<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-K/A
                                AMENDMENT NO. 1
                                        
                                        
(Mark One)
     [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                   EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1998

                                      OR

     [_]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE   
                           SECURITIES EXCHANGE ACT OF 1934

                      FOR THE TRANSITION PERIOD FROM   TO


                        Commission file number 1-14516
                                        
                           PRENTISS PROPERTIES TRUST
            (Exact name of registrant as specified in its charter)

        MARYLAND                                                 75-2661588
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)
 
3890 WEST NORTHWEST HIGHWAY, SUITE 400, DALLAS, TEXAS              75220
(Address of Registrant's Principal Executive Offices)            (Zip Code)
                                        
                                (214) 654-0886
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:


        TITLE OF EACH CLASS            NAME OF EACH EXCHANGE ON WHICH REGISTERED
        -------------------            -----------------------------------------
Common Shares of Beneficial Interest,        New York Stock Exchange, Inc.
     par value $.01 per share
                                                                          
  Preferred Share Purchase Rights            New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

                                     NONE
                               (Title of class)

     Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [_]

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

     The aggregate market value of the voting stock held by non-affiliates of
the registrant, as of March 23, 1999, was approximately $698,724,421.

     As of  March 23, 1999, the number of Common Shares of Beneficial Interest
outstanding was 37,856,595, and the number of outstanding Participating
Cumulative Redeemable Preferred Shares of Beneficial Interest, Series A, was
3,773,585.

                      DOCUMENTS INCORPORATED BY REFERENCE
                                        
     Part III incorporates by reference the Company's Definitive Proxy Statement
to be filed with respect to the Annual Meeting of Shareholders to be held on May
4, 1999.
<PAGE>
 
     This Amendment No. 1 to Form 10-K (the "Form 10-K/A") amends and
supplements the annual report on Form 10-K for the fiscal year ended December
31, 1998, filed with the SEC on March 29, 1999 (the "Form 10-K"), of Prentiss
Properties Trust (the "Company"). Capitalized terms used herein have the
meanings ascribed to such terms in the Form 10-K unless otherwise defined
herein.

     Item 7A of the Company's annual report on Form 10-K for the year ended
December 31, 1998 is amended to read as follows:

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's primary market risk exposure is to changes in interest rates
as a result of its line of credit and long-term debt.  At December 31, 1998, the
Company had outstanding total indebtedness, including its pro rata share of
Joint Venture Debt and construction loans of approximately $877.3 million, or
approximately 44.7% of total market capitalization.  The Company's interest rate
risk objective is to limit the impact of interest rate fluctuations on earnings
and cash flows and to lower its overall borrowing costs.  To achieve this
objective, the Company manages its exposure to fluctuations in market interest
rates for its borrowings through the use of fixed rate debt instruments to the
extent that reasonably favorable rates are obtainable with such arrangements and
may enter into derivative financial instruments such as interest rate swaps,
caps and treasury locks to mitigate its interest rate risk on a related
financial instrument or to effectively lock the interest rate on a portion of
its variable debt.  The Company does not enter into derivative or interest rate
transactions for speculative purposes.  Approximately 58% of the Company's
outstanding debt was subject to fixed rates with a weighted average of 7.29% at
December 31, 1998. An additional 13% of the Company's outstanding debt at
December 31, 1998 was effectively locked at an interest rate of 7.50% through an
interest rate swap agreement for a notional amount of $110.0 million.  The
Company regularly reviews interest rate exposure on its outstanding borrowings
in an effort to minimize the risk of interest rate fluctuations.

     In addition to the risk of interest rate fluctuations, the Company was
exposed to market risk with respect to a forward stock contract that the Company
entered into in February 1998. On February 2, 1998, the Company closed a direct
placement of 1,100,000 common shares to an affiliate of Union Bank of
Switzerland ("UBS") for a gross consideration of $29.7 million, or $27.00 per
share.  In a related transaction, the Company entered into a forward stock
contract with UBS which provided that during the first year after the closing of
the direct placement, the Company would have the right to consummate a share
settlement with UBS based on the then market price for the common shares. On
January 21, 1999, the Company reacquired all of the 1,100,000 common shares for
approximately $30.0 million with proceeds from borrowings under the Company's
line of credit.  The Company does not have any other material market-sensitive
financial instruments.

     The following table provides information about the Company's financial
instruments that are sensitive to changes in interest rates, including interest
rate swaps and debt obligations.  For debt obligations, the table presents
principal cash flows and related weighted average interest rates by expected
maturity dates including the Company's pro rata share of Joint Venture Debt
totaling $77.0 million.  For interest rate swaps, the table presents notional
amounts and weighted average interest rates by expected contractual maturity
dates.  Notional amounts are used to calculate the contractual payments to be
exchanged under the contract.  Weighted average variable rates are based on
implied forward rates in the yield curve as of December 31, 1998.

<TABLE>
<CAPTION>
                                                             EXPECTED MATURITY DATE
                                                                 (IN THOUSANDS)
                                   ----------------------------------------------------------------------------------
                                                                                                              FAIR 
                                                                                                              ----
                                    1999      2000      2001      2002      2003     THEREAFTER     TOTAL     VALUE  
                                    ----      ----      ----      ----      ----     ----------     -----     -----     
<S>                              <C>       <C>       <C>       <C>       <C>       <C>             <C>       <C>
LIABILITIES
Long-Term Debt:
   Fixed Rate                    $         $         $         $          $63,020     $445,867     $508,887  $508,887
      Average Interest               7.29%    7.29%      7.29%     7.29%     7.29%        7.20%
       Rate                                                               
   Variable Rate                  120,000   13,151    135,225   100,000                             368,376   368,376
      Average Interest               6.45%    6.46%      6.47%     6.44%  
       Rate                                                               
                                                                          
INTEREST RATE DERIVATIVES                                                 
Interest Rate Swaps:                                                      
   Variable to Fixed             $         $         $         $          $           $110,000     $110,000  $110,000
      Avg. Pay Rate                  6.25%    6.25%      6.25%     6.25%     6.25%        6.25%
      Avg. Receive Rate              5.06%    5.06%      5.06%     5.06%     5.06%        5.06%
</TABLE>
<PAGE>
 
     The table incorporates only those exposures that exist as of December 31,
1998 and does not consider exposures or positions which could arise after that
date.  In addition, because firm commitments are not represented in the table
above, the information presented therein has limited predictive value.  As a
result, the Company's ultimate realized gain or loss with respect to interest
rate fluctuations will depend on the exposures that arise during the future
period, prevailing interest rates, and the Company's hedging strategies at that
time.  There is inherent rollover risk for borrowings as they mature and are
renewed at current market rates.  The extent of this risk is not quantifiable or
predictable because of the variability of future interest rates and the
Company's financing requirements.



Exhibits
--------

23.1  -- Consent of PricewaterhouseCoopers LLP.
<PAGE>
 
                                   SIGNATURES

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

                                     PRENTISS PROPERTIES TRUST



                                     By: /s/ Thomas P. Simon
                                        ----------------------------------------
                                        Thomas P. Simon
                                        Vice President and Principal
                                        Accounting Officer

Date:  April 23, 1999

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

<TABLE>
<CAPTION>
             Date                                                    Signature
             ----                                                    ---------
       <S>                                   <C>
       April 23, 1999                        *
                                             ---------------------------------------------------------
                                             Michael V. Prentiss
                                             Chief Executive Officer
                                             Chairman of the Board and Trustee
                                             
       April 23, 1999                        /s/ Thomas F. August
                                             ---------------------------------------------------------
                                             Thomas F. August
                                             President and Chief Operating Officer
                                             Trustee
                                             
       April 23, 1999                        /s/ Michael A. Ernst
                                             ---------------------------------------------------------
                                             Michael A. Ernst
                                             Chief Financial Officer
                                             
       April 23, 1999                        /s/ Thomas P. Simon
                                             ---------------------------------------------------------
                                             Thomas P. Simon
                                             Vice President and Principal Accounting Officer
                                             
       April 23, 1999                        *
                                             ---------------------------------------------------------
                                             Thomas J. Hynes, Jr.
                                             Trustee
                                             
       April 23, 1999                        *
                                             ---------------------------------------------------------
                                             Barry J.C. Parker
                                             Trustee
                                             
       April 23, 1999                        *
                                             ---------------------------------------------------------
                                             Dr. Leonard M. Riggs, Jr.
                                             Trustee
                                             
       April 23, 1999                        *
                                             ---------------------------------------------------------
                                             Ronald G. Steinhart
                                             Trustee
                                             
       April 23, 1999                        *
                                             ---------------------------------------------------------
                                             Lawrence A. Wilson
                                             Trustee
</TABLE> 

*  By: /s/ Thomas F. August
       ------------------------------
       Thomas F. August
       Attorney-in-Fact