Cabot L.P. prior to the merger, primarily payable to financial advisors, were $7.6 million.



Interest expense decreased by $1.2 million from $9.9 million for the three months ended December 31, 2001 to $8.7 million for the three months ended December 31, 2002. The decrease is primarily due to
the amortization of the premium that was recorded when the outstanding mortgage loans were revalued as a result of the Merger and a reduction of Cabot L.Ps borrowing rate on its Revolving Credit Facility. This decrease is offset by the amount
of interest expense that was capitalized to development projects due to the completion and transfer of several development projects to operational properties.



Interest and other income decreased by $70,000 from $208,000 for the three months ended December 31, 2001 to $138,000 for the three months ended December
31, 2002. This decrease is attributable to decreased interest income related to bridge loan financing provided by Cabot L.P. to the joint ventures that was earned in 2001, and generally lower interest rates on invested cash in 2002.



Earnings and Fees from Joint Ventures and Advisory Clients decreased by
approximately $247,000 from $511,000 for the three months ended December 31, 2001 to $264,000 for the three months ended December 31, 2002. The decrease in Earnings and Fees from Joint Ventures and Advisory Clients is primarily attributable to
acquisition, development and asset management fees that were earned by Cabot L.P. from advisory clients in 2001. In conjunction with the Merger Transactions, RREEF was engaged to provide these services and therefore there are no such fees earned by
Cabot L.P. for the three months ended December 31, 2002.



On
November 2, 2001, Cabot L.P. sold one property for a sales prices of $5.5 million which resulted in a realized gain of $945,000.



On October 15, 2002, Cabot L.P. sold two properties located in Ohio. The properties were sold for an aggregate sales price of $14.8 million. A gain of
$2.2 million was recognized and is included with discontinued operations. On December 20, 2002, Cabot L.P. sold two properties located in Texas and California. The properties were sold for an aggregate sales price of $14.7 million. A loss of $1.4
million was recognized and is included with discontinued operations.



12



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Income from Discontinued
Operations decreased approximately $2.1 million to $2.0 million for the three months ended December 31, 2002. Income from Discontinued Operations reflects the actual operating results for rental revenues, property operating expenses, property tax
expenses and depreciation and amortization expenses for each of the properties included within Discontinued Operations in 2002. In addition, Income from Discontinued Operations also reflects approximately $1.6 million of interest expense for three
months ended December 31, 2001 related to the mortgage loans assumed by CalEast Industrial Investors, LLC in connection with sale of certain property. The decrease in Income from Discontinued Operations of approximately $2.1 million resulted
primarily from a decrease in net income related to a full quarter of operations (including interest expense, as discussed above) in 2001 compared to a partial quarter of operations for 2002. In addition, the December 31, 2002 Discontinued Operations
includes a net realized gain of $812,000 from the sale of four of the assets and an additional gain of $1.1 million for one of the properties that was sold on August 1, 2002.



Distributions to Preferred Unitholders totaled $5.3 million for the three months ended December 31, 2002, which was unchanged
from the $5.3 million that was distributed for the three months ended December 31, 2001.



Six Months Ended December 31, 2002 compared with Six Months Ended December 31, 2001.



Net income allocable to partnership units for the six months ended December 31, 2002 totaled $23.3 million compared to a loss of $17.9 million for the six months ended December 31, 2001. The increase
in net income allocable to partnership units in 2002 is primarily attributable to $51.3 million of Severance and Merger Expenses incurred in 2001 which were not incurred in 2002 and offset by decreased property operations reflective of property
sales in 2002.



Rental revenues were $91.9 million, including
tenant reimbursements of $15.1 million, for the six months ended December 31, 2002, compared to $96.5 million, including tenant reimbursements of $14.7 million, for the six months ended December 31, 2001. This decrease is reflective of a decrease in
occupancy from 93% to 88% as of December 31, 2001 and 2002, respectively.



Cabot L.P.s operating margin (the ratio of total revenues minus property operating and property tax expenses to total revenues) decreased to approximately 75% for the six months ended December 31, 2002 compared with 79% for the
six months ended December 31, 2001. The decrease is primarily due to a change in the composition of leases (primarily as a result of the acquisition of multitenant and workspace properties) to include more leases where Cabot L.P. pays property and
operating expenses and is reimbursed by the tenants compared to leases where the tenant pays these expenses directly. In addition, occupancy for the entire property portfolio (including properties included within Discontinued Operations) decreased
to 88% as of December 31, 2002 from 93% as of December 31, 2001.



Property operating expenses increased $2.3 million from $10.0 million for the six months ended December 31, 2001 to $12.3 million for the six months ended December 31, 2002. This increase is primarily due to increased insurance
coverage and significant increases in insurance costs and increased professional fees.



Depreciation and amortization expense related to real estate investments increased $200,000 from $18.1 million for the six months ended December 31, 2001 to $18.3 million for the six months ended December 31, 2002. The
increased depreciation and amortization expense is reflective of a full quarter of depreciation and amortization in 2002 for properties acquired and developed after October 1, 2001.



General and administrative expense decreased by $2.2 million from $6.2 million for the six months ended December 31, 2001 to
$4.0 million for the six months ended December 31, 2002. The decrease is primarily due to decreased compensation and rental expenses. In conjunction with the Merger, all employees were terminated and all general and administrative duties subsequent
to the Merger are performed by RREEF, Cabot L.P.s investment manager.



Cabot L.P. incurred expenses of $51.3 million related to the Merger during the six months ended December 31, 2001. Severance expense payable to certain senior executives pursuant to employment agreements was $21.7 million and
severance expense payable to other employees pursuant to the Cabot Trust Severance Plan was $6.0 million. Expense recognized from distribution equivalent units (DEU) payable to employees due to the change of control was $14.6 million and other
compensation expenses total $1.4 million. Other merger expenses incurred by Cabot L.P. prior to the merger, primarily payable to financial advisors, were $7.6 million.



13



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Interest expense decreased by
$2 million from $19.5 million for the six months ended December 31, 2001 to $17.5 million for the six months ended December 31, 2002. The decrease is primarily due to the amortization of the premium that was recorded when the outstanding mortgage
loans were revalued as a result of the Merger and a reduction of Cabot L.Ps borrowing rate on its Revolving Credit Facility. This decrease is offset by the amount of interest expense that was capitalized to development projects due to the
completion and transfer of several development projects to operational properties.



Interest and other income decreased by $321,000 from $858,000 for the six months ended December 31, 2001 to $537,000 for the six months ended December 31, 2002. This decrease is attributable to decreased interest income
related to bridge loan financing provided by Cabot L.P. to the joint ventures that was earned in 2001, and generally lower interest rates on invested cash in 2002.



Earnings and Fees from Joint Ventures and Advisory Clients decreased by approximately $212,000 from $664,000 for the six
months ended December 31, 2001 to $452,000 for the six months ended December 31, 2002. The decrease in Earnings and Fees from Joint Ventures and Advisory Clients is primarily attributable to acquisition, development and asset management fees that
were earned by Cabot L.P. from advisory clients in 2001. In conjunction with the Merger Transactions, RREEF was engaged to provide these services and therefore there are no such fees earned by Cabot L.P. for the six months ended December 31, 2002.



During the quarter ended September 30, 2001, Cabot L.P. sold one
property and two acres of undeveloped land for a realized gain of $683,000. On November 2, 2001, Cabot L.P. sold one property for a sales prices of $5.5 million which resulted in a realized gain of $945,000.



On August 1, 2002, Cabot L.P. sold its interest in Cabot Acquisition, LLC, its
wholly-owned subsidiary, which owned 46 properties, to CalEast Industrial Investors, LLC for $375.5 million, of which $300.5 million was paid in cash and $75 million was paid by the assumption of mortgage loans. On September 20, 2002, Cabot L.P.
sold two properties located in California. These properties were sold for an aggregate sales price of approximately $15.9 million for which a loss of $452,000 is included within discontinued operations. On October 15, 2002, Cabot L.P. sold two
industrial properties located in Ohio. The properties were sold for an aggregate sales price of $14.8 million. A gain of $2.2 million was recognized and is included with discontinued operations. On December 20, 2002, Cabot L.P. sold two
properties located in Texas and California. The properties were sold for an aggregate sales price of $14.7 million. A loss of $1.4 million was recognized and is included with discontinued operations.



Income from Discontinued Operations decreased $4.5 million to $3.6 million for
the six months ended December 31, 2002. Income from Discontinued Operations reflects the actual operating results for rental revenues, property operating expenses, property tax expenses and depreciation and amortization expenses for each of the
properties included within Discontinued Operations in 2002. In addition, Income from Discontinued Operations also reflects approximately $525,000 and $1.6 million of interest expense for each of the six months ended December 31, 2002 and 2001,
respectively, related to the mortgage loans assumed by CalEast Industrial Investors, LLC in connection with sale of certain property. The decrease in Income from Discontinued Operations of approximately $4.5 million resulted primarily from a
decrease in net income related to a full period of operations (including interest expense, as discussed above) in 2001 compared to a partial period of operations in 2002. In addition, the December 31, 2002 Discontinued Operations includes a net
realized gain of $348,000 for the sale of six properties and an additional gain of $1.1 million for one of the properties that was sold on August 1, 2002.



Distributions to Preferred Unitholders totaled $10.6 million for the six months ended December 31, 2002, which was unchanged from the $10.6 million that
was distributed for the six months ended December 31, 2001.



Inflation



Substantially all of the leases of
Cabot L.P.s properties require the tenant to pay, as additional rent, either all real estate taxes and operating expenses or all increases in real estate taxes and operating expenses over a base amount. In addition, many of such leases provide
for fixed or indexed increases (based on the consumer price index or other measures) in base rent. Management believes that inflationary increases in operating expenses will be offset, in part, by these expense reimbursements and contractual rent
increases.



14



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Capital Resources and
Liquidity



Cabot L.P. intends to rely on cash provided by
operations, unsecured and secured borrowings from institutional sources, and public debt as its primary sources of funding for acquisition, development, expansion and renovation of properties. Cabot L.P. may also consider preferred and common equity
financing when such financing is available on attractive terms.



On February 5, 2002, Cabot L.P. entered into a Revolving Credit Facility (the Revolving Credit Facility) with JP Morgan Chase Bank as lead agent for a syndicate of banks. The Revolving Credit Facility is guaranteed by Cabot Trust and
Calwest and provides for a loan amount of $300 million or such lesser amount as will enable Cabot L.P. and Calwest to comply with all financial covenants. The loan is due in February 2005, and may be extended one year after payment of an extension
fee of 20 basis points. Cabot L.P. initially borrowed $300 million and the proceeds of the Revolving Credit Facility were used to partially repay the Bridge Financing.



The Revolving Credit Facility bears interest at rates that are dependent on the type of borrowing and the credit rating of
Calwest, as detailed below:



|Borrowing type |  | Base rate                       |  | Spread     
|-------------- |  | ------------------------------- |  | -----------
|Euro-Dollar    |  | Applicable LIBOR                |  | 0.65%1.40%
|Base Rate      |  | U.S. Prime or Fed Funds + 0.50% |  | 0.00%0.70%
|Money Market   |  | Auction based                   |  | N/A        



For Money Market loans,
Cabot L.P. is able to request that the syndicate of banks bid on loan commitments, which may result in Cabot L.P. obtaining borrowings at interest rates lower than those available under either the Euro-Dollar or Base Rate borrowing types. As of
December 31, 2002, the Revolving Credit Facility has $271 million outstanding, and bears interest at 2.22%.



Additionally, the Revolving Credit Facility has an expansion option which allows Cabot L.P. to increase the total commitment to $400 million. This option must be exercised in the first 24 months of the
term. The Revolving Credit Facility is subject to various covenants, which are customary in nature, including a limit on distributions to 100% of cash flow as defined, which excludes proceeds from sales or refinancings. There is an additional
one-time right to distribute up to $75 million.



In January 2002,
Cabot Trust contributed 62,156 Partnership Units to Cabot L.P., thereby decreasing Cabot L.P.s outstanding Partnership Units to 43,617,995. Cabot Trust issued 7,300 Common Shares to minority shareholders of Cabot Trust and in turn, Cabot L.P.
issued an additional 7,300 Partnership Units to Cabot Trust which resulted in proceeds of approximately $149,000. In February 2002, Calwest repaid $192.9 million, a portion of the Bridge Financing, including $298,000 of accrued interest, on behalf
of Cabot L.P. In exchange for this contribution, Calwest received an additional 9,354,591 Common Shares and in turn Cabot L.P. issued an additional 9,354,591 Partnership Units to Cabot Trust. The proceeds from the Revolving Credit Facility and
proceeds from a sale of real estate in 2001 were also used to repay the outstanding balance on the Bridge Financing.



As of December 31, 2002, Cabot L.P. had $151.9 million of fixed rate debt secured by properties (excluding discounts and premiums), $271 million of
unsecured borrowings under its Revolving Credit Facility, $255 million of unsecured debt (excluding premiums) and a 40% debt-to-total undepreciated assets ratio. In the future, Cabot L.P. expects to continue to maintain this ratio at 40% or less,
but is not required to do so.



On February 14, 2003, Cabot L.P.
completed its tender offers (the Offers) to purchase its 7.125% Redeemable Notes Due 2004 (the 7.125% Notes), 8.200% Series A Medium Term Notes Due 2005 (the 8.200% Notes) and 8.500% Series A Medium Term Notes Due
2010 (the 8.500% Notes and together with the 7.125% Notes and the 8.200% Notes, the Securities). As of 5:00 p.m., New York City time, on February 13, 2003 (the Expiration Date), Cabot L.P. had received tenders for
98.13% of the issued and outstanding 7.125% Notes, 100% of the issued and outstanding 8.200% Notes and 86.95% of the issued and outstanding 8.500% Notes. Cabot L.P. has accepted for payment all of those Securities tendered as of the Expiration Date.



In accordance with the terms and conditions of its Offer to
Purchase and Consent Solicitation Statement dated January 15, 2003 and the related Letter of Transmittal (the Offer to Purchase), on February 11, 2003, the second business day immediately preceding the Expiration Date, the consideration
(excluding accrued interest) to be paid for each series of Securities was determined to be as follows:



| |  |  | $1,058.90 for each $1,000 principal amount of 7.125% Notes validly tendered and not withdrawn;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | $1,123.00 for each $1,000 principal amount of 8.200% Notes validly tendered and not withdrawn; and
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | $1,207.83 for each $1,000 principal amount of 8.500% Notes validly tendered and not withdrawn.
| | - |  | ----------------------------------------------------------------------------------------------



15



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The consideration was
determined by reference to a fixed spread over the yield to maturity of the applicable reference U.S. Treasury security specified in the Offer to Purchase, at 3:00 p.m., New York City time, on February 11, 2003. The consideration includes a $20
consent payment that will be paid for each $1,000 principal amount of Securities tendered on or prior to January 29, 2003 (the Consent Payment Deadline), and not withdrawn. No consent payment will be paid in respect of Securities
tendered after the Consent Payment Deadline.



As of the Consent
Payment Deadline, the Consent Condition to the Offers was satisfied, which means that there were validly tendered and not withdrawn Securities in an aggregate principal amount sufficient to authorize the execution of Supplemental
Indenture No. 3, Supplemental Indenture No. 4 and Supplemental Indenture No. 5 (together, the New Supplemental Indentures), which amend the Indenture under which the Securities were issued (the Amendments). As of the Consent
Payment Deadline, Cabot L.P. had received valid tenders for 98.13% of the issued and outstanding 7.125% Notes, 100% of the issued and outstanding 8.200% Notes and 86.95% of the issued and outstanding 8.500% Notes. Accordingly, on January 30, 2003,
Cabot L.P and The Bank of New York, as Trustee (and, in the case of Supplemental Indenture No. 3, Cabot Trust) executed and entered into the New Supplemental Indentures. The Amendments and the New Supplemental Indentures became operative upon Cabot
L.P.s acceptance for purchase of those Securities validly tendered and not withdrawn as of the Expiration Date.



In addition, Cabot L.P. has filed an application with The New York Stock Exchange (the NYSE) and the Securities and Exchange Commission to
delist the 7.125% Notes from the NYSE. If this application is granted, because Cabot L.P. has fewer than 300 holders of each class of the Securities, Cabot L.P. will no longer be subject to any periodic reporting requirements under Sections 13(a)
and 15(d) of the Securities Exchange Act of 1934, as amended. If the application is approved, Cabot L.P. does not intend to continue providing financial information to the holders of Securities. There may be no active market in the Securities
following consummation of the Offers.



Cabot L.P. funded the
purchase of the Securities pursuant to the Offers using proceeds from a loan received from Goldman Sachs Mortgage Company (GSMC), an affiliate of Goldman, Sachs & Co., the dealer manager for the Offers.



The loan from GSMC is secured by a first-priority perfected pledge by Calwest
Industrial Properties, LLC of its equity interests in Cabot Trust and has a maturity date that is approximately six months from the date of closing, subject to two three-month extension options. In order to exercise any extension option, Cabot L.P.
would be required to pay an extension fee at the time of the extension and to deliver mortgages on properties satisfactory to GSMC as additional collateral for a portion of the loan. The initial interest rate on the loan is equal to one-month London
Inter Bank Offer Rate (LIBOR) plus 1.0% and, during any extension terms, the portion of the loan that is secured by mortgages will bear an interest rate of one-month LIBOR plus 1.50% and the portion of the loan that is secured only by
the equity interests in Cabot Trust will bear an interest rate of one-month LIBOR plus 4.00%. The loan is prepayable in whole or in part at any time, and Cabot L.P. is required to apply net cash proceeds received from the sale of any assets toward
partial prepayment of the loan (subject to certain exceptions). The loan documents contain various financial covenants with respect to Cabot L.P. and Cabot Trust.



Cabot L.P. plans to repay the loan by a combination of the following: (i) a refinancing of certain of its existing assets
and/or (ii) the sale of certain of its existing assets. No decision has been made concerning the exact amounts that would be sought or realized from each of these alternatives. Such decision will be made based on Cabot L.P.s review from time
to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions and such other factors as Cabot L.P. may deem appropriate.



Cash and cash equivalents totaled $24.7 million at December 31, 2002,
representing an increase of $15.9 million compared to June 30, 2002. This increase is mainly attributable to the sales proceeds received from the two properties that were sold on December 20, 2002. These proceeds, along with excess cash, were used
to paydown the outstanding balance on the Revolving Credit Facility by $20.0 million in January 2003.



RATIO OF EARNINGS TO FIXED CHARGES



We have computed the ratios of earnings to fixed charges and preferred distributions by dividing income from continuing operations, less income allocable to preferred unitholders, plus fixed charges,
plus distributed income of equity investees, less earnings of equity investees, less interest capitalized, by fixed charges. Fixed charges consist of interest costs, whether expensed or capitalized, amortization of debt premiums, amortization of
deferred financing costs and preferred distributions.



The ratio
of earnings to fixed charges was 1.69 for the six months ended December 31, 2002 compared to 1.67 for the six months ended December 31, 2001. The December 31, 2001 ratio was adjusted to remove the impact of $51.3 million of severance and merger
costs to make the ratios more comparable.



16



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|ITEM 3. |  | QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ------------------------------------------



Cabot L.P.s exposure to market risk has not changed materially from its exposure at June 30, 2002 as set forth in Item 7A in Cabot L.P.s Form
10-K for the fiscal year ended June 30, 2002.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



Cabot Trusts chief executive officer and chief financial officer, after evaluating the effectiveness of the Cabot L.P.s disclosure
controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the Evaluation Date) within 90 days before the filing date of this quarterly report, have concluded that as of
the Evaluation Date, Cabot L.P.s disclosure controls and procedures were adequate and designed to ensure that material information relating to Cabot L.P. and its consolidated subsidiaries would be made known to them by others within those
entities. There were no significant changes in Cabot L.P.s internal controls or to Cabot L.P.s knowledge, in other factors that could significantly affect its disclosure controls and procedures subsequent to the Evaluation Date.





PART II:    OTHER INFORMATION



|ITEM 1. |  | LEGAL PROCEEDINGS
|------- |  | -----------------



Cabot L.P. is not a party to any material litigation nor, to Cabot L.P.s knowledge, is any litigation threatened against Cabot L.P.,
other than routine actions arising in the ordinary course of business, substantially all of which are expected to be covered by liability insurance and which, in the aggregate, are not expected to have a material adverse effect on the business,
results of operations or financial condition of Cabot L.P.



|ITEM 2. |  | CHANGES IN SECURITIES AND USE OF PROCEEDS
|------- |  | -----------------------------------------



None



|ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES
|------- |  | -------------------------------



None



|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- |  | ---------------------------------------------------



Not Applicable



|ITEM 5. |  | OTHER INFORMATION
|------- |  | -----------------



None



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORMS 8-K
|------- |  | ---------------------------------



(a)   The following documents are filed as part of this report:



1.

Exhibit 99.1 Certification of Principal Executive Officer and Principal Financial
Officer of Cabot Industrial Properties, L.P.2.

Exhibit 99.2 Certification of Principal Executive Officer and Principal Financial
Officer of Cabot Industrial Properties, L.P.3.

Exhibit 99.3 Press release of Cabot Industrial Properties, L.P. dated February 14,
2003.




(b)   Reports on Form 8-K



1.

On October 3, 2002, Cabot L.P. filed a Form 8-K dated September 11, 2002 to report
information under Item 5 of Form 8-K.2.

On December 18, 2002, Cabot L.P. filed a Form 8-K dated December 16, 2002 to report
information under Item 5 and 7 of Form 8-K.




17



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized as of the 14th day of February 2003.



|                 
|-----------------
|                 
|                 
|                 
|                 
|                 
|February 14, 2003
|Date             
|                 
|                 
|February 14, 2003
|Date             
|                 
|                 



18



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Statement
Under Oath of Principal Executive Officer Regarding Facts and

Circumstances Relating to Exchange Act Filings



I, Daniel S. Weaver, state and attest that:



(1)    I have reviewed this quarterly report on Form 10-Q
of Cabot Industrial Properties, L.P.



(2)    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this quarterly report;



(3)    Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



(4)    The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



(a)    designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



(b)    evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and



(c)    presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;



(5)    The
registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



(a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and



(b)    any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal controls; and



(6)    The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



/s/    DANIEL S. WEAVER

Daniel S. Weaver

February 14, 2003



19



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Statement
Under Oath of Principal Financial Officer Regarding Facts and

Circumstances Relating to Exchange Act Filings



I, Christopher L. Hughes, state and attest that:



(1)    I have reviewed this quarterly report
on Form 10-Q of Cabot Industrial Properties, L.P.



(2)    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this quarterly report;



(3)    Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



(4)    The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



(a)    designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



(b)    evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and



(c)    presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;



(5)    The
registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



(a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and



(b)    any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal controls; and



(6)    The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



/s/    CHRISTOPHER L. HUGHES

Christopher L. Hughes

February 14, 2003



20



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INDEX TO
EXHIBITS



|Exhibit Number |  | Description                                                                                                      
|-------------- |  | -----------------------------------------------------------------------------------------------------------------
|              
|99.1           |  | Certification of Principal Executive Officer and Principal Financial Officer of Cabot Industrial Properties,
L.P.
|              
|99.2           |  | Certification of Principal Executive Officer and Principal Financial Officer of Cabot Industrial Properties,
L.P.
|              
|99.3           |  | Press release of Cabot Industrial Properties, L.P. dated February 14, 2003.