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
                   For the Fiscal Year Ended December 31, 2001

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the Transition Period from ______ to ______

                         Commission File Number 0-21849

                          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.)

                                 410 Park Avenue
                                   14th Floor
                            New York, New York 10022
          (Address of principal executive offices, including zip code)

                                 (212) 655-0220
              (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

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

                                                Yes [X]    No [ ]

<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]

As of March 15, 2002, there were 13,004,946  shares of the  registrant's  Common
Stock issued and outstanding.

Of the  registrant's  13,004,946  shares of Common Stock issued and outstanding,
approximately  8,658,193  shares are held by  affiliates of the  registrant  and
approximately 4,346,753 shares are held by non-affiliates of the registrant.

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.


                      DOCUMENTS INCORPORATED BY REFERENCE:

The Exhibits to (i) the Company's Registration Statement on Form 10, as amended,
(ii) the Company's definitive  Information Statement on Schedule 14C, filed with
the  Commission on October 29, 1999,  and (iii) the  Company's  Annual Report on
Form 10-K filed with the Commission on March 30, 2000 are hereby incorporated by
reference in Part IV of this Annual Report on Form 10-K.

                                       i

<PAGE>


                                TABLE OF CONTENTS

PART I.........................................................................1
   ITEM 1.      BUSINESS.......................................................1
   ITEM 2.      PROPERTY.......................................................3
   ITEM 3.      LEGAL PROCEEDINGS..............................................7
   ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............7

PART II........................................................................7
   ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS............................................7
   ITEM 6.      SELECTED FINANCIAL DATA........................................9
   ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS...........................10
   ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....13
   ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................14
   ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE........................26

PART III......................................................................27
   ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............27
   ITEM 11.     EXECUTIVE COMPENSATION........................................29
   ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT....................................................31
   ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................34

PART IV.......................................................................36
   ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                ON FORM 8-K...................................................36


             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.

                                       ii
<PAGE>


                                     PART I

ITEM 1. BUSINESS

        Business

       Metropolis Realty Trust, Inc., a Maryland corporation (the "Company"), is
a real estate investment trust (a "REIT"), which was formed on May 13, 1996. The
Company's  principal  assets consist of its interests in 1290 Partners,  L.P., a
Delaware limited  partnership (the "1290 Property Owning  Partnership")  through
which it owns 1290 Avenue of the Americas  (the "1290  Property"),  as described
below under "ITEM 2. -- PROPERTY." The Company's principal business objective is
to operate the 1290 Property in a manner that will maximize the 1290  Property's
revenues and value and in turn maximize funds from  operations  and  stockholder
value. As further described under "ITEM 13. -- CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS -- Asset Manager" and " -- Management and Leasing  Agreements," the
1290 Property Owning  Partnership has retained  Capital Trust,  Inc. (the "Asset
Manager") 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 1290 Property.

        Competition

        Numerous  office  building  properties in New York City compete with the
1290  Property in  attracting  tenants to lease space.  Some of these  competing
properties  are newer or better  located than the 1290  Property.  The amount of
space available in competitive  commercial  properties in the New York City area
could have a material effect on the 1290 Property Owning  Partnership's  ability
to lease space in the 1290 Property and on the rents charged.  However, the 1290
Property  is  currently  approximately  99%  leased.  Over the next five  years,
approximately  28% of the total rentable  square feet of the building is subject
to  expiring  leases,  of which 7% has been  leased  to an  existing  tenant  as
expansion space at the 1290 Property. See "Item 2 -- Property."

        Employees

        The  Company  does not  have any  employees.  The 1290  Property  Owning
Partnership  is a party to labor  agreements  with  respect  to union  employees
employed at the 1290 Property.  The Property  Manager/Leasing Agent has employed
such union  employees on behalf of the 1290  Property  Owning  Partnership.  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 has elected 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 ended December 31, 1996. As a REIT, the
Company (subject to certain exceptions) generally will not be subject to federal
income taxation on income it distributes to stockholders.  For any year in which
the Company does not meet the requirements for qualifying 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 to be taxed as a REIT,  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 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


<PAGE>

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 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 90% of its taxable income. The Company will be subject
to income tax on any of its undistributed  taxable income and net capital gains,
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 1290 Property  Owning
Partnership and the Company's cash flow will consist  primarily of distributions
from the 1290 Property Owning Partnership.

        Differences  in timing  between the receipt of income and the payment of
expenses  in  arriving  at taxable  income of the  Company or the 1290  Property
Owning  Partnership,  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.

                                       2
<PAGE>

        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 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. PROPERTY

        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 2,000,000
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 1997
through 2001 were approximately 97%, 99%, 99%, 99% and 99%, respectively.

        As of December 31, 2001, the 1290 Property was  approximately 99% leased
and there were  leases and  license  agreements  with 31 tenants and 8 licensees
covering  approximately  1,960,000  rentable square feet of space.  For the year
ended  December 31, 2001,  the annual average rent  (including  electricity  and
additional rent payable on account of operating expenses, porters wage, and real
estate  tax   escalations)   for  office   space  leased  in  the  building  was
approximately  $45.86 per square  foot.  For the year ended  December  31, 2001,
approximately  72,000 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 expenses,  porters wage and real estate tax escalations) of
approximately  $82.58  per  rentable  square  foot.  As of  December  31,  2001,
approximately  5,000  rentable  square feet of storage  space was  available for
rent.

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


                                       3
<PAGE>

        The following table summarizes certain information regarding the largest
leases at the 1290 Property as of December 31, 2001:

<TABLE>
<CAPTION>


                                                                           Annual Base
                                                           Leased           Rent per         Gross Rent       Date(s) of
                                                           Square          Square Foot        per Square        Lease
Tenant                           Nature of Business        Footage(1)       Leased(2)        Foot Leased(3)   Expiration
------                           ------------------        ----------    ---------------     ------------     ----------
<S>                              <C>                       <C>           <C>                 <C>              <C>

Equitable (AXA Financial         Insurance/Financial         777,578          $38.16(4)         $42.89(4)      12/31/11(5)
Advisors)                        Services
Warner Communications, Inc.      Entertainment               226,373          $41.91(6)         $45.59(6)       6/30/12(7)
Robinson Silverman               Law Firm                    125,744          $52.29(8)         $58.53(8)       3/31/04
The Bank of New York             Financial Services          107,448          $39.44(9)         $42.78(9)      12/31/10(10)
EMI Entertainment World, Inc.    Entertainment               104,553          $37.95(11)        $43.29(11)      9/30/02(12)
Deutsche Bank, AG                Financial Services          100,380          $41.00            $44.99          2/14/14
Morrison Foerster                Law Firm                     93,606          $50.19(13)        $56.33(13)      9/30/12(14)
ABN-AMRO                         Financial Services           87,626          $57.00(15)        $63.07(15)     10/31/14
GMAC                             Financial Services           81,892          $33.50            $37.66         12/31/10
Other Office and Retail Tenants  Various                     259,948          $50.57            $58.16         2001-2016

</TABLE>

(1)     Leased square footage does not include  approximately  7,700 square feet
        of vacant storage space and the building office.

(2)     Annual  Base  Rent  means  the  amount   contractually   due  (excluding
        adjustments  related to recoveries from tenants for operating  expenses,
        porters  wage,  real  estate  taxes,  utilities  or other items and rent
        concessions)  for the year ended December 31, 2001. 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
        operating expenses, porters wage, real estate taxes, utilities and other
        items.

(4)     Does not include  42,110 square feet leased in the basement at an Annual
        Base Rent of $28.01 per square  foot and Gross Rent of $28.26 per square
        foot.

(5)     Leases with Equitable  expire  December 31, 2015 (with respect to 13,689
        square feet), December 31, 2011 (with respect to 626,668 square feet and
        38,454  square feet in the basement) and December 31, 2008 (with respect
        to 95,111 square feet and 3,656 square feet in the basement).

(6)     Does not include 2,615 square feet of space leased in the basement at an
        Annual  Base Rent of $22.00 per square foot and Gross Rent of $24.50 per
        square foot.

(7)     Leases with Warner  expire  September  30, 2004 (with  respect to 66,367
        square feet) and June 30, 2012 (with respect to 157,391  square feet and
        2,615 square feet in the basement).

(8)     Does not include 1,800 square feet of space leased in the basement at an
        Annual  Base Rent of $24.00 per square foot and Gross Rent of $24.75 per
        square foot.

                                       4
<PAGE>

(9)     Does not include  11,633  square feet of space leased in the basement at
        an Annual Base Rent and Gross Rent of $45.00 per square foot.

(10)    Leases with The Bank of New York expire April 30, 2003 (with  respect to
        31,402  square feet and 11,633 square feet in the basement) and December
        31,2010 (with respect to 64,413 square feet).

(11)    Does not include 2,456 square feet of space leased in the basement at an
        Annual  Base Rent of $26.80 per square foot and Gross Rent of $30.84 per
        square foot.

(12)    Leases with EMI expire September 30, 2002 (with respect to 75,474 square
        feet and 923 square feet in the  basement)  and September 30, 2012 (with
        respect to 26,623 square feet and 1,533 square feet in the basement). Of
        the space  expiring  September  30, 2002,  Morrison  Foerster has leased
        75,474  square feet through  September  30, 2012.  EMI has the option to
        terminate  its lease  effective  September  30,  2007 by giving the 1290
        Property Owning  Partnership  written notice on or before  September 30,
        2006 and by paying a termination fee of $1,258,000.

(13)    Does not include 879 square feet of space  leased in the  basement at an
        Annual  Base Rent of $28.00 per square foot and Gross Rent of $30.36 per
        square foot.

(14)    Leases  with  Morrison  & Forester  expire on  February  28,  2003 (with
        respect to 17,468  square feet) and  September 30, 2012 (with respect to
        75,259 square feet and 879 square feet in the basement).

(15)    Does not include 6,746 square feet of space leased in the basement at an
        Annual Base Rent and Gross Rent of $26.65 per square foot.

                 Expenditures for capital projects for the 1290 Property in 2001
aggregated approximately $477,000 and related primarily to (i) the completion of
the elevator  modernization  program;  (ii) the completion of a 100-ton  chiller
installation  for the lobby;  (iii) the upgrade and  modernization  of the video
surveillance  system; and (iv) the modernization of the truck lift.  Anticipated
expenditures   for  capital   projects  for  the  1290   Property  in  2002  are
approximately  $75,000 and relate to the completion of the  modernization of the
trucklift.


                                       5
<PAGE>

        The following table shows  anticipated lease expirations on an aggregate
basis for each calendar year from 2002 through and  including  2011.  Such chart
assumes  that there  will be no early  terminations  of leases  and that  leases
expire without extension by existing tenants pursuant to lease options.

<TABLE>
<CAPTION>

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

          2002                     4                 102,660         $   2,613,096                3.17%
          2003                     3                  61,075         $   2,957,440                3.50%
          2004                     5                 234,757         $  11,476,188               14.71%
          2005                     8                  54,754         $   2,901,468                3.99%
          2006                     3                  94,538         $   3,894,336                5.62%
          2007                     -                       -                     -                    -
          2008                     2                 116,070         $   6,168,528                9.12%
          2009                     1                  10,000         $     150,000                 .24%
          2010                     2                 146,305         $   6,279,314                9.86%
          2011                     1                 665,122         $  25,171,284               43.82%

</TABLE>

        Annual real estate  taxes  assessed  against the 1290  Property  for the
fiscal year ending June 30, 2002 and for each of the fiscal years ended June 30,
2001,  2000,  and  1999  were   $18,076,000,   $17,442,000,   $17,755,000,   and
$17,964,000,  respectively,  which amounts were calculated on assessed values of
approximately  $186,120,000,   $178,560,000,   $185,400,000,  and  $175,500,000,
respectively.  See -- Other  Assets -- "Tax  Certiorari  Proceedings  and Tenant
Reimbursement Claims."

        In  December  1999,  the 1290  Property  Owning  Partnership  refinanced
mortgage indebtedness secured by the 1290 Property of approximately $224,900,000
and obtained a $425,000,000  mortgage loan (the "1290 Mortgage Loan").  Interest
on the 1290 Mortgage  Loan is based on LIBOR plus 2% and requires  interest only
payments  through  maturity  on  January  2,  2003.  The  1290  Property  Owning
Partnership  has a one time right  (subject  to  achieving  certain  conditions,
including a debt service coverage ratio,  loan to value ratio and the payment of
a 25 basis point  extension  fee),  at its option,  to extend the maturity for a
period of twelve  months.  The 1290 Mortgage Loan may be repaid in whole without
penalty.

        The 237 Property

        A wholly-owned  subsidiary of the Company owned the property  located at
237 Park  Avenue  (the "237  Property")  and all  improvements  thereon  through
November 22, 1999.  On November 22, 1999,  the Company sold all of its interests
in the 237 Property for an aggregate purchase price of $372,000,000,  subject to
customary  prorations and certain  adjustments.  Such prorations and adjustments
reduced the aggregate purchase price to approximately $357,862,000.

                                       6
<PAGE>

        Other Assets

        Tax Certiorari Proceedings and Tenant Reimbursement Claims

        Tax certiorari  proceedings  have been settled with the City of New York
for  over-assessment  of property  taxes for the tax years  ending June 30, 1991
through June 30, 1996 with respect to the 1290  Property.  The Company  received
net  proceeds of  approximately  $6,519,000  in December  2000 after  payment of
approximately  $876,000 of fees and expenses  incurred in  connection  with such
proceedings.  Of  this  amount,  approximately  $3,211,000  was  expected  to be
reimbursed  to tenants and was  included in  restricted  cash as of December 31,
2000.  During 2001,  approximately  $2,027,000  was  reimbursed to tenants.  The
remaining  balance of $1,184,000  is included in restricted  cash as of December
31, 2001. The net proceeds were approximately  $3,800,000 in excess of estimated
net proceeds and were included in miscellaneous income in 2000.

        Tax certiorari  proceedings have been commenced which remain outstanding
against the City of New York for  over-assessment  of property taxes for the tax
years  ending  June 30,  1997  through  June 30,  2001 with  respect to the 1290
Property.

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  1290  Property  Owning  Partnership  or the  1290
Property.

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

        The Annual  Meeting  of  Stockholders  for fiscal  year 2001 was held on
January 22, 2002. At such meeting,  the  stockholders of the Company (i) elected
William L. Mack, Lee S. Neibart, Bruce H. Spector, John R.S. Jacobsson,  John R.
Klopp, Russel S. Bernard, David A. Strumwasser and David Roberts as directors of
the Company, each of their terms to expire in 2002, and (ii) ratified Deloitte &
Touche LLP as the Company's independent auditors for the year ended December 31,
2001.

                                    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.
On October 10, 2001, the  classification of the Common Stock into two classes of
Common  Stock  terminated  pursuant to the terms of the  Charter.  All shares of
Class A and Class B Common  Stock  were  automatically  converted  into a single
class of Class A Common Stock.  As of March 15, 2002,  there were  approximately
111 holders of record of the Company's Class A Common Stock.

        Distribution Policy

        On March 6, 1997, the Board of Directors  adopted a distribution  policy
calling for regular quarterly distributions. 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 1290 Property, 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

                                       7
<PAGE>

make annual  distributions to stockholders of at least 90% of its taxable income
(excluding capital gains). The Company has made the following  distributions for
its two most recent fiscal years:

                                                          Amount of Distribution
Date of Distribution             Type of Distribution           (Per Share)
--------------------             --------------------       ---------------
April 13, 2000                          Regular                  $   .15
July 13, 2000                           Regular                  $   .15
October 12, 2000                        Regular                  $   .15
December 14, 2000                       Regular                  $   .25
April 16, 2001                          Regular                  $   .25
July 16, 2001                           Regular                  $   .25
October 19, 2001                        Regular                  $   .25
December 28, 2001                       Regular                  $   .25

        On March 20, 2002 the Company announced a regular quarterly  dividend of
$0.25 per share, which is payable on April 15, 2002 to stockholders of record as
of March 29, 2002.


                                       8
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

        The following table sets forth selected historical financial data.

<TABLE>
<CAPTION>

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share amounts)
---------------------------------------------------------------------------------------------------------------------------------
                                                                            Years Ended December 31,
                                                   2001               2000             1999              1998              1997
                                                   ----               ----             ----              ----              ----
<S>                                        <C>               <C>                <C>              <C>               <C>

REVENUES
   Rental income                           $      91,030     $      90,073      $    126,434     $     134,754     $     129,617
   Lease termination income                            -                 -            26,455                 -                 -
   Miscellaneous income                            2,936             5,245             4,669             4,889             1,190
                                           -------------     -------------      ------------     -------------     -------------
      Total revenues                              93,966            95,318           157,558           139,643           130,807
                                           -------------     -------------      ------------     -------------     -------------

OPERATING EXPENSES
   Real estate taxes                              17,821            18,266            27,414            27,733            26,813
   Operating and maintenance                       5,518             5,173             6,756             7,119             7,224
   Utilities                                       9,450             8,186             6,991             6,674             6,870
   Payroll                                         3,480             3,091             4,323             4,430             4,332
   Management fees                                 1,820             1,770             2,198             2,298             2,121
   Professional fees                                 524               932             1,960             3,451             2,055
   General and administrative                        328               430               980               562             1,032
   Bad debt expense                                1,301                 -               585                 -               329
   Depreciation and amortization                  11,981            11,680            16,245            14,466            13,347
                                           -------------      ------------      ------------     -------------     -------------
        Total operating expenses                  52,223            49,528            67,452            66,733            64,123
                                           -------------      ------------      ------------     -------------     -------------

OTHER ITEMS
   Interest income                                   973             2,917             3,759             3,293             3,676
   Interest expense                              (41,400)          (41,464)          (33,582)          (35,800)          (36,233)
   Write-off of note receivable                        -                 -            (1,088)                -                 -
   Write-off of deferred financing costs               -                 -            (2,307)                -                 -
                                           -------------      ------------      ------------     -------------     -------------
      Total other items                          (40,427)          (38,547)          (33,218)          (32,507)          (32,557)
                                           -------------      ------------      ------------     -------------     -------------
GAIN ON SALE OF PROPERTY                               -                 -            50,445                 -                 -
                                           -------------      ------------      ------------     -------------     -------------
GAIN ON REPURCHASE OF
MINORITY INTEREST                                 13,009                 -                 -                 -                 -
                                           -------------      ------------      ------------     -------------     -------------

NET INCOME                                 $      14,325     $       7,243      $    107,333     $      40,403     $      34,127
                                           =============      ============      ============     =============     =============

Net Income Per Common Share:

Net income                                 $        1.10     $         .56       $      8.27      $       3.12     $        2.63
                                           -------------     -------------      ------------     -------------     -------------
Weighted average common shares
outstanding                                   13,001,307        12,997,699        12,971,262        12,967,153        12,963,963
                                           -------------     -------------      ------------     -------------     -------------

Net Income Per Common Share (assuming
dilution):

Net income                                 $        1.10     $         .56       $      8.26     $        3.11     $        2.63
                                           -------------     -------------      ------------     -------------     -------------
Weighted average common shares
outstanding (assuming dilution)               13,004,307        13,000,699        12,998,646        12,993,666        12,988,963
                                           --------------    -------------      ------------     -------------     -------------

Total assets as of year end                $     460,346     $     477,076       $   475,276      $    767,771     $     757,932
                                           -------------     -------------      ------------     -------------     -------------

Long-term debt as of year end              $     425,000     $     425,000       $   425,000     $     410,625     $     418,125
                                           -------------     -------------      ------------     -------------     -------------

Cash dividends declared per common share   $        1.00     $         .70      $      31.50     $        1.50     $        2.75
                                           -------------     -------------      ------------     -------------     -------------
</TABLE>

                                       9
<PAGE>


On  November  22,  1999,  the  Company  sold  the 237  Property.  The  following
represents  the  condensed  results of  operations  for the 237 Property for the
period January 1, 1999 through November 21, 1999:


                                                               (In thousands)

        REVENUES:
        Rental income                                             $43,618
        Lease termination income                                   25,855
        Miscellaneous income                                          495
                                                                 --------

        Total revenues                                             69,968
                                                                 --------

        OPERATING EXPENSES:
        Real estate taxes                                           9,324
        Operating and maintenance                                   2,300
        Utilities                                                     572
        Payroll                                                     1,539
        Management fees                                               635
        Professional fees                                             515
        General and administrative                                    285
        Depreciation and amortization                               5,624
                                                                 --------

        Total operating expenses                                   20,794
                                                                 --------

        OTHER ITEMS:
        Interest income                                             1,100
        Interest expense                                          (11,801)
                                                                 --------
        Total other items                                         (10,701)
                                                                 --------

        NET INCOME                                                $38,473
                                                                 ========

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. The Company is a Maryland corporation that qualifies as a REIT
for tax purposes.

        Prior to November  22,  1999,  the Company  owned and  operated  the 237
Property  and the 1290  Property.  On November  22,  1999,  the Company sold its
interests in the 237 Property.  Consequently,  the Company's  principal business
objective  is to operate the 1290  Property in a manner that will  maximize  the
1290  Property's  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 2,000,000 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 1290 Property serves as the corporate
headquarters for Equitable and is currently  approximately 99% leased.  Over the
next five years, approximately 28% of the total rentable area of the building is
subject to expiring leases, of which 7% has been leased to an existing tenant as
expansion space at the 1290 Property.

                                       10
<PAGE>

        The  1290  Property  Owning  Partnership  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 1290 Property,  and Capital
Trust,  Inc. to serve as the Asset Manager.  The Company has also entered into a
REIT  Management  Agreement  with  Tishman  Speyer  Properties,  L.P. to perform
certain accounting, administrative and REIT compliance monitoring services.

        On October 10,  2001,  the  classification  of the Common Stock into two
classes of Common Stock  terminated  pursuant to the terms of the  Charter.  All
shares of Class A and Class B Common Stock were  automatically  converted into a
single class of Class A Common Stock. As of December 31, 2001, 13,001,346 shares
of  Class  A  Common  Stock,  par  value  $10.00  per  share,  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 1290 Property are reported
in the consolidated  financial statements of the Company using the consolidation
method of accounting.

        Historical  Consolidated  Statement of Income,  year ended  December 31,
2001

        Rental  income  for the  year  ended  December  31,  2001  increased  by
approximately $1,036, an increase of 1.2% from the year ended December 31, 2000.
This  increase  is  primarily  due to the  commencement  of new leases at higher
market rents and scheduled rent increases in existing leases.

        Miscellaneous income for the year ended December 31, 2001 decreased by
approximately $2,309, a decrease of 44.0% from the year ended December 31, 2000.
This  decrease is primarily  due to: (i) $2,100 that was  recognized in December
2000  related to real estate tax refunds  received for the tax years ending June
30, 1991  through  June 30, 1996 and (ii) $1,000 that was  received in June 2000
from a tenant at the 1290  Property in  connection  with the  occupancy of space
that the tenant was previously subleasing and now leases directly. This decrease
is offset by an increase in tenant  submetered  electric  charges of $629 during
2001.

        Operating expenses for the year ended December 31, 2001 were $52,223, an
increase  of 5.4% from the year  ended  December  31,  2000.  This  increase  is
primarily  attributable to increases in (i) bad debt expense  resulting from the
write-off  of  certain   tenant   receivables   acquired   from  the   Company's
predecessors,  (ii) utility expense, (iii) payroll expense resulting from annual
wage increases and (iv)  depreciation and  amortization  related to additions to
building and tenant  improvements in 2000 and 2001.  These increases were offset
by a decrease in professional  fees as 2000 includes amounts incurred related to
the sale of the 237 Property.  Operating expenses as a percentage of base rental
income and escalation  income increased to 57.4% for the year ended December 31,
2001 as compared to 55% for the year ended December 31, 2000.

        Interest  income for the year  ended  December  31,  2001  decreased  by
approximately $1,944, a decrease of 66.7% from the year ended December 31, 2000.
This  decrease  was due to  approximately  $1,700 of  interest  income  that was
recognized  in December  2000  related to the receipt of real estate tax refunds
received in 2000.  In addition,  interest  income  decreased due to a decline in
interest rates during 2001 as compared to 2000.

        On March 23, 2001,  the Company  exercised its right to  repurchase  the
4.95% limited partnership  interest in the 1290 Property Owning Partnership (the
"Subordinated  Minority  Interest")  that  was  owned  by  237/1290  Upper  Tier
Associates,  L.P.  (the "Upper Tier LP"),  in  accordance  with the Agreement of
Limited  Partnership of the 1290 Property  Owning  Partnership.  The exercise of
such  repurchase  right  resulted  in a payment of  approximately  $1,400 by the
Company to the Upper Tier LP and a gain to the Company of $13,009.

                                       11
<PAGE>

        Historical  Consolidated  Statement of Income,  year ended  December 31,
2000

        Rental  income  for the  year  ended  December  31,  2000  decreased  by
approximately  $36,361,  a decrease  of 28.8% from the year ended  December  31,
1999.  This  decrease was the result of the sale of the 237 Property on November
22,  1999.  This  decrease  is offset by an  increase  in base rents at the 1290
Property associated with new leases, and an increase in operating escalations at
the 1290  Property,  which was  primarily  the result of an  increase in utility
expense in 2000.

        Miscellaneous  income in 1999 includes  approximately  $2,900 related to
the  reversal  of  a  reserve  for  utility  tax  claims  settled  during  1999.
Miscellaneous  income in 2000  includes  $2,100 that was  recognized in December
2000  related to the real estate tax refunds  received  for the tax years ending
June 30, 1991 through June 30, 1996.  Miscellaneous income in 2000 also included
$1,000  that was  received  in June 2000 from a tenant at the 1290  Property  in
connection with the occupancy of space that the tenant was previously subleasing
and now leases directly.

        Operating  expenses for the year ended December 31, 2000 were $49,528, a
decrease of 26.6% from the year ended  December 31, 1999.  This decrease was the
result of the sale of the 237 Property on November 22,  1999.  This  decrease is
partially offset by increases in utilities, repairs and maintenance, payroll and
management  fees at the  1290  Property  and an  increase  in  depreciation  and
amortization  related to additions to building and tenant  improvements  in 1999
and  2000.  Operating  expenses  as a  percentage  of  base  rental  income  and
escalation income is 55.0% in 2000 versus 53.3% in 1999.

        Interest  income for the year  ended  December  31,  2000  decreased  by
approximately  $842, a decrease of 22.4% from the year ended  December 31, 1999.
This  decrease  was the result of the sale of the 237  Property on November  22,
1999,  and a  reduction  in cash held by the  Company,  offset by  approximately
$1,700 of interest  income that was  recognized  in December 2000 related to the
real estate tax refunds  received for the tax years ending June 30, 1991 through
June 30, 1996.

        Interest  expense  for the year ended  December  31, 2000  increased  by
approximately  $7,882,  an  increase of 23.5% from the year ended  December  31,
1999. This increase is due to a higher level of mortgage indebtedness,  a higher
interest  rate on such  indebtedness  and an  increase  in the  amortization  of
deferred financing costs associated with such indebtedness.

        Liquidity and Capital Resources

        During  2001,  the  Company  generated  cash  flows from  operations  of
approximately  $13,747.  The  Company  used  this  cash  and cash on hand to pay
dividends in the amount of $13,001,  pay leasing  commissions  of  approximately
$2,069 and fund building and tenant improvements of approximately $614.

        At December  31,  2001,  the Company  had  unrestricted  cash on hand of
approximately  $11,012.  At December 31, 2000, the Company had unrestricted cash
on hand of approximately $15,066.

        In  December  1999,  the 1290  Property  Owning  Partnership  refinanced
mortgage  indebtedness  secured by the 1290 Property of approximately  $224,900,
and obtained the 1290 Mortgage Loan. Interest on the 1290 Mortgage Loan is based
on LIBOR plus 2% and requires interest only payments through maturity on January
2, 2003. The 1290 Property  Owning  Partnership has a one time right (subject to
achieving certain  conditions,  including a debt service coverage ratio, loan to
value ratio and the payment of a 25 basis point  extension  fee), at its option,
to extend the maturity for a period of twelve months. The 1290 Mortgage Loan may
be repaid in whole without penalty.

                                       12
<PAGE>

        Recent Pronouncements

        Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting
for  Derivative  Instruments  and Hedging  Activities,  was  implemented  by the
Company  on  January  1,  2001.  SFAS  No.  133,  as  amended  and  interpreted,
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities. All derivatives, whether designated as hedging relationships
or not, are required to be recorded on the balance  sheet at fair value.  If the
derivative is designated as a fair-value hedge, the changes in the fair value of
the derivative and the hedged item are recognized in earnings. If the derivative
is designated as a cash-flow hedge, the effective portion of changes in the fair
value of the  derivative  is recorded in other  comprehensive  (loss) income and
will be  recognized  in the  income  statement  when  the  hedged  item  affects
earnings. The ineffective portion of changes in the fair value of the derivative
designated as a cash flow hedge is recognized in the income statement.  SFAS No.
133  defines new  requirements  for  designation  and  documentation  of hedging
relationships as well as ongoing effectiveness assessments in order to use hedge
accounting.  For a derivative that does not qualify as a hedge,  changes in fair
value are recognized in earnings.

        On January 1, 2001, the Company recorded  approximately  $6,900 in other
comprehensive loss as a cumulative transition adjustment, to record its interest
rate swap agreement (see Note 4 to the Company's  financial  statements included
in response to Item 8 hereof) at its estimated fair value as of that date.

        In  August  2001,  the FASB  issued  SFAS No.  144,  Accounting  for the
Impairment or Disposal of Long Lived Assets  (effective  January 1, 2002).  SFAS
No. 144 supersedes  existing  accounting  literature dealing with impairment and
disposal of long-lived assets, including discontinued  operations.  It addresses
financial  accounting and reporting for the impairment of long-lived  assets and
for  long-lived  assets to be disposed  of, and expands  current  reporting  for
discontinued  operations to include disposals of a "component" of an entity that
has been disposed of or is  classified  as held for sale.  The Company is in the
process of  evaluating  the financial  statement  impact of the adoption of this
standard.

ITEM 7A.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                The  1290  Property   Owning   Partnership  and  Morgan  Stanley
Derivative  Products,  Inc.  entered into an Interest  Rate  Exchange  Agreement
effective December 13, 1999 (the "1290 Swap Agreement"). The 1290 Swap Agreement
provides  that the 1290  Property  Owning  Partnership  will pay  interest at an
effective  rate of  8.4995%  per  annum  on the  notional  amount  of  $425,000.
Management believes that the risk of incurring losses related to the credit risk
is remote and that any losses would be immaterial.

                The maturity date of the 1290 Mortgage Loan and the  termination
date of the 1290 Swap  Agreement  are  identical.  The  estimate  of the cost to
unwind the 1290 Swap  Agreement is  approximately  $19,439 at December 31, 2001.
The Company has no intention of unwinding the 1290 Swap Agreement.

                                       13
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                          METROPOLIS REALTY TRUST, INC.
                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----
HISTORICAL FINANCIAL STATEMENTS
       Independent Auditors' Report......................................     15

       Consolidated Balance Sheets as of December 31, 2001 and 2000......     16

       Consolidated Statements of Income and Comprehensive Loss for the
       years ended December 31, 2001, 2000 and 1999......................     17

       Consolidated Statements of Stockholders' Equity for years ended
       December 31, 2001, 2000, and 1999.................................     18

       Consolidated Statements of Cash Flows for years ended December 31,
       2001, 2000 and 1999...............................................     19

       Notes to Consolidated Financial Statements........................     20


                                       14
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Stockholders of Metropolis Realty Trust, Inc.

We have  audited the  accompanying  consolidated  balance  sheets of  Metropolis
Realty  Trust,  Inc. and  Subsidiaries  as of December 31, 2001 and 2000 and the
related consolidated statements of income and comprehensive loss,  stockholders'
equity and cash flows for each of the three years in the period  ended  December
31, 2001.  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 auditing standards generally accepted
in the  United  States of  America.  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  audits  provide  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,  2001  and  2000  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.

Deloitte & Touche LLP
New York, New York
January 18, 2002


                                       15
<PAGE>

<TABLE>
<CAPTION>

METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                            December 31,
                                                                                             2001               2000
                                                                                             ----               ----
<S>                                                                                          <C>                <C>

Rental property - net of accumulated depreciation of $48,077 and $37,601,
   respectively                                                                     $      358,709    $      368,152
Cash and cash equivalents                                                                   11,012            15,066
Escrow deposits and restricted cash                                                          7,506             5,669
Tenant security deposits                                                                       203               228
Due from tenants - net of doubtful accounts of $0 and $2,745,
    respectively                                                                             2,138             4,874
Deferred financing costs - net of amortization of $8,830 and $4,515,
   respectively                                                                              4,101             8,401
Notes receivable                                                                               275               289
Deferred rent receivable                                                                    50,119            48,828
Prepaid real estate taxes                                                                    8,986             8,721
Deferred leasing costs, net of amortization of $4,132 and $2,627,
   respectively                                                                             17,016            16,451
Other assets                                                                                   281               397
                                                                                    --------------    --------------

TOTAL ASSETS                                                                        $      460,346    $      477,076
                                                                                    ==============    ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

   Mortgage loan                                                                    $      425,000     $     425,000
   Accounts payable and accrued expenses                                                     8,009             8,327
   Tenants security deposits, unearned revenue and credits due tenants                       2,135             5,463
   Derivative investment                                                                    17,897                 -
                                                                                    --------------    --------------

Total Liabilities                                                                          453,041           438,790
                                                                                    --------------    --------------

Subordinated Minority Interest                                                                   -            14,409
                                                                                    --------------    --------------

Stockholders' Equity
   Preferred Stock - $10 par value, 10,000,000 shares authorized, none issued
   or outstanding
   Common Stock - $10 par value, 50,000,000 shares authorized,
   (13,001,346 Class A shares outstanding as of December 31, 2001;
   8,059,586 Class A shares and 4,936,060 Class B shares outstanding
   as of December 31, 2000)                                                                130,013           130,012
   Paid-in capital                                                                         175,847           175,847
   Accumulated Other Comprehensive Loss                                                    (17,897)                -
   Deficit                                                                                (280,658)         (281,982)
                                                                                    --------------    --------------
   Total Stockholders' Equity                                                                7,305            23,877
                                                                                    --------------    --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $      460,346    $      477,076
                                                                                    ==============    ==============

See notes to consolidated financial statements.

</TABLE>

                                       16
<PAGE>

<TABLE>
<CAPTION>

METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS
(in thousands, except share amounts)
------------------------------------------------------------------------------------------------------------------------------------
                                                                           Years Ended December 31,
                                                                2001                  2000                  1999
                                                                ----                  ----                  ----
<S>                                                             <C>                   <C>                   <C>

REVENUES:
   Base rental income                                    $    86,165           $    85,129           $   114,983
   Lease termination income                                        -                     -                26,455
   Operating escalation income                                 4,865                 4,944                11,451
   Miscellaneous income                                        2,936                 5,245                 4,669
                                                        ------------           -----------          ------------
      Total revenues                                          93,966                95,318               157,558
                                                        ------------           -----------          ------------

OPERATING EXPENSES:
   Real estate taxes                                          17,821                18,266                27,414
   Operating and maintenance                                   5,518                 5,173                 6,756
   Utilities                                                   9,450                 8,186                 6,991
   Payroll                                                     3,480                 3,091                 4,323
   Management fees                                             1,820                 1,770                 2,198
   Professional fees                                             524                   932                 1,960
   General and administrative                                    328                   430                   980
   Bad debt expense                                            1,301                     -                   585
   Depreciation and amortization                              11,981                11,680                16,245
                                                       -------------          ------------          ------------
      Total operating expenses                                52,223                49,528                67,452
                                                       -------------          ------------          ------------

OTHER ITEMS:
   Interest income                                               973                 2,917                 3,759
   Interest expense                                          (41,400)              (41,464)              (33,582)
   Write-off of note receivable                                    -                     -                (1,088)
   Write-off of deferred financing costs                           -                     -                (2,307)
                                                       -------------          ------------          ------------
      Total other items                                      (40,427)              (38,547)              (33,218)
                                                       -------------          ------------          ------------

GAIN ON SALE OF PROPERTY                                           -                     -                50,445
                                                       -------------          ------------          ------------

GAIN ON REPURCHASE OF MINORITY INTEREST                       13,009                     -                     -
                                                       -------------          ------------          ------------

NET INCOME                                                    14,325                 7,243               107,333

OTHER COMPREHENSIVE LOSS                                     (17,897)                    -                     -
                                                       -------------          ------------          ------------

COMPREHENSIVE (LOSS) INCOME                            $     (3,572)         $       7,243          $    107,333
                                                       =============          ============          ============

NET INCOME PER COMMON SHARE:

   Net income                                          $        1.10         $         .56          $       8.27
                                                       -------------          ------------          ------------
   Weighted average common shares outstanding             13,001,307            12,997,699            12,971,262
                                                       -------------          ------------          ------------

NET INCOME PER COMMON SHARE
(assuming dilution):

   Net income                                          $        1.10         $         .56          $       8.26
                                                       -------------          ------------          ------------
   Weighted average common shares outstanding
   (including 3,000 shares of common stock issuable
   upon the exercise of outstanding options as of
   December 31, 2001, 2000, and 1999, respectively)       13,004,307            13,000,699            12,998,646
                                                       -------------          ------------          ------------

   See notes to consolidated financial statements.

</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>

METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
------------------------------------------------------------------------------------------------------------------------------------

                                                                                              Retained            Total
                                                     Common Stock           Paid-in           Earnings         Stockholders'
                                                     at Par Value           Capital           (Deficit)           Equity
                                                     ------------           -------           ---------        ------------
<S>                                                  <C>                    <C>               <C>              <C>

BALANCE, DECEMBER 31, 1998                             $ 129,706          $ 175,844          $    21,522      $  327,072
Shares issued under Directors' Stock Plan                    250                  -                    -             250
Net income                                                     -                  -              107,333         107,333
Dividends paid                                                 -                  -             (408,950)       (408,950)
                                                     -----------          ---------          -----------      ----------
BALANCE, DECEMBER 31, 1999                               129,956            175,844             (280,095)         25,705
Shares issued under Directors' Stock Plan                     56                  3                    -              59
Net income                                                     -                  -                7,243           7,243
Dividends paid                                                 -                  -               (9,130)         (9,130)
                                                     -----------          ---------          -----------      ----------
BALANCE, DECEMBER 31, 2000                               130,012            175,847             (281,982)         23,877
Shares issued under Directors' Stock Plan                      1                  -                    -               1
Net income                                                     -                  -               14,325          14,325
Other comprehensive loss                                       -                  -              (17,897)        (17,897)
Dividends paid                                                 -                  -              (13,001)        (13,001)
                                                     -----------          ---------          -----------      ----------
BALANCE, DECEMBER 31, 2001                            $  130,013          $ 175,847            ($298,555)     $    7,305
                                                     ===========          =========          ===========      ==========

See notes to consolidated financial statements.

</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>

METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                                   Years Ended December 31,
                                                                             2001            2000             1999
                                                                             ----            ----             ----
<S>                                                                          <C>             <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                $    14,325      $    7,243       $ 107,333
Adjustments to reconcile net income to net cash provided by operating
activities:
   Gain on sale of property                                                         -               -         (50,445)
   Gain on purchase of minority interest                                      (13,009)              -               -
   Write-off of deferred financing costs                                           -                -           2,307
   Depreciation and amortization                                               16,297          15,987          17,440
   Bad debt expense                                                             1,301               -             585
   Write-off of note receivable                                                     -               -           1,088
   Change in:
      Increase in escrow deposits and restricted cash                          (1,836)         (2,490)         (2,516)
      Decrease/(increase) in due from tenants                                   1,434          (2,427)          1,057
      Decrease/(increase)in tenant security deposits                               24              (2)            416
      (Increase)/decrease in prepaid expenses and other assets                   (151)            149           5,345
      Decrease in real estate tax refunds                                           -           3,175           2,421
      Increase in deferred rent receivable                                     (1,291)         (2,719)        (15,229)
      (Decrease)/increase in accounts payable and accrued expenses                (30)           (373)          3,619
      (Decrease)/increase in tenant security deposits, unearned
      revenue and credits due tenants                                          (3,326)          4,000            (990)
                                                                          -----------      ----------       ---------
   Net cash provided by operating activities                                   13,738          22,543          72,431
                                                                          -----------      ----------       ---------

CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of property                                                      -               -         344,259
Additions to building and equipment                                            (1,033)         (4,155)        (12,308)
Leasing costs                                                                  (2,357)         (2,982)        (21,250)
Changes in notes receivable                                                        14            (289)          8,218
                                                                          -----------      ----------       ---------
   Net cash (used) provided in investing activities                            (3,376)         (7,426)        318,919
                                                                          -----------      ----------       ---------

CASH FLOW FROM FINANCING ACTIVITIES:
Purchase of minority interest                                                  (1,400)              -               -
Proceeds from mortgage note payable                                                 -               -         425,000
Financing costs                                                                   (16)            (93)        (12,823)
Payments on secured notes                                                           -               -        (410,625)
Dividends paid                                                                (13,001)         (9,130)       (408,950)
Distribution to subordinated minority interests                                     -               -            (446)
Issuance of shares of common stock                                                  1              59             250
                                                                          -----------      ----------       ---------
   Net cash used in financing activities                                      (14,416)         (9,164)       (407,594)
                                                                          -----------      ----------       ---------

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                               (4,054)          5,953         (16,244)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                 15,066           9,113          25,357
                                                                          -----------      ----------       ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                  $    11,012      $   15,066       $   9,113
                                                                          ===========      ==========       =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Interest paid                                                         $    37,283      $   34,046       $  32,387
                                                                          ===========      ==========       =========
    Dividends declared                                                    $    13,001      $    9,100       $ 408,950
                                                                          ===========      ==========       =========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
    Liabilities disposed of in connection with sale of property                     -               -       $ 170,009
                                                                          ===========      ==========       =========

See notes to consolidated financial statements.

</TABLE>


                                       19
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
(in thousands, except 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").

        On November 22, 1999,  the Company sold all of its  interests in the 237
        Property.  Following  such sale and as of December 31, 2000, the Company
        owned  a  94.05%  partnership  interest,  as  limited  partner,  in 1290
        Partners,  L.P.,  a Delaware  limited  partnership  (the "1290  Property
        Owning Partnership"). The 1290 Property Owning Partnership owns the 1290
        Property.  A  wholly-owned  subsidiary of the Company  ("1290 GP Corp.")
        owns a 1% interest,  as general  partner,  in the 1290  Property  Owning
        Partnership.  The remaining  4.95% interest in the 1290 Property  Owning
        Partnership  was  owned by  237/1290  Upper  Tier  Associates,  L.P.,  a
        Delaware  limited  partnership (the "Upper Tier LP"). On March 23, 2001,
        the Company acquired the limited partnership  interest held by the Upper
        Tier  LP  for  $1,400  in  accordance  with  the  Agreement  of  Limited
        Partnership of the 1290 Property Owning  Partnership.  Upon consummation
        of such  transaction,  as of December 31, 2001, the Company directly and
        indirectly owns 100% of the 1290 Property Owning Partnership.

        Basis of Presentation - The consolidated  financial  statements  include
        Metropolis and each of the entities through which Metropolis  indirectly
        owns  the  Properties.   All  significant   intercompany   accounts  and
        transactions have been eliminated in consolidation. Actual results could
        differ from those  estimates.  Certain  2000 and 1999  amounts have been
        reclassified to conform with the 2001 presentation.

        Rental Property - Rental property is carried at cost, net of accumulated
        depreciation  and  amortization,  and includes  land,  building,  tenant
        improvements and building  improvements.  Land is carried at $63,500, as
        of  December  31,  2001 and  2000.  Building,  tenant  improvements  and
        building  improvements  are  carried  at  $343,286  and  $342,253  as of
        December 31, 2001 and December 31, 2000, respectively.  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.  No  impairment  of the 1290  Property  exists  as of
        December 31, 2001 and 2000.

        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 lives of 40 years using the  straight-line
        method.  Furniture and fixtures are depreciated over their useful lives,
        ranging  from 5 to 7  years.  Tenant  improvements  are  amortized  on a
        straight-line basis over the terms of the respective leases.

                                       20
<PAGE>

        Deferred Charges - Deferred  financing costs are amortized over the term
        of the related loan.  Direct costs related to leasing are amortized over
        the related lease term.

        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 leases and the straight-line  basis are included
        in deferred rent receivable.

        Escrow  Deposits and  Restricted  Cash - Escrow  deposits and restricted
        cash for the years ended  December 31, 2001 and 2000  includes  reserves
        for tenant  improvements,  leasing commissions,  insurance,  real estate
        taxes and real estate tax refunds.

        Recent  Pronouncement  - Statement  of  Financial  Accounting  Standards
        ("SFAS") No. 133,  Accounting  for  Derivative  Instruments  and Hedging
        Activities,  was implemented by the Company on January 1, 2001. SFAS No.
        133, as amended and  interpreted,  establishes  accounting and reporting
        standards  for  derivative  instruments,  including  certain  derivative
        instruments embedded in other contracts, and for hedging activities. All
        derivatives,  whether  designated as hedging  relationships  or not, are
        required  to be recorded  on the  balance  sheet at fair  value.  If the
        derivative is designated as a fair-value  hedge, the changes in the fair
        value of the  derivative and the hedged item are recognized in earnings.
        If the  derivative  is designated  as a cash-flow  hedge,  the effective
        portion of changes in the fair value of the  derivative  is  recorded in
        other  comprehensive  (loss) income and will be recognized in the income
        statement when the hedged item affects earnings. The ineffective portion
        of changes in the fair value of the derivative designated as a cash flow
        hedge is  recognized in the income  statement.  SFAS No. 133 defines new
        requirements for designation and documentation of hedging  relationships
        as well as  ongoing  effectiveness  assessments  in order  to use  hedge
        accounting.  For a derivative that does not qualify as a hedge,  changes
        in fair value are recognized in earnings.

        At January 1, 2001 the Company  recorded  approximately  $6,900 in other
        comprehensive loss as a cumulative  transition  adjustment to record the
        1290 Swap  Agreement (See Note 4) at its estimated fair value as of that
        date.

        In  August  2001,  the FASB  issued  SFAS No.  144,  Accounting  for the
        Impairment or Disposal of Long Lived Assets (effective January 1, 2002).
        SFAS No. 144  supersedes  existing  accounting  literature  dealing with
        impairment  and disposal of long-lived  assets,  including  discontinued
        operations.  It addresses  financial  accounting  and  reporting for the
        impairment of long-lived assets and for long-lived assets to be disposed
        of, and expands current reporting for discontinued operations to include
        disposals of a "component"  of an entity that has been disposed of or is
        classified as held for sale. The Company is in the process of evaluating
        the financial statement impact of the adoption of this standard.

        Use of Estimates - The presentation of the financial statements requires
        estimates and assumptions that affect the reported amounts of assets and
        liabilities as of December 31, 2001 and 2000 and the reported amounts of
        revenues and expenses during the reporting periods. Actual results could
        differ from those estimates.

        Fair Value of Financial  Instruments  - The carrying  amount of cash and
        cash  equivalents,  escrow deposits and restricted cash, tenant security
        deposits,  accounts  receivable  and  accounts  payable are a reasonable
        estimate of their fair value due to their short-term nature.  Management
        believes the fair market value of the mortgage loan payable approximates
        the  carrying  value at  December  31,  2001 and  2000.  The fair  value
        estimates presented herein are based on pertinent  information available
        to management as of December 31, 2001 and 2000.

                                       21
<PAGE>

        Income  Taxes - The  Company  qualifies  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 90% of its REIT
        taxable income.

2.     SALE OF PROPERTY

        On September  23, 1999,  the Company  entered into an Interest  Purchase
        Agreement with 237 Park Investors, L.L.C., pursuant to which the Company
        agreed to sell all of its interests in the 237 Property for an aggregate
        purchase price of $372,000,  subject to customary prorations and certain
        adjustments (the "237 Property Sale").

        On November 22, 1999, the Company  consummated the 237 Property Sale and
        recognized  a gain of  $50,445.  Net  assets as of the date of sale were
        $293,814. The following represents the results of operations for the 237
        Property for the period January 1, 1999 through November 21, 1999:


                  REVENUES:
                  Base rental income                             $   34,261
                  Lease termination income                           25,855
                  Operating escalation income                         9,357
                  Miscellaneous income                                  495
                                                                -----------

                  Total revenues                                     69,968
                                                                -----------

                  OPERATING EXPENSES:
                  Real estate taxes                                   9,324
                  Operating and maintenance                           2,300
                  Utilities                                             572
                  Payroll                                             1,539
                  Management fees                                       635
                  Professional fees                                     515
                  General and administrative                            285
                  Depreciation and amortization                       5,624
                                                                -----------

                  Total operating expenses                           20,794
                                                                -----------

                  OTHER ITEMS:
                  Interest income                                     1,100
                  Interest expense                                  (11,801)
                                                                -----------

                  Total other items                                 (10,701)
                                                                -----------

                  NET INCOME                                    $    38,473
                                                                ===========

3.      REAL ESTATE TAX REFUNDS

        Tax certiorari  proceedings  have been settled with the City of New York
        for  over-assessment of property taxes for the tax years ending June 30,
        1991  through  June 30,  1996 with  respect  to the 1290  Property.  The
        Company received net proceeds of  approximately  $6,519 in December 2000
        after  payment of  approximately  $876 of fees and expenses  incurred in
        connection with such proceedings.  Of this amount,  approximately $3,211
        was  expected to be  reimbursed  to tenants  and was  included in escrow
        deposits  and  restricted  cash  at  December  31,  2000.  During  2001,
        approximately $2,027 was reimbursed to tenants. The remaining balance to
        be reimbursed of approximately $1,184 is included in escrow deposits and
        restricted  cash  as of  December  31,  2001.  Such  net  proceeds  were
        approximately  $3,800  in  excess  of  estimated  net  proceeds  and are
        included in miscellaneous income in 2000.

                                       22
<PAGE>

      Tax certiorari  proceedings  have been commenced which remain  outstanding
      against the City of New York for over-assessment of property taxes for the
      tax years  ending June 30, 1997  through June 30, 2001 with respect to the
      1290  Property.  The  outcome  of these  proceedings  cannot be  presently
      estimated.

4.    MORTGAGE LOAN

      In December 1999, the 1290 Property Owning Partnership refinanced mortgage
      indebtedness secured by the 1290 Property of approximately  $224,900,  and
      obtained a $425,000 mortgage loan (the "1290 Mortgage Loan").  Interest on
      the 1290  Mortgage  Loan is based on LIBOR plus 2% and  requires  interest
      only  payments  through  maturity  on January 2, 2003.  The 1290  Property
      Owning  Partnership  has a one time right  (subject to  achieving  certain
      conditions,  including a debt service coverage ratio,  loan to value ratio
      and the  payment of a 25 basis point  extension  fee),  at its option,  to
      extend the maturity for a period of twelve months.  The 1290 Mortgage Loan
      may be repaid in whole without penalty. The costs associated with securing
      the 1290 Mortgage Loan of  approximately  $12,916 are included in deferred
      financing  costs and are amortized over the term of the 1290 Mortgage Loan
      as a component of interest expense.  Unamortized costs associated with the
      prior mortgage  indebtedness of  approximately  $2,307 were written off in
      1999.

      The  1290  Property  Owning  Partnership  and  Morgan  Stanley  Derivative
      Products,  Inc. entered into an Interest Rate Exchange Agreement effective
      December  13, 1999 (the "1290 Swap  Agreement").  The 1290 Swap  Agreement
      provides that the 1290 Property Owning Partnership will pay interest at an
      effective  rate of 8.4995% per annum on the  notional  amount of $425,000.
      Management  believes  that the risk of  incurring  losses  related  to the
      credit risk is remote and that any losses would be immaterial.

      The 1290 Swap  Agreement has been  designated as a cash flow hedge and was
      deemed to be perfectly effective during 2001. As such, changes in the fair
      value of the 1290 Swap  Agreement  during the year ended December 31, 2001
      have  been  reflected  as  other  comprehensive  loss in the  accompanying
      statement of income and comprehensive loss. The difference between accrued
      interest  expense  calculated  at the  effective  rate under the 1290 Swap
      Agreement  and accrued  interest  expense  calculated at the interest rate
      under the 1290  Mortgage  Loan is  recognized  currently  in  earnings  as
      interest.

      The maturity date of the 1290 Mortgage  Loan and the  termination  date of
      the 1290 Swap Agreement are identical.  The estimate of the cost to unwind
      the 1290 Swap Agreement is approximately $19,439 at December 31, 2001. The
      Company has no intention of unwinding the 1290 Swap Agreement. The Company
      estimates that  approximately  $18,254 of net derivative  loss included in
      accumulated  other  comprehensive  loss will be reclassified into earnings
      within the next 12 months.

5.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      Accounts  payable  and accrued  expenses as of December  31, 2001 and 2000
      include property operating expenses payable and tenant claims against real
      estate tax proceeds.

6.    SUBORDINATED MINORITY INTEREST

      The Subordinated Minority Interest represented the 99% limited partnership
      interest that JMB/NYC Office Building Associates,  L.P. owned of the Upper
      Tier LP which  in turn  owned a  subordinated  4.95%  limited  partnership
      interest  in the  1290  Property  Owning  Partnership  (the  "Subordinated
      Minority Interest"). On March 23, 2001, the Company exercised its right to
      acquire the Subordinated  Minority  Interest held by the Upper Tier LP for
      $1,400 in accordance with the Agreement of Limited Partnership of the 1290
      Property Ownership Partnership.

                                       23
<PAGE>

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.  On  October  10,  2001,  the
     classification  of the  Common  Stock  into two  classes  of  Common  Stock
     terminated pursuant to the terms of the Charter.  All shares of Class A and
     Class B Common Stock were  automatically  converted  into a single class of
     Class A Common Stock. As of December 31, 2001, there were 13,001,346 shares
     of the Company's Class A Common Stock issued and outstanding.

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.  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.

     Pursuant to the Stock Plan,  each  Director  received  400 shares of Common
     Stock at the annual  meetings in 1997, 1998 and 2000 in  consideration  for
     services  rendered  to the Company  during  such  years.  The value of such
     shares  was  based  upon the most  recent  price  at  which  shares  of the
     Company's  Common  Stock were  traded  prior to such grant of shares and is
     included as an operating expense.

     As of  December  31,  2001,  there were  outstanding  options to acquire an
     aggregate of 3,000  shares of Common  Stock at an exercise  price of $12.50
     per share.

     The Company has entered into a Registration  Rights  Agreement  between the
     Company  and  certain  holders of Common  Stock.  The  Registration  Rights
     Agreement  permits  such   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

     Sale of 237  Property/Refinancing  of 1290  Property  - John  R.  Klopp,  a
     director,  officer and  stockholder of the Company,  is employed by Capital
     Trust,  Inc., the parent company of Victor Capital Group L.P. ("VCG").  VCG
     acted as one of the Company's  representatives  in connection with the sale
     of the  237  Property  in  November  1999.  Pursuant  to the  terms  of the
     retention  agreement between VCG and the Company,  VCG was paid a fee equal
     to $930 (0.25% of the total transaction  value). In addition,  VCG was paid
     approximately $1,594 by the Company in December 1999 as a fee in connection
     with the refinancing of the debt pertaining to the 1290 Property.

     Asset  Management  - The  Company  has  entered  into an  Asset  Management
     Agreement with a company ("Asset Manager") that is directly affiliated with
     two of  Metropolis'  stockholders.  One of  these  stockholders  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, at a rate of $25 per month. The Asset
     Management Agreement also provides for reimbursement for costs and expenses
     for  contractors  and  professional  fees,   payable  as  incurred.   Asset
     management  fees incurred for the years ended December 31, 2001,  2000, and
     1999 were approximately $300 each year.

                                       24
<PAGE>

     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 stockholder.  The Property Manager/Leasing Agent managed,
     operated and provided all supervisory,  management and leasing services for
     the 1290 Property for the years ended December 31, 2001,  2000 and 1999 and
     for the 237 Property for the year ended  December 31, 1999.  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-of-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  incurred  under the  Management  and Leasing
     Agreement  for the years ended  December 31, 2001,  2000,  and 1999 totaled
     approximately $2,071, $2,295, and $5,528, respectively.

     An affiliate of the Property  Manager/Leasing  Agent  provided the cleaning
     services for the 1290 Property for the months January  through  February of
     2001  and the  years  ended  December  31,  2000  and  1999 and for the 237
     Property for the year ended  December 31, 1999.  Fees incurred for cleaning
     services  for the years ended  December 31,  2001,  2000,  and 1999 totaled
     $405, $2,499, and $3,680, respectively.

     REIT Management - The Company has entered into a REIT Management  Agreement
     with the Property  Manager/Leasing Agent ("REIT Manager"). The REIT Manager
     performs 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. Fees
     incurred under the REIT  Management  Agreement for the years ended December
     31, 2001, 2000, and 1999 were $126, $137, and $125, respectively.

10.  LEASES

     Minimum  future  rents  (excluding  escalation  rentals) due to the Company
     under noncancellable leases as of December 31, 2001 are as follows:

                            2002                                  $  82,256
                            2003                                     84,260
                            2004                                     77,837
                            2005                                     72,567
                            2006                                     69,135
                            Thereafter                              360,736
                                                                   --------
                                                                   $746,791
                                                                   ========

                                       25
<PAGE>

11.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>

                                                             (In Thousands, Except Per Share Amounts)
                                                                       Fiscal Quarters Ended

2001                                           1Q                    2Q                    3Q                    4Q
-------------------------------------- -------------------- --------------------- --------------------- ---------------------
<S>                                    <C>                  <C>                   <C>                   <C>

Total revenues                                  22,787               23,718                23,275                24,186
Net income                                      13,604                  344                   120                   257
Net income per share                         $    1.05            $    0.03             $    0.01             $    0.01
Net income per share assuming
     dilution                                $    1.05            $    0.03             $    0.01             $    0.01

2000                                           1Q                    2Q                    3Q                    4Q
-------------------------------------- -------------------- --------------------- --------------------- ---------------------
Total revenues                                  21,875               23,777                22,495                27,171
Net income (loss)                                  475                2,117                  (315)                4,966
Net income (loss) per share                  $    0.04            $    0.16             $   (0.02)            $    0.38
Net income (loss) per share assuming
     dilution                                $    0.04            $    0.16             $   (0.02)            $    0.38

1999                                           1Q                    2Q                    3Q                    4Q
-------------------------------------- -------------------- --------------------- --------------------- ---------------------
Total revenues                                  32,813               59,145                33,631                31,969
Net income                                       8,772               35,126                 5,532                57,903
Net income per share                         $    0.68            $    2.71             $    0.43             $    4.45
Net income per share assuming
     dilution                                $    0.68            $    2.70             $    0.43             $    4.45

</TABLE>

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

     None.


                                       26
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive  officers of the Company as of December 31, 2001 are
as follows:

Name                                       Age        Position
----                                       ---        --------

William L. Mack......................      62         Director and Chairman
                                                      of the Board

Lee S. Neibart.......................      51         Director and President

Bruce H. Spector.....................      59         Director

John R.S. Jacobsson..................      33         Director, Vice President
                                                      and Secretary

John R. Klopp........................      48         Director and Vice
                                                      President

Russel S. Bernard....................      44         Director

David A. Strumwasser.................      50         Director

David Roberts........................      39         Director

                Each of the officers and directors listed above, other than John
R. Klopp and John R.S.  Jacobsson,  has served in the  positions  listed for the
Company since September 1996. Mr. Klopp has served as a Director since September
1996 and as an  officer  since  December  1996.  Mr.  Jacobsson  has served as a
Director since October 1997 and as an officer since December 1996.

                William  L.  Mack has  served  as the  Chairman  of the Board of
Directors of the Company since 1996. Mr. Mack is the managing  partner of Apollo
Real Estate Advisors,  L.P.  ("AREA"),  the manager of five  opportunistic  real
estate investment funds, which he co-founded in 1993, and serves as President of
its corporate  general  partner.  Beginning in 1969, Mr. Mack served as Managing
Partner of the Mack  Company,  where he oversaw the  dynamic  growth of the Mack
Company's office,  industrial,  retail and hotel facilities. Mr. Mack has served
as a director  of  Mack-Cali  Realty  Corporation  ("Mack-Cali")  since the 1997
merger of the Mack Company's  office  portfolio into Mack-Cali and has served as
Chairman of Mack-Cali  since June 2000.  Mr. Mack is also a director of The Bear
Stearns  Companies,  Inc., an investment  banking firm,  Vail Resorts,  Inc., an
owner and operator of Colorado ski resorts, and Wyndham International,  Inc., an
owner and operator of a national  chain of hotel  properties.  Mr. Mack attended
the Wharton School of Business and Finance at the University of Pennsylvania and
received a B.S. degree in business administration,  finance and real estate from
New York University.

                Lee S.  Neibart  is a  partner  of AREA  with  which he has been
associated since 1993, 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. Mr.
Neibart is a director of Atlantic Gulf  Communities  Corp.,  a land  development
company, Roland International  Corporation,  a land development company, Wyndham
International,  Inc., and Meadowbrook Golf Group, Inc., an owner and operator of
golf courses.  Mr. Neibart  received a B.A. from the University of Wisconsin and
an M.B.A. from New York University.

                Bruce H.  Spector  is a partner  of AREA with  which he has been
associated  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 is a
director of Pacer  International,  Inc.,  a national  intermodal  and  logistics
company, Vail Resorts, Inc. and Park Media, LLC, a firm specializing in bringing

                                       27
<PAGE>

advertising revenue to the owners of parking venues. Mr. Spector received a B.A.
from the  University of Southern  California  and a J.D. from the UCLA School of
Law.

                John R.S.  Jacobsson is a partner of AREA with which he has been
associated  since  its  founding  in 1993.  Mr.  Jacobsson  is  responsible  for
investments,  investment management and capital raising at AREA and co-heads its
Japanese  investment  program.  Prior to 1993, Mr. Jacobsson was associated with
the acquisitions group of Trammell Crow Ventures, a real estate investment firm.
Mr.  Jacobsson  is a  director  of  Koger  Equity,  Inc.,  Roland  International
Corporation and Oasis Car Wash,  Inc., an owner and operator of car washes.  Mr.
Jacobsson received a B.A. from Harvard College in 1990.

                John R.  Klopp  has  been a  director  of  Capital  Trust,  Inc.
("Capital Trust"),  an investment  management and finance company focused on the
commercial  real estate  industry,  since January 1997, and the Chief  Executive
Officer, a Vice Chairman and the President of Capital Trust since February 1997,
July 1997 and January 1999, respectively. Mr. Klopp was a founder and a Managing
Partner of Victor Capital Group L.P.  ("VCG") from 1989 until the acquisition of
VCG by Capital  Trust in July 1997.  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,  Mr. Klopp held various  positions  with Chemical  Bank's Real
Estate  Division,  where  he  was  responsible  for  originating,   closing  and
monitoring portfolios of construction and interim loans. 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 of Business and Finance at the  University  of  Pennsylvania
with a major in real estate and finance.

                Russel S. Bernard is a Principal of Oaktree Capital  Management,
LLC  ("Oaktree"),  with  which he has been  associated  since  1995,  and is the
portfolio manager of Oaktree's real estate and mortgage funds.  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  holds a B.S. in Business  Management  and  Marketing  from Cornell
University.

                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 is a director of Barneys New York, Inc.,
a luxury retailer. 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 and special situations 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.

                                       28
<PAGE>

                Prior to October 10, 2001, the Company's  Board of Directors was
divided  into  five  classes.  Each  director  in such  class was  elected  by a
specifically  designated  stockholder (or class of  stockholders)  in accordance
with the  Charter.  The  initial  terms of the first,  second,  third and fourth
classes  expired in 1997,  1998, 1999 and 2000,  respectively,  after which time
each such class of directors  was elected for a term which expired at the annual
meeting of stockholders  for fiscal year 2001, which meeting was held in January
2002. The initial term of the fifth class of directors expired immediately prior
to such annual meeting.

                On October 10, 2001, the classification of the Common Stock into
two classes of Common Stock terminated pursuant to the terms of the Charter. All
shares of Class A and Class B Common Stock were  automatically  converted into a
single class of Class A Common Stock.

                Pursuant to the Charter,  the Company's Board of Directors is no
longer divided into classes and each director will be elected for one-year terms
by the holders of the Class A Common Stock voting as a single class. The Charter
does  require,  however,  that the  Company  will at all times have at least two
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.

                Compliance with Section 16(a) of the Exchange Act

                Section  16(a) of the  Securities  and Exchange Act of 1934 (the
"Exchange Act") requires the Company's  officers and directors,  and persons who
own more than 10% of a registered class of the Company's equity  securities,  to
file  reports of  ownership  and changes in ownership  with the  Securities  and
Exchange  Commission.  Officers,  directors and 10% stockholders are required by
regulation of the Securities and Exchange Commission to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of Forms
3, 4 and 5 available to the Company and written  representations from certain of
the  directors,  officers  and 10%  stockholders  that no form is required to be
filed,  the Company  believes that no director,  officer or beneficial  owner of
more  than 10% of the  Common  Stock  failed to file on a timely  basis  reports
required pursuant to Section 16(a) of the Exchange Act with respect to 2001.

ITEM 11.        EXECUTIVE COMPENSATION

                The Company has no employees and none of its executive  officers
receives any compensation in their capacities as executive officers.  For fiscal
year 2001,  the members of the Board of Directors  earned (i) $15,000 in cash as
an annual  retainer,  (ii) 400 shares of Common Stock issued under the Company's
1996  Directors'  Stock  Option Plan (as  amended,  the "Stock  Plan") and (iii)
$750.00 per meeting of the Board of  Directors  attended  by such  member.  Upon
election to the Board of Directors,  each initial Director received options (the
"Options") to purchase 3,000 shares of the Company's  Class A Common Stock which
vested over two years.

                On December  13,  1999,  the Board of  Directors  decreased  the
exercise price of all outstanding  options by $15.00 per share in  consideration
of a special  distribution  to stockholders of $15.00 per share that was made on
December 10, 1999.  On December 23, 1999,  each member of the Board of Directors
(except Mr. Jacobsson) exercised his Options. On December 28, 1999, the Board of
Directors  decreased the exercise  price of Mr.  Jacobsson's  options by another
$15.00  per  share to  $12.50  per share in  consideration  of a second  special
distribution  to  stockholders of $15.00 per share that was made on December 27,
1999.  See "SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND MANAGEMENT --
Description of Stock Plan."

                                       29
<PAGE>

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

                John R.S.  Jacobsson,  Lee S. Neibart and John R. Klopp are also
the  directors of a  wholly-owned  subsidiary  of the Company  ("1290 GP Corp.")
which  owns a 1%  interest,  as general  partner,  in the 1290  Property  Owning
Partnership.  The officers of the Company and 1290 GP Corp. 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 1290 GP Corp. will not receive any compensation from 1290 GP Corp.

                In January 2000,  the directors of the Company  appointed Lee S.
Neibart,  John R.S.  Jacobsson  and John R. Klopp to serve as the members of the
Company's audit  committee.  Messrs.  Neibart and Jacobsson are partners of AREA
which is the general  partner of Apollo Real Estate  Investment  Fund,  L.P.,  a
significant stockholder of the Company. Mr. Klopp is the Chief Executive Officer
of Capital Trust,  Inc.  whose  relationship  to the Company is described  under
"CERTAIN  RELATIONSHIPS  AND RELATED  TRANSACTIONS  -- Asset Manager." The audit
committee does not serve pursuant to a written charter.  Its purposes are to (i)
make  recommendations  concerning  the  engagement of the Company's  independent
public   accountants,   (ii)  review  with  the  Company's   independent  public
accountants the policies,  procedures and results of the audit engagement, (iii)
approve  professional  services  provided by the  Company's  independent  public
accountants,  (iv) review the independence of the Company's  independent  public
accountants, (v) consider the range of audit and non-audit fees, (vi) review the
adequacy of the Company's  internal  accounting  controls,  and (vii)  recommend
information to be included in the Company's  quarterly reports on Forms 10-Q and
annual reports on Forms 10-K.

                                       30
<PAGE>

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                The information set forth in the following table is furnished as
of March 15, 2002,  with respect to any person  (including  any "group," as that
term is used in  Section  13(d)(3)  of 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 March 15, 2002,  there
were 13,004,946 shares of Common Stock outstanding.

<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                  38.0%
The TCW Group, Inc. (2)                                     2,254,341                  17.3%
Oaktree Capital Management, LLC (3)                         1,917,463                  14.7%
WSB Realty, L.L.C. (4)                                      1,122,421                   8.6%
Angelo, Gordon & Co., L.P. (5)                              1,094,543                   8.4%
Intermarket Corp. (6)                                         931,000                   7.2%

Directors and Executive Officers

William L. Mack (7)                                             4,600                   *
Lee S. Neibart (8)                                              4,600                   *
John R.S. Jacobsson (9)                                         4,600                   *
Bruce H. Spector (10)                                           4,600                   *
John R. Klopp (11)                                             24,600                   *
Russel S. Bernard (12)                                              0                   *
David A. Strumwasser (13)                                           0                   *
David Roberts (14)                                                  0                   *
                                                              -------
Directors and Executive Officers as a group (8 persons) (15)   43,000                   *
                                                              =======
</TABLE>

*        Less than 1%

(1)      Held of record by Atwell & Co., c/o The Chase Manhattan  Bank,  N.A., 4
         New York  Plaza,  New York,  NY  10004.  AREA is the  managing  general
         partner of Apollo Real Estate  Investment  Fund, L.P.  ("Apollo") and a
         joint  reporting  person with respect to beneficial  ownership of these
         shares of Common Stock  according  to Apollo's  Schedule 13G filed with
         the Securities and Exchange Commission on February 13, 1998.

(2)      Includes  1,586,814 shares as to which voting and dispositive  power is
         shared  with  Oaktree  Capital   Management,   LLC  ("Oaktree")  as  an
         investment  sub-adviser  to TCW Asset  Management  Company  for various
         limited  partnerships,  trusts and third party  accounts  for which TCW
         Asset Management Company acts as general partner or investment manager.
         Also  includes  667,527  shares held by various  limited  partnerships,
         trusts and third party  accounts for which TCW Special  Credits acts as
         general  partner or  investment  manager.  The shares shown are held of
         record by (i) Hare & Co., c/o  Investors  Bank and Trust  Company,  200
         Clarendon Street, Boston, Massachusetts 02117-9130 (58,124 shares), and
         (ii) Cede & Co., c/o Investors  Bank and Trust  Company,  200 Clarendon
         Street,  Boston,  Massachusetts  02117-9130  (2,196,217 shares). To the
         extent permitted by applicable law, The TCW Group Inc. hereby disclaims
         beneficial ownership of such shares.

(3)      Includes  1,586,814 shares as to which voting and dispositive  power is
         shared with TCW Asset Management Company, which acts as general partner
         or investment  manager for certain funds and accounts for which Oaktree
         acts as an investment sub-adviser. Also includes 284,839 shares held by

                                       31
<PAGE>

         two limited partnerships of which Oaktree is general partner and 41,210
         shares  held  by a  third  party  account  for  which  Oaktree  acts as
         investment  manager.  The 326,049  shares as to which  Oaktree has sole
         voting and  dispositive  power are held of record by Cun & Co., c/o The
         Bank of New York,  One Wall Street,  New York, NY 10005.  Also includes
         4,600  shares  held  directly by Oaktree.  To the extent  permitted  by
         applicable law, Oaktree hereby disclaims  beneficial  ownership of such
         shares.

(4)      Does not include  4,600 shares owned by The Goldman  Sachs Group,  Inc.
         WSB Realty,  L.L.C. is located at 85 Broad Street,  New York, NY 10004.
         According to  Amendment  No. 3 to the Schedule 13G filed by The Goldman
         Sachs  Group,  Inc.  with the  Securities  and Exchange  Commission  on
         February 13, 2001, these shares are reported as beneficially  owned by:
         (i) Goldman, Sachs & Co., (ii) The Goldman Sachs Group, Inc., (iii) WSB
         Realty, L.L.C., (iv) Whitehall Street Real Estate Limited Partnership V
         and (v) WH Advisors, L.L.C. V.

(5)      The address of Angelo,  Gordon & Co.,  L.P.  ("Angelo,  Gordon") is 245
         Park Avenue,  New York,  NY 10167.  According to Amendment No. 3 to the
         Schedule 13G filed by Angelo,  Gordon with the  Securities and Exchange
         Commission   on  February  8,  2002,   these  shares  are  reported  as
         beneficially  owned by: (i) Angelo,  Gordon & Co.,  L.P.,  (ii) John M.
         Angelo,  in his capacities as a general  partner of AG Partners,  L.P.,
         the sole general  partner of Angelo,  Gordon,  and the chief  executive
         officer  of  Angelo,  Gordon  and  (iii)  Michael  L.  Gordon,  in  his
         capacities  as the other general  partner of AG Partners,  L.P. and the
         chief operating officer of Angelo, Gordon.

(6)      Intermarket Corp.'s address is 667 Madison Avenue, New York, NY 10021.

(7)      Does not  include  shares  owned by Apollo.  Includes  1,600  shares of
         Common  Stock issued  directly to Mr. Mack,  and 3,000 shares of Common
         Stock  issued upon the exercise of options  granted to Mr. Mack,  under
         the Company's Stock Plan. Mr. Mack is the managing partner of AREA, the
         general  partner  of  Apollo,  and the  President  of AREA's  corporate
         general partner.  Mr. Mack disclaims beneficial ownership of the shares
         of Common Stock owned by Apollo.

(8)      Does not  include  shares  owned by Apollo.  Includes  1,600  shares of
         Common Stock issued directly to Mr. Neibart, and 3,000 shares of Common
         Stock issued upon the exercise of options granted to Mr. Neibart, under
         the Company's Stock Plan. Mr. Neibart is a partner of AREA. Mr. Neibart
         disclaims  beneficial  ownership of the shares of Common Stock owned by
         Apollo.

(9)      Does not  include  shares  owned by Apollo.  Includes  1,600  shares of
         Common  Stock  issued  directly to Mr.  Jacobsson,  and 3,000 shares of
         Common  Stock  issuable  upon the  exercise  of options  granted to Mr.
         Jacobsson,  under the Company's Stock Plan. Mr.  Jacobsson is a partner
         of AREA. Mr. Jacobsson disclaims  beneficial ownership of the shares of
         Common Stock owned by Apollo.

(10)     Does not  include  shares  owned by Apollo.  Includes  1,600  shares of
         Common Stock issued directly to Mr. Spector, and 3,000 shares of Common
         Stock issued upon the exercise of options granted to Mr. Spector, under
         the Company's Stock Plan. Mr. Spector is a partner of AREA. Mr. Spector
         disclaims  beneficial  ownership of the shares of Common Stock owned by
         Apollo.

(11)     Includes 1,600 shares of Common Stock issued directly to Mr. Klopp, and
         3,000  shares of Common  Stock  issued  upon the  exercise  of  options
         granted to Mr. Klopp, under the Company's Stock Plan.

(12)     Does not include shares owned by funds and accounts  managed by Oaktree
         or shares owned  directly by Oaktree.  Does not include 1,600 shares of
         Common Stock issued directly to Mr. Bernard, and 3,000 shares of Common
         Stock issued upon the exercise of options granted to Mr. Bernard, under
         the  Company's  Stock  Plan.  Mr.  Bernard is  required  to transfer to
         Oaktree any shares of Common Stock he either  receives  directly  under
         the  Company's  Stock Plan or  purchases  upon an  exercise  of options
         granted 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 and the
         shares of Common Stock owned directly by Oaktree.

                                       32
<PAGE>

(13)     Does not include 289,503 shares held by various limited partnerships, a
         trust and third party accounts for which Whippoorwill has discretionary
         authority and acts as general partner or investment  manager.  Does not
         include   1,600  shares  of  Common   Stock  issued   directly  to  Mr.
         Strumwasser,  and 3,000 shares of Common Stock issued upon the exercise
         of options granted to Mr. Strumwasser,  under the Company's Stock Plan.
         Mr.  Strumwasser  is a  Principal,  Managing  Director  and the General
         Counsel of  Whippoorwill.  Mr.  Strumwasser  is required to transfer to
         Whippoorwill  any shares of Common  Stock he either  receives  directly
         under the Company's Stock Plan or purchases upon an exercise of options
         granted  under the Stock Plan.  Mr.  Strumwasser  disclaims  beneficial
         ownership of the shares of Common Stock owned by discretionary accounts
         managed by Whippoorwill as set forth above.

(14)     Does not include shares owned by Angelo, Gordon. Does not include 1,600
         shares of Common Stock issued directly to Mr. Roberts, and 3,000 shares
         of Common  Stock  issued upon the  exercise  of options  granted to Mr.
         Roberts,  under the Company's  Stock Plan.  Mr.  Roberts is required to
         transfer  to  Angelo,  Gordon  any  shares  of  Common  Stock he either
         receives  directly under the Company's  Stock Plan or purchases upon an
         exercise  of options  granted  under the Stock Plan.  Mr.  Roberts is a
         Managing Director of Angelo,  Gordon. Mr. Roberts disclaims  beneficial
         ownership of the shares of Common Stock owned by Angelo, Gordon.

(15)     See  notes 7  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, as amended.  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 Exhibit 10.5 hereto.
   -----------
                The Board of  Directors  adopted  the Stock Plan on October  10,
1996 (the  "Effective  Date"),  and amended the Stock Plan on December 13, 1999.
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 Class A Common Stock. Pursuant to
the Plan of Reorganization of the Company's  predecessors and the Stock Plan, on
the Effective Date, the initial members of the Company's Board of Directors were
each granted  3,000  Options.  After the  adjustment  of the  Options'  exercise
prices,  each such Director  exercised his Options on December 23, 1999, as more
particularly described under "EXECUTIVE  COMPENSATION." In March 1998, John R.S.
Jacobsson  was granted  options  entitling him to purchase an aggregate of 3,000
shares of Class A Common  Stock at an exercise  price of $42.50 per share.  Such
options were issued in July 1998,  and are fully  exercisable as of December 31,
2000. The exercise price of Mr.  Jacobsson's  options was adjusted to $27.50 and
to $12.50 on December  13, 1999 and December  28,  1999,  respectively,  as more
particularly described under "EXECUTIVE COMPENSATION."

                Each  Director who is elected or appointed  after the  Effective
Date will be granted options to purchase 3,000 shares of Class A 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 date of grant.

                                       33
<PAGE>

                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 Capital Trust to serve as the Company's
Asset Manager  pursuant to an Asset Management  Agreement,  dated as of December
22, 2000 (the "Asset Management Agreement"). John R. Klopp, one of the Company's
Directors  and an  officer  and a  stockholder  of  the  Company,  is the  Chief
Executive Officer of Capital Trust.  Pursuant to the Asset Management Agreement,
the Asset Manager serves as the Company's advisor and consultant with respect to
the  management  of the 1290  Property and the  Company's  interests in the 1290
Property Owning Partnership.

                The Asset Management  Agreement had an initial term of one year,
which term is automatically extended for consecutive one-year periods thereafter
unless the  Company  or the Asset  Manager  notifies  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 1290  Property  is 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 default continues for 30 days after the Asset Manager's written
notice to the Company of such  default.  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.

                Pursuant to the Asset Management Agreement, the Company pays the
Asset Manager a fee (the "Asset  Management  Fee") in an amount equal to $25,000
per month.  Asset  management fees incurred for each of the years ended December
31, 2001, 2000, and 1999 aggregated  approximately  $300,000. In addition to the
payment of the Asset  Management  Fee, the Company  reimburses the Asset Manager
for certain  expenses.  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.

                Management and Leasing Agreements

                The 1290 Property Owning  Partnership  entered into a management
and leasing agreement,  dated as of the Effective Date (the "Property Management
Agreement"), 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  Agreement,  the  Property  Manager/Leasing  Agent
performed  all  supervisory,  management  and  leasing  services  and  functions
reasonably necessary or incidental to the leasing,  management and operations of
the 1290 Property for the years ended December 31, 2001,  2000, and 1999 and for
the 237 Property for the year ended  December 31, 1999.  Fees under the Property

                                       34
<PAGE>

Management  Agreement  for the years ended  December  31, 2001,  2000,  and 1999
totaled approximately $2,071,000, $2,295,000, and $5,528,000, respectively.

                An  affiliate  of the Property  Manager/Leasing  Agent  provided
cleaning  services for the 1290 Property for the months January through February
of 2001  and for the  years  ended  December  31,  2000 and 1999 and for the 237
Property  for the year ended  December  31,  1999.  Fees  incurred  for cleaning
services for the years ended December 31, 2001, 2000, and 1999 totaled $405,000,
$2,499,000, and $3,680,000, respectively.

                The  Property  Management  Agreement  had an initial term of two
years,  which term is automatically  extended for additional  consecutive 90-day
terms  until such time as the 1290  Property  Owning  Partnership  notifies  the
Property  Manager/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 the Property Management Agreement.

                The 1290 Property Owning  Partnership may terminate the Property
Management  Agreement  on 60 days notice if the 1290  Property is either sold by
the 1290 Property  Owning  Partnership or refinanced by the 1290 Property Owning
Partnership pursuant to a securitized  financing of the 1290 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.  In addition, the
1290 Property Owning Partnership may terminate the 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
1290  Property  Owning  Partnership  or commits  fraud against the 1290 Property
Owning  Partnership  or (y)  there  is a  change  in  control  of  the  Property
Manager/Leasing  Agent.  The Property  Manager/Leasing  Agent may  terminate the
Property  Management  Agreement (i) after a certain cure period,  upon notice to
the 1290 Property  Owning  Partnership if the 1290 Property  Owning  Partnership
breaches a material term of the Property Management Agreement,  and (ii) upon 60
days notice to the 1290 Property Owning  Partnership if the 1290 Property Owning
Partnership fails to provide funds on a consistent basis to operate and maintain
the 1290 Property.  Either party may terminate the Property Management Agreement
upon notice to the other party if (x) a petition in  bankruptcy is filed against
the other party and is not dismissed within 60 days, (y) a trustee,  receiver or
other  custodian is appointed  for a  substantial  portion of the other  party's
assets  and is not  vacated  within  60 days or (z) the  other  party  makes  an
assignment for the benefit of its creditors.

                Pursuant to the Property Management Agreement, the 1290 Property
Owning  Partnership  (i) pays  the  Property  Manager/Leasing  Agent a fee in an
amount equal to 1.5% of gross revenues from the 1290 Property, which fee is paid
monthly,  and  (ii)  reimburses  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 is entitled to receive commissions in connection
with the leasing of space at the 1290  Property 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 performs
certain accounting,  administrative and monitoring services. The REIT Management
Agreement  provides  for  compensation  to the REIT  Manager of monthly  fees of
approximately  $10,500 per month, and reimbursement of documented  out-of-pocket
expenses.  Fees incurred under the REIT Management Agreement for the years ended
December  31,  2001,  2000,  and 1999 were  $126,000,  $137,000,  and  $125,000,
respectively.

                                       35
<PAGE>

                                    PART IV

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

(a)(1)        Financial Statements are included in response to Item 8 hereof.

(a)(2)        Financial  Statement  Schedules have been omitted because they are
              inapplicable,  not required, or the information is included in the
              financial statements or notes thereto.

(a)(3)        Exhibits

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          Amended and Restated Partnership Agreement of 1290 Partners, L.P.,
              dated November 22, 1999.***

10.3          Third  Amended  and  Restated  Limited  Partnership  Agreement  of
              237/1290 Upper Tier Associates, L.P., dated November 19, 1999.***

10.4          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. *

10.5          Amended and Restated Metropolis Realty Trust, Inc. 1996 Directors'
              Stock Plan. ***

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

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

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

10.9          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. *

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

10.11         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. *

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

                                       36
<PAGE>

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

10.14         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. *

10.15         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. *

10.16         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.*

10.17         Loan Agreement  among 1290 Partners,  L.P.,  Lenders Party thereto
              and General  Electric  Capital  Corporation,  dated  December  13,
              1999.***

10.18         Amended,  Restated and Consolidated  Promissory Note, made by 1290
              Partners,  L.P. in favor of General Electric Capital  Corporation,
              dated December 13, 1999.***

10.19         Amended,   Restated   and   Consolidated   Mortgage  and  Security
              Agreement,  between  1290  Partners,  L.P.  and  General  Electric
              Capital Corporation, dated December 13, 1999.***

10.20         Indemnification  and Pledge Agreement between 1290 Partners,  L.P.
              and Apollo Real Estate  Investment  Fund, L.P., dated December 13,
              1999.***

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

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

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

10.24         Interest Purchase Agreement between Metropolis Realty Trust, Inc.,
              237 GP Corp., 237 Park Investors,  L.L.C. and Escrow Agent,  dated
              as of September 23, 1999. **

10.25         Restructuring Agreement between Metropolis Realty Trust, Inc., 237
              GP Corp., JMB/NYC Office Building Associates,  L.P., certain other
              holders of  indirect  interests  in 237 Park  Avenue  and  certain
              affiliates of 237 Park Investors,  L.L.C., dated as of October 28,
              1999. **

(b)           Reports on Form 8-K incorporated by reference.
              None.

(c)           Exhibits.
              Refer to paragraph (a)(3) under this Item 14.

(d)           Not applicable.

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

**            Incorporated   by   reference  to  the   registrant's   definitive
              Information  Statement on Schedule  14C filed with the  Securities
              and Exchange Commission on October 29, 1999.

***           Incorporated  by reference to the  Registrant's  Annual  Report on
              Form 10-K filed with the  Securities  and Exchange  Commission  on
              March 30, 2000.


                                       37
<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 28, 2002


                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 28, 2002
------------------------------------
Lee S. Neibart

/s/  William L. Mack                         Chairman of the Board and                   March 28, 2002
---------------------------                             Director
William L. Mack

 /s/  John R.S. Jacobsson                    Vice President, Secretary and               March 28, 2002
---------------------------                             Director
John R.S. Jacobsson

 /s/  John R. Klopp                          Vice President and Director                 March 28, 2002
------------------------------------
John R. Klopp

 /s/  Bruce H. Spector                                 Director                          March 28, 2002
------------------------------------
Bruce H. Spector


<PAGE>
               Signature                                 Title                                  Date
               ---------                                 -----                                  ----

 /s/  Russel S. Bernard                                Director                          March 28, 2002
------------------------------------
Russel S. Bernard

 /s/  David A. Strumwasser                             Director                          March 28, 2002
---------------------------
David A. Strumwasser

</TABLE>