UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                      ------------------------------------


                                    FORM 10-K

[X]                      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
                          For the Fiscal Year Ended December 31, 1996
                                Commission File Number 0-21849

                                              OR

[  ]                   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                        For the Transition Period from ______ to ______

                             ------------------------------------


                                 METROPOLIS REALTY TRUST, INC.
                    (Exact name of Registrant as specified in its charter)

              MARYLAND                                            13-3910684
   (State or other jurisdiction of                               (IRS Employer
   incorporation or organization)                            Identification No.)

                                885 Third Avenue
                                   12th Floor
                            New York, New York 10022
          (Address of principal executive offices, including zip code)

                                 (212) 593-5400
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

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

                                 Title of Class
                                 --------------


            Class A Common Stock, par value $10.00 per share
            Class B Common Stock, par value $10.00 per share
            Class C Common Stock, par value $10.00 per share

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

                     Yes [ ]         No [x]



<PAGE>




Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) 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 or any amendment to this Form 10-K. [x]

The Common Stock is not listed on any exchange, the Company does not intend to
list the Common Stock on any exchange in the near term, there is not currently a
public market for the Common Stock and there can be no assurance that an active
trading market for the Common Stock will develop or be sustained.

As of March 28, 1997, there were 12,963,046 shares of the Registrant's Common
Stock issued and outstanding.


                                       DOCUMENTS INCORPORATED BY REFERENCE:

                    The Exhibits to the Company Registration Statement on Form
                10, as amended, are hereby incorporated by reference in Item 14
                of this Annual Report on Form 10-K.

                                                      -2-


<PAGE>



                                                 TABLE OF CONTENTS


<TABLE>
<CAPTION>

PART I
          <S>           <C>                                                                                     <C>
         ITEM 1.    BUSINESS....................................................................................  4
         ITEM 2.    PROPERTIES..................................................................................  8
         ITEM 3.    LEGAL PROCEEDINGS........................................................................... 17
         ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................... 17

PART II
         ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                    STOCKHOLDER MATTERS......................................................................... 18
         ITEM 6.    SELECTED FINANCIAL DATA..................................................................... 18
         ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS......................................................... 21
         ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................................. 25
         ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                    ACCOUNTING AND FINANCIAL DISCLOSURE......................................................... 45

PART III
         ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......................................... 46
         ITEM 11.   EXECUTIVE COMPENSATION...................................................................... 49
         ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                    MANAGEMENT.................................................................................. 49
         ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................. 52
         ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                    FORM 8-K.................................................................................... 54

</TABLE>


               ---------------------------------------------------



             CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
           PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT OF 1995

         WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND
"BUSINESS -QUALIFICATION AS A REIT". READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF OR THEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES OCCURRING AFTER
THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. THE
COMPANY'S ACTUAL RESULTS OR OUTCOMES MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED.

                                                      -3-


<PAGE>



                                                      PART I

ITEM 1.           BUSINESS

                  Overview

                  Metropolis Realty Trust, Inc., a Maryland corporation (the
"Company"), is a real estate investment trust (a "REIT"). The Company was formed
on May 13, 1996 to facilitate the consummation of the Second Amended Joint Plan
of Reorganization of 237 Park Avenue Associates, L.L.C. ("237 LLC") and 1290
Associates, L.L.C. ("1290 LLC" and, together with 237 LLC, the "Debtors"), dated
September 20, 1996 (as amended, the "Plan"), and, thereby, acquire the interests
of 237 LLC and 1290 LLC in the properties located in New York City at 237 Park
Avenue (the "237 Property") and 1290 Avenue of the Americas (the "1290
Property," and together with the 237 Property, the "Properties"). The Debtors
were two of the many companies, partnerships and joint ventures that
collectively constituted the United States operations of the Olympia & York
("O&Y") group of companies. The transactions contemplated by the Plan were
consummated on October 10, 1996 (the "Effective Date").

                  As depicted in the following chart, the Company owns a 95%
partnership interest, as general partner, in 237/1290 Lower Tier Associates,
L.P., a Delaware limited partnership (the "Lower Tier Limited Partnership")
which owns a 99% partnership interest, as limited partner, in each of 237 Park
Partners, L.P., a Delaware limited partnership (the "237 Property Owning
Partnership") and 1290 Partners, L.P., a Delaware limited partnership (the "1290
Property Owning Partnership," and together with the 237 Property Owning
Partnership, the "Property Owning Partnerships"). The Property Owning
Partnerships own the Properties. The remaining 1% interest in each of the
Property Owning Partnerships is owned by one of two wholly-owned subsidiaries of
the Company (the "GP Corps"), as general partner. The remaining 5% interest in
the Lower Tier Limited Partnership (the "LP Interest") is owned by a limited
partnership (the "Upper Tier Limited Partnership") which is owned almost
entirely by JMB/NYC Office Building Associates, L.P. ("JMB LP"), a former holder
of equity interests in the Debtors, as limited partner. The 5% LP Interest is
subordinated to the 95% partnership interest of the Company with respect to
certain priority distributions from the Lower Tier Limited Partnership. The
Upper Tier Limited Partnership, the Lower Tier Limited Partnership and the
Property Owning Partnerships are hereinafter referred to, collectively, as the
"Partnerships." Pursuant to the Plan, the Company also succeeded to certain
other assets held by the Debtors, and certain affiliates of the Debtors, as
further described under the caption titled "PROPERTIES -- Other Assets."

                                                      -4-


<PAGE>



The following chart depicts the Company's indirect ownership of the Properties
as described above.

                                                      [CHART]


                                                      -5-


<PAGE>




                  Business

                  Since the Effective Date, the Company has held, through its
interests in the Partnerships, the assets described below under "ITEM 2. --
PROPERTIES." The Company's principal business objective is to operate the
Properties in a manner that will maximize the Properties' revenues and value and
in turn maximize funds from operations and stockholder value. The Company may
acquire additional properties in the future, although it has no present plans to
do so. As further described under "MANAGEMENT OF THE COMPANY -- Asset Management
Agreement" and " -- Management and Leasing Agreements," the Property Owning
Partnerships have retained 970 Management, LLC (the "Asset Manager"), an
affiliate of Victor Capital Group, L.P. ("VCG"), to serve as asset manager and
Tishman Speyer Properties, L.P. (the "Property Manager/Leasing Agent"), to serve
as property manager/leasing agent to manage the day-to-day operations of the
Properties.

                  Competition

                  Numerous office building properties in New York City compete
with the Properties in attracting tenants to lease space. Some of these
competing properties are newer or better located than the Properties. The amount
of space available in competitive commercial properties in the New York City
area could have a material effect on the Property Owning Partnerships' ability
to lease space in the Properties and on the rents charged. However, the 237
Property is currently 99% occupied, with leases representing less than 4% of the
total rentable square feet expiring over the next four years and the 1290
Property is currently 95% occupied, with leases representing less than 12% of
the total rentable square feet expiring over the next four years. See "Item 2 --
Properties."

                  Employees

                  The Company does not have any employees. The Property Owning
Partnerships assumed the Debtors' labor agreements with respect to union
employees employed at the Properties. The Property Manager/Leasing Agent has
employed such union employees on behalf of the Property Owning Partnerships. The
Property Manager/Leasing Agent offered employment to certain of the non-union
employees of the Properties and will continue the Debtors' non-union employee
policies relating to seniority, vacations and severance.

                  The Plan provided that pursuant to section 1129(a)(13) of the
Bankruptcy Code, the Property Owning Partnerships or their successors and
assigns will continue to pay all retiree benefits related to the Properties
(within the meaning of section 1114 of the Bankruptcy Code), at the level
established in accordance with subsection (e)(1)(B) or (g) of section 1114 of
the Bankruptcy Code at any time prior to the Confirmation Date (as such term is
defined in the Plan) for the duration of the period the Debtors obligated
themselves to provide such benefits. The Company believes that there are no
unfunded retiree benefits liabilities under the pension plans established
pursuant to the labor agreements referred to above.

                  Qualification as a REIT

                  The Company will elect to be taxed as a REIT under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), commencing with its taxable year ending December 31, 1996. If
the Company qualifies for taxation as a REIT, the Company (subject to certain
exceptions) will not be subject to federal income taxation at the corporate
level on income it distributes to stockholders so long as it distributes at
least 95% of its REIT taxable income. For any year in which the Company does not
meet the requirements for electing to be taxed as a REIT, it will be taxed as a
corporation. Although the Company believes that it will operate in such a manner
so as to qualify and remain so qualified, qualification as a REIT involves the
application of highly technical and complex Internal Revenue Code provisions for
which there are only limited judicial or administrative interpretations. The
determination of

                                                      -6-


<PAGE>



various factual matters and circumstances not entirely within the Company's
control may affect its ability to qualify and to continue to qualify as a REIT.
Moreover, no assurance can be given that legislation, new regulations,
administrative interpretations or court decisions will not change the tax laws
with respect to qualification as a REIT or the Federal income tax consequences
of such qualification.

                  To obtain the favorable tax treatment accorded to a REIT under
the Internal Revenue Code, the Company generally will be required each year to
distribute to its stockholders at least 95% of its taxable income. The Company
will be subject to income tax on any of its undistributed taxable income and net
capital gain, and to a 4% nondeductible excise tax on the amount, if any, by
which certain distributions paid by it with respect to any calendar year are
less than the sum of 85% of its ordinary income plus 95% of its capital gain net
income for the calendar year, plus 100% of its undistributed income from prior
years.

                  The Company intends to make distributions to its stockholders
to comply with the distribution provisions of the Internal Revenue Code and to
avoid Federal income taxes and the nondeductible 4% excise tax. A substantial
portion of the Company's income will consist of the income of the Property
Owning Partnerships and the Company's cash flow will consist primarily of
distributions from the Property Owning Partnerships through the Lower Tier
Limited Partnership.

                  Differences in timing between the receipt of income and the
payment of expenses in arriving at taxable income of the Company, the Upper Tier
Limited Partnership, the Lower Tier Limited Partnership or the Property Owning
Partnerships, the effect of nondeductible capital expenditures, the creation of
reserves or required debt amortization payments could require the Company to
borrow funds on a short-term or long-term basis to meet the distribution
requirements that are necessary to continue to qualify as a REIT. In such
circumstances, the Company might need to borrow funds to avoid adverse tax
consequences even if the Company's management believes that the then prevailing
market conditions generally are not favorable for such borrowings or that such
borrowings are not advisable in the absence of such tax considerations. There is
no assurance that the Company will be able to continue to satisfy the annual
distribution requirement so as to qualify as a REIT.

                  In order for the Company to qualify as a REIT under the
Internal Revenue Code, not more than 50% in value of its outstanding stock may
be owned, directly or indirectly, by five or fewer individuals (defined in the
Internal Revenue Code to include certain entities) during the last half of a
taxable year (other than the first year) (the "Five or Fewer Requirement"), and
such shares of stock must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of 12 months (other than the first year) or
during a proportionate part of a shorter taxable year. In order to protect the
Company against the risk of losing its status as a REIT on account of a
concentration of ownership among its stockholders, the Company's Amended and
Restated Articles of Incorporation (the "Charter") subject to certain
exceptions, provides that no Person (as defined in the Charter) may beneficially
own, or be deemed to own by virtue of the attribution provisions of the Internal
Revenue Code, more than 7.9% (the "Ownership Limit") of the aggregate value of
the Company's shares of stock. The restrictions contained in the Charter,
however, may not ensure that the Company will be able to satisfy the Five or
Fewer Requirement in all cases. If the Company fails to satisfy such
requirement, the Company's status as a REIT will terminate, and the Company will
not be able to prevent such termination. If the Company were to fail to qualify
as a REIT in any taxable year, the Company would be subject to Federal income
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates, and would not be allowed a deduction in computing its
taxable income for amounts distributed to its stockholders. Moreover, unless
entitled to relief under certain statutory provisions, the Company also would be
ineligible for qualification as a REIT for the four taxable years following the
year during which qualification was lost. Such disqualification would reduce the
net earnings of the Company available for investment or distribution to its
stockholders due to the additional tax liability of the Company for the years
involved.

     Subject to certain exceptions, the Charter does not permit any person to
acquire or own (either actually or constructively under the applicable
attribution rules of the Code) more than the Ownership Limit. In

                                                      -7-


<PAGE>



addition, no holder may own or acquire (either actually or constructively under
the applicable attribution rules of the Code) shares of any class of the
Company's common stock, par value $10.00 per share (the "Common Stock"), if such
ownership or acquisition (i) would cause more than 50% in value of the
outstanding Common Stock to be owned by five or fewer individuals or (ii) would
otherwise result in the Company failing to qualify as a REIT. The Charter
provides that the foregoing ownership restrictions will not apply to persons
designated by Apollo Real Estate Investment Fund, L.P. ("Apollo") provided that
the aggregate percentage by which all individuals permitted, by designation, to
exceed the Ownership Limit will not be greater than 10%.

                  Any attempted acquisition (actual or constructive) of Common
Stock by a person who, as a result of such acquisition, would violate certain of
the limitations set forth in the Charter will cause the Common Stock purportedly
transferred to be automatically transferred to the trustee of a trust for the
benefit of a charitable beneficiary and such shares will not be entitled to
voting rights or rights to distributions and the transfer resulting in such
violation may be deemed void ab initio. Violations of the ownership limitations
may result in a repurchase by the Company of shares in excess of the Ownership
Limit.

ITEM 2.           PROPERTIES

                  The 1290 Property

                  The 1290 Property Owning Partnership holds the fee title to
the 1290 Property and all improvements thereon. The 1290 Property, completed in
1963, is a 43-story, first class commercial office building with approximately
1,964,000 rentable square feet of space. The building is centrally located in
midtown Manhattan and is connected to the famed "Rockefeller Center" complex via
an underground passageway.

                  The average occupancy rates for the 1290 Property for the
years 1992 through 1996 were 97%, 98%, 94%, 78% and 90%, respectively.

                  As of December 31, 1996, the 1290 Property was approximately
95% leased and there were leases and license agreements with 37 tenants and 4
licensees covering approximately 1,865,000 rentable square feet of space. As of
December 31, 1996, the annual average rent (including electricity and additional
rent payable on account of operating expenses and real estate tax escalations)
for office space leased in the building was approximately $39.70 per square
foot. As of December 31, 1996, approximately 47,000 square feet of space was
under lease to retail tenants, at an average annual rent (including electricity
and additional rent payable on account of operating and real estate tax
escalations) of approximately $68.35 per rentable square foot. As of December
31, 1996, approximately 99,000 rentable square feet of office and retail space
was available for rent.

                  The building serves as the corporate headquarters of The
Equitable Life Assurance Society of the United States ("Equitable"). In addition
to Equitable, the building houses a variety of tenants, including law firms,
financial institutions and entertainment companies.


                                                      -8-


<PAGE>



                  The following table summarizes certain information regarding
the largest leases at the 1290 Property as of December 31, 1996:

<TABLE>
<CAPTION>


-----------------------------------------------------------------------------------------------------------------------------------
                                                                             Annual Base
                                                              Leased            Rent            Gross Rent         Date(s) of
                                                              square          per square        per square            Lease
Tenant                              Nature of Business      footage(1)      foot leased(2)    foot leased(3)       Expiration
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>                 <C>             <C>
Equitable(4)                       Insurance/Financial
                                   Services                513,054              $36.25(5)           $36.47(5)       12/31/11
-----------------------------------------------------------------------------------------------------------------------------------
Warner Communications, Inc.        Entertainment           268,577              $37.32(6)           $39.58(6)       6/30/12(7)
-----------------------------------------------------------------------------------------------------------------------------------
The Bank of New York               Financial Services      169,011              $35.65(8)           $36.59(8)       12/31/10(9)
-----------------------------------------------------------------------------------------------------------------------------------
EMI Entertainment World, Inc.      Entertainment           144,981              $37.09(10)          $37.50(10)      9/30/02
-----------------------------------------------------------------------------------------------------------------------------------
Other Office and Retail
Tenants(11)                        Various                 859,585              $39.04              $43.36          1997-2005
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Leased square footage does not include approximately 14,400 square feet of
storage space.

(2) Annual Base Rent means the amount contractually due (excluding adjustments
    related to recoveries from tenants for common area maintenance charges,
    taxes, utilities or other items and rent concessions) for the calendar month
    ending December 31, 1996, annualized. The Company believes that base rent is
    a conservative and appropriate measure for comparative purposes of
    commercial real estate rental revenue from office building properties that
    do not generate percentage rents based on sales.

(3) Gross Rent means Annual Base Rent plus recoveries from tenants for common
    area maintenance charges, taxes, utilities and other items. Information
    necessary to compute effective rent, including rent concessions, leasing
    commissions and tenant improvements is not available with respect to leases
    entered into prior to the date the Properties were acquired by the Property
    Owning Partnerships.

(4) The lease agreement with Equitable provides for the delivery of space to
    Equitable in three separate blocks; Block A, comprising 287,664 rentable
    square feet, Block B, comprising 135,528 rentable square feet and Block C,
    comprising 79,288 rentable square feet. Equitable is currently in possession
    of the space designated as Blocks A and B, and is entitled to a free rent
    period through June 1997 with respect to Block A and through October 1997
    with respect to Block B. The space designated as Block C is currently
    occupied by another tenant and such space will be delivered to Equitable on
    March 1, 1999. Equitable is entitled to a free rent period through December
    1999 with respect to Block C. In addition to free rent, Equitable is
    entitled to a credit against rent of up to approximately $1,625,000 for all
    three blocks as reimbursement for the cost of certain tenant improvements
    made by and paid for by Equitable.

(5) Does not include 10,574 square feet leased in the basement at an Annual Base
    Rent of $20 per square foot and a Gross Rent of $20.75 per square foot.

(6) The lease agreements with Warner Communications, Inc. ("Warner") provide
    that, with respect to 133,011 rentable square feet of space, Warner will not
    be required to pay rent until July 1, 1997. A block of space constituting
    24,380 rentable square feet is not scheduled to be delivered to Warner until
    June 30, 1998, following which Warner is entitled to a free rent period of
    approximately 14 1/2 months with respect to such space. Does not include
    6,422 square feet of space leased in the basement at an Annual Base Rent of
    $18.50 per square foot and a Gross Rent of $20.80 per square foot.


                                                      -9-


<PAGE>



(7) Leases with Warner expire May 31, 1999 (with respect to 76,708 square feet);
    February 28, 2000 (with respect to 28,056 square feet and 6,422 square feet
    in the basement); and June 30, 2012 (with respect to 157,391 square feet).

(8) Does not include 11,633 square feet of space leased in the basement at an
    Annual Base Rent and a Gross Rent of $40.00 per square foot.

(9) The Bank of New York lease expires May 31, 1998 (with respect to 24,380
    square feet); April 30, 2003 (with respect to 31,463 square feet and 11,633
    square feet in the basement); and December 31, 2010 (with respect to 100,159
    square feet). The Bank of New York lease provides that the Bank of New York
    has the option to terminate its lease with respect to 100,159 square feet on
    the third floor of the 1290 Property effective as of December 31, 2006 by
    giving the 1290 Property Owning Partnership notice on December 31, 2005 and
    by paying a fee of $1,000,000.

(10)     Does not include (i) 923 square feet of space leased in the basement at
         an Annual Base Rent of $17.32 per square foot and a Gross Rent of
         $18.32 per square foot and (ii) an additional 1,533 square feet of
         space leased in the basement at an Annual Base Rent of $32.50 per
         square foot and a Gross Rent of $35.37 per square foot.

(11)     Other Office and Retail Tenants includes 79,288 square feet of office
         space currently occupied by a tenant that is to be delivered to
         Equitable on March 1, 1999, as disclosed in footnote (4). Other Office
         and Retail Tenants also includes 24,380 square feet of office space
         currently occupied by a tenant that is to be delivered to Warner on
         June 30, 1998, as disclosed in footnote (6).

                  A major capital project at the 1290 Property which included a
renovation of the building's lobby was substantially completed in December 1996.
The total budget for the project was $7,700,000 with approximately $900,000
remaining to be paid as of December 31, 1996. Anticipated expenditures for other
capital projects for the 1290 Property in 1997 are approximately $2,746,000 and
relate primarily to: (i) the commencement of an elevator modernization program;
(ii) conversion of a refrigeration machine (in accordance with the 1992 Clean
Air Act); (iii) the replacement of the main roof and the repair of certain roof
setbacks; and (iv) removal of asbestos in several mechanical rooms. Capital
expenditures in future years are estimated to be $1,000,000 per annum, and
relate primarily to the continuation of the elevator modernization program.

                  An environmental report prepared for the Properties indicates
that the 1290 Property contains asbestos or asbestos containing materials in
several mechanical rooms and certain other locations. The total cost of removing
the asbestos in accordance with the operations and maintenance plan for the 1290
Property is estimated to be approximately $2,000,000 and the removal is
anticipated to occur over a two-year period.


                                                      -10-


<PAGE>



                  The following table shows anticipated lease expirations on an
aggregate basis for the period for each calendar year from 1997 through and
including 2006. Such chart assumes that there are no early terminations of
leases and that leases expire without extension by existing tenants pursuant to
lease options.

<TABLE>
<CAPTION>


-------------------------------------------------------------------------------------------------------------------------
                                                                                                  Percentage of Total
                                                                                                  1290 Property Owning
                                                Rentable Square          Annual Base Rent       Partnership Annual Base
   Year of Lease           Number of            Feet Subject to           Represented by            Rent Represented
    Expiration          Leases Expiring         Expiring Leases          Expiring Leases           by Expiring Leases
   ------------         ---------------         ---------------         -----------------         -------------------
-------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------
       <S>                     <C>                      <C>                    <C>                          <C>
       1997                    5                        80,190                 $2,493,588                   4.62%
-------------------------------------------------------------------------------------------------------------------------
       1998                    3                        34,355                 $1,218,626                   1.89%
-------------------------------------------------------------------------------------------------------------------------
       1999                    3                        80,562                 $2,908,093                   4.77%
-------------------------------------------------------------------------------------------------------------------------
       2000                    2                        35,596                 $1,353,180                   2.19%
-------------------------------------------------------------------------------------------------------------------------
       2001                    2                        98,501                 $4,207,620                   6.91%
-------------------------------------------------------------------------------------------------------------------------
       2002                    3                       221,334                 $9,171,696                  16.37%
-------------------------------------------------------------------------------------------------------------------------
       2003                    3                        48,440                $   878,487                   1.80%
-------------------------------------------------------------------------------------------------------------------------
       2004                    3                       163,190                 $7,861,872                  18.07%
-------------------------------------------------------------------------------------------------------------------------
       2005                    5                        16,218                $   922,548                   2.25%
-------------------------------------------------------------------------------------------------------------------------
       2006                    2                        91,042                 $3,811,656                   9.71%
-------------------------------------------------------------------------------------------------------------------------

</TABLE>

                  Annual real estate taxes assessed against the 1290 Property
for the fiscal years ended June 30, 1997, 1996 and 1995 were $17,300,250,
$19,023,178 and $19,094,400, respectively, which amounts were calculated on
assessed values of approximately $168,750,000, $189,000,000 and $180,000,000,
respectively.
See -- "Tax Certiorari Proceedings and Tenant Reimbursement Claims."

                  The 237 Property

                  The 237 Property Owning Partnership holds the fee title to the
237 Property and all improvements thereon. The 237 Property is a 21-story, first
class commercial office building with approximately 1,141,000 rentable square
feet of space. The building was completed in 1981 as a comprehensive renovation
of an existing structure and now features an interior layout of an open full
atrium. The building, centrally located in midtown Manhattan, is situated off of
one of New York City's prestigious thoroughfares and is within close proximity
to Grand Central Station, a transportation hub.

                  The average occupancy rates for the 237 Property for years
1992 through 1996 were 98%, 98%, 98%, 98% and 98%, respectively.

                  As of December 31, 1996, the 237 Property was approximately
99% leased and there were leases and license agreements with 16 tenants and 3
licensees covering approximately 1,126,000 rentable square feet of space. As of
December 31, 1996, the annual average rent (including electricity and additional
rent on this space payable on account of operating expenses and real estate tax
escalations) for office space leased in the building was approximately $43.40
per square foot. As of December 31, 1996, approximately 19,000 square feet of
space was under lease to retail tenants, at an average annual rent (including
electricity and additional rent on this space payable on account of operating
expenses and real estate tax escalations) of approximately $59.50 per rentable
square foot. As of December 31, 1996, approximately 15,000 rentable square feet
of office and retail space was available for rent.


                                                      -11-


<PAGE>



                  The following table summarizes certain information regarding
the largest leases at the 237 Property as of December 31, 1996:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                                          Annual Base           Gross
                                                                           Rent per           Rent per          Year of
                                                      Leased Square       square foot        square foot         Lease
          Tenant              Nature of Business       Footage(1)          leased(2)          leased(3)        Expiration

----------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                            <C>                <C>                 <C>          <C>
J. Walter Thompson           Advertising                    456,132            $22.39              $32.07       8/31/06
Company(4)

----------------------------------------------------------------------------------------------------------------------------
Swiss Reinsurance
Company, U.S. Branch
(and certain of its          Insurance/Financial
affiliates)                  Services                       279,906            $36.09              $57.74       8/31/01

----------------------------------------------------------------------------------------------------------------------------
E.M. Warburg, Pincus &
Co., Inc.                    Financial Services             148,197            $48.57(5)           $54.99       10/31/09

----------------------------------------------------------------------------------------------------------------------------
Champion International       Pulp and Paper
Corporation                  Industry                       110,800            $39.20              $44.80       9/30/11

----------------------------------------------------------------------------------------------------------------------------
Other Office and Retail
Tenants                      Various                        130,000            $39.27              $39.39      1998-2004
----------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1)       Leased square footage does not include approximately 1,000 square feet
          of storage space.

(2)       Annual Base Rent means the amount contractually due (excluding
          adjustments related to recoveries from tenants for common area
          maintenance charges, taxes, utilities or other items and rent
          concessions) for the calendar month ending December 31, 1996,
          annualized. The Company believes that base rent is a conservative and
          appropriate measure for comparative purposes of commercial real estate
          rental revenue from office building properties that do not generate
          percentage rents based on sales.

(3)       Gross Rent means Annual Base Rent plus recoveries from tenants for
          common area maintenance charges, taxes, utilities and other items.
          Information necessary to compute effective rent, including rent
          concessions, leasing commissions and tenant improvements is not
          available with respect to leases entered into prior to the date the
          Properties were acquired by the Property Owning Partnerships.

(4)       J. Walter Thompson Company ("JWT") has the option to terminate its
          lease on September 30, 2000 with respect to up to 110,607 rentable
          square feet of space on the 8th Floor and the 9th Floor if JWT's
          subtenant exercises its option to terminate its sublease. JWT must
          provide notice to the 237 Property Owning Partnership with respect to
          such termination at least one year in advance of such date.

(5)       The lease agreement with E.M. Warburg, Pincus & Co. ("Warburg Pincus")
          provides that with respect to 56,243 rentable square feet Warburg
          Pincus will not be required to pay rent until May 1, 1997. Fixed rent
          shall be abated in full with respect to the 77,238 square foot space
          for the months of September and October in each of 1997, 1998 and
          1999.

                  Anticipated expenditures for capital projects for the 237
Property in 1997 are approximately $1,000,000 and relate primarily to facade and
roof repairs, as well as an upgrade of the condenser water system. Capital
expenditures in future years are estimated to be $225,000 per annum.



                                                      -12-


<PAGE>



                  The following table sets forth anticipated lease expirations
on an aggregate basis for each calendar year from 1997 through and including
2006. This chart assumes that there are no early terminations of leases and that
leases expire without extension by existing tenants pursuant to lease options.

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------
                                                                                                  Percentage of Total
                                                                                                  237 Property Owning
                                                Rentable Square         Annual Base Rent          Partnership Annual
                           Number of             Feet Subject              Represented           Base Rent Represented
   Year of Lease        Leases/Licenses           to Expiring              by Expiring                by Expiring
    Expiration             Expiring             Leases/Licenses          Leases/Licenses            Leases/Licenses
-------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------
       <S>                    <C>                       <C>                  <C>                           <C> 
       1997                    1                         10,000               $    350,000                  .97%
-------------------------------------------------------------------------------------------------------------------------
       1998                    1                            900               $     36,000                  .10%
-------------------------------------------------------------------------------------------------------------------------
       1999                    2                         28,452                $ 1,147,560                 3.00%
-------------------------------------------------------------------------------------------------------------------------
       2000                    1                          3,450               $    196,656                  .58%
-------------------------------------------------------------------------------------------------------------------------
       2001                    3                        282,546                $10,159,128                32.79%
-------------------------------------------------------------------------------------------------------------------------
       2002                    -                              -                 -                              -
-------------------------------------------------------------------------------------------------------------------------
       2003                    2                         21,641               $    873,420                 3.53%
-------------------------------------------------------------------------------------------------------------------------
       2004                    2                          9,693               $    350,352                 1.46%
-------------------------------------------------------------------------------------------------------------------------
       2005                    -                              -                          -                     -
-------------------------------------------------------------------------------------------------------------------------
       2006                    1                        456,132                $10,898,364                53.13%
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

                  Annual real estate taxes assessed against the 237 Property for
the fiscal years ended June 30, 1997, 1996 and 1995 were $9,835,307, $9,511,807
and $8,900,056, respectively, which amounts were calculated on assessed values
of approximately $110,250,000, $108,450,000 and $102,000,000, respectively.
See -- "Tax Certiorari Proceedings and Tenant Reimbursement Claims."

                  Other Assets

                  Tenant Notes Receivable

                  An affiliate of O&Y was the holder of a note (the "Robinson
Silverman Note") issued by Robinson Silverman Pearce & Aronsohn ("Robinson
Silverman") dated April 1, 1989 in the face amount of $6,500,000 and a maturity
date of September 1, 1999, which note was executed in connection with Robinson
Silverman's lease at the 1290 Property. The Robinson Silverman Note was assigned
to the 1290 Property Owning Partnership on the Effective Date. In 1991 and 1992,
Robinson Silverman claimed certain concessions regarding the payment terms of
such note. Although 1290 LLC was unable to locate any records evidencing an
agreement to such concessions, Robinson Silverman has made payments reflecting
such concessions and such payments were not rejected by 1290 LLC and have not
been rejected by the Property Owning Partnerships. Without the Company
expressing any opinion with regard thereto, if such concessions were granted,
the Robinson Silverman note would have an outstanding principal balance as of
December 31, 1996 of $4,976,173, would bear interest at 7.5% per annum and would
require level monthly payments of interest and principal of $75,000. If such
concessions were not granted, then the Robinson Silverman Note would bear
interest at 10% and, based on the monthly payments of $75,000 received from
Robinson Silverman, the outstanding balance as of December 31, 1996 would be
approximately $6,065,644.

                  An affiliate of O&Y was the holder of a note (the "Warburg
Pincus Note," and together with the Robinson Silverman Note, the "Tenant
Notes"), issued by Warburg Pincus dated August 20, 1985, in the face amount of
$4,354,758, which note was executed in connection with Warburg Pincus' lease at
the 237 Property. The note is payable on October 31, 1999 and does not bear
interest prior to its maturity.

                  On the Effective Date, such affiliates of O&Y holding the
Tenant Notes assigned their interests in the Tenant Notes to the applicable
Property Owning Partnership.


                                                      -13-


<PAGE>



                  JMB Notes

                  Certain notes (the "JMB Notes") were issued by JMB LP's
predecessor in interest to an affiliate of O&Y in 1984 in connection with the
admission of such predecessor as a partner of the predecessor of the Debtors and
an affiliate of the Debtors which owned the property located at 2 Broadway, New
York, New York (the "2 Broadway Property"). The amount outstanding on an
aggregate basis under all the JMB Notes, as of the Effective Date, was
$83,918,815. On the Effective Date, the JMB Notes and related security
agreements were assigned by such O&Y affiliate to the Company. Immediately prior
to such assignment, the Company entered into a Participation Agreement with an
affiliate of JMB LP pursuant to which the Company or its designee will receive
the first $750,000 of payments made pursuant to, or in respect of, the JMB Notes
and the JMB LP affiliate will receive all further payments in respect of the JMB
Notes. Amounts, if any, distributable to JMB LP from the Upper Tier Limited
Partnership, including pursuant to the Company's purchase option and JMB LP's
put option as provided for in the Upper Tier Limited Partnership Agreement,
would first be applied to the prepayment of the JMB Notes. On the Effective
Date, the JMB Notes were restated. The JMB Notes, as restated, bear interest at
12.75% per annum and have a maturity date of January 1, 2001. The JMB Notes are
non-recourse and are payable solely out of the distributions JMB LP receives
from the Upper Tier Limited Partnership.

                  Claims Reserve

                  On the Effective Date, Bankers Trust Company, as disbursing
agent under the Plan, received $4,966,595 on behalf of the Company, representing
the amount of cash estimated to be required to pay in full all claims (disputed
or otherwise), including Priority Utility Tax Claims, discussed below, arising
from the Debtors' bankruptcy cases. As of December 31, 1996, $1,459,194 is being
held in the Claims Reserve (as such term is defined in the Plan) pending
resolution of such claims. The cash held in the Claims Reserve will be held in
trust for the benefit of holders of such claims pending determination of their
entitlement thereto. The Company believes that amounts in the Claims Reserve
will be sufficient to pay in full all claims arising from the Debtors'
bankruptcy cases.

                  Payments and distributions to each holder of a disputed claim
will be made in accordance with the provisions of the Plan as soon as
practicable after the date that the order or judgment of the Bankruptcy Court
allowing such disputed claim to be paid, without any interest thereon, from cash
held in the Claims Reserve becomes a final order.

                  In the event that any cash held in the Claims Reserve remains
after all claims have been allowed or disallowed and distributions have been
made in accordance with the Plan, such cash will be transferred to the Company.

                  Tax Certiorari Proceedings and Tenant Reimbursement Claims

                  The Debtors and their predecessors-in-interest commenced tax
certiorari proceedings which remain outstanding against the City of New York,
for over-assessment of property taxes for the tax years ending June 30, 1995
through June 30, 1997 with respect to the 237 Property and for the tax years
ending June 30, 1991 through June 30, 1997 with respect to the 1290 Property. In
addition, 2 Broadway Associates, L.P. ("2 Broadway LP") similarly commenced tax
certiorari proceedings against the City of New York for over- assessment of
property taxes for the tax years ending June 30, 1988 through June 30, 1995 with
respect to the 2 Broadway Property. The rights to the proceeds of the 2 Broadway
Property tax certiorari proceedings were assigned to the Company pursuant to the
Plan. See "-- Certain Assets Related to 2 Broadway." The Property Owning
Partnerships and the Company have executed stipulations which would substitute
the Property Owning Partnerships and the Company for the Debtors and 2 Broadway
LP, respectively, in such tax certiorari proceedings. Such stipulations have
been filed with the Bankruptcy Court and the Property Owning Partnerships and
the Company are awaiting the Bankruptcy Court's approval. The Company estimates
Net Tax

                                                      -14-


<PAGE>



Proceeds (as hereinafter defined) from such tax certiorari proceedings of
approximately $14,000,000. Certain current and former tenants of the Properties
and the 2 Broadway Property hold unsecured claims (the "Tenant Reimbursement
Claims") against the Property Owning Partnerships and the Company based upon a
right to payment provided in such tenant's lease, contingent upon the
realization by the Property Owning Partnerships and the Company of the proceeds,
if any, of any tax certiorari proceedings which were commenced by the Debtors
and 2 Broadway LP with respect to the Properties, net of any amounts, fees and
expenses incurred to prepare for, institute and prosecute such tax certiorari
proceedings (the "Net Tax Proceeds"). The Property Owning Partnerships and/or
the Company receiving such Net Tax Proceeds will cause an amount necessary, in
their sole determination, to reserve in full for all Tenant Reimbursement Claims
to be transferred to the Disbursing Agent for deposit in the Claims Reserve.
Within 30 days after the date of such deposit, the Property Owning Partnerships
and the Company will determine the entitlement of holders of Tenant
Reimbursement Claims to payment of such Tenant Reimbursement Claims by reason of
the receipt of such Net Tax Proceeds and, in making such determination, will be
entitled to give effect to any rights of setoff, recoupment or other claims that
the Property Owning Partnerships and/or the Company or any
predecessor-in-interest may have against the holders of such Tenant
Reimbursement Claims. Thereafter, the Property Owning Partnerships and/or the
Company will deliver a notice of such determination to each holder of a Tenant
Reimbursement Claim. Each holder of a Tenant Reimbursement Claim will have 30
days after receipt of such notice to object to the determination of the amount
to which it is entitled. If the holder of a Tenant Reimbursement Claim does not
object to the determination by the Property Owning Partnerships and/or the
Company within such 30 day period, then such Tenant Reimbursement Claim will be
paid from the Claims Reserve at the request of the Property Owning Partnerships
and/or the Company, without the necessity of Bankruptcy Court approval. If the
holder of a Tenant Reimbursement Claim objects on a timely basis to the
determination by the Property Owning Partnerships and/or the Company, then such
Tenant Reimbursement Claim will be a disputed claim and no payments will be made
on account of such claim until such claim is allowed, in whole or in part, by
final order of the Bankruptcy Court. All remaining Net Tax Proceeds held by the
Property Owning Partnerships will be distributed to the Lower Tier Limited
Partnership which will in turn distribute such Net Tax Proceeds related to the
Properties to the Company; provided, that, the Property Owning Partnerships are
required to retain sufficient cash to pay all disputed Tenant Reimbursement
Claims until such claims have been allowed or disallowed. The Company estimates
that approximately $6,414,000 will be paid to current and former tenants in
respect of Tenant Reimbursement Claims resulting in a net recovery by the
Property Owning Partnerships of approximately $7,586,000.

                  Priority Utility Tax Claims

                  Pursuant to the Plan, the Debtors were deemed to have objected
to all claims against the Debtors arising from the nonpayment of New York State
or New York City utility taxes (the "Priority Utility Tax Claims") evidenced by
a filed proof of claim. As successor to the Debtors, the Upper Tier Limited
Partnership has the exclusive right to prosecute any objection to Priority
Utility Tax Claims, any litigation related to any objection to Priority Utility
Tax Claims and to compromise or settle any such objection or litigation.
Pursuant to the Plan, the Company established a claims reserve for such claims.
In the event that the Upper Tier Limited Partnership settles any Priority
Utility Tax Claim, the Property Owning Partnership owning the Property in
question will indemnify the holders of equity interests in the Debtor which had
formerly owned the Property in question (and their successors and assigns) from
all claims which may be made by the City or State of New York in respect of
utility taxes, interest and penalties in connection with such Property unless
such settlement includes a release of such holders from all such claims. At such
time as the Priority Utility Tax Claims are disallowed or allowed (as determined
by either a court of competent jurisdiction or by agreement between the Company
and the relevant taxing authority), the Disbursing Agent will at the direction
of the Company pay any such allowed claims from cash held in such claims reserve
and any amount held in the claims reserve in excess of the amount of such
allowed claims will be paid to the Company. The Company believes that amounts
held in such claims reserve will be sufficient to pay in full all Priority
Utility Tax Claims.



                                                      -15-


<PAGE>




                  Certain Assets Related to 2 Broadway

                  Prior to the Merger of the Debtors into the Upper Tier Limited
Partnership, 1290 LLC assigned to the Company all of its rights in certain
assets related to the sale of 2 Broadway that was owned by 2 Broadway LP, an
affiliate of the Debtors, including the assets described below and segregated
reserve accounts established by the Trustee, as disbursing agent under the
reorganization plan related to the 2 Broadway Property (the "2 Broadway Plan"),
(i) in the amount of $2,400,000 for potential utility tax claims of the taxing
authorities of the City and State of New York (the "2 Broadway Priority Utility
Tax Claims") and (ii) in the amount of $811,278, for the payment of all claims
which were not then, but might become allowed claims (other than the 2 Broadway
Priority Utility Tax Claims) in connection with the 2 Broadway Plan. As of the
Effective Date, the $811,278 reserve was reduced to $346,139 as a result of the
payment of certain claims. Pursuant to an Assumption and Indemnification
Agreement, dated as of the Effective Date, by and among 1290 LLC, 2 Broadway LP,
the Company and the Indenture Trustee, (i) the Company assumed any and all
remaining obligations of 1290 LLC and 2 Broadway LP in connection with any
claims reserved pursuant to section 9.3 of the 2 Broadway Plan, and (ii) the
Company received the remaining $346,139 of the claims reserve. The balance in
the 2 Broadway Utility Tax Claims reserve account as of December 31, 1996 was
$2,553,515. The Company believes that amounts held in the 2 Broadway claims
reserve will be sufficient to pay in full all claims arising under the 2
Broadway Plan.

         The assets related to the 2 Broadway Property that were assigned to the
Company include the following:

         (a)   the right to receive any surplus amounts in the claims reserve
               and the utility tax reserve under the 2 Broadway Plan;

         (b)   the right to proceeds of certain tax certiorari proceedings
               existing with respect to 2 Broadway (net of costs of collections
               and payments to be made to tenants);

         (c)   the right to receive any remaining post-closing apportionments
               under the contract of sale pursuant to which the 2 Broadway
               Property was sold; and

         (d)   the right to receive dividends and distributions
               under certain non-transferable stock received by 2
               Broadway LP in connection with the bankruptcy of
               Drexel Burnham Lambert, a former tenant of the 2
               Broadway Property.

                  The Company has executed stipulations which would substitute
the Company for 2 Broadway LP in the tax certiorari proceedings described in (b)
above. Such stipulations have been filed with the Bankruptcy Court and the
Company is awaiting the Bankruptcy Court's approval. The Company received the
remaining post-closing apportionments described in (c) above, totaling
approximately $86,000, in 1997.

                  Indebtedness

                  On the Effective Date, The Chase Manhattan Bank ("Chase") and
certain other lenders made a loan to the Property Owning Partnerships in the
aggregate principal amount of $420,000,000. The net proceeds (after fees,
expenses and escrows) of the Chase financing (approximately $398,741,189) were
used to make distributions pursuant to the Plan. The Company intends to cause
the Property Owning Partnerships to pay debt service on this indebtedness out of
the Property Owning Partnerships' revenues from their operation of the
Properties. The Company and the Property Owning Partnerships do not intend to
incur any additional indebtedness, other than trade payables incurred in the
ordinary course of business. The Company believes that the cash flow generated
by the Properties will be sufficient to meet the debt service requirements of
the loan and that it has sufficient cash to fund its working capital needs for
the next twelve months.


                                                      -16-


<PAGE>



ITEM 3.           LEGAL PROCEEDINGS

                  There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business of the Company, against
or involving the Company, the Partnerships or the Properties.

                  Retention of Jurisdiction by Bankruptcy Court

                  The Bankruptcy Court may retain jurisdiction, and if the
Bankruptcy Court exercises its retained jurisdiction, it will have exclusive
jurisdiction of all matters arising out of, and related to, the Plan and, for
among other things, the following purposes: (a) to determine any and all
adversary proceedings, applications and contested matters; (b) to ensure that
distributions to holders of Allowed Claims (as defined in the Plan) are
accomplished in accordance with the Plan; (c) to hear and determine any timely
objections to Administrative Expense Claims (as defined in the Plan) or to
proofs of claim and equity interests filed, including to allow or disallow any
Disputed Claim (as defined in the Plan), in whole or in part; (d) to issue such
orders in aid of execution of the Plan, to the extent authorized by section 1142
of the Bankruptcy Code; (e) to consider any modifications of the Plan, to cure
any defect or omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order (as such term is defined in
the Plan); (f) to hear and determine disputes arising in connection with the
interpretation, implementation, or enforcement of the Plan; (g) to hear and
determine matters concerning state, local and federal taxes in accordance with
sections 346, 505 and 1146 of the Bankruptcy Code including, without limitation,
the New York Real Property Transfer Gains Tax, Article 31-B of the New York Tax
Law; and (h) to enter a final decree closing the reorganization cases of the
Debtors.

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

                  No matters have been submitted to a vote of the Company's
security holders since the Effective Date.

                                                      -17-


<PAGE>



                                                      PART II


ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS

                  The Common Stock is not listed on any exchange, the Company
does not intend to list the Common Stock on any exchange in the near term, there
is not currently a public market for the Common Stock and there can be no
assurance that an active trading market for the Common Stock will develop or be
sustained.

          As of March 13, 1997, there were approximately 130 holders of record
of the Company's Common Stock.

                  Distribution Policy

                  On March 6, 1997, the Board of Directors adopted a
distribution policy calling for regular quarterly distributions of $.25 per
share of Common Stock. The Board of Directors, in its sole discretion,
determines the actual distribution rate based on a number of factors, including
the amount of cash available for distribution, the Company's financial
condition, capital expenditure requirements for the Company's Properties, the
annual distribution requirements under the REIT provisions of the Internal
Revenue Code and such other factors as the Board of Directors deems relevant.
The Company intends to make distributions to comply with the REIT distribution
requirements. In order to maintain its qualification as a REIT, the Company must
make annual distributions to stockholders of at least 95% of its taxable income
(excluding capital gains).

                  On January 20, 1997, the Company made a special distribution
of $.50 per share of Common Stock to holders of record of Common Stock on
December 31, 1996.

                  On March 6, 1997, the Board of Directors authorized a regular
quarterly distribution of $.25 per share of Common Stock, payable on April 15,
1997 to holders of record on March 31, 1997.

ITEM 6.           SELECTED FINANCIAL DATA

                  The following table sets forth selected historical and pro
forma financial data. The unaudited Pro Forma Consolidated Condensed Statement
of Income has been presented as if the transactions contemplated by the Plan,
including the acquisition of the Properties, had been consummated on January 1,
1996. The unaudited Pro Forma Consolidated Condensed Statement of Income is
derived from and should be read in conjunction with the Consolidated Statement
of Income for the period October 10, 1996 (commencement of operations) to
December 31, 1996 and the Combined Statements of Revenue and Certain Expenses
for the period January 1, 1996 to October 10, 1996 included in "ITEM 8. --
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA." The unaudited Pro Forma
Consolidated Condensed Statement of Income is presented for the Company
principally because the Company believes that it more appropriately depicts the
Company's operations in a manner comparable to the future operations of the
Company. Specifically, the Company's Properties are encumbered with less debt
and related interest and the Company's valuation of the Properties for purposes
of computing depreciation differs significantly from the historical valuation
used by the Debtors. Accordingly, the statements do not reflect the Debtors'
historical operations for the period January 1, 1996 to October 10, 1996 as
certain expenses which are not comparable to the expenses incurred in the
operations of the Company have been excluded. Historical expenses excluded
consist of interest, depreciation and amortization and other costs not directly
related to the operations of the Company. The unaudited Pro Forma Consolidated
Condensed Statement of Income is not necessarily indicative of what actual
results of operations of the Company would have been had the transactions
contemplated by the Plan been consummated

                                                      -18-


<PAGE>



as of January 1, 1996, nor does it purport to represent the results of
operations of the Company for future periods.

                                                      -19-


<PAGE>



              PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME

            For the twelve months ended December 31, 1996 (Unaudited)
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
                                                      Consolidated
                                                      Statement of
                                                       Income for
                                                       the period
                                                    October 10, 1996
                                                    (commencement of                                       Metropolis
                                                     operations) to               Pro Forma               Realty Trust
                                                    December 31, 1996            Adjustments               Pro Forma



---------------------------------------------------------------------------------------------------------------------------
                                                                   (In thousands, except share amounts)
---------------------------------------------------------------------------------------------------------------------------
REVENUES
---------------------------------------------------------------------------------------------------------------------------
  <S>                                                      <C>                 <C>                          <C>      
  Rental Income                                             $ 30,106            $ 90,993(A)                  $ 121,099
  Interest Income                                                779                 410(A)                      1,189
                                                            --------            --------                     ---------
    Total Revenues                                            30,885                 91,403                    122,288
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
---------------------------------------------------------------------------------------------------------------------------
  Payroll and Benefits                                         1,170               3,258(A)                      4,428
  Operating and Maintenance                                    1,774               4,798(A)                      6,572
  Utilities                                                    1,195               5,288(A)                      6,483
  Management Fees                                                426               1,470(B)                      1,896
  Real Estate Taxes                                            6,208              21,299(A)                     27,507
  General and Administrative                                     588               1,991(A)                      2,579
                                                              ------              ------                        ------
   Total Operating Expenses                                   11,361              38,104                        49,465
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
---------------------------------------------------------------------------------------------------------------------------
  Depreciation and Amortization                                3,457              11,931(C)                     15,388
  Interest Expense                                             7,484              25,829(D)                     33,313
                                                              ------              ------                        ------
   Total Other Expenses                                       10,941              37,760                        48,701
                                                              ------              ------                        ------
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                   $ 8,583             $15,539                       $24,122
                                                             =======             =======                       =======
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share:
---------------------------------------------------------------------------------------------------------------------------
Net Income from Continuing Operations                          $0.66                                             $1.86
                                                               =====                                             =====
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares
Outstanding                                               12,963,046                                        12,963,046
                                                          ==========                                        ==========
---------------------------------------------------------------------------------------------------------------------------
Fully Diluted Earnings Per Share:
---------------------------------------------------------------------------------------------------------------------------
Net Income from Continuing Operations                          $0.66                                             $1.86
                                                               =====                                             =====
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares
Outstanding                                               12,990,046                                        12,990,046
                                                          ==========                                        ==========
---------------------------------------------------------------------------------------------------------------------------
Funds from Operations (E)                                                                             $         37,267
                                                                                                      ================
---------------------------------------------------------------------------------------------------------------------------
Total Assets as of December 31, 1996                                                                   $       766,219
                                                                                                       ===============
---------------------------------------------------------------------------------------------------------------------------
Long-Term Debt as of December 31, 1996                                                                 $       420,000
                                                                                                       ===============
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                      -20-


<PAGE>


<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
<S>     <C>    
(A)     Reflects adjustments for operations of the Properties for the period January 1, 1996
        to October 10, 1996.  See Item 8 -- FINANCIAL STATEMENTS AND
        SUPPLEMENTARY DATA.
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
(B)     Reflects pro forma adjusted management fees for the period January 1, 1996 to
        October 10, 1996.                                                                              $1,470
                                                                                                       ======
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
(C)     Reflects pro forma adjusted depreciation and amortization of the rental property and
        capitalized financing costs for the period January 1, 1996 to October 10, 1996                $11,931
                                                                                                       ======
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
(D)     Reflects pro forma adjusted interest costs from the Secured Notes (as such term is
        defined below in Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY
        DATA) for the period January 1, 1996 to October 10, 1996                                      $25,829
                                                                                                     ========
---------------------------------------------------------------------------------------------------------------------

(E)     The Company generally considers Funds from Operations to be a useful measure of the operating
        performance of an equity REIT because, together with net income and cash flows, Funds from
        Operations provides investors with an additional basis to evaluate the ability of a REIT to incur and
        service debt and to fund acquisitions and other capital expenditures.  Funds from Operations does not
        represent net income or cash flows from operations as defined by generally accepted accounting
        principles ("GAAP") and does not necessarily indicate that cash flows will be sufficient to fund cash
        needs.  It should not be considered as an alternative to net income as an indicator of the Company's
        operating performance or to cash flows as a measure of liquidity.  Funds from Operations does not
        measure whether cash flow is sufficient to fund all of the Company's cash needs, including principal
        amortization, capital improvements and distributions to shareholders.  Funds from operations also does
        not represent cash flows generated from operating, investing or financing activities as defined by GAAP.
        Further, Funds from Operations as disclosed by other REITs may not be comparable to the Company's
        calculation of Funds from Operations.  The Company adopted the National Association of Real Estate
        Investment Trusts ("NAREIT") definition of Funds from Operations in 1996 and has used it for all
        periods presented.  Funds from Operations is calculated as net income (loss) computed in accordance
        with GAAP adjusted for depreciation expense attributable to real property, amortization expense
        attributable to capitalized leasing costs, tenant allowances and improvements, gains and losses on sales
        of real estate investments and extraordinary and nonrecurring items.  See "MANAGEMENT'S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
        - Funds From Operations."

</TABLE>

ITEM 7.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

          The following discussion should be read in conjunction with Selected
Financial Data and the financial statements included in "ITEM 6. -- SELECTED
FINANCIAL DATA" and "ITEM 8. -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."

                  Overview

                  The Company was formed on May 13, 1996 and commenced
operations on October 10, 1996, upon acquisition of the 237 Property and the
1290 Property pursuant to the Plan. The Company expects to qualify as a REIT
under the Internal Revenue Code.


                                                      -21-


<PAGE>



                  The Company's principal business objective is to operate the
Properties in a manner that will maximize the Properties' revenues and value and
in turn maximize funds from operations and stockholder value. The 1290 Property
is a 43-story Class A commercial office building with approximately 1.9 million
rentable square feet of space. The building is centrally located in midtown
Manhattan and is connected to the famed "Rockefeller Center" complex via an
underground passageway. The 1290 Property serves as the corporate headquarters
for The Equitable Life Assurance Society of the United States, and is currently
95% occupied. Over the next four years, less than 12% of the total rentable area
of the building is subject to expiring leases. During 1996, the 1290 Property
completed a major capital improvement program, which included a $7.7 million
lobby renovation project.

                  The 237 Property is a 21-story Class A commercial office
building with approximately 1.1 million rentable square feet of space. The
building, centrally located in midtown Manhattan, is situated off one of New
York City's most prestigious thoroughfares and is within close proximity to
Grand Central Station, a transportation hub. The 237 Property serves as the
corporate headquarters for J. Walter Thompson Company, a major advertising
agency, as well as Swiss Reinsurance Company ("Swiss Re"), an
insurance/financial services organization, and is currently 99% occupied. Over
the next four years, less than 4% of the total rentable area of the building is
subject to expiring leases. The Swiss Re lease terminates on August 31, 2001 and
is not expected to be renewed upon expiration.

                  The Company, through the Property Owning Partnerships, has
retained Tishman Speyer Properties, L.P. to serve as the property manager and
leasing agent, which is responsible for managing the daily operations of the
Properties, and 970 Management, LLC, an affiliate of Victor Capital Group, L.P.,
to serve as the Asset Manager.

                  On March 6, 1997, the Board of Directors adopted a
distribution policy calling for a regular quarterly dividend of $.25 per share
of Common Stock. On January 20, 1997, the Company made a special distribution of
$.50 per share of Common Stock to shareholders of record on December 31, 1996.
On March 6, 1997, the Board of Directors authorized the payment of the regular
quarterly dividend of $.25 per share of Common Stock payable on April 15, 1997,
to holders of record on March 31, 1997. As of December 31, 1996, 12,963,046
shares of common stock were issued and outstanding. The Common Stock of the
Company is not listed on any exchange, and the Company does not intend to list
the Common Stock on any exchange in the near term.

                  The assets and results of operations of the Properties are
reported in the consolidated financial statements of the Company using the
consolidation method of accounting. In accordance with Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission, the financial information
presented for the years ended December 31, 1995 and 1994 and for the Period
January 1, 1996 to October 10, 1996 represent Combined Statements of Revenues
and Certain Expenses. These statements are not representative of the actual
operations for the respective periods, as certain expenses, which may not be
comparable to the expenses expected to be incurred in the future operations of
the Properties, have been excluded. As a result, the operating results of the
Company for the period October 10, 1996 to December 31, 1996 are not directly
comparable with the prior periods.

          Historical Consolidated Statement of Income, Period October 10, 1996
          to December 31, 1996.

                  The Company's revenues of $30,885,000 for the period consist
of base rental income of $24,919,000 (80.7%), operating escalation income of
$3,222,000 (10.4%), and miscellaneous income of $2,744,000 (8.9%). This revenue
is achieved based on the 237 Property and the 1290 Property being approximately
98% and 90% leased, respectively, during the period.


                                                      -22-


<PAGE>



          Pro Forma Twelve Months Ended December 31, 1996 and Combined Statement
of Revenues and Certain Expenses for the Year Ended December 31, 1995

                  The Company's revenues, which consist of rental income,
operating escalation income, and miscellaneous income were $122,288,000 in 1996,
compared to $122,029,000 in 1995, an increase of $259,000 or less than 1%.

                  Rental income of $121,099,000 in 1996 remained relatively
unchanged compared to $121,209,000 in 1995.

                  Payroll and benefits expense of $4,428,000 in 1996 represents
an increase of 9.1%, compared to 1995. Operating and maintenance expense was
$6,572,000 in 1996, compared to $7,397,000 in 1995 a decrease of $825,000 or
11.2%. Utilities expense was $6,483,000 in 1996 compared to $6,685,000 in 1995 a
decrease of $202,000 or 3.0%. Real estate taxes were $27,507,000 in 1996,
compared to $28,309,000 in 1995 a decrease of $802,000 or 2.9% primarily caused
by a reduction of the assessed value of the Properties. General and
administrative expenses were $2,579,000 in 1996, compared to $3,956,000 in 1995
a decrease of $1,377,000 or 34.8%. The reduction is caused primarily by a
decrease in legal and professional fees and related bad debt expense associated
with a delinquent tenant lease in 1995.

                  Historical - Twelve Months Ended December 31, 1995 and
                  December 31, 1994

                  The Company's revenues, which consist of rental income, tenant
expense reimbursements, interest income and other income were $122,029,000 in
1995, compared to $132,583,000 in 1994, a decrease of $10,554,000 or 8.0%.

                  Rental income was $121,209,000 in 1995, compared to
$132,460,000 in 1994, a decrease of $11,257,000 or 8.5%. The change is primarily
due to lease expirations during 1995.

                  Interest income was $820,000 in 1995, compared to $123,000 in
1994, an increase of $697,000 or 566.7%, reflecting a short term increase in
cash and cash equivalents due to the receipt of a lease termination payment in
late 1994.

                  Payroll and benefits expenses was $4,058,000 in 1995, compared
to $3,711,000 in 1994, an increase of $347,000 or 9.4%. Operating and
maintenance expense was $7,397,000, compared to $7,742,000, a decrease of
$345,000 or 4.5%. Utilities expense was $6,685,000 in 1995, compared to
$6,414,000, an increase of $271,000 or 4.2%. Management fees were $1,163,000 in
1995 compared to $1,633,000 in 1994, a decrease of $470,000 or 28.8%, reflecting
a reduction in cash receipts of rental income. Real estate taxes were
$28,309,000 in 1995 compared to $28,822,000, reflecting a reduction of $513,000
or 1.8% primarily caused by a reduction in the assessed value of the properties.
General and administrative expense was $1,359,000 in 1995 compared to $694,000
in 1994, an increase of $665,000 or 95.8%. The increase is caused primarily by
an increase in legal and professional fees associated with the litigation of a
delinquent tenant lease in 1995. Bad debt expense in 1995 was $2,015,000
compared to $3,342,000 in 1994; a decrease of $1,327,000 or 39.7%. The decrease
is caused primarily by the resolution of certain delinquent tenant leases in
1995. Insurance expense was $582,000 in 1995 compared to $577,000 in 1994, an
increase of $5,000 or 0.9%.

                  Liquidity and Capital Resources

                  At December 31, 1996, the Company had unrestricted cash on
hand of approximately $42,215,000 of which $6,481,000 was used to pay a dividend
on January 15, 1997 to holders of record on December 31, 1996. On October 10,
1996, the Property Owning Partnerships borrowed $420,000,000 secured by the 1290
Property and the 237 Property. The Loan is cross-collateralized by the
Properties and prohibits the

                                                      -23-


<PAGE>



Property Owning Partnerships from incurring any additional indebtedness. The
Company may, however, be able to incur unsecured indebtedness, although it has
no present plans to do so. The Company believes that cash on hand and existing
cash flow from operations are sufficient to satisfy the Company's foreseeable
cash requirements which consist primarily of property operating expenses, real
estate taxes, capital expenditures, debt service on the Loan and distributions
necessary to enable the Company to continue to qualify as a REIT. The Loan
matures on October 10, 2001. If not repaid or refinanced prior to such date, the
Property Owning Partnerships will be required to refinance the Loan on that
date. There can be no assurance, however, that the Company will be able to
refinance the Loan on that date or what the terms of any refinancing will be.

                  Funds from Operations

                  The Company generally considers Funds from Operations as one
measure of REIT performance. The Company adopted the NAREIT definition of Funds
from Operations in 1996 and has used this definition for all periods presented
in this Form 10-K. Funds from Operations is calculated as net income (loss)
computed in accordance with GAAP adjusted for depreciation expense attributable
to real property, amortization expense attributable to capitalized leasing
costs, tenant allowances and improvements, gains and losses on sales of real
estate investments and extraordinary and nonrecurring items. Funds from
Operations should not be considered as an alternative to net income as an
indication of the Company's performance or to cash flows as a measure of
liquidity.

                  Funds from Operations for the period October 10, 1996
(commencement of operations) to December 31, 1996 and on a pro forma basis for
the year ended December 31, 1996 is summarized in the following table (in
thousands, except share data).

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
                                                                            Period October 10, 1996        Pro Forma Year Ended
                                                                         (commencement of operations)        December 31, 1996
                                                                             to December 31, 1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                           <C>          
Net Income                                                                      $       8,583                 $      24,122
------------------------------------------------------------------------------------------------------------------------------------
Add:
         Depreciation attributable to real property                                     2,958                        13,145
                                                                                -------------                 -------------
------------------------------------------------------------------------------------------------------------------------------------
Funds from Operations                                                           $      11,541                 $      37,267
                                                                                =============                 =============
------------------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares of Common Stock outstanding (1)                  12,990,046                    12,990,046
                                                                                   ==========                    ==========
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1)       Includes 27,000 shares of Common Stock issuable upon the exercise of
          outstanding options.

                                                      -24-


<PAGE>



ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                           METROPOLIS REALTY TRUST, INC.
                                           INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                           Page


HISTORICAL FINANCIAL STATEMENTS

         <S>                                                                                               <C>
         Independent Auditors' Report....................................................................  26

         Consolidated Balance Sheet as of December 31, 1996..............................................  27

         Consolidated Statement of Operations for the period October 10, 1996
         (commencement of operations) to December 31, 1996...............................................  28

         Consolidated Statement of Stockholders' Equity for the period October 10, 1996
         (commencement of operations) to December 31, 1996...............................................  29

         Consolidated Statement of Cash Flows for the period October 10, 1996
         (commencement of operations) to December 31, 1996...............................................  30

         Notes to Consolidated Financial Statements......................................................  31

PRO FORMA (Unaudited)

         Consolidated Condensed Statement of Income for the twelve months
         ended December 31, 1996.........................................................................  37

PURCHASED PROPERTIES

         Independent Auditors' Report....................................................................  39

         Combined Balance Sheet as of December 31, 1995..................................................  40

         Combined Statements of Revenues and Certain Expenses for the period
         January 1, 1996 to October 10, 1996 and for the years ended
         December 31, 1995 and 1994......................................................................  41

         Notes to Combined Balance Sheet and Statements of Revenues
         and Certain Expenses............................................................................  42

</TABLE>

                                                      -25-


<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Stockholders of Metropolis Realty Trust, Inc.

We have audited the accompanying consolidated balance sheet of Metropolis Realty
Trust, Inc. and Subsidiaries as of December 31, 1996 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period October 10, 1996 (commencement of operations) to December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Metropolis Realty Trust, Inc. and
Subsidiaries as of December 31, 1996 and the results of their operations and
their cash flows for the period October 10, 1996 (commencement of operations) to
December 31, 1996 in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
New York, New York
March 5, 1997


                                                      -26-


<PAGE>



METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(In Thousands, except share amounts)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

ASSETS
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                                                                               
Rental property - net of accumulated depreciation of $2,958         $  655,755
--------------------------------------------------------------------------------
Cash and cash equivalents                                               42,215
--------------------------------------------------------------------------------
Escrow deposits                                                          9,217
--------------------------------------------------------------------------------
Tenant security deposits                                                   594
--------------------------------------------------------------------------------
Due from tenants - net of doubtful accounts of $2,745                    3,952
--------------------------------------------------------------------------------
Deferred financing costs - net of amortization of $493                  10,432
--------------------------------------------------------------------------------
Real estate tax refunds                                                 14,088
--------------------------------------------------------------------------------
Notes receivable - net of unamortized discount of $636                   8,904
--------------------------------------------------------------------------------
Deferred rent receivable                                                 6,576
--------------------------------------------------------------------------------
Prepaid real estate taxes                                               13,208
--------------------------------------------------------------------------------
Other assets                                                             1,278
                                                                        -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
TOTAL ASSETS                                                        $  766,219
                                                                       -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Liabilities
--------------------------------------------------------------------------------
  Secured notes                                                     $ 420,000
--------------------------------------------------------------------------------
  Accounts payable and accrued expenses                                16,421
--------------------------------------------------------------------------------
  Tenants' security deposits and unearned revenue                       1,115
--------------------------------------------------------------------------------
  Dividends payable                                                     6,481
                                                                      -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Total Liabilities                                                     444,017
                                                                      -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Subordinated Minority Interest                                         14,855
                                                                      -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Stockholders' Equity
--------------------------------------------------------------------------------
  Common Stock - $10 par value
--------------------------------------------------------------------------------
  (Class A - outstanding - 7,986,986 shares;
--------------------------------------------------------------------------------
    Class B - outstanding - 4,936,060 shares;
    and Class C - outstanding - 40,000 shares)                        129,630
--------------------------------------------------------------------------------
  Paid-in capital                                                     175,615
--------------------------------------------------------------------------------
  Retained earnings                                                     2,102
                                                                       ------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Total Stockholders' Equity                                            307,347
                                                                      -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  766,219
                                                                   ==========
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

See notes to consolidated financial statements.
--------------------------------------------------------------------------------


                                                      -27-


<PAGE>


METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 10, 1996 (COMMENCEMENT
OF OPERATIONS) TO DECEMBER 31, 1996
(In Thousands)
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
REVENUES:
--------------------------------------------------------------------------------
  Base rental income                                                    $24,919
--------------------------------------------------------------------------------
  Operating escalation income                                             3,222
--------------------------------------------------------------------------------
  Miscellaneous income                                                    1,965
--------------------------------------------------------------------------------
  Interest income                                                           779
                                                                         ------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
    Total revenues                                                       30,885
                                                                         ------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
OPERATING EXPENSES:
--------------------------------------------------------------------------------
  Real estate taxes                                                       6,208
--------------------------------------------------------------------------------
  Operating and maintenance                                               1,774
--------------------------------------------------------------------------------
  Utilities                                                               1,195
--------------------------------------------------------------------------------
  Payroll                                                                 1,170
--------------------------------------------------------------------------------
  General and administrative                                                588
--------------------------------------------------------------------------------
  Management fees                                                           426
                                                                         -------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
    Total operating expenses                                             11,361
                                                                         ------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
OTHER EXPENSES:
--------------------------------------------------------------------------------
  Interest expense                                                        7,484
--------------------------------------------------------------------------------
  Depreciation and amortization                                           3,457
                                                                         ------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
    Total other expenses                                                 10,941
                                                                         ------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
NET INCOME                                                              $ 8,583
                                                                        =======
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
See notes to consolidated financial statements.
--------------------------------------------------------------------------------


                                                      -28-


<PAGE>


METROPOLIS REALTY TRUST, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 10, 1996 (COMMENCEMENT
OF OPERATIONS) TO DECEMBER 31, 1996
(In Thousands)

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------------
                                                                         Additional                       Total
                                                               Par         Paid-in       Retained     Stockholders'
                                                              Value        Capital       Earnings        Equity
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>              <C>           <C>     
BALANCE, OCTOBER 10, 1996                                   $129,630        $175,615         $  --         $305,245
----------------------------------------------------------------------------------------------------------------------
  Net income                                                      --              --         8,583            8,583
----------------------------------------------------------------------------------------------------------------------
  Dividend                                                         --           --         (6,481)          (6,481)
                                                           ------------   ----------     ---------        ---------
----------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996                                  $129,630        $175,615      $  2,102        $ 307,347
                                                            ========        ========      ========        =========
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
----------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                      -29-


<PAGE>


METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 10, 1996 (COMMENCEMENT
OF OPERATIONS) TO DECEMBER 31, 1996
(In Thousands)

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------


-------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>    
Net income                                                                                              $ 8,583
-------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by operating
   activities:
-------------------------------------------------------------------------------------------------------------------
   Depreciation and amortization                                                                          3,457
-------------------------------------------------------------------------------------------------------------------
   Amortization of discount - notes receivable                                                             (96)
-------------------------------------------------------------------------------------------------------------------
   Change in:
-------------------------------------------------------------------------------------------------------------------
      Decrease in escrow deposits                                                                        12,717
-------------------------------------------------------------------------------------------------------------------
      Decrease in due from tenants                                                                          734
-------------------------------------------------------------------------------------------------------------------
      Increase in prepaid expenses and other assets                                                     (7,860)
-------------------------------------------------------------------------------------------------------------------
      Increase in deferred rent receivable                                                              (6,576)
-------------------------------------------------------------------------------------------------------------------
      Decrease in accounts payable and accrued expenses                                                    (79)
-------------------------------------------------------------------------------------------------------------------
      Decrease in unearned revenue                                                                      (5,125)
                                                                                                       --------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                                                        5,755
                                                                                                        -------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------------------------------------------------------------------------------------
 Additions to building and equipment                                                                    (2,405)
-------------------------------------------------------------------------------------------------------------------
 Leasing and organization costs                                                                           (182)
-------------------------------------------------------------------------------------------------------------------
 Collections on notes receivable                                                                             48
                                                                                                        --------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
   Net cash used in investing activities                                                                (2,539)
                                                                                                      ---------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS                                                                     3,216
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                           38,999
                                                                                                        -------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                $42,215
                                                                                                        -------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
-------------------------------------------------------------------------------------------------------------------
 Interest paid during period                                                                            $ 5,341
                                                                                                        =======
-------------------------------------------------------------------------------------------------------------------
 Dividend declared                                                                                      $ 6,481
                                                                                                        =======
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
-------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                      -30-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD OCTOBER 10, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1996 ($000s omitted except for share amounts)







1.  BACKGROUND, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES





    Organization - Metropolis Realty Trust, Inc., a Maryland corporation
    ("Metropolis" or the "Company"), was formed on May 13, 1996 to facilitate
    the consummation of the Second Amended Joint Plan of Reorganization of 237
    Park Avenue Associates, L.L.C. ("237 LLC") and 1290 Associates, L.L.C.
    ("1290 LLC" and together with 237 LLC), (the "Predecessors"), dated
    September 20, 1996 (the "Plan"). Pursuant to the Plan, on October 10, 1996,
    the date operations commenced ("Effective Date"), the Company acquired the
    interests of 237 LLC and 1290 LLC in the properties located at 237 Park
    Avenue (the "237 Property") and 1290 Avenue of the Americas (the "1290
    Property," and together with the 237 Property, the "Properties"). The
    Company owns a 95% interest, as general partner, and .05% interest, as
    limited partner (through its 1% general partnership interest in Upper Tier
    Associates, L.P.), in 237/1290 Lower Tier Associates, L.P., a Delaware
    limited partnership (the "Lower Tier Limited Partnership") which owns a 99%
    partnership interest, as limited partner in each of 237 Park Partners, L.P.,
    a Delaware limited partnership (the "237 Property Owning Partnership") and
    1290 Partners, L.P., a Delaware limited partnership (the "1290 Property
    Owning Partnership," and together with the 237 Property Owning Partnership,
    the "Property Owning Partnerships"). The Property Owning Partnerships were
    formed to own the Properties. The remaining 1% general partnership interest
    in each of the Property Owning Partnerships is owned by 237 GP Corp. and
    1290 GP Corp. (the "GP Corps") which are wholly-owned subsidiaries of the
    Company.





    Basis of Presentation - The consolidated balance sheet includes Metropolis,
    the Lower Tier Limited Partnership, the GP Corps and each of the Property
    Owning Partnerships.





    The presentation of the consolidated balance sheet requires estimates and
    assumptions that affect the reported amounts of assets and liabilities at
    the balance sheet date. Actual results could differ from those estimates.





    Rental Property - Rental property includes land, land improvements,
    building, tenant improvements and building improvements. Land is valued at
    $134,518 and building, tenant improvements and building improvements are
    valued at $521,789. In accordance with SFAS No. 121, "Accounting for
    Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
    of," impairment is determined to exist when estimated amounts recoverable
    through future operations and sale of property on an undiscounted basis are
    below that property's carrying value. If a property is determined to be
    impaired, it must be written down to its estimated fair value. Fair value is
    defined as the amount for which the asset could be bought or sold in a
    current transaction, that is, other than a forced or liquidation sale.





    Cash and Cash Equivalents - Cash and cash equivalents includes investments
    purchased with an original maturity of three months or less.





    Depreciation and Amortization - Building and building improvements are
    depreciated over their useful life of 40 years. Furniture and fixtures are
    depreciated over their useful life, ranging from 5 to 7 years. Tenant
    improvements are amortized on a straight-line basis over the terms of the
    respective leases.




                                                      -31-


<PAGE>



    Rental Income - Rental income is recognized on a straight-line basis over
    the terms of the related leases. Differences between actual base amounts due
    from tenant losses and the straight-line basis are included in deferred rent
    receivable.





    Escrow Deposits - Escrow deposits include reserves for certain claims made
    in conjunction with the Plan and escrow deposits for building and tenant
    improvements, insurance and real estate taxes.





    Income Taxes - The Company expects to qualify as a REIT under the Internal
    Revenue Code, as amended, and will generally not be taxed at the corporate
    level on income it currently distributes to its stockholders so long as it,
    among other things, distributes at least 95% of its REIT taxable income.





2.  REAL ESTATE TAX REFUNDS





    Real estate tax refunds represent real estate tax proceeds expected to be
    recovered by the Company as a result of real estate tax certiorari
    proceedings commenced by the Predecessors, net of any fees and expenses
    incurred to collect such proceeds (the "Tax Proceeds"). The Company has
    reserved approximately $6,414 for tenant claims against the Tax Proceeds.
    This reserve is included in accounts payable and accrued expenses on the
    accompanying balance sheet.





3.  NOTES RECEIVABLE





    Included in Notes Receivable is the estimated fair value of two tenant notes
    aggregating approximately $8,904. The first note, dated April 1, 1989 with a
    face amount of $6,500 and a maturity date of September 1, 1999, is carried
    at $5,430, based on certain payment terms net of unamortized discount. Such
    payment terms include a stated interest rate of 10%. In 1991 and 1992, the
    tenant claimed certain concessions regarding the payment terms of such note.
    Without the Company expressing an opinion with regard thereto, if such
    concessions were granted, the note would bear interest at 7.5% per annum and
    would require level monthly payments of interest and principal of $75. The
    second note, dated August 20, 1985, with a face value of $4,355, is carried
    at $3,474 net of unamortized discount. The second note does not bear
    interest and is payable on October 31, 1999.





4.  SECURED NOTES





    Secured Notes consist of promissory notes ("Loan") issued by the Property
    Owning Partnerships in the original principal amount of $420,000 pursuant to
    a Credit Agreement ("Agreement") among the Property Owning Partnerships, the
    lenders as signatories thereto in the Agreement and the lead lender. Of the
    aggregate principal amount of the loan, $250,000 of the Loan is allocated to
    the 1290 Property and $170,000 is allocated to the 237 Property. The Loan is
    cross collateralized by the Properties. The Loan will terminate on October
    10, 2000 unless sooner terminated by the occurrence of an Event of Default
    as described in the Agreement. The Loan requires the Property Owning
    Partnerships to make interest only payments during the first year of the
    Loan and then make principal payments of $7,500, $7,500, $10,000, and
    $15,000 in each of the second, third, fourth and fifth years of the Loan,
    respectively. If any such scheduled principal payments would cause the
    Company to fail to comply with any income test requirements necessary for
    the Company to maintain its status as a REIT, then the Property Owning
    Partnerships may, in lieu of such principal payment, post an irrevocable
    letter of credit in the amount of such payment. The Property Owning
    Partnerships have entered into lock box agreements for the collection of
    rents and have established escrow accounts for real estate taxes and
    insurance.





    The Property Owning Partnerships and the lead lender entered into an
    Interest Rate Exchange Agreement effective October 10, 1996 (the "Swap
    Agreement"). The Swap Agreement has a term of 5 years and provides that the
    Property Owning Partnerships will pay interest at an effective rate of
    7.987% per annum

                                                      -32-


<PAGE>



    of the notional amount of $420,000. Management believes the risk of
    incurring losses related to the credit risk is remote and any losses would
    be immaterial.





5.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES





    Accounts payable and accrued expenses include funded reserves held by the
    Company for utility tax claims, certain claims related to the Plan, tenant
    claims against Tax Proceeds and property operating expenses payable. The
    utility tax claims include approximately $2,677 of claims pertaining to a
    property owned by an affiliate of the Predecessors which was disposed of
    prior to October 10, 1996.





6.  SUBORDINATED MINORITY INTEREST





    Represents 4.95% of the net reorganization value of the Lower Tier Limited
    Partnership, reflecting the 99% limited partnership interest of JMB/NYC
    Office Building Associates, L.P. ("JMB LP") in the limited partnership (the
    "Upper Tier Limited Partnership") which owns a subordinated 5% limited
    partnership interest in the Lower Tier Limited Partnership (the
    "Subordinated Minority Interest"). Management believes, however, that no
    economic obligation exists to JMB LP as of December 31, 1996 and, that,
    pursuant to the distribution priorities set forth in the limited partnership
    agreement of the Lower Tier Limited Partnership (the "Lower Tier Partnership
    Agreement"), if the Company's Properties were sold, JMB LP would be entitled
    to receive approximately $450 in respect of the Subordinated Minority
    Interest. Pursuant to the Lower Tier Limited Partnership Agreement, JMB LP
    would be entitled to distributions only after the Company has received
    certain priority distributions as more fully described below. As of December
    31, 1996, the Company, as general partner of the Lower Tier Limited
    Partnership, is entitled to receive $400,000 and a 12% cumulative compounded
    return on such amount from the Lower Tier Limited Partnership, before any
    distributions are made in respect of the Subordinated Minority Interest.





    The Upper Tier Limited Partnership has the right to require the Company to
    acquire the Subordinated Minority Interest at a price based upon a multiple
    of the net operating income of the Properties for the immediately preceding
    calendar year reduced by the debt encumbering the Properties and any
    priority distributions to which the Company is entitled as general partner
    of the Lower Tier Limited Partnership. As of December 31, 1996, no economic
    obligation exists based upon such formula.





    The Lower Tier Limited Partnership Agreement provides that the aggregate
    Available Cash (as defined in the Lower Tier Limited Partnership Agreement),
    from distributions from the Property Owning Partnerships will be distributed
    no less frequently than quarterly to the partners of the Lower Tier Limited
    Partnership as follows:





         (i) 100% to the Company, as general partner, until it has received,
         together with all prior distributions pursuant to this clause and
         clauses (i) and (iv) of the succeeding paragraph, aggregate
         distributions equal to a cumulative compounded return, commencing on
         October 10, 1996 (or with respect to capital contributions made after
         October 10, 1996, the date of such capital contributions), of 12% per
         annum on the sum of (x) $280,000, (y) any additional capital
         contributions made by the Company, as general partner, to the Lower
         Tier Limited Partnership ($20,000 as of December 31, 1996), and (z) a
         $100,000 preference amount (the "Preference Amount") (the amounts in
         (x), (y) and (z), as reduced by distributions in respect of such
         amounts referred to herein as the "Adjusted GP Contribution");





         (ii) 100% to the Company, as general partner, until it has received in
         total, taking into account distributions made to it from Available Cash
         and sale or refinancing proceeds, the Adjusted GP Contribution; and





         (iii) the balance, 95% to the Company, as general partner, and 5% to
         the Upper Tier Limited Partnership, as limited partner.

                                                      -33-


<PAGE>




         The Lower Tier Limited Partnership Agreement also provides that net
         proceeds from any distributions from the Property Owning Partnerships
         related to any sale, refinancing, condemnation or insurance recovery of
         the Properties or any loan made to the Partnership will be distributed
         by the Lower Tier Limited Partnership to its partners as follows:





         (i) 100% to the Company, as general partner, until it has received,
         together with all prior distributions pursuant to this clause (i) and
         clause (i) of the immediately preceding paragraph, aggregate
         distributions equal to the product of (x) 0.5 and (y) a 12% per annum
         cumulative compounded return on the Adjusted GP Contribution from
         October 10, 1996 (or with respect to capital contributions made after
         October 10, 1996, the date of such capital contributions);





         (ii) 100% to the Company, as general partner, until it has received,
         together with all prior distributions pursuant to this clause (ii) and
         clause (ii) of the immediately preceding paragraph, aggregate
         distributions equal to the product of (x) .75 and (y) the Adjusted GP
         Contribution;





         (iii) from the next $500, 90% (i.e., $450) to the Upper Tier Limited
         Partnership, as limited partner, and 10% to the Company, as general
         partner;





         (iv) 100% to the Company, as general partner, until it has received,
         together with all prior distributions pursuant to this clause (iv),
         clause (i) of this paragraph and clause (i) of the immediately
         preceding paragraph, a 12% per annum cumulative compounded return on
         the Adjusted GP Contribution commencing with respect to each capital
         contribution, on the date such Capital Contribution was made;





         (v) 100% to the Company, as general partner, until it has received,
         together with all prior distributions pursuant to this clause (v),
         clause (ii) of this paragraph and clause (ii) of the immediately
         preceding paragraph, aggregate distributions equal to the Adjusted GP
         Contribution; and





         (vi) 95% to the Company, as general partner, and 5% to the Upper Tier
         Limited Partnership, as limited partner.





7.  STOCKHOLDERS' EQUITY





    The Company has the authority to issue 50,000,000 shares of common stock,
    par value $10 per share (the "Common Stock"), and 10,000,000 shares of
    Preferred Stock, par value $10 per share. Stockholders equity consists of
    12,963,046 shares of Common Stock issued and outstanding. Of the 12,963,046
    shares issued and outstanding, 7,986,986 represent shares of Class A Common
    Stock, 4,936,060 represent shares of Class B Common Stock, and 40,000
    represent shares of Class C Common Stock which were issued to affiliates of
    the Company's Asset Manager. Of the 7,986,986 of Class A Common Stock issued
    and outstanding, approximately 923,077 shares were issued as part of a
    subscription rights offering under the Plan. 12,962,046 shares were issued
    on the Effective Date pursuant to the Plan, and 1,000 were subsequently
    distributed. The Class A Common Stock, the Class B Common Stock and the
    Class C Common Stock have identical rights and privileges, and are treated
    as a single class, with respect to all matters (other than certain voting
    rights) including, without limitation, the payment of distributions and upon
    liquidation.





    On December 18, 1996, the Company declared a dividend of $6,481 to Class A,
    Class B and Class C Common Stockholders, on a pro-rata basis.





8.  STOCK PLAN AND REGISTRATION RIGHTS





    The Board of Directors of the Company adopted a Directors' Stock Plan
    effective October 10, 1996. Pursuant to the Stock Plan, the Board of
    Directors of the Company has the authority to issue to members of the
    Company's Board of Directors options to purchase, in the aggregate, 100,000
    shares of Common Stock.

                                                      -34-


<PAGE>



    On the Effective Date, the initial members of the Company's Board of
    Directors were granted options entitling each director to purchase an
    aggregate of 3,000 shares of Common Stock at an exercise price of $25 per
    share in accordance with the Plan. Each Director will receive an additional
    400 shares of Common Stock at the 1997 annual meeting and each subsequent
    annual meeting. Total outstanding options at December 31, 1996 aggregated
    27,000, of which 9,000 are exercisable currently and 9,000 are exercisable
    as of October 10, 1997 and October 10, 1998, respectively.





    The Company has entered into a Registration Rights Agreement between the
    Company and the holders of Common Stock. The Registration Rights Agreement
    permits certain of the Company's stockholders to demand, subject to certain
    conditions, that the Company register their Common Stock for sale and
    provides all of the Company's stockholders with the right to participate
    proportionally in any public offering of the Company's securities.





9.  RELATED PARTY TRANSACTIONS





    Asset Management - The Company has entered into an Asset Management
    Agreement with a company ("Asset Manager") that is directly affiliated with
    two of Metropolis' shareholders. One of these shareholders is also a
    Director and Officer of the Company. The Asset Manager provides asset
    advisory, consultation and management services for the Company. Fees for
    such services are payable in arrears, on a monthly basis of $25. The Asset
    Management Agreement also provides for reimbursement for costs and expenses
    for contractors and professional fees, payable as incurred. Fees under the
    Asset Management Agreement aggregated approximately $74.





    Property Management - The Company has also entered into a Management and
    Leasing Agreement with a company ("Property Manager/Leasing Agent") that is
    an affiliate of a shareholder. The Property Manager/Leasing Agent is to
    manage and operate the property and provide all supervisory, management and
    leasing services. The Management and Leasing Agreement provides for a fee of
    1.5% of Gross Revenues, payable monthly and reimbursement for overhead and
    all reasonable out-pocket-expenses incurred. The Management and Leasing
    Agreement also provides for leasing commissions to be calculated on a
    sliding scale percentage basis of the lease's base rent. Fees under
    Management and Leasing Agreement aggregated approximately $392.





    REIT Management - The Company has entered into a REIT Management Agreement
    with the Property Manager/Leasing Agent ("REIT Manager"). The REIT Manager
    is to perform certain accounting, administrative and monitoring services.
    The REIT Management Agreement provides for compensation to the REIT Manager
    of a monthly fee and reimbursement of documented out-of-pocket expenses.
    There were no fees paid under the REIT Management Agreement for the period
    October 10, 1996 to December 31, 1996.





10. FAIR VALUE OF FINANCIAL INSTRUMENTS





    The carrying amount of cash and cash equivalents, escrow deposits, tenant
    security deposits, tax refunds receivable, and accounts receivable are a
    reasonable estimate of their fair value due to their short-term nature. The
    Company believes the fair value of the interest rate swap agreement
    generally offsets gains or losses on the Secured Notes being hedged and
    changes the nature of such underlying financial instruments. Because the
    maturity date of the Secured Notes and the termination date of the interest
    rate swap agreement are identical and the Company has no intention of
    terminating either the Secured Notes or the interest rate swap agreement,
    the fair value of the interest rate swap agreement may be of limited
    usefulness.




                                                      -35-


<PAGE>



    The fair value of the notes receivables has been estimated by discounting
    cash flows at the current rate at which similar instruments would be issued
    with similar credit ratings for the remaining term. Management believes the
    fair market value of the notes receivables approximates the carry value at
    December 31,1996.





    The fair value of the mortgage loan payable has been estimated by
    discounting cash flows at the current rate at which similar loans would be
    made to borrowers with similar credit ratings for the remaining term.
    Management believes the fair market value of the mortgage loan payable
    approximates the carrying value at December 31, 1996.





    The fair value estimates presented herein are based on pertinent information
    available to management as of December 31, 1996.





11. LEASES





    Minimum future rents (excluding escalation rentals) due to the Company under
    noncancelable leases as of December 31, 1996 are as follows:





                              1997                     $90,277
                              1998                     101,637
                              1999                      97,428
                              2000                      97,808
                              2001                      93,603
                              Thereafter               562,054
                                                    ----------
                                                    $1,042,807
                                                    ==========




                                                      -36-


<PAGE>



                          METROPOLIS REALTY TRUST, INC.


              PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME





            For the twelve months ended December 31, 1996 (Unaudited)





The following table sets forth selected historical and pro forma financial data.
The unaudited Pro Forma Consolidated Condensed Statement of Income has been
presented as if the transactions contemplated by the Plan, including the
acquisition of the Properties, had been consummated on January 1, 1996. The
unaudited Pro Forma Consolidated Condensed Statement of Income is derived from
and should be read in conjunction with the Consolidated Statement of Income for
the period October 10, 1996 (commencement of operations) to December 31, 1996
and the Combined Statements of Revenue and Certain Expenses for the period
January 1, 1996 to October 10, 1996 included elsewhere in this Form 10-K. The
unaudited Pro Forma Consolidated Condensed Statement of Income is presented for
the Company principally because the Company believes that it more appropriately
depicts the Company's operations in a manner comparable to the future operations
of the Company. Specifically, the Company's Properties will be encumbered with
less debt and related interest and the Company's valuation of the Properties for
purposes of computing depreciation differs significantly from the historical
valuation used by the Debtors. Accordingly, the statements do not reflect the
Debtors' historical operations for the period January 1, 1996 to October 10,
1996 as certain expenses which are not be comparable to the expenses expected to
be incurred in the future operations of the Company have been excluded.
Historical expenses excluded consist of interest, depreciation and amortization
and other costs not directly related to the future operations of the Company.
The unaudited Pro Forma Consolidated Condensed Statement of Income is not
necessarily indicative of what actual results of operations of the Company would
have been had the transactions contemplated by the Plan been consummated as of
January 1, 1996, nor does it purport to represent the results of operations of
the Company for future periods.




<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
                                                      Consolidated
                                                      Statement of
                                                       Income for
                                                       the period                                         
                                                       October                                            
                                                    October 10, 1996                                      
                                                    (commencement of                                     Metropolis
                                                     operations) to               Pro Forma              Realty Trust
                                                    December 31, 1996            Adjustments              Pro Forma
---------------------------------------------------------------------------------------------------------------------------
                                                                   (In thousands, except share amounts)
---------------------------------------------------------------------------------------------------------------------------
REVENUES
---------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                 <C>                          <C>      
  Rental Income                                             $ 30,106            $ 90,993(A)                  $ 121,099


  Interest Income                                                779                 410(A)                      1,189
                                                            --------            --------                     ---------


    Total Revenues                                            30,885                 91,403                    122,288
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
---------------------------------------------------------------------------------------------------------------------------
  Payroll and Benefits                                         1,170               3,258(A)                      4,428


  Operating and Maintenance                                    1,774               4,798(A)                      6,572


  Utilities                                                    1,195               5,288(A)                      6,483


  Management Fees                                                426               1,470(B)                      1,896


  Real Estate Taxes                                            6,208              21,299(A)                     27,507


  General and Administrative                                     588               1,991(A)                      2,579
                                                              ------              ------                        ------


   Total Operating Expenses                                   11,361              38,104                        49,465
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
---------------------------------------------------------------------------------------------------------------------------
  Depreciation and Amortization                                3,457              11,931(C)                     15,388


  Interest Expense                                             7,484              25,829(D)                     33,313
                                                              ------              ------                        ------


   Total Other Expenses                                       10,941              37,760                        48,701
                                                              ------              ------                        ------
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                   $ 8,583             $15,539                       $24,122
                                                             =======             =======                       =======
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share:
---------------------------------------------------------------------------------------------------------------------------
Net Income from Continuing Operations                          $0.66                                             $1.86
                                                               =====                                             =====
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares
Outstanding                                               12,963,046                                        12,963,046
                                                          ==========                                        ==========
---------------------------------------------------------------------------------------------------------------------------
Fully Diluted Earnings Per Share:
---------------------------------------------------------------------------------------------------------------------------
Net Income from Continuing Operations                          $0.66                                             $1.86
                                                               =====                                             =====
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares
Outstanding                                               12,990,046                                        12,990,046
                                                          ==========                                        ==========
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                      -37-


<PAGE>


<TABLE>
<CAPTION>


<S>                                                                                                   <C>    
(A)     Reflects adjustments for operations of the Properties for the period January 1, 1996
        to October 10, 1996.  See Item 8 -- FINANCIAL STATEMENTS AND
        SUPPLEMENTARY DATA.

(B)     Reflects pro forma adjusted management fees for the period January 1, 1996 to
        October 10, 1996.                                                                              $1,470
                                                                                                      =======

(C)     Reflects pro forma adjusted depreciation and amortization of the rental property and
        capitalized financing costs for the period January 1, 1996 to October 10, 1996                $11,931
                                                                                                      =======

(D)     Reflects pro forma adjusted interest costs from the Secured Notes for the period
        January 1, 1996 to October 10, 1996                                                           $25,829
                                                                                                     ========

</TABLE>


                                                      -38-


<PAGE>



                                           INDEPENDENT AUDITORS' REPORT








To the Stockholders of Metropolis Realty Trust, Inc.:





                  We have audited the combined balance sheet of the Purchased
Properties owned indirectly by Metropolis Realty Trust, Inc. as described in
Note 1 as of December 31, 1995 and the combined statements of revenues and
certain expenses as described in Note 1 for the period January 1, 1996 to
October 10, 1996 and for the years ended December 31, 1995 and 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.





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





                  The accompanying combined statements of revenue and certain
expenses were prepared in compliance with the rules and regulations of the
Securities and Exchange Commission (for inclusion in the Annual Report on Form
10-K of Metropolis Realty Trust, Inc.) and as described in Note 1, are not
intended to be a complete presentation of the Purchased Properties' revenue and
expenses.





                  In our opinion, the financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Purchased Properties owned indirectly by Metropolis Realty Trust, Inc. as
described in Note 1 as of December 31, 1995 and the statements of combined
revenues and certain expenses as described in Note 1 for the period January 1,
1996 to October 10, 1996 and for the years ended December 31, 1995 and 1994 in
conformity with generally accepted accounting principles.














Deloitte & Touche LLP
New York, New York
December 5, 1996

                                                      -39-


<PAGE>



                              PURCHASED PROPERTIES

                             COMBINED BALANCE SHEET
                                December 31, 1995
                                ($000's Omitted)


ASSETS

  Rental property                                         $ 645,235
  Cash and restricted cash                                    7,218
  Escrow deposits                                               493
  Rent receivables                                           54,573
  Deferred expenses                                          18,169
  Other assets                                                1,024
                                                         ----------
TOTAL ASSETS                                              $ 726,712
                                                          =========


LIABILITIES & CUMULATIVE DEFICIT

Liabilities
  Long-term debt                                          $ 902,603
  Deferred rent                                              20,706
  Accounts payable and accrued expenses                      11,280
  Security deposit payable                                      493
                                                         ----------
Total Liabilities                                           935,082
                                                         ----------
Cumulative Deficit                                        (208,370)
                                                         ----------

TOTAL LIABILITIES AND CUMULATIVE DEFICIT                  $ 726,712
                                                          =========

See notes to combined balance sheet.









                                                      -40-


<PAGE>



                              PURCHASED PROPERTIES








              COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES


                    Period January 1, to October 10, 1996 and


                 For the Years Ended December 31, 1995 and 1994


                                ($000's Omitted)






<TABLE>
<CAPTION>


                                         Period
                                         January 1,        Year Ended        Year Ended
                                         to October         December          December
                                          10, 1996          31, 1995          31, 1994
                                        ---------------  ---------------  ----------------

REVENUES:
<S>                                            <C>             <C>               <C>     
  Rental Income                                $90,993         $121,209          $132,460
  Interest Income                                  410              820               123



                                        ---------------  ---------------  ----------------
    Total Revenues                              91,403          122,029           132,583

CERTAIN EXPENSES:
  Payroll and Benefits                           3,258            4,058             3,711



  Operating and Maintenance                      4,798            7,397             7,742



  Utilities                                      5,288            6,685             6,414



  Management Fees                                  528            1,163             1,633



  Real Estate Taxes                             21,299           28,309            28,822



  General and Administrative                     1,991            3,956             4,613



                                        ---------------  ---------------  ----------------
   Total Certain Expenses                       37,162           51,568            52,935
                                        ---------------  ---------------  ----------------

REVENUES IN EXCESS OF CERTAIN EXPENSES         $54,241          $70,461           $79,648
                                        ===============  ===============  ================

</TABLE>








See notes to Combined Statements of Revenues and Certain Expenses.

                                                      -41-


<PAGE>



                              PURCHASED PROPERTIES

                         NOTES TO COMBINED BALANCE SHEET
                             As of December 31, 1995





        AND NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
             For the period January 1, 1996 to October 10, 1996 and
                 For the years ended December 31, 1995 and 1994
                                ($000's Omitted)


1.       BACKGROUND, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
         ACCOUNTING POLICIES

         Organization - Metropolis Realty Trust, Inc., a Maryland corporation
         ("Metropolis" or the Company"), was formed on May 13, 1996 to
         facilitate the consummation of the Second Amended Joint Plan of
         Reorganization of 237 Park Avenue Associates, L.L.C. ("237 LLC") and
         1290 Associates, L.L.C. ("1290 LLC" and together with 237 LLC, the
         "Predecessors"), dated September 20, 1996 (the "Plan"). Pursuant to the
         Plan, on October 10, 1996 (the "Effective Date") the Company acquired
         the interests of 237 LLC and 1290 LLC in the office properties located
         at 237 Park Avenue (the "237 Property") and 1290 Avenue of the Americas
         (the "1290 Property," and together with the 237 Property, the
         "Properties"). The Company owns a 95% interest, as general partner, in
         237/1290 Lower Tier Associates, L.P., a Delaware limited partnership
         (the "Lower Tier Limited Partnership") which owns a 99% partnership
         interest, as limited partner in each of 237 Park Partners, L.P., a
         Delaware limited partnership (the "237 Property Owning Partnership")
         and 1290 Partners, L.P., a Delaware limited partnership (the "1290
         Property Owning Partnership," and together with the 237 Property Owning
         Partnership, the "Property Owning Partnerships"). The Property Owning
         Partnerships were formed to own the Properties. The remaining 1%
         interest in each of the Property Owning Partnerships is owned by one of
         two wholly-owned subsidiaries of the Company

         Basis of Presentation - The combined statements relate to the
         operations of the Properties (the "Purchased Properties"). The
         Purchased Properties have a combined net leasable area of approximately
         3,103,000 square feet. As of October 10, 1996, the Purchased Properties
         are encumbered with less debt and related interest; the asset base and
         related depreciation is significantly different; one of the
         Predecessor's equity holders has a remaining subordinated 5% indirect
         interest; and the properties are managed by an affiliated property
         manager with a different management structure. Accordingly, Management
         believes the combined statements are the most meaningful presentation
         as they present the Purchased Properties' operations in a manner which
         excludes variables associated with the ownership and management of the
         Predecessors.

         Combined Statements of Revenue and Certain Expenses:

         The accompanying combined statements of revenue and certain expenses
         are presented in conformity with Rule 3-14 of Regulation S-X of the
         Securities and Exchange Commission. Accordingly, the statements are not
         representative of the actual operations for the period January 1, 1996
         to October 10, 1996 and for the years ended December 31, 1995 and 1994
         as certain expenses which may not be comparable to the expenses
         expected to be incurred in the proposed future operations of the
         Purchased Properties have been excluded. Expenses excluded consist of
         interest, depreciation and amortization and other costs not directly
         related to the future operations of the Purchased Properties.

         Rental income is recognized on a straight line basis over the term of
the related leases.

                                                      -42-


<PAGE>


         Combined Balance Sheet:


         The accompanying combined balance sheet of the Purchased Properties
         include the separate balance sheets of each of the Properties.


         The presentation of the accompanying combined balance sheet in
         accordance with generally accepted accounting principles requires the
         management of the Purchased Properties to make estimates and
         assumptions that affect the reported amounts of assets and liabilities
         at the date of the balance sheet.
         Actual results could differ from those estimates.

         In conjunction with the negotiations with representatives of the first
         mortgage lender regarding a loan restructure, affiliates of the
         Predecessors reached an agreement with the first mortgage lender
         whereby effective January 1, 1993, the affiliates of the Purchased
         Properties were limited to taking distributions of $250 on a monthly
         basis from the Purchased Properties reserving the remaining excess cash
         flow in a separate interest-bearing account to be used exclusively to
         meet the obligations of the Purchased Properties. Such reserved
         amounts, of approximately $6,576 in the aggregate at December 31, 1995,
         are classified as restricted funds in the accompanying combined balance
         sheet.

         Provisions for value impairment are recorded with respect to the
         investment properties whenever the estimated future cash flows from a
         property's operations and projected sale are less than the property's
         net carry value. The investment properties are carried at historical
         cost on the accompanying balance sheet.

         Deferred expenses are comprised of leasing and renting costs which are
         amortized using the straight-line method over the terms of the related
         leases.

         No provision for State or Federal income taxes has been made as the
         liability for such taxes is that of the Purchased Properties' owners.

         Depreciation on the investment properties has been provided over the
         estimated useful lives of 5 to 39 years using the straight-line method.

         Although certain leases of the Purchased Properties provide for tenant
         occupancy during periods for which no rent is due, the Purchased
         Properties accrue prorated rental income for the full period of
         occupancy. In addition, although certain leases provide for step
         increases in rent during the lease term, the Purchased Properties
         recognize the total rents receivable on a straight-line basis. Such
         amounts are included in accrued rents receivable in the accompanying
         combined balance sheet.

         Significant betterments and improvements are capitalized and
         depreciated over their estimated useful lives. An affiliate of the
         Predecessor Owners of the Purchased Properties' performs certain
         maintenance and repair work and construction of certain tenant
         improvements.

2.       LONG TERM DEBT

         Long term debt consists of a first mortgage loan of $902,603 bearing
         interest at the short-term U.S. Treasury obligation note rate plus
         1-3/4% with a minimum rate on the loan of 7% per annum; allocated among
         and cross-collaterally secured by the Properties. Monthly payments of
         principal and interest are based upon a 30-year amortization schedule.
         The loan is in technical default at December 31, 1995. The terms of
         default were subsequently cured through the Plan. The stated maturity
         of the principal plus accrued interest is due March 1999.




                                                      -43-


<PAGE>



3.       LEASES

         At December 31, 1995, all leases relating to the properties are
         properly classified as operating leases. Leases with commercial tenants
         range in term from 1 to 17 years and provide for fixed minimum rent and
         partial to full reimbursement of operating costs. Affiliates of the
         Predecessor Owner of the Purchased Properties have lease agreements and
         occupy approximately 95,000 square feet of space at 237 Park Avenue at
         rental rates which approximate market.

         Deferred rent represents the unearned portion of lease termination fees
         paid by certain tenants of the 1290 Avenue of America's property. The
         lease termination fees are being amortized over the remaining terms of
         the tenant and sub-tenant leases.

         Minimum future rents due under noncancelable leases as of December 31,
1995 are as follows:


                              1996                     $80,951
                              1997                      90,148
                              1998                     101,492
                              1999                      97,235
                              2000                      96,314
                              Thereafter               665,041
                                                     ---------
                                                    $1,131,181
                                                    ==========



4.       CAPITAL EXPENDITURES

         For the period from January 1, 1996 to October 10, 1996 and for the
         years ended December 31, 1995 and 1994, capital expenditures related to
         the rental property aggregated $4,048, $4,142 and $107, respectively.





                                                      -44-


<PAGE>



ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE.





                                                       None

                                                      -45-


<PAGE>



                                                     PART III





ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT





The directors and executive officers of the Company as of December 31, 1996 are
as follows:






Name                               Age                 Position



William L. Mack..................  57       Director and Chairman of the Board

Lee S. Neibart...................  46       Director and President

W. Edward Scheetz................  32       Director and Vice President

Bruce H. Spector.................  54       Director

John R. Klopp....................  43       Director and Vice President

Russel S. Bernard................  39       Director

Ralph F. Rosenberg...............  32       Director

David A. Strumwasser.............  45       Director

David Roberts....................  35       Director







                  Each of the officers and directors listed above, other than
John R. Klopp, has served in the positions listed for the Company, the GP Corps
and the Upper Tier GP Corp. since September 1996. Mr. Klopp has served as a
Director since September 1996 and as an officer since December 1996.





                  William L. Mack has been a principal of Apollo Real Estate
Advisors, L.P. since its inception in 1993 and serves as President of its
corporate general partner. Since 1969, Mr. Mack has been President and a Senior
Partner of the Mack Organization, a national owner and developer of and investor
in office and industrial buildings and other income-producing real estate
investments. Mr. Mack is also the controlling stockholder of Patriot American,
an owner and manager of office buildings in the Southwest and West. Mr. Mack is
a director of Vail Resorts, Inc., an owner and operator of several Colorado ski
resorts, and Koger Equity, Inc., a REIT that owns and operates office parks in
the Southeastern and Southwestern regions of the United States. Mr. Mack also
serves as a director of the New York State Urban Development Corporation, as
Chairman of the Undergraduate Executive Board of the University of
Pennsylvania's Wharton School of Business and as Chairman Emeritus of the Board
of Trustees of the Long Island Jewish Center. Mr. Mack received a BS in Business
Administration from the New York University School of Business.





                  Lee S. Neibart is a partner of Apollo Real Estate Advisors,
L.P., with which he has been associated since 1994, and directs portfolio and
asset management. From 1979 to 1993, he was Executive Vice President and Chief
Operating Officer of the Robert Martin Company, a private real estate
development and management firm which owns and manages approximately seven
million square feet of commercial real estate and with which he was associated
for over fourteen years. Mr. Neibart is a director of Capital Apartment
Properties, Inc., a private REIT that owns and manages multi-family housing
units across the United States; Roland International, Inc., a land development
company; Allright Corporation, an owner and operator of parking facilities
throughout the United States; Koger Equity, Inc., a REIT that owns and operates
office parks in the Southeastern and Southwestern regions of the United States;
and NextHealth, Inc., an owner and operator of spa and wellness facilities. He
is also a past president of the New York Chapter of the National Association

                                                      -46-


<PAGE>



of Industrial and Office Parks. Mr. Neibart received a BA from the University of
Wisconsin and an MBA from New York University.





                  W. Edward Scheetz has been a partner of Apollo Real Estate
Advisors, the managing general partner of the Apollo Real Estate Investment
Funds since May 1993. Mr. Scheetz directs the acquisition and investment
activities of such funds. From 1989 to 1993, Mr. Scheetz was a principal of
Trammell Crow Ventures, a national real estate investment firm. Mr. Scheetz is a
director of Capital Apartment Properties, Inc., a private REIT that owns and
manages multi-family housing units across the United States; Roland
International, Inc., a land development company; NextHealth, Inc., an owner and
operator of spa and wellness facilities; Koger Equity, Inc., a REIT that owns
and operates office parks in the Southeastern and Southwestern regions of the
United States; Allright Corporation, one of the largest parking operators in the
country; and Koll Management Services, Inc., one of the nation's largest
commercial management firms. Mr. Scheetz serves on the compensation committee of
Koger Equity, Inc. Mr. Scheetz received an AB in Economics from Princeton
University.





                  Bruce H. Spector is a principal of Apollo Real Estate
Advisors, L.P., with which he has been involved since 1993 and has been
responsible for advising on matters of reorganization strategy. From 1967 to
1992, Mr. Spector was a member of the law firm of Stutman, Treister and Glatt,
spending a substantial amount of that time as a senior partner and head of the
firm's executive committee. Mr. Spector serves on the boards of Vail Resorts,
Inc., an owner and operator of several Colorado ski resorts; United
International Holdings, Inc., a designer and owner of cable and telephone
systems outside of North America; Telemundo Group, Inc., a national
Spanish-language oriented television producer; and NextHealth, Inc., an owner
and operator of spa and wellness facilities. Mr. Spector graduated from the
University of Southern California with a degree in economics and from the UCLA
School of Law with a JD.





                  John R. Klopp has been a Managing Partner of VCG since 1989.
VCG served as financial advisor to the ad hoc committee of Noteholders in the
Debtors' Chapter 11 case. VCG is a private real estate merchant banking firm
which was formed in 1989 and is based in New York City. From 1982 to 1989, Mr.
Klopp was a Managing Director and co-head of Chemical Realty Corporation
("Chemical Realty"), the real estate investment banking affiliate of Chemical
Bank. Prior to founding Chemical Realty, he held various positions in Chemical
Bank's Real Estate Division and was responsible for originating, closing and
monitoring portfolios of construction and interim loans. Mr. Klopp is a trustee
of California Real Estate Investment Trust. He received a B.A. from Tufts
University in 1976 with a major in economics, and an M.B.A. in 1978 from the
Wharton School at the University of Pennsylvania with a major in real estate and
finance.





                  Russel S. Bernard is a principal of Oaktree Capital
Management, LLC, with which he has been involved since 1995, and is the
portfolio manager of Oaktree's real estate and mortgage fund. Prior to joining
Oaktree in 1995, Mr. Bernard was a Managing Director of Trust Company of the
West (TCW). Under subadvisory relationships with Oaktree, Mr. Bernard continues
to serve as portfolio manager for the TCW Special Credits distressed mortgage
funds. From 1986 to 1994, Mr. Bernard was a partner in Win Properties, Inc., a
national real estate investment company, where he was responsible for the
acquisition, financing and operation of a national real estate portfolio. Mr.
Bernard is a director of Cadillac Fairview Corporation, which owns, manages and
develops shopping centers and office and mixed use properties in the U.S. and
Canada. Mr. Bernard holds a B.S. in Business Management and Marketing from
Cornell University.





          Ralph F. Rosenberg has been a Vice President in the Investment Banking
Division at Goldman, Sachs & Co. since 1994. Prior to that he was an Associate
in the Real Estate Principal Investment Area from 1992 to 1994, and he served as
an Associate in the Real Estate Department from 1990 to 1992. Mr. Rosenberg was
a Financial Analyst at Goldman, Sachs & Co. from 1986 until 1988. Mr. Rosenberg
is a director of Cadillac Fairview Corporation and Rockefeller Center
Properties, Inc. He received a B.A. from Brown University in 1986, and an M.B.A.
from the Stanford Graduate School of Business in 1990.

                                                      -47-


<PAGE>




                  David A. Strumwasser is a principal of Whippoorwill
Associates, Incorporated ("Whippoorwill"), an investment management firm, and
has served as a Managing Director and General Counsel of Whippoorwill since
1993. From 1984 to 1993, Mr. Strumwasser was a Partner and co-head of the
Bankruptcy and Reorganization Practice at the New York law firm of Berlack,
Israels & Liberman LLP. Prior to that, he practiced bankruptcy law at Anderson
Kill & Olick, LLP, from 1981 to 1984, and at Weil, Gotshal & Manges LLP, from
1976 to 1979. From 1979 to 1981, Mr. Strumwasser was an Assistant Vice President
at Citicorp Industrial Credit, Inc. Mr. Strumwasser received a B.A. in political
science from the State University of New York at Buffalo in 1973, and a J.D.
from Boston College Law School in 1976.





                  David Roberts has been a Managing Director of Angelo, Gordon &
Co., L.P. ("Angelo, Gordon") an investment management firm, since 1993, where he
oversees the firm's real estate investment activities. From 1988 until 1993, Mr.
Roberts was a principal of Gordon Investment Corporation, a Canadian merchant
bank, where he participated in a wide variety of principal transactions
including investments in the real estate and mortgage banking industries. Prior
to that, Mr. Roberts worked in the Corporate Finance Department of L.F.
Rothschild & Co. Incorporated, an investment bank, as a Senior Vice President
specializing in mergers and acquisitions. Mr. Roberts has a B.S. in Economics
from the Wharton School of the University of Pennsylvania.





                  Pursuant to the Charter, until the occurrence of a
Simplification Event (as hereinafter defined), the Company's nine-member Board
of Directors will be divided into five classes. The Class I Director, Lee S.
Neibart, was designated by Apollo, (and after the Effective Date, by the holders
of Class B Common Stock); the Class II Directors consist of Bruce H. Spector, a
director designated by Apollo (and, after the Effective Date, by the holders of
the Class B Common Stock) and David Roberts, a director reasonably acceptable to
Apollo designated by Noteholders other than Apollo, Whitehall Street Real
Estate, Ltd. ("Whitehall") and Oaktree Capital Management, LLC ("Oaktree") (and,
after the Effective Date, by the holders of the Class A Common Stock); the Class
III Directors consist of W. Edward Scheetz, a director designated by Apollo
(and, after the Effective Date, by the holders of Class B Common Stock) and
David A. Strumwasser, a director reasonably acceptable to Apollo designated by
Noteholders other than Apollo, Whitehall and Oaktree (and, after the Effective
Date, by the holders of Class A Common Stock); the Class IV Directors consist of
William L. Mack, a director designated by Apollo (and, after the Effective Date,
by the holders of Class B Common Stock) and Ralph F. Rosenberg, a director
reasonably acceptable to Apollo designated by Whitehall (the "Whitehall
Director"); and the Class V Directors consist of Russel S. Bernard, a director
designated by Oaktree (the "Oaktree Director") and John R. Klopp, a director
designated by Noteholders (other than Apollo, Whitehall and Oaktree).





                  The term of the initial Class I Director will terminate on the
date of the 1997 annual meeting of stockholders; the term of the initial Class
II Directors will terminate on the date of the 1998 annual meeting of
stockholders; the term of the initial Class III Directors will terminate on the
date of the 1999 annual meeting of stockholders; the term of the initial Class
IV Directors will terminate on the date of the 2000 annual meeting of
stockholders; and the term of the initial Class V Directors will terminate on
the date of the 2001 annual meeting of stockholders. At the 1997 annual meeting
of stockholders, the successor to the initial Class I Director will be elected
for a four-year term; at the 1998 annual meeting of stockholders, the successors
to the initial Class II Directors shall be elected for a three-year term; at the
1999 annual meeting of stockholders, the successors to the initial Class III
Directors will be elected for a two-year term; at the 2000 annual meeting of
stockholders, the successors to the initial Class IV Directors shall be elected
for a one-year term; at the 2001 annual meeting of stockholders, the successors
to the Class I, Class II, Class III, Class IV and Class V Directors will be
elected for a one year term. Directors will hold office until the annual meeting
for the year in which their terms expire and until their successors shall be
elected and qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. The terms of the Initial Directors will
commence on the Effective Date. The Charter provides that the Company will at
all times have at least two

                                                      -48-


<PAGE>



directors that are not affiliated with Apollo, any Transferee (as defined in the
Charter) or any other stockholder of more than 10% of the stock of the Company.





                  For so long as any shares of Class C Common Stock are
outstanding as Class C Common Stock, holders of Class C Common Stock will not be
permitted to vote in any election of Directors.





                  "Simplification Event" means the earliest to occur of (i) the
date on which Apollo and its affiliates (taken together) or any transferee and
its affiliates (taken together) no longer hold a number of shares of Common
Stock representing at least 30% of the combined voting power of all outstanding
shares of stock of the Company; (ii) the date on which Apollo and its affiliates
(taken together) or any transferee and its affiliates (taken together) or any
other person or entity and its affiliates (taken together) holds a number of
shares of Common Stock representing at least 75% of the combined voting power of
all outstanding shares of stock of the Company; (iii) the fifth anniversary of
the Effective Date; and (iv) the date of the annual meeting of stockholders in
2001.








ITEM 11.          EXECUTIVE COMPENSATION





                  The Company has no employees. The members of the Board of
Directors will each receive as an annual retainer (i) $10,000 which will be paid
in cash, and (ii) 400 shares of Common Stock to be issued under the Stock Plan.
Such stock and cash will be paid to the current Board of Directors at the 1997
annual meeting of directors. Directors will receive an additional payment of
$750 for each Board of Directors meeting attended. Upon election to the Board of
Directors, each Director received options to purchase 3,000 shares of the
Company's common stock which will vest over two years and will be exercisable at
$25.00 per share. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Description of the Company's Stock Plan."





          The Company has purchased a directors' and officers' liability
insurance policy in the amount of $10,000,000.





                  The Directors and officers of the Company, the Upper Tier GP
Corp. and the GP Corps are identical. The officers of the Company will not
receive any compensation from the Company, other than any compensation they may
receive as Directors. The Directors and officers of the Upper Tier GP Corp. and
the GP Corps will not receive any compensation from the Upper Tier GP Corp. or
the GP Corps.





ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT





                  The information set forth in the following table is furnished
as of February 28, 1997, with respect to any person (including, any "group," as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) who is known to the Company to be the beneficial
owner of more than 5% of any class of the Company's voting securities, and as to
those shares of the Company's equity securities beneficially owned by each of
its Directors, its executive officers, and all of its executive officers and
Directors as a group. As of the December 31, 1996, there were 12,963,046 shares
of Common Stock outstanding.

                                                      -49-


<PAGE>


<TABLE>
<CAPTION>




                                                                         Number of Shares       Percent of Common
                                                                        Beneficially Owned            Stock
                                                                        ------------------       ----------------


Principal Stockholders
<S>                                                                            <C>                     <C>  
Apollo Real Estate Investment Fund, L.P. (1)                                   4,936,060               38.1%
Oaktree Capital Management, LLC (2)                                            2,407,856               18.6%
Whitehall Street Real Estate, Ltd. (3)                                         1,122,421                8.7%
Angelo, Gordon & Co., L.P.                                                       818,339                6.3%
Fernwood Associates, L.P. (4)                                                    704,197                5.4%
Fernwood Foundation Fund LP (5)                                                  704,197                5.4%

Directors and Executive Officers

William L. Mack (6)                                                            4,937,060               38.1%
Lee S. Neibart (7)                                                             4,937,060               38.1%
W. Edward Scheetz (8)                                                          4,937,060               38.1%
Bruce H. Spector (9)                                                           4,937,060               38.1%
John R. Klopp (10)                                                                21,000                   *
Russel S. Bernard (11)                                                         2,408,856               18.6%
Ralph F. Rosenberg (12)                                                        1,123,421                8.7%
David A. Strumwasser (13)                                                        336,558                2.6%
David Roberts (14)                                                                 1,000                   *
Directors and Executive Officers as a group (9 persons) (15)                   8,830,895               68.1%

</TABLE>




---------------------
*        Less than 1%





(1)       Held of record by Atwell & Co., c/o The Chase Manhattan Bank, N.A., 4
          New York Plaza - 11th Floor, New York, NY 10004.

(2)       Held of record by (i) Taylor & Co., c/o Sanwa Bank California Trust
          Operations, 1977 Saturn Street, Monterey Park, CA 91754 (1,848,248
          shares), (ii) Cun & Co, c/o The Bank of New York, One Wall Street, New
          York, NY 10005 (176,049 shares) and (iii) Salkeld & Co., c/o Bankers
          Trust Company, 14 Wall Street, New York, NY 10015 (383,559 shares).
          Includes (i) 140,839 shares held by a limited partnership of which
          Oaktree is the general partner, (ii) 35,210 shares held by a third
          party account for which Oaktree is the investment manager, (iii)
          2,231,807 shares held by various limited partnerships, trusts and
          third party accounts for which TCW Asset Management Company or certain
          of its affiliates are the general partner, trustee or investment
          manager, respectively. Oaktree is a sub-advisor of TCW Asset
          Management Company and acts as a fiduciary on behalf of such funds and
          accounts.

(3)      Held of record by WSB Realty LLC, 85 Broad Street, New York, NY 10004.

(4)       Fernwood Associates, L.P.'s address is c/o NSCC NY Window, 55 Water
          Street, Concourse Level - South Bldg., New York, NY 10041. Includes
          the 12,574 shares of Common Stock owned by Fernwood Foundation Fund,
          L.P. ("Fernwood Foundation"); Fernwood Foundation and Fernwood
          Associates, L.P. ("Fernwood Associates") have the same general
          partner.

(5)       Fernwood Foundation Fund LP's address is NSCC NY Window, 55 Water
          Street, Concourse Level - South Bldg., New York, NY 10041. Includes
          the 691,623 shares of Common Stock owned by Fernwood Associates;
          Fernwood Foundation and Fernwood Associates have the same general
          partner.

(6)       Includes all shares owned by Apollo and 1,000 shares of Common Stock
          issuable upon the exercise of options granted to Mr. Mack on the
          Effective Date under the Company's Stock Plan. Mr. Mack is a principal
          of Apollo Real Estate Advisors, L.P., the general partner of Apollo,
          and the President of its corporate general partner. Mr. Mack disclaims
          beneficial ownership of the shares of Common Stock owned by Apollo.

(7)       Includes all shares owned by Apollo and 1,000 shares of Common Stock
          issuable upon the exercise of options granted to Mr. Neibart on the
          Effective Date under the Company's Stock Plan. Mr. Neibart is a
          partner of Apollo Real Estate Advisors, L.P. Mr. Neibart disclaims
          beneficial ownership of the shares of Common Stock owned by Apollo.

                                                      -50-


<PAGE>




(8)       Includes all shares owned by Apollo and 1,000 shares of Common Stock
          issuable upon the exercise of options granted to Mr. Scheetz on the
          Effective Date under the Company's Stock Plan. Mr. Scheetz is a
          partner of Apollo Real Estate Advisors, L.P. Mr. Scheetz disclaims
          beneficial ownership of the Common Stock owned by Apollo.

(9)      Includes all shares owned by Apollo and 1,000 shares of Common Stock
         issuable upon the exercise of options granted to Mr. Spector on the
         Effective Date under the Company's Stock Plan. Mr. Spector is a
         principal of Apollo Real Estate Advisors, L.P. Mr. Spector disclaims
         beneficial ownership of the shares of Common Stock owned by Apollo.

(10)      Includes 1,000 shares of Common Stock issuable upon the exercise of
          options granted to Mr. Klopp on the Effective Date under the Company's
          Stock Plan.

(11)      Includes all shares owned by funds and accounts managed by Oaktree and
          1,000 shares of Common Stock issuable upon the exercise of options
          granted to Mr. Bernard on the Effective Date under the Company's Stock
          Plan. Mr. Bernard is a principal of Oaktree. Mr. Bernard disclaims
          beneficial ownership of the shares of Common Stock owned by funds and
          accounts managed by Oaktree. Mr. Bernard has declined the Company's
          grant of stock options to him and has requested that the Company grant
          such stock options to the funds and accounts managed by Oaktree.

(12)      Includes all shares owned by Whitehall and 1,000 shares of Common
          Stock issuable upon the exercise of options granted to Mr. Rosenberg
          on the Effective Date under the Company's Stock Plan. Mr. Rosenberg
          disclaims beneficial ownership of the shares of Common Stock owned by
          Whitehall. Mr. Rosenberg is a Vice President of Goldman, Sachs & Co.
          Pursuant to Mr. Rosenberg's employment arrangements with Goldman
          Sachs, Mr. Rosenberg is required to transfer to Goldman Sachs any
          shares of Common Stock he receives either directly under the Company's
          Stock Plan or purchases upon an exercise of options granted under the
          Company's Stock Plan.

(13)     Includes all shares held by Whippoorwill Associates, Inc. as agent
         and/or general partner of various discretionary accounts and 1,000
         shares of Common Stock issuable upon the exercise of options granted to
         Mr. Strumwasser on the Effective Date under the Company's Stock Plan.
         Mr. Strumwasser is a principal of and Managing Director and General
         Counsel of Whippoorwill Associates. Mr. Strumwasser disclaims
         beneficial ownership of the shares of Common Stock owned by
         discretionary accounts managed by Whippoorwill Associates as set forth
         above.

(4)       Includes 1,000 shares of Common Stock issuable upon the exercise of
          options granted to Mr. Roberts on the Effective Date under the
          Company's Stock Plan. Does not include 818,339 shares owned by Angelo
          Gordon. Mr. Roberts is a Managing Director of Angelo Gordon. Mr.
          Roberts disclaims beneficial ownership of the 818,339 shares of Common
          Stock owned by Angelo Gordon.

(15)     See notes 1 through 14 above with respect to the nature of the
         ownership of Directors and Executive Officers as a group, including
         disclaimers of beneficial ownership described therein.


                  Description of Stock Plan





          The following is a summary of the material terms of the Stock Plan.
Such summary does not purport to be complete and is qualified in its entirety by
reference to the Stock Plan, a copy of which has been filed as an exhibit to
this Form 10-K.





                  The Board of Directors adopted the Stock Plan on the Effective
Date. The purpose of the Stock Plan is to attract and retain qualified persons
as Directors. Pursuant to the Stock Plan, the Board of Directors of the Company
has the authority to issue to members of the Company's Board of Directors
options to purchase, in the aggregate, 100,000 shares of Common Stock. Pursuant
to the Plan and the Stock Plan, on the Effective Date, the initial members of
the Company's Board of Directors were granted options entitling each director to
purchase an aggregate of 3,000 shares of Common Stock at an exercise price of
$25.00 per share. Thereafter, each Director who is elected or appointed after
the Effective Date will be granted options to purchase 3,000 shares of Common
Stock on the date of the meeting of the Company's stockholders at which such
Director is first elected to the Board of Directors or the date of the Board of
Directors meeting at which such Director is first appointed to the Board of
Directors to fill a vacancy on the Board of Directors. Each holder of an option
issued under the Stock Plan will be entitled to exercise the option to purchase
one-third of the shares of Common Stock covered by such option on the date of
original issuance thereof, one-third on the first anniversary of such date and
one-third on the second anniversary of such date, in each case, any time prior
to the tenth anniversary of the Effective Date. Pursuant to the Stock Plan,
Directors will receive 400 shares of

                                                      -51-


<PAGE>



Common Stock on the date of each annual meeting of the Company's stockholders
beginning with the annual meeting of stockholders in 1997.





                  If the holder of an option ceases to serve as a Director of
the Company for any reason, options that have been previously granted to such
holder and that have not been vested will be forfeited and options that are
vested as of the date of such cessation may be exercised by such holder in
accordance with and subject to the Stock Plan. If the holder of an option dies
while serving as a Director of the Company, options that have been previously
granted to such holder and that are vested as of the date of such holder's death
may be exercised by such holder's legal representative in accordance with and
subject to the Stock Plan.








ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





                  Asset Manager





                  The Company has retained 970 Management, LLC, an affiliate of
Victor Capital Group, L.P. to serve as the Company's Asset Manager pursuant to
an Asset Management Agreement, dated as of the Effective Date (the "Asset
Management Agreement"). John R. Klopp, one of the Company's Directors and an
officer and a stockholder of the Company, is a Managing Partner of VCG. Pursuant
to the Asset Management Agreement, the Asset Manager will act as the Company's
advisor and consultant with respect to the management of the Properties and the
Company's interests in the Property Owning Partnerships and Lower Tier Limited
Partnership.





                  The Asset Management Agreement has an initial term of one
year, which term will be automatically extended for consecutive one year periods
thereafter unless the Company or the Asset Manager notify the other at least 30
days before the then current term would otherwise terminate, of its election not
to extend the term.





                  The Company may terminate the Asset Management Agreement (i)
after the expiration of a cure period, by notice to the Asset Manager if the
Asset Manager defaults in any material respect in its performance under the
Asset Management Agreement, and (ii) immediately upon notice to the Asset
Manager if the Properties are sold or if there is a change in control of the
Asset Manager. The Asset Manager may terminate the Asset Management Agreement if
the Company defaults in the payment of any amount due and payable to the Asset
Manager and such failure continues for 30 days after the Asset Manager's written
notice of such failure. Either party may terminate the Asset Management
Agreement by giving notice to the other upon the occurrence of certain events
relating to the bankruptcy or insolvency of the other party.





                  The Company will pay the Asset Manager a fee (the "Asset
Management Fee") in an amount equal to $25,000 per month. In addition to the
payment of the Asset Management Fee, the Company will reimburse the Asset
Manager for certain expenses. If the Company sells or disposes of one but not
both of the Properties, the Company and the Asset Manager will review whether an
adjustment to the Asset Management Fee is appropriate. If the Company believes
that the Asset Management Fee should be reduced and the parties are unable in
good faith to agree upon a reduced fee, the Asset Management Agreement will be
terminable by either party upon 90 days' notice to the other.





                  Pursuant to the Plan, VCG received fees of $1,000,000 for
services rendered in connection with the financing of the Properties, $500,000
for services rendered in connection with the consummation of the Plan and
approximately $416,000 for services rendered to the Ad Hoc Committee of
Noteholders in connection with the Plan. In addition, 40,000 shares of Common
Stock payable to VCG under the Plan for services rendered in connection with the
consummation of the Plan were issued to the Managing Partners of VCG.







                                                      -52-


<PAGE>




                  Management and Leasing Agreements





                  Each of the Property Owning Partnerships entered into a
Management and Leasing Agreement, dated as of the Effective Date (the "Property
Management Agreements") with the Property Manager/Leasing Agent. Nyprop, LLC, a
stockholder of the Company, is an affiliate of the Property Manager/Leasing
Agent. Pursuant to the Property Management Agreements, the Property
Manager/Leasing Agent will perform all supervisory, management and leasing
services and functions reasonably necessary or incidental to the leasing,
management and operations of the Properties.





                  The Property Management Agreements have an initial term of two
years, which term will be automatically extended for additional consecutive 90
day terms until such time as a Property Owning Partnership notifies the Property
Manger/Leasing Agent in writing, at least 30 days before the then current term
would otherwise terminate, of its election not to extend the term of a Property
Management Agreement.





                  A Property Owning Partnership may terminate its Property
Management Agreement on 60 days notice if its Property is either sold by the
Property Owning Partnership or refinanced by the Property Owning Partnership
pursuant to a securitized financing of the Property, provided that termination
of the Property Management Agreement as a result of such financing will only be
effective if the Property Manager/Leasing Agent is not approved by the rating
agency participating in such financing. Each Property Owning Partnerships may
terminate its Property Management Agreement (i) after a certain cure period,
upon notice to the Property Manager/Leasing Agent if the Property
Manager/Leasing Agent breaches a material term of the Property Management
Agreement, and (ii) immediately upon notice to the Property Manager/Leasing
Agent if (x) the Property Manager/Leasing Agent or any principal of the Property
Manager/Leasing Agent intentionally misappropriates funds of the Property Owning
Partnership or commits fraud against the Property Owning Partnership or if there
is a change in control of the Property Manager/Leasing Agent. The Property
Manager/Leasing Agent may terminate a Property Management Agreement (i) after a
certain cure period, upon notice to the Property Owning Partnership if the
Property Owning Partnership breaches a material term of the Property Management
Agreement, and (ii) upon 60 days notice to the Property Owning Partnership if
the Property Owning Partnership fails to provide funds on a consistent basis to
operate and maintain the Property. Either party may terminate a Property
Management Agreement upon notice to the other party in the event that a petition
in bankruptcy is filed against the other party and is not dismissed within 60
days, or a trustee, receiver or other custodian is appointed for a substantial
part of the other party's assets and is not vacated within 60 days or the other
party makes an assignment for the benefit of its creditors.





                  On the Effective Date, each Property Owning Partnership paid
the Property Manager/Leasing Agent $50,000 per month (pro rated for any partial
month) for services provided by the Property Manager/Leasing Agent prior to the
Effective Date in connection with the transition of ownership and management of
the Properties from the Property Owning Partnerships' predecessors, for the
period commencing August 1, 1996 and ending on the Effective Date. Each Property
Owning Partnership will (i) pay the Property Manager/Leasing Agent a fee in an
amount equal to 1.5% of gross revenues from the respective Property, which fee
will be paid monthly, and (ii) reimburse the Property Manager/Leasing Agent for
all reasonable out-of-pocket expenses incurred by the Property Manager/Leasing
Agent related to the performance of its responsibilities under the Property
Management Agreement, to the extent set forth in the annual budget. In addition,
the Property Manager/Leasing Agent will be entitled to receive commissions in
connection with the leasing of space at the Properties and renewals and
extensions of leases.





                  The Company has entered into a REIT Management Agreement with
the Property Manager/Leasing Agent ("REIT Manager"). The REIT Manager is to
perform certain accounting, administrative and monitoring services. The REIT
Management Agreement provides for compensation to the REIT Manager of monthly
fees aggregating approximately $125,000 per annum, a one-time fee of $15,000,
and reimbursement of documented out-of-pocket expenses. There were no fees paid
under the REIT Management Agreement for the period October 10, 1996 to December
31, 1996.

                                                      -53-


<PAGE>




                  Other Transactions





                  On December 17, 1996, the Bankruptcy Court approved the
payment by the Company to Goldman, Sachs & Co. of approximately $345,000 in fees
and expenses for services rendered in connection with the financing of the
Properties. Ralph Rosenberg, a director of the Company, is a Vice President of
Goldman, Sachs & Co. Goldman, Sachs & Co. is the managing partner of Whitehall
Street Real Estate, Ltd., a stockholder of the Company.





ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>


<S>   <C>                         
2.1   Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
      Associates, L.L.C.*

2.2   Technical Amendment to Second Amended Joint Plan of Reorganization of 237 Park Avenue
      Associates, L.L.C. and 1290 Associates, L.L.C.*

2.3   Second Technical Amendment to Second Amended Joint Plan of Reorganization of 237 Park
      Avenue Associates, L.L.C. and 1290 Associates, L.L.C.*

3.1   Articles of Amendment and Restatement of Metropolis Realty, Trust, Inc., dated October 7,
      1996.*

3.2   Amended and Restated By-Laws of Metropolis Realty Trust, Inc.*

10.1  Agreement and Plan of Merger among 1290 Associates, L.L.C., 237 Park Avenue Associates,
      L.L.C. and 237/1290 Upper Tier Associates, L.P., as of October 10, 1996.*

10.2  Limited Partnership Agreement of 237 Park Partners, L.P.*

10.3  Limited Partnership Agreement of 1290 Partners, L.P.*

10.4  Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P.*

10.5  Amended and Restated Limited Partnership Agreement of 237/1290 Upper Tier Associates,
      L.P.*

10.6  Redemption and Substitution Agreement among JMB/NYC Office
      Building Associates, L.P., O&Y Equity Company, L.P., O&Y NY
      Building Corp., 237/1290 Upper Tier GP Corp., and 237/1290
      Upper Tier Associates, L.P., dated October 10, 1996.*

10.7  Metropolis Realty Trust, Inc. 1996 Directors' Stock Plan.*

10.8  Form of Metropolis Realty Trust, Inc. Stock Option Agreement for Directors.*

10.9  Form of Indemnification Agreement, dated as of October 10, 1996.*

10.10 Registration Rights Agreement, dated as of October 10, 1996.*

10.11 Participation Agreement (JMB Notes) between Metropolis Realty Trust, Inc. and Michigan
      Avenue L.L.C., dated as of October 10, 1996.*

10.12 Indemnification Agreement given by Property Partners, L.P., Carlyle-XIII Associates, L.P., and
      Carlyle-XIV Associates, L.P. to Metropolis Realty Trust, Inc., dated as of October 10, 1996.*

----------------



*         Incorporated by reference to the Registrant's Registration Statement
          on Form 10 (File No. 0-21849) and any amendments thereto.





<PAGE>





10.13    Modification of Operating Agreement of 237 Park Avenue Associates, L.L.C., dated as of
         October 10, 1996.*

10.14    Noteholders Contribution and Participation Agreement between Metropolis Realty Trust, Inc.
         and Bankers Trust Company, dated as of October 10, 1996.*

10.15    Debt Contribution Agreement, dated as of October 10, 1996, among Metropolis Realty Trust,
         Inc., 237/1290 Lower Tier Associates, L.P., 237 Park Partners, L.P.,  and 1290 Partners,
         L.P.*

10.16    Debt Assumption, Release and Security Agreement (237 Excess amount) dated October 10,
         1996.*

10.17    Debt Assumption, Release and Security Agreement (1290 Excess amount) dated October 10,
         1996.*

10.18    Release of Assumed Debt and Termination of Security Interest by Bankers Trust Company for
         the benefit of O&Y NY Building Corp. and O&Y Equity Company, L.P., dated as of
         October 10, 1996.*

10.19    237 Property Contribution Agreement between 237/1290 Upper Tier Associates, L.P., 237/1290
         Lower Tier Associates, L.P. and 237 Park Partners, L.P. dated as of October 10, 1996.*

10.20    1290 Property Contribution Agreement among 237/1290 Upper Tier Associates, L.P., 237/1290
         Lower Tier Associates, L.P. and 1290 Partners, L.P. dated as of October 10, 1996.*

10.21    Credit Agreement among 1290 Partners, L.P., 237 Park Partners, L.P., the lenders listed herein
         and The Chase Manhattan Bank, dated as of October 10, 1996.*

10.22    Consolidated, Amended and Restated Promissory Note in the amount of $420,000,000 from
         1290 Partners, L.P., and 237 Park Partners, L.P. to The Chase Manhattan Bank, dated October
         10, 1996.*

10.23    Mortgage Modification, Restatement and Security Agreement from
         1290 Partners, L.P., and 237 Park Partners, L.P., to The Chase
         Manhattan Bank, dated as of October 10, 1996.*

10.24    Master Agreement among The Chase Manhattan Bank, 1290 Partners, L.P. and 237 Park
         Partners, L.P., dated as of October 10, 1996.*

10.25    Schedule to the Master Agreement between The Chase Manhattan Bank and 1290 Partners, L.P.
         and 237 Park Partners, L.P., dated as of October 10, 1996.*

10.26    Interest Rate Agreement Pledge, and Security Agreement among 1290 Partners, L.P., 237 Park
         Partners, L.P., and The Chase Manhattan Bank, dated as of October 10, 1996.*

10.27    Assignment of Leases, Rents and Security Deposits, dated October 10, 1996, by 1290 Partners,
         L.P. and 237 Park Partners L.P. to The Chase Manhattan Bank.*

10.28    Note Pledge and Security Agreement among 1290 Partners, L.P., 237 Park Partners, L.P. and
         The Chase Manhattan Bank, dated as of October 10, 1996.*

10.29    Consent and Subordination of Property Management Agreement, dated as of October 10, 1996.*


----------------





*         Incorporated by reference to the Registrant's Registration Statement
          on Form 10 (File No. 0-21849) and any amendments thereto.





<PAGE>





10.30    Cash and Collateral Account Security, Pledge and Assignment Agreement among 1290 Partners,
         L.P., 237 Park Partners, L.P., and The Chase Manhattan Bank, dated as of October 10, 1996.*

10.31    Management and Leasing Agreement between 237 Park Partners, L.P. and Tishman Speyer
         Properties, L.P.*


         Management and Leasing Agreement between 1290 Partners, L.P. and Tishman Speyer
         Properties, L.P.*
10.32

10.33    Asset Management Agreement between Metropolis Realty Trust, Inc. and 970 Management,
         L.L.C., dated as of October 10, 1996.*

27.1     Financial Data Schedule for the period October 10, 1996 (Commencement of
         Operations) to December 31, 1996.

</TABLE>


----------------





*         Incorporated by reference to the Registrant's Registration Statement
          on Form 10 (File No. 0-21849) and any amendments thereto.





<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.





                                         METROPOLIS REALTY TRUST, INC.




                                          
                                          By:  /s/ Lee S. Neibart
                                             -----------------------------
                                          Name:  Lee S. Neibart
                                          Title: President and Director




                                          By:  /s/ Stuart Koenig
                                               --------------------------
                                          Name:  Stuart Koenig
                                          Title: Principal Financial Officer





Date:  March 31, 1997








                  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>

-------------------------------------------------------------------------------------------------------------------------
                   Signature                                      Title                                      Date
<S>                                                       <C>                                             <C> 
/s/ Lee S. Neibart                                        President and Director                        March 27, 1997
-----------------------------------------------
Lee S. Neibart


                                                        Chairman of the Board and                       March __, 1997
-----------------------------------------------                  Director
William L. Mack


/s/ W. Edward Scheetz                                  Vice President and Director                      March 27, 1997
-----------------------------------------------
W. Edward Scheetz




/s/ John R. Klopp                                      Vice President and Director                      March 27, 1997
-----------------------------------------------
John R. Klopp


                                                      S-1


<PAGE>


                                                                 Director                               March __, 1997
----------------------------------------
Bruce H. Spector                                                 



/s/ Russel S. Bernard                                            Director                               March 27, 1997
----------------------------------------
Russel S. Bernard

                                                                 Director                                March __, 1997
----------------------------------------      
Ralph F. Rosenberg                                             



                                                                 Director                                March __, 1997
----------------------------------------   
David A. Strumwasser       




/s/ David Roberts                                              Director                                March 27, 1997
-------------------------------------                          
David Roberts            




                                                      S-2


<PAGE>


</TABLE>