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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO

SECTIONS 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934


(Mark One)

x   ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2002

or

o   TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the transition period from

to

Commission file number: 1-13115

EQUITY OFFICE PROPERTIES TRUST


(Exact name of registrant as specified in its
charter)


|                                                                                                         |  |                                     
|-------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|Maryland                                                                                                 |  | 36-4151656                          
|(State or other jurisdiction of incorporation
    or organization)                                       |  | (I.R.S. Employer Identification No.)
|Two North Riverside Plaza,
    Suite 2100, Chicago, Illinois(Address of principal executive
    offices) |  | 60606(Zip Code)                     

(Registrants telephone number, including
area
code)(312) 466-3300

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

|                                                                                     |  |                                          
|------------------------------------------------------------------------------------ |  | -----------------------------------------
|Title of each class                                                                  |  | Name of each exchange on which registered
|                                                                                     |  |                                          
|Common Shares of Beneficial Interest,
    $.01 par value per share (Common Shares) |  | New York Stock Exchange                  
|5.25% Series B Convertible,
    Cumulative Redeemable Preferred Shares               |  | New York Stock Exchange                  
|8.625% Series C Cumulative
    Redeemable Preferred Shares                           |  | New York Stock Exchange                  
|7.875% Series E Cumulative Redeemable
    Preferred Shares                           |  | New York Stock Exchange                  
|8.0% Series F Cumulative Redeemable
    Preferred Shares                             |  | New York Stock Exchange                  
|7.75% Series G Cumulative Redeemable
    Preferred Shares                            |  | New York Stock Exchange                  

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

(None)


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 o

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of the 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

Indicate by check mark
whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the
Act).  Yes x  No o

The aggregate market
value of the Common Shares held by non-affiliates of the
registrant as of June 28, 2002 (the last business day of
the registrants most recently completed second fiscal
quarter) was $11,705,154,236 based on the reported closing sale
price per Common Share on the New York Stock Exchange of $30.10.

On March 13, 2003,
409,798,304 Common Shares were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the registrants proxy statement for the annual
shareholders meeting to be held in 2003 are incorporated
by reference into Part III. We expect to file our proxy
statement by April 30, 2003.



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EQUITY OFFICE PROPERTIES TRUST

TABLE OF CONTENTS

|          |  |                                                                                                    |  |      |     | 
|--------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|          |  |                                                                                                    |  | Page |    
|          |  |                                                                                                    |  |      |    
|PART I.   |  |                                                                                                    |  |     
|          |  | Forward-Looking Statements                                                                         |  |      | 3   | 
|Item 1.   |  | Business                                                                                           |  |      | 4   | 
|Item 2.   |  | Properties                                                                                         |  |      | 11  | 
|Item 3.   |  | Legal Proceedings                                                                                  |  |      | 16  | 
|Item 4.   |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 16  | 
|PART II.  |  |                                                                                                    |  |     
|Item 5.   |  | Market for Registrants Common Equity and
    Related Stockholder Matters                          |  |      | 17  | 
|Item 6.   |  | Selected Financial Data                                                                            |  |      | 18  | 
|Item 7.   |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |  |      | 21  | 
|Item 7A.  |  | Quantitative and Qualitative Disclosures About
    Market Risk                                     |  |      | 51  | 
|Item 8.   |  | Financial Statements and Supplementary Data                                                        |  |      | 52  | 
|Item 9.   |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure           |  |      | 100 | 
|PART III. |  |                                                                                                    |  |     
|Item 10.  |  | Directors and Executive Officers of the Registrant                                                 |  |      | 101 | 
|Item 11.  |  | Executive Compensation                                                                             |  |      | 101 | 
|Item 12.  |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |  |      | 101 | 
|Item 13.  |  | Certain Relationships and Related Transactions                                                     |  |      | 101 | 
|Item 14.  |  | Controls and Procedures                                                                            |  |      | 101 | 
|PART IV.  |  |                                                                                                    |  |     
|Item 15.  |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                               |  |      | 102 | 

2



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PART I

FORWARD - LOOKING STATEMENTS

Statements contained in this Form 10-K which
are not historical fact may be forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act
of 1934 (the Exchange Act). Equity Office Properties
Trust (Equity Office) intends such forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 21E of the
Exchange Act. Such statements (none of which is intended as a
guarantee of performance) are subject to certain risks and
uncertainties, which could cause actual results to differ
materially from those projected or anticipated. A number of
important factors could cause actual results to differ
materially from those indicated by the forward-looking
statements, including, but not limited to, the risks described
in our current reports on Form 8-K filed with the
Securities and Exchange Commission (the SEC) on
February 12, 2002 and June 27, 2002, as the same may
be supplemented from time to time. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date this Form 10-K is filed with the
SEC. Among the factors about which Equity Office has made
assumptions are the following:



| |   |                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in general economic conditions, including
    those affecting industries in which Equity Offices
    principal tenants compete;                           
|
| |  | the extent of any white-collar job growth in
    markets in which we have a presence;                                                                              
|
| |  | the extent, duration and strength of any economic
    recovery, including its effect on the demand for office space
    and the creation of new office development;
|
| |  | the domestic effect of any heightened
    geopolitical risks;                                                                                                      
|
| |  | the extent of tenant bankruptcies, financial
    difficulties and defaults;                                                                                        
|
| |  | the amount of lease termination fees received, if
    any;                                                                                                         
|
| |  | the availability of new competitive supply, which
    may become available by way of sublease rather than new
    construction;                                    
|
| |  | the extent of future demand for high-rise and
    other office space in markets in which Equity Office has a
    presence;                                         
|
| |  | Equity Offices ability to complete and
    lease current and future development projects on schedule, on
    budget and in accordance with expectations;          
|
| |  | Equity Offices ability to maintain
    occupancy and to timely lease or re-lease space at current or
    anticipated rents;                                       
|
| |  | future demand for Equity Offices debt and
    equity securities;                                                                                                  
|
| |  | Equity Offices ability to refinance its
    debt at reasonable terms upon maturity;                                                                               
|
| |  | Equity Offices ability to achieve economies
    of scale over time and to realize anticipated cost savings from
    the implementation of its EOPlus initiatives; 
|
| |  | Equity Offices ability to attract and
    retain high quality personnel at a reasonable cost;                                                                     
|
| |  | changes in interest rates;                                                                                                                                         
|
| |  | changes in operating costs, including real estate
    taxes, utilities, insurance and security costs;                                                              
|
| |  | Equity Offices ability to pay amounts due
    to its noteholders and preferred shareholders before any
    distribution to holders of Common Shares; and          
|
| |  | Equity Offices ability to obtain, at a
    reasonable cost, adequate insurance coverage for catastrophic
    events, such as earthquakes and terrorist acts.      

3



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Item 1.     Business.

EQUITY OFFICE

As used herein, Equity Office,
we, us and our refer to
Equity Office Properties Trust, a Maryland real estate
investment trust, together with its consolidated subsidiaries,
including EOP Operating Limited Partnership, a Delaware limited
partnership (EOP Partnership), and the predecessors
thereof, except where the context otherwise requires. Equity
Office was organized in 1996 and began operations in 1997. We
own substantially all of our assets and conduct all of our
operations through EOP Partnership, which, though its various
subsidiaries, is principally engaged in owning, managing,
leasing, acquiring and developing office properties. We are the
sole general partner of, and owned, at December 31, 2002,
an approximate 89.1% interest in, EOP Partnership. Equity Office
has elected to be taxed as a real estate investment trust
(REIT) for federal income tax purposes, and
generally will not be subject to federal income tax if 100% of
its taxable income is distributed and it complies with a number
of organizational and operational requirements.

At December 31, 2002, we had a portfolio of
734 office properties comprising approximately
125.7 million square feet of commercial office space in
20 states and the District of Columbia (the Office
Properties), 77 industrial properties comprising
approximately 6.0 million square feet (the Industrial
Properties and, together with the Office Properties, the
Properties) and approximately 1.5 million
square feet of office properties under development.

Our executive offices are located at Two North
Riverside Plaza, Suite 2100, Chicago, Illinois 60606, and
our telephone number is (312) 466-3300.

Equity Offices internet site is at
http://www.equityoffice.com. Equity Office will provide to the
public on its website, free of charge, its annual report on
Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) of the Exchange Act
as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC.

DEVELOPMENT OF OUR BUSINESS IN 2002

During the year ended December 31, 2002, we
completed the following key transactions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | disposed of 45 office properties, four parking
    facilities, two industrial properties and three land parcels in
    various transactions to unaffiliated parties for approximately
    $508.3 million. The sold office properties consisted of
    approximately 3,113,189 square feet, the industrial properties
    consisted of approximately 77,072 square feet, and the parking
    facilities consisted of approximately 7,464 parking spaces;
|
| |  | acquired two office buildings for approximately
    $92.3 million. The properties are located in
    Washington, D.C., and consist of approximately 327,550
    square feet, of which approximately 260,372 square feet is
    office space;                                                                                                                                                                                                           
|
| |  | placed two developments into service consisting
    of three buildings and approximately 330,646 square feet;                                                                                                                                                                                                                                                                                                                                          
|
| |  | commenced two developments consisting of
    approximately 292,000 square feet;                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | exchanged our equity interest in a land parcel
    under option and operating business in exchange for
    Wilson/Equity Offices equity interest in several
    developments and land parcels;                                                                                                                                                                                                                                                        
|
| |  | issued $500 million of unsecured notes due
    February 2012 at an all-in cost of 7.0% and exchanged
    approximately $260.0 million of these notes for the
    previously outstanding $250.0 million MandatOry Par Put
    Remarketed SecuritiesSM which were subject to
    mandatory redemption; repaid $310 million of unsecured
    notes upon maturity and repaid approximately $156.1 million
    of mortgage debt;                            

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | redeemed the 7,994,000 outstanding 8.98%
    Series A Cumulative Redeemable Preferred Shares at an
    aggregate redemption price of approximately $201.9 million,
    including accrued distributions;                                                                                                                                                                                                                                                                                                                      
|
| |  | issued 8,500,000 7.75% Series G Cumulative
    Redeemable Preferred Shares for approximately
    $206.1 million;                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | repurchased 7,901,900 Common Shares at an average
    price of $24.92 per share for a total of $196.9 million in
    the aggregate as part of a Common Share repurchase program for
    up to $400 million of our Common Shares;                                                                                                                                                                                                                                                                                             
|
| |  | redeemed 3,727,925 units of limited partnership
    interest of EOP Partnership (Units) for cash at an
    average price of $28.62 per Unit for a total of approximately
    $106.7 million;                                                                                                                                                                                                                                                                                                                               
|
| |  | recognized approximately $105.5 million from
    lease termination fees, including approximately
    $46.1 million and 5,000,000 common shares (which were
    initially valued at zero and subsequently sold and recognized in
    March 2003 for a gain on sale of securities of approximately
    $8.1 million) from one tenant. In addition, we recognized
    approximately $46.4 million from lease terminations at our
    unconsolidated joint ventures, including approximately
    $40 million from one tenant; and
|
| |  | received approximately $20.1 million from CT
    Convertible Trust I in connection with the redemption of its
    non-convertible preferred securities.                                                                                                                                                                                                                                                                                                                                                                      

BUSINESS AND GROWTH STRATEGIES

Our primary business objective is to achieve
sustainable long-term growth in cash flow and portfolio value in
order to maximize shareholder value. We intend to achieve this
objective by owning and operating high-quality office buildings
and providing a superior level of service to customers across
the United States.

Internal Growth

We believe that our future internal growth will
come from:



| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increasing occupancy by leasing up vacant space,
    retaining tenants, reducing the lease cycle time and improving
    customer service;                                                               
|
| |  | recycling of capital through selective
    disposition of certain assets and reinvestment in properties or
    other assets more consistent with our desire to focus on core
    assets in core markets;
|
| |  | our ability to achieve economies of scale over
    time, including anticipated cost savings from the implementation
    of our EOPlus initiatives; and                                                  
|
| |  | completion and lease-up of development properties.                                                                                                                                                      

At December 31, 2002, approximately
12.7 million rentable square feet, or 10.1%, of our office
space, was vacant. During the period from December 31, 2002
through December 31, 2007, there is approximately
71.6 million square feet, or 64.2%, of currently occupied
office space scheduled to become vacant. As of December 31,
2002, the average annual total rent, including base rent and
estimated expense reimbursements from tenants per occupied
square foot for this space was $28.95 per square foot (see
Item 2. Properties). The actual rental rates at which
available space will be relet will depend on prevailing market
factors at the time.

At December 31, 2002, approximately
1.5 million square feet of projects were under development.
Our policy is to prudently pursue projects where customer need
is evident and market conditions warrant.

In addition to our current development pipeline,
we own various undeveloped land parcels on which approximately
12 million square feet of office space could be developed,
assuming our receipt of necessary permits, licenses and
approvals. Our policy is to develop land only when market
conditions warrant. Although we may develop some properties
ourselves, a portion of this activity may also be conducted with
joint venture partners. If we develop a property with a joint
venture partner, we may not have the same degree of control over
the property as if we owned it ourselves. In addition, if we
develop a property with a joint venture partner, we will be
required to share a portion of the economic benefits from such
property with our joint venture partner.

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EOPlus

In 2001, we initiated a comprehensive analysis of
our operating structure with the help of a management consulting
firm and our employees. The goal of the analysis was to
significantly reduce operating expenses, improve customer
service, reduce lease cycle time, increase occupancy and retain
tenants. The analysis resulted in a significant reengineering
effort called EOPlus. As part of this effort, most of the
activities that occurred at the property level will eventually
be centralized into core regional offices with a view towards
allowing property managers to spend more time building customer
relationships. The centralization of each regions
operations is designed to permit us to manage our Properties
with fewer people. By the end of 2003, we expect to have 16%
fewer employees than at the end of 2001 as a result of staff
reductions and attrition. We expect the related severance
expenses to be immaterial. By consolidating our property
management offices, we expect to make available between 130,000
square feet and 160,000 square feet of office space for leasing.
We anticipate this new model will be fully implemented in all of
our markets by the end of 2003. We have also created a central
purchasing function to review and analyze our goods and services
expenditures. The goal of the central purchasing function is to
obtain preferred pricing, reduce the number of our vendors and
reduce the number of invoices we process. Beginning in 2004,
after the new model is fully implemented, we expect annual cost
savings of $75 million to $100 million. Since a
significant portion of these savings will be passed on to our
tenants, we expect to benefit from an ability to offer our
tenants a lower cost of occupancy than our competition.

External Growth

As part of our long-term growth strategy,
assuming that capital is available to us on reasonable terms, we
intend to continue to acquire additional office properties.
Properties may be acquired separately or as part of a portfolio
and may be acquired for cash and/or in exchange for our debt or
equity securities. These acquisitions may be individual asset
transactions, joint ventures, mergers or other business
combinations.

ACQUISITION ACTIVITY

Over the past five years, we have invested
approximately $15.3 billion, calculated on a cost basis, in
acquisitions of institutional quality office properties,
industrial properties and parking facilities throughout the
United States.

Management considers various factors when
evaluating potential property acquisitions. These factors
include:



| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the attractiveness of the property to existing
    and potential tenants;                                                                                                                                   
|
| |  | the likelihood and relative attractiveness of
    competitive supply;                                                                                                                                       
|
| |  | the anticipated demand for space in the local
    market;                                                                                                                                                   
|
| |  | the creditworthiness and diversity of risk in the
    current tenants occupying the property;                                                                                                               
|
| |  | the ability to acquire the asset at an attractive
    going-in yield, as well as the potential to increase operating
    income over time by renewing leases for increasing rents;                          
|
| |  | the physical condition of the property, including
    the extent of funds required for its maintenance and for
    physical upgrades needed in order to establish or sustain its
    market competitiveness;
|
| |  | the ability to operate the property with a
    competitive cost structure; and                                                                                                                              
|
| |  | the propertys location in one of our target
    markets.                                                                                                                                                   

In determining whether to enter into a new
development, the foregoing factors are considered as well as the
additional risks of development, including the following:



| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | the extent of lease-up risk in the context of the
    demand/supply characteristics of the local market;
|
| |  | the ability to minimize construction risks; and                                                         
|
| |  | the quality of local development partners, if
    relevant.                                             

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DISPOSITION ACTIVITY

Over the past five years, we have disposed of
approximately $2.4 billion, calculated based on the sales
price, of office properties, industrial properties and parking
facilities throughout the United States. Management considers
various factors when evaluating potential property dispositions.
These factors include but are not limited to:



| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | our ability to recycle capital into markets
    consistent with our long-term strategy;
|
| |  | exiting markets that are not core markets;                                             
|
| |  | whether the property is strategically located;                                         
|
| |  | tenant composition and lease rollover for the
    asset;                               
|
| |  | general economic conditions, including job growth
    in the local market;             
|
| |  | the general quality of the asset; and                                                  
|
| |  | the long-term outlook for the market for which
    the asset is located.               

FINANCING POLICIES

We conduct substantially all of our investment
and debt-financing activities through EOP Partnership. To date,
we have financed our investments through a combination of
equity, which may be issued by either EOP Partnership or us, as
well as secured and unsecured debt (which would be issued by EOP
Partnership but in many cases guaranteed by us). The terms of
EOP Partnerships line of credit and unsecured notes
contain various financial covenants which require satisfaction
of certain total debt-to-asset ratios, secured
debt-to-total-asset ratios, debt service coverage ratios, and
unsecured debt-to-unencumbered-asset ratios, as well as other
limitations. In addition, EOP Partnership has obtained
investment grade credit ratings on its unsecured debt from each
of Standard & Poors, Fitch and Moodys rating agencies. A
primary objective of our financing policy is to manage our
financial position to allow us to raise capital at competitive
rates. As of December 31, 2002, approximately 97.9% of our
outstanding debt had a fixed interest rate which limits the risk
of fluctuating interest rates. In addition, we utilize certain
derivative financial instruments at times to limit interest rate
risk. Derivatives are used for hedging purposes rather than
speculation.

To the extent that our Board of Trustees decides
to obtain additional capital, we may elect to issue equity
securities, cause EOP Partnership to issue additional Units or
debt securities, retain our earnings (subject to the provisions
of the Internal Revenue Code requiring distributions of taxable
income to maintain REIT status), or dispose of some of our
properties or utilize a combination of these methods. Under the
terms of EOP Partnerships partnership agreement, the
proceeds of all equity capital raised by Equity Office are
contributed to EOP Partnership in exchange for additional
interests in EOP Partnership.

INDUSTRY SEGMENTS

Our primary business is the ownership and
operation of office properties. Our long-term tenants are in a
variety of businesses, and no single tenant is significant to
our business. Information related to this segment for the years
ended December 31, 2002, 2001 and 2000 is set forth in
Item 8. Financial Statements and Supplementary
Data  Note 20  Segment Information.

COMPETITION

The leasing of real estate is highly competitive.
We compete for tenants in our markets primarily on the basis of
property location, rent charged, services provided and the
design and condition of improvements. We also experience
competition when attempting to acquire or divest ownership of
desirable real estate, building sites or redevelopment
opportunities, including competition from domestic and foreign
financial institutions, other REITs, life insurance companies,
pension trusts, trust funds, partnerships and individual
investors.

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ENVIRONMENTAL EXPOSURE

As an owner of real estate, we are subject to
various environmental laws of federal, state and local
governments. Compliance with existing laws has not had a
material adverse effect on our financial condition and results
of operations, and management does not believe it will have such
an impact in the future. However, we cannot predict the impact
of unforeseen environmental contingencies or new or changed laws
or regulations on our Properties, properties that we have sold
or on properties that may be acquired in the future.

EMPLOYEES

As of December 31, 2002, we had
approximately 2,500 employees providing in-house expertise
in leasing, property management, investments and
dispositions, finance, tax, property development, marketing,
accounting, information systems and law.

Our nine executive officers have an average
tenure of nine years with us or our affiliates or
predecessors and an average of 19 years experience in the
real estate industry.

EXECUTIVE AND SENIOR OFFICERS OF EQUITY
OFFICE

As of March 14, 2003, the following
executive and senior officers of Equity Office held the offices
indicated:

|                      |  |     |    |  |             |                                                                    
|--------------------- |  | --- | -- |  | ----------- | -------------------------------------------------------------------
|Name                  |  | Age |    |  | Office Held
|                      |  |     |    |  |            
|Samuel Zell           |  |     | 61 |  |             | Interim Chief Executive Officer                                    
|Richard D. Kincaid    |  |     | 41 |  |             | President (and Chief Executive Officer as of
    April 1, 2003)    
|Peter H. Adams        |  |     | 56 |  |             | Executive Vice President  Strategic
    Planning and Operations   
|David A. Helfand      |  |     | 38 |  |             | Executive Vice President and Chief Investment
    Officer          
|Lawrence J. Krema     |  |     | 42 |  |             | Executive Vice President  Human
    Resources and Communications  
|Christopher P. Mundy  |  |     | 41 |  |             | Executive Vice President  Strategic
    Planning and Operations   
|Stanley M. Stevens    |  |     | 54 |  |             | Executive Vice President, Chief Legal Counsel and
    Secretary    
|Marsha C. Williams    |  |     | 51 |  |             | Executive Vice President and Chief Financial
    Officer           
|Robert J. Winter, Jr. |  |     | 57 |  |             | Executive Vice President  Development
    and Portfolio Management
|Thomas Q. Bakke       |  |     | 48 |  |             | Senior Vice President  New York/
    Washington D.C. Region       
|Stephen M. Briggs     |  |     | 44 |  |             | Senior Vice President  Chief
    Accounting Officer               
|M. Patrick Callahan   |  |     | 41 |  |             | Senior Vice President  Seattle Region                             
|Robert E. Dezzutti    |  |     | 42 |  |             | Senior Vice President  Los Angeles
    Region                     
|Maureen O. Fear       |  |     | 46 |  |             | Senior Vice President and Treasurer                                
|Debra L. Ferruzzi     |  |     | 42 |  |             | Senior Vice President and Executive Advisor                        
|Frank Frankini        |  |     | 48 |  |             | Senior Vice President  Development and
    Energy Operations      

8



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|                        |  |     |    |  |             |                                                                                        
|----------------------- |  | --- | -- |  | ----------- | ---------------------------------------------------------------------------------------
|Name                    |  | Age |    |  | Office Held
|                        |  |     |    |  |            
|Mark P. Geisreiter      |  |     | 41 |  |             | Senior Vice President  San Francisco
    Region                                       
|Matthew T. Gworek       |  |     | 42 |  |             | Senior Vice President  Investments                                                    
|Donald J. Huffner, Jr.  |  |     | 45 |  |             | Senior Vice President  Atlanta Region                                                 
|Peter D. Johnston       |  |     | 46 |  |             | Senior Vice President  Houston Region                                                 
|Kim J. Koehn            |  |     | 47 |  |             | Senior Vice President  Denver Region                                                  
|Diane M. Morefield      |  |     | 44 |  |             | Senior Vice President  Investor
    Relations                                         
|Scott T. Morey          |  |     | 38 |  |             | Senior Vice President  Chief
    Information Officer                                  
|John W. Peterson        |  |     | 39 |  |             | Senior Vice President  San Jose Region                                                
|Arvid A. Povilaitis     |  |     | 42 |  |             | Senior Vice President  Chicago Region                                                 
|Ross G. Satterwhite     |  |     | 43 |  |             | Senior Vice President  Investments                                                    
|John C. Schneider       |  |     | 44 |  |             | Senior Vice President  Legal and
    Associate General Counsel for Property Operations
|Mark E. Scully          |  |     | 44 |  |             | Senior Vice President  National Leasing                                               
|Maryann Gilligan Suydam |  |     | 53 |  |             | Senior Vice President  Boston Region                                                  

Set forth below is biographical information for
each of the executive officers:

Samuel Zellhas been
a trustee and Chairman of the Board of Equity Office since
October 1996 and has been interim Chief Executive Officer of
Equity Office since April 2002. He also has been chairman of
Equity Group Investments, L.L.C., an owner and financier of real
estate and corporate investments, since January 1999 and chief
executive officer of Danielson Holding Corporation, an insurance
holding company, since July 2002. Additionally, Mr. Zell
currently serves as a director and chairman of the board of a
number of public companies and also has held the following
executive positions:



| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Interim President of Equity Office from April
    2002 until November 2002; and                                                                        
|
| |  | Chairman of Equity Group Investments, Inc., a
    related entity of Equity Group Investments, L.L.C., for more
    than five years until December 1998.

Richard D. Kincaidhas been a trustee and President of
Equity Office since November 2002 and will become Chief
Executive Officer of Equity Office effective April 1, 2003.
Mr. Kincaid also has held the following positions:



| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Executive Vice President of Equity Office from
    March 1997 until November 2002;                                                                             
|
| |  | Chief Operating Officer of Equity Office from
    September 2001 until November 2002;                                                                          
|
| |  | Chief Financial Officer of Equity Office from
    March 1997 until August 2002;                                                                                
|
| |  | Senior Vice President of Equity Office from
    October 1996 until March 1997;                                                                                 
|
| |  | Senior Vice President and Chief Financial Officer
    of Equity Office Holdings, L.L.C., a predecessor of Equity
    Office, from July 1995 until October 1997;
|
| |  | Senior Vice President of Equity Group
    Investments, Inc. from February 1995 until July 1995;                                                                
|
| |  | Senior Vice President of the Yarmouth Group, a
    real estate investment company in New York, New York, from
    August 1994 until February 1995;             
|
| |  | Senior Vice President  Finance of
    Equity Group Investments, Inc. from December 1993 until July
    1994; and                                              
|
| |  | Vice President  Finance of Equity
    Group Investments, Inc. from August 1990 until December 1993.                                                           

9



---



##### 



Peter H. Adamshas
been Executive Vice President  Strategic Planning and
Operations of Equity Office since September 2001. Mr. Adams
also has held the following positions:



| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Senior Vice President  Strategic
    Planning and Operations of Equity Office from May 2000 until
    September 2001;                                                                                                           
|
| |  | Senior Vice President  Pacific Region
    of Equity Office from March 1998 until May 2000;                                                                                                                                      
|
| |  | Regional Vice President  Pacific of
    Equity Office from July 1997 until March 1998;                                                                                                                                          
|
| |  | Vice President/ Regional Manager of Equity Office
    Holdings, L.L.C. from March 1997 until October 1997;                                                                                                                       
|
| |  | Vice President/ Regional Manager of Equity Office
    Properties, L.L.C., a predecessor of Equity Office, from July
    1995 until October 1997; and                                                                             
|
| |  | Vice President/ Group Manager of Equity Office
    Properties, Inc., a provider of real estate property management
    services and a former subsidiary of Equity Group Investments,
    Inc., from July 1994 until January 1998.

David A. Helfandhas
been Executive Vice President and Chief Investment Officer of
Equity Office since September 2001. Mr. Helfand also has
held the following positions:



| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | Executive Vice President  Business
    Development of Equity Office from February 2000 until September
    2001;                        
|
| |  | Senior Vice President  New Business
    Development of Equity Office from July 1998 until February 2000;
    and                        
|
| |  | Managing Director of Equity International
    Properties, Ltd., a real estate investment company, from
    December 1997 until July 1998.

Lawrence J. Kremahas been Executive Vice
President  Human Resources and Communications of
Equity Office since November 2002. Mr. Krema also has held
the following positions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Senior Vice President  Human Resources
    of Equity Office from March 2001 until November 2002 and                                                                                                                                                                                                                                                                                                                              
|
| |  | Vice President of NEC Technologies, Inc., a
    leading supplier of presentation systems, computing and other
    empowering technologies for the North American market, from
    April 1995 until October 2000 (in this capacity, Mr. Krema
    managed the human resources division of the company in North
    America and was responsible for corporate services, which
    included real estate, travel and office services).

Christopher P. Mundyhas been Executive Vice
President  Strategic Planning and Operations of
Equity Office since September 2001. Mr. Mundy also has held
the following positions:



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | Senior Vice President  Strategic
    Planning and Operations of Equity Office from May 2000 until
    September 2001;      
|
| |  | Senior Vice President  Northeast
    Region of Equity Office from March 1998 until May 2000;                               
|
| |  | Regional Vice President  Northeast of
    Equity Office from July 1997 until March 1998;                                   
|
| |  | Vice President/ Regional Manager of Equity Office
    Holdings, L.L.C. from March 1997 until October 1997;                  
|
| |  | Vice President/ Regional Leasing Director of
    Equity Office Properties, L.L.C. from July 1995 until October
    1997; and
|
| |  | Vice President/ Regional Leasing Director of
    Equity Office Properties, Inc. from September 1993 until January
    1998. 

10



---



##### 



Stanley M. Stevenshas been Executive Vice President of
Equity Office since September 1996 and Chief Legal Counsel and
Secretary of Equity Office since October 1996. Mr. Stevens
also has held the following position:



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | Executive Vice President and General Counsel of
    Equity Office Holdings, L.L.C. from September 1996 until October
    1997.

Marsha C. Williamshas been Executive Vice President and
Chief Financial Officer of Equity Office since August 2002.
Ms. Williams also has held the following positions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Chief Administrative Officer of Crate and Barrel,
    a national Chicago-based leading retailer of contemporary home
    furnishings and accessories (Crate and Barrel is the trade name
    of Euromarket Designs Inc., which is an indirect majority owned
    subsidiary of Otto Versand Gmbh & Co., a German
    mail-order company), from May 1998 until August 2002 (in this
    capacity, Ms. Williams participated in the planning and
    execution of Crate and Barrels growth strategy and managed
    its finance, accounting, information technology, warehousing,
    distribution and logistics, loss prevention, strategic planning,
    direct marketing operations and purchasing departments); and
|
| |  | Vice President of Amoco Corporation, a worldwide
    energy and chemical company, from December 1997 until April 1998
    and Treasurer of Amoco Corporation from October 1993 until April
    1998, as well as other capacities and positions from May 1989
    until October 1993.                                                                                                                                                                                                                                                                                                                                                                                                                                  

Robert J. Winter, Jr.has been Executive Vice
President  Development and Portfolio Management of
Equity Office since November 2002. Mr. Winter also has held
the following positions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Senior Vice President  Development of
    Equity Office from June 2002 until November 2002;                                                                                                                                                                                                                                                                                                                         
|
| |  | Senior Vice President  Development
    Investments of Equity Office from July 2001 until June 2002;                                                                                                                                                                                                                                                                                                                 
|
| |  | President and Chief Executive Officer of Amli
    Commercial Properties Trust, a private real estate investment
    trust with office and industrial properties in the suburban
    Chicago market, from August 1998 until July 2001 (in this
    capacity, Mr. Winter was responsible for all aspects of the
    companys business, including the development, management
    and ownership of its properties); and
|
| |  | President and Chief Executive Officer of Amli
    Commercial Properties, LLC, a limited liability company and
    predecessor of Amli Commercial Properties Trust, from November
    1996 until July 1998 (in this capacity, along with developing
    the business, Mr. Winter was responsible for forming Amli
    Commercial Properties Trust, the future growth vehicle for the
    business).                   

Item 2.     Properties.

All capitalized terms used herein and not
otherwise defined shall have the meaning given in the financial
statements and notes thereto set forth in Item 8. For
information regarding encumbrances on our properties, see
Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations 
Liquidity and Capital Resources  Debt
Financing  Mortgage Debt and
Item 15. Exhibits, Financial Statements, Schedules
and Reports on Form 8-K 
Schedule III  Real Estate and Accumulated
Depreciation as of December 31, 2002. All of our
consolidated properties are held in fee simple interest, except
for approximately 80 properties in which we have leasehold
interests and do not own the land or a portion thereof and one
property in which we are the mortgage holder.

General

We are the largest publicly-held owner and
operator of office properties in the United States based upon
equity market capitalization and square footage. At
December 31, 2002, we had a portfolio of 734 Office
Properties comprising approximately 125.7 million square
feet of commercial office space in 20 states and the
District of Columbia, 77 Industrial Properties comprising
approximately 6.0 million square feet and approximately
1.5 million square feet of office properties under
development. Approximately 41.1% of the total square feet of our
office properties is located in central business districts
(CBDs) and approximately 58.9%

11



---



##### 



is located in suburban markets. At
December 31, 2002, our Office Properties were approximately
88.6% occupied on a weighted average basis. No single tenant
accounts for more than 1.6% of the aggregate annualized rent or
1.9% of the aggregate occupied square feet.


For segment reporting purposes, the Office
Properties are included in the Office Properties
segment and the Industrial Properties are included in the
Corporate and Other segment.

All property data presented below are as of
December 31, 2002.

Property Statistics

Office Properties

The following table sets forth certain data
relating to our Office Properties, including those we own in
joint ventures with other partners.

|                        |  |           |     |  |             |            |             |             |  |                 |                 |   |  |                   |                |   |                 |   |           |                |  |  |       |   |  |   |       | 
|----------------------- |  | --------- | --- |  | ----------- | ---------- | ----------- | ----------- |  | --------------- | --------------- | - |  | ----------------- | -------------- | - | --------------- | - | --------- | -------------- |  |  | ----- | - |  | - | ----- | 
|                        |  |           |     |  |             |            |             |             |  | Annualized      |                 |   |  |                   |               
|                        |  |           |     |  |             |            |             |             |  | Rent, including |                 |   |  |                   | Average Annual |  
|                        |  |           |     |  |             |            |             |             |  | Base Rent       |                 |   |  |                   | Total Rent,    |  
|                        |  |           |     |  |             | Percent of |             |             |  |                 | and Tenant      |   |  | Percent of        |                |   | including Base  |  
|                        |  |           |     |  |             | Office     |             |             |  |                 | Reimbursements, |   |  | Office            |                |   | Rent and Tenant |  
|                        |  |           |     |  |             | Portfolio  |             |             |  |                 | for Occupied    |   |  | Portfolio         |                |   | Reimbursements, |  
|                        |  | Number of |     |  | Rentable    |            |             | Rentable    |  |                 | Percent         |   |  | Square Feet       |                |   | Annualized      |   |           | Per Occupied   | 
|Primary Market          |  | Buildings |     |  | Square Feet |            |             | Square Feet |  |                 | Occupied        |   |  | (in thousands)(a) |                |   | Rent            |   |           | Square Foot(a) | 
|                        |  |           |     |  |             |            |             |             |  |                 |                 |   |  |                   |                |   |                 |   |           |                | 
|San Francisco           |  |           | 95  |  |             |            | 10,642,718  |             |  |                 | 8.5             | % |  |                   | 76.6           | % |                 | $ | 363,532   |                |  |  | 10.7  | % |  | $ | 44.57 | 
|San Jose                |  |           | 128 |  |             |            | 8,577,382   |             |  |                 | 6.8             | % |  |                   | 86.6           | % |                 |   | 306,026   |                |  |  | 9.0   | % |  |   | 41.18 | 
|Boston                  |  |           | 55  |  |             |            | 13,017,977  |             |  |                 | 10.4            | % |  |                   | 91.4           | % |                 |   | 460,009   |                |  |  | 13.5  | % |  |   | 38.67 | 
|Seattle                 |  |           | 57  |  |             |            | 10,071,078  |             |  |                 | 8.0             | % |  |                   | 91.4           | % |                 |   | 261,410   |                |  |  | 7.7   | % |  |   | 28.40 | 
|New York                |  |           | 6   |  |             |            | 4,986,407   |             |  |                 | 4.0             | % |  |                   | 98.9           | % |                 |   | 245,887   |                |  |  | 7.2   | % |  |   | 49.86 | 
|Chicago                 |  |           | 30  |  |             |            | 11,190,188  |             |  |                 | 8.9             | % |  |                   | 91.7           | % |                 |   | 286,164   |                |  |  | 8.4   | % |  |   | 27.88 | 
|Los Angeles             |  |           | 48  |  |             |            | 7,130,081   |             |  |                 | 5.7             | % |  |                   | 92.7           | % |                 |   | 194,512   |                |  |  | 5.7   | % |  |   | 29.42 | 
|Washington, D.C.        |  |           | 25  |  |             |            | 6,041,210   |             |  |                 | 4.8             | % |  |                   | 89.1           | % |                 |   | 178,072   |                |  |  | 5.2   | % |  |   | 33.10 | 
|Atlanta                 |  |           | 44  |  |             |            | 7,783,233   |             |  |                 | 6.2             | % |  |                   | 85.6           | % |                 |   | 162,561   |                |  |  | 4.8   | % |  |   | 24.41 | 
|Orange County           |  |           | 38  |  |             |            | 6,227,769   |             |  |                 | 5.0             | % |  |                   | 88.6           | % |                 |   | 137,474   |                |  |  | 4.0   | % |  |   | 24.91 | 
|All others              |  |           | 208 |  |             |            | 40,057,356  |             |  |                 | 31.9            | % |  |                   | 88.3           | % |                 |   | 808,426   |                |  |  | 23.7  | % |  |   | 22.85 | 
|                        |  |           |     |  |             |            |             |             |  |                 |                 |   |  |                   |                |   |                 |   |           |                | 
|Total/ Weighted Average |  |           | 734 |  |             |            | 125,725,399 |             |  |                 | 100.0           | % |  |                   | 88.6           | % |                 | $ | 3,404,073 |                |  |  | 100.0 | % |  | $ | 30.55 | 
|                        |  |           |     |  |             |            |             |             |  |                 |                 |   |  |                   |                |   |                 |   |           |                | 

Industrial Properties

The following table sets forth certain data
relating to our Industrial Properties.

|                        |  |           |    |  |             |            |           |             |  |                 |                 |   |  |                   |                |   |                 |   |        |                |  |  |       |   |  |   |       | 
|----------------------- |  | --------- | -- |  | ----------- | ---------- | --------- | ----------- |  | --------------- | --------------- | - |  | ----------------- | -------------- | - | --------------- | - | ------ | -------------- |  |  | ----- | - |  | - | ----- | 
|                        |  |           |    |  |             |            |           |             |  | Annualized      |                 |   |  |                   |               
|                        |  |           |    |  |             |            |           |             |  | Rent, including |                 |   |  |                   | Average Annual |  
|                        |  |           |    |  |             |            |           |             |  | Base Rent       |                 |   |  |                   | Total Rent,    |  
|                        |  |           |    |  |             | Percent of |           |             |  |                 | and Tenant      |   |  | Percent of        |                |   | including Base  |  
|                        |  |           |    |  |             | Industrial |           |             |  |                 | Reimbursements, |   |  | Industrial        |                |   | Rent and Tenant |  
|                        |  |           |    |  |             | Portfolio  |           |             |  |                 | for Occupied    |   |  | Portfolio         |                |   | Reimbursements, |  
|                        |  | Number of |    |  | Rentable    |            |           | Rentable    |  |                 | Percent         |   |  | Square Feet       |                |   | Annualized      |   |        | Per Occupied   | 
|Primary Market          |  | Buildings |    |  | Square Feet |            |           | Square Feet |  |                 | Occupied        |   |  | (in thousands)(a) |                |   | Rent            |   |        | Square Foot(a) | 
|                        |  |           |    |  |             |            |           |             |  |                 |                 |   |  |                   |                |   |                 |   |        |                | 
|Los Angeles             |  |           | 1  |  |             |            | 130,600   |             |  |                 | 2.2             | % |  |                   | 100.0          | % |                 | $ | 470    |                |  |  | 0.9   | % |  | $ | 3.60  | 
|Oakland-East Bay        |  |           | 48 |  |             |            | 3,981,486 |             |  |                 | 66.7            | % |  |                   | 91.2           | % |                 |   | 28,326 |                |  |  | 56.5  | % |  |   | 7.80  | 
|San Jose                |  |           | 28 |  |             |            | 1,855,673 |             |  |                 | 31.1            | % |  |                   | 84.5           | % |                 |   | 21,299 |                |  |  | 42.5  | % |  |   | 13.58 | 
|                        |  |           |    |  |             |            |           |             |  |                 |                 |   |  |                   |                |   |                 |   |        |                | 
|Total/ Weighted Average |  |           | 77 |  |             |            | 5,967,759 |             |  |                 | 100.0           | % |  |                   | 89.3           | % |                 | $ | 50,095 |                |  |  | 100.0 | % |  | $ | 9.40  | 
|                        |  |           |    |  |             |            |           |             |  |                 |                 |   |  |                   |                |   |                 |   |        |                | 

12



---



##### 



Lease Distribution

The following table sets forth information
relating to the distribution of the Office Property leases,
based on occupied square feet.

|                       |  |                |             |            |             |                 |                 |                   |  |            |                |  |          |                 |       |   |  |   |       | 
|---------------------- |  | -------------- | ----------- | ---------- | ----------- | --------------- | --------------- | ----------------- |  | ---------- | -------------- |  | -------- | --------------- | ----- | - |  | - | ----- | 
|                       |  |                |             |            |             | Annualized      |                 |                   |  |            | Average Annual | 
|                       |  |                |             |            |             | Rent, including |                 |                   |  |            | Total Rent,    | 
|                       |  |                |             |            |             | Base Rent       |                 |                   |  |            | including Base | 
|                       |  |                |             | Percent of |             |                 | and Tenant      |                   |  | Percent of |                |  | Rent and |                
|                       |  |                |             | Office     |             |                 | Reimbursements, |                   |  | Office     |                |  | Tenant   |                
|                       |  | Total Occupied |             |            | Portfolio   |                 |                 | for Occupied      |  |            | Portfolio      |  |          | Reimbursements, |      
|                       |  | Square         |             |            | Occupied    |                 |                 | Square Feet       |  |            | Annualized     |  |          | Per Occupied    |      
|Square Feet            |  | Feet(b)        |             |            | Square Feet |                 |                 | (in thousands)(a) |  |            | Rent           |  |          | Square Foot(a)  |      
|                       |  |                |             |            |             |                 |                 |                   |  |            |                |  |          |                 |      
|2,500 or less          |  |                | 4,944,536   |            |             |                 | 4.5             | %                 |  | $          | 141,333        |  |          |                 | 4.2   | % |  | $ | 28.58 | 
|2,501  5,000          |  |                | 7,706,519   |            |             |                 | 7.0             | %                 |  |            | 223,635        |  |          |                 | 6.6   | % |  |   | 29.02 | 
|5,001  7,500          |  |                | 6,525,283   |            |             |                 | 5.9             | %                 |  |            | 195,098        |  |          |                 | 5.7   | % |  |   | 29.90 | 
|7,501  10,000         |  |                | 5,100,552   |            |             |                 | 4.6             | %                 |  |            | 151,248        |  |          |                 | 4.4   | % |  |   | 29.65 | 
|10,001  20,000        |  |                | 15,540,957  |            |             |                 | 14.1            | %                 |  |            | 453,149        |  |          |                 | 13.3  | % |  |   | 29.16 | 
|20,001  40,000        |  |                | 17,970,492  |            |             |                 | 16.3            | %                 |  |            | 549,604        |  |          |                 | 16.1  | % |  |   | 30.58 | 
|40,001  60,000        |  |                | 10,622,046  |            |             |                 | 9.6             | %                 |  |            | 331,418        |  |          |                 | 9.7   | % |  |   | 31.20 | 
|60,001  100,000       |  |                | 11,460,829  |            |             |                 | 10.4            | %                 |  |            | 352,985        |  |          |                 | 10.4  | % |  |   | 30.80 | 
|100,001 or greater     |  |                | 30,419,554  |            |             |                 | 27.6            | %                 |  |            | 1,005,603      |  |          |                 | 29.5  | % |  |   | 33.06 | 
|                       |  |                |             |            |             |                 |                 |                   |  |            |                |  |          |                 |      
|Total/Weighted Average |  |                | 110,290,768 |            |             |                 | 100.0           | %                 |  | $          | 3,404,073      |  |          |                 | 100.0 | % |  | $ | 30.55 | 
|                       |  |                |             |            |             |                 |                 |                   |  |            |                |  |          |                 |      



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Annualized rent is the monthly contractual rent
    under existing leases as of December 31, 2002, multiplied
    by 12 months. Annualized rent per occupied square foot is
    annualized rent divided by occupied square feet at
    December 31, 2002. This amount reflects total base rent and
    estimated expense reimbursements from tenants, as of
    December 31, 2002 without regard to any rent abatements and
    contractual increases or decreases in rent subsequent to
    December 31, 2002.
|   
|(b) |  | Reconciliation for total net rentable square feet
    for Office Properties is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                                                |  |                |             |            |       |  |       |  
|--------------------------------------------------------------- |  | -------------- | ----------- | ---------- | ----- |  | ----- | -
|                                                                |  |                |             | Percent of |      
|                                                                |  | Square Footage |             |            | Total | 
|                                                                |  |                |             |            |       | 
|Square footage occupied by tenants                              |  |                | 110,290,768 |            |       |  | 87.7  | %
|Square footage used for management offices and
    building use |  |                | 1,134,125   |            |       |  | 0.9   | %
|                                                                |  |                |             |            |       | 
|Total occupied square feet                                      |  |                | 111,424,893 |            |       |  | 88.6  | %
|Leased and unoccupied square feet                               |  |                | 1,590,061   |            |       |  | 1.3   | %
|Unleased square feet                                            |  |                | 12,710,445  |            |       |  | 10.1  | %
|                                                                |  |                |             |            |       | 
|Total rentable square feet                                      |  |                | 125,725,399 |            |       |  | 100.0 | %
|                                                                |  |                |             |            |       | 

13



---



##### 



Lease Expiration

The following table
sets forth information relating to expiration patterns of our
Office Property leases. (Dollars in thousands, except per square
foot amounts)

|                                                                                                          |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|--------------------------------------------------------------------------------------------------------- |  | -------- | --------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  | ---- | - | --------- | ------------- |  | - | ------- |  |  | - | --------- |  |  | - | --------- |  |  | - | ---------- | 
|                                                                                                          |  | 2003 and |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  | 
|                                                                                                          |  | month to |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  | 
|                                                                                                          |  | month(4) |           |  | 2004 |   |           | 2005 |  |   | 2006      |  |  | 2007 |           |  | 2008 |   |           | 2009 |  |   | 2010      |  |  | 2011 |           |  | 2012 |   |           | Thereafter(5) |  |   | Totals  | 
|                                                                                                          |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         | 
|San Francisco                                                                                             |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|Square Feet(1)                                                                                            |  |          | 1,206,121 |  |      |   | 1,071,923 |      |  |   | 1,318,646 |  |  |      | 1,227,354 |  |      |   | 1,403,898 |      |  |   | 659,496   |  |  |      | 265,106   |  |      |   | 620,159   |               |  |   | 170,530 |  |  |   | 27,428    |  |  |   | 186,347   |  |  |   | 8,157,008  | 
|% Square Feet(2)                                                                                          |  |          | 11.3%     |  |      |   | 10.1%     |      |  |   | 12.4%     |  |  |      | 11.5%     |  |      |   | 13.2%     |      |  |   | 6.2%      |  |  |      | 2.5%      |  |      |   | 5.8%      |               |  |   | 1.6%    |  |  |   | 0.3%      |  |  |   | 1.8%      |  |  |   | 76.6%      | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 42,572    |  |      | $ | 42,368    |      |  | $ | 55,844    |  |  | $    | 56,824    |  |      | $ | 62,305    |      |  | $ | 31,413    |  |  | $    | 13,007    |  |      | $ | 36,478    |               |  | $ | 10,659  |  |  | $ | 880       |  |  | $ | 11,182    |  |  | $ | 363,532    | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, Per Occupied Square Foot(3) |  | $        | 35.30     |  |      | $ | 39.53     |      |  | $ | 42.35     |  |  | $    | 46.30     |  |      | $ | 44.38     |      |  | $ | 47.63     |  |  | $    | 49.06     |  |      | $ | 58.82     |               |  | $ | 62.50   |  |  | $ | 32.09     |  |  | $ | 60.00     |  |  | $ | 44.57      | 
|San Jose                                                                                                  |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|Square Feet(1)                                                                                            |  |          | 885,051   |  |      |   | 921,446   |      |  |   | 1,808,152 |  |  |      | 720,303   |  |      |   | 594,031   |      |  |   | 205,098   |  |  |      | 142,860   |  |      |   | 816,075   |               |  |   | 809,261 |  |  |   | 122,882   |  |  |   | 405,373   |  |  |   | 7,430,532  | 
|% Square Feet(2)                                                                                          |  |          | 10.3%     |  |      |   | 10.7%     |      |  |   | 21.1%     |  |  |      | 8.4%      |  |      |   | 6.9%      |      |  |   | 2.4%      |  |  |      | 1.7%      |  |      |   | 9.5%      |               |  |   | 9.4%    |  |  |   | 1.4%      |  |  |   | 4.7%      |  |  |   | 86.6%      | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 33,258    |  |      | $ | 32,638    |      |  | $ | 57,244    |  |  | $    | 29,868    |  |      | $ | 23,875    |      |  | $ | 10,392    |  |  | $    | 4,703     |  |      | $ | 37,273    |               |  | $ | 53,864  |  |  | $ | 4,308     |  |  | $ | 18,603    |  |  | $ | 306,026    | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, Per Occupied Square Foot(3) |  | $        | 37.58     |  |      | $ | 35.42     |      |  | $ | 31.66     |  |  | $    | 41.47     |  |      | $ | 40.19     |      |  | $ | 50.67     |  |  | $    | 32.92     |  |      | $ | 45.67     |               |  | $ | 66.56   |  |  | $ | 35.06     |  |  | $ | 45.89     |  |  | $ | 41.18      | 
|Boston                                                                                                    |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|Square Feet(1)                                                                                            |  |          | 1,212,711 |  |      |   | 1,090,810 |      |  |   | 1,286,479 |  |  |      | 799,574   |  |      |   | 1,353,468 |      |  |   | 1,106,438 |  |  |      | 977,179   |  |      |   | 1,054,190 |               |  |   | 402,917 |  |  |   | 1,037,289 |  |  |   | 1,574,211 |  |  |   | 11,895,266 | 
|% Square Feet(2)                                                                                          |  |          | 9.3%      |  |      |   | 8.4%      |      |  |   | 9.9%      |  |  |      | 6.1%      |  |      |   | 10.4%     |      |  |   | 8.5%      |  |  |      | 7.5%      |  |      |   | 8.1%      |               |  |   | 3.1%    |  |  |   | 8.0%      |  |  |   | 12.1%     |  |  |   | 91.4%      | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 44,486    |  |      | $ | 38,788    |      |  | $ | 47,835    |  |  | $    | 27,810    |  |      | $ | 54,281    |      |  | $ | 43,307    |  |  | $    | 37,742    |  |      | $ | 41,571    |               |  | $ | 20,371  |  |  | $ | 37,809    |  |  | $ | 66,009    |  |  | $ | 460,009    | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, Per Occupied Square Foot(3) |  | $        | 36.68     |  |      | $ | 35.56     |      |  | $ | 37.18     |  |  | $    | 34.78     |  |      | $ | 40.11     |      |  | $ | 39.14     |  |  | $    | 38.62     |  |      | $ | 39.43     |               |  | $ | 50.56   |  |  | $ | 36.45     |  |  | $ | 41.93     |  |  | $ | 38.67      | 
|Seattle                                                                                                   |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|Square Feet(1)                                                                                            |  |          | 2,090,698 |  |      |   | 1,431,085 |      |  |   | 1,271,546 |  |  |      | 1,034,519 |  |      |   | 628,705   |      |  |   | 900,987   |  |  |      | 561,976   |  |      |   | 683,539   |               |  |   | 350,030 |  |  |   | 128,507   |  |  |   | 122,499   |  |  |   | 9,204,091  | 
|% Square Feet(2)                                                                                          |  |          | 20.8%     |  |      |   | 14.2%     |      |  |   | 12.6%     |  |  |      | 10.3%     |  |      |   | 6.2%      |      |  |   | 8.9%      |  |  |      | 5.6%      |  |      |   | 6.8%      |               |  |   | 3.5%    |  |  |   | 1.3%      |  |  |   | 1.2%      |  |  |   | 91.4%      | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 58,117    |  |      | $ | 40,894    |      |  | $ | 37,333    |  |  | $    | 29,433    |  |      | $ | 17,476    |      |  | $ | 25,881    |  |  | $    | 15,484    |  |      | $ | 20,997    |               |  | $ | 11,513  |  |  | $ | 3,209     |  |  | $ | 1,073     |  |  | $ | 261,410    | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, Per Occupied Square Foot(3) |  | $        | 27.80     |  |      | $ | 28.58     |      |  | $ | 29.36     |  |  | $    | 28.45     |  |      | $ | 27.80     |      |  | $ | 28.72     |  |  | $    | 27.55     |  |      | $ | 30.72     |               |  | $ | 32.89   |  |  | $ | 24.97     |  |  | $ | 8.76      |  |  | $ | 28.40      | 
|New York                                                                                                  |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|Square Feet(1)                                                                                            |  |          | 235,205   |  |      |   | 111,569   |      |  |   | 99,719    |  |  |      | 191,651   |  |      |   | 164,762   |      |  |   | 73,759    |  |  |      | 1,146,667 |  |      |   | 1,255,241 |               |  |   | 531,252 |  |  |   | 139,383   |  |  |   | 982,732   |  |  |   | 4,931,940  | 
|% Square Feet(2)                                                                                          |  |          | 4.7%      |  |      |   | 2.2%      |      |  |   | 2.0%      |  |  |      | 3.8%      |  |      |   | 3.3%      |      |  |   | 1.5%      |  |  |      | 23.0%     |  |      |   | 25.2%     |               |  |   | 10.7%   |  |  |   | 2.8%      |  |  |   | 19.7%     |  |  |   | 98.9%      | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 8,895     |  |      | $ | 6,742     |      |  | $ | 5,298     |  |  | $    | 11,360    |  |      | $ | 7,477     |      |  | $ | 4,201     |  |  | $    | 60,173    |  |      | $ | 60,634    |               |  | $ | 20,974  |  |  | $ | 8,082     |  |  | $ | 52,051    |  |  | $ | 245,887    | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, Per Occupied Square Foot(3) |  | $        | 37.82     |  |      | $ | 60.43     |      |  | $ | 53.13     |  |  | $    | 59.28     |  |      | $ | 45.38     |      |  | $ | 56.96     |  |  | $    | 52.48     |  |      | $ | 48.30     |               |  | $ | 39.48   |  |  | $ | 57.99     |  |  | $ | 52.97     |  |  | $ | 49.86      | 
|Chicago                                                                                                   |  |          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |         |  |  |   |           |  |  |   |           |  |  |   |            | 
|Square Feet(1)                                                                                            |  |          | 1,502,466 |  |      |   | 1,079,853 |      |  |   | 1,193,749 |  |  |      | 1,152,488 |  |      |   | 744,096   |      |  |   | 1,404,236 |  |  |      | 761,037   |  |      |   | 980,253   |               |  |   | 261,248 |  |  |   | 584,807   |  |  |   | 599,525   |  |  |   | 10,263,758 | 
|% Square Feet(2)                                                                                          |  |          | 13.4%     |  |      |   | 9.6%      |      |  |   | 10.7%     |  |  |      | 10.3%     |  |      |   | 6.6%      |      |  |   | 12.5%     |  |  |      | 6.8%      |  |      |   | 8.8%      |               |  |   | 2.3%    |  |  |   | 5.2%      |  |  |   | 5.4%      |  |  |   | 91.7%      | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 43,877    |  |      | $ | 30,067    |      |  | $ | 30,502    |  |  | $    | 31,509    |  |      | $ | 19,514    |      |  | $ | 42,032    |  |  | $    | 23,486    |  |      | $ | 23,776    |               |  | $ | 7,625   |  |  | $ | 16,289    |  |  | $ | 17,487    |  |  | $ | 286,164    | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, Per Occupied Square Foot(3) |  | $        | 29.20     |  |      | $ | 27.84     |      |  | $ | 25.55     |  |  | $    | 27.34     |  |      | $ | 26.23     |      |  | $ | 29.93     |  |  | $    | 30.86     |  |      | $ | 24.25     |               |  | $ | 29.19   |  |  | $ | 27.85     |  |  | $ | 29.17     |  |  | $ | 27.88      | 

14



---



##### 



|                                                                                                          |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|--------------------------------------------------------------------------------------------------------- |  | -------- | ---------- |  | ---- | - | ---------- | ---- |  | - | ---------- |  |  | ---- | ---------- |  | ---- | - | ---------- | ---- |  | - | --------- |  |  | ---- | --------- |  | ---- | - | --------- | ------------- |  | - | --------- |  |  | - | --------- |  |  | - | --------- |  |  | - | ----------- | 
|                                                                                                          |  | 2003 and |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  | 
|                                                                                                          |  | month to |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  | 
|                                                                                                          |  | month(4) |            |  | 2004 |   |            | 2005 |  |   | 2006       |  |  | 2007 |            |  | 2008 |   |            | 2009 |  |   | 2010      |  |  | 2011 |           |  | 2012 |   |           | Thereafter(5) |  |   | Totals    | 
|                                                                                                          |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           | 
|Los Angeles                                                                                               |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|Square Feet(1)                                                                                            |  |          | 811,720    |  |      |   | 633,408    |      |  |   | 824,092    |  |  |      | 885,217    |  |      |   | 1,004,972  |      |  |   | 288,585   |  |  |      | 384,854   |  |      |   | 362,000   |               |  |   | 211,874   |  |  |   | 561,216   |  |  |   | 643,969   |  |  |   | 6,611,907   | 
|% Square Feet(2)                                                                                          |  |          | 11.4%      |  |      |   | 8.9%       |      |  |   | 11.6%      |  |  |      | 12.4%      |  |      |   | 14.1%      |      |  |   | 4.0%      |  |  |      | 5.4%      |  |      |   | 5.1%      |               |  |   | 3.0%      |  |  |   | 7.9%      |  |  |   | 9.0%      |  |  |   | 92.7%       | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 21,576     |  |      | $ | 18,255     |      |  | $ | 25,571     |  |  | $    | 28,256     |  |      | $ | 34,190     |      |  | $ | 8,310     |  |  | $    | 9,909     |  |      | $ | 10,047    |               |  | $ | 5,969     |  |  | $ | 17,266    |  |  | $ | 15,163    |  |  | $ | 194,512     | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, per Occupied Square Foot(3) |  | $        | 26.58      |  |      | $ | 28.82      |      |  | $ | 31.03      |  |  | $    | 31.92      |  |      | $ | 34.02      |      |  | $ | 28.80     |  |  | $    | 25.75     |  |      | $ | 27.75     |               |  | $ | 28.17     |  |  | $ | 30.77     |  |  | $ | 23.55     |  |  | $ | 29.42       | 
|Washington D.C.                                                                                           |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|Square Feet(1)                                                                                            |  |          | 994,998    |  |      |   | 425,044    |      |  |   | 947,042    |  |  |      | 529,170    |  |      |   | 520,796    |      |  |   | 354,996   |  |  |      | 179,316   |  |      |   | 545,607   |               |  |   | 271,979   |  |  |   | 344,233   |  |  |   | 266,629   |  |  |   | 5,379,810   | 
|% Square Feet(2)                                                                                          |  |          | 16.5%      |  |      |   | 7.0%       |      |  |   | 15.7%      |  |  |      | 8.8%       |  |      |   | 8.6%       |      |  |   | 5.9%      |  |  |      | 3.0%      |  |      |   | 9.0%      |               |  |   | 4.5%      |  |  |   | 5.7%      |  |  |   | 4.4%      |  |  |   | 89.1%       | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 29,668     |  |      | $ | 15,031     |      |  | $ | 34,884     |  |  | $    | 17,102     |  |      | $ | 13,984     |      |  | $ | 11,726    |  |  | $    | 6,641     |  |      | $ | 19,371    |               |  | $ | 11,184    |  |  | $ | 10,766    |  |  | $ | 7,715     |  |  | $ | 178,072     | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, per Occupied Square Foot(3) |  | $        | 29.82      |  |      | $ | 35.36      |      |  | $ | 36.83      |  |  | $    | 32.32      |  |      | $ | 26.85      |      |  | $ | 33.03     |  |  | $    | 37.03     |  |      | $ | 35.50     |               |  | $ | 41.12     |  |  | $ | 31.28     |  |  | $ | 28.94     |  |  | $ | 33.10       | 
|Atlanta                                                                                                   |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|Square Feet(1)                                                                                            |  |          | 1,276,604  |  |      |   | 412,848    |      |  |   | 568,292    |  |  |      | 1,779,139  |  |      |   | 542,806    |      |  |   | 499,903   |  |  |      | 464,114   |  |      |   | 759,310   |               |  |   | 195,983   |  |  |   | 72,533    |  |  |   | 87,204    |  |  |   | 6,658,736   | 
|% Square Feet(2)                                                                                          |  |          | 16.4%      |  |      |   | 5.3%       |      |  |   | 7.3%       |  |  |      | 22.9%      |  |      |   | 7.0%       |      |  |   | 6.4%      |  |  |      | 6.0%      |  |      |   | 9.8%      |               |  |   | 2.5%      |  |  |   | 0.9%      |  |  |   | 1.1%      |  |  |   | 85.6%       | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 25,350     |  |      | $ | 9,765      |      |  | $ | 13,472     |  |  | $    | 50,038     |  |      | $ | 11,685     |      |  | $ | 15,741    |  |  | $    | 11,374    |  |      | $ | 19,068    |               |  | $ | 4,940     |  |  | $ | 1,128     |  |  | $ |          |  |  | $ | 162,561     | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, per Occupied Square Foot(3) |  | $        | 19.86      |  |      | $ | 23.65      |      |  | $ | 23.71      |  |  | $    | 28.12      |  |      | $ | 21.53      |      |  | $ | 31.49     |  |  | $    | 24.51     |  |      | $ | 25.11     |               |  | $ | 25.21     |  |  | $ | 15.54     |  |  | $ |          |  |  | $ | 24.41       | 
|Orange County                                                                                             |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|Square Feet(1)                                                                                            |  |          | 920,380    |  |      |   | 839,426    |      |  |   | 1,073,040  |  |  |      | 716,814    |  |      |   | 805,986    |      |  |   | 754,492   |  |  |      | 102,728   |  |      |   | 39,292    |               |  |   | 72,786    |  |  |   | 114,571   |  |  |   | 79,667    |  |  |   | 5,519,182   | 
|% Square Feet(2)                                                                                          |  |          | 14.8%      |  |      |   | 13.5%      |      |  |   | 17.2%      |  |  |      | 11.5%      |  |      |   | 12.9%      |      |  |   | 12.1%     |  |  |      | 1.6%      |  |      |   | 0.6%      |               |  |   | 1.2%      |  |  |   | 1.8%      |  |  |   | 1.3%      |  |  |   | 88.6%       | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 24,004     |  |      | $ | 21,526     |      |  | $ | 27,463     |  |  | $    | 18,638     |  |      | $ | 20,658     |      |  | $ | 16,455    |  |  | $    | 2,772     |  |      | $ | 1,068     |               |  | $ | 1,832     |  |  | $ | 2,698     |  |  | $ | 360       |  |  | $ | 137,474     | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, per Occupied Square Foot(3) |  | $        | 26.08      |  |      | $ | 25.64      |      |  | $ | 25.59      |  |  | $    | 26.00      |  |      | $ | 25.63      |      |  | $ | 21.81     |  |  | $    | 26.98     |  |      | $ | 27.17     |               |  | $ | 25.17     |  |  | $ | 23.55     |  |  | $ | 4.52      |  |  | $ | 24.91       | 
|All Others                                                                                                |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|Square Feet(1)                                                                                            |  |          | 5,135,321  |  |      |   | 5,452,909  |      |  |   | 4,981,526  |  |  |      | 5,282,247  |  |      |   | 4,381,334  |      |  |   | 2,950,723 |  |  |      | 1,933,710 |  |      |   | 977,085   |               |  |   | 636,952   |  |  |   | 897,050   |  |  |   | 2,743,806 |  |  |   | 35,372,663  | 
|% Square Feet(2)                                                                                          |  |          | 12.8%      |  |      |   | 13.6%      |      |  |   | 12.4%      |  |  |      | 13.2%      |  |      |   | 10.9%      |      |  |   | 7.4%      |  |  |      | 4.8%      |  |      |   | 2.4%      |               |  |   | 1.6%      |  |  |   | 2.2%      |  |  |   | 6.8%      |  |  |   | 88.3%       | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 116,618    |  |      | $ | 118,722    |      |  | $ | 117,221    |  |  | $    | 128,222    |  |      | $ | 101,455    |      |  | $ | 66,042    |  |  | $    | 44,699    |  |      | $ | 26,414    |               |  | $ | 16,493    |  |  | $ | 19,183    |  |  | $ | 53,357    |  |  | $ | 808,426     | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, per Occupied Square Foot(3) |  | $        | 22.71      |  |      | $ | 21.77      |      |  | $ | 23.53      |  |  | $    | 24.27      |  |      | $ | 23.16      |      |  | $ | 22.38     |  |  | $    | 23.12     |  |      | $ | 27.03     |               |  | $ | 25.89     |  |  | $ | 21.39     |  |  | $ | 19.45     |  |  | $ | 22.85       | 
|Total Portfolio                                                                                           |  |          |            |  |      |   |            |      |  |   |            |  |  |      |            |  |      |   |            |      |  |   |           |  |  |      |           |  |      |   |           |               |  |   |           |  |  |   |           |  |  |   |           |  |  |   |             | 
|Square Feet(1)                                                                                            |  |          | 16,271,275 |  |      |   | 13,470,321 |      |  |   | 15,372,283 |  |  |      | 14,318,476 |  |      |   | 12,144,854 |      |  |   | 9,198,713 |  |  |      | 6,919,547 |  |      |   | 8,092,751 |               |  |   | 3,914,812 |  |  |   | 4,029,899 |  |  |   | 7,691,962 |  |  |   | 111,424,893 | 
|% Square Feet(2)                                                                                          |  |          | 12.9%      |  |      |   | 10.7%      |      |  |   | 12.2%      |  |  |      | 11.4%      |  |      |   | 9.7%       |      |  |   | 7.3%      |  |  |      | 5.5%      |  |      |   | 6.4%      |               |  |   | 3.1%      |  |  |   | 3.2%      |  |  |   | 6.1%      |  |  |   | 88.6%       | 
|Annualized Rent, including Base Rent and Tenant
    Reimbursements, for Occupied Square Feet(3)           |  | $        | 448,421    |  |      | $ | 374,796    |      |  | $ | 452,667    |  |  | $    | 429,060    |  |      | $ | 366,900    |      |  | $ | 275,500   |  |  | $    | 229,990   |  |      | $ | 296,697   |               |  | $ | 165,424   |  |  | $ | 121,618   |  |  | $ | 243,000   |  |  | $ | 3,404,073   | 
|Average Annual Total Rent, including Base Rent
    and Tenant Reimbursements, per Occupied Square Foot(3) |  | $        | 27.56      |  |      | $ | 27.82      |      |  | $ | 29.45      |  |  | $    | 29.97      |  |      | $ | 30.21      |      |  | $ | 29.95     |  |  | $    | 33.24     |  |      | $ | 36.66     |               |  | $ | 42.26     |  |  | $ | 30.18     |  |  | $ | 31.59     |  |  | $ | 30.55       | 



---

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Total net rentable square feet represented by
    expiring leases.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | Percentage of total net rentable feet represented
    by expiring leases.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | Annualized rent is the monthly contractual rent
    under existing leases as of December 31, 2002, multiplied
    by 12 months. Annualized rent per occupied square foot is
    annualized rent divided by occupied square feet at
    December 31, 2002. This amount reflects total base rent and
    estimated expense reimbursements from tenants as of
    December 31, 2002 without regard to any rent abatements and
    contractual increases or decreases in rent subsequent to
    December 31, 2002.
|(4) | Total square feet on month to month leases is
    1,389,831.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(5) | Management offices and building use square
    footage is included with no rent per square foot.                                                                                                                                                                                                                                                                                                                                                                                                              

15



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##### 



Item 3.     Legal
Proceedings.

Equity Office is not presently subject to
material litigation nor, to Equity Offices knowledge, is
any litigation threatened against Equity Office, other than
routine actions for negligence and other claims and
administrative proceedings arising in the ordinary course of
business, some of which are expected to be covered by liability
insurance and all of which collectively are not expected to have
a material adverse effect on the liquidity, results of
operations, business or financial condition of Equity Office.

Item 4.     Submission
of Matters to a Vote of Security Holders.

None.

16



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##### 



PART II

Item 5.     Market
for Registrants Common Equity and Related Stockholder
Matters.

Our Common Shares are traded on the New York
Stock Exchange (NYSE) under the symbol
EOP. On March 13, 2003, the reported closing
sale price per Common Share on the NYSE was $24.08 and there
were approximately 3,241 holders of record. The high and
low sales prices and closing sales prices on the NYSE and
distributions for the Common Shares during 2002 and 2001 are set
forth in the table below:

|     |  |         |        |  |      |   |       |     |  |   |       |  |  |               |       |  |  |   |      | 
|---- |  | ------- | ------ |  | ---- | - | ----- | --- |  | - | ----- |  |  | ------------- | ----- |  |  | - | ---- | 
|Year |  | Quarter |        |  | High |   |       | Low |  |   | Close |  |  | Distributions |      
|     |  |         |        |  |      |   |       |     |  |   |       |  |  |               |      
|2002 |  |         | Fourth |  |      | $ | 26.25 |     |  | $ | 22.96 |  |  | $             | 24.98 |  |  | $ | 0.50 | 
|     |  |         | Third  |  |      | $ | 29.93 |     |  | $ | 22.78 |  |  | $             | 25.82 |  |  | $ | 0.50 | 
|     |  |         | Second |  |      | $ | 31.36 |     |  | $ | 27.96 |  |  | $             | 30.10 |  |  | $ | 0.50 | 
|     |  |         | First  |  |      | $ | 30.60 |     |  | $ | 27.18 |  |  | $             | 29.99 |  |  | $ | 0.50 | 
|2001 |  |         | Fourth |  |      | $ | 32.55 |     |  | $ | 27.00 |  |  | $             | 30.08 |  |  | $ | 0.50 | 
|     |  |         | Third  |  |      | $ | 33.08 |     |  | $ | 29.50 |  |  | $             | 32.00 |  |  | $ | 0.50 | 
|     |  |         | Second |  |      | $ | 31.75 |     |  | $ | 26.20 |  |  | $             | 31.63 |  |  | $ | 0.45 | 
|     |  |         | First  |  |      | $ | 32.63 |     |  | $ | 27.75 |  |  | $             | 28.00 |  |  | $ | 0.45 | 

17



---



##### 



Item 6.     Selected
Financial Data.

The following sets forth selected consolidated
financial and operating information on a historical basis for
Equity Office. The selected financial data has been derived from
the historical consolidated financial statements of Equity
Office audited by Ernst & Young LLP, independent auditors.
The following information should be read together with the
consolidated financial statements and notes thereto of Equity
Office included in Item 8. Financial Statements
and Supplementary Data.

|                                                                                  |                      |                                               |            |            |         |   |            |            |   |   |            |            |   |      |            |          |   |   |            |            |  
|--------------------------------------------------------------------------------- | -------------------- | --------------------------------------------- | ---------- | ---------- | ------- | - | ---------- | ---------- | - | - | ---------- | ---------- | - | ---- | ---------- | -------- | - | - | ---------- | ---------- | -
|                                                                                  |                      | 2002(1)                                       |            |            | 2001(2) |   |            | 2000(3)    |   |   | 1999       |            |   | 1998 |           
|                                                                                  |                      |                                               |            |            |         |   |            |            |   |   |            |            |   |      |           
|                                                                                  |                      |                                              
|                                                                                  |                      | (Dollars in thousands, except per share data) |           
|Operating Data:                                                                   |                      |                                               |            |            |         |   |            |            |   |   |            |            |   |      |            |          |   |   |            |           
|Rental, tenant reimbursements, parking and other
    property revenues            |                      | $                                             | 3,467,848  |            |         | $ | 3,025,664  |            |   | $ | 2,185,055  |            |   | $    | 1,890,430  |          |   | $ | 1,632,366  |           
|Income from continuing operations                                                 |                      | $                                             | 732,011    |            |         | $ | 598,261    |            |   | $ | 458,122    |            |   | $    | 420,465    |          |   | $ | 338,539    |           
|Net income available for Common Shares                                            |                      | $                                             | 707,642    |            |         | $ | 563,796    |            |   | $ | 424,936    |            |   | $    | 382,092    |          |   | $ | 316,827    |           
|Funds from Operations(4)                                                          |                      | $                                             | 1,504,544  |            |         | $ | 1,176,983  |            |   | $ | 909,157    |            |   | $    | 739,093    |          |   | $ | 654,139    |           
|Earnings before interest, taxes depreciation and
    amortization(5)              |                      | $                                             | 2,467,445  |            |         | $ | 2,202,139  |            |   | $ | 1,549,468  |            |   | $    | 1,230,894  |          |   | $ | 1,051,693  |           
|Property net operating income(6)                                                  |                      | $                                             | 2,377,001  |            |         | $ | 2,088,198  |            |   | $ | 1,463,151  |            |   | $    | 1,256,180  |          |   | $ | 1,065,714  |           
|Cash flows:                                                                       |                      |                                               |            |            |         |   |            |            |   |   |            |            |   |      |            |          |   |   |            |           
|                                                                                  | Operating activities |                                               | $          | 1,390,949  |         |   | $          | 1,241,601  |   |   | $          | 907,343    |   |      | $          | 720,711  |   |   | $          | 759,151    |  
|                                                                                  | Investing activities |                                               | $          | 85,173     |         |   | $          | (1,348,203 | ) |   | $          | (1,311,778 | ) |      | $          | (67,138  | ) |   | $          | (2,231,712 | )
|                                                                                  | Financing activities |                                               | $          | (1,478,772 | )       |   | $          | 114,467    |   |   | $          | 455,353    |   |      | $          | (718,315 | ) |   | $          | 1,310,788  |  
|Ratio of earnings to combined fixed charges and
    preferred share distributions |                      |                                               | 1.9        |            |         |   | 1.7        |            |   |   | 1.7        |            |   |      | 1.7        |          |   |   | 1.8        |           
|Income from continuing operations per Common
    Share-basic                      |                      | $                                             | 1.76       |            |         | $ | 1.65       |            |   | $ | 1.64       |            |   | $    | 1.63       |          |   | $ | 1.33       |           
|Income from continuing operations per Common
    Share-diluted                    |                      | $                                             | 1.75       |            |         | $ | 1.64       |            |   | $ | 1.62       |            |   | $    | 1.61       |          |   | $ | 1.32       |           
|Net income available for Common Shares-basic                                      |                      | $                                             | 1.71       |            |         | $ | 1.57       |            |   | $ | 1.53       |            |   | $    | 1.49       |          |   | $ | 1.25       |           
|Net income available for Common Shares-diluted                                    |                      | $                                             | 1.70       |            |         | $ | 1.55       |            |   | $ | 1.52       |            |   | $    | 1.48       |          |   | $ | 1.24       |           
|Cash distributions declared per Common Share                                      |                      | $                                             | 2.00       |            |         | $ | 1.90       |            |   | $ | 1.74       |            |   | $    | 1.58       |          |   | $ | 1.38       |           
|Balance Sheet Data (at end of
    period):                                        |                      |                                               |            |            |         |   |            |            |   |   |            |            |   |      |            |          |   |   |            |           
|Total assets                                                                      |                      | $                                             | 25,246,783 |            |         | $ | 25,808,422 |            |   | $ | 18,794,253 |            |   | $    | 14,046,058 |          |   | $ | 14,261,291 |           
|Total liabilities                                                                 |                      | $                                             | 12,728,959 |            |         | $ | 12,895,706 |            |   | $ | 9,504,662  |            |   | $    | 6,334,985  |          |   | $ | 6,472,613  |           
|Other Data (at end of period):                                                    |                      |                                               |            |            |         |   |            |            |   |   |            |            |   |      |            |          |   |   |            |           
|Number of Office Properties                                                       |                      |                                               | 734        |            |         |   | 774        |            |   |   | 381        |            |   |      | 294        |          |   |   | 284        |           
|Number of Industrial Properties                                                   |                      |                                               | 77         |            |         |   | 79         |            |   |   |           |            |   |      |           |          |   |   |           |           
|Rentable square feet of Office Properties (in
    millions)                       |                      |                                               | 125.7      |            |         |   | 128.2      |            |   |   | 99.0       |            |   |      | 77.0       |          |   |   | 75.1       |           
|Occupancy of Office Properties                                                    |                      |                                               | 88.6       | %          |         |   | 91.8       | %          |   |   | 94.6       | %          |   |      | 93.7       | %        |   |   | 95.0       | %         



---



|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In 2002, we recognized approximately $105.5
    million in lease termination fees from consolidated properties
    and an additional $46.4 million in lease termination fees from
    unconsolidated joint ventures.

18



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##### 



| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | See Item 7, Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Comparison of Year Ended
    December 31, 2002 to December 31, 2001.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | On July 2, 2001, Equity Office completed its
    acquisition by merger (the Spieker Merger) of
    Spieker Properties, Inc. (Spieker) at a cost of
    approximately $7.2 billion. As a result of the Spieker
    Merger, Equity Office acquired an interest in 391 office
    properties containing approximately 28.3 million square
    feet and 98 industrial properties containing approximately
    10.1 million square feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) | On June 19, 2000, Equity Office completed
    its acquisition by merger (the Cornerstone Merger)
    of Cornerstone Properties, Inc. (Cornerstone) at a
    cost of approximately $4.5 billion. As a result of the
    Cornerstone Merger, Equity Office acquired an interest in
    82 office properties containing approximately
    18.9 million square feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) | Refer to Item 7. Managements
    Discussion and Analysis of Financial Condition  Funds
    from Operations for information regarding why Equity Office
    presents funds from operations and for a reconciliation of this
    non-GAAP financial measure to net income available for Common
    Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(5) | Earnings before interest, taxes, depreciation and
    amortization (EBITDA) is a non-GAAP financial
    measure and is presented because Equity Office considers EBITDA
    to be an indicative measure of its operating performance due to
    the significance of Equity Offices long-lived assets and
    because this data can be used to measure Equity Offices
    ability to service debt, fund capital expenditures and expand
    its business. However, this data should not be considered as an
    alternative to net income, operating profit, cash flow from
    operations or any other operating or liquidity performance
    measure prescribed by generally accepted accounting principles
    (GAAP). In addition, EBITDA as calculated by Equity
    Office may not be comparable to similarly titled measures
    reported by other companies. Interest expense, taxes,
    depreciation and amortization, impairment on securities and
    other investments, impairment on assets held for sale, minority
    interests, net gain on sales of real estate, extraordinary
    items, preferred distributions, put option settlements and
    cumulative effect of a change in accounting principle for
    consolidated properties and unconsolidated joint ventures which
    are not reflected in the presentation of EBITDA, have been, and
    will or may be, incurred by Equity Office. Investors are
    cautioned that these excluded items are significant components
    in understanding and assessing Equity Offices financial
    performance.

19



---



##### 



Equity Office calculates EBITDA as follows:

|                                                                                         |  |                                  |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|---------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ---- | --------- | - |  | - | --------- | -
|                                                                                         |  |                                 
|                                                                                         |  | For the Years Ended December 31, |          
|                                                                                         |  |                                  |          
|                                                                                         |  | 2002                             |           |   | 2001 |   |           | 2000 |  |   | 1999      |   |  | 1998 |          
|                                                                                         |  |                                  |           |   |      |   |           |      |  |   |           |   |  |      |          
|                                                                                         |  |                                 
|                                                                                         |  | (Dollars in thousands)           |          
|Net income available for Common Shares                                                   |  | $                                | 707,642   |   |      | $ | 563,796   |      |  | $ | 424,936   |   |  | $    | 382,092   |   |  | $ | 316,827   |  
|Add back (deduct):                                                                       |  |                                  |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Interest expense                                                                         |  |                                  | 810,129   |   |      |   | 726,930   |      |  |   | 523,860   |   |  |      | 412,170   |   |  |   | 336,153   |  
|Interest expense included in discontinued
    operations                                 |  |                                  | (25       | ) |      |   | 1,322     |      |  |   | 1,927     |   |  |      | 1,825     |   |  |   | 2,458     |  
|Loan amortization                                                                        |  |                                  | 4,886     |   |      |   | 14,996    |      |  |   | 11,493    |   |  |      | 15,204    |   |  |   | 13,928    |  
|Loan amortization included in discontinued
    operations                                |  |                                  |          |   |      |   | 188       |      |  |   | 55        |   |  |      | 37        |   |  |   | (18       | )
|Depreciation and lease amortization                                                      |  |                                  | 684,192   |   |      |   | 566,596   |      |  |   | 421,195   |   |  |      | 349,081   |   |  |   | 295,679   |  
|Depreciation and lease amortization included in
    discontinued operations              |  |                                  | 6,812     |   |      |   | 8,434     |      |  |   | 5,476     |   |  |      | 5,215     |   |  |   | 3,899     |  
|Impairment on securities and other investments                                           |  |                                  |          |   |      |   | 132,684   |      |  |   |          |   |  |      |          |   |  |   |          |  
|Impairment on assets held for sale                                                       |  |                                  |          |   |      |   | 2,536     |      |  |   |          |   |  |      |          |   |  |   |          |  
|Income taxes                                                                             |  |                                  | 9,394     |   |      |   | 8,814     |      |  |   | 2,719     |   |  |      | 656       |   |  |   | 1,666     |  
|Income taxes included in discontinued operations                                         |  |                                  | 101       |   |      |   | 23        |      |  |   |          |   |  |      |          |   |  |   |          |  
|Minority interests  EOP Partnership                                                     |  |                                  | 89,205    |   |      |   | 76,249    |      |  |   | 59,376    |   |  |      | 48,172    |   |  |   | 36,226    |  
|Minority interest  partially owned
    properties                                       |  |                                  | 7,200     |   |      |   | 8,685     |      |  |   | 6,843     |   |  |      | 1,981     |   |  |   | 2,114     |  
|Income from investment in unconsolidated joint
    ventures                              |  |                                  | (106,852  | ) |      |   | (69,203   | )    |  |   | (56,251   | ) |  |      | (13,824   | ) |  |   | (11,267   | )
|Equity Offices share of EBITDA from its
    investment in unconsolidated joint ventures |  |                                  | 210,114   |   |      |   | 185,223   |      |  |   | 137,928   |   |  |      | 38,685    |   |  |   | 34,259    |  
|Gain on sales of real estate                                                             |  |                                  |          |   |      |   | (81,662   | )    |  |   | (36,013   | ) |  |      | (59,661   | ) |  |   | (12,433   | )
|Gain on sales of real estate included in
    discontinued operations                     |  |                                  | (17,926   | ) |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|Extraordinary item                                                                       |  |                                  |          |   |      |   | 1,000     |      |  |   |          |   |  |      |          |   |  |   |          |  
|Cumulative effect of change in accounting
    principle                                  |  |                                  |          |   |      |   | 1,142     |      |  |   |          |   |  |      |          |   |  |   |          |  
|Put option settlement                                                                    |  |                                  |          |   |      |   | (2,655    | )    |  |   | 2,576     |   |  |      | 5,658     |   |  |   |          |  
|Preferred distributions, net                                                             |  |                                  | 62,573    |   |      |   | 57,041    |      |  |   | 43,348    |   |  |      | 43,603    |   |  |   | 32,202    |  
|                                                                                         |  |                                  |           |   |      |   |           |      |  |   |           |   |  |      |          
|Earnings before interest, taxes, depreciation
    and amortization                       |  | $                                | 2,467,445 |   |      | $ | 2,202,139 |      |  | $ | 1,549,468 |   |  | $    | 1,230,894 |   |  | $ | 1,051,693 |  
|                                                                                         |  |                                  |           |   |      |   |           |      |  |   |           |   |  |      |          



|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Calculated as property operating revenue less
    property operating expense from continuing operations and
    discontinued operations. For more information, refer to
    Item 8. Financial Statements and Supplementary
    Data  Note 20  Segment Information.

20



---



##### 



Item 7.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations.

Overview

The following discussion and analysis is based
primarily on the consolidated financial statements of Equity
Office for the years presented and should be read together with
the notes thereto contained in this Form 10-K. Terms
employed herein as defined terms, but without definition, shall
have the meaning set forth in the notes to the financial
statements.

Key Transactions of 2002

During the year ended December 31, 2002, we
completed the following key transactions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | disposed of 45 office properties, four parking
    facilities, two industrial properties and three land parcels in
    various transactions to unaffiliated parties for approximately
    $508.3 million. The sold office properties consisted of
    approximately 3,113,189 square feet, the industrial properties
    consisted of approximately 77,072 square feet, and the parking
    facilities consisted of approximately 7,464 parking spaces;                                                                      
|
| |  | acquired two office buildings for approximately
    $92.3 million. The properties are located in
    Washington, D.C., and consist of approximately 327,550
    square feet, of which approximately 260,372 square feet is
    office space;                                                                                                                                                                                                                                                                                 
|
| |  | placed two developments into service consisting
    of three buildings and approximately 330,646 square feet;                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | commenced two developments consisting of
    approximately 292,000 square feet;                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | exchanged our equity interest in a land parcel
    under option and operating business in exchange for
    Wilson/Equity Offices equity interest in several
    developments and land parcels;                                                                                                                                                                                                                                                                                                                              
|
| |  | issued $500 million of unsecured notes due
    February 2012 at an all-in cost of 7.0% and exchanged
    approximately $260.0 million of these notes for the
    previously outstanding $250.0 million MandatOry Par Put
    Remarketed SecuritiesSM which were subject to
    mandatory redemption; repaid $310 million of unsecured
    notes upon maturity and repaid approximately $156.1 million
    of mortgage debt;                                                                                                  
|
| |  | redeemed the 7,994,000 outstanding 8.98%
    Series A Cumulative Redeemable Preferred Shares at an
    aggregate redemption price of approximately $201.9 million,
    including accrued distributions;                                                                                                                                                                                                                                                                                                                      
|
| |  | issued 8,500,000 7.75% Series G Cumulative
    Redeemable Preferred Shares for approximately
    $206.1 million;                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | repurchased 7,901,900 Common Shares at an average
    price of $24.92 per share for a total of $196.9 million in
    the aggregate as part of a Common Share repurchase program for
    up to $400 million of our Common Shares;                                                                                                                                                                                                                                                                                             
|
| |  | redeemed 3,727,925 Units for cash at an average
    price of $28.62 per Unit for a total of approximately
    $106.7 million;                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | recognized approximately $105.5 million from
    lease termination fees, including approximately
    $46.1 million and 5,000,000 common shares (which were
    initially valued at zero and subsequently sold and recognized in
    March 2003 for a gain on sale of securities of approximately
    $8.1 million) from one tenant. In addition, we recognized
    approximately $46.4 million from lease terminations at our
    unconsolidated joint ventures, including approximately
    $40 million from one tenant; and
|
| |  | received approximately $20.1 million from CT
    Convertible Trust I in connection with the redemption of its
    non-convertible preferred securities.                                                                                                                                                                                                                                                                                                                                                                      

21



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##### 



Critical Accounting Policies and
Estimates

Our significant accounting policies are described
in Note 2 to the consolidated financial statements included
in Item 8 of this Form 10-K. We believe our most
critical accounting policies include revenue recognition,
allowance for doubtful accounts, impairment of long-lived
assets, depreciation and the fair value of financial instruments
including derivative instruments, each of which we discuss below.

Revenue Recognition and Allowance for
Doubtful Accounts

Rental revenue from our tenants is our principal
source of revenue and is recognized in accordance with GAAP
based on the contractual terms of the leases. We monitor the
liquidity and creditworthiness of our tenants on an on-going
basis. Based on this analysis, historical experiences and the
current economic environment, we establish provisions, and
maintain an allowance for doubtful accounts for estimated losses
resulting from the possible inability of our tenants to make
required rent payments to us. An allowance for doubtful accounts
is recorded during each period and the bad debt expense is
netted against rental revenue in our consolidated statements of
operations. The allowance for doubtful accounts, which
represents the cumulative allowances less write-offs of
uncollectible rent, is netted against tenant and other
receivables and deferred rent receivable on our consolidated
balance sheets.

As a result of the slow down in economic
activity, we have experienced over the past two years an
increase in the amount of uncollectible receivables relating to
tenants in bankruptcy and tenants in financial distress and have
increased our bad debt expense and allowance for doubtful
accounts accordingly. Although our historical bad debt expense
has been based on the factors described above, if we incorrectly
estimate the required allowance for doubtful accounts, our
financial condition and results of operations could be adversely
affected. Below is our historical bad debt expense for each of
the three years in the period ended December 31, 2002.

|                                                          |  |                                  |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------- |  | -------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                          |  |                                 
|                                                          |  | For the years ended December 31, |          
|                                                          |  |                                  |          
|                                                          |  | 2002                             |           |   | 2001 |   |           | 2000 | 
|                                                          |  |                                  |           |   |      |   |           |      | 
|                                                          |  |                                 
|                                                          |  | (Dollars in thousands)           |          
|Historical results:                                       |  |                                  |           |   |      |   |           |      |  |   |           |  
|Bad debt expense                                          |  | $                                | 27,995    |   |      | $ | 26,124    |      |  | $ | 6,349     |  
|                                                          |  |                                  |           |   |      |   |           |      | 
|Property operating revenues                               |  | $                                | 3,467,848 |   |      | $ | 3,025,664 |      |  | $ | 2,185,055 |  
|                                                          |  |                                  |           |   |      |   |           |      | 
|Bad debt expense as a percentage of property
    revenues |  |                                  | 0.81      | % |      |   | 0.86      | %    |  |   | 0.29      | %
|                                                          |  |                                  |           |   |      |   |           |      | 

Impairment of Long-Lived
Assets

Under GAAP, we are required to record at fair
value any of our long-lived assets that we have determined to be
permanently impaired. Our long-lived assets consist primarily of
our investments in real estate and unconsolidated joint
ventures, but we also have investments in preferred securities
and notes receivable. The fair value of our investments in real
estate and unconsolidated joint ventures depends on the future
cash flows from operations of the properties or joint ventures
over our anticipated holding period. The fair value of our
investments in preferred securities and notes receivable depends
on the underlying fair value of the issuer. In assessing
potential impairment for our investments, we consider these
factors. If these factors result in a fair value that is less
than our carrying value, an impairment may be recognized if we
determine the loss to be permanent. There were no impairments in
2002. During 2001, we recognized an impairment of approximately
$2.5 million on an investment in an unconsolidated joint venture
that was subsequently sold. Also during 2001, we recognized an
impairment of approximately $132.7 million on several
investments in securities and other investments. Of this amount,
securities and other investments with carrying values of $125.7
million were entirely written-off. If we do not recognize
impairments at appropriate times and in appropriate amounts, our
consolidated balance sheet may overstate the value of our
long-lived assets.

22



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##### 



Depreciation

We compute depreciation on our Properties using
the straight-line method based on an estimated useful life of
40 years. A significant portion of the acquisition cost of
each property is allocated to building (usually 85% to 90%
unless the property is subject to a ground lease in which case
100% of the acquisition cost is allocated to building). The
allocation of the acquisition cost to building and the
determination of the useful life are based on managements
estimates. If we do not allocate appropriately to building or we
incorrectly estimate the useful life of our Properties, our
computation of depreciation will not appropriately reflect the
allocation of our capital expenditures over future periods.

Fair Value of Financial
Instruments

We are required to determine periodically the
fair value of our mortgage debt and unsecured notes for
disclosure purposes. In determining the fair value of these
financial instruments, we use internally developed models that
are based on current market conditions. For example, in
determining the fair value of our mortgage debt and unsecured
notes, we discount the spread between the future contractual
interest payments and future interest payments based on a
current market rate. In determining the current market rate, we
add a credit spread to the quoted yields on federal government
debt securities with similar maturity dates to our own debt. The
credit spread estimate is based on our historical experience in
obtaining either secured or unsecured financing and also is
affected by current market conditions.

We are also required periodically to adjust the
carrying values of interest rate swaps and caps, as well as the
underlying hedged liability, if applicable, to its fair value.
In determining the fair value of interest rate swaps and caps,
we rely on third party quotations to adjust these instruments,
as well as the hedged liability, if applicable, to its fair
value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on
the nature of the hedge, changes in the fair value of
derivatives either will be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective
portion of a derivatives change in fair value will be
immediately recognized in earnings.

Because our valuations of our financial
instruments are based on these types of estimates, the fair
value of our financial instruments may change if our estimates
are inaccurate. For the effect of hypothetical changes in market
rates of interest on interest expense for variable rate debt,
the fair value of total outstanding debt and our
forward-starting interest rate swaps, see the Market Risk
section.

New Accounting Policies Adopted in
2002

Effective January 1, 2002, we adopted the
provisions of Statement of Financial Accounting Standards
No. 144 (SFAS No. 144) Accounting for
the Impairment or Disposal of Long-Lived Assets,which is
effective for financial statements issued for fiscal years
beginning after December 15, 2001. SFAS No. 144
addresses the financial accounting and reporting for the
impairment or disposal of long-lived assets. SFAS No. 144
extends the reporting requirements of discontinued operations to
include components of an entity that have either been disposed
of or are classified as held for sale. During 2002, we disposed
of 47 properties in various geographical regions consisting
of approximately 3,190,261 square feet. The operating
results of these properties have been reclassified as
discontinued operations in the consolidated statements of
operations for each of the three years in the period ended
December 31, 2002 included herein.

In accordance with Statement of Financial
Accounting Standards No. 145 (SFAS
No. 145), Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13,
and Technical Corrections,effective for financial
statements issued for fiscal years beginning after May 15,
2002, any gain or loss on extinguishment of debt that was
classified as an extraordinary item in prior periods shall be
reclassified. As a result of the adoption, extraordinary losses
of $9,374 and $1,802, for each of the two years in the period
ended December 31, 2001, were reclassified to
amortization of deferred financing costs and prepayment
expenses.

23



---



##### 



Accounting Policy Adopted in 2003

Effective January 1, 2003, we adopted
Statement of Financial Accounting Standards No. 123
(SFAS No. 123) Accounting for Stock Based
Compensation,which requires a fair value based accounting
method for determining compensation expense associated with the
issuance of stock options and other equity awards. We decided to
adopt the accounting provisions of SFAS No. 123 to reflect
the cost to the company of issuing stock options and other
equity awards to certain individuals in the consolidated
financial statements. We will employ the prospective method for
adopting SFAS No. 123 which requires the recognition of
compensation expense for stock options and other equity
compensation granted on or after January 1, 2003 and to
record compensation expense for modifications of stock options
and other equity awards that were outstanding as of
December 31, 2002. We anticipate recognizing compensation
expense of approximately $6.0 million, $12.0 million
and $18.0 million for the years ending December 31,
2003, 2004 and 2005, respectively, for both Option and Share
Award grants accounted for under SFAS No. 123. These
anticipated compensation expense amounts are based on the
existing compensation structure for 2003 and assumes a similar
level of Option and Share Award compensation in future years.
Future Option and Share Award compensation is subject to change
based on actual Option and Share Award grants in future years
and their respective fair values.

Compensation expense related to Share Award
grants was previously recognized in accordance with APB
No. 25. The adoption of SFAS No. 123 does not
significantly change the amount of compensation expense
recognized for Share Awards.

Mergers

Spieker Merger

On July 2, 2001, Spieker merged into Equity
Office and Spieker Partnership merged into EOP Partnership. The
transaction, which was accounted for by the purchase method,
valued Spieker (including the outside interests in Spieker
Partnership) at approximately $7.2 billion, which included
transaction costs, the assumption of approximately
$2.1 billion in debt and the issuance of 14.25 million
of Equity Office preferred shares valued at approximately
$356.3 million. We paid approximately $1.1 billion in
cash and issued approximately 101.5 million Common Shares
and EOP Partnership issued approximately 16.7 million Units
to third parties, each valued at $29.29 per Common Share/Unit.
Equity Office financed the $1.1 billion cash portion of the
purchase price using a combination of available cash and a new
$1.0 billion bridge loan facility that was entered into
before the closing of the Spieker Merger. The $1.0 billion
bridge loan facility had a term of 364 days and an interest
rate based on LIBOR plus 80 basis points. The $1.0 billion
bridge loan facility was repaid in full with the net proceeds
from the issuance of $1.4 billion of unsecured notes in
July 2001 and terminated upon repayment. Through the
Spieker Merger, we acquired 391 office properties comprising
approximately 28.3 million square feet, 98 industrial
properties comprising approximately 10.1 million square
feet and several development properties which added to our
ownership in key markets across the western United States.

Cornerstone Merger

On June 19, 2000, Cornerstone merged into
Equity Office and Cornerstone Partnership merged into EOP
Partnership. The transaction, which was accounted for by the
purchase method, valued Cornerstone (including the outside
interests in Cornerstone Partnership) at approximately $4.5
billion, which included transaction costs, the assumption of
approximately $1.7 billion in debt, the redemption of 3.0
million shares of Cornerstone preferred stock valued at $18.00
per share, including accrued but unpaid dividends for a total of
approximately $57.6 million, the redemption of approximately
58.5 million shares of Cornerstone common stock valued at $18.00
per share for a total of approximately $1.1 billion, the
issuance of approximately 51.2 million Common Shares and the
issuance by EOP Partnership of approximately 12.4 million Units
each valued at $24.68 per Common Share/ Unit. We financed the
$1.2 billion in cash from credit facilities available to us when
the Cornerstone Merger closed.

24



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##### 



Results of Operations

Trends in Property Operating
Revenues

Income is received primarily from rental revenue
from the Office Properties, including reimbursements from
tenants for certain operating costs and from parking revenue
from Office Properties. As a result of the current slowdown in
economic activity, there has been a decrease in our occupancy
rates and a general decline in overall market rental rates for
our Office Properties. Below is a summary of our leasing
activity for leases commencing in 2002 in our top 5 markets, top
10 markets and our total portfolio for our Office Properties.
Our top 10 markets in terms of square footage in order from
greatest to least are Boston, Chicago, San Francisco, Seattle,
San Jose, Atlanta, Los Angeles, Orange County,
Washington, D.C. and New York.

|                                          |                                                                                                                                                                                                |               |  |           |                |  |  |                 |  |  |  |            | 
|----------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- |  | --------- | -------------- |  |  | --------------- |  |  |  | ---------- | 
|Office Property Data:                     |                                                                                                                                                                                                | Top 5 Markets |  |           | Top 10 Markets |  |  | Total Portfolio | 
|                                          |                                                                                                                                                                                                |               |  |           |                |  |  |                 | 
|For the year ended December 31,
    2002: |                                                                                                                                                                                                |               |  |           |                |  |  |                 |  |  |  |           
|                                          | Portion of total portfolio based on square feet
    at end of year                                                                                                                             |               |  | 42.6%     |                |  |  | 68.1%           |  |  |  | 100.0%     | 
|                                          | Occupancy at end of year                                                                                                                                                                       |               |  | 87.8%     |                |  |  | 88.8%           |  |  |  | 88.6%      | 
|                                          | Gross square footage leased during the year                                                                                                                                                    |               |  | 8,436,133 |                |  |  | 12,814,407      |  |  |  | 20,620,427 | 
|                                          | Weighted average annual base rent per square foot
    leased during the year calculated in accordance with GAAP but
    without regard to estimated expense reimbursements from
    tenants(a) |               |  | $33.47    |                |  |  | $31.48          |  |  |  | $28.48     | 
|For the year ended December 31,
    2001: |                                                                                                                                                                                                |               |  |           |                |  |  |                 |  |  |  |           
|                                          | Portion of total portfolio based on square feet
    at end of year                                                                                                                             |               |  | 42.0%     |                |  |  | 66.9%           |  |  |  | 100.0%     | 
|                                          | Occupancy at end of year                                                                                                                                                                       |               |  | 92.5%     |                |  |  | 92.7%           |  |  |  | 91.8%      | 
|                                          | Gross square footage leased during the year                                                                                                                                                    |               |  | 5,288,539 |                |  |  | 8,944,907       |  |  |  | 14,711,018 | 
|                                          | Weighted average annual base rent per square foot
    leased during the year calculated in accordance with GAAP but
    without regard to estimated expense reimbursements from
    tenants(a) |               |  | $46.36    |                |  |  | $41.48          |  |  |  | $34.17     | 



---



|    |                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Average annual rent per square foot for new
    office leases for which the tenants have occupied the space
    during the relevant period may lag behind market because leasing
    decisions typically are made anywhere from one month to 12 or
    more months prior to taking occupancy.

One of the main factors contributing to the
decline in occupancy for our Office Properties was the increased
level of early lease terminations. For the year ended
December 31, 2002, we had approximately 6.1 million
square feet of early lease terminations and received lease
termination fees on a portion of the terminations of
approximately $151.9 million. Future rental income may be
affected by future lease terminations as we may be unable to
collect the full amount that was due under the lease and would
incur additional cost in re-leasing the space. Although there is
no way of predicting future lease terminations, we currently
anticipate they will be significantly lower in 2003.

As mentioned above, there has been a general
decline in the overall market rates for our Office Properties.
As of December 31, 2002, the average annual total rent,
including base rent and estimated expense reimbursements from
tenants, per occupied square foot under existing leases for our
Office Properties was approximately $30.55 (See Item 2.
Properties  Property Statistics). The weighted
average annual base rent per square foot calculated in
accordance with GAAP but without regard to estimated expense
reimbursements from tenants on leases executed during 2002 was
approximately $28.48. If this declining trend in market rates
continues, we would experience a decrease in rental revenues if
the average annual contractual rent per square foot on leases
expiring is greater than the average annual market rent per
square foot on new leases executed.

25



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##### 



As of December 31, 2002, approximately
71,577,209 occupied square feet (approximately 64.2% of the
occupied office square feet) is expiring through 2007. The
average annual rent per square foot for these leases is
presented in the table below.

|     |       |                 |            |                 |                |   |       |       | 
|---- | ----- | --------------- | ---------- | --------------- | -------------- | - | ----- | ----- | 
|     |       |                 |            | Average Annual  |               
|     |       |                 |            | Total Rent,     |               
|     |       |                 |            | including Base  |               
|     |       |                 |            | Rent and Tenant |               
|     |       |                 |            | Reimbursements, |               
|     |       | Square Feet of  |            |                 | per Occupied   |  
|Year |       | Expiring Leases |            |                 | Square Foot(a) |  
|     |       |                 |            |                 |                |  
|2003 |       |                 | 16,271,275 |                 |                | $ | 27.56 |      
|2004 |       |                 | 13,470,321 |                 |                | $ | 27.82 |      
|2005 |       |                 | 15,372,283 |                 |                | $ | 29.45 |      
|2006 |       |                 | 14,318,476 |                 |                | $ | 29.97 |      
|2007 |       |                 | 12,144,854 |                 |                | $ | 30.21 |      
|     |       |                 |            |                 |                |  
|     | Total |                 |            | 71,577,209      |                |   | $     | 28.95 | 
|     |       |                 |            |                 |                |  



---

(a) See Item 2. Properties for an
explanation of how these amounts are calculated.

We believe that it is not currently possible to
draw any conclusions about where occupancy levels or market
rents ultimately will stabilize. Further decreases in occupancy
rates and/or declines in rents could adversely affect our
revenues and results of operations in subsequent periods. We
estimate that each one percent change in weighted average
occupancy for our Office Properties can equate to a
$30 million to $35 million change in rental revenue.

In addition to the downward trends in occupancy
and market rents, we have experienced an increase in the amount
of uncollectible receivables relating to tenants in bankruptcy
and tenants that are having financial difficulties. For the
years ended December 31, 2002, 2001 and 2000, bad debt
expense was approximately $28.0 million, $26.1 million
and $6.3 million, respectively. Although we have collateral
from many of our tenants, we anticipate additional write-offs to
occur in subsequent periods.

Trends in Property Operating
Expenses

Increased Costs
Due to Terrorism Threat

As a result of the terrorist acts on
September 11, 2001, we have realized increased costs for
property insurance and safety and security. We believe that
these increased costs will remain higher than similar costs
incurred in previous periods for the foreseeable future.

Substantially all of the office leases require
the tenant to pay, as additional rent, a portion of any
increases in these operating expenses over a base amount. We
believe a significant portion of any increase in these operating
expenses will be offset by expense reimbursements from tenants.

In addition to the increased cost for property
insurance described above, the insurance coverage provided
through third-party insurance carriers is subject to coverage
limitations. Should an uninsured or underinsured loss occur, we
could lose all or a portion of our investment in, and
anticipated cash flows from, one or more of the Properties. In
addition, there can be no assurance that third-party insurance
carriers will be able to maintain reinsurance sufficient to
cover any losses that may be incurred. A description of our
insurance coverage is described in Item 8. Financial
Statements and Supplementary Data 
Note 25  Commitments and Contingencies and
Note 26  Subsequent Events.



| |       
| | ------
| | EOPlus

In 2001, we initiated a comprehensive analysis of
our operating structure with the help of a management consulting
firm and our employees. The goal of the analysis was to
significantly reduce operating expenses, improve customer
service, reduce lease cycle time, increase occupancy and retain
tenants. The analysis

26



---



##### 



resulted in a significant reengineering effort
called EOPlus. As part of this effort, most of the activities
that occurred at the property will eventually be centralized
into core regional offices with a view towards allowing property
managers to spend more time building customer relationships. The
centralization of each regions operations is designed to
permit us to manage our buildings with fewer people. By the end
of 2003, we expect to have 16% fewer employees than at the end
of 2001 as a result of staff reductions and attrition. We expect
the related severance expenses to be immaterial. By
consolidating our property management offices, we expect to make
available between 130,000 square feet and
160,000 square feet of office space for leasing. We
anticipate this new model will be fully implemented in all of
our markets by the end of 2003. We have also created a central
purchasing function to review and analyze our goods and services
expenditures. The goal of the central purchasing function is to
obtain preferred pricing, reduce the number of our vendors and
reduce the number of invoices we process. Beginning in 2004,
after the new model is fully implemented, we expect annual cost
savings of $75 million to $100 million. Since a
significant portion of these savings will be passed on to our
tenants, we expect to benefit from an ability to offer our
tenants a lower cost of occupancy than our competition.


Acquisition and Disposition
Activity

Below is a summary of our acquisition and
disposition activity since January 1, 2001. The buildings
and total square feet shown include properties we own in joint
ventures with other partners and reflect the total square feet
of the properties. Excluding the joint venture partners
share of the square feet of these properties, we effectively
owned 119,563,201 square feet of office space as of
December 31, 2002.

|                        |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        |  |   |    |   |  |        |        |  
|----------------------- | --------------------------------- | ----------------- | --- | ----- | --------------------- |  | ----------- | ------------------ | ----- |  | ----------- | --- | - | ------- | --------- | ---------- | ------ |  | - | -- | - |  | ------ | ------ | -
|                        |                                   |                   |     |       |                       | 
|                        |                                   | Office Properties |     |       | Industrial Properties |  |             | Parking Facilities |      
|                        |                                   |                   |     |       |                       |  |             |                    |      
|                        |                                   |                   |     | Total |                       |  |             |                    | Total |  |             |    
|                        |                                   | Buildings         |     |       | Square Feet           |  |             | Buildings          |       |  | Square Feet |     |   | Garages |           |            | Spaces | 
|                        |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|Properties owned as of: |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        |  |   |    |   |  |        |       
|January 1, 2001         |                                   |                   | 381 |       |                       |  | 98,995,994  |                    |       |  |            |     |   |         |          |            |        |  | 9 |    |   |  | 14,244 |       
|                        | Spieker Merger                    |                   |     | 293   |                       |  |             | 26,080,670         |       |  |             | 100 |   |         |           | 12,306,053 |        |  |   |   |   |  |        |       |  
|                        | Acquisitions                      |                   |     | 1     |                       |  |             | 259,441            |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                        | Developments placed in service    |                   |     | 9     |                       |  |             | 1,497,014          |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                        | Dispositions                      |                   |     | (8    | )                     |  |             | (879,388           | )     |  |             | (19 | ) |         |           | (4,052,476 | )      |  |   | (4 | ) |  |        | (3,721 | )
|                        | Reclass from industrial to office |                   |     | 44    |                       |  |             | 2,208,837          |       |  |             | (44 | ) |         |           | (2,208,837 | )      |  |   |   |   |  |        |       |  
|                        | Building remeasurements(a)        |                   |     | 54    |                       |  |             | 71,419             |       |  |             | 42  |   |         |           | 91         |        |  |   |   |   |  |        | 242    |  
|                        |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|December 31, 2001       |                                   |                   | 774 |       |                       |  | 128,233,987 |                    |       |  | 79          |     |   |         | 6,044,831 |            |        |  | 5 |    |   |  | 10,765 |       
|                        | Acquisitions                      |                   |     | 2     |                       |  |             | 260,372            |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                        | Developments placed in service    |                   |     | 3     |                       |  |             | 330,646            |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                        | Dispositions                      |                   |     | (45   | )                     |  |             | (3,113,189         | )     |  |             | (2  | ) |         |           | (77,072    | )      |  |   | (4 | ) |  |        | (7,464 | )
|                        | Building remeasurements           |                   |     |      |                       |  |             | 13,583             |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                        |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|December 31, 2002       |                                   |                   | 734 |       |                       |  | 125,725,399 |                    |       |  | 77          |     |   |         | 5,967,759 |            |        |  | 1 |    |   |  | 3,301  |       
|                        |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Building remeasurements during 2001 relate to the
    office properties and industrial properties acquired in the
    Spieker Merger. The initial property count was based on a count
    prepared prior to the Spieker Merger by the former management of
    Spieker. We count our properties based on the actual number of
    buildings at the property, which is different than the method
    used by the former management of Spieker.

Primarily as a result of the Spieker Merger in
July 2001, the Cornerstone Merger in June 2000, and
the acquisition and disposition of certain properties, the
financial data presented show significant changes in revenues
and expenses from period-to-period. Therefore, we do not believe
our period-to-period financial data are necessarily comparable.
The following analysis shows changes attributable to the
Properties that were held during the entire period for the
periods being compared (the Core Portfolio) and the
changes in our aggregate total portfolio of Properties (the
Total Portfolio).

As reflected in the tables below, property
revenues include rental revenues, reimbursements from tenants
for certain expenses, parking revenue and other property
operating revenues, which includes lease termination

27



---



##### 



income. Property operating expenses include real
estate taxes, insurance, repairs and maintenance and other
property operating expenses.


Comparison of year ended December 31,
2002 to December 31, 2001

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 378 Office Properties acquired or placed in
service on or prior to January 1, 2001.

|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |           |  |   |         |         |   |  |        |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------- | --------------- | --------- | --------- | -------------- | - | --------- | ---------- |  | - | -------- | --------- |  | ---- | ------ | ---- | ---- | - | --------- | ---------- |  | - | --------- | --------- |  | - | ------- | ------- | - |  | ------ | ---- | -
|                                                                                                                                                                   |                |                 |           |          
|                                                                                                                                                                   |                | Total Portfolio |           |           | Core Portfolio |  
|                                                                                                                                                                   |                |                 |           |           |                |  
|                                                                                                                                                                   |                |                 |           | Increase/ |                |   | %         |            |  |   |          | Increase/ |  |      | %      |     
|                                                                                                                                                                   |                | 2002            |           |           | 2001           |   |           | (Decrease) |  |   | Change   |           |  | 2002 |        |      | 2001 |   |           | (Decrease) |  |   | Change    |          
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|(Dollars in thousands)                                                                                                                                             |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |           |  |   |         |         |   |  |        |     
|Property revenues                                                                                                                                                  |                | $               | 3,467,848 |           |                | $ | 3,025,664 |            |  | $ | 442,184  |           |  |      | 14.6   | %    |      | $ | 2,508,762 |            |  | $ | 2,567,558 |           |  | $ | (58,796 | )       |   |  | (2.3   | )%  
|Fee income                                                                                                                                                         |                |                 | 15,907    |           |                |   | 15,085    |            |  |   | 822      |           |  |      | 5.4    |      |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|Interest/dividend income                                                                                                                                           |                |                 | 22,327    |           |                |   | 40,214    |            |  |   | (17,887  | )         |  |      | (44.5  | )    |      |   | 3,913     |            |  |   | 4,940     |           |  |   | (1,027  | )       |   |  | (20.8  | )   
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|                                                                                                                                                                   | Total revenues |                 |           | 3,506,082 |                |   |           | 3,080,963  |  |   |          | 425,119   |  |      |        | 13.8 |      |   |           | 2,512,675  |  |   |           | 2,572,498 |  |   |         | (59,823 | ) |  |        | (2.3 | )
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Interest expense(a)                                                                                                                                                |                |                 | 810,129   |           |                |   | 726,930   |            |  |   | 83,199   |           |  |      | 11.4   |      |      |   | 195,575   |            |  |   | 211,148   |           |  |   | (15,573 | )       |   |  | (7.4   | )   
|Depreciation and amortization                                                                                                                                      |                |                 | 689,078   |           |                |   | 581,592   |            |  |   | 107,486  |           |  |      | 18.5   |      |      |   | 507,995   |            |  |   | 499,190   |           |  |   | 8,805   |         |   |  | 1.8    |     
|Property operating expenses                                                                                                                                        |                |                 | 1,118,003 |           |                |   | 969,593   |            |  |   | 148,410  |           |  |      | 15.3   |      |      |   | 866,908   |            |  |   | 840,669   |           |  |   | 26,239  |         |   |  | 3.1    |     
|Ground rent                                                                                                                                                        |                |                 | 20,446    |           |                |   | 16,812    |            |  |   | 3,634    |           |  |      | 21.6   |      |      |   | 11,571    |            |  |   | 12,632    |           |  |   | (1,061  | )       |   |  | (8.4   | )   
|General and administrative                                                                                                                                         |                |                 | 137,468   |           |                |   | 109,672   |            |  |   | 27,796   |           |  |      | 25.3   |      |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|Impairment on securities and other investments                                                                                                                     |                |                 |          |           |                |   | 132,684   |            |  |   | (132,684 | )         |  |      | (100.0 | )    |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|Impairment on assets held for sale                                                                                                                                 |                |                 |          |           |                |   | 2,536     |            |  |   | (2,536   | )         |  |      | (100.0 | )    |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|                                                                                                                                                                   | Total expenses |                 |           | 2,775,124 |                |   |           | 2,539,819  |  |   |          | 235,305   |  |      |        | 9.3  |      |   |           | 1,582,049  |  |   |           | 1,563,639 |  |   |         | 18,410  |   |  |        | 1.2  |  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and net gain on sales of real estate |                |                 | 730,958   |           |                |   | 541,144   |            |  |   | 189,814  |           |  |      | 35.1   |      |      |   | 930,626   |            |  |   | 1,008,859 |           |  |   | (78,233 | )       |   |  | (7.8   | )   
|Income taxes                                                                                                                                                       |                |                 | (9,394    | )         |                |   | (8,814    | )          |  |   | (580     | )         |  |      | 6.6    |      |      |   | (1,027    | )          |  |   | (1,535    | )         |  |   | 508     |         |   |  | (33.1  | )   
|Minority interests                                                                                                                                                 |                |                 | (96,405   | )         |                |   | (84,934   | )          |  |   | (11,471  | )         |  |      | 13.5   |      |      |   | (7,146    | )          |  |   | (8,685    | )         |  |   | 1,539   |         |   |  | (17.7  | )   
|Income from investment in unconsolidated joint
    ventures                                                                                                        |                |                 | 106,852   |           |                |   | 69,203    |            |  |   | 37,649   |           |  |      | 54.4   |      |      |   | 71,792    |            |  |   | 64,504    |           |  |   | 7,288   |         |   |  | 11.3   |     
|Net gain on sales of real estate                                                                                                                                   |                |                 |          |           |                |   | 81,662    |            |  |   | (81,662  | )         |  |      | (100.0 | )    |      |   |          |            |  |   | 8,000     |           |  |   | (8,000  | )       |   |  | (100.0 | )   
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Income from continuing operations                                                                                                                                  |                |                 | 732,011   |           |                |   | 598,261   |            |  |   | 133,750  |           |  |      | 22.4   |      |      |   | 994,245   |            |  |   | 1,071,143 |           |  |   | (76,898 | )       |   |  | (7.2   | )   
|Discontinued operations (including net gain on
    sales of real estate of $17,926 in 2002)                                                                        |                |                 | 38,204    |           |                |   | 22,063    |            |  |   | 16,141   |           |  |      | 73.2   |      |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Income before extraordinary item and cumulative
    effect of a change in accounting principle                                                                     |                |                 | 770,215   |           |                |   | 620,324   |            |  |   | 149,891  |           |  |      | 24.2   |      |      |   | 994,245   |            |  |   | 1,071,143 |           |  |   | (76,898 | )       |   |  | (7.2   | )   
|Extraordinary items                                                                                                                                                |                |                 |          |           |                |   | (1,000    | )          |  |   | 1,000    |           |  |      | (100.0 | )    |      |   |          |            |  |   | (268      | )         |  |   | 268     |         |   |  | (100.0 | )   
|Cumulative effect of a change in accounting
    principle                                                                                                          |                |                 |          |           |                |   | (1,142    | )          |  |   | 1,142    |           |  |      | (100.0 | )    |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Net income                                                                                                                                                         |                | $               | 770,215   |           |                | $ | 618,182   |            |  | $ | 152,033  |           |  |      | 24.6   | %    |      | $ | 994,245   |            |  | $ | 1,070,875 |           |  | $ | (76,630 | )       |   |  | (7.2   | )%  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Property net operating income(b)                                                                                                                                   |                | $               | 2,377,001 |           |                | $ | 2,088,198 |            |  | $ | 288,803  |           |  |      | 13.8   | %    |      | $ | 1,641,854 |            |  | $ | 1,726,889 |           |  | $ | (85,035 | )       |   |  | (4.9   | )%  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Deferred rental revenue(b)                                                                                                                                         |                | $               | 72,891    |           |                | $ | 69,149    |            |  | $ | 3,742    |           |  |      | 5.4    | %    |      | $ | 31,811    |            |  | $ | 49,951    |           |  | $ | (18,140 | )       |   |  | (36.3  | )%  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          
|Lease termination fees(b)                                                                                                                                          |                | $               | 105,543   |           |                | $ | 40,193    |            |  | $ | 65,350   |           |  |      | 162.6  | %    |      | $ | 46,497    |            |  | $ | 34,732    |           |  | $ | 11,765  |         |   |  | 33.9   | %   
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |          |           |  |      |        |      |      |   |           |            |  |   |           |          



---



|    |                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Interest expense on unsecured notes and the line
    of credit are not allocated to the Core Portfolio.                                            
|   
|(b) | For the Total Portfolio, these amounts include
    amounts from discontinued operations and exclude amounts from
    unconsolidated joint ventures.

28



---



##### 



Property Revenues

The increase in property revenues in the Total
Portfolio is primarily due to the Spieker Merger in July 2001,
which was partially offset by a decrease in occupancy in the
Core Portfolio as described below. In addition, lease
termination fees were $105.5 million in 2002 as compared to
$40.2 million in 2001. Included in the lease termination
fees of $105.5 million in 2002 is approximately
$46.1 million from one tenant. The primary reason for the
increase in the lease termination fees and the decrease in
occupancy is a result of the continued slowdown in economic
activity. Lease termination fees relate to specific tenants,
each of whom has paid a fee to terminate its lease obligations
before the end of the contractual term of the lease. Although
there is no way of predicting the precise timing or amounts of
future lease termination fees, we currently anticipate that
lease termination fees will be significantly lower in 2003.

The decrease in property revenues in the Core
Portfolio is primarily due to a decrease in occupancy from 94.5%
at January 1, 2001 to 89.2% at December 31, 2002.
Occupancy decreased primarily due to tenant rollover and early
lease terminations where the space was not re-leased. The
decrease in property revenues was partially offset by lease
termination fees of $46.5 million in 2002 as compared to
$34.7 million in 2001.

Interest/ Dividend Income

Interest/dividend income decreased for the Total
Portfolio as a result of a $8.5 million decrease in
dividends and discount amortization from our $90.6 million
investment in HQ Global Workplaces, Inc. (HQ Global)
Series A Convertible Cumulative Preferred Stock (HQ
Preferred Stock) which was written-off in 2001 and a
reduction in interest income on notes receivable of
approximately $6.6 million. In addition, CT Convertible
Trust I redeemed its non-convertible preferred securities that
earned a 13% annual dividend for approximately
$20.1 million, including accrued dividends, in September
2002.

Interest Expense

Total Portfolio interest expense increased from
the prior year as a result of having more debt outstanding
during 2002, mainly as a result of the Spieker Merger. This
increase was partially offset by interest rate swap agreements
in effect during 2002 and 2001 which effectively reduced
interest expense by approximately $21.3 million by
converting the fixed interest rates to variable rates for a
portion of the unsecured notes. The swap agreements were all
terminated in 2001 and 2002. Total proceeds resulting from the
termination of approximately $90.2 million are being
amortized ratably over the remaining terms of the respective
unsecured notes as a reduction to interest expense. Core
Portfolio interest expense decreased from the prior year as a
result of the repayment and refinancing of certain mortgage
notes.

Depreciation and Amortization

Total Portfolio depreciation and amortization
expense increased primarily due to the Spieker Merger and
capital and tenant improvements made during each year. Core
Portfolio depreciation and amortization expense increased as a
result of capital and tenant improvements made during each year.

Property Operating Expenses

Total Portfolio property operating expenses
increased primarily due to the Spieker Merger. Core Portfolio
property operating expenses increased primarily due to an
increase of approximately $4.5 million for safety and
security expense and approximately $8.4 million in
insurance expense due to higher premiums both primarily due to
the terrorist attacks on September 11, 2001, an increase of
approximately $10.6 million for repairs and maintenance and
an increase in real estate taxes of approximately $5.2 million.
The increase in property operating expenses was partially offset
by a decrease of approximately $8.2 million in utilities
expense.

Ground Rent

Ground rent for the Total Portfolio increased
from the prior period primarily due to the Spieker Merger as
several Properties acquired in the Spieker Merger are subject to
ground leases.

29



---



##### 



General and Administrative Expenses

General and administrative expenses increased
primarily due to professional and consulting fees related to the
EOPlus initiative of $15.7 million in 2002 and severance
expense of approximately $7.3 million in 2002. The total
severance consists of severance payments and the accelerated
vesting of share options and restricted shares.

Beginning in fiscal 2003, we will be
reclassifying regional operating expenses and other costs
directly associated with property operations from general and
administrative expenses to property operating expenses. The
regional offices exist to provide oversight for the management
and leasing of the Properties. Accordingly, these expenses will
be classified as property operating expenses and all prior
periods will be reclassified to provide for comparability. This
reclassification will not change the prior period results or
shareholders equity.

Impairment on Securities and Other Investments
and Assets Held for Sale

For information on this item refer to
Item 8. Financial Statements and Supplementary
Data  Note 7  Impairment on
Securities, Other Investments and Assets Held for Sale.

Income from Investment in Unconsolidated Joint
Ventures

Income from investment in unconsolidated joint
ventures increased for the Total Portfolio primarily due to
lease termination fees of $46.4 million in 2002 as compared
to $1.0 million in 2001. Included in the lease termination
fees of $46.4 million in 2002 is approximately
$40 million from one tenant.

Income from investment in unconsolidated joint
ventures increased for the Core Portfolio primarily due to lease
termination fees of $6.4 million in 2002 as compared to
$1.0 million in 2001 and also increased due to a
$7.6 million decrease in interest expense as a result of
lower interest rates on variable rate mortgage notes and the
repayment of a mortgage note. The increase in income from
unconsolidated joint ventures was partially offset by a decrease
in property revenues as a result of a decrease in occupancy.

Net Gain on Sales of Real Estate and Discontinued
Operations

Net gain on sales of real estate for the Total
Portfolio decreased from the prior period as a result of a
presentation change for sold properties in accordance with SFAS
No. 144. Gains and losses from properties sold prior to
2002 are reflected as net gain on sales of real
estate and gains and losses from properties sold in 2002
are reflected in discontinued operations. The
increase in discontinued operations is primarily due to the gain
on the sale of the properties sold in 2002. The gain on sale of
real estate in 2001 from the Core Portfolio represents income
received from an unaffiliated party for an easement allowing
highway access under an Office Property.

Extraordinary Items

The extraordinary item relates to repair costs to
certain Office Properties located in Seattle, Washington that
were incurred as a result of damage from an earthquake in
February 2001.

30



---



##### 



Comparison of year ended December 31,
2001 to December 31, 2000

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 287 Office Properties and five parking
facilities acquired or placed in service on or prior to
January 1, 2000.

|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |           |  |   |         |        |  |  |       |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------- | --------------- | --------- | --------- | -------------- | - | --------- | ---------- |  | - | ------- | --------- |  | ---- | ----- | ---- | ---- | - | --------- | ---------- |  | - | --------- | --------- |  | - | ------- | ------ |  |  | ----- | --- | 
|                                                                                                                                                                   |                |                 |           |          
|                                                                                                                                                                   |                | Total Portfolio |           |           | Core Portfolio |  
|                                                                                                                                                                   |                |                 |           |           |                |  
|                                                                                                                                                                   |                |                 |           | Increase/ |                |   | %         |            |  |   |         | Increase/ |  |      | %     |     
|                                                                                                                                                                   |                | 2001            |           |           | 2000           |   |           | (Decrease) |  |   | Change  |           |  | 2001 |       |      | 2000 |   |           | (Decrease) |  |   | Change    |          
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|(Dollars in thousands)                                                                                                                                             |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |           |  |   |         |        |  |  |       |    
|Property revenues                                                                                                                                                  |                | $               | 3,025,664 |           |                | $ | 2,185,055 |            |  | $ | 840,609 |           |  |      | 38.5  | %    |      | $ | 1,879,868 |            |  | $ | 1,790,716 |           |  | $ | 89,152  |        |  |  | 5.0   | %  
|Fee income                                                                                                                                                         |                |                 | 15,085    |           |                |   | 10,931    |            |  |   | 4,154   |           |  |      | 38.0  |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|Interest/dividend income                                                                                                                                           |                |                 | 40,214    |           |                |   | 36,076    |            |  |   | 4,138   |           |  |      | 11.5  |      |      |   | 2,973     |            |  |   | 3,758     |           |  |   | (785    | )      |  |  | (20.9 | )  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|                                                                                                                                                                   | Total revenues |                 |           | 3,080,963 |                |   |           | 2,232,062  |  |   |         | 848,901   |  |      |       | 38.0 |      |   |           | 1,882,841  |  |   |           | 1,794,474 |  |   |         | 88,367 |  |  |       | 4.9 | 
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Interest expense(a)                                                                                                                                                |                |                 | 726,930   |           |                |   | 523,860   |            |  |   | 203,070 |           |  |      | 38.8  |      |      |   | 124,712   |            |  |   | 127,561   |           |  |   | (2,849  | )      |  |  | (2.2  | )  
|Depreciation and amortization                                                                                                                                      |                |                 | 581,592   |           |                |   | 432,688   |            |  |   | 148,904 |           |  |      | 34.4  |      |      |   | 375,482   |            |  |   | 346,419   |           |  |   | 29,063  |        |  |  | 8.4   |    
|Property operating expenses                                                                                                                                        |                |                 | 969,593   |           |                |   | 742,126   |            |  |   | 227,467 |           |  |      | 30.7  |      |      |   | 631,862   |            |  |   | 613,033   |           |  |   | 18,829  |        |  |  | 3.1   |    
|Ground rent                                                                                                                                                        |                |                 | 16,812    |           |                |   | 9,896     |            |  |   | 6,916   |           |  |      | 69.9  |      |      |   | 11,292    |            |  |   | 9,236     |           |  |   | 2,056   |        |  |  | 22.3  |    
|General and administrative                                                                                                                                         |                |                 | 109,672   |           |                |   | 88,696    |            |  |   | 20,976  |           |  |      | 23.6  |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|Impairment on securities and other investments                                                                                                                     |                |                 | 132,684   |           |                |   |          |            |  |   | 132,684 |           |  |      |      |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|Impairment on assets held for sale                                                                                                                                 |                |                 | 2,536     |           |                |   |          |            |  |   | 2,536   |           |  |      |      |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|                                                                                                                                                                   | Total expenses |                 |           | 2,539,819 |                |   |           | 1,797,266  |  |   |         | 742,553   |  |      |       | 41.3 |      |   |           | 1,143,348  |  |   |           | 1,096,249 |  |   |         | 47,099 |  |  |       | 4.3 | 
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and net gain on sales of real estate |                |                 | 541,144   |           |                |   | 434,796   |            |  |   | 106,348 |           |  |      | 24.5  |      |      |   | 739,493   |            |  |   | 698,225   |           |  |   | 41,268  |        |  |  | 5.9   |    
|Income taxes                                                                                                                                                       |                |                 | (8,814    | )         |                |   | (2,719    | )          |  |   | (6,095  | )         |  |      | 224.2 |      |      |   | (1,018    | )          |  |   | (1,612    | )         |  |   | 594     |        |  |  | (36.8 | )  
|Minority interests                                                                                                                                                 |                |                 | (84,934   | )         |                |   | (66,219   | )          |  |   | (18,715 | )         |  |      | 28.3  |      |      |   | (2,324    | )          |  |   | (2,340    | )         |  |   | 16      |        |  |  | (0.7  | )  
|Income from investment in unconsolidated joint
    ventures                                                                                                        |                |                 | 69,203    |           |                |   | 56,251    |            |  |   | 12,952  |           |  |      | 23.0  |      |      |   | 49,356    |            |  |   | 44,667    |           |  |   | 4,689   |        |  |  | 10.5  |    
|Net gain on sales of real estate                                                                                                                                   |                |                 | 81,662    |           |                |   | 36,013    |            |  |   | 45,649  |           |  |      | 126.8 |      |      |   | 8,000     |            |  |   |          |           |  |   | 8,000   |        |  |  |      |    
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Income from continuing operations                                                                                                                                  |                |                 | 598,261   |           |                |   | 458,122   |            |  |   | 140,139 |           |  |      | 30.6  |      |      |   | 793,507   |            |  |   | 738,940   |           |  |   | 54,567  |        |  |  | 7.4   |    
|Discontinued operations                                                                                                                                            |                |                 | 22,063    |           |                |   | 12,738    |            |  |   | 9,325   |           |  |      | 73.2  |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Income before extraordinary items and cumulative
    effect of a change in accounting principle                                                                    |                |                 | 620,324   |           |                |   | 470,860   |            |  |   | 149,464 |           |  |      | 31.7  |      |      |   | 793,507   |            |  |   | 738,940   |           |  |   | 54,567  |        |  |  | 7.4   |    
|Extraordinary items                                                                                                                                                |                |                 | (1,000    | )         |                |   |          |            |  |   | (1,000  | )         |  |      |      |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|Cumulative effect of a change in accounting
    principle                                                                                                          |                |                 | (1,142    | )         |                |   |          |            |  |   | (1,142  | )         |  |      |      |      |      |   |          |            |  |   |          |           |  |   |        |        |  |  |      |    
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Net income                                                                                                                                                         |                | $               | 618,182   |           |                | $ | 470,860   |            |  | $ | 147,322 |           |  |      | 31.3  | %    |      | $ | 793,507   |            |  | $ | 738,940   |           |  | $ | 54,567  |        |  |  | 7.4   | %  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Property net operating income(b)                                                                                                                                   |                | $               | 2,088,198 |           |                | $ | 1,463,151 |            |  | $ | 625,047 |           |  |      | 42.7  | %    |      | $ | 1,248,006 |            |  | $ | 1,177,683 |           |  | $ | 70,323  |        |  |  | 6.0   | %  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Deferred rental revenue(b)                                                                                                                                         |                | $               | 69,149    |           |                | $ | 69,822    |            |  | $ | (673    | )         |  |      | (1.0  | )%   |      | $ | 26,744    |            |  | $ | 53,760    |           |  | $ | (27,016 | )      |  |  | (50.3 | )% 
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          
|Lease termination fees(b)                                                                                                                                          |                | $               | 40,193    |           |                | $ | 19,542    |            |  | $ | 20,651  |           |  |      | 105.7 | %    |      | $ | 22,611    |            |  | $ | 16,306    |           |  | $ | 6,305   |        |  |  | 38.7  | %  
|                                                                                                                                                                   |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |       |      |      |   |           |            |  |   |           |          



---



|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(a) | Interest expense on unsecured notes and the line
    of credit are not allocated to the Core Portfolio.                   
|   
|(b) | These amounts include amounts from discontinued
    operations and exclude amounts from unconsolidated joint
    ventures.

Property Revenues

The increase in property revenues in the Total
Portfolio is primarily due to the properties acquired in the
Spieker Merger in 2001 and the Cornerstone Merger in 2000. The
increase in property revenues in the Core Portfolio resulted
primarily from an increase in rental rates and an increase in
lease termination fees partially offset by the write-off of
uncollectible receivables and a decrease in occupancy. The
weighted average

31



---



##### 



occupancy of the Core Portfolio decreased from
93.7% at January 1, 2000 to 91.3% at December 31,
2001, mainly due to tenant rollover at various properties where
the space was not re-leased due to the slowdown in economic
activity. As a result of the slowdown in economic activity, we
also experienced an increase in the amount of uncollectible
receivables relating to tenants in bankruptcy and tenants that
are having financial difficulties. The amount of bad debts
written off for the year ended December 31, 2001 was
approximately $26.1 million as compared to
$6.3 million for the prior period.


Interest Expense

Total Portfolio interest expense increased from
the prior period as a result of having a higher average
outstanding debt balance as compared to the prior period, mainly
as a result of the Spieker Merger and the Cornerstone Merger,
partially offset by a reduction to interest expense of
approximately $10.6 million from interest rate swap
agreements which converted the fixed interest rate to a variable
interest rate for a portion of our unsecured notes.

Depreciation and Amortization

Total Portfolio depreciation and amortization
expense increased from the prior period primarily as a result of
the Spieker Merger in July 2001, the Cornerstone Merger in
June 2000 and capital and tenant improvements made during
the periods. In addition, there was approximately
$9.4 million of prepayment expenses in 2001 which consisted
of a $5.0 million prepayment penalty and the write-off of
approximately $4.4 million of unamortized mark-to-market
adjustments relating to the prepayment of $185 million of
mortgage debt (See Item 8.  Financial
Statements and Supplementary Data 
Note 23  Related Party Transactions,
subfootnote (1)) and the repayment of approximately
$32.6 million of mortgage debt on parking facilities sold.
In 2000, there were prepayment expenses of approximately
$1.8 million related to the write-off of unamortized
deferred loan costs and unamortized discounts and premiums and
pre-payment penalties.

Core Portfolio depreciation and amortization
expense increased as a result of capital and tenant improvements
made during the periods.

Property Operating Expenses

Total Portfolio property operating expenses
increased mainly as a result of the Spieker Merger in 2001 and
the Cornerstone Merger in 2000. Core Portfolio property
operating expenses increased mainly as a result of increases in
utilities of $8.3 million consisting primarily of
electricity expense, increases in repairs and maintenance of
approximately $6.4 million primarily due to higher wages and
increases in contract services, increases in insurance expenses
of approximately $1.1 million due to higher premiums and an
increase in real estate taxes of approximately $4.6 million.

General and Administrative Expenses

General and administrative expenses increased due
to an increase in the number of employees at the corporate and
regional offices as a result of the Spieker Merger and the
Cornerstone Merger.

Impairment on Securities and Other Investments
and Assets Held for Sale

For information on this item refer to
Item 8. Financial Statements and Supplementary
Data  Note 7  Impairment on
Securities, Other Investments and Assets Held for Sale.

Income from Investment in Unconsolidated Joint
Ventures

Income from investment in unconsolidated joint
ventures increased for the Total Portfolio due to an increase in
property revenues at several Office Properties and the
acquisition of an interest in 1301 Avenue of the Americas
office property in August 2000.

32



---



##### 



Net Gain on Sales of Real Estate and Discontinued
Operations

Net gain on sales of real estate increased due to
the combined gross sales price in excess of book value at the
time of disposition for the real estate assets sold in 2001
being more than the combined gross sales price in excess of book
value at the time of disposition for the real estate assets sold
in 2000.

The gain on sale of real estate in 2001 from the
Core Portfolio represents income received from an unaffiliated
party for an easement allowing highway access under an Office
Property.

Please see New Accounting Policies Adopted
in 2002 related to SFAS No. 144 for an explanation of
discontinued operations.

Extraordinary Items

The extraordinary item relates to repair costs to
certain Office Properties located in Seattle, Washington that
were incurred as a result of damage from an earthquake in
February 2001.

Property Dispositions

2002

During 2002, we disposed of 45 office
properties, four parking facilities, two industrial
properties and three land parcels in separate transactions
to various unaffiliated parties for approximately
$508.3 million. The total gain on the sale of these
properties was approximately $17.9 million. The sold office
properties consisted of approximately 3,113,189 square
feet, the industrial properties consisted of approximately
77,072 square feet, and the parking facilities consisted of
approximately 7,464 parking spaces. The net income,
including the gain on sale, of the properties is reflected in
discontinued operations for each year presented in
the consolidated statements of operations.

2001

During 2001, we disposed of eight office
properties, four parking facilities, a land parcel and an
apartment property in separate transactions to various
unaffiliated parties for approximately $327.8 million. The
total gain on the sale of these properties was approximately
$81.7 million. The sold office properties consisted of
approximately 879,388 square feet, the parking facilities
contained approximately 3,721 parking spaces and the apartment
property contained approximately 161 units.

We disposed of 19 industrial properties that were
acquired in the Spieker Merger for approximately
$213.4 million. There was no gain or loss on the sale of
these properties. The sold industrial properties are located in
California and Oregon and consist of approximately
4.1 million square feet.

2000

During 2000, we disposed of seven office
properties totaling approximately 964,136 square feet, 11
parking facilities and a partial interest in two Office
Properties for approximately $536.0 million and recognized
a total net gain on sale of real estate of approximately
$36.0 million.

Segment Reporting

For segment reporting purposes, the office
properties, the apartment property and the land parcels that
were sold are included in the Office Properties
segment and the industrial properties and parking facilities
that were sold are included in the Corporate and
Other segment.

33



---



##### 



Below is a summary of the results of operations
of these properties through their respective disposition dates:

|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |         |        |  |   |        |        | 
|----------------------------------------------------------------------------------------------------- | -------------- | ----------------------- | ------ | --------------------- | ------------------ | - | ------ | ------ |  | - | ------ | ------ |  | ---- | ------- | ------ |  | - | ------ | ------ | 
|                                                                                                      |                |                         |        |                      
|                                                                                                      |                | For the year ended      |        |                       | For the year ended |  
|                                                                                                      |                | December 31,            |        |                       | December 31,       |  
|                                                                                                      |                |                         |        |                       |                    |  
|                                                                                                      |                | 2002                    |        |                       | 2001               |   |        | 2000   |  |   | 2001   |        |  | 2000 |        
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|                                                                                                      |                |                         |        |                       |                    |   |        |       
|                                                                                                      |                |                         |        | Properties Sold Prior |                   
|                                                                                                      |                | Properties Sold in 2002 |        |                       | to 2002            |  
|                                                                                                      |                |                         |        |                       |                    |  
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |  
|(Dollars in thousands)                                                                                |                |                         |        |                       |                    |   |        |        |  |  
|Property revenues                                                                                     |                | $                       | 40,436 |                       |                    | $ | 49,167 |        |  | $ | 32,091 |        |  | $    | 37,787  |        |  | $ | 71,582 |       
|Interest income                                                                                       |                |                         | 54     |                       |                    |   | 18     |        |  |   | 90     |        |  |      |        |        |  |   | 288    |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|                                                                                                      | Total revenues |                         |        | 40,490                |                    |   |        | 49,185 |  |   |        | 32,181 |  |      |         | 37,787 |  |   |        | 71,870 | 
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Interest expense                                                                                      |                |                         | (24    | )                     |                    |   | 1,321  |        |  |   | 1,927  |        |  |      | 2,390   |        |  |   | 2,718  |       
|Depreciation and amortization                                                                         |                |                         | 6,812  |                       |                    |   | 8,622  |        |  |   | 5,531  |        |  |      | 5,526   |        |  |   | 11,936 |       
|Property operating expenses                                                                           |                |                         | 13,280 |                       |                    |   | 17,040 |        |  |   | 11,869 |        |  |      | 10,991  |        |  |   | 22,596 |       
|Ground rent                                                                                           |                |                         | 43     |                       |                    |   | 116    |        |  |   | 116    |        |  |      |        |        |  |   |       |       
|General and administrative                                                                            |                |                         |       |                       |                    |   |       |        |  |   |       |        |  |      | 355     |        |  |   | 156    |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|                                                                                                      | Total expenses |                         |        | 20,111                |                    |   |        | 27,099 |  |   |        | 19,443 |  |      |         | 19,262 |  |   |        | 37,406 | 
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Income before income taxes, allocation to
    minority interests and net gain on sales of real estate |                |                         | 20,379 |                       |                    |   | 22,086 |        |  |   | 12,738 |        |  |      | 18,525  |        |  |   | 34,464 |       
|Income taxes                                                                                          |                |                         | (101   | )                     |                    |   | (23    | )      |  |   |       |        |  |      |        |        |  |   |       |       
|Minority interest  partially owned
    properties                                                    |                |                         |       |                       |                    |   |       |        |  |   |       |        |  |      |        |        |  |   | (1,457 | )     
|Net gain on sales of real estate                                                                      |                |                         | 17,926 |                       |                    |   |       |        |  |   |       |        |  |      | 81,662  |        |  |   | 36,013 |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Net income                                                                                            |                | $                       | 38,204 |                       |                    | $ | 22,063 |        |  | $ | 12,738 |        |  | $    | 100,187 |        |  | $ | 69,020 |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Property net operating income                                                                         |                | $                       | 27,156 |                       |                    | $ | 32,127 |        |  | $ | 20,222 |        |  | $    | 26,796  |        |  | $ | 48,986 |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        

34



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##### 



Liquidity and Capital Resources

Liquidity

Net cash flow from operations represents the
primary source of liquidity to fund distributions, debt service,
capital improvements and tenant improvements. We expect that our
$1.0 billion line of credit will provide for funding of
working capital and unanticipated cash needs as well as
acquisitions and development costs.

Our net cash flow from operations is dependent
upon the occupancy level of our properties, the rental rates on
our leases, the collectibility of rent from our tenants, the
level of operating and other expenses, and other factors.
Material changes in these factors may adversely affect our net
cash flow from operations. Such changes, in turn, would
adversely affect our ability to fund distributions, debt
service, capital improvements and tenant improvements. In
addition, a material adverse change in our net cash flow from
operations may affect the financial performance covenants under
our line of credit and unsecured notes. If we fail to meet any
of our financial performance covenants our line of credit may
become unavailable to us, or the interest charged on the line of
credit may increase. Either of these circumstances could
adversely affect our ability to fund working capital and
unanticipated cash needs, acquisitions and development costs.

In order to qualify as a REIT for federal income
tax purposes, Equity Office must distribute at least 90% of its
REIT taxable income (excluding capital gains). Accordingly, we
currently intend to continue to make regular quarterly
distributions to holders of Common Shares and preferred shares.

Subject to the foregoing, we have established
quarterly distribution rates which, if annualized, would be as
follows:

|                         |   |                         |      |         |    
|------------------------ | - | ----------------------- | ---- | ------- | ---
|                         |   | Annualized Distribution |     
|Security                 |   | Per Share               |     
|                         |   |                         |     
|Common Shares            |   | $                       | 2.00 |        
|Preferred Shares Series: |   |                         |      |        
|                         | A |                         | $    | 2.245   | (a)
|                         | B |                         | $    | 2.625   |    
|                         | C |                         | $    | 2.15625 |    
|                         | E |                         | $    | 1.96875 |    
|                         | F |                         | $    | 2.00    |    
|                         | G |                         | $    | 1.9375  | (a)



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In July 2002, Equity Office redeemed its
    7,994,000 outstanding 8.98% Series A Cumulative Redeemable
    Preferred Shares at an aggregate redemption price of
    approximately $201.9 million, including accrued
    distributions. In addition, Equity Office issued 8,500,000 7.75%
    Series G Cumulative Redeemable Preferred Shares on
    July 29, 2002. Substantially all of the net proceeds from
    the issuance and sale of the Series G Preferred Shares
    totaling approximately $206.1 million were used to redeem
    the Series A Preferred Shares.

Since our anticipated distributions will not
allow us to retain sufficient cash to repay all of our debt as
it comes due using only cash from operations, we will be
required to repay maturing debt with proceeds from debt and/or
equity offerings. There can be no assurance that such financing
will be available on acceptable terms or at all.

35



---



##### 



Contractual Obligations

As of December 31, 2002, we were subject to
certain contractual payment obligations as described in the
table below. We are not subject to capital lease obligations or
unconditional purchase obligations as of December 31, 2002.

|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |           | 
|----------------------------------------------------------- | ------------------ | ---------------------- | ---------- | --------- | ---- | ---------------------- | --------- | ------- |  | - | --------- | ------- |  | ---- | --------- | ------- | ---- | - | --------- | ---------- |  | - | --------- | ------- |  | - | --------- | --------- | 
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |        
|                                                            |                    |                        |            |           |      | Payments due by Period |           |         |  |   |           |         | 
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         | 
|Contractual Obligations                                     |                    | Total                  |            |           | 2003 |                        |           | 2004    |  |   | 2005      |         |  | 2006 |           |         | 2007 |   |           | Thereafter | 
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|                                                            |                    |                       
|                                                            |                    | (Dollars in thousands) |           
|Long-term debt:                                             |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |          
|                                                            | Mortgage debt(1)   |                        | $          | 2,520,474 |      |                        | $         | 102,230 |  |   | $         | 448,664 |  |      | $         | 584,595 |      |   | $         | 343,941    |  |   | $         | 237,024 |  |   | $         | 804,020   | 
|                                                            | Unsecured notes(2) |                        |            | 9,016,500 |      |                        |           | 700,000 |  |   |           | 880,000 |  |      |           | 675,000 |      |   |           | 650,000    |  |   |           | 976,500 |  |   |           | 5,135,000 | 
|Line of Credit                                              |                    |                        | 205,700    |           |      |                        | 205,700   |         |  |   |          |         |  |      |          |         |      |   |          |            |  |   |          |         |  |   |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                    |                        | 818,975    |           |      |                        | 109,006   |         |  |   | 117,023   |         |  |      | 466,410   |         |      |   | 51,182    |            |  |   | 1,454     |         |  |   | 73,900    |          
|Ground leases                                               |                    |                        | 1,149,914  |           |      |                        | 18,088    |         |  |   | 15,588    |         |  |      | 15,263    |         |      |   | 15,118    |            |  |   | 15,008    |         |  |   | 1,070,849 |          
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|Total Contractual Obligations                               |                    | $                      | 13,711,563 |           |      | $                      | 1,135,024 |         |  | $ | 1,461,275 |         |  | $    | 1,741,268 |         |      | $ | 1,060,241 |            |  | $ | 1,229,986 |         |  | $ | 7,083,769 |          
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|Weighted Average Interest Rates on Maturing
    Debt:       |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |          
|Long-term debt:                                             |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |          
|                                                            | Mortgage debt      |                        |            | 7.62%     |      |                        |           | 7.73%   |  |   |           | 7.14%   |  |      |           | 7.88%   |      |   |           | 7.15%      |  |   |           | 7.88%   |  |   |           | 7.79%     | 
|                                                            | Unsecured notes    |                        |            | 7.03%     |      |                        |           | 7.21%   |  |   |           | 5.42%   |  |      |           | 5.67%   |      |   |           | 7.52%      |  |   |           | 7.52%   |  |   |           | 7.30%     | 
|Line of credit                                              |                    |                        | 2.44%      |           |      |                        | 2.44%     |         |  |   |          |         |  |      |          |         |      |   |          |            |  |   |          |         |  |   |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                    |                        | 5.94%      |           |      |                        | 2.41%     |         |  |   | 2.58%     |         |  |      | 7.38%     |         |      |   | 7.67%     |            |  |   |          |         |  |   | 5.42%     |          
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|Total Weighted Average Interest Rates                       |                    |                        | 7.00%      |           |      |                        | 5.91%     |         |  |   | 5.72%     |         |  |      | 6.88%     |         |      |   | 7.41%     |            |  |   | 7.58%     |         |  |   | 7.34%     |          
|                                                            |                    |                        |            |           |      |                        |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 



---



|    |                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------
|(1) | Balance excludes net discount of $(12.6) million,
    net of accumulated amortization of approximately $(6.4) million.  
|   
|(2) | Balance excludes net premium of
    $41.2 million, net of accumulated amortization of
    approximately ($15.4) million.

Forward-Starting Interest Rate Swaps

In October 2002, we entered into
$1.1 billion of forward-starting interest rate swaps to
effectively fix the 10-year Treasury rate at approximately 3.7%
for future note offerings that occurred in 2003 and are
anticipated to occur in 2004. The forward-starting interest rate
swaps were entered into at current market rates and, therefore,
had no initial cost. The terms of the forward-starting interest
rate swaps require us to pay a fixed-interest rate to the
counterparties and to receive a variable rate from the
counterparties. The swaps settle at six-month intervals
beginning in 2003 and 2004 and are scheduled to terminate in
2004. The market value of the forward-starting swaps at
December 31, 2002 was a liability of approximately
$18.6 million which is included in other liabilities and in
other comprehensive income. In January 2003, we settled one of
the forward-starting swaps that had a notional amount of
$300 million and received approximately $0.8 million.
The forward-starting swap was settled in connection with
$500 million of unsecured notes that were issued in
February 2003. We are obligated to settle the remaining swap
agreements no later than the commencement of their term in
early 2004. Upon settlement of the swaps, we may be
obligated to pay the counterparties a settlement payment, or
alternatively to receive settlement proceeds from the
counterparties. Any monies paid or received will be amortized to
interest expense over the term of the respective note offering.

36



---



##### 



Off-Balance Sheet Arrangements

Commitments

In accordance with the agreement governing the
investment in Wright Runstad Associates Limited Partnership
(WRALP) made in 1997, we agreed, for a period
generally continuing until December 31, 2007, to make
available to WRALP up to $20.0 million in additional financing
or credit support for future development. As of
December 31, 2002, no amounts have been funded pursuant to
this agreement. However, we have unconditionally guaranteed
payment of WRALPs $19.5 million revolving line of
credit, which has an outstanding balance of approximately
$12.9 million as of December 31, 2002, in the event of
WRALPs non-payment. WRALPs current line of credit
matures in July 2003. We do not have a liability accrued related
to this guarantee. In the event we make payment on WRALPs
line of credit and WRALP does not repay us, we are entitled to
(i) terminate the credit facility provided to WRALP from us
and (ii) declare all amounts borrowed by WRALP due and
payable. We believe the risk of an unrecovered loss is minimal
at this time.

Letters of Credit

As of December 31, 2002, we had provided
approximately $3.3 million in letters of credit. The
letters of credit were required to be issued under the
provisions of our workers compensation insurance policies
and certain utility contracts.

Debt Financing

The table below summarizes our consolidated
mortgage debt, unsecured notes and line of credit indebtedness
at December 31, 2002 and 2001, including a net unamortized
discount on mortgage debt of $(12.6) million and
$(11.8) million, respectively, and a net unamortized
premium on unsecured notes of $41.2 million and
$17.5 million, respectively, recorded in connection with
property acquisitions, mergers, issuance of unsecured notes and
interest rate swap terminations.

|                                          |                     |                         |   |            |            |  |   |            |            | 
|----------------------------------------- | ------------------- | ----------------------- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                          |                     |                        
|                                          |                     | December 31,            |  
|                                          |                     |                         |  
|                                          |                     | 2002                    |   |            | 2001       | 
|(Dollars in thousands)                    |                     |                         |   |            |            | 
|Balance                                   |                     |                         |   |            |            |  |   |           
|                                          | Fixed rate          |                         | $ | 11,529,541 |            |  | $ | 10,891,325 |           
|                                          | Variable rate(1)    |                         |   | 241,700    |            |  |   | 1,097,300  |           
|                                          |                     |                         |   |            |            | 
|                                          |                     | Total                   |   | $          | 11,771,241 |  |   | $          | 11,988,625 | 
|                                          |                     |                         |   |            |            | 
|Percent of total debt:                    |                     |                         |   |            |            |  |   |           
|                                          | Fixed rate          |                         |   | 97.9%      |            |  |   | 90.8%      |           
|                                          | Variable rate(1)    |                         |   | 2.1%       |            |  |   | 9.2%       |           
|                                          |                     |                         |   |            |            | 
|                                          |                     | Total                   |   |            | 100.0%     |  |   |            | 100.0%     | 
|                                          |                     |                         |   |            |            | 
|Effective interest rate at end of period: |                     |                         |   |            |            |  |   |           
|                                          | Fixed rate          |                         |   | 7.17%      |            |  |   | 7.37%      |           
|                                          | Variable rate(1)(2) |                         |   | 2.37%      |            |  |   | 3.31%      |           
|                                          |                     |                         |   |            |            | 
|                                          |                     | Effective interest rate |   |            | 7.08%      |  |   |            | 7.00%      | 
|                                          |                     |                         |   |            |            | 



---



|    |                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The variable rate debt as of December 31,
    2001 included $817 million of fixed rate unsecured notes that
    were converted to a variable rate based on various spreads over
    LIBOR through several interest rate swap agreements. During
    2002, the interest rate swap agreements were terminated.
|(2) | The variable rate debt bears interest at a rate
    based on various spreads over LIBOR.                                                                                                                                                                                                                    

Mortgage Debt

As of December 31, 2002, total mortgage debt
(excluding our share of unconsolidated debt of approximately
$819.0 million) consisted of approximately
$2.5 billion of fixed rate debt with a weighted average
interest rate of approximately 7.70% and $36.0 million of
variable rate debt based on LIBOR plus 55

37



---



##### 



basis points (as of December 31, 2002, the
variable rate was approximately 1.98%). See Liquidity and
Capital Resources  Contractual Obligations for
annual payment of obligations under our mortgage debt.


The instruments encumbering the properties
restrict transfer of the respective properties subject to the
terms of the mortgage, prohibit additional liens, require
payment of real estate taxes on the properties, maintenance of
the properties in good condition, maintenance of insurance on
the properties and a requirement to obtain lender consent to
enter into material tenant leases.

Line of Credit

EOP Partnership has a $1.0 billion revolving
credit facility that was obtained in May 2000. As of
December 31, 2002, $205.7 million was outstanding
under this facility. The line of credit bears interest at LIBOR
plus 60 basis points and matures on May 12, 2003 (as
of December 31, 2002, the variable rate was approximately
2.44%). There is also an annual facility fee of $2.0 million
payable quarterly. In addition, a competitive bid option,
whereby the lenders participating in the credit facility bid on
the interest to be charged, is available for up to $350 million
of the borrowings under the credit facility. We have guaranteed
outstanding obligations under the line of credit.

Unsecured Notes

Unsecured notes decreased to approximately
$9,057.7 million at December 31, 2002 compared to
approximately $9,094.0 million at December 31, 2001,
as a result of the following transactions:

|                                                                         |  |                        |         |   |           |  |      |           |  |  |          |   |  |  |          | 
|------------------------------------------------------------------------ |  | ---------------------- | ------- | - | --------- |  | ---- | --------- |  |  | -------- | - |  |  | -------- | 
|                                                                         |  | Coupon/                |         |   | All  in  |  |      |           |  | 
|                                                                         |  | Stated                 |         |   | Effective |  |      | Principal |  |  | Maturity |  
|Original Term (in years)                                                 |  | Rate                   |         |   | Rate(a)   |  |      | Amount    |  |  | Date     |  
|                                                                         |  |                        |         |   |           |  |      |           |  |  |          |  
|                                                                         |  |                       
|                                                                         |  | (Dollars in thousands) |        
|Issuance                                                                 |  |                        |         |   |           |  |      |           |  |  |          |   |  |  |          | 
|10                                                                       |  |                        | 6.75    | % |           |  | 7.02 | %         |  |  | 500,000  |   |  |  | 2/15/12  | 
|                                                                         |  |                        |         |   |           |  |      |           |  |  |          |  
|Repayments                                                               |  |                        |         |   |           |  |      |           |  |  |          |   |  |  |          | 
|3                                                                        |  |                        | 6.38    | % |           |  | 6.62 | %         |  |  | (200,000 | ) |  |  | 1/15/02  | 
|4                                                                        |  |                        | 6.38    | % |           |  | 6.30 | %         |  |  | (250,000 | ) |  |  | 2/15/02  | 
|7                                                                        |  |                        | 6.95    | % |           |  | 5.37 | %         |  |  | (110,000 | ) |  |  | 12/15/02 | 
|                                                                         |  |                        |         |   |           |  |      |           |  |  |          |  
|Total repayments                                                         |  |                        |         |   |           |  |      |           |  |  | (560,000 | ) |  |  |          | 
|                                                                         |  |                        |         |   |           |  |      |           |  |  |          |  
|Reversal of mark to market of swaps outstanding
    at December 31, 2001 |  |                        | 8,117   |   |           |  |      |          
|Net discount on notes issuance in February 2002                          |  |                        | (10,873 | ) |           |  |      |          
|Proceeds from terminated interest rate swaps                             |  |                        | 42,810  |   |           |  |      |          
|Amortization of discounts and premiums                                   |  |                        | (16,390 | ) |           |  |      |          
|                                                                         |  |                        |         |   |           | 
|Total                                                                    |  |                        | 23,664  |   |           |  |      |          
|                                                                         |  |                        |         |   |           | 
|Net activity                                                             |  | $                      | (36,336 | ) |           |  |      |          
|                                                                         |  |                        |         |   |           | 

The table below summarizes the unsecured notes
outstanding as of December 31, 2002:

|                                   |  |                        |      |   |           |  |      |           |  |   |          |  |  |  |          | 
|---------------------------------- |  | ---------------------- | ---- | - | --------- |  | ---- | --------- |  | - | -------- |  |  |  | -------- | 
|                                   |  | Coupon/                |      |   | All  in  |  |      |           |  |  
|                                   |  | Stated                 |      |   | Effective |  |      | Principal |  |   | Maturity | 
|Original Term (in years)           |  | Rate                   |      |   | Rate(a)   |  |      | Amount    |  |   | Date     | 
|                                   |  |                        |      |   |           |  |      |           |  |   |          | 
|                                   |  |                       
|                                   |  | (Dollars in thousands) |     
|Fixed interest rate notes payable: |  |                        |      |   |           |  |      |           |  |   |          |  |  |  |          | 
|5 Year Unsecured Notes             |  |                        | 6.38 | % |           |  | 6.76 | %         |  | $ | 300,000  |  |  |  | 02/15/03 | 
|3 Year Unsecured Notes             |  |                        | 7.38 | % |           |  | 7.55 | %         |  |   | 400,000  |  |  |  | 11/15/03 | 
|5 Year Unsecured Notes             |  |                        | 6.50 | % |           |  | 4.59 | %         |  |   | 300,000  |  |  |  | 01/15/04 | 
|9 Year Unsecured Notes             |  |                        | 6.90 | % |           |  | 6.27 | %         |  |   | 100,000  |  |  |  | 01/15/04 | 
|5 Year Unsecured Notes             |  |                        | 6.80 | % |           |  | 6.10 | %         |  |   | 200,000  |  |  |  | 05/01/04 | 

38



---



##### 



|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |           |           |  |          |  |  | 
|-------------------------------------------------------------------------------- | -------------------------- | ---------------------- | ---- | ---- | --------- |  | ---- | --------- | - |  | --------- | --------- | --------- |  | -------- |  |  | 
|                                                                                 |                            | Coupon/                |      |      | All  in  |  |      |           |   | 
|                                                                                 |                            | Stated                 |      |      | Effective |  |      | Principal |   |  | Maturity  |          
|Original Term (in years)                                                         |                            | Rate                   |      |      | Rate(a)   |  |      | Amount    |   |  | Date      |          
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|                                                                                 |                            |                       
|                                                                                 |                            | (Dollars in thousands) |     
|6 Year Unsecured Notes                                                           |                            |                        | 6.50 | %    |           |  | 5.31 | %         |   |  | 250,000   |           |           |  | 06/15/04 | 
|7 Year Unsecured Notes                                                           |                            |                        | 7.24 | %    |           |  | 7.26 | %         |   |  | 30,000    |           |           |  | 09/01/04 | 
|8 Year Unsecured Notes                                                           |                            |                        | 6.88 | %    |           |  | 6.40 | %         |   |  | 125,000   |           |           |  | 02/01/05 | 
|7 Year Unsecured Notes                                                           |                            |                        | 6.63 | %    |           |  | 4.99 | %         |   |  | 400,000   |           |           |  | 02/15/05 | 
|7 Year Unsecured Notes                                                           |                            |                        | 8.00 | %    |           |  | 6.49 | %         |   |  | 100,000   |           |           |  | 07/19/05 | 
|8 Year Unsecured Notes                                                           |                            |                        | 7.36 | %    |           |  | 7.69 | %         |   |  | 50,000    |           |           |  | 09/01/05 | 
|6 Year Unsecured Notes                                                           |                            |                        | 8.38 | %    |           |  | 7.65 | %         |   |  | 500,000   |           |           |  | 03/15/06 | 
|9 Year Unsecured Notes                                                           |                            |                        | 7.44 | %    |           |  | 7.74 | %         |   |  | 50,000    |           |           |  | 09/01/06 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.13 | %    |           |  | 6.74 | %         |   |  | 100,000   |           |           |  | 12/01/06 | 
|9 Year Unsecured Notes                                                           |                            |                        | 7.00 | %    |           |  | 6.80 | %         |   |  | 1,500     |           |           |  | 02/02/07 | 
|9 Year Unsecured Notes                                                           |                            |                        | 6.88 | %    |           |  | 6.83 | %         |   |  | 25,000    |           |           |  | 04/30/07 | 
|9 Year Unsecured Notes                                                           |                            |                        | 6.76 | %    |           |  | 6.76 | %         |   |  | 300,000   |           |           |  | 06/15/07 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.41 | %    |           |  | 7.70 | %         |   |  | 50,000    |           |           |  | 09/01/07 | 
|7 Year Unsecured Notes                                                           |                            |                        | 7.75 | %    |           |  | 7.91 | %         |   |  | 600,000   |           |           |  | 11/15/07 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.75 | %    |           |  | 6.97 | %         |   |  | 150,000   |           |           |  | 01/15/08 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.75 | %    |           |  | 7.01 | %         |   |  | 300,000   |           |           |  | 02/15/08 | 
|8 Year Unsecured Notes(b)                                                        |                            |                        | 7.25 | %    |           |  | 7.64 | %         |   |  | 325,000   |           |           |  | 11/15/08 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.80 | %    |           |  | 6.94 | %         |   |  | 500,000   |           |           |  | 01/15/09 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.25 | %    |           |  | 7.14 | %         |   |  | 200,000   |           |           |  | 05/01/09 | 
|11 Year Unsecured Notes                                                          |                            |                        | 7.13 | %    |           |  | 6.97 | %         |   |  | 150,000   |           |           |  | 07/01/09 | 
|10 Year Unsecured Notes                                                          |                            |                        | 8.10 | %    |           |  | 8.22 | %         |   |  | 360,000   |           |           |  | 08/01/10 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.65 | %    |           |  | 7.20 | %         |   |  | 200,000   |           |           |  | 12/15/10 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.00 | %    |           |  | 6.83 | %         |   |  | 1,100,000 |           |           |  | 07/15/11 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.75 | %    |           |  | 7.02 | %         |   |  | 500,000   |           |           |  | 02/15/12 | 
|20 Year Unsecured Notes                                                          |                            |                        | 7.88 | %    |           |  | 8.08 | %         |   |  | 25,000    |           |           |  | 12/01/16 | 
|20 Year Unsecured Notes                                                          |                            |                        | 7.35 | %    |           |  | 8.08 | %         |   |  | 200,000   |           |           |  | 12/01/17 | 
|20 Year Unsecured Notes                                                          |                            |                        | 7.25 | %    |           |  | 7.54 | %         |   |  | 250,000   |           |           |  | 02/15/18 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.50 | %    |           |  | 8.24 | %         |   |  | 150,000   |           |           |  | 10/01/27 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.25 | %    |           |  | 7.31 | %         |   |  | 225,000   |           |           |  | 06/15/28 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.50 | %    |           |  | 7.55 | %         |   |  | 200,000   |           |           |  | 04/19/29 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.88 | %    |           |  | 7.94 | %         |   |  | 300,000   |           |           |  | 07/15/31 | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|                                                                                 | Weighted Average/ Subtotal |                        |      | 7.19 | %         |  |      | 7.03      | % |  |           | 9,016,500 |           |  |          |  | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|Net premium (net of accumulated amortization of
    approximately $15.4 million) |                            |                        |      |      |           |  |      |           |   |  | 41,151    |           |           |  |          | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|                                                                                 |                            | Total                  |      |      |           |  |      |           |   |  |           | $         | 9,057,651 |  |          |  |  | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Includes the effect of terminated interest rate
    protection and swap agreements, offering and transaction costs
    and premiums and discounts on certain unsecured notes.                                                                                                                                                                                                                                                                                                                                        
|(b) |  | The notes are exchangeable into Common Shares at
    an exchange rate of $34.00 per share. If the closing price at
    the time a holder exercises its exchange right is less than the
    exchange price of $34.00, the holder will receive, in lieu of
    Common Shares, cash in an amount equal to 97% of the product of
    the number of Common Shares into which the principal amount of
    notes subject to such exercise would otherwise be exchangeable
    and the current market price per Common Share.

39



---



##### 



As of March 13, 2003, $1.6 billion of
capacity was available for issuance, under a shelf registration
statement.

Restrictions and Covenants under Unsecured
Indebtedness

Agreements or instruments relating to our
unsecured notes and the line of credit contain certain financial
restrictions and requirements described below. As of
December 31, 2002, we were in compliance with each of these
financial restrictions and requirements.

Set forth below are the financial restrictions
and requirements to which we are subject under our line of
credit agreement:



| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | total liabilities to total asset value may not
    exceed 0.55:1 at any time;                                                                                                                                                 
|
| |  | earnings before interest, taxes, depreciation and
    amortization to interest expense may not be less than 2.00:1;                                                                                                           
|
| |  | cash flow to fixed charges may not be less than
    1.5:1;                                                                                                                                                                    
|
| |  | secured debt to total asset value may not exceed
    0.40:1;                                                                                                                                                                  
|
| |  | unsecured debt to unencumbered asset value may
    not exceed 0.55:1;                                                                                                                                                         
|
| |  | unencumbered net operating income to unsecured
    debt service may not be less than 2.0:1;                                                                                                                                   
|
| |  | consolidated tangible net worth may not be less
    than the sum of $7.8 billion and 70% of all net offering
    proceeds received by Equity Office or EOP Partnership after
    February 29, 2000;                           
|
| |  | we may not pay any distributions on Common Shares
    and Units in excess of 90% of annual funds from operations
    (FFO); and                                                                                             
|
| |  | our investments in unimproved assets, interest in
    taxable REIT subsidiaries, developments, unconsolidated joint
    ventures, mortgages and securities, in the aggregate, may not
    exceed 25% of our total asset value.

Set forth below are the financial restrictions
and requirements to which we are subject under our unsecured
note indentures and our performance under each covenant as of
December 31, 2002:

|                                                                                                             |  |                    |        | 
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------ | 
|Covenant                                                                                                     |  | Actual Performance |       
|                                                                                                             |  |                    |       
|Debt to adjusted total assets may not exceed
    0.60:1                                                      |  |                    | 0.47:1 | 
|Secured debt to adjusted total assets may not
    exceed 0.40:1                                              |  |                    | 0.13:1 | 
|Consolidated income available for debt service to
    annual debt service charge may not be less than 1.50:1 |  |                    | 2.73:1 | 
|Total unencumbered assets to unsecured debt may
    not be less than 1.50:1                                  |  |                    | 2.22:1 | 

40



---



##### 



Equity Securities

A summary of the activity of our Common Shares
and EOP Partnerships Units (exclusive of Units owned by
us) during the year ended 2002 is as follows:

|                                 |                                                                    |        |             |            |       |  |            |            |   |  |             |            |  
|-------------------------------- | ------------------------------------------------------------------ | ------ | ----------- | ---------- | ----- |  | ---------- | ---------- | - |  | ----------- | ---------- | -
|                                 |                                                                    | Common |             |            |       |  |           
|                                 |                                                                    | Shares |             |            | Units |  |            | Total      |  
|                                 |                                                                    |        |             |            |       |  |            |            |  
|Outstanding at December 31, 2001 |                                                                    |        | 414,548,673 |            |       |  | 56,490,302 |            |   |  | 471,038,975 |           
|                                 | Share options exercised                                            |        |             | 1,739,863  |       |  |            |           |   |  |             | 1,739,863  |  
|                                 | Common Shares repurchased/ retired(a)                              |        |             | (7,920,854 | )     |  |            |           |   |  |             | (7,920,854 | )
|                                 | Units redeemed for Common Shares                                   |        |             | 2,555,646  |       |  |            | (2,555,646 | ) |  |             |           |  
|                                 | Units redeemed for cash(b)                                         |        |             |           |       |  |            | (3,727,925 | ) |  |             | (3,727,925 | )
|                                 | Restricted shares and share awards issued/
    cancelled, net      |        |             | 214,291    |       |  |            |           |   |  |             | 214,291    |  
|                                 | Common Shares issued through the Dividend
    Reinvestment Program |        |             | 63,379     |       |  |            |           |   |  |             | 63,379     |  
|                                 |                                                                    |        |             |            |       |  |            |            |  
|Outstanding at December 31, 2002 |                                                                    |        | 411,200,998 |            |       |  | 50,206,731 |            |   |  | 461,407,729 |           
|                                 |                                                                    |        |             |            |       |  |            |            |  



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In July 2002, Equity Office announced a Common
    Share repurchase program allowing for the repurchase of up to
    $200 million of Common Shares, which was later increased to
    $400 million in November 2002, over the next 12 months at
    the discretion of management. The Common Shares may be
    repurchased in the open market or privately negotiated
    transactions. During 2002, 7,901,900 Common Shares were
    repurchased at an average price of $24.92 for approximately
    $196.9 million in the aggregate. From January 1, 2003
    through March 13, 2003, 2,518,100 Common Shares were
    repurchased at an average price of $23.82 for approximately
    $60.0 million in the aggregate.
|   
|(b) |  | During 2002, EOP Partnership redeemed 3,727,925
    Units for cash at an average price of $28.62 for a total of
    approximately $106.7 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Cash Flows

The following summary discussion of our cash
flows is based on the consolidated statements of cash flows in
Item 8.  Financial Statements and
Supplementary Data and is not meant to be an all-inclusive
discussion of the changes in our cash flows for the periods
presented below.

Years Ended December 31, 2002 and
2001

Cash and cash equivalents decreased by
approximately $2.7 million to approximately
$58.5 million at December 31, 2002, compared to
$61.1 million at December 31, 2001. This decrease was
the net result of approximately $1,390.9 million provided
by operating activities, approximately $85.2 million
provided by investing activities (consisting primarily of
approximately $377.2 million provided by property
dispositions and approximately $167.0 million released from
escrows partially offset by approximately $433.6 million
used for capital and tenant improvements and lease acquisition
costs) and approximately $1,478.8 million used for
financing activities.

Years Ended December 31, 2001 and
2000

Cash and cash equivalents increased by
approximately $7.9 million to approximately
$61.1 million at December 31, 2001, compared to
$53.3 million at December 31, 2000. This increase was
the net result of approximately $1,241.6 million provided
by operating activities, approximately $1,348.2 million
used for investing activities (consisting primarily of
approximately $1,077.0 million used for the acquisition of
Spieker and approximately $437.7 million used for capital
and tenant improvements and lease acquisition costs) and
approximately $114.5 million provided by financing
activities.

41



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##### 



Additional Items

Tenant and Other Receivables

Tenant and other receivables decreased from
approximately $120.4 million at December 31, 2001 to
approximately $77.6 million at December 31, 2002
primarily due to the collection of receivables from tenants
during 2002 relating to reimbursable expenses. In the fourth
quarter 2001, receivables from tenants for reimbursable expenses
were increased based on an analysis of actual reimbursable
expenses compared to the amount billed to the tenants during
2001.

Deferred Rent Receivables

Certain leases provide for tenant occupancy
during periods for which no rent is due or where minimum rent
payments increase during the term of the lease. We record rental
income for the full term of each lease on a straight-line basis.
Accordingly, a receivable is recorded from tenants for the
current difference between the straight-line rent and the rent
that is actually due from the tenant. This receivable amount is
included in the consolidated balance sheets as deferred
rent receivable. The deferred rent receivable increased
approximately $62.1 million to $331.9 million at
December 31, 2002, from $269.8 million at
December 31, 2001. The increase was due to a net increase
in the difference between the straight-line rent and the rent
that is actually due from tenants primarily from the acquisition
of the Properties acquired in the Spieker Merger on July 2,
2001 and certain development properties that were placed in
service.

Escrow Deposits and Restricted
Cash

Escrow deposits primarily consist of amounts held
by lenders to provide for future real estate tax expenditures
and tenant improvements, earnest money deposits on acquisitions
and net proceeds from tax-deferred dispositions. Restricted cash
represents amounts committed for various utility deposits and
security deposits. Certain of these amounts may be reduced upon
the fulfillment of certain obligations. The escrow deposits and
restricted cash decreased approximately $167.1 million to
$29.2 million at December 31, 2002, from
$196.3 million at December 31, 2001. The decrease was
primarily due to the disbursement of approximately
$162.0 million of proceeds from the sale of certain parking
facilities in 2001 that were deposited into a tax-deferred
escrow account.

Investments in Unconsolidated Joint
Ventures

Investments in unconsolidated joint ventures
decreased to approximately $1,087.8 million at
December 31, 2002 from $1,321.1 million at
December 31, 2001 primarily due to the consolidation of
several properties that were previously accounted for under the
equity method. See Developments  subfootnote (b)
for additional information.

Other Liabilities

Other liabilities increased from approximately
$330.3 million at December 31, 2001 to approximately
$392.0 million at December 31, 2002 primarily due to
an increase in prepaid rents and other accruals.

Market Risk

Qualitative Information About Market
Risk

Our future earnings, cash flows and fair values
relevant to financial instruments are dependent upon prevalent
market rates for those financial instruments. Market risk is the
risk of loss from adverse changes in market prices and interest
rates. We manage our market risk by matching projected cash
inflows from operating, investing and financing activities with
projected cash outflows to fund debt service, acquisitions,
capital expenditures, distributions to shareholders and other
cash requirements. The majority of our outstanding debt
obligations (maturing at various times through 2031) have fixed
interest rates which limit the risk of fluctuating interest
rates. We utilize certain derivative financial instruments at
times to further reduce interest rate risk. Interest rate
protection and swap agreements are used to convert some variable
rate

42



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##### 



debt to a fixed rate basis, fixed rate debt to a
variable rate basis, or to hedge anticipated financing
transactions. Derivatives are used for hedging purposes rather
than speculation. We do not enter into financial instruments for
trading purposes.


Quantitative Information About Market
Risk

Interest Rate Risk  Debt

The tables below disclose the effect of
hypothetical changes in market rates of interest on interest
expense for variable rate debt and the fair value of total
outstanding debt. Interest risk amounts were determined by
considering the impact of hypothetical interest rates on our
debt. This analysis does not reflect the impact that a changing
interest rate environment could have on the overall level of
economic activity. Further, in the event of a changing interest
rate environment, management would likely take actions to
further mitigate its exposure to the change. However, due to the
uncertainty of the specific actions that would be taken and
their possible effects, this analysis assumes no change in our
financial structure.

|                            |       |                         |            |            |                         |  |      |        |            |   |            |            |  |  |      |       |  
|--------------------------- | ----- | ----------------------- | ---------- | ---------- | ----------------------- |  | ---- | ------ | ---------- | - | ---------- | ---------- |  |  | ---- | ----- | -
|                            |       |                         |            |           
|                            |       | As of December 31, 2002 |            |            | As of December 31, 2001 | 
|                            |       |                         |            |            |                         | 
|                            |       |                         |            | Percent of |                         |  |      |        | Percent of |  
|                            |       | Amount                  |            |            | Total Debt              |  |      | Amount |            |   | Total Debt |           
|                            |       |                         |            |            |                         |  |      |        |            |   |            |           
|Total fixed rate debt       |       | $                       | 11,529,541 |            |                         |  | 97.9 | %      |            | $ | 10,891,325 |            |  |  | 90.8 | %    
|Total variable rate debt(a) |       |                         | 241,700    |            |                         |  | 2.1  | %      |            |   | 1,097,300  |            |  |  | 9.2  | %    
|                            |       |                         |            |            |                         |  |      |        |            |   |            |           
|                            | Total |                         | $          | 11,771,241 |                         |  |      | 100.0  | %          |   | $          | 11,988,625 |  |  |      | 100.0 | %
|                            |       |                         |            |            |                         |  |      |        |            |   |            |           



---

|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The variable rate debt as of December 31,
    2001 includes $817 million of fixed rate unsecured notes
    that were converted to a variable rate based on various spreads
    over LIBOR through several interest rate swap agreements.

|                  |  |                          |                         |  |                    |  |                |               |  |  |                      |  |  |  |                | 
|----------------- |  | ------------------------ | ----------------------- |  | ------------------ |  | -------------- | ------------- |  |  | -------------------- |  |  |  | -------------- | 
|                  |  | Hypothetical change in   |                         |  | Effect on Interest |  |                | Effect on Net |  |  | Effect on Fair Value | 
|As of             |  | market rates of interest |                         |  | Expense            |  |                | Income        |  |  | of Total Debt(b)     | 
|                  |  |                          |                         |  |                    |  |                |               |  |  |                      | 
|December 31, 2002 |  |                          | +10% or 14 basis points |  |                    |  | $0.3 million   |               |  |  | $(0.3) million       |  |  |  | $(190) million | 
|                  |  |                          | -10% or 14 basis points |  |                    |  | $(0.3) million |               |  |  | $0.3 million         |  |  |  | $197 million   | 
|December 31, 2001 |  |                          | +10% or 20 basis points |  |                    |  | $2.2 million   |               |  |  | $(2.2) million       |  |  |  | $(272) million | 
|                  |  |                          | -10% or 20 basis points |  |                    |  | $(2.2) million |               |  |  | $2.2 million         |  |  |  | $292 million   | 



---

|    |                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | As of December 31, 2002, the fair value of
    our fixed-rate debt was approximately $1.0 billion higher
    than the book value of approximately $11.5 billion
    primarily due to the general decrease in market interest rates
    on secured and unsecured debt. As of December 31, 2001, the
    fair value of our fixed-rate debt approximated book value.

Interest Rate Risk 
Derivatives

Interest Rate Swaps

During 2002 and 2001, we entered into and
terminated several interest rate swap agreements that hedged
certain unsecured notes. In each case, we were the variable
interest rate payer and the counterparty was the fixed rate
payer. The variable interest rates were based on various spreads
over LIBOR. The settlement dates correspond to the interest
payment dates of the respective unsecured notes being hedged.
Each of the interest rate swap agreements were to terminate on
the maturity date of the respective unsecured notes being
hedged. The interest rate swap agreements were designated as
fair value hedges. As of December 31, 2001, approximately
$1.4 million was included in other assets and approximately
$9.5 million was included in other liabilities which
represented the fair value of the interest rate swaps. A
corresponding amount is included in discounts/ premium on
unsecured notes. As of December 31, 2002, all of the
interest rate swaps in the table

43



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##### 



below had been terminated. The table below
summarizes the interest rate swap agreements that were effective
during 2002 and 2001.


|               |  |                  |                |                |                |  |               |               |       |          |              |                  |                  |       |       |  |  |  |                   | 
|-------------- |  | ---------------- | -------------- | -------------- | -------------- |  | ------------- | ------------- | ----- | -------- | ------------ | ---------------- | ---------------- | ----- | ----- |  |  |  | ----------------- | 
|               |  |                  |                | Total Proceeds |                |  |               |               | Fixed |          |              | Maturity Date of |                 
|Swap Effective |  | Swap Termination |                |                | from Swap      |  |               |               |       | Interest |              |                  | Unsecured Notes/ |      
|Date           |  | Date             |                |                | Termination(a) |  |               | Amount Hedged |       |          | Rate         |                  |                  | Swaps |      
|               |  |                  |                |                |                |  |               |               |       |          |              |                  |                  |       |      
|May 2002       |  |                  | September 2002 |                |                |  | $7.1 million  |               |       |          | $150 million |                  |                  |       | 8.38% |  |  |  | March 15, 2006    | 
|May 2002       |  |                  | September 2002 |                |                |  | $9.3 million  |               |       |          | $200 million |                  |                  |       | 8.38% |  |  |  | March 15, 2006    | 
|March 2002     |  |                  | September 2002 |                |                |  | $4.3 million  |               |       |          | $150 million |                  |                  |       | 6.50% |  |  |  | January 15, 2004  | 
|March 2002     |  |                  | September 2002 |                |                |  | $4.2 million  |               |       |          | $150 million |                  |                  |       | 6.50% |  |  |  | January 15, 2004  | 
|December 2001  |  |                  | February 2002  |                |                |  | $3.2 million  |               |       |          | $267 million |                  |                  |       | 7.00% |  |  |  | July 15, 2011     | 
|October 2001   |  |                  | September 2002 |                |                |  | $8.7 million  |               |       |          | $300 million |                  |                  |       | 6.63% |  |  |  | February 15, 2005 | 
|October 2001   |  |                  | September 2002 |                |                |  | $3.6 million  |               |       |          | $150 million |                  |                  |       | 6.50% |  |  |  | June 15, 2004     | 
|October 2001   |  |                  | September 2002 |                |                |  | $2.4 million  |               |       |          | $100 million |                  |                  |       | 6.50% |  |  |  | June 15, 2004     | 
|July 2001      |  |                  | September 2001 |                |                |  | $31.6 million |               |       |          | $500 million |                  |                  |       | 7.00% |  |  |  | July 15, 2011     | 
|June 2001      |  |                  | September 2001 |                |                |  | $15.8 million |               |       |          | $400 million |                  |                  |       | 6.63% |  |  |  | February 15, 2005 | 



---



|    |                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The proceeds from the swap terminations were
    recorded as additional premium on the respective unsecured note
    that was hedged by the terminated swap. The amount recorded as
    additional premium is being amortized over the remaining term of
    the unsecured notes.

Forward-Starting Interest Rate Swaps

In October 2002, we entered into
$1.1 billion of forward-starting interest rate swaps to
effectively fix the 10-year Treasury rate at approximately 3.7%
for note offerings that occurred in 2003 and are anticipated to
occur in 2004. The forward-starting interest rate swaps were
entered into at current market rates and, therefore, had no
initial cost. The terms of the forward-starting interest rate
swaps require us to pay a fixed-interest rate to the
counterparties and to receive a variable rate from the
counterparties. The swaps settle at six-month intervals
beginning in 2003 and 2004 and are scheduled to terminate in
2004. The market value of the forward-starting swaps at
December 31, 2002 was a liability of approximately
$18.6 million which is included in other liabilities and in
other comprehensive income. If the market interest rates were
10 basis points higher, our liability under the swaps would
have been approximately $3.0 million at December 31,
2002. If the market interest rates were 10 basis points
lower, our liability under these swaps would have been
approximately $21.8 million at December 31, 2002. In
January 2003, we settled one of the forward-starting swaps that
had a notional amount of $300 million and received
approximately $0.8 million. The forward-starting swap was
settled in connection with $500 million of unsecured notes
that were issued in February 2003. We are obligated to settle
the remaining swap agreements no later than the commencement of
their term in early 2004. Upon settlement of the swaps, we
may be obligated to pay the counterparties a settlement payment,
or alternatively to receive settlement proceeds from the
counterparties. Any monies paid or received will be amortized to
interest expense over the term of the respective note offering.

Market Rate Risk

During 2002, we sold our investments in
marketable securities that were owned as of December 31,
2001, and realized a gain of approximately $0.1 million. In
addition, we received marketable securities from a tenant in
connection with a lease termination and from the buyout of
another company in which we owned common stock. Our cost basis
in these investments is zero and the market value of
approximately $0.4 million is included in other assets and
other comprehensive income as of December 31, 2002.

In August 2001, we had put option agreements
outstanding in connection with the acquisition of certain
properties in 1997. We paid approximately $1.4 million in
settlement of these put options. We previously recognized
approximately $4.1 million as a total potential payment for the
put option exercise between the period from August 1999 to
August 2000. The difference of approximately $2.7 million
between the $4.1 million previously recognized and the $1.4
million actually paid was recognized as a put option settlement
during the third quarter 2001.

44



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During 2001, we recorded a permanent impairment
on our investment in marketable securities and reduced the
carrying value to a nominal amount, which approximates the
current market value. A 10% increase or decrease in the market
price of these securities would increase or decrease our
investment in these securities by approximately
$0.01 million. Changes in the market prices of these
securities are required to be reflected as a corresponding
adjustment to accumulated other comprehensive income. At
December 31, 2001, we had an unrealized holding loss on
these investments totaling approximately $0.1 million,
which is reflected as accumulated other comprehensive (loss).
There will be no impact on earnings or cash flows from market
price fluctuations unless we dispose of these investments or
write-down the investments upon the determination that these
investments have suffered a permanent impairment.

Capital Improvements, Tenant Improvements and
Leasing Commissions

Capital Improvements

Significant renovations and improvements which
improve or extend the useful life of our Properties are
capitalized. We categorize these capital expenditures as follows:



| |                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Capital
    Improvements  improvements that enhance the value
    of the property such as lobby renovations, roof replacement,
    significant renovations for Americans with Disabilities Act
    compliance, chiller replacement and elevator upgrades.                                                                                        
|
| |  Development and Redevelopment
    Costs  include costs associated with the
    development or redevelopment of a property including tenant
    improvements, leasing commissions, capitalized interest and
    operating costs incurred during completion of the property and
    incurred while the property is made ready for its intended use.

The table below details the costs incurred for
each type of improvement.

|                     |                        |                                  |   |                |                    |  |   |              |                |  |                    |         |         |                |   |         |                    |  |   |         |         |  |   |        |        | 
|-------------------- | ---------------------- | -------------------------------- | - | -------------- | ------------------ |  | - | ------------ | -------------- |  | ------------------ | ------- | ------- | -------------- | - | ------- | ------------------ |  | - | ------- | ------- |  | - | ------ | ------ | 
|                     |                        |                                 
|                     |                        | For the years ended December 31, |  
|                     |                        |                                  |  
|                     |                        |                                  |   |                |                    | 
|                     |                        | 2002                             |   |                | 2001               |  |   | 2000         |               
|                     |                        |                                  |   |                |                    |  |   |              |               
|                     |                        |                                  |   | Unconsolidated |                    |  |   |              | Unconsolidated |  |                    |         |         | Unconsolidated |  
|                     |                        | Consolidated                     |   |                | Properties (Equity |  |   | Consolidated |                |  | Properties (Equity |         |         | Consolidated   |   |         | Properties (Equity | 
|                     |                        | Properties                       |   |                | Offices share)    |  |   | Properties   |                |  | Offices share)    |         |         | Properties     |   |         | Offices share)    | 
|                     |                        |                                  |   |                |                    |  |   |              |                |  |                    |         |         |                |   |         |                    | 
|                     |                        |                                 
|                     |                        | (Dollars in thousands)           |  
|Capital Improvements |                        |                                  |   |                |                    |  |   |              |                |  |                    |         |         |                |   |         |                    |  |   |         |         |  |   |       
|                     | Capital improvements   |                                  | $ | 46,662         |                    |  | $ | 4,544        |                |  | $                  | 67,536  |         |                | $ | 4,577   |                    |  | $ | 47,858  |         |  | $ | 4,736  |       
|                     | Development costs      |                                  |   | 92,214         |                    |  |   | 110,244      |                |  |                    | 141,776 |         |                |   | 105,370 |                    |  |   | 132,509 |         |  |   | 77,789 |       
|                     | Redevelopment costs(a) |                                  |   | 32,976         |                    |  |   |             |                |  |                    | 17,308  |         |                |   |        |                    |  |   |        |         |  |   |       |       
|                     |                        |                                  |   |                |                    |  |   |              |                |  |                    |         |         |                |   |         |                    | 
|                     |                        | Total capital improvements       |   | $              | 171,852            |  |   | $            | 114,788        |  |                    | $       | 226,620 |                |   | $       | 109,947            |  |   | $       | 180,367 |  |   | $      | 82,525 | 
|                     |                        |                                  |   |                |                    |  |   |              |                |  |                    |         |         |                |   |         |                    | 



---



|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Properties included in redevelopment for 2002 are
    Tabor Center, Polk and Taylor Buildings, Worldwide Plaza and
    500-600 City Parkway. Redevelopments in 2001 are
    US Bancorp, 100 Summer and Tabor Center.

Tenant Improvements and Leasing
Commissions

Costs related to the renovation, alteration or
build-out of existing second-generation space, as well as
related leasing commissions, are capitalized. These tenant
improvements may include, but are not limited to, floor
coverings, ceilings, walls, HVAC, mechanical, electrical,
plumbing and fire protection systems. We categorize tenant
improvements and leasing commissions as follows:



| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Revenue
    enhancing costs incurred
    on space which is vacant at the time of acquisition or has been
    vacant for nine months or more.                                       
|
| |  | Non-revenue
    enhancing costs incurred
    in connection with the renewal or retenanting of currently
    leased space to maintain the revenue being generated by such
    space.

45



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##### 



The amounts shown below represent the total
tenant improvement and leasing commissions for leases which
commenced during the period, regardless of when such costs were
actually paid, which is a more useful measure of the total
tenant improvement and leasing commission costs for the periods
presented.

|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |       | 
|--------------------------------------------- | ---------- | -------------------------------- | ------- | ---------- | ----------- | - | ----- | ----------- | ---------- | - | ----------- | ------- |  | ----------- | ----- | ----- | ----------- | - | ------- | ------ |  | - | ----- | ----- | 
|                                              |            |                                 
|                                              |            | For the years ended December 31, |        
|                                              |            |                                  |        
|                                              |            |                                  |         |            |             |  
|                                              |            | 2002                             |         |            | 2001        |   |       | 2000        |           
|                                              |            |                                  |         |            |             |   |       |             |           
|                                              |            |                                  |         | Total Cost |             |   |       |             | Total Cost |   |             |         |  | Total Cost  |      
|                                              |            |                                  |         | per Square |             |   |       |             | per Square |   |             |         |  | per Square  |      
|                                              |            | Total Costs                      |         |            | Foot Leased |   |       | Total Costs |            |   | Foot Leased |         |  | Total Costs |       |       | Foot Leased |  
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Consolidated Properties:                      |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|Office Properties:                            |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|Revenue enhancing                             |            | $                                | 58,262  |            |             | $ | 22.82 |             |            | $ | 24,574      |         |  | $           | 21.24 |       |             | $ | 42,106  |        |  | $ | 27.80 |      
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Non-revenue enhancing:                        |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|                                              | Renewals   |                                  | $       | 69,710     |             |   | $     | 8.14        |            |   | $           | 34,729  |  |             | $     | 6.71  |             |   | $       | 33,739 |  |   | $     | 6.18  | 
|                                              | Retenanted |                                  |         | 124,969    |             |   |       | 16.91       |            |   |             | 102,271 |  |             |       | 15.92 |             |   |         | 84,009 |  |   |       | 13.48 | 
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average Non-revenue enhancing |            | $                                | 194,679 |            |             | $ | 12.20 |             |            | $ | 137,000     |         |  | $           | 11.81 |       |             | $ | 117,748 |        |  | $ | 10.07 |      
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Industrial Properties:                        |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|Revenue enhancing                             |            | $                                | 467     |            |             | $ | 9.65  |             |            |   |            |         |  |             |      |       |             |   |        |        |  |   |      |      
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Non-revenue enhancing:                        |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|                                              | Renewals   |                                  | $       | 2,540      |             |   | $     | 2.13        |            |   |             |        |  |             |       |      |             |   |         |       |  |   |       |      | 
|                                              | Retenanted |                                  |         | 686        |             |   |       | 2.57        |            |   |             | 110     |  |             |       | 8.31  |             |   |         |       |  |   |       |      | 
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average Non-revenue enhancing |            | $                                | 3,226   |            |             | $ | 2.21  |             |            | $ | 110         |         |  | $           | 8.31  |       |             |   |        |        |  |   |      |      
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Unconsolidated Joint Ventures(a):             |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|Revenue enhancing                             |            | $                                | 2,038   |            |             | $ | 21.91 |             |            | $ | 1,250       |         |  | $           | 25.77 |       |             | $ | 1,267   |        |  | $ | 21.98 |      
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Non-revenue enhancing:                        |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |        |  |   |       |      
|                                              | Renewals   |                                  | $       | 2,203      |             |   | $     | 7.80        |            |   | $           | 1,398   |  |             | $     | 5.42  |             |   | $       | 1,682  |  |   | $     | 4.87  | 
|                                              | Retenanted |                                  |         | 2,227      |             |   |       | 10.60       |            |   |             | 4,047   |  |             |       | 11.41 |             |   |         | 8,376  |  |   |       | 21.99 | 
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average Non-revenue enhancing |            | $                                | 4,430   |            |             | $ | 8.99  |             |            | $ | 5,445       |         |  | $           | 8.89  |       |             | $ | 10,058  |        |  | $ | 13.85 |      
|                                              |            |                                  |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  



---



|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents Equity Offices share of
    unconsolidated joint venture tenant improvement and leasing
    costs. All joint ventures are office properties.

The above information includes actual capital
improvements incurred and tenant improvements and leasing
commissions for leases which commenced during the years shown.
The amounts included in the consolidated statements of cash
flows represent the cash expenditures made during each of these
years. The differences between these amounts represent timing
differences between the lease commencement dates and the actual
cash expenditures as well as expenditures for corporate
furniture, fixtures and equipment, software,

46



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##### 



leasehold improvements and other. The
reconciliation between the amounts above for the consolidated
properties and the amounts disclosed in the consolidated
statements of cash flows are as follows:


|                                                                                                                             |  |                                  |         |   |      |   |         |      |  |   |         | 
|---------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | 
|                                                                                                                             |  |                                 
|                                                                                                                             |  | For the years ended December 31, |        
|                                                                                                                             |  |                                  |        
|                                                                                                                             |  | 2002                             |         |   | 2001 |   |         | 2000 | 
|                                                                                                                             |  |                                  |         |   |      |   |         |      | 
|                                                                                                                             |  |                                 
|                                                                                                                             |  | (Dollars in thousands)           |        
|Total capital improvements, tenant improvements
    and leasing commissions                                                  |  | $                                | 428,486 |   |      | $ | 388,304 |      |  | $ | 340,221 | 
|Timing differences                                                                                                           |  |                                  | (93     | ) |      |   | 15,106  |      |  |   | 12,219  | 
|Expenditures for corporate furniture, fixtures
    and equipment, software, leasehold improvements and other                 |  |                                  | 5,251   |   |      |   | 34,294  |      |  |   | 20,711  | 
|                                                                                                                             |  |                                  |         |   |      |   |         |      | 
|Total capital improvements, tenant improvements
    and leasing commissions on the consolidated statements of cash
    flows |  | $                                | 433,644 |   |      | $ | 437,704 |      |  | $ | 373,151 | 
|                                                                                                                             |  |                                  |         |   |      |   |         |      | 

Developments

Consolidated Developments:

We currently own directly and through joint
ventures several properties in various stages of development or
pre-development. These developments are funded by working
capital and the line of credit. Specifically identifiable direct
acquisition, development and construction costs are capitalized,
including, where applicable, salaries and related costs, real
estate taxes and interest essential to the development of a
property. The properties under development and all figures
stated below are as of December 31, 2002.

|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |         |  |  |   |         |  |  |  |    |  
|--------------------------- |  | ---------------------- | ------- |  | -------- |  | ----------------- | --------- |  | --------------- | --------- |  | ---------- | ----- | ------- | -------- | ----- |  | --------- | -------- |  | --------- | -------- |  | ---------- | ------ | ------- |  |  | - | ------- |  |  |  | -- | -
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |      
|                            |  |                        |         |  |          |  |                   |           |  | Equity Offices |           |  |            |       |        
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |        
|                            |  | Estimated              |         |  |          |  |                   |           |  |                 | Effective |  |            |       |         | Total    |       |  |          
|                            |  | Placed                 |         |  |          |  |                   |           |  |                 | Ownership |  |            | Costs |         |          | Total |  |           | Project  |  |           | Current  | 
|                            |  | in Service             |         |  |          |  | Number of         |           |  | Square          |           |  | Percentage |       |         | Incurred |       |  | Estimated |          |  | Estimated |          |  | Percentage |       
|                            |  | Date(a)                |         |  | Location |  |                   | Buildings |  |                 | Feet      |  |            | (a)   |         |          | (a)   |  |           | Costs(a) |  |           | Costs(a) |  |            | Leased |        
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        
|                            |  |                       
|                            |  | (Dollars in thousands) |        
|Wholly-Owned                |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |         |  |  |   |         |  |  |  |    |  
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        
|Kruse Woods V               |  |                        | 3Q/2003 |  |          |  | Lake Oswego, OR   |           |  |                 | 1         |  |            |       | 184,000 |          |       |  | 100       | %        |  | $         | 10,651   |  |            | $      | 33,900  |  |  | $ | 33,900  |  |  |  | 6  | %
|Douglas Corporate Center II |  |                        | 3Q/2003 |  |          |  | Roseville, CA     |           |  |                 | 1         |  |            |       | 108,000 |          |       |  | 100       | %        |  |           | 5,047    |  |            |        | 16,800  |  |  |   | 16,800  |  |  |  | 0  | %
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        
|                            |  |                        |         |  |          |  |                   |           |  |                 | 2         |  |            |       | 292,000 |          |       |  |           |          |  |           | 15,698   |  |            |        | 50,700  |  |  |   | 50,700  |  |  |  | 4  | %
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        
|Joint Venture               |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |         |  |  |   |         |  |  |  |    |  
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        
|Ferry Building(b),(c)       |  |                        | 3Q/2002 |  |          |  | San Francisco, CA |           |  |                 | 1         |  |            |       | 242,000 |          |       |  |           | (c)      |  |           | 59,932   |  |            |        | 83,600  |  |  |   | 107,100 |  |  |  | 51 | %
|Waters Edge Phase I        |  |                        | 3Q/2002 |  |          |  | Los Angeles, CA   |           |  |                 | 2         |  |            |       | 240,000 |          |       |  | 87.5      | %        |  |           | 55,988   |  |            |        | 74,300  |  |  |   | 76,500  |  |  |  | 0  | %
|Foundry Square II(b)        |  |                        | 3Q/2002 |  |          |  | San Francisco, CA |           |  |                 | 1         |  |            |       | 502,200 |          |       |  | 87.5      | %        |  |           | 121,688  |  |            |        | 155,500 |  |  |   | 177,700 |  |  |  | 23 | %
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        
|                            |  |                        |         |  |          |  |                   |           |  |                 | 4         |  |            |       | 984,200 |          |       |  |           |          |  |           | 237,608  |  |            |        | 313,400 |  |  |   | 361,300 |  |  |  | 24 | %
|                            |  |                        |         |  |          |  |                   |           |  |                 |           |  |            |       |         |          |       |  |           |          |  |           |          |  |            |        |        

Unconsolidated Developments:

|                             |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  |  |    |   |  |   |         |  |  |   |         |  |  |   |         |  |  |  |    |  
|---------------------------- |  |  | ------- |  |  |  | ----------------- |  |  |  | - |  |  |  | --------- |  |  |  | -- | - |  | - | ------- |  |  | - | ------- |  |  | - | ------- |  |  |  | -- | -
|Wilson/ Equity Office        |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  | 
|Developments(b)              |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  | 
|                             |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  | 
|Foundry Square IV            |  |  | 1Q/2003 |  |  |  | San Francisco, CA |  |  |  | 1 |  |  |  | 232,600   |  |  |  | 40 | % |  |   | 19,853  |  |  |   | 31,400  |  |  |   | 77,400  |  |  |  | 96 | %
|                             |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  |  |    |   |  |   |         |  |  |   |        
|                             |  |  |         |  |  |  |                   |  |  |  | 1 |  |  |  | 232,600   |  |  |  |    |   |  |   | 19,853  |  |  |   | 31,400  |  |  |   | 77,400  |  |  |  | 96 | %
|                             |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  |  |    |   |  |   |         |  |  |   |        
|Grand Total/Weighted Average |  |  |         |  |  |  |                   |  |  |  | 7 |  |  |  | 1,508,800 |  |  |  |    |   |  | $ | 273,159 |  |  | $ | 395,500 |  |  | $ | 489,400 |  |  |  | 31 | %
|                             |  |  |         |  |  |  |                   |  |  |  |   |  |  |  |           |  |  |  |    |   |  |   |         |  |  |   |        

|                                                                    |               |   |         |         | 
|------------------------------------------------------------------- | ------------- | - | ------- | ------- | 
|Balance Sheet Reconciliation of
    Developments:                   |               |   |         |        
|Consolidated developments  costs
    incurred as reflected above:  |               |   |         |        
|                                                                    | Wholly-owned  |   | $       | 15,698  | 
|                                                                    | Joint venture |   |         | 237,608 | 
|Minority interests portion of consolidated
    developments         |               |   | 31,431  |        
|                                                                    |               |   |        
|Total developments in process on the consolidated
    balance sheet |               | $ | 284,737 |        
|                                                                    |               |   |        

47



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##### 





---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Estimated Placed in Service Date represents
    the date the certificate of occupancy was or is currently
    anticipated to be obtained. Subsequent to obtaining the
    certificate of occupancy, the property is expected to undergo a
    lease-up period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | For consolidated developments, Equity
    Offices Costs Incurred and the Total Estimated Costs are
    based on Equity Offices Effective Ownership Percentage,
    and include, for Foundry Square II, Equity Offices
    portion of the first mortgage financing described in
    footnote (b). The Total Project Estimated Costs represent
    100% of the developments estimated costs including Equity
    Offices and any unaffiliated parties portions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    | For unconsolidated developments, the Effective
    Ownership Percentage represents Equity Offices direct
    interest in the development and its indirect interest through
    its 49.9% interest in Wilson/ Equity Office (W/EO).
    Equity Offices Costs Incurred and Total Estimated Costs
    are based on Equity Offices Effective Ownership Percentage
    and include Equity Offices portion of the first mortgage
    financing described in footnote (b). The Total Project
    Estimated Costs represent 100% of the developments
    estimated costs including Equity Offices, Wilson
    Investors (WI) and any third parties
    portions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | The Total Estimated Costs and the Total Project
    Estimated Costs are subject to change upon, or prior to, the
    completion of the development and include amounts required to
    lease the property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(b) | Equity Office and WI previously entered into a
    joint venture agreement to form W/EO for the purpose of
    developing, constructing, leasing and managing developments in
    northern California. W/EO is owned 49.9% by Equity Office and
    50.1% by WI. William Wilson III, a trustee of Equity
    Office, through his ownership of WI, owns approximately 22% of
    W/EO and approximately 30% of any promote to which WI is
    entitled under the joint venture agreement. Equity Office had
    agreed to loan up to $25 million to WI for its required
    contribution to W/EO at a 15% interest rate per annum. All
    amounts outstanding have been repaid and as a result of the
    recent transactions with WI described below, the loan commitment
    has been terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    | Equity Office created joint ventures with W/EO
    and, in certain cases, unaffiliated parties for the development
    of various office properties. Equity Office has agreed to
    provide first mortgage financing to the ownership entities of
    each of these developments at the greater of 6.5% or LIBOR plus
    3.25%, generally maturing 36 months after initial funding
    or earlier at the option of Equity Office in the event
    alternative financing sources are available on terms reasonably
    acceptable to WI and any unaffiliated party. The aggregate
    amount of any such financing would generally be capped at 70% of
    budgeted construction costs (76% in the case of Concar which, at
    December 31, 2002 had been completed and leased and as such
    is no longer included in the Developments summary above). At
    December 31, 2002, Equity Office had committed to make
    mortgage loans for Foundry Square IV and Concar totaling
    approximately $96 million, of which approximately
    $74 million in principal and approximately $.4 million
    in accrued interest was outstanding. In addition, the mortgage
    loan commitment on Foundry Square II is approximately
    $117 million of which approximately $77 million of
    principal and $.4 million in accrued interest was
    outstanding as of December 31, 2002.                                                             
|   
|    | In December 2002, Equity Office, W/EO and WI
    completed a transaction pursuant to which Equity Office acquired
    W/EOs interests in various projects known as Foundry
    Square II, Foundry Square III (a land parcel under
    option), the Ferry Building, San Rafael Corporate Center I
    and San Rafael Corporate Center II (a land parcel). WI
    acquired W/EOs interest in a project known as Larkspur (a
    land parcel under option) and WI acquired the operating business
    and all assets of W/EO other than its ownership interests in the
    development projects known as Foundry Square IV and Concar.
    In accordance with the W/EO operating agreement, Equity Office
    may, but is not required to, purchase the W/EO interest in
    Foundry Square IV and Concar, subsequent to project
    stabilization. A WI subsidiary will continue providing the
    development management services to Foundry Square II, the
    Ferry Building and Concar. Equity Office also engaged a
    subsidiary of WI to provide leasing brokerage services for
    Foundry Square II and the Ferry Building. Equity
    Offices and W/EOs interests in Foundry
    Square IV and Concar remain unchanged as a result of this
    transaction. Joint ventures with other unaffiliated parties on
    the projects in which Equity Office acquired W/EOs
    interest also remain unchanged as a result of this transaction.
|   
|(c) | A joint venture between Equity Office and other
    unaffiliated parties leased the Ferry Building from the City and
    County of San Francisco, through its Port Commission (the
    Port). Under this lease, the Port is paid a stated
    base rent. In addition, once the lessee has received from the
    project a cumulative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

48



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##### 



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | preferred return of 8% (prior to stabilization)
    and 11% (after stabilization), then 50% of the proceeds from the
    operation and ownership of the project are paid to the Port as
    percentage rent.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The joint venture is redeveloping the Ferry
    Building in a manner to permit the use of federal rehabilitation
    tax credits (Historic Tax Credits). Since the
    original members of the joint venture could not take full
    advantage of the Historic Tax Credits, the joint venture
    admitted a new member who could do so. This investor member will
    contribute approximately $23.5 million in equity to fund a
    portion of the Total Project Estimated Costs for the project,
    and will be entitled to a preferred return with an effective
    annual rate of approximately 3% on its capital investment. The
    investor members interest in the joint venture is subject
    to put/call rights during the sixth and seventh years after the
    Ferry Building is placed in service. Upon the purchase of the
    investor members interest pursuant to the put/call, it is
    estimated that the joint venture will retain approximately
    $11 million of the capital contributed by the investor
    member, based on a formula to determine the purchase price for
    the investor members interest and after taking into
    account the preferred return that will have been paid to the
    investor member by such time. Through the creation of a master
    lease, Equity Offices Effective Ownership Percentage in
    the net cash flow of the Ferry Building project is effectively
    100%, after the payment to the Port of the percentage rent
    described above and the distribution of preferred returns to the
    investor member.

In addition to the developments described above,
we own or have under option various land parcels available for
development. These sites represent possible future development
of up to approximately 12 million square feet of office
space. The development of these sites will be impacted by the
timing and likelihood of success of the entitlement process,
both of which are uncertain. These various sites include, among
others: Russia Wharf, Boston, MA; Reston Town Center, Reston,
VA; Prominence in Buckhead, Atlanta, GA; Perimeter Center,
Atlanta, GA; Tabor Center, Denver, CO; Bridge Pointe, San Diego,
CA; La Jolla Centre, San Diego, CA; Orange Center, Orange, CA;
Waters Edge, Los Angeles, CA; Skyport Plaza, San Jose, CA;
Foundry Square, San Francisco, CA; San Rafael Corporate Center,
San Rafael, CA; Station Oaks, Walnut Creek, CA; Parkshore Plaza,
Folsom, CA; City Center Bellevue; Bellevue, WA; and
8th Street, Bellevue, WA.

Consolidated developments in process increased to
approximately $284.7 million at December 31, 2002 compared
to $165.0 million at December 31, 2001, primarily due to
the consolidation of the Ferry Building and Foundry
Square II in 2002 (see Item 8. Financial Statements
and Supplementary Data  Note 8 
Investment in Unconsolidated Joint
Venture-subfootnote (6)), the commencement of two
developments and additional expenditures made during 2002,
partially offset by two developments that were placed in service.

Subsequent Events

The following transactions occurred subsequent to
December 31, 2002 through March 13, 2003:

In January 2003, EOP Partnership issued
$500 million of 5.875% unsecured notes due January 15,
2013. Including all offering expenses, the all-in effective rate
of the unsecured notes is 5.98%. The notes are guaranteed by
Equity Office. Total cash proceeds net of selling commissions
and other expenses were approximately $494.9 million. The
net proceeds were used to repay $300 million of unsecured
notes that matured in February 2003. The remaining net proceeds
were used to repay outstanding balances on the line of credit
and for general business purposes, including working capital.

In January 2003, we sold the ABAM Building,
Washington Park and the Federal Way office buildings to an
unaffiliated party for approximately $13.5 million. The
properties comprised three office properties, approximately
114,527 square feet and are located in Seattle, Washington.

In February 2003, we sold the U.S. West Dex
Center office building to an unaffiliated party for
approximately $11.6 million. The property comprised one
office building, approximately 136,176 square feet and is
located in Salt Lake City, Utah.

In February 2003, we sold the Commerce Park
office building to an unaffiliated party for approximately
$16.1 million. The property comprised one office building,
approximately 94,367 square feet and is located in Santa Monica,
CA.

Effective in February 2003, we amended our
third-party insurance coverage for acts of terrorism as a result
of the Terrorism Risk Insurance Act of 2002 (TRIA)
enacted by Congress and signed into law by President Bush on
November 26, 2002. We canceled the terrorism insurance
program that provided a limit of $270 million in the
aggregate per year and replaced it with a limit of
$825 million in the current property

49



---



##### 



insurance program which provides coverage for
chemical and biological exposure, whereas the previous insurance
coverage excluded this exposure. Under TRIA, we have a per
occurrence deductible of $750,000 and retain 10% of each and
every loss up to a maximum of $33.25 million per
occurrence, inclusive of the deductible. The federal government
is obligated to cover the remaining 90% of the loss above the
deductible up to $100 billion in the aggregate annually.


In March 2003, we sold the Janss Court office
building to an unaffiliated party for approximately
$35.5 million. The property comprised one office building,
approximately 92,403 square feet, 32 residential units and
is located in Santa Monica, CA.

Inflation

Substantially all of our office leases require
the tenant to pay, as additional rent, a portion of any
increases in real estate taxes (except in the case of certain
California leases, which limit the ability of the landlord to
pass through to the tenants the effect of increased real estate
taxes attributable to a sale of real property interests) and
operating expenses over a base amount. In addition, many of our
office leases provide for fixed increases in base rent or
indexed escalations (based on the Consumer Price Index or other
measures). We believe that the majority of inflationary
increases in expenses will be offset, in part, by the expense
reimbursements and contractual rent increases described above.

Funds From Operations

Funds from Operation (FFO) is a
non-GAAP financial measure. We believe FFO, as defined by the
Board of Governors of the National Association of Real Estate
Investment Trusts (NAREIT), to be an appropriate
measure of performance for an equity REIT. While FFO is a
relevant and widely used measure of operating performance of
equity REITs, it does not represent cash flow from operations or
net income as defined by GAAP, and it should not be considered
as an alternative to these indicators in evaluating liquidity or
operating performance.

The following table reflects the reconciliation
of FFO to net income available for Common Shares, the most
directly comparable GAAP measure, for the five years ended
December 31, 2002:

|                                       |                                                                                                                                        |                                 |           |         |      |   |           |         |   |   |         |         |   |      |         |         |   |   |         |         |  
|-------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | --------- | ------- | ---- | - | --------- | ------- | - | - | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                       |                                                                                                                                        |                                
|                                       |                                                                                                                                        | For the year ended December 31, |          
|                                       |                                                                                                                                        |                                 |          
|                                       |                                                                                                                                        | 2002                            |           |         | 2001 |   |           | 2000    |   |   | 1999    |         |   | 1998 |        
|                                       |                                                                                                                                        |                                 |           |         |      |   |           |         |   |   |         |         |   |      |        
|                                       |                                                                                                                                        |                                
|                                       |                                                                                                                                        | (Dollars in thousands)          |          
|Net income available for Common Shares |                                                                                                                                        | $                               | 707,642   |         |      | $ | 563,796   |         |   | $ | 424,936 |         |   | $    | 382,092 |         |   | $ | 316,827 |        
|Add back (deduct):                     |                                                                                                                                        |                                 |           |         |      |   |           |         |   |   |         |         |   |      |         |         |   |   |         |        
|                                       | Net income allocated to minority interests in EOP
    Partnership                                                                      |                                 |           | 89,205  |      |   |           | 76,249  |   |   |         | 59,376  |   |      |         | 48,172  |   |   |         | 36,226  |  
|                                       | Real estate related depreciation and amortization
    (including Equity Offices share of unconsolidated joint
    ventures)           |                                 |           | 719,240 |      |   |           | 605,488 |   |   |         | 453,909 |   |      |         | 363,275 |   |   |         | 309,620 |  
|                                       | Real estate related depreciation and amortization
    and net gain on sales of real estate included in discontinued
    operations     |                                 |           | (11,114 | )    |   |           | 8,434   |   |   |         | 5,476   |   |      |         | 5,215   |   |   |         | 3,899   |  
|                                       | Impairment on assets held for sale                                                                                                     |                                 |           |        |      |   |           | 2,536   |   |   |         |        |   |      |         |        |   |   |         |        |  
|                                       | Net gain on sales of real estate (excluding
    allocation of gain on sale of real estate of $1,473 in 2000 to
    minority interests) |                                 |           |        |      |   |           | (81,662 | ) |   |         | (34,540 | ) |      |         | (59,661 | ) |   |         | (12,433 | )
|                                       | Net gain on sale of unconsolidated joint venture                                                                                       |                                 |           | (429    | )    |   |           |        |   |   |         |        |   |      |         |        |   |   |         |        |  
|                                       | Extraordinary item                                                                                                                     |                                 |           |        |      |   |           | 1,000   |   |   |         |        |   |      |         |        |   |   |         |        |  
|                                       | Cumulative effect of a change in accounting
    principle                                                                              |                                 |           |        |      |   |           | 1,142   |   |   |         |        |   |      |         |        |   |   |         |        |  
|                                       |                                                                                                                                        |                                 |           |         |      |   |           |         |   |   |         |         |   |      |        
|Funds from Operations                  |                                                                                                                                        | $                               | 1,504,544 |         |      | $ | 1,176,983 |         |   | $ | 909,157 |         |   | $    | 739,093 |         |   | $ | 654,139 |        
|                                       |                                                                                                                                        |                                 |           |         |      |   |           |         |   |   |         |         |   |      |        

50



---



##### 



|                                                                                  |                      |                                 |     |            |      |  |     |            |   |  |      |            |   |      |     |          |   |  |     |            |  
|--------------------------------------------------------------------------------- | -------------------- | ------------------------------- | --- | ---------- | ---- |  | --- | ---------- | - |  | ---- | ---------- | - | ---- | --- | -------- | - |  | --- | ---------- | -
|                                                                                  |                      |                                
|                                                                                  |                      | For the year ended December 31, |    
|                                                                                  |                      |                                 |    
|                                                                                  |                      | 2002                            |     |            | 2001 |  |     | 2000       |   |  | 1999 |            |   | 1998 |    
|                                                                                  |                      |                                 |     |            |      |  |     |            |   |  |      |            |   |      |    
|                                                                                  |                      |                                
|                                                                                  |                      | (Dollars in thousands)          |    
|Cash flow provided by (used for):                                                 |                      |                                 |     |            |      |  |     |            |   |  |      |            |   |      |     |          |   |  |     |           
|                                                                                  | Operating Activities |                                 | $   | 1,390,949  |      |  | $   | 1,241,601  |   |  | $    | 907,343    |   |      | $   | 720,711  |   |  | $   | 759,151    |  
|                                                                                  | Investing Activities |                                 | $   | 85,173     |      |  | $   | (1,348,203 | ) |  | $    | (1,311,778 | ) |      | $   | (67,138  | ) |  | $   | (2,231,712 | )
|                                                                                  | Financing Activities |                                 | $   | (1,478,772 | )    |  | $   | 114,467    |   |  | $    | 455,353    |   |      | $   | (718,315 | ) |  | $   | 1,310,788  |  
|Ratio of earnings to combined fixed charges and
    preferred share distributions |                      |                                 | 1.9 |            |      |  | 1.7 |            |   |  | 1.7  |            |   |      | 1.7 |          |   |  | 1.8 |           

|                                                                                                                                                |  |                                  |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                                                                                                                |  |                                 
|                                                                                                                                                |  | For the years ended December 31, |      
|                                                                                                                                                |  |                                  |      
|                                                                                                                                                |  | 2002                             |       |   | 2001 |   |       | 2000 |  |   | 1999  |   |  | 1998 |      
|                                                                                                                                                |  |                                  |       |   |      |   |       |      |  |   |       |   |  |      |      
|Reconciliation of diluted earnings per share
    to diluted funds from operations per share:                                                    |  |                                  |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net income available for Common
    Shares                                                                                                      |  | $                                | 1.70  |   |      | $ | 1.55  |      |  | $ | 1.52  |   |  | $    | 1.48  |   |  | $ | 1.24  |  
|Add real estate related depreciation and
    amortization (including Equity Offices share of
    unconsolidated joint ventures)                |  |                                  | 1.53  |   |      |   | 1.47  |      |  |   | 1.42  |   |  |      | 1.25  |   |  |   | 1.09  |  
|Add / deduct real estate related depreciation and
    amortization and net gain on sales of real estate included in
    discontinued operations |  |                                  | (0.02 | ) |      |   | 0.02  |      |  |   | 0.02  |   |  |      | 0.02  |   |  |   | 0.01  |  
|Add impairment on assets held for sale                                                                                                          |  |                                  |      |   |      |   | 0.01  |      |  |   |      |   |  |      |      |   |  |   |      |  
|Less gain on sales of real estate                                                                                                               |  |                                  |      |   |      |   | (0.20 | )    |  |   | (0.11 | ) |  |      | (0.20 | ) |  |   | (0.04 | )
|                                                                                                                                                |  |                                  |       |   |      |   |       |      |  |   |       |   |  |      |      
|Funds from operations available for Common
    Shares                                                                                           |  | $                                | 3.21  |   |      | $ | 2.86  |      |  | $ | 2.85  |   |  | $    | 2.54  |   |  | $ | 2.30  |  
|                                                                                                                                                |  |                                  |       |   |      |   |       |      |  |   |       |   |  |      |      

FFO is defined as net income, computed in
accordance with GAAP, excluding gains (or losses) from sales of
properties (which we believe includes impairments on properties
held for sale), plus real estate related depreciation and
amortization and after adjustments for unconsolidated
partnerships and joint ventures. We believe that FFO is helpful
to investors as a measure of the performance of an equity REIT
because, along with cash flow from operating activities,
investing activities and financing activities, it provides
investors with an indication of the ability of a company to
incur and service debt, to make capital expenditures and to fund
other cash needs. Equity Office computes FFO in accordance with
standards established by NAREIT, which may not be comparable to
FFO reported by other REITs that do not define the term in
accordance with the current NAREIT definition or that interpret
the current NAREIT definition differently than Equity Office.
FFO does not represent cash generated from operating activities
in accordance with GAAP, nor does it represent cash available to
pay distributions and should not be considered as an alternative
to net income, determined in accordance with GAAP, as an
indication of Equity Offices financial performance or to
cash flow from operating activities, determined in accordance
with GAAP, as a measure of Equity Offices liquidity, nor
is it indicative of funds available to fund Equity Offices
cash needs, including its ability to make cash distributions.

Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about
market risk are incorporated herein by reference from
Item 7.  Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Market Risk.

51



---



##### 



Item 8.     Financial
Statements and Supplementary Data.

REPORT OF INDEPENDENT AUDITORS

The Board of Trustees and Shareholders of Equity
Office Properties Trust

We have audited the accompanying consolidated
balance sheets of Equity Office Properties Trust (Equity
Office) as of December 31, 2002 and 2001, and the
related consolidated statements of operations,
shareholders equity, net comprehensive income and cash
flows for each of the three years in the period ended
December 31, 2002. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These
financial statements and the schedule are the responsibility of
Equity Offices management. Our responsibility is to
express an opinion on these financial statements and the
schedule based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
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, the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Equity Office at
December 31, 2002 and 2001, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.



| |                  
| | -----------------
| | ERNST & YOUNG LLP

Chicago, Illinois

February 5, 2003, except for Note 26


as to which the date is March 13, 2003


52



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##### 



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS


|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |         |   |            |            |         | 
|------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ------- | - | ---------- | ---------- | ------- | 
|                                                              |                                                                                                               |                                                                                                                                        
|                                                              |                                                                                                               | December 31,                                                                                                                            |                                                                                                                                                      
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                      
|                                                              |                                                                                                               | 2002                                                                                                                                    |                                                                                                                                                       |            | 2001       |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               |                                                                                                                                        
|                                                              |                                                                                                               | (Dollars in thousands,                                                                                                                  |                                                                                                                                                      
|                                                              |                                                                                                               | except per share amounts)                                                                                                               |                                                                                                                                                      
|Assets:                                                       |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |         |   |           
|                                                              | Investment in real estate                                                                                     |                                                                                                                                         | $                                                                                                                                                     | 24,625,927 |            |         | $ | 24,399,658 |           
|                                                              | Developments in process                                                                                       |                                                                                                                                         |                                                                                                                                                       | 284,737    |            |         |   | 164,997    |           
|                                                              | Land available for development                                                                                |                                                                                                                                         |                                                                                                                                                       | 252,852    |            |         |   | 251,696    |           
|                                                              | Accumulated depreciation                                                                                      |                                                                                                                                         |                                                                                                                                                       | (2,077,613 | )          |         |   | (1,494,301 | )         
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               | Investment in real estate, net of accumulated
    depreciation                                                                          |                                                                                                                                                       |            | 23,085,903 |         |   |            | 23,322,050 |        
|                                                              | Cash and cash equivalents                                                                                     |                                                                                                                                         |                                                                                                                                                       | 58,471     |            |         |   | 61,121     |           
|                                                              | Tenant and other receivables (net of allowance
    for doubtful accounts of $11,695 and $7,794, respectively) |                                                                                                                                         |                                                                                                                                                       | 77,597     |            |         |   | 120,425    |           
|                                                              | Deferred rent receivable                                                                                      |                                                                                                                                         |                                                                                                                                                       | 331,932    |            |         |   | 269,796    |           
|                                                              | Escrow deposits and restricted cash                                                                           |                                                                                                                                         |                                                                                                                                                       | 29,185     |            |         |   | 196,289    |           
|                                                              | Investments in unconsolidated joint ventures                                                                  |                                                                                                                                         |                                                                                                                                                       | 1,087,815  |            |         |   | 1,321,127  |           
|                                                              | Deferred financing costs (net of accumulated
    amortization of $48,801 and $36,198, respectively)           |                                                                                                                                         |                                                                                                                                                       | 67,151     |            |         |   | 77,880     |           
|                                                              | Deferred leasing costs (net of accumulated
    amortization of $115,710 and $78,600, respectively)            |                                                                                                                                         |                                                                                                                                                       | 235,002    |            |         |   | 187,336    |           
|                                                              | Prepaid expenses and other assets (net of
    discounts of $66,557 and $67,413, respectively)                 |                                                                                                                                         |                                                                                                                                                       | 273,727    |            |         |   | 252,398    |           
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               | Total Assets                                                                                                                            |                                                                                                                                                       | $          | 25,246,783 |         |   | $          | 25,808,422 |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|Liabilities, Minority Interests and
    Shareholders Equity: |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |         |   |           
|                                                              | Mortgage debt (including a net discount of
    $(12,584) and $(11,761), respectively)                         |                                                                                                                                         | $                                                                                                                                                     | 2,507,890  |            |         | $ | 2,650,338  |           
|                                                              | Unsecured notes (including a net premium of
    $41,151 and $17,487, respectively)                            |                                                                                                                                         |                                                                                                                                                       | 9,057,651  |            |         |   | 9,093,987  |           
|                                                              | Line of credit                                                                                                |                                                                                                                                         |                                                                                                                                                       | 205,700    |            |         |   | 244,300    |           
|                                                              | Accounts payable and accrued expenses                                                                         |                                                                                                                                         |                                                                                                                                                       | 560,101    |            |         |   | 570,744    |           
|                                                              | Distribution payable                                                                                          |                                                                                                                                         |                                                                                                                                                       | 5,654      |            |         |   | 6,060      |           
|                                                              | Other liabilities                                                                                             |                                                                                                                                         |                                                                                                                                                       | 391,963    |            |         |   | 330,277    |           
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               | Total Liabilities                                                                                                                       |                                                                                                                                                       |            | 12,728,959 |         |   |            | 12,895,706 |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              | Commitments and contingencies                                                                                 |                                                                                                                                         |                                                                                                                                                       |           |            |         |   |           |           
|                                                              | Minority Interests:                                                                                           |                                                                                                                                         |                                                                                                                                                       |            |            |         |   |            |           
|                                                              |                                                                                                               | EOP Partnership                                                                                                                         |                                                                                                                                                       |            | 1,246,543  |         |   |            | 1,423,333  |        
|                                                              |                                                                                                               | Partially owned properties                                                                                                              |                                                                                                                                                       |            | 185,809    |         |   |            | 181,017    |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               | Total Minority Interests                                                                                                                |                                                                                                                                                       |            | 1,432,352  |         |   |            | 1,604,350  |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              | Shareholders Equity:                                                                                         |                                                                                                                                         |                                                                                                                                                       |            |            |         |   |            |           
|                                                              |                                                                                                               | Preferred Shares, 100,000,000 authorized:                                                                                               |                                                                                                                                                       |            |            |         |   |            |            |        
|                                                              |                                                                                                               |                                                                                                                                         | 8.98% Series A Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share,
    0 and 7,994,000 issued and outstanding        |            |            |        |   |            |            | 199,850 | 
|                                                              |                                                                                                               |                                                                                                                                         | 5.25% Series B Convertible, Cumulative
    Redeemable Preferred Shares, liquidation preference
    $50.00 per share, 5,990,000 issued and outstanding |            |            | 299,500 |   |            |            | 299,500 | 
|                                                              |                                                                                                               |                                                                                                                                         | 8.625% Series C Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share,
    4,562,900 issued and outstanding             |            |            | 114,073 |   |            |            | 114,073 | 
|                                                              |                                                                                                               |                                                                                                                                         | 7.875% Series E Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share,
    6,000,000 issued and outstanding             |            |            | 150,000 |   |            |            | 150,000 | 
|                                                              |                                                                                                               |                                                                                                                                         | 8.0% Series F Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share,
    4,000,000 issued and outstanding               |            |            | 100,000 |   |            |            | 100,000 | 
|                                                              |                                                                                                               |                                                                                                                                         | 7.75% Series G Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share,
    8,500,000 and 0 issued and outstanding        |            |            | 212,500 |   |            |            |        | 
|                                                              |                                                                                                               | Common Shares, $0.01 par value;
    750,000,000 shares authorized, 411,200,998 and
    414,548,673 issued and outstanding, respectively |                                                                                                                                                       |            | 4,112      |         |   |            | 4,145      |        
|                                                              | Additional paid in capital                                                                                    |                                                                                                                                         |                                                                                                                                                       | 10,691,610 |            |         |   | 10,788,273 |           
|                                                              | Deferred compensation                                                                                         |                                                                                                                                         |                                                                                                                                                       | (15,472    | )          |         |   | (19,822    | )         
|                                                              | Dividends in excess of accumulated earnings                                                                   |                                                                                                                                         |                                                                                                                                                       | (452,636   | )          |         |   | (327,537   | )         
|                                                              | Accumulated other comprehensive (loss)                                                                        |                                                                                                                                         |                                                                                                                                                       | (18,215    | )          |         |   | (116       | )         
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               | Total Shareholders Equity                                                                                                              |                                                                                                                                                       |            | 11,085,472 |         |   |            | 11,308,366 |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        
|                                                              |                                                                                                               | Total Liabilities, Minority Interests and
    Shareholders Equity                                                                      |                                                                                                                                                       | $          | 25,246,783 |         |   | $          | 25,808,422 |        
|                                                              |                                                                                                               |                                                                                                                                         |                                                                                                                                                       |            |            |        

See accompanying notes.

53



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##### 



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |         |           |         |             |         |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------- | ----------- | ------- | --------- | ------- | ----------- | ------- | --------- | ------- | ----------- | ------- | --------- | 
|                                                                                                                                                                   |                                                                             |                                                                     
|                                                                                                                                                                   |                                                                             | For the years ended December 31,                                     |               
|                                                                                                                                                                   |                                                                             |                                                                      |               
|                                                                                                                                                                   |                                                                             | 2002                                                                 |                |             | 2001    |           |         | 2000        |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   |                                                                             |                                                                     
|                                                                                                                                                                   |                                                                             | (Dollars in thousands,                                               |               
|                                                                                                                                                                   |                                                                             | except per share amounts)                                            |               
|Revenues:                                                                                                                                                          |                                                                             |                                                                      |                |             |         |           |         |             |         |           |         |            
|                                                                                                                                                                   | Rental                                                                      |                                                                      | $              | 2,714,705   |         |           | $       | 2,384,187   |         |           | $       | 1,705,353   |        
|                                                                                                                                                                   | Tenant reimbursements                                                       |                                                                      |                | 505,822     |         |           |         | 444,503     |         |           |         | 322,145     |        
|                                                                                                                                                                   | Parking                                                                     |                                                                      |                | 115,664     |         |           |         | 125,284     |         |           |         | 109,769     |        
|                                                                                                                                                                   | Other                                                                       |                                                                      |                | 131,657     |         |           |         | 71,690      |         |           |         | 47,788      |        
|                                                                                                                                                                   | Fee income                                                                  |                                                                      |                | 15,907      |         |           |         | 15,085      |         |           |         | 10,931      |        
|                                                                                                                                                                   | Interest / dividends                                                        |                                                                      |                | 22,327      |         |           |         | 40,214      |         |           |         | 36,076      |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   |                                                                             |                                                                      | Total revenues |             |         | 3,506,082 |         |             |         | 3,080,963 |         |             |         | 2,232,062 | 
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Expenses:                                                                                                                                                          |                                                                             |                                                                      |                |             |         |           |         |             |         |           |         |            
|                                                                                                                                                                   | Interest:                                                                   |                                                                      |                |             |         |           |         |             |         |           |         |             |        
|                                                                                                                                                                   |                                                                             | Expense incurred                                                     |                |             | 810,129 |           |         |             | 726,930 |           |         |             | 523,860 |          
|                                                                                                                                                                   |                                                                             | Amortization of deferred financing costs and
    prepayment expenses |                |             | 4,886   |           |         |             | 14,996  |           |         |             | 11,493  |          
|                                                                                                                                                                   | Depreciation                                                                |                                                                      |                | 631,262     |         |           |         | 524,632     |         |           |         | 394,775     |        
|                                                                                                                                                                   | Amortization                                                                |                                                                      |                | 52,930      |         |           |         | 41,964      |         |           |         | 26,420      |        
|                                                                                                                                                                   | Real estate taxes                                                           |                                                                      |                | 373,787     |         |           |         | 341,550     |         |           |         | 265,591     |        
|                                                                                                                                                                   | Insurance                                                                   |                                                                      |                | 44,341      |         |           |         | 21,840      |         |           |         | 12,002      |        
|                                                                                                                                                                   | Repairs and maintenance                                                     |                                                                      |                | 351,139     |         |           |         | 296,948     |         |           |         | 230,775     |        
|                                                                                                                                                                   | Property operating                                                          |                                                                      |                | 348,736     |         |           |         | 309,255     |         |           |         | 233,758     |        
|                                                                                                                                                                   | Ground rent                                                                 |                                                                      |                | 20,446      |         |           |         | 16,812      |         |           |         | 9,896       |        
|                                                                                                                                                                   | General and administrative                                                  |                                                                      |                | 137,468     |         |           |         | 109,672     |         |           |         | 88,696      |        
|                                                                                                                                                                   | Impairment on securities and other investments                              |                                                                      |                |            |         |           |         | 132,684     |         |           |         |            |        
|                                                                                                                                                                   | Impairment on assets held for sale                                          |                                                                      |                |            |         |           |         | 2,536       |         |           |         |            |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   |                                                                             |                                                                      | Total expenses |             |         | 2,775,124 |         |             |         | 2,539,819 |         |             |         | 1,797,266 | 
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and net gain on sales of real estate |                                                                             |                                                                      | 730,958        |             |         |           | 541,144 |             |         |           | 434,796 |            
|Income taxes                                                                                                                                                       |                                                                             |                                                                      | (9,394         | )           |         |           | (8,814  | )           |         |           | (2,719  | )          
|Minority Interests:                                                                                                                                                |                                                                             |                                                                      |                |             |         |           |         |             |         |           |         |            
|                                                                                                                                                                   | EOP Partnership                                                             |                                                                      |                | (89,205     | )       |           |         | (76,249     | )       |           |         | (59,376     | )      
|                                                                                                                                                                   | Partially owned properties                                                  |                                                                      |                | (7,200      | )       |           |         | (8,685      | )       |           |         | (6,843      | )      
|Income from investment in unconsolidated joint
    ventures                                                                                                        |                                                                             |                                                                      | 106,852        |             |         |           | 69,203  |             |         |           | 56,251  |            
|Net gain on sales of real estate                                                                                                                                   |                                                                             |                                                                      |               |             |         |           | 81,662  |             |         |           | 36,013  |            
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Income from continuing operations                                                                                                                                  |                                                                             |                                                                      | 732,011        |             |         |           | 598,261 |             |         |           | 458,122 |            
|Discontinued operations (including net gain on
    sales of real estate of $17,926 in 2002)                                                                        |                                                                             |                                                                      | 38,204         |             |         |           | 22,063  |             |         |           | 12,738  |            
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Income before extraordinary item and cumulative
    effect of a change in accounting principle                                                                     |                                                                             |                                                                      | 770,215        |             |         |           | 620,324 |             |         |           | 470,860 |            
|Extraordinary item                                                                                                                                                 |                                                                             |                                                                      |               |             |         |           | (1,000  | )           |         |           |        |            
|Cumulative effect of change in accounting
    principle                                                                                                            |                                                                             |                                                                      |               |             |         |           | (1,142  | )           |         |           |        |            
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Net income                                                                                                                                                         |                                                                             |                                                                      | 770,215        |             |         |           | 618,182 |             |         |           | 470,860 |            
|Put option settlement                                                                                                                                              |                                                                             |                                                                      |               |             |         |           | 2,655   |             |         |           | (2,576  | )          
|Preferred distributions, net                                                                                                                                       |                                                                             |                                                                      | (62,573        | )           |         |           | (57,041 | )           |         |           | (43,348 | )          
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Net income available for Common Shares                                                                                                                             |                                                                             | $                                                                    | 707,642        |             |         | $         | 563,796 |             |         | $         | 424,936 |            
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Earnings per share 
    basic:                                                                                                                                    |                                                                             |                                                                      |                |             |         |           |         |             |         |           |         |            
|                                                                                                                                                                   | Income from continuing operations                                           |                                                                      | $              | 1.76        |         |           | $       | 1.65        |         |           | $       | 1.64        |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   | Net income available for Common Shares                                      |                                                                      | $              | 1.71        |         |           | $       | 1.57        |         |           | $       | 1.53        |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   | Weighted average Common Shares outstanding                                  |                                                                      |                | 414,689,029 |         |           |         | 360,026,097 |         |           |         | 277,186,733 |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Earnings per share 
    diluted:                                                                                                                                  |                                                                             |                                                                      |                |             |         |           |         |             |         |           |         |            
|                                                                                                                                                                   | Income from continuing operations                                           |                                                                      | $              | 1.75        |         |           | $       | 1.64        |         |           | $       | 1.62        |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   | Net income available for Common Shares                                      |                                                                      | $              | 1.70        |         |           | $       | 1.55        |         |           | $       | 1.52        |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|                                                                                                                                                                   | Weighted average Common Shares and common share
    equivalents outstanding |                                                                      |                | 469,138,720 |         |           |         | 411,986,897 |         |           |         | 318,997,407 |        
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        
|Distributions declared per Common Share
    outstanding                                                                                                            |                                                                             | $                                                                    | 2.00           |             |         | $         | 1.90    |             |         | $         | 1.74    |            
|                                                                                                                                                                   |                                                                             |                                                                      |                |             |         |           |         |             |        

See accompanying notes.

54



---



##### 



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY


|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |   |   |           |           |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ---------- | -------- | ---- | - | ---------- | --------- | - | - | --------- | --------- | -
|                                                     |                                                                                                                                                         |                                 
|                                                     |                                                                                                                                                         | For the years ended December 31, |           
|                                                     |                                                                                                                                                         |                                  |           
|                                                     |                                                                                                                                                         | 2002                             |            |          | 2001 |   |            | 2000      |  
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|                                                     |                                                                                                                                                         |                                 
|                                                     |                                                                                                                                                         | (Dollars in thousands)           |           
|Preferred Shares:                                    |                                                                                                                                                         |                                  |            |          |      |   |            |           |   |   |           |          
|Balance, beginning of period                         |                                                                                                                                                         | $                                | 863,423    |          |      | $ | 613,923    |           |   | $ | 615,000   |          
|                                                     | Redemption of 8.98% Series A Cumulative
    Redeemable Preferred Shares                                                                                 |                                  |            | (199,850 | )    |   |            |          |   |   |           |          |  
|                                                     | 9.45% Series D Cumulative Redeemable issued
    in the Spieker Merger                                                                                   |                                  |            |         |      |   |            | 106,250   |   |   |           |          |  
|                                                     | 7.875% Series E Cumulative Redeemable issued
    in the Spieker Merger                                                                                  |                                  |            |         |      |   |            | 150,000   |   |   |           |          |  
|                                                     | 8.0% Series F Cumulative Redeemable issued
    in the Spieker Merger                                                                                    |                                  |            |         |      |   |            | 100,000   |   |   |           |          |  
|                                                     | Issuance of 7.75% Series G Cumulative
    Redeemable Preferred Shares                                                                                   |                                  |            | 212,500  |      |   |            |          |   |   |           |          |  
|                                                     | Conversion of Series B Cumulative Redeemable
    Preferred Shares to Common Shares                                                                      |                                  |            |         |      |   |            | (500      | ) |   |           |          |  
|                                                     | Redemptions                                                                                                                                             |                                  |            |         |      |   |            | (106,250  | ) |   |           | (1,077    | )
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Balance, end of period                               |                                                                                                                                                         | $                                | 876,073    |          |      | $ | 863,423    |           |   | $ | 613,923   |          
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Common Shares, $0.01 par Value Per
    Share:        |                                                                                                                                                         |                                  |            |          |      |   |            |           |   |   |           |          
|Balance, beginning of period                         |                                                                                                                                                         | $                                | 4,145      |          |      | $ | 3,053      |           |   | $ | 2,499     |          
|                                                     | Issuance of Common Shares for Spieker Merger                                                                                                            |                                  |            |         |      |   |            | 1,015     |   |   |           |          |  
|                                                     | Issuance of Common Shares for Cornerstone Merger                                                                                                        |                                  |            |         |      |   |            |          |   |   |           | 512       |  
|                                                     | Issuance of Common Shares through exercise of
    share options                                                                                         |                                  |            | 17       |      |   |            | 33        |   |   |           | 36        |  
|                                                     | Issuance of Common Shares in exchange for Units                                                                                                         |                                  |            | 26       |      |   |            | 21        |   |   |           | 48        |  
|                                                     | Conversion of redeemable common shares                                                                                                                  |                                  |            |         |      |   |            | 17        |   |   |           |          |  
|                                                     | Common Shares issued for restricted shares,
    trustee fees and for the dividend reinvestment plan, net of
    restricted shares retired               |                                  |            | 3        |      |   |            | 6         |   |   |           | 5         |  
|                                                     | Common Shares repurchased                                                                                                                               |                                  |            | (79      | )    |   |            |          |   |   |           | (47       | )
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Balance, end of period                               |                                                                                                                                                         | $                                | 4,112      |          |      | $ | 4,145      |           |   | $ | 3,053     |          
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Additional Paid in Capital:                          |                                                                                                                                                         |                                  |            |          |      |   |            |           |   |   |           |          
|Balance, beginning of period                         |                                                                                                                                                         | $                                | 10,788,273 |          |      | $ | 7,595,918  |           |   | $ | 6,229,340 |          
|                                                     | Issuance of Common Shares for Spieker Merger                                                                                                            |                                  |            |         |      |   |            | 2,972,979 |   |   |           |          |  
|                                                     | Issuance of share options in the Spieker Merger                                                                                                         |                                  |            |         |      |   |            | 18,701    |   |   |           |          |  
|                                                     | Issuance of Common Shares for Cornerstone Merger                                                                                                        |                                  |            |         |      |   |            |          |   |   |           | 1,268,088 |  
|                                                     | Issuance of Common Shares through exercise of
    share options                                                                                         |                                  |            | 39,998   |      |   |            | 72,326    |   |   |           | 81,920    |  
|                                                     | Issuance of Common Shares in exchange for Units                                                                                                         |                                  |            | 62,163   |      |   |            | 57,850    |   |   |           | 127,442   |  
|                                                     | Conversion of redeemable common shares                                                                                                                  |                                  |            |         |      |   |            | 49,983    |   |   |           |          |  
|                                                     | Common Shares issued for restricted Common
    Shares, trustee fees and for the dividend reinvestment plan, net
    of restricted Common Shares retired |                                  |            | 11,869   |      |   |            | 15,240    |   |   |           | 12,912    |  
|                                                     | Offering costs                                                                                                                                          |                                  |            | (7,042   | )    |   |            | (65       | ) |   |           | (28       | )
|                                                     | Conversion of Series B preferred shares to
    common shares                                                                                            |                                  |            |         |      |   |            | 500       |   |   |           |          |  
|                                                     | Common Shares repurchased                                                                                                                               |                                  |            | (196,803 | )    |   |            |          |   |   |           | (119,586  | )
|                                                     | Adjustment for minority interests ownership in
    EOP Partnership                                                                                      |                                  |            | (6,848   | )    |   |            | 4,841     |   |   |           | (4,170    | )
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Balance, end of period                               |                                                                                                                                                         | $                                | 10,691,610 |          |      | $ | 10,788,273 |           |   | $ | 7,595,918 |          
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Deferred Compensation:                               |                                                                                                                                                         |                                  |            |          |      |   |            |           |   |   |           |          
|Balance, beginning of period                         |                                                                                                                                                         | $                                | (19,822    | )        |      | $ | (14,871    | )         |   | $ | (10,064   | )        
|                                                     | Restricted Shares granted                                                                                                                               |                                  |            | (17,060  | )    |   |            | (17,519   | ) |   |           | (13,274   | )
|                                                     | Restricted Shares retired                                                                                                                               |                                  |            | 7,669    |      |   |            | 3,328     |   |   |           | 757       |  
|                                                     | Amortization of restricted shares                                                                                                                       |                                  |            | 13,741   |      |   |            | 9,240     |   |   |           | 7,710     |  
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Balance, end of period                               |                                                                                                                                                         | $                                | (15,472    | )        |      | $ | (19,822    | )         |   | $ | (14,871   | )        
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Distributions in Excess of Accumulated
    Earnings: |                                                                                                                                                         |                                  |            |          |      |   |            |           |   |   |           |          
|Balance, beginning of period                         |                                                                                                                                                         | $                                | (327,537   | )        |      | $ | (152,695   | )         |   | $ | (71,640   | )        
|                                                     | Net income                                                                                                                                              |                                  |            | 770,215  |      |   |            | 618,182   |   |   |           | 470,860   |  
|                                                     | Put option settlement                                                                                                                                   |                                  |            |         |      |   |            | 2,655     |   |   |           | (2,576    | )
|                                                     | Preferred distributions, net                                                                                                                            |                                  |            | (62,573  | )    |   |            | (57,041   | ) |   |           | (43,348   | )
|                                                     | Distributions to common shareholders                                                                                                                    |                                  |            | (832,741 | )    |   |            | (738,638  | ) |   |           | (505,991  | )
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  
|Balance, end of period                               |                                                                                                                                                         | $                                | (452,636   | )        |      | $ | (327,537   | )         |   | $ | (152,695  | )        
|                                                     |                                                                                                                                                         |                                  |            |          |      |   |            |           |  

See accompanying notes.

55



---



##### 



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF NET COMPREHENSIVE
INCOME


|                                   |                                                                           |                                  |         |         |      |   |         |        |   |   |         |         |  
|---------------------------------- | ------------------------------------------------------------------------- | -------------------------------- | ------- | ------- | ---- | - | ------- | ------ | - | - | ------- | ------- | -
|                                   |                                                                           |                                 
|                                   |                                                                           | For the years ended December 31, |        
|                                   |                                                                           |                                  |        
|                                   |                                                                           | 2002                             |         |         | 2001 |   |         | 2000   |  
|                                   |                                                                           |                                  |         |         |      |   |         |        |  
|                                   |                                                                           |                                 
|                                   |                                                                           | (Dollars in thousands)           |        
|Net income                         |                                                                           | $                                | 770,215 |         |      | $ | 618,182 |        |   | $ | 470,860 |        
|Other comprehensive income (loss): |                                                                           |                                  |         |         |      |   |         |        |   |   |         |        
|                                   | Unrealized holding loss on forward starting
    interest rate swaps       |                                  |         | (18,611 | )    |   |         |       |   |   |         |        |  
|                                   | Reclassification adjustment for realized gains
    included in net income |                                  |         | 116     |      |   |         |       |   |   |         |        |  
|                                   | Unrealized holding gains (losses) from investments                        |                                  |         | 396     |      |   |         | (2,699 | ) |   |         | (39,193 | )
|                                   | Recognition of permanent impairment on marketable
    securities          |                                  |         |        |      |   |         | 30,838 |   |   |         |        |  
|                                   |                                                                           |                                  |         |         |      |   |         |        |  
|Net comprehensive income           |                                                                           | $                                | 752,116 |         |      | $ | 646,321 |        |   | $ | 431,667 |        
|                                   |                                                                           |                                  |         |         |      |   |         |        |  

See accompanying notes.

56



---



##### 



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                      |                                                                                       |                                                                                                                                               |                                                                  |                                           |          |         |           |         |         |         |           |         |         |         |         | 
|--------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | -------- | ------- | --------- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | ------- | 
|                      |                                                                                       |                                                                                                                                              
|                      |                                                                                       | For the years ended December 31,                                                                                                              |                                                                 
|                      |                                                                                       |                                                                                                                                               |                                                                 
|                      |                                                                                       | 2002                                                                                                                                          |                                                                  |                                           | 2001     |         |           | 2000    |        
|                      |                                                                                       |                                                                                                                                               |                                                                  |                                           |          |         |           |         |        
|                      |                                                                                       |                                                                                                                                              
|                      |                                                                                       | (Dollars in thousands)                                                                                                                        |                                                                 
|Operating Activities: |                                                                                       |                                                                                                                                               |                                                                  |                                           |          |         |           |         |         |         |           |        
|                      | Net income                                                                            |                                                                                                                                               | $                                                                | 770,215                                   |          |         | $         | 618,182 |         |         | $         | 470,860 |        
|                      | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                                                                                               |                                                                  |                                           |          |         |           |         |         |         |           |         |        
|                      |                                                                                       | Interest/dividend income accrued but not received                                                                                             |                                                                  |                                           |         |         |           |         | (9,852  | )       |           |         | (5,934  | )      
|                      |                                                                                       | Amortization of discounts included in
    interest/dividend income                                                                            |                                                                  |                                           | (856     | )       |           |         | (2,919  | )       |           |         | (958    | )      
|                      |                                                                                       | Amortization of deferred revenue included in
    other income                                                                                 |                                                                  |                                           |         |         |           |         | (3,073  | )       |           |         | (5,715  | )      
|                      |                                                                                       | Depreciation and amortization (including
    discontinued operations)                                                                         |                                                                  |                                           | 695,892  |         |           |         | 590,214 |         |           |         | 438,219 |        
|                      |                                                                                       | Amortization of premiums/discounts on unsecured
    notes and terminated interest rate protection agreements
    included in interest expense |                                                                  |                                           | (7,183   | )       |           |         | 3,167   |         |           |         | 3,980   |        
|                      |                                                                                       | Impairment on securities and other investments                                                                                                |                                                                  |                                           |         |         |           |         | 132,684 |         |           |         |        |        
|                      |                                                                                       | Impairment on assets held for sale                                                                                                            |                                                                  |                                           |         |         |           |         | 2,536   |         |           |         |        |        
|                      |                                                                                       | Compensation related to restricted shares issued
    to employees                                                                             |                                                                  |                                           | 14,961   |         |           |         | 9,240   |         |           |         | 7,710   |        
|                      |                                                                                       | Income from unconsolidated joint ventures                                                                                                     |                                                                  |                                           | (106,852 | )       |           |         | (69,203 | )       |           |         | (56,251 | )      
|                      |                                                                                       | Net gain on sales of real estate (including
    discontinued operations)                                                                      |                                                                  |                                           | (17,926  | )       |           |         | (81,662 | )       |           |         | (36,013 | )      
|                      |                                                                                       | Extraordinary items                                                                                                                           |                                                                  |                                           |         |         |           |         | 1,000   |         |           |         |        |        
|                      |                                                                                       | Cumulative effect of a change in accounting
    principle                                                                                     |                                                                  |                                           |         |         |           |         | 1,142   |         |           |         |        |        
|                      |                                                                                       | Provision for doubtful accounts                                                                                                               |                                                                  |                                           | 27,995   |         |           |         | 26,124  |         |           |         | 6,349   |        
|                      |                                                                                       | Income allocated to minority interests                                                                                                        |                                                                  |                                           | 96,405   |         |           |         | 84,934  |         |           |         | 66,219  |        
|                      |                                                                                       | Changes in assets and liabilities:                                                                                                            |                                                                  |                                           |          |         |           |         |         |         |           |         |         |        
|                      |                                                                                       |                                                                                                                                               | Decrease (increase) in rents receivable                          |                                           |          | 30,236  |           |         |         | (22,655 | )         |         |         | (41,517 | )      
|                      |                                                                                       |                                                                                                                                               | (Increase) in deferred rent receivables                          |                                           |          | (77,123 | )         |         |         | (75,555 | )         |         |         | (72,351 | )      
|                      |                                                                                       |                                                                                                                                               | (Increase) decrease in prepaid expenses and other
    assets     |                                           |          | (27,861 | )         |         |         | (5,051  | )         |         |         | 12,819  |        
|                      |                                                                                       |                                                                                                                                               | (Decrease) increase in accounts payable and
    accrued expenses |                                           |          | (22,883 | )         |         |         | 21,434  |           |         |         | 119,470 |        
|                      |                                                                                       |                                                                                                                                               | Increase in other liabilities                                    |                                           |          | 15,929  |           |         |         | 20,914  |           |         |         | 456     |        
|                      |                                                                                       |                                                                                                                                               |                                                                  |                                           |          |         |           |         |        
|                      |                                                                                       |                                                                                                                                               |                                                                  | Net cash provided by operating activities |          |         | 1,390,949 |         |         |         | 1,241,601 |         |         |         | 907,343 | 
|                      |                                                                                       |                                                                                                                                               |                                                                  |                                           |          |         |           |         |        

57



---



##### 



EQUITY OFFICE PROPERTIES TRUST


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)


|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |            |   |   |            |            |  
|------------------------- | --------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | - | ---------- | ---------- | - | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                          |                                                                                                                       |                                                         
|                          |                                                                                                                       | For the years ended December 31,                         |  
|                          |                                                                                                                       |                                                          |  
|                          |                                                                                                                       | 2002                                                     |   |            | 2001       |   |   | 2000       |           
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|                          |                                                                                                                       |                                                         
|                          |                                                                                                                       | (Dollars in thousands)                                   |  
|Investing Activities:     |                                                                                                                       |                                                          |   |            |            |   |   |            |            |   |   |           
|                          | Property acquisitions                                                                                                 |                                                          |   | (53,067    | )          |   |   | (104,748   | )          |   |   | (69,914    | )         
|                          | Acquisition of Spieker Properties, Inc.                                                                               |                                                          |   |           |            |   |   | (1,076,957 | )          |   |   |           |           
|                          | Acquisition of Cornerstone Properties, Inc.                                                                           |                                                          |   |           |            |   |   |           |            |   |   | (1,159,440 | )         
|                          | Property dispositions                                                                                                 |                                                          |   | 377,150    |            |   |   | 361,353    |            |   |   | 352,375    |           
|                          | Capital and tenant improvements                                                                                       |                                                          |   | (328,930   | )          |   |   | (360,065   | )          |   |   | (293,711   | )         
|                          | Lease acquisition costs                                                                                               |                                                          |   | (104,714   | )          |   |   | (77,639    | )          |   |   | (79,440    | )         
|                          | Decrease in escrow deposits and restricted cash                                                                       |                                                          |   | 167,026    |            |   |   | 28,064     |            |   |   | 118,386    |           
|                          | Distributions from unconsolidated joint ventures                                                                      |                                                          |   | 199,665    |            |   |   | 131,983    |            |   |   | 174,817    |           
|                          | Investments in unconsolidated joint ventures                                                                          |                                                          |   | (198,040   | )          |   |   | (249,893   | )          |   |   | (228,924   | )         
|                          | Redemption of CT Convertible Trust I
    Preferred Stock                                                              |                                                          |   | 20,086     |            |   |   |           |            |   |   |           |           
|                          | Investment in securities                                                                                              |                                                          |   |           |            |   |   | (683       | )          |   |   | (87,075    | )         
|                          | Repayments of (investment in) notes receivable                                                                        |                                                          |   | 5,997      |            |   |   | 382        |            |   |   | (39,056    | )         
|                          | Contributions from minority interest partner in
    partially owned properties                                        |                                                          |   |           |            |   |   |           |            |   |   | 204        |           
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|                          |                                                                                                                       | Net cash provided by (used for) investing
    activities |   |            | 85,173     |   |   |            | (1,348,203 | ) |   |            | (1,311,778 | )
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|Financing Activities:     |                                                                                                                       |                                                          |   |            |            |   |   |            |            |   |   |           
|                          | Proceeds from mortgage debt                                                                                           |                                                          |   | 14,427     |            |   |   | 140,000    |            |   |   | 270,000    |           
|                          | Principal payments on mortgage debt                                                                                   |                                                          |   | (156,052   | )          |   |   | (458,731   | )          |   |   | (460,111   | )         
|                          | Prepayment penalties on early extinguishment of
    debt                                                              |                                                          |   |           |            |   |   | (5,000     | )          |   |   |           |           
|                          | Proceeds from unsecured notes                                                                                         |                                                          |   | 239,127    |            |   |   | 1,386,598  |            |   |   | 2,180,785  |           
|                          | Repayment of unsecured notes                                                                                          |                                                          |   | (310,000   | )          |   |   | (100,000   | )          |   |   |           |           
|                          | Proceeds from lines of credit                                                                                         |                                                          |   | 1,336,350  |            |   |   | 3,206,050  |            |   |   | 5,168,975  |           
|                          | Principal payments on lines of credit                                                                                 |                                                          |   | (1,374,950 | )          |   |   | (3,152,036 | )          |   |   | (5,986,516 | )         
|                          | Payments of loan costs                                                                                                |                                                          |   | (4,296     | )          |   |   | (10,481    | )          |   |   | (39,245    | )         
|                          | Settlement of interest rate swap agreements                                                                           |                                                          |   | 42,810     |            |   |   | 47,369     |            |   |   |           |           
|                          | Distributions to minority interests in partially
    owned properties                                                 |                                                          |   | (10,401    | )          |   |   | (5,878     | )          |   |   | (13,732    | )         
|                          | Repurchase of preferred shares                                                                                        |                                                          |   | (199,850   | )          |   |   | (106,250   | )          |   |   | (890       | )         
|                          | Issuance of preferred shares                                                                                          |                                                          |   | 205,645    |            |   |   |           |            |   |   |           |           
|                          | Payment of offering costs                                                                                             |                                                          |   | (187       | )          |   |   | (65        | )          |   |   | (28        | )         
|                          | Proceeds from exercise of share options                                                                               |                                                          |   | 40,015     |            |   |   | 71,835     |            |   |   | 81,956     |           
|                          | Distributions to shareholders and unitholders                                                                         |                                                          |   | (935,083   | )          |   |   | (837,659   | )          |   |   | (578,893   | )         
|                          | Repurchase of Common Shares                                                                                           |                                                          |   | (196,882   | )          |   |   |           |            |   |   | (119,633   | )         
|                          | Redemption of Units                                                                                                   |                                                          |   | (106,690   | )          |   |   | (1,245     | )          |   |   | (3,780     | )         
|                          | Put option settlement                                                                                                 |                                                          |   |           |            |   |   | (1,467     | )          |   |   |           |           
|                          | Payment of preferred distributions                                                                                    |                                                          |   | (62,755    | )          |   |   | (58,573    | )          |   |   | (43,535    | )         
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|                          |                                                                                                                       | Net cash (used for) provided by financing
    activities |   |            | (1,478,772 | ) |   |            | 114,467    |   |   |            | 455,353    |  
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|                          | Net (decrease) increase in cash and cash
    equivalents                                                              |                                                          |   | (2,650     | )          |   |   | 7,865      |            |   |   | 50,918     |           
|                          | Cash and cash equivalents at the beginning of the
    year                                                            |                                                          |   | 61,121     |            |   |   | 53,256     |            |   |   | 2,338      |           
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|                          | Cash and cash equivalents at the end of the year                                                                      |                                                          | $ | 58,471     |            |   | $ | 61,121     |            |   | $ | 53,256     |           
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           
|Supplemental Information: |                                                                                                                       |                                                          |   |            |            |   |   |            |            |   |   |           
|                          | Interest paid during the period, including
    capitalized interest of $21,447, $25,871 and $14,764,
    respectively |                                                          | $ | 836,573    |            |   | $ | 679,537    |            |   | $ | 498,012    |           
|                          |                                                                                                                       |                                                          |   |            |            |   |   |            |           

58



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##### 



EQUITY OFFICE PROPERTIES TRUST


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)


|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |   |  |   |           |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | - | -------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                 |                                                                                                                                                                                 |                                 
|                                                 |                                                                                                                                                                                 | For the years ended December 31, |  
|                                                 |                                                                                                                                                                                 |                                  |  
|                                                 |                                                                                                                                                                                 | 2002                             |   |          | 2001 |  |   | 2000      |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 |                                                                                                                                                                                 |                                 
|                                                 |                                                                                                                                                                                 | (Dollars in thousands)           |  
|Non-Cash Investing and Financing
    Activities: |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |   |  |   |          
|                                                 | Issuance of unsecured notes at a discount of
    $10,048 in exchange for $250 million MandatOry Par Put
    Remarketed SecuritiesSM                                             |                                  | $ | (254,631 | )    |  | $ |          |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Exchange of $250 million MandatOry Par Put
    Remarketed SecuritiesSM, including an unamortized
    premium of $4,631, for $264,679 notes due 2012 issued in
    February 2002 |                                  | $ | 254,631  |      |  | $ |          |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Escrow deposits used for property acquisitions                                                                                                                                  |                                  | $ | 70,030   |      |  | $ |          |   |  | $ | 37,105    |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Escrow deposits provided by property dispositions                                                                                                                               |                                  | $ | (70,025  | )    |  | $ | (184,458  | ) |  | $ | (167,922  | )
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Mortgage loans, unsecured notes and line of
    credit assumed in the Spieker Merger                                                                                            |                                  | $ |         |      |  | $ | 2,125,610 |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Net liabilities assumed in the Spieker Merger                                                                                                                                   |                                  | $ |         |      |  | $ | 125,558   |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Minority interest in partially owned properties
    assumed in the Spieker Merger                                                                                               |                                  | $ |         |      |  | $ | 1,272     |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Common Shares, share options and Units issued in
    the Spieker Merger                                                                                                         |                                  | $ |         |      |  | $ | 3,483,326 |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Preferred shares issued in the Spieker Merger                                                                                                                                   |                                  | $ |         |      |  | $ | 356,250   |   |  | $ |          |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Mortgage loans and line of credit assumed in the
    Cornerstone Merger                                                                                                         |                                  | $ |         |      |  | $ |          |   |  | $ | 1,720,449 |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Net liabilities assumed in the Cornerstone Merger                                                                                                                               |                                  | $ |         |      |  | $ |          |   |  | $ | 19,792    |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Minority interest in partially owned properties
    assumed in the Cornerstone Merger                                                                                           |                                  | $ |         |      |  | $ |          |   |  | $ | 174,470   |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Common Shares, share options and Units issued in
    connection with the Cornerstone Merger                                                                                     |                                  | $ |         |      |  | $ |          |   |  | $ | 1,574,625 |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Units issued in connection with property
    acquisitions                                                                                                                       |                                  | $ |         |      |  | $ |          |   |  | $ | 9,685     |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Mortgage loan assumed/ promissory notes issued in
    connection with property acquisitions                                                                                     |                                  | $ |         |      |  | $ |          |   |  | $ | 65,661    |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Mortgage loan assumed by purchaser in connection
    with property disposition                                                                                                  |                                  | $ |         |      |  | $ |          |   |  | $ | (11,369   | )
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  
|                                                 | Deferred revenue recorded in connection with
    receipt of securities                                                                                                          |                                  | $ |         |      |  | $ |          |   |  | $ | 11,317    |  
|                                                 |                                                                                                                                                                                 |                                  |   |          |      |  |   |           |  

See accompanying notes.

59



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##### 





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 1  BUSINESS AND FORMATION
OF EQUITY OFFICE

As used herein, Equity Office means
Equity Office Properties Trust, a Maryland real estate
investment trust, together with its subsidiaries, including EOP
Operating Limited Partnership, a Delaware limited partnership
(EOP Partnership), and the predecessors thereof
(Equity Office Predecessors), except where the
context otherwise requires. Equity Office was organized in 1996
to continue and expand the national office property business
organized by Mr. Samuel Zell, Chairman of the Board of
Trustees of Equity Office, and to complete the consolidation of
the Equity Office Predecessors (the Consolidation).
Equity Office completed its initial public offering (the
IPO) on July 11, 1997, having sold its common
shares of beneficial interest, $0.01 par value per share
(Common Shares). The net proceeds from the IPO were
contributed to EOP Partnership in exchange for units of
partnership interest (Units). Equity Office is a
fully integrated, self-administered and self-managed real estate
company principally engaged, through its subsidiaries, in
owning, managing, leasing, acquiring and developing office
properties. At December 31, 2002, Equity Office owned or
had an interest in 734 office properties (the Office
Properties) comprising approximately 125.7 million
rentable square feet of office space and 77 industrial
properties (the Industrial Properties) comprising
approximately 6.0 million rentable square feet of
industrial space (together with the Office Properties, the
Properties). The Office Properties were, on a
weighted average basis, 88.6% occupied at December 31,
2002, and are located in 138 submarkets in 32 markets in
20 states and the District of Columbia. The Office
Properties, by rentable square feet, are located approximately
41.1% in central business districts (CBDs) and
approximately 58.9% in suburban markets.

NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

Basis of Presentation

Equity Office owns substantially all of its
assets and conducts all of its operations through EOP
Partnership and its subsidiary entities. Equity Office is the
sole general partner of, and owned at December 31, 2002 an
approximate 89.1% interest in, EOP Partnership. Due to Equity
Offices ability as general partner to control EOP
Partnership and various other property holding entities and
other subsidiaries, each such entity has been consolidated for
financial reporting purposes.

The Consolidation and Equity Offices
mergers with Spieker Properties, Inc., Cornerstone Properties
Inc. and Beacon Properties Corporation were accounted for using
the purchase method in accordance with Accounting Principles
Board Opinion No. 16 and Statement of Financial Accounting
Standards No. 141, Business Combinations. The fair value
of the consideration given in these transactions was used as the
valuation basis for the transactions. The assets acquired and
liabilities assumed in these transactions were recorded at their
fair values as of the closing dates of the transactions. The
results of operations of the companies acquired in the mergers
for the period from their respective closing dates were included
in the consolidated statements of operations.

Investment in Real Estate

Rental property and improvements, including
interest and other costs capitalized during construction, are
included in investment in real estate and are stated at cost.
Expenditures for ordinary maintenance and repairs are expensed
to operations as they are incurred. Significant renovations and
improvements, which improve or extend the useful life of the
assets, are capitalized. Rental property and improvements,
excluding land, are

60



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES  (continued)


depreciated over their estimated useful lives
using the straight-line method. The estimated useful lives by
asset category are:

|                       |  |                       |               | 
|---------------------- |  | --------------------- | ------------- | 
|Asset Category         |  | Estimated Useful Life |              
|                       |  |                       |              
|Building               |  |                       | 40 years      | 
|Building improvements  |  |                       | 4-40 years    | 
|Tenant improvements    |  |                       | Term of lease | 
|Furniture and fixtures |  |                       | 3-12 years    | 

Rental properties are individually evaluated for
impairment when conditions exist which may indicate that it is
probable that the sum of expected future cash flows (on an
undiscounted basis) from a rental property over the anticipated
holding period is less than its historical net cost basis. Upon
determination that a permanent impairment has occurred, rental
properties are reduced to their fair value. For properties to be
disposed of, an impairment loss is recognized when the fair
value of the property, less the estimated cost to sell, is less
than the carrying amount of the property measured at the time
Equity Office has a commitment to sell the property and/or is
actively marketing the property for sale. A property to be
disposed of is reported at the lower of its carrying amount or
its estimated fair value, less its cost to sell. Subsequent to
the date that a property is held for disposition, depreciation
expense is not recorded.

The FASB issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or
Disposal of Long Lived Assets.Statement 144 addresses
financial accounting and reporting for the impairment or
disposal of long-lived assets. The provisions of
Statement 144 are effective for financial statements issued
for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years. We adopted the
standard in 2002 and it did not have a material effect on our
financial condition or results of operations.

Developments in process are carried at cost,
which includes land acquisition cost, architectural fees,
general contractor fees, capitalized interest, internal costs
related directly to the development and other costs related
directly to the construction of the property. Depreciation is
not recorded until the property is placed in service, which
occurs shortly after receipt of a certificate of occupancy.

Land available for development is carried at cost
and is not depreciated. Land available for development includes
various vacant land parcels that may have some improvements such
as utility service.

Investments in Unconsolidated Joint
Ventures

Investments in unconsolidated joint ventures are
accounted for using the equity method of accounting because
Equity Office does not have control over the activities of the
investees. The net equity investment of Equity Office is
reflected on the consolidated balance sheets, and the
consolidated statements of operations include Equity
Offices share of net income or loss from the
unconsolidated joint ventures. Any difference between the
carrying amount of these investments on the consolidated balance
sheet of Equity Office and the value of the underlying equity is
depreciated as an adjustment to income from unconsolidated joint
ventures over 40 years. In 2001, Equity Office adopted SFAS
142 Goodwill and Other Intangible Assetsupon
its effective date and it did not have an effect on the
consolidated financial statements.

Deferred Leasing and Financing Costs

Deferred leasing and financing costs, which
consist of, but are not limited to, commissions paid to third
parties for new or renewal leases, and fees paid to third
parties for unsecured note offerings, are recorded at cost. The
deferred leasing costs are amortized over the terms of the
respective leases and the deferred financing costs are amortized
over the terms of the respective financings on a straight-line
basis, which approximates the effective yield method.

61



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES  (continued)


Revenue Recognition

Certain leases provide for tenant occupancy
during periods for which no rent is due or where minimum rent
payments increase during the term of the lease. Equity Office
records rental income for the full term of each lease on a
straight-line basis. Accordingly, a receivable is recorded from
tenants for the current difference between the straight-line
rent and the rent that is contractually due from the tenant
(Deferred Rent Receivable). When a property is
acquired, the term of existing leases is considered to commence
as of the acquisition date for purposes of this calculation. The
amounts included in rental income for the years ended
December 31, 2002, 2001 and 2000, which had not yet been
billed as of such dates, were approximately $72.9 million,
$69.1 million and $69.8 million, respectively.
Deferred rental revenue is not recognized for income tax
purposes.

Cash Equivalents

Cash equivalents are considered to be all highly
liquid investments purchased with a maturity of three months or
less at the date of purchase.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is maintained for
estimated losses resulting from the inability of certain tenants
to meet the contractual obligations under their lease agreements.

Escrow Deposits and Restricted Cash

Escrow deposits primarily consist of amounts held
by lenders to provide for future real estate tax expenditures
and tenant improvements, earnest money deposits on acquisitions
and net proceeds from tax-deferred dispositions. Restricted cash
represents amounts committed for various utility deposits and
security deposits. Certain of these amounts may be reduced upon
the fulfillment of certain obligations.

Fair Value of Financial Instruments and Other
Assets

Investments in notes receivable approximate their
fair value and are included in other assets.

The fair value of the fixed-rate mortgage debt
and unsecured notes as of December 31, 2002 was
approximately $1.0 billion higher than the book value of
approximately $11.5 billion primarily due to the general
decrease in market interest rates on secured and unsecured debt.
As of December 31, 2001, the fair value of our fixed-rate
debt approximated book value. The fair value of the mortgage
debt and the unsecured notes was determined by discounting the
spread between the future contractual interest payments and the
future interest payments based on a market rate. The fair value
of the interest rate swap agreements was determined by third
party quotations. In addition, management believes that the
carrying values of cash equivalents, restricted cash, escrow
deposits, tenant and other rents receivable, prepaid expenses
and other assets, accounts payable and accrued expenses and
other liabilities are reasonable estimates of their fair value.

Derivatives and Hedging Activities

Equity Office periodically enters into certain
interest rate protection and swap agreements to effectively
convert or cap floating rate debt to a fixed rate basis, fixed
rate debt to a floating rate basis, as well as to hedge
anticipated future financing transactions. Net amounts paid or
received under these agreements are recognized as an adjustment
to interest expense when such amounts are incurred or earned.
Settlement amounts paid or received in connection with
terminated interest rate protection agreements and interest rate
swap agreements are deferred and amortized as an adjustment to
interest expense over the remaining term of the related
financing transaction on a straight-line basis, which
approximates the effective yield method.

62



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES  (continued)


In June 1998, the FASB issued Statement
No. 133 Accounting for Derivative Instruments and
Hedging Activitiesas amended by FASB Statement
Nos. 137 and 138, which is effective for financial
statements for all fiscal quarters of fiscal years beginning
after June 15, 2000. The statement requires recording all
derivative instruments as assets or liabilities, measured at
fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value
of derivatives either will be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective
portion of a derivatives change in fair value will be
immediately recognized in earnings. Equity Office adopted the
standard on January 1, 2001 and recorded a cumulative
effect of a change in accounting principle resulting in a loss
of approximately $1.1 million in the year ended
December 31, 2001.

Deferred Revenue

During 2000 and 1999, Equity Office received
common stock and/or warrants to purchase common stock for
allowing companies that provide telecommunication and other
services access to the Properties. The securities received from
these companies were recorded as deferred revenue at fair value
at the time such securities were earned and were included in
other liabilities on the balance sheet. The deferred revenue was
being amortized into other income over the terms of the
respective license agreements. During 2001, it was determined
that there was no remaining future benefit period for the
unamortized deferred revenue. The unamortized deferred revenue
balance as of December 31, 2001 and 2000 was $0 and
$37.2 million, respectively. The amount of deferred revenue
recognized in other income, net of the write-off of the related
securities, for the years ended December 31, 2001 and 2000
was approximately $3.1 million and $5.7 million,
respectively.

Income Taxes

The Office Properties and Industrial Properties
primarily are owned by limited partnerships or limited liability
companies, which are substantially pass-through entities.
However, various consolidated entities owned by Equity Office
are individually subject to certain taxes. Some of the
pass-through entities have corporate general partners or
members, which are subject to federal and state income and
franchise taxes. In addition, the property management business
is owned by a corporation and is subject to federal and state
income and franchise taxes.

Equity Office has elected to be taxed as a REIT,
under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended (the Code). As a REIT, Equity
Office generally will not be subject to federal income tax if it
distributes 100% of its taxable income for each tax year to its
shareholders. REITs are subject to a number of organizational
and operational requirements. If Equity Office fails to qualify
as a REIT in any taxable year, it will be subject to federal
income tax (including any applicable alternative minimum tax) on
its taxable income at regular corporate tax rates. Even if
Equity Office qualifies for taxation as a REIT, Equity Office
may be subject to state and local income taxes and to federal
income tax and excise tax on its undistributed income. In
addition, taxable income from non-REIT activities managed
through taxable REIT subsidiaries is subject to federal, state
and local income taxes. The aggregate cost of land and
depreciable property for federal income tax purposes as of
December 31, 2002 and 2001 was approximately
$14.8 billion and $15.0 billion, respectively.

63



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES  (continued)



| |                                                                                
| | -------------------------------------------------------------------------------
| | Reconciliation Between Net Income and
    Estimated Taxable Income (Unaudited):

|                                                                |                                                                 |                                  |         |         |      |   |         |          |   |   |         |         |  
|--------------------------------------------------------------- | --------------------------------------------------------------- | -------------------------------- | ------- | ------- | ---- | - | ------- | -------- | - | - | ------- | ------- | -
|                                                                |                                                                 |                                 
|                                                                |                                                                 | For the years ended December 31, |        
|                                                                |                                                                 |                                  |        
|                                                                |                                                                 | 2002                             |         |         | 2001 |   |         | 2000     |  
|                                                                |                                                                 |                                  |         |         |      |   |         |          |  
|                                                                |                                                                 |                                 
|                                                                |                                                                 | (Dollars in thousands)           |        
|Net income available to Common Shares                           |                                                                 | $                                | 707,642 |         |      | $ | 563,796 |          |   | $ | 424,936 |        
|                                                                | Straight-line rent adjustments                                  |                                  |         | (72,891 | )    |   |         | (69,149  | ) |   |         | (69,822 | )
|                                                                | Preferred distributions not deductible for tax                  |                                  |         | 62,573  |      |   |         | 57,041   |   |   |         | 43,348  |  
|                                                                | Tax gain on sale of real estate in excess of GAAP
    gain      |                                  |         | 72,658  |      |   |         | 82,219   |   |   |         | 30,064  |  
|                                                                | Depreciation/amortization timing differences on
    real estate |                                  |         | 146,389 |      |   |         | 146,277  |   |   |         | 109,071 |  
|                                                                | Other adjustments                                               |                                  |         | (74,635 | )    |   |         | (55,617  | ) |   |         | (11,204 | )
|                                                                |                                                                 |                                  |         |         |      |   |         |          |  
|Taxable income before adjustments                               |                                                                 |                                  | 841,736 |         |      |   | 724,567 |          |   |   | 526,393 |        
|                                                                | Less capital gains                                              |                                  |         | (90,584 | )    |   |         | (163,881 | ) |   |         | (66,077 | )
|                                                                |                                                                 |                                  |         |         |      |   |         |          |  
|Adjusted taxable income subject to 90% dividend
    requirement |                                                                 | $                                | 751,152 |         |      | $ | 560,686 |          |   | $ | 460,316 |        
|                                                                |                                                                 |                                  |         |         |      |   |         |          |  



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Reconciliation Between Cash Distributions Paid
    and Distributions Paid Deduction (Unaudited):

|                         |                                          |                                  |         |   |      |   |         |      |  |   |         |         |  
|------------------------ | ---------------------------------------- | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | ------- | -
|                         |                                          |                                 
|                         |                                          | For the years ended December 31, |        
|                         |                                          |                                  |        
|                         |                                          | 2002                             |         |   | 2001 |   |         | 2000 | 
|                         |                                          |                                  |         |   |      |   |         |      | 
|                         |                                          |                                 
|                         |                                          | (Dollars in thousands)           |        
|Cash dividends paid      |                                          | $                                | 895,314 |   |      | $ | 795,679 |      |  | $ | 549,339 |        
|                         | Less: Dividends designated to prior year |                                  |         |  |      |   |         |     |  |   |         | (39,138 | )
|                         |                                          |                                  |         |   |      |   |         |      | 
|Dividends paid deduction |                                          | $                                | 895,314 |   |      | $ | 795,679 |      |  | $ | 510,201 |        
|                         |                                          |                                  |         |   |      |   |         |      | 



| |                                                   
| | --------------------------------------------------
| | Characterization of Distributions
    (Unaudited):

|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |   |         |  |  |  |       |  
|------------------------------ |  | -------------------------------- | ------- |  | ---- |  | ----- | ---- |  | - | ------- |  |  | - | ----- | - | - | - | ------- |  |  |  | ----- | -
|                               |  |                                 
|                               |  | For the years ended December 31, |        
|                               |  |                                  |        
|                               |  |                                  |         |  |      | 
|                               |  | 2002                             |         |  | 2001 |  |       | 2000 | 
|                               |  |                                  |         |  |      |  |       |      | 
|                               |  | $                                |         |  | %    |  |       | $    |  |   | %       |  |  | $ |       |   | % |  
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|                               |  |                                 
|                               |  | (Dollars in thousands)           |        
|Ordinary income                |  | $                                | 694,986 |  |      |  | 83.5  | %    |  | $ | 516,782 |  |  |   | 70.0  | % |   | $ | 437,249 |  |  |  | 86.4  | %
|Return of capital              |  |                                  | 53,578  |  |      |  | 6.4   | %    |  |   | 71,112  |  |  |   | 9.6   | % |   |   | 16,192  |  |  |  | 3.2   | %
|Capital gains                  |  |                                  | 60,656  |  |      |  | 7.3   | %    |  |   | 130,618 |  |  |   | 17.7  | % |   |   | 42,024  |  |  |  | 8.3   | %
|Unrecaptured section 1250 gain |  |                                  | 23,521  |  |      |  | 2.8   | %    |  |   | 20,126  |  |  |   | 2.7   | % |   |   | 10,526  |  |  |  | 2.1   | %
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|Common distributions           |  |                                  | 832,741 |  |      |  | 100.0 | %    |  |   | 738,638 |  |  |   | 100.0 | % |   |   | 505,991 |  |  |  | 100.0 | %
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|Preferred distributions        |  |                                  | 62,573  |  |      |  |       |      |  |   | 57,041  |  |  |   |       |   |   |   | 43,348  |  |  |  |       |  
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|Total REIT distributions       |  | $                                | 895,314 |  |      |  |       |      |  | $ | 795,679 |  |  |   |       |   |   | $ | 549,339 |  |  |  |       |  
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  

Minority Interests



| |                
| | ---------------
| | EOP Partnership

Net income is allocated to minority interests
based on their respective ownership percentage of EOP
Partnership. The ownership percentage is calculated by dividing
the number of Units held by the minority interests by the total
Units held by both the minority interests and Equity Office.
Issuance of additional Common Shares and Units changes the
ownership interests of both the minority interests and Equity
Office.

64



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES  (continued)


Such transactions and the proceeds therefrom are
treated as capital transactions. As of December 31, 2002
and 2001, Equity Office had an 89.1% and 88.0% interest in EOP
Partnership, respectively.



| |                           
| | --------------------------
| | Partially Owned Properties

Minority interests in consolidated Properties are
reflected in the consolidated balance sheets as Minority
interests  partially owned properties and
represents the minority interests share in the assets and
liabilities of the Properties. The earnings or losses from these
properties attributable to the minority interests are reflected
as Minority interests  Partially owned
properties in the consolidated statements of operations.

Use of Estimates

The preparation of the consolidated financial
statements in conformity with accounting principles generally
accepted in the United States (GAAP) requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from
those estimates.

Reclassifications

Certain reclassifications have been made to the
previously reported 2001 and 2000 statements in order to provide
comparability with the 2002 statements reported herein. These
reclassifications have not changed the 2001 or 2000 results of
operations or shareholders equity.

NOTE 3  MERGERS

Spieker Merger

On July 2, 2001, Spieker Properties, Inc.
(Spieker) merged into Equity Office and Spieker
Properties, L.P. (Spieker Partnership),
Spiekers operating partnership subsidiary, merged into EOP
Partnership (collectively, the Spieker Merger) which
was accounted for using the purchase method. The transaction
valued Spieker (including the outside interests in Spieker
Partnership) at approximately $7.2 billion, which included
transaction costs, the assumption of approximately
$2.1 billion in debt and the issuance of 14.25 million
of Equity Office preferred shares valued at approximately
$356.3 million. Equity Office paid approximately
$1.1 billion in cash and issued approximately
101.5 million Common Shares and EOP Partnership issued
approximately 16.7 million Units to third parties, each
valued at $29.29 per Common Share/ Unit. Equity Office financed
the $1.1 billion cash portion of the purchase price using a
combination of available cash and a new $1.0 billion bridge
loan facility that was entered into before the closing of the
Spieker Merger. The $1.0 billion bridge loan facility had a
term of 364 days and an interest rate based on LIBOR plus
80 basis points. The $1.0 billion bridge loan facility was
repaid in full with the net proceeds from the issuance of
$1.4 billion of unsecured notes in July 2001 and terminated
upon the repayment. Through the Spieker Merger, Equity Office
acquired 391 Office Properties comprising approximately
28.3 million square feet, 98 Industrial Properties
comprising approximately 10.1 million square feet and
several development properties which added to Equity
Offices ownership in key markets across the western United
States.

Shortly after completion of the Spieker Merger,
Equity Office expanded its Board of Trustees from 13 to 16
members. The new members are Warren E. Spieker, Jr.,
previous chairman of Spieker, and Craig G. Vought and
John A. Foster, previous Co-Chief Executive Officers of
Spieker.

65



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




|         |                      
|-------- | ---------------------
|NOTE 3  | MERGERS  (continued)

The following table summarizes the estimated fair
values of the assets acquired and liabilities assumed at the
date of acquisition:

|                                                   |                           |                        |            |            |  
|-------------------------------------------------- | ------------------------- | ---------------------- | ---------- | ---------- | -
|                                                   |                           | (Dollars in thousands) |           
|                                                   |                           |                        |           
|Investment in real estate                          |                           | $                      | 7,168,973  |           
|Other assets                                       |                           |                        | 47,824     |           
|                                                   |                           |                        |           
|                                                   | Total assets acquired     |                        |            | 7,216,797  |  
|                                                   |                           |                        |           
|Mortgage debt, unsecured notes and lines of credit |                           |                        | (2,125,610 | )         
|Other liabilities                                  |                           |                        | (173,382   | )         
|                                                   |                           |                        |           
|                                                   | Total liabilities assumed |                        |            | (2,298,992 | )
|                                                   |                           |                        |           
|Minority interest in partially owned properties    |                           |                        | (1,272     | )         
|                                                   |                           |                        |           
|Common Shares, Units and stock options issued      |                           |                        | (3,483,326 | )         
|Preferred shares issued                            |                           |                        | (356,250   | )         
|                                                   |                           |                        |           
|                                                   | Total equity issued       |                        |            | (3,839,576 | )
|                                                   |                           |                        |           
|Total cash used for Spieker Merger                 |                           | $                      | (1,076,957 | )         
|                                                   |                           |                        |           

Cornerstone Merger

On June 19, 2000, Cornerstone Properties
Inc. (Cornerstone) merged into Equity Office and
Cornerstone Properties Limited Partnership (Cornerstone
Partnership), Cornerstones operating partnership
subsidiary, merged into EOP Partnership (collectively, the
Cornerstone Merger). The transaction, which was
accounted for by the purchase method, valued Cornerstone,
including the outside interests in Cornerstone Partnership at
approximately $4.5 billion, which included transaction costs,
the assumption of approximately $1.7 billion in debt, the
redemption of 3.0 million shares of Cornerstone preferred stock
valued at $18.00 per share, including accrued but unpaid
dividends for a total of approximately $57.6 million, the
redemption of approximately 58.5 million of Cornerstone common
stock valued at $18.00 per share for a total of approximately
$1.1 billion, the issuance of approximately 51.2 million Common
Shares and the issuance by EOP Partnership of approximately 12.4
million Units valued at $24.68 per Common Share/ Unit. We
financed the $1.2 billion in cash from our credit facilities. As
a result of the Cornerstone Merger, Equity Office acquired an
interest in 82 Office Properties containing approximately 18.9
million square feet of office space.

66



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 4  INVESTMENT IN REAL
ESTATE

Investment in real estate, including Office
Properties, Industrial Properties, properties under development
and vacant land, was as follows:

|                               |                                 |                        |            |            |      |   |            |            | 
|------------------------------ | ------------------------------- | ---------------------- | ---------- | ---------- | ---- | - | ---------- | ---------- | 
|                               |                                 |                       
|                               |                                 | December 31,           |           
|                               |                                 |                        |           
|                               |                                 | 2002                   |            |            | 2001 |  
|                               |                                 |                        |            |            |      |  
|                               |                                 |                       
|                               |                                 | (Dollars in thousands) |           
|Land                           |                                 | $                      | 2,878,102  |            |      | $ | 2,820,079  |           
|Land available for development |                                 |                        | 252,852    |            |      |   | 251,696    |           
|Building                       |                                 |                        | 20,545,623 |            |      |   | 20,392,703 |           
|Building improvements          |                                 |                        | 446,808    |            |      |   | 574,744    |           
|Tenant improvements            |                                 |                        | 683,142    |            |      |   | 552,090    |           
|Furniture and fixtures         |                                 |                        | 72,252     |            |      |   | 60,042     |           
|Developments in process        |                                 |                        | 284,737    |            |      |   | 164,997    |           
|                               |                                 |                        |            |            |      |  
|                               | Gross investment in real estate |                        |            | 25,163,516 |      |   |            | 24,816,351 | 
|Accumulated depreciation       |                                 |                        | (2,077,613 | )          |      |   | (1,494,301 | )         
|                               |                                 |                        |            |            |      |  
|                               | Net investment in real estate   |                        | $          | 23,085,903 |      |   | $          | 23,322,050 | 
|                               |                                 |                        |            |            |      |  

During 2002, the Army and Navy Club Building and
Liberty Plaza were acquired for a total of approximately
$92.3 million from an unaffiliated party. These properties
are located in Washington, D.C. and comprise approximately
260,372 square feet of office space.

During 2001, in addition to the properties
acquired in the Spieker Merger, the Three Lafayette Centre
office building was acquired for a total cost of approximately
$68.7 million from an unaffiliated party. The property is
located in Washington, D.C. and comprises approximately 259,441
square feet.

During 2000, in addition to the Properties
acquired in the Cornerstone Merger, several Properties, or the
remaining interests therein, were acquired for a total cost of
approximately $130.2 million. These Properties comprised
approximately 317,616 square feet.

NOTE 5  DISPOSITIONS

2002

During 2002, Equity Office disposed of 45 office
properties, four parking facilities (see Note 8 sub
footnote (4)), two industrial properties and three land
parcels in separate transactions to various unaffiliated parties
for approximately $508.3 million. The total gain on the
sale of these properties was approximately $17.9 million.
The sold office properties consisted of approximately 3,113,189
square feet, the industrial properties consisted of
approximately 77,072 square feet, and the parking facilities
consisted of approximately 7,464 parking spaces.

2001

During 2001, Equity Office disposed of eight
office properties, four parking facilities, a land parcel and an
apartment property in separate transactions to various
unaffiliated parties for approximately $327.8 million. The
total gain on the sale of these properties was approximately
$81.7 million. The sold office properties consisted of
approximately 879,388 square feet, the parking facilities
contained approximately 3,721 parking spaces and the apartment
property contained approximately 161 units.

Equity Office sold 19 industrial properties that
were acquired in the Spieker Merger for approximately
$213.4 million. There was no gain or loss on the sale of
these properties. The sold industrial properties are located in
California and Oregon and consist of approximately
4.1 million square feet.

67



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 5 
DISPOSITIONS  (continued)

2000

During 2000, Equity Office disposed of seven
office properties totaling approximately 964,136 square feet, 11
parking facilities and a partial interest in two Office
Properties for approximately $536.0 million and recognized
a total net gain on sale of real estate of approximately
$36.0 million.

Segment Reporting

For segment reporting purposes, the office
properties, the apartment property and the land parcels that
were sold are included in the Office Properties
segment and the industrial properties and parking facilities
that were sold are included in the Corporate and
Other segment.

Below is a summary of the results of operations
of these properties through their respective disposition dates:

|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |         |        |  |   |        |        | 
|----------------------------------------------------------------------------------------------------- | -------------- | ----------------------- | ------ | --------------------- | ------------------ | - | ------ | ------ |  | - | ------ | ------ |  | ---- | ------- | ------ |  | - | ------ | ------ | 
|                                                                                                      |                |                         |        |                      
|                                                                                                      |                | For the year ended      |        |                       | For the year ended |  
|                                                                                                      |                | December 31,            |        |                       | December 31,       |  
|                                                                                                      |                |                         |        |                       |                    |  
|                                                                                                      |                | 2002                    |        |                       | 2001               |   |        | 2000   |  |   | 2001   |        |  | 2000 |        
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|                                                                                                      |                |                         |        |                       |                    |   |        |       
|                                                                                                      |                |                         |        | Properties Sold Prior |                   
|                                                                                                      |                | Properties Sold in 2002 |        |                       | to 2002            |  
|                                                                                                      |                |                         |        |                       |                    |  
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |  
|(Dollars in thousands)                                                                                |                |                         |        |                       |                    |   |        |        |  |  
|Property revenues                                                                                     |                | $                       | 40,436 |                       |                    | $ | 49,167 |        |  | $ | 32,091 |        |  | $    | 37,787  |        |  | $ | 71,582 |       
|Interest income                                                                                       |                |                         | 54     |                       |                    |   | 18     |        |  |   | 90     |        |  |      |        |        |  |   | 288    |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|                                                                                                      | Total revenues |                         |        | 40,490                |                    |   |        | 49,185 |  |   |        | 32,181 |  |      |         | 37,787 |  |   |        | 71,870 | 
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Interest expense                                                                                      |                |                         | (24    | )                     |                    |   | 1,321  |        |  |   | 1,927  |        |  |      | 2,390   |        |  |   | 2,718  |       
|Depreciation and amortization                                                                         |                |                         | 6,812  |                       |                    |   | 8,622  |        |  |   | 5,531  |        |  |      | 5,526   |        |  |   | 11,936 |       
|Property operating expenses                                                                           |                |                         | 13,280 |                       |                    |   | 17,040 |        |  |   | 11,869 |        |  |      | 10,991  |        |  |   | 22,596 |       
|Ground rent                                                                                           |                |                         | 43     |                       |                    |   | 116    |        |  |   | 116    |        |  |      |        |        |  |   |       |       
|General and administrative                                                                            |                |                         |       |                       |                    |   |       |        |  |   |       |        |  |      | 355     |        |  |   | 156    |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|                                                                                                      | Total expenses |                         |        | 20,111                |                    |   |        | 27,099 |  |   |        | 19,443 |  |      |         | 19,262 |  |   |        | 37,406 | 
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Income before income taxes, allocation to
    minority interests and net gain on sales of real estate |                |                         | 20,379 |                       |                    |   | 22,086 |        |  |   | 12,738 |        |  |      | 18,525  |        |  |   | 34,464 |       
|Income taxes                                                                                          |                |                         | (101   | )                     |                    |   | (23    | )      |  |   |       |        |  |      |        |        |  |   |       |       
|Minority interest  partially owned
    properties                                                    |                |                         |       |                       |                    |   |       |        |  |   |       |        |  |      |        |        |  |   | (1,457 | )     
|Net gain on sales of real estate                                                                      |                |                         | 17,926 |                       |                    |   |       |        |  |   |       |        |  |      | 81,662  |        |  |   | 36,013 |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Net income                                                                                            |                | $                       | 38,204 |                       |                    | $ | 22,063 |        |  | $ | 12,738 |        |  | $    | 100,187 |        |  | $ | 69,020 |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        
|Property net operating income                                                                         |                | $                       | 27,156 |                       |                    | $ | 32,127 |        |  | $ | 20,222 |        |  | $    | 26,796  |        |  | $ | 48,986 |       
|                                                                                                      |                |                         |        |                       |                    |   |        |        |  |   |        |        |  |      |        

NOTE 6  INVESTMENT IN NOTES
RECEIVABLE AND PREFERRED STOCK

The following investments are included in Prepaid
Expenses and Other Assets:

During 1999, a 67% share of a $202.2 million
mezzanine-level debt position was acquired for approximately
$73.9 million as part of a debt restructuring related to
the SunAmerica Center office property. The unamortized discount
to the face amount of the note of approximately
$62.9 million may be amortized to interest income based on
the estimated yield of the investment. The note accrues interest
at 7.25% per annum and matures in August 2014 and is
payable based on cash flow, as defined in the respective loan
agreement. Equity Office recognizes interest income on this
investment based on actual cash receipts. In addition, Equity
Office has the option to acquire 67% of the aggregate face
amount of two other subordinate notes from the current holder,
an affiliate of the property owner. The aggregate face amount of
these notes is $15.0 million.

68



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 6  INVESTMENT IN NOTES
RECEIVABLE AND PREFERRED
STOCK  (continued)

In July 1998, 50,000 preferred shares of CT
Convertible Trust I, an investment management and real
estate finance company, were acquired for approximately
$48.5 million. The preferred shares have a liquidation
preference of $1,000 each. The discount of $1.5 million is
being amortized as additional dividend income over the term of
20 years. The terms of the preferred shares are as follows:



| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | (a) For 60% of the investment, or
    approximately $30 million of the preferred shares:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | the coupon rate of 8.25% per annum remains fixed
    through March 31, 2002. Thereafter, the rate will increase
    to the greater of:

| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | 10% per annum, increasing by 75 basis points per
    annum commencing October 1, 2004 and on each October 1
    thereafter, or
| |  | a rate equal to Capital Trust, Inc.s then
    annual dividend per common share divided by $7.00;                             

| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | the conversion price is $7.00 per share;                         
| |  | the common share equivalent is fixed at 4,285,714
    shares; and
| |  | the preferred shares are callable through
    September 30, 2004.



| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | (b) For 40% of the investment, or
    approximately $20 million of the preferred shares:



| |   |                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | the coupon rate is 13.0% per annum and is fixed
    until October 1, 2004 when it will increase by 75 basis
    points per annum; and
| |  | the preferred shares are callable at any time.                                                                                       

On September 30, 2002, CT Convertible
Trust I redeemed the non-convertible amount of its
preferred securities at par, including accrued dividends. Equity
Office received approximately $20.1 million upon the
redemption. Equity Office still has an approximate
$29.2 million investment in the convertible portion of the
preferred securities of CT Convertible Trust I.



|         |                                                                         
|-------- | ------------------------------------------------------------------------
|NOTE 7  | IMPAIRMENT ON SECURITIES, OTHER INVESTMENTS
    AND ASSETS HELD FOR SALE

During 2001, an impairment on securities and
other investments of approximately $132.7 million was
recognized in connection with various investments and other
assets. The impairment is included in the statement of
operations as Impairment on securities and other
investments. The total impairment consisted of the
investment in HQ Global Workplaces, Inc. preferred stock,
including accrued but unpaid dividends, of approximately
$90.6 million, the investments in several telecom,
technology and advertising related companies, investments in two
full-service business center joint ventures, and a portion of an
investment in an internally developed software system.

During the latter part of 2001, HQ Global was in
default with respect to certain covenant and payment obligations
under its senior and mezzanine indebtedness, but received
forbearance periods from both its senior and mezzanine lenders.
HQ Global was unable to restructure its indebtedness during
these forbearance periods. Based on these circumstances and
other factors, Equity Office determined that its investment in
HQ Global was not recoverable and, therefore, recorded a
permanent impairment on 100% of its investment. Subsequently, in
March 2002 HQ Global filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code.

Equity Offices telecom, technology and
advertising related investments and full-service business center
joint venture investments have been experiencing operating
losses due, in part, to the current economic environment. These
investments were considered to be impaired based on their
current fair value as compared to the carrying value. The fair
value of the investments was based on internally prepared
valuations considering current economic conditions. The
impairments represent Equity Offices entire investment in
the respective assets, except for the internally developed
software system, for which the impairment represented

69



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




|         |                                                                                       
|-------- | --------------------------------------------------------------------------------------
|NOTE 7  | IMPAIRMENT ON SECURITIES, OTHER INVESTMENTS
    AND ASSETS HELD FOR SALE  (continued)

approximately one-half of the investment. These
investments and the related impairment are reported under the
Corporate and Other segment for segment reporting
purposes.

During 2001, an impairment on assets held for
sale of approximately $2.5 million was recognized in
connection with the sale of the St. Louis Parking Garage located
in St. Louis, Missouri. The impairment is included in the
statement of operations as Impairment on assets held for
sale. The property was sold in January 2002. The
sales price less costs to sell was less than the carrying amount
of the property as of December 31, 2001. Equity Office had
a 50% interest in the property and accounted for its investment
using the equity method of accounting. Equity Offices
share of the net income from the property is included in
Income from Unconsolidated Joint Ventures and was
approximately $1.7 million and $2.0 million for the
years ended December 31, 2001 and 2000, respectively. The
asset and the related impairment are reported under the
Corporate and Other segment for reporting purposes.

70



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 8  INVESTMENT IN
UNCONSOLIDATED JOINT VENTURES

The following is a summary of Equity
Offices economic ownership in unconsolidated joint
ventures. All of the properties are Office Properties except for
the St. Louis parking garages and the entities included in the
other category.

|                                                                          |  |          |                   |                |             |              |            |      |  |  |       |      |  |  |       |  
|------------------------------------------------------------------------- |  | -------- | ----------------- | -------------- | ----------- | ------------ | ---------- | ---- |  |  | ----- | ---- |  |  | ----- | -
|                                                                          |  |          |                   |                |             |             
|                                                                          |  |          |                   |                |             | Economic     |           
|                                                                          |  |          |                   |                |             | Interest(1)  |           
|                                                                          |  |          |                   |                |             | as of        |           
|                                                                          |  |          |                   |                |             | December 31, |           
|                                                                          |  |          |                   | Total Rentable |             |              |            |     
|Property                                                                  |  | Location |                   |                | Square Feet |              |            | 2002 |  |  | 2001  |     
|                                                                          |  |          |                   |                |             |              |            |      |  |  |       |     
|One Post Office Square                                                    |  |          | Boston, MA        |                |             |              | 765,296    |      |  |  | 50    | %    |  |  | 50    | %
|75-101 Federal Street                                                     |  |          | Boston, MA        |                |             |              | 813,195    |      |  |  | 51.61 | %    |  |  | 51.61 | %
|Rowes Wharf(2)                                                            |  |          | Boston, MA        |                |             |              | 344,645    |      |  |  | 44    | %    |  |  | 39    | %
|Four Oaks Place (square feet not included in
    Equity Office portfolio) |  |          | Houston, TX       |                |             |              | 1,753,281  |      |  |  | 2.55  | %    |  |  | 2.55  | %
|10 & 30 South Wacker                                                      |  |          | Chicago, IL       |                |             |              | 2,003,288  |      |  |  | 75    | %    |  |  | 75    | %
|Bank One Center                                                           |  |          | Indianapolis, IN  |                |             |              | 1,057,877  |      |  |  | 25    | %    |  |  | 25    | %
|Pasadena Towers                                                           |  |          | Los Angeles, CA   |                |             |              | 439,366    |      |  |  | 25    | %    |  |  | 25    | %
|Promenade II                                                              |  |          | Atlanta, GA       |                |             |              | 774,385    |      |  |  | 50    | %    |  |  | 50    | %
|SunTrust Center                                                           |  |          | Orlando, FL       |                |             |              | 640,741    |      |  |  | 25    | %    |  |  | 25    | %
|Preston Commons                                                           |  |          | Dallas, TX        |                |             |              | 418,604    |      |  |  | 50    | %    |  |  | 50    | %
|Sterling Plaza                                                            |  |          | Dallas, TX        |                |             |              | 302,747    |      |  |  | 50    | %    |  |  | 50    | %
|Bank of America Tower                                                     |  |          | Seattle, WA       |                |             |              | 1,537,932  |      |  |  | 50.1  | %    |  |  | 50.1  | %
|One Post Street                                                           |  |          | San Francisco, CA |                |             |              | 391,450    |      |  |  | 50    | %    |  |  | 50    | %
|Key Center                                                                |  |          | Seattle, WA       |                |             |              | 472,929    |      |  |  | 80    | %    |  |  | 80    | %
|1301 Avenue of the Americas                                               |  |          | New York, NY      |                |             |              | 1,765,694  |      |  |  | 84.47 | %    |  |  | 84.47 | %
|Griffin Towers(3)                                                         |  |          | Orange County, CA |                |             |              | 542,530    |      |  |  | 100   | %    |  |  | 90    | %
|St. Louis parking garages(4)                                              |  |          | St. Louis, MO     |                |             |              |           |      |  |  |      |      |  |  | 50    | %
|Concar                                                                    |  |          | San Mateo, CA     |                |             |              | 205,000    |      |  |  | 79.96 | %    |  |  | 79.96 | %
|Foundry Square I(5)                                                       |  |          | San Francisco, CA |                |             |              |           |      |  |  | 100   | %    |  |  | 64    | %
|San Rafael Corporate Center(6)                                            |  |          | San Rafael, CA    |                |             |              | 155,318    |      |  |  | 100   | %    |  |  | 79.96 | %
|Properties Under Development                                              |  |          |                   |                |             |              |            |      |  |  |       |      |  |  |       |  
|Ferry Building(6)(7)                                                      |  |          | San Francisco, CA |                |             |              |           |      |  |  | (7    | )    |  |  | (7    | )
|Foundry Square II(6)                                                      |  |          | San Francisco, CA |                |             |              |           |      |  |  | 87.5  | %    |  |  | 70    | %
|Foundry Square III(6)                                                     |  |          | San Francisco, CA |                |             |              |           |      |  |  | (5    | )    |  |  | (5    | )
|Foundry Square IV                                                         |  |          | San Francisco, CA |                |             |              |           |      |  |  | 40    | %    |  |  | 40    | %
|Other                                                                     |  |          |                   |                |             |              |            |      |  |  |       |      |  |  |       |  
|Wright Runstad Associates LP                                              |  |          |                  |                |             |              |           |      |  |  | 30    | %    |  |  | 30    | %
|Wilson/ Equity Office, LLC(5)(6)                                          |  |          |                  |                |             |              |           |      |  |  | (5    | )(6) |  |  | (5    | )
|Regus Equity Business Centers, LLC                                        |  |          |                  |                |             |              |           |      |  |  | 50    | %    |  |  | 50    | %
|HQ Global Workplaces                                                      |  |          |                  |                |             |              |           |      |  |  | 50    | %    |  |  | 50    | %
|                                                                          |  |          |                   |                |             |              |            |      |  |  |       |     
|                                                                          |  |          | Total             |                |             |              | 14,384,278 |      |  |  |       |      |  |  |       |  
|                                                                          |  |          |                   |                |             |              |            |      |  |  |       |     



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amounts shown above approximate Equity
    Offices economic ownership interest for the periods
    presented. Cash flow from operations, capital transactions and
    net income are allocated to the joint venture partners in
    accordance with their respective partnership agreements. Equity
    Offices share of these items is subject to change based
    on, among other things, the operations of the Property and the
    timing and amount of capital transactions. Equity Offices
    legal ownership may differ.

71



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 8  INVESTMENT IN
UNCONSOLIDATED JOINT
VENTURES  (continued)




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In 2002, in connection with the restructuring of
    the partnership Equity Office contributed approximately
    $30.9 million to the joint venture which increased Equity
    Offices economic ownership of Rowes Wharf to 44%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | In 2002, Equity Office acquired the remaining
    interest in the joint venture in exchange for the assumption by
    Equity Office of the joint venture partners share of the
    joint venture debt of approximately $50.8 million. Equity
    Office had previously accounted for the investment in Griffin
    Towers under the equity method and is now consolidating the
    investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(4) | In January 2002, Equity Office disposed of its
    50% interest in four parking facilities in St. Louis, Missouri
    to an unaffiliated party for approximately $47.5 million
    and repaid Equity Offices share of the mortgage debt of
    approximately $28.7 million. During 2001, an impairment on
    assets held for sale of approximately $2.5 million was
    recognized in connection with the sale (see Note 7). The
    parking facilities contained approximately 7,464 parking spaces.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(5) | In 2000, Equity Office formed a joint venture
    with Wilson Investors (WI, of which William
    Wilson III, a trustee of Equity Office, is principal),
    through its interest in Wilson/Equity Office (W/EO
    of which 49.9% is owned by Equity Office and 50.1%, is owned by
    WI), and an unaffiliated party to develop, construct, lease and
    manage Foundry Square I, a 327,000 square foot office building
    project located in San Francisco, California which was scheduled
    to be completed in the third quarter of 2003 and was leased to a
    single tenant. In March 2002, the tenant terminated its
    lease for $85 million. WIs share of the lease
    termination income and consideration for its joint venture
    interest was approximately $26 million from which WI repaid
    the $12 million outstanding balance under a
    $25 million loan commitment from Equity Office previously
    made to WI and the accrued interest of approximately $2 million.
    Equity Offices share of the lease termination income was
    approximately $40 million and was recorded as income from
    investment in unconsolidated joint ventures in the first quarter
    2002.                                                          
|   
|(6) | In December 2002, Equity Office and WI, entered
    into a nonmonetary exchange in which Equity Office acquired
    Wilson Investors ownership of the Ferry Building, San
    Rafael Corporate Center I and II (a land parcel) and
    Foundry Square II and III (a land parcel under option), in
    exchange for its ownership in Larkspur (a land parcel under
    option) and its ownership in the W/EO operating business. The
    transaction was accounted for as a nonmonetary exchange since
    the assets included in the exchange were similar and since the
    cash consideration exchanged was minimal. Equity Offices
    investment in Larkspur and the W/EO operating business was
    recorded as additional basis in the assets received since it
    represented the fair value of WIs equity in the assets
    received. As a result of the exchange, the Ferry Building, San
    Rafael Corporate Center I and II, and Foundry Square II and III
    are now consolidated.                                                                                                                                                                                                                                                                          
|   
|(7) | A joint venture between Equity Office and other
    unaffiliated parties leased the Ferry Building from the City and
    County of San Francisco, through its Port Commission (the
    Port). Under this lease, the Port is paid a stated
    base rent. In addition, once the lessee has received from the
    project a cumulative preferred return of 8% (prior to
    stabilization) and 11% (after stabilization), then 50% of the
    proceeds from the operation and ownership of the project are
    paid to the Port as percentage rent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | The joint venture is redeveloping the Ferry
    Building in a manner to permit the use of federal rehabilitation
    tax credits (Historic Tax Credits). Since the
    original members of the joint venture could not take full
    advantage of the Historic Tax Credits, the joint venture
    admitted a new member who could do so. This investor member will
    contribute approximately $23.5 million in equity to fund a
    portion of the Total Project Estimated Costs for the project,
    and will be entitled to a preferred return with an effective
    annual rate of approximately 3% on its capital investment. The
    investor members interest in the joint venture is subject
    to put/call rights during the sixth and seventh years after the
    Ferry Building is placed in service. Upon the purchase of the
    investor members interest pursuant to the put/call, it is
    estimated that the joint venture will retain approximately
    $11 million of the capital contributed by the investor
    member, based on a formula to determine the purchase price for
    the investor members interest and after taking into
    account the preferred return that will have been paid to the
    investor member by such time. Through

72



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




| |                                                                           
| | --------------------------------------------------------------------------
| | NOTE 8  INVESTMENT IN
    UNCONSOLIDATED JOINT
    VENTURES  (continued)

the creation of a master lease, Equity
Offices effective ownership percentage in the net cash
flow of the Ferry Building project is approximately 100% after
the payment to the Port of the percentage rent described above
and the distribution of the preferred returns.

Combined summarized financial information of the
unconsolidated joint ventures is as follows:

|                                                                                                                                                                 |                                    |                                                              |           |           |           |   |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------------------------------ | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                                                                                                                 |                                    |                                                             
|                                                                                                                                                                 |                                    | December 31,                                                 |          
|                                                                                                                                                                 |                                    |                                                              |          
|                                                                                                                                                                 |                                    | 2002                                                         |           |           | 2001      |  
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|                                                                                                                                                                 |                                    |                                                             
|                                                                                                                                                                 |                                    | (Dollars in thousands)                                       |          
|Balance Sheets:                                                                                                                                                  |                                    |                                                              |           |           |           |   |           |          
|                                                                                                                                                                 | Real estate, net                   |                                                              | $         | 2,757,699 |           |   | $         | 3,135,250 |          
|                                                                                                                                                                 | Other assets                       |                                                              |           | 207,740   |           |   |           | 276,322   |          
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|                                                                                                                                                                 |                                    | Total Assets                                                 |           | $         | 2,965,439 |   |           | $         | 3,411,572 | 
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|                                                                                                                                                                 | Mortgage debt                      |                                                              | $         | 1,312,404 |           |   | $         | 1,370,025 |          
|                                                                                                                                                                 | Other liabilities                  |                                                              |           | 112,968   |           |   |           | 169,987   |          
|                                                                                                                                                                 | Partners and shareholders equity |                                                              |           | 1,540,067 |           |   |           | 1,871,560 |          
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|                                                                                                                                                                 |                                    | Total Liabilities and Partners and
    Shareholders Equity |           | $         | 2,965,439 |   |           | $         | 3,411,572 | 
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|Equity Offices share of equity                                                                                                                                  |                                    | $                                                            | 966,773   |           |           | $ | 1,194,441 |          
|Net excess of cost of investments over the net
    book value of underlying net assets, net of accumulated
    depreciation of $20,704 and $17,517, respectively |                                    |                                                              | 121,042   |           |           |   | 126,686   |          
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|Carrying value of investments in unconsolidated
    joint ventures                                                                                               |                                    | $                                                            | 1,087,815 |           |           | $ | 1,321,127 |          
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  
|Equity Offices share of unconsolidated
    non-recourse mortgage debt                                                                                           |                                    | $                                                            | 818,975   | (a)       |           | $ | 848,944   |          
|                                                                                                                                                                 |                                    |                                                              |           |           |           |  



|    |                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Equity Offices share of the scheduled
    payments of principal on mortgage debt for each of the next five
    years and thereafter through maturity as of December 31,
    2002 are as follows:

|           |       |                      |         |         | 
|---------- | ----- | -------------------- | ------- | ------- | 
|Year       |       | Dollars in thousands |        
|           |       |                      |        
|2003       |       | $                    | 109,006 |        
|2004       |       |                      | 117,023 |        
|2005       |       |                      | 466,410 |        
|2006       |       |                      | 51,182  |        
|2007       |       |                      | 1,454   |        
|Thereafter |       |                      | 73,900  |        
|           |       |                      |        
|           | Total |                      | $       | 818,975 | 
|           |       |                      |        

73



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 8  INVESTMENT IN
UNCONSOLIDATED JOINT
VENTURES  (continued)


|                          |                                                           |                                  |                |         |         |         |   |         |         |         |   |         |         |         | 
|------------------------- | --------------------------------------------------------- | -------------------------------- | -------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                          |                                                           |                                 
|                          |                                                           | For the years ended December 31, |               
|                          |                                                           |                                  |               
|                          |                                                           | 2002                             |                |         | 2001    |         |   | 2000    |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          |                                                           |                                 
|                          |                                                           | (Dollars in thousands)           |               
|Statements of Operations: |                                                           |                                  |                |         |         |         |   |         |         |         |   |        
|                          | Revenues                                                  |                                  | $              | 561,482 |         |         | $ | 509,238 |         |         | $ | 383,526 |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          | Expenses:                                                 |                                  |                |         |         |         |   |         |         |         |   |         |        
|                          |                                                           | Interest expense                 |                |         | 77,020  |         |   |         | 95,389  |         |   |         | 74,376  |        
|                          |                                                           | Depreciation and amortization    |                |         | 83,656  |         |   |         | 86,270  |         |   |         | 63,376  |        
|                          |                                                           | Operating expenses               |                |         | 196,936 |         |   |         | 212,202 |         |   |         | 143,575 |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          |                                                           |                                  | Total expenses |         |         | 357,612 |   |         |         | 393,861 |   |         |         | 281,327 | 
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          | Net income before gain on sale of real estate             |                                  |                | 203,870 |         |         |   | 115,377 |         |         |   | 102,199 |        
|                          | Gain on sale of real estate                               |                                  |                | 3,703   |         |         |   |        |         |         |   | 17,915  |        
|                          | Cumulative effect of a change in accounting
    principle |                                  |                |        |         |         |   | (2,279  | )       |         |   |        |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          | Net income                                                |                                  | $              | 207,573 |         |         | $ | 113,098 |         |         | $ | 120,114 |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|Equity Offices share of: |                                                           |                                  |                |         |         |         |   |         |         |         |   |        
|                          | Net income                                                |                                  | $              | 106,852 |         |         | $ | 69,203  |         |         | $ | 56,251  |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          | Interest expense and loan cost amortization               |                                  | $              | 53,248  |         |         | $ | 63,105  |         |         | $ | 41,947  |        
|                          |                                                           |                                  |                |         |         |         |   |         |        
|                          | Depreciation and amortization (real estate
    related)   |                                  | $              | 48,865  |         |         | $ | 51,021  |         |         | $ | 39,730  |        
|                          |                                                           |                                  |                |         |         |         |   |         |        

NOTE 9  MORTGAGE DEBT

Equity Office had outstanding mortgage debt of
approximately $2.5 billion and $2.7 billion as of
December 31, 2002 and 2001, respectively. The historical
cost, net of accumulated depreciation, of encumbered properties
at December 31, 2002 and 2001 was approximately
$5.2 billion and $5.6 billion, respectively. During
the years ended December 31, 2002 and 2001, the following
transactions occurred:

|                                |                                                  |                        |           |          |      |   |           |          |  
|------------------------------- | ------------------------------------------------ | ---------------------- | --------- | -------- | ---- | - | --------- | -------- | -
|                                |                                                  |                       
|                                |                                                  | For the years ended    |          
|                                |                                                  | December 31,           |          
|                                |                                                  |                        |          
|                                |                                                  | 2002                   |           |          | 2001 |  
|                                |                                                  |                        |           |          |      |  
|                                |                                                  |                       
|                                |                                                  | (Dollars in thousands) |          
|Balance at beginning of year(1) |                                                  | $                      | 2,662,099 |          |      | $ | 2,933,626 |         
|                                | Assumed through Spieker Merger                   |                        |           |         |      |   |           | 47,204   |  
|                                | Repayments/principal amortization                |                        |           | (156,052 | )    |   |           | (426,112 | )
|                                | Proceeds from financings                         |                        |           | 14,427   |      |   |           | 140,000  |  
|                                | Repaid or assumed by buyer upon sale of property |                        |           |         |      |   |           | (32,619  | )
|                                |                                                  |                        |           |          |      |  
|Balance at end of year(1)       |                                                  | $                      | 2,520,474 |          |      | $ | 2,662,099 |         
|                                |                                                  |                        |           |          |      |  



---



|    |                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes net discount on mortgage debt of
    approximately $(12,584) and $(11,761) as of December 31,
    2002 and 2001, respectively.

Fixed Interest Rate Mortgage Debt

As of December 31, 2002 and 2001,
approximately $2.5 billion and $2.6 billion,
respectively, of mortgage debt was at a fixed interest rate.
Payments on fixed interest rate mortgage debt are generally due
in monthly installments of principal and interest or interest
only. As of December 31, 2002 and 2001, the effective
interest rates ranged from 5.81% to 8.63% and 6.80% to 8.63%,
respectively, and the weighted average effective interest rate
was approximately 7.70% and 7.74%, respectively.

74



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 9  MORTGAGE
DEBT  (continued)

Variable Interest Rate Mortgage Debt

As of December 31, 2002 and 2001,
approximately $36.0 million of mortgage debt was at
variable interest rates based on spreads over LIBOR. Payments on
variable interest rate mortgage debt are due in monthly
installments of interest only. As of December 31, 2002 and
2001, the weighted average variable effective interest rate was
approximately 1.98% and 2.59%, respectively.

Repayment Schedule

Scheduled payments of principal for the next five
years and thereafter through maturity as of December 31,
2002 are as follows:

|                                                                                       |       |                      |           |           | 
|-------------------------------------------------------------------------------------- | ----- | -------------------- | --------- | --------- | 
|Year                                                                                   |       | Dollars in thousands |          
|                                                                                       |       |                      |          
|2003                                                                                   |       | $                    | 102,230   |          
|2004                                                                                   |       |                      | 448,664   |          
|2005                                                                                   |       |                      | 584,595   |          
|2006                                                                                   |       |                      | 343,941   |          
|2007                                                                                   |       |                      | 237,024   |          
|Thereafter                                                                             |       |                      | 804,020   |          
|                                                                                       |       |                      |          
|Subtotal                                                                               |       |                      | 2,520,474 |          
|Net discount (net of accumulated amortization
    of
    approximately $(6.4) million) |       |                      | (12,584   | )        
|                                                                                       |       |                      |          
|                                                                                       | Total |                      | $         | 2,507,890 | 
|                                                                                       |       |                      |          

NOTE 10  LINE OF CREDIT AND TERM
LOAN

EOP Partnership has a $1.0 billion revolving
credit facility that was obtained in May 2000. The line of
credit bears interest at LIBOR plus 60 basis points and matures
on May 12, 2003. There is also an annual facility fee of
$2.0 million payable quarterly. In addition, a competitive bid
option, whereby the lenders participating in the credit facility
bid on the interest to be charged, is available for up to $350
million of the borrowings under the credit facility. Agreements
or instruments relating to the line of credit contain certain
financial restrictions and requirements described below. As of
December 31, 2002, Equity Office was in compliance with
each of these financial restrictions and requirements.

Set forth below are the financial restrictions
and requirements to which we are subject under our line of
credit agreement:



| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | total liabilities to total asset value may not
    exceed 0.55:1 at any time;                                                                                                                      
|
| |  | earnings before interest, taxes, depreciation and
    amortization to interest expense may not be less than 2.00:1;                                                                                
|
| |  | cash flow to fixed charges may not be less than
    1.5:1;                                                                                                                                         
|
| |  | secured debt to total asset value may not exceed
    0.40:1;                                                                                                                                       
|
| |  | unsecured debt to unencumbered asset value may
    not exceed 0.55:1;                                                                                                                              
|
| |  | unencumbered net operating income to unsecured
    debt service may not be less than 2.0:1;                                                                                                        
|
| |  | consolidated tangible net worth may not be less
    than the sum of $7.8 billion and 70% of all net offering
    proceeds received by Equity Office or EOP Partnership after
    February 29, 2000;

75



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 10  LINES OF CREDIT AND
TERM LOANS  (continued)




| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we may not pay any distributions on Common Shares
    and Units in excess of 90% of annual Funds From Operations; and                                                                                                         
|
| |  | our investments in unimproved assets, interest in
    taxable REIT subsidiaries, developments, unconsolidated joint
    ventures, mortgages and securities, in the aggregate, may not
    exceed 25% of our total asset value.

Prior to the closing of the Spieker Merger on
July 2, 2001, Equity Office obtained a $1.0 billion
bridge term facility to finance a portion of the cash portion of
the Spieker Merger. This $1.0 billion bridge term facility
had a term of 364 days and an interest rate based on LIBOR
plus 80 basis points. The $1.0 billion bridge loan facility
was repaid and terminated on July 18, 2001 with proceeds
from $1.4 billion unsecured note offering.

NOTE 11  UNSECURED NOTES

During 2002, the following transactions occurred:

|                                                             |                  |                        |         |   |           |  |      |           |  |   |          |          |   |  |          |  | 
|------------------------------------------------------------ | ---------------- | ---------------------- | ------- | - | --------- |  | ---- | --------- |  | - | -------- | -------- | - |  | -------- |  | 
|                                                             |                  | Coupon/                |         |   | All  in  |  |      |           |  |  
|                                                             |                  | Stated                 |         |   | Effective |  |      | Principal |  |   | Maturity |         
|Original Term (in years)                                     |                  | Rate                   |         |   | Rate(a)   |  |      | Amount    |  |   | Date     |         
|                                                             |                  |                        |         |   |           |  |      |           |  |   |          |         
|                                                             |                  |                       
|                                                             |                  | (Dollars in thousands) |        
|Issuance                                                     |                  |                        |         |   |           |  |      |           |  |   |          |          |   |  |          | 
|10                                                           |                  |                        | 6.75    | % |           |  | 7.02 | %         |  | $ | 500,000  |          |   |  | 2/15/12  | 
|                                                             |                  |                        |         |   |           |  |      |           |  |   |          |         
|Repayments                                                   |                  |                        |         |   |           |  |      |           |  |   |          |          |   |  |          | 
|3                                                            |                  |                        | 6.38    | % |           |  | 6.62 | %         |  |   | (200,000 | )        |   |  | 1/15/02  | 
|4                                                            |                  |                        | 6.38    | % |           |  | 6.30 | %         |  |   | (250,000 | )        |   |  | 2/15/02  | 
|7                                                            |                  |                        | 6.95    | % |           |  | 5.37 | %         |  |   | (110,000 | )        |   |  | 12/15/02 | 
|                                                             |                  |                        |         |   |           |  |      |           |  |   |          |         
|                                                             | Total repayments |                        |         |   |           |  |      |           |  |   |          | (560,000 | ) |  |          |  | 
|                                                             |                  |                        |         |   |           |  |      |           |  |   |          |         
|Reversal of mark to market of swaps at
    December 31, 2001 |                  |                        | 8,117   |   |           |  |      |          
|Net discount on notes issuance in February 2002              |                  |                        | (10,873 | ) |           |  |      |          
|Proceeds from terminated interest rate swaps                 |                  |                        | 42,810  |   |           |  |      |          
|Amortization of discounts and premiums                       |                  |                        | (16,390 | ) |           |  |      |          
|                                                             |                  |                        |         |   |           | 
|Total                                                        |                  |                        | 23,664  |   |           |  |      |          
|                                                             |                  |                        |         |   |           | 
|Net activity                                                 |                  | $                      | (36,336 | ) |           |  |      |          
|                                                             |                  |                        |         |   |           | 

The following notes were outstanding as of
December 31, 2002:

|                         |  |                        |      |   |           |  |      |           |  |   |          |  |  |  |          | 
|------------------------ |  | ---------------------- | ---- | - | --------- |  | ---- | --------- |  | - | -------- |  |  |  | -------- | 
|                         |  | Coupon/                |      |   | All  in  |  |      |           |  |  
|                         |  | Stated                 |      |   | Effective |  |      | Principal |  |   | Maturity | 
|Original Term (in years) |  | Rate                   |      |   | Rate(a)   |  |      | Amount    |  |   | Date     | 
|                         |  |                        |      |   |           |  |      |           |  |   |          | 
|                         |  |                       
|                         |  | (Dollars in thousands) |     
|5 Year Unsecured Notes   |  |                        | 6.38 | % |           |  | 6.76 | %         |  | $ | 300,000  |  |  |  | 02/15/03 | 
|3 Year Unsecured Notes   |  |                        | 7.38 | % |           |  | 7.55 | %         |  |   | 400,000  |  |  |  | 11/15/03 | 
|5 Year Unsecured Notes   |  |                        | 6.50 | % |           |  | 4.59 | %         |  |   | 300,000  |  |  |  | 01/15/04 | 
|9 Year Unsecured Notes   |  |                        | 6.90 | % |           |  | 6.27 | %         |  |   | 100,000  |  |  |  | 01/15/04 | 
|5 Year Unsecured Notes   |  |                        | 6.80 | % |           |  | 6.10 | %         |  |   | 200,000  |  |  |  | 05/01/04 | 
|6 Year Unsecured Notes   |  |                        | 6.50 | % |           |  | 5.31 | %         |  |   | 250,000  |  |  |  | 06/15/04 | 
|7 Year Unsecured Notes   |  |                        | 7.24 | % |           |  | 7.26 | %         |  |   | 30,000   |  |  |  | 09/01/04 | 
|8 Year Unsecured Notes   |  |                        | 6.88 | % |           |  | 6.40 | %         |  |   | 125,000  |  |  |  | 02/01/05 | 

76



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 11  UNSECURED
NOTES  (continued)


|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |           |           |  |          |  |  | 
|-------------------------------------------------------------------------------- | -------------------------- | ---------------------- | ---- | ---- | --------- |  | ---- | --------- | - |  | --------- | --------- | --------- |  | -------- |  |  | 
|                                                                                 |                            | Coupon/                |      |      | All  in  |  |      |           |   | 
|                                                                                 |                            | Stated                 |      |      | Effective |  |      | Principal |   |  | Maturity  |          
|Original Term (in years)                                                         |                            | Rate                   |      |      | Rate(a)   |  |      | Amount    |   |  | Date      |          
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|                                                                                 |                            |                       
|                                                                                 |                            | (Dollars in thousands) |     
|7 Year Unsecured Notes                                                           |                            |                        | 6.63 | %    |           |  | 4.99 | %         |   |  | 400,000   |           |           |  | 02/15/05 | 
|7 Year Unsecured Notes                                                           |                            |                        | 8.00 | %    |           |  | 6.49 | %         |   |  | 100,000   |           |           |  | 07/19/05 | 
|8 Year Unsecured Notes                                                           |                            |                        | 7.36 | %    |           |  | 7.69 | %         |   |  | 50,000    |           |           |  | 09/01/05 | 
|6 Year Unsecured Notes                                                           |                            |                        | 8.38 | %    |           |  | 7.65 | %         |   |  | 500,000   |           |           |  | 03/15/06 | 
|9 Year Unsecured Notes                                                           |                            |                        | 7.44 | %    |           |  | 7.74 | %         |   |  | 50,000    |           |           |  | 09/01/06 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.13 | %    |           |  | 6.74 | %         |   |  | 100,000   |           |           |  | 12/01/06 | 
|9 Year Unsecured Notes                                                           |                            |                        | 7.00 | %    |           |  | 6.80 | %         |   |  | 1,500     |           |           |  | 02/02/07 | 
|9 Year Unsecured Notes                                                           |                            |                        | 6.88 | %    |           |  | 6.83 | %         |   |  | 25,000    |           |           |  | 04/30/07 | 
|9 Year Unsecured Notes                                                           |                            |                        | 6.76 | %    |           |  | 6.76 | %         |   |  | 300,000   |           |           |  | 06/15/07 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.41 | %    |           |  | 7.70 | %         |   |  | 50,000    |           |           |  | 09/01/07 | 
|7 Year Unsecured Notes                                                           |                            |                        | 7.75 | %    |           |  | 7.91 | %         |   |  | 600,000   |           |           |  | 11/15/07 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.75 | %    |           |  | 6.97 | %         |   |  | 150,000   |           |           |  | 01/15/08 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.75 | %    |           |  | 7.01 | %         |   |  | 300,000   |           |           |  | 02/15/08 | 
|8 Year Unsecured Notes(b)                                                        |                            |                        | 7.25 | %    |           |  | 7.64 | %         |   |  | 325,000   |           |           |  | 11/15/08 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.80 | %    |           |  | 6.94 | %         |   |  | 500,000   |           |           |  | 01/15/09 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.25 | %    |           |  | 7.14 | %         |   |  | 200,000   |           |           |  | 05/01/09 | 
|11 Year Unsecured Notes                                                          |                            |                        | 7.13 | %    |           |  | 6.97 | %         |   |  | 150,000   |           |           |  | 07/01/09 | 
|10 Year Unsecured Notes                                                          |                            |                        | 8.10 | %    |           |  | 8.22 | %         |   |  | 360,000   |           |           |  | 08/01/10 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.65 | %    |           |  | 7.20 | %         |   |  | 200,000   |           |           |  | 12/15/10 | 
|10 Year Unsecured Notes                                                          |                            |                        | 7.00 | %    |           |  | 6.83 | %         |   |  | 1,100,000 |           |           |  | 07/15/11 | 
|10 Year Unsecured Notes                                                          |                            |                        | 6.75 | %    |           |  | 7.02 | %         |   |  | 500,000   |           |           |  | 02/15/12 | 
|20 Year Unsecured Notes                                                          |                            |                        | 7.88 | %    |           |  | 8.08 | %         |   |  | 25,000    |           |           |  | 12/01/16 | 
|20 Year Unsecured Notes                                                          |                            |                        | 7.35 | %    |           |  | 8.08 | %         |   |  | 200,000   |           |           |  | 12/01/17 | 
|20 Year Unsecured Notes                                                          |                            |                        | 7.25 | %    |           |  | 7.54 | %         |   |  | 250,000   |           |           |  | 02/15/18 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.50 | %    |           |  | 8.24 | %         |   |  | 150,000   |           |           |  | 10/01/27 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.25 | %    |           |  | 7.31 | %         |   |  | 225,000   |           |           |  | 06/15/28 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.50 | %    |           |  | 7.55 | %         |   |  | 200,000   |           |           |  | 04/19/29 | 
|30 Year Unsecured Notes                                                          |                            |                        | 7.88 | %    |           |  | 7.94 | %         |   |  | 300,000   |           |           |  | 07/15/31 | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|                                                                                 | Weighted Average/ Subtotal |                        |      | 7.19 | %         |  |      | 7.03      | % |  |           | 9,016,500 |           |  |          |  | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|Net premium (net of accumulated amortization of
    approximately $15.4 million) |                            |                        |      |      |           |  |      |           |   |  | 41,151    |           |           |  |          | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          
|                                                                                 |                            | Total                  |      |      |           |  |      |           |   |  |           | $         | 9,057,651 |  |          |  |  | 
|                                                                                 |                            |                        |      |      |           |  |      |           |   |  |           |          



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Includes the effect of terminated interest rate
    protection and swap agreements, offering and transaction costs
    and premiums and discounts on certain unsecured notes.                                                                                                                                                                                                                                                                                                                                        
|(b) |  | The notes are exchangeable into Common Shares at
    an exchange rate of $34.00 per share. If the closing price at
    the time a holder exercises its exchange right is less than the
    exchange price of $34.00, the holder will receive, in lieu of
    Common Shares, cash in an amount equal to 97% of the product of
    the number of Common Shares into which the principal amount of
    notes subject to such exercise would otherwise be exchangeable
    and the current market price per Common Share.

77



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 11  UNSECURED
NOTES  (continued)


As of December 31, 2002, $2.1 billion
of unsecured debt securities and related guarantees were
available for issuance under a shelf registration statement.

Restrictions and Covenants under Unsecured
Indebtedness

Agreements or instruments relating to our
unsecured notes and the line of credit contain certain financial
restrictions and requirements described below. As of
December 31, 2002, Equity Office was in compliance with
each of these financial restrictions and requirements.

Restrictions and Covenants

Set forth below are the financial restrictions
and requirements to which we are subject under our unsecured
note indentures and Equity Offices performance under each
covenant as of December 31, 2002:

|                                                                                                             |  |                    |        | 
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------ | 
|Covenant                                                                                                     |  | Actual Performance |       
|                                                                                                             |  |                    |       
|Debt to adjusted total assets may not exceed
    0.60:1                                                      |  |                    | 0.47:1 | 
|Secured debt to adjusted total assets may not
    exceed 0.40:1                                              |  |                    | 0.13:1 | 
|Consolidated income available for debt service to
    annual debt service charge may not be less than 1.50:1 |  |                    | 2.73:1 | 
|Total unencumbered assets to unsecured debt may
    not be less than 1.50:1                                  |  |                    | 2.22:1 | 

NOTE 12  DERIVATIVE FINANCIAL
INSTRUMENTS

Interest Rate Swaps

During 2002 and 2001, Equity Office entered into
and terminated several interest rate swap agreements that hedged
certain unsecured notes. In each case, Equity Office was the
variable interest rate payer and the counterparty was the fixed
rate payer. The variable interest rates were based on various
spreads over LIBOR. The settlement dates corresponded to the
interest payment dates of the respective unsecured notes being
hedged. Each of the interest rate swap agreements were to
terminate on the maturity date of the respective unsecured notes
being hedged. The interest rate swap agreements were designated
as fair value hedges. As of December 31, 2001,
approximately $1.4 million was included in other assets and
approximately $9.5 million was included in other
liabilities which represented the fair value of the interest
rate swaps. A corresponding amount is included in
discounts/premiums on unsecured notes at December 31, 2001.
As of December 31,

78



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




|          |                                                   
|--------- | --------------------------------------------------
|NOTE 12  | DERIVATIVE FINANCIAL
    INSTRUMENTS  (continued)

2002, all of the interest rate swaps in the table
below had been terminated. The table below summarizes the
interest rate swap agreements that were effective during 2002
and 2001.

|          |                |  |             |  |                |                |  |   |              |  |       |          |             |                  |                  |  |       |  |  |  |                   | 
|--------- | -------------- |  | ----------- |  | -------------- | -------------- |  | - | ------------ |  | ----- | -------- | ----------- | ---------------- | ---------------- |  | ----- |  |  |  | ----------------- | 
|Swap      |                |  | Swap        |  |                | Total Proceeds |  |   |              |  | Fixed |          |             | Maturity Date of |                 
|Effective |                |  | Termination |  |                | from Swap      |  |   | Amount       |  |       | Interest |             |                  | Unsecured Notes/ | 
|Date      |                |  | Date        |  |                | Termination(a) |  |   | Hedged       |  |       | Rate     |             |                  | Swaps            | 
|          |                |  |             |  |                |                |  |   |              |  |       |          |             |                  |                  | 
|          | May 2002       |  |             |  | September 2002 |                |  | $ | 7.1 million  |  |       | $        | 150 million |                  |                  |  | 8.38% |  |  |  | March 15, 2006    | 
|          | May 2002       |  |             |  | September 2002 |                |  | $ | 9.3 million  |  |       | $        | 200 million |                  |                  |  | 8.38% |  |  |  | March 15, 2006    | 
|          | March 2002     |  |             |  | September 2002 |                |  | $ | 4.3 million  |  |       | $        | 150 million |                  |                  |  | 6.50% |  |  |  | January 15, 2004  | 
|          | March 2002     |  |             |  | September 2002 |                |  | $ | 4.2 million  |  |       | $        | 150 million |                  |                  |  | 6.50% |  |  |  | January 15, 2004  | 
|          | December  2001 |  |             |  | February 2002  |                |  | $ | 3.2 million  |  |       | $        | 267 million |                  |                  |  | 7.00% |  |  |  | July 15, 2011     | 
|          | October  2001  |  |             |  | September 2002 |                |  | $ | 8.7 million  |  |       | $        | 300 million |                  |                  |  | 6.63% |  |  |  | February 15, 2005 | 
|          | October  2001  |  |             |  | September 2002 |                |  | $ | 3.6 million  |  |       | $        | 150 million |                  |                  |  | 6.50% |  |  |  | June 15, 2004     | 
|          | October  2001  |  |             |  | September 2002 |                |  | $ | 2.4 million  |  |       | $        | 100 million |                  |                  |  | 6.50% |  |  |  | June 15, 2004     | 
|          | July 2001      |  |             |  | September 2001 |                |  | $ | 31.6 million |  |       | $        | 500 million |                  |                  |  | 7.00% |  |  |  | July 15, 2011     | 
|          | June 2001      |  |             |  | September 2001 |                |  | $ | 15.8 million |  |       | $        | 400 million |                  |                  |  | 6.63% |  |  |  | February 15, 2005 | 




|    |                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The proceeds from the swap terminations were
    recorded as additional premium on the respective unsecured note
    that was hedged by the terminated swap. The amount recorded as
    additional premium is being amortized over the remaining term of
    the unsecured notes.

Forward-Starting Interest Rate Swaps

In October 2002, Equity Office entered into
$1.1 billion of forward-starting interest rate swaps to
effectively fix the 10-year Treasury rate at approximately 3.7%
for note offerings that occurred in 2003 and are anticipated to
occur in 2004. The forward-starting interest rate swaps were
entered into at current market rates and, therefore, had no
initial cost. The terms of the forward-starting interest rate
swaps require Equity Office to pay a fixed-interest rate to the
counterparties and to receive a variable rate from the
counterparties. The swaps settle at six-month intervals
beginning in 2003 and 2004 and are scheduled to terminate in
2004. The market value of the forward-starting swaps at
December 31, 2002 was a liability of approximately
$18.6 million which is included in other liabilities and in
other comprehensive income. In January 2003, Equity Office
settled one of the forward-starting swaps that had a notional
amount of $300 million and received approximately $.8
million. The forward-starting swap was settled in connection
with $500 million of unsecured notes that were issued in
February 2003. Equity Office is obligated to settle the
remaining swap agreements no later than the commencement of
their term in early 2004. Upon settlement of the swaps, Equity
Office may be obligated to pay the counterparties a settlement
payment, or alternatively to receive settlement proceeds from
the counterparties. Any monies paid or received will be
amortized to interest expense over the term of the respective
note offering.

NOTE 13  MINORITY INTERESTS IN
PARTIALLY OWNED PROPERTIES

Although the financial condition and results of
operations of the following Properties are consolidated, there
are unaffiliated parties that own an interest in these
Properties. These Properties are consolidated since Equity
Office owns at least 50% of the respective ownership entities
and controls the major decisions regarding the respective
Properties. All of the Properties are Office Properties except
for Fremont Bayside, an Industrial Property. Equity
Offices legal ownership of each Property and its economic
interest in each Property is substantially the same.

The amounts shown below approximate Equity
Offices economic ownership interest for the period
presented. Cash flow from operations, capital transactions and
net income are allocated to the minority interests in accordance
with their respective partnership agreements. Equity
Offices share of these items is

79



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 13  MINORITY INTERESTS IN
PARTIALLY OWNED
PROPERTIES  (continued)


subject to change based on, among other things,
the operations of the Property and the timing and amount of
capital transactions.

|                          |  |          |                   |                |             |                   |           |      |  |  |       |   |  |  |       |  
|------------------------- |  | -------- | ----------------- | -------------- | ----------- | ----------------- | --------- | ---- |  |  | ----- | - |  |  | ----- | -
|                          |  |          |                   |                |             |                  
|                          |  |          |                   |                |             | Economic Interest |          
|                          |  |          |                   |                |             | as of             |          
|                          |  |          |                   |                |             | December 31,      |          
|                          |  |          |                   | Total Rentable |             |                   |           |     
|Office Property           |  | Location |                   |                | Square Feet |                   |           | 2002 |  |  | 2001  |  
|                          |  |          |                   |                |             |                   |           |      |  |  |       |  
|Plaza at La Jolla Village |  |          | San Diego, CA     |                |             |                   | 635,419   |      |  |  | 66.7  | % |  |  | 66.7  | %
|Park Avenue Tower         |  |          | New York, NY      |                |             |                   | 568,060   |      |  |  | 94.0  | % |  |  | 94.0  | %
|850 Third Avenue          |  |          | New York, NY      |                |             |                   | 568,867   |      |  |  | 94.0  | % |  |  | 94.0  | %
|222 Berkley Street        |  |          | Boston , MA       |                |             |                   | 519,608   |      |  |  | 91.5  | % |  |  | 91.5  | %
|500 Boylston Street       |  |          | Boston, MA        |                |             |                   | 706,864   |      |  |  | 91.5  | % |  |  | 91.5  | %
|120 Montgomery(1)         |  |          | San Francisco, CA |                |             |                   | 420,310   |      |  |  | 100.0 | % |  |  | 100.0 | %
|Washington Mutual Tower   |  |          | Seattle, WA       |                |             |                   | 1,210,162 |      |  |  | 75.0  | % |  |  | 75.0  | %
|Norwest Center            |  |          | Minneapolis, MN   |                |             |                   | 1,117,439 |      |  |  | 75.0  | % |  |  | 75.0  | %
|Waters Edge Phase I(2)    |  |          | Los Angeles, CA   |                |             |                   |          |      |  |  | 87.5  | % |  |  | 87.5  | %
|2951 28th Street(3)       |  |          | Santa Monica, CA  |                |             |                   | 85,000    |      |  |  | 98.0  | % |  |  | 98.0  | %
|Fremont Bayside(3)        |  |          | Oakland, CA       |                |             |                   | 103,920   |      |  |  | 90.0  | % |  |  | 90.0  | %
|                          |  |          |                   |                |             |                   |           |      |  |  |       |  
|Total                     |  |          |                   |                |             |                   | 5,935,649 |      |  |  |       |   |  |  |       |  
|                          |  |          |                   |                |             |                   |           |      |  |  |       |  




|    |                                                                     
|--- | --------------------------------------------------------------------
|(1) | Equity Office acquired the remaining 33% interest
    in April 2001.
|   
|(2) | This property is currently under development.                       
|   
|(3) | Acquired in the Spieker Merger.                                     

Equity Office has additional Properties that are
partially owned by unaffiliated parties where Equity
Offices approximate economic ownership is 100%.

NOTE 14  REDEEMABLE COMMON
SHARES

As of December 31, 2000, 1,717,844
redeemable Common Shares were outstanding which related to
Common Shares subject to a put option agreement entered into
with an affiliate of the Wright Runstad & Company in
connection with the acquisition of certain Properties in
December 1997. In September 2001, Equity Office paid
approximately $1.4 million in settlement of this put
option. Equity Office previously recognized approximately
$4.1 million as a total potential payment for the put
option exercise between the period from August 1999 to
August 2000. The difference of approximately
$2.7 million between the $4.1 million previously
recognized and the $1.4 million actually paid was
recognized as a put option settlement.

NOTE 15  SHAREHOLDERS
EQUITY

Common Shares

The following table presents the changes in the
issued and outstanding Common Shares since January 1, 2001
(excluding 50,206,731 Units and 56,490,302 Units
outstanding at December 31, 2002 and 2001,

80



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 15  SHAREHOLDERS
EQUITY  (continued)


respectively, which are convertible into Common
Shares on a one-for-one basis, or the cash equivalent thereof,
subject to certain restrictions):

|                            |                                                                    |                     |             |            |      |  |             |             | 
|--------------------------- | ------------------------------------------------------------------ | ------------------- | ----------- | ---------- | ---- |  | ----------- | ----------- | 
|                            |                                                                    |                    
|                            |                                                                    | For the years ended |            
|                            |                                                                    | December 31,        |            
|                            |                                                                    |                     |            
|                            |                                                                    | 2002                |             |            | 2001 | 
|                            |                                                                    |                     |             |            |      | 
|Outstanding at January 1,   |                                                                    |                     | 414,548,673 |            |      |  | 305,248,752 |            
|                            | Repurchases/retired(1)                                             |                     |             | (7,920,854 | )    |  |             |            | 
|                            | Common Shares issued in the Spieker Merger                         |                     |             |           |      |  |             | 101,520,398 | 
|                            | Share options exercised                                            |                     |             | 1,739,863  |      |  |             | 3,282,003   | 
|                            | Units redeemed for Common Shares                                   |                     |             | 2,555,646  |      |  |             | 2,172,016   | 
|                            | Conversion of redeemable Common Shares                             |                     |             |           |      |  |             | 1,717,844   | 
|                            | Restricted shares and share awards
    issued/cancelled, net       |                     |             | 214,291    |      |  |             | 558,666     | 
|                            | Common Shares issued through the Dividend
    Reinvestment Program |                     |             | 63,379     |      |  |             | 34,989      | 
|                            | Conversion of Series B Preferred Shares into
    Common Shares     |                     |             |           |      |  |             | 14,005      | 
|                            |                                                                    |                     |             |            |      | 
|Outstanding at December 31, |                                                                    |                     | 411,200,998 |            |      |  | 414,548,673 |            
|                            |                                                                    |                     |             |            |      | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In July 2002, Equity Office announced a Common
    Share repurchase program allowing for the repurchase of up to
    $200 million of Common Shares, which was later increased to
    $400 million in November 2002, over the next 12 months
    at the discretion of management. The Common Shares may be
    repurchased in the open market or privately negotiated
    transactions. During 2002, 7,901,900 Common Shares were
    repurchased at an average price of $24.92 for approximately
    $196.9 million in the aggregate.

Distributions

Distributions are declared and paid quarterly to
holders of Common Shares as of the record dates of each
declaration. The current quarterly distribution is $0.50 per
Common Share. For the years ended December 31, 2002, 2001
and 2000, the per share distributions were $2.00, $1.90 and
$1.74, respectively.

Preferred Shares

Listed below is a summary of Equity Offices
preferred shares. The preferred shareholders are entitled to
receive, when and as authorized by the Board of Trustees of
Equity Office, cumulative preferential cash distributions.
Equity Office may redeem the preferred shares at certain dates
in whole or in part at a cash redemption price equal to the
redemption preference plus all accrued unpaid dividends to the
date fixed for redemption.

|       |  |              |        |  |             |         |       |                        |           |   |              |  |  |              |          |                 |                 |  |           |  |  |                             |  |  |           | 
|------ |  | ------------ | ------ |  | ----------- | ------- | ----- | ---------------------- | --------- | - | ------------ |  |  | ------------ | -------- | --------------- | --------------- |  | --------- |  |  | --------------------------- |  |  | --------- | 
|       |  |              |        |  |             | Current |       |                        | Quarterly |   |              |  |  |              |          |                
|       |  | Annual       |        |  | Liquidation |         |       | Balance                |           |   | Distribution |  |  |              |          | Equity Offices |                 | 
|       |  | Distribution |        |  | Preference  |         |       | Outstanding            |           |   | Amount       |  |  | Distribution |          |                 | Voluntary       |  | Maturity  | 
|Series |  | Rate         |        |  | Per Share   |         |       | (Dollars in thousands) |           |   | Per Share    |  |  | Frequency    |          |                 | Redemption Date |  | Date      | 
|       |  |              |        |  |             |         |       |                        |           |   |              |  |  |              |          |                 |                 |  |           | 
|A(1)   |  |              |       |  |             | $       |      |                        |           | $ |             |  |  | $            |         |                 |                 |  |           |  |  |                            |  |  |           | 
|B(2)   |  |              | 5.25%  |  |             |         | 50.00 |                        |           |   | 299,500      |  |  |              | .65625   |                 |                 |  | Quarterly |  |  | 2/15/2003 through 2/15/2008 |  |  | 2/15/08   | 
|C      |  |              | 8.625% |  |             |         | 25.00 |                        |           |   | 114,073      |  |  |              | .5390625 |                 |                 |  | Quarterly |  |  | on or after 12/8/2003       |  |  | Perpetual | 
|D(3)   |  |              |       |  |             |         |      |                        |           |   |             |  |  |              |         |                 |                 |  |           |  |  |                            |  |  |           | 
|E(3)   |  |              | 7.875% |  |             |         | 25.00 |                        |           |   | 150,000      |  |  |              | .4921875 |                 |                 |  | Quarterly |  |  | on or after 10/10/2002      |  |  | Perpetual | 
|F(3)   |  |              | 8.0%   |  |             |         | 25.00 |                        |           |   | 100,000      |  |  |              | .50      |                 |                 |  | Quarterly |  |  | on or after 6/4/2003        |  |  | Perpetual | 
|G(1)   |  |              | 7.75%  |  |             |         | 25.00 |                        |           |   | 212,500      |  |  |              | .484375  |                 |                 |  | Quarterly |  |  | on or after 7/29/2007       |  |  | Perpetual | 

81



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 15  SHAREHOLDERS
EQUITY  (continued)


The annual per share distributions are as follows:

|            |  |                                  |           |  |      |   |           |      |  |   |         | 
|----------- |  | -------------------------------- | --------- |  | ---- | - | --------- | ---- |  | - | ------- | 
|            |  |                                 
|            |  | Distributions per share          |          
|            |  |                                  |          
|            |  |                                 
|            |  | For the years ended December 31, |          
|            |  |                                  |          
|            |  | 2002                             |           |  | 2001 |   |           | 2000 | 
|            |  |                                  |           |  |      |   |           |      | 
|Series A(1) |  | $                                | 1.3844167 |  |      | $ | 2.245     |      |  | $ | 2.245   | 
|Series B    |  | $                                | 2.625     |  |      | $ | 2.625     |      |  | $ | 2.625   | 
|Series C    |  | $                                | 2.15625   |  |      | $ | 2.15625   |      |  | $ | 2.15625 | 
|Series D(3) |  |                                  |          |  |      | $ | 0.8728125 |      |  |   |        | 
|Series E    |  | $                                | 1.96875   |  |      | $ | 0.984375  |      |  |   |        | 
|Series F    |  | $                                | 2.00      |  |      | $ | 1.00      |      |  |   |        | 
|Series G(1) |  | $                                | 0.7427083 |  |      |   |          |      |  |   |        | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In July 2002, Equity Office redeemed its
    7,994,000 outstanding 8.98% Series A Cumulative Redeemable
    Preferred Shares at an aggregate redemption price of
    approximately $201.9 million, including accrued
    distributions. In addition, Equity Office issued 8,500,000 7.75%
    Series G Cumulative Redeemable Preferred Shares in an
    offering that closed July 29, 2002. Substantially all of
    the net proceeds from the issuance and sale of the Series G
    Preferred Shares totaling approximately $206.1 million were
    used to redeem the Series A Preferred Shares.
|   
|(2) | The Series B Preferred Shares are
    convertible at any time by the holder into Common Shares at a
    conversion price of $35.70 per share. These shares are
    non-callable for five years with a mandatory call on
    February 15, 2008.                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | The Series D, E and F preferred shares were
    issued in connection with the Spieker Merger. In
    November 2001, Equity Office redeemed all of its 4,250,000
    outstanding 9.45% Cumulative Redeemable Series D Preferred
    Shares at a redemption price of $25.00 per share, plus accrued
    and unpaid distributions for the period from October 1,
    2001 to the redemption date of $0.2821875 per share, or an
    aggregate redemption price of approximately $107.4 million.                                                                                                      

In March 2001, a holder of 10,000
Series B Preferred Shares exercised its right to convert
its Series B Preferred Shares into 14,005 Common Shares.

In January 2000, Equity Office repurchased
6,000 Series A Cumulative Redeemable Preferred Shares and
37,100 Series C Cumulative Redeemable Preferred Shares at
an average share price of $20.66 for approximately
$0.9 million in the aggregate and the shares were retired.
The difference between the share repurchase amount and the
carrying amount of the preferred shares was classified as a
preferred distribution in the consolidated statement of
operations for the year ended December 31, 2000.

82



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 16  FUTURE MINIMUM
RENTS

Future minimum rental receipts due on
noncancelable operating leases at the Office Properties and
Industrial Properties as of December 31, 2002 were as
follows:

|           |  |                      |            | 
|---------- |  | -------------------- | ---------- | 
|Year       |  | Dollars in thousands |           
|           |  |                      |           
|2003       |  | $                    | 2,519,739  | 
|2004       |  |                      | 2,246,422  | 
|2005       |  |                      | 1,921,084  | 
|2006       |  |                      | 1,549,562  | 
|2007       |  |                      | 1,230,439  | 
|Thereafter |  |                      | 3,552,023  | 
|           |  |                      |           
|Total      |  | $                    | 13,019,269 | 
|           |  |                      |           

Equity Office is subject to the usual business
risks associated with the collection of the above scheduled
rents. The future minimum rental receipts due on noncancelable
operating leases from Equity Offices investment in
unconsolidated joint ventures are not included in the above
schedule.

NOTE 17  FUTURE MINIMUM
LEASE PAYMENTS

Certain Office Properties are subject to ground
leases. Certain of these leases are subject to rental increases
based upon the appraised value of the Property at specified
dates or certain financial calculations based on the operations
of the respective Property. Future minimum lease obligations
under these noncancelable leases as of December 31, 2002
were as follows:

|           |  |                      |           | 
|---------- |  | -------------------- | --------- | 
|Year       |  | Dollars in thousands |          
|           |  |                      |          
|2003       |  | $                    | 18,088    | 
|2004       |  |                      | 15,588    | 
|2005       |  |                      | 15,263    | 
|2006       |  |                      | 15,118    | 
|2007       |  |                      | 15,008    | 
|Thereafter |  |                      | 1,070,849 | 
|           |  |                      |          
|Total      |  | $                    | 1,149,914 | 
|           |  |                      |          

Rental expense for the years ended
December 31, 2002, 2001 and 2000 was approximately
$24.4 million, $19.9 million and $12.8 million,
respectively, including rental expenses included in discontinued
operations of $0, $.1 million and $.1 million,
respectively. These rental expense amounts include ground rent
and rent for the corporate offices.

NOTE 18  EXTRAORDINARY
ITEM

The $1.0 million extraordinary loss in 2001
related to costs on certain Office Properties located in
Seattle, Washington as a result of damage from an earthquake in
February 2001.

In accordance with SFAS 145,
Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections, effective for fiscal years beginning after
May 15, 2002, any gain or loss on extinguishment of debt
that was classified as an extraordinary loss in prior periods
shall be reclassified. During the years ended December 31,
2001 and 2000, Equity Office recognized approximately
$9.4 million and approximately $1.8 million relating
to early extinguishments of debt as extraordinary items. These
amounts have been reclassified to amortization of deferred
financing costs and prepayment expenses.

83



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 19  EARNINGS PER
SHARE

The following table sets forth the computation of
basic and diluted earnings per Common Share and common share
equivalent:

|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            |  |   |             |            | 
|---------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | --------------------------------------------- | ----------- | ---------- | ---- | - | ----------- | ---------- |  | - | ----------- | ---------- | 
|                                                                                                                                   |                                                  | 2002                                          |             |            | 2001 |   |             | 2000       | 
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|                                                                                                                                   |                                                  |                                              
|                                                                                                                                   |                                                  | (Dollars in thousands, except per share data) |            
|Numerator:                                                                                                                         |                                                  |                                               |             |            |      |   |             |            |  |   |             |           
|Income from continuing operations                                                                                                  |                                                  | $                                             | 732,011     |            |      | $ | 598,261     |            |  | $ | 458,122     |           
|Discontinued operations (including net gain on
    disposal of $17,926 in 2002)                                                    |                                                  |                                               | 38,204      |            |      |   | 22,063      |            |  |   | 12,738      |           
|Extraordinary item                                                                                                                 |                                                  |                                               |            |            |      |   | (1,000      | )          |  |   |            |           
|Cumulative effect of a change in accounting
    principle                                                                          |                                                  |                                               |            |            |      |   | (1,142      | )          |  |   |            |           
|Put option settlement                                                                                                              |                                                  |                                               |            |            |      |   | 2,655       |            |  |   | (2,576      | )         
|Preferred distributions, net                                                                                                       |                                                  |                                               | (62,573     | )          |      |   | (57,041     | )          |  |   | (43,348     | )         
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Numerator for basic earnings per
    share  net income available for Common Shares                                                |                                                  |                                               | 707,642     |            |      |   | 563,796     |            |  |   | 424,936     |           
|Net income allocated to minority interests in EOP
    Partnership                                                                  |                                                  |                                               | 89,205      |            |      |   | 76,249      |            |  |   | 59,376      |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Numerator for diluted earnings per
    share  net income available for Common Shares and
    common share equivalents             |                                                  | $                                             | 796,847     |            |      | $ | 640,045     |            |  | $ | 484,312     |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Denominator:                                                                                                                       |                                                  |                                               |             |            |      |   |             |            |  |   |             |           
|Denominator for net income available per weighted
    average Common Shares outstanding  basic                                    |                                                  |                                               | 414,689,029 |            |      |   | 360,026,097 |            |  |   | 277,186,733 |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Effect of dilutive securities:                                                                                                     |                                                  |                                               |             |            |      |   |             |            |  |   |             |           
|                                                                                                                                   | Redemption of Units for Common Shares            |                                               |             | 52,445,745 |      |   |             | 48,893,485 |  |   |             | 38,880,961 | 
|                                                                                                                                   | Share options, put options and restricted shares |                                               |             | 2,003,946  |      |   |             | 3,067,315  |  |   |             | 2,929,713  | 
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Common Shares equivalents                                                                                                          |                                                  |                                               | 54,449,691  |            |      |   | 51,960,800  |            |  |   | 41,810,674  |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Denominator for net income available per weighted
    average Common Shares and common share equivalents
    outstanding  diluted |                                                  |                                               | 469,138,720 |            |      |   | 411,986,897 |            |  |   | 318,997,407 |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Earnings per share 
    basic:                                                                                                    |                                                  |                                               |             |            |      |   |             |            |  |   |             |           
|Income from continuing operations, net of
    minority interests                                                                   |                                                  | $                                             | 1.76        |            |      | $ | 1.65        |            |  | $ | 1.64        |           
|Discontinued operations, net of minority interests                                                                                 |                                                  |                                               | 0.08        |            |      |   | 0.05        |            |  |   | 0.04        |           
|Put option settlement, net of minority interests                                                                                   |                                                  |                                               |            |            |      |   | 0.01        |            |  |   | (0.01       | )         
|Preferred distributions, net, net of minority
    interests                                                                        |                                                  |                                               | (0.13       | )          |      |   | (0.14       | )          |  |   | (0.14       | )         
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Net income available for common shares                                                                                             |                                                  | $                                             | 1.71        |            |      | $ | 1.57        |            |  | $ | 1.53        |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Earnings per share 
    diluted:                                                                                                  |                                                  |                                               |             |            |      |   |             |            |  |   |             |           
|Income from continuing operations                                                                                                  |                                                  | $                                             | 1.75        |            |      | $ | 1.64        |            |  | $ | 1.62        |           
|Discontinued operations                                                                                                            |                                                  |                                               | 0.08        |            |      |   | 0.05        |            |  |   | 0.04        |           
|Put option settlement                                                                                                              |                                                  |                                               |            |            |      |   | 0.01        |            |  |   | (0.01       | )         
|Preferred distributions, net                                                                                                       |                                                  |                                               | (0.13       | )          |      |   | (0.14       | )          |  |   | (0.14       | )         
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 
|Net income available for Common Shares                                                                                             |                                                  | $                                             | 1.70        |            |      | $ | 1.55        |            |  | $ | 1.52        |           
|                                                                                                                                   |                                                  |                                               |             |            |      |   |             |            | 

84



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 19  EARNINGS PER
SHARE  (continued)


The following securities were not included in the
computation of diluted earnings per Common Share and common
share equivalent since they would have an antidilutive effect:

|                                        |       |                  |        |                                 |      |  |            |            |  |  |           |            |  |  |           |            | 
|--------------------------------------- | ----- | ---------------- | ------ | ------------------------------- | ---- |  | ---------- | ---------- |  |  | --------- | ---------- |  |  | --------- | ---------- | 
|                                        |       |                  |        |                                
|                                        |       |                  |        | For the year ended December 31, |     
|                                        |       | Weighted Average |        |                                 |      | 
|Antidilutive Securities                 |       | Exercise Price   |        |                                 | 2002 |  |            | 2001       |  |  | 2000      |           
|                                        |       |                  |        |                                 |      |  |            |            |  |  |           |           
|Share options                           |       | $                | 29.240 |                                 |      |  | 13,032,648 |            |  |  |          |            |  |  |          |           
|Share options                           |       | $                | 30.350 |                                 |      |  |           |            |  |  | 4,849,148 |            |  |  |          |           
|Share options                           |       | $                | 30.250 |                                 |      |  |           |            |  |  |          |            |  |  | 3,019,089 |           
|Series B Preferred Shares               |       | $                | 35.700 |                                 |      |  | 5,990,000  |            |  |  | 5,990,000 |            |  |  | 6,000,000 |           
|Warrants (expired on December 17, 2002) |       | $                | 39.375 |                                 |      |  | 4,808,219  |            |  |  | 5,000,000 |            |  |  | 5,000,000 |           
|                                        |       |                  |        |                                 |      |  |            |            |  |  |           |           
|                                        | Total |                  |        |                                 |      |  |            | 23,830,867 |  |  |           | 15,839,148 |  |  |           | 14,019,089 | 
|                                        |       |                  |        |                                 |      |  |            |            |  |  |           |           

For additional disclosures regarding employee
share options and restricted shares, see Note 23 
Share Option Plan and Share Award Plan.

85



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 20  SEGMENT
INFORMATION

As discussed in Note 1, Equity Offices
primary business is the ownership and operation of Office
Properties. Management operates each Office Property as an
individual operating segment and has aggregated these operating
segments into a single operating segment for financial reporting
purposes due to the fact that the individual operating segments
have similar economic characteristics. Equity Offices
long-term tenants are in a variety of businesses, and no single
tenant is significant to Equity Offices business. The
property operating revenues generated at the Corporate and
Other segment consists primarily of revenues earned by the
Industrial Properties and the stand-alone parking facilities.
The Other revenues generated at the Corporate
and Other segment consist primarily of fee income from the
management of office properties owned by third parties and
interest and dividend income from various investments.

|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |   |   |            |            |  
|-------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | --------------------------------------------- | ---------- | -------- | --------- | - | -------- | ------------ | - | - | ---------- | ---------- | -
|                                                                                                                                 |                                           |                                              
|                                                                                                                                 |                                           | As of or for the year ended December 31, 2002 |           
|                                                                                                                                 |                                           |                                               |           
|                                                                                                                                 |                                           | Office                                        |            |          | Corporate |   |          |             
|                                                                                                                                 |                                           | Properties                                    |            |          | and Other |   |          | Consolidated |  
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|                                                                                                                                 |                                           |                                              
|                                                                                                                                 |                                           | (Dollars in thousands)                        |           
|Property operating revenues                                                                                                      |                                           | $                                             | 3,413,561  |          |           | $ | 54,287   |              |   | $ | 3,467,848  |           
|Property operating expenses                                                                                                      |                                           |                                               | (1,107,452 | )        |           |   | (10,551  | )            |   |   | (1,118,003 | )         
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Property net operating income from continuing
    operations                                                                     |                                           |                                               | 2,306,109  |          |           |   | 43,736   |              |   |   | 2,349,845  |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Adjustments to arrive at net income:                                                                                             |                                           |                                               |            |          |           |   |          |              |   |   |            |           
|                                                                                                                                 | Other revenues                            |                                               |            | 2,721    |           |   |          | 35,513       |   |   |            | 38,234     |  
|                                                                                                                                 | Interest expense(1)                       |                                               |            | (194,194 | )         |   |          | (615,935     | ) |   |            | (810,129   | )
|                                                                                                                                 | Depreciation and amortization             |                                               |            | (664,272 | )         |   |          | (24,806      | ) |   |            | (689,078   | )
|                                                                                                                                 | Ground rent                               |                                               |            | (20,446  | )         |   |          |             |   |   |            | (20,446    | )
|                                                                                                                                 | General and administrative                |                                               |            | (1,668   | )         |   |          | (135,800     | ) |   |            | (137,468   | )
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|                                                                                                                                 | Total adjustments to arrive at net income |                                               |            | (877,859 | )         |   |          | (741,028     | ) |   |            | (1,618,887 | )
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Income before income taxes, allocation to
    minority interests and income from investment in unconsolidated
    joint ventures |                                           |                                               | 1,428,250  |          |           |   | (697,292 | )            |   |   | 730,958    |           
|Income taxes                                                                                                                     |                                           |                                               | (2,398     | )        |           |   | (6,996   | )            |   |   | (9,394     | )         
|Minority interests                                                                                                               |                                           |                                               | (7,120     | )        |           |   | (89,285  | )            |   |   | (96,405    | )         
|Income from investment in unconsolidated joint
    ventures                                                                      |                                           |                                               | 106,701    |          |           |   | 151      |              |   |   | 106,852    |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Income from continuing operations                                                                                                |                                           |                                               | 1,525,433  |          |           |   | (793,422 | )            |   |   | 732,011    |           
|Discontinued operations (including net gain on
    sales of real estate of $17,926)                                              |                                           |                                               | 36,540     |          |           |   | 1,664    |              |   |   | 38,204     |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Net income                                                                                                                       |                                           | $                                             | 1,561,973  |          |           | $ | (791,758 | )            |   | $ | 770,215    |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Property net operating income from continuing
    operations                                                                     |                                           | $                                             | 2,306,109  |          |           | $ | 43,736   |              |   | $ | 2,349,845  |           
|Property net operating income from discontinued
    operations (see Note 5  Dispositions)                                       |                                           |                                               | 26,290     |          |           |   | 866      |              |   |   | 27,156     |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Total property net operating income from
    continuing operations and discontinued operations                                   |                                           | $                                             | 2,332,399  |          |           | $ | 44,602   |              |   | $ | 2,377,001  |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Capital and tenant improvements                                                                                                  |                                           | $                                             | 321,803    |          |           | $ | 7,127    |              |   | $ | 328,930    |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Investment in unconsolidated joint ventures                                                                                      |                                           | $                                             | 1,077,273  |          |           | $ | 10,542   |              |   | $ | 1,087,815  |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  
|Total Assets                                                                                                                     |                                           | $                                             | 24,394,552 |          |           | $ | 852,231  |              |   | $ | 25,246,783 |           
|                                                                                                                                 |                                           |                                               |            |          |           |   |          |              |  




|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest expense for the Office Properties does
    not include allocation of interest expense on the unsecured
    notes or the line of credit.

86



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 20  SEGMENT
INFORMATION  (continued)


|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |   |   |            |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------- | --------------------------------------------- | ---------- | -------- | --------- | - | --------- | ------------ | - | - | ---------- | ---------- | -
|                                                                                                                                                                   |                                                |                                              
|                                                                                                                                                                   |                                                | As of or for the year ended December 31, 2001 |           
|                                                                                                                                                                   |                                                |                                               |           
|                                                                                                                                                                   |                                                | Office                                        |            |          | Corporate |   |           |             
|                                                                                                                                                                   |                                                | Properties                                    |            |          | and Other |   |           | Consolidated |  
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|                                                                                                                                                                   |                                                |                                              
|                                                                                                                                                                   |                                                | (Dollars in thousands)                        |           
|Property operating revenues                                                                                                                                        |                                                | $                                             | 2,974,128  |          |           | $ | 51,536    |              |   | $ | 3,025,664  |           
|Property operating expenses                                                                                                                                        |                                                |                                               | (958,935   | )        |           |   | (10,658   | )            |   |   | (969,593   | )         
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Property net operating income from continuing
    operations                                                                                                       |                                                |                                               | 2,015,193  |          |           |   | 40,878    |              |   |   | 2,056,071  |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Adjustments to arrive at net income:                                                                                                                               |                                                |                                               |            |          |           |   |           |              |   |   |            |           
|                                                                                                                                                                   | Other revenues                                 |                                               |            | 3,695    |           |   |           | 51,604       |   |   |            | 55,299     |  
|                                                                                                                                                                   | Interest expense(1)                            |                                               |            | (195,571 | )         |   |           | (531,359     | ) |   |            | (726,930   | )
|                                                                                                                                                                   | Depreciation and amortization                  |                                               |            | (557,482 | )         |   |           | (24,110      | ) |   |            | (581,592   | )
|                                                                                                                                                                   | Ground rent                                    |                                               |            | (16,812  | )         |   |           |             |   |   |            | (16,812    | )
|                                                                                                                                                                   | General and administrative                     |                                               |            | (11      | )         |   |           | (109,661     | ) |   |            | (109,672   | )
|                                                                                                                                                                   | Impairment on securities and other investments |                                               |            |         |           |   |           | (132,684     | ) |   |            | (132,684   | )
|                                                                                                                                                                   | Impairment on assets held for sale             |                                               |            |         |           |   |           | (2,536       | ) |   |            | (2,536     | )
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|                                                                                                                                                                   | Total adjustments to arrive at net income      |                                               |            | (766,181 | )         |   |           | (748,746     | ) |   |            | (1,514,927 | )
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and net gain on sales of real estate |                                                |                                               | 1,249,012  |          |           |   | (707,868  | )            |   |   | 541,144    |           
|Income taxes                                                                                                                                                       |                                                |                                               | (1,853     | )        |           |   | (6,961    | )            |   |   | (8,814     | )         
|Minority interests                                                                                                                                                 |                                                |                                               | (8,685     | )        |           |   | (76,249   | )            |   |   | (84,934    | )         
|Income from investment in unconsolidated joint
    ventures                                                                                                        |                                                |                                               | 67,216     |          |           |   | 1,987     |              |   |   | 69,203     |           
|Net gain on sales of real estate                                                                                                                                   |                                                |                                               | 22,265     |          |           |   | 59,397    |              |   |   | 81,662     |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Income from continuing operations                                                                                                                                  |                                                |                                               | 1,327,955  |          |           |   | (729,694  | )            |   |   | 598,261    |           
|Discontinued operations                                                                                                                                            |                                                |                                               | 21,666     |          |           |   | 397       |              |   |   | 22,063     |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Income before extraordinary item and cumulative
    effect of change in accounting principle                                                                       |                                                |                                               | 1,349,621  |          |           |   | (729,297  | )            |   |   | 620,324    |           
|Extraordinary item                                                                                                                                                 |                                                |                                               | (1,000     | )        |           |   |          |              |   |   | (1,000     | )         
|Cumulative effect of change in accounting
    principle                                                                                                            |                                                |                                               | (1,142     | )        |           |   |          |              |   |   | (1,142     | )         
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Net income                                                                                                                                                         |                                                | $                                             | 1,347,479  |          |           | $ | (729,297  | )            |   | $ | 618,182    |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Property net operating income from continuing
    operations                                                                                                       |                                                | $                                             | 2,015,193  |          |           | $ | 40,878    |              |   | $ | 2,056,071  |           
|Property net operating income from discontinued
    operations (see Note 5  Dispositions)                                                                         |                                                |                                               | 31,646     |          |           |   | 481       |              |   |   | 32,127     |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Total property net operating income from
    continuing operations and discontinued operations                                                                     |                                                | $                                             | 2,046,839  |          |           | $ | 41,359    |              |   | $ | 2,088,198  |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Capital and tenant improvements                                                                                                                                    |                                                | $                                             | 325,215    |          |           | $ | 34,850    |              |   | $ | 360,065    |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Investment in unconsolidated joint ventures                                                                                                                        |                                                | $                                             | 1,239,608  |          |           | $ | 81,519    |              |   | $ | 1,321,127  |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  
|Total Assets                                                                                                                                                       |                                                | $                                             | 24,695,702 |          |           | $ | 1,112,720 |              |   | $ | 25,808,422 |           
|                                                                                                                                                                   |                                                |                                               |            |          |           |   |           |              |  




|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest expense for the Office Properties does
    not include allocation of interest expense on the unsecured
    notes or the line of credit.

87



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 20  SEGMENT
INFORMATION  (continued)

|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |          |   |           |           |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------------------- | --------- | --------- | --------- | - | -------- | ------------ | -------- | - | --------- | --------- | ---------- | -
|                                                                                                                                                                   |                                                              |                                              
|                                                                                                                                                                   |                                                              | As of or for the year ended December 31, 2000 |          
|                                                                                                                                                                   |                                                              |                                               |          
|                                                                                                                                                                   |                                                              | Office                                        |           |           | Corporate |   |          |             
|                                                                                                                                                                   |                                                              | Properties                                    |           |           | and Other |   |          | Consolidated |         
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|                                                                                                                                                                   |                                                              |                                              
|                                                                                                                                                                   |                                                              | (Dollars in thousands)                        |          
|Property operating revenues                                                                                                                                        |                                                              | $                                             | 2,158,812 |           |           | $ | 26,243   |              |          | $ | 2,185,055 |          
|Property operating expenses                                                                                                                                        |                                                              |                                               | (734,350  | )         |           |   | (7,776   | )            |          |   | (742,126  | )        
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|                                                                                                                                                                   | Property net operating income from continuing
    operations |                                               |           | 1,424,462 |           |   |          | 18,467       |          |   |           | 1,442,929 |           
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Adjustments to arrive at net income:                                                                                                                               |                                                              |                                               |           |           |           |   |          |              |          |   |           |          
|                                                                                                                                                                   | Other revenues                                               |                                               |           | 3,526     |           |   |          | 43,481       |          |   |           | 47,007    |           
|                                                                                                                                                                   | Interest expense(1)                                          |                                               |           | (163,612  | )         |   |          | (360,248     | )        |   |           | (523,860  | )         
|                                                                                                                                                                   | Depreciation and amortization                                |                                               |           | (411,802  | )         |   |          | (20,886      | )        |   |           | (432,688  | )         
|                                                                                                                                                                   | Ground rent                                                  |                                               |           | (9,877    | )         |   |          | (19          | )        |   |           | (9,896    | )         
|                                                                                                                                                                   | General and administrative                                   |                                               |           | (177      | )         |   |          | (88,519      | )        |   |           | (88,696   | )         
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|                                                                                                                                                                   |                                                              | Total adjustments to arrive at net income     |           |           | (581,942  | ) |          |              | (426,191 | ) |           |           | (1,008,133 | )
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and net gain on sales of real estate |                                                              |                                               | 842,520   |           |           |   | (407,724 | )            |          |   | 434,796   |          
|Income taxes                                                                                                                                                       |                                                              |                                               | (1,696    | )         |           |   | (1,023   | )            |          |   | (2,719    | )        
|Minority interests                                                                                                                                                 |                                                              |                                               | (5,385    | )         |           |   | (60,834  | )            |          |   | (66,219   | )        
|Income from investment in unconsolidated joint
    ventures                                                                                                        |                                                              |                                               | 53,189    |           |           |   | 3,062    |              |          |   | 56,251    |          
|Net gain on sales of real estate                                                                                                                                   |                                                              |                                               | 13,660    |           |           |   | 22,353   |              |          |   | 36,013    |          
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Income from continuing operations                                                                                                                                  |                                                              |                                               | 902,288   |           |           |   | (444,166 | )            |          |   | 458,122   |          
|Discontinued operations                                                                                                                                            |                                                              |                                               | 12,738    |           |           |   |         |              |          |   | 12,738    |          
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Net income                                                                                                                                                         |                                                              | $                                             | 915,026   |           |           | $ | (444,166 | )            |          | $ | 470,860   |          
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Property net operating income from continuing
    operations                                                                                                       |                                                              | $                                             | 1,424,462 |           |           | $ | 18,467   |              |          | $ | 1,442,929 |          
|Property net operating income from discontinued
    operations (see Note 5  Dispositions)                                                                         |                                                              |                                               | 20,222    |           |           |   |         |              |          |   | 20,222    |          
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Total property net operating income from
    continuing operations and discontinued operations                                                                     |                                                              | $                                             | 1,444,684 |           |           | $ | 18,467   |              |          | $ | 1,463,151 |          
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         
|Capital and tenant improvements                                                                                                                                    |                                                              | $                                             | 270,259   |           |           | $ | 23,452   |              |          | $ | 293,711   |          
|                                                                                                                                                                   |                                                              |                                               |           |           |           |   |          |              |         




|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest expense for the Office Properties does
    not include allocation of interest expense on the unsecured
    notes or the line of credit.

88



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 21  QUARTERLY DATA
(UNAUDITED)

Quarterly data for the last two years are
presented in the tables below:

|                                       |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |      |  |   |         |      | 
|-------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------- | ------- | ---- | --------- | - | ------- | --------- |  | - | --------- | ---- |  | - | ------- | ---- | 
|                                       |                                                                                               |                                              
|                                       |                                                                                               | For the three months ended                    |        
|                                       |                                                                                               |                                               |        
|                                       |                                                                                               | 12/31/2002                                    |         |      | 9/30/2002 |   |         | 6/30/2002 |  |   | 3/31/2002 |     
|                                       |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |     
|                                       |                                                                                               |                                              
|                                       |                                                                                               | (Dollars in thousands, except per share data) |        
|Total revenues(a)                      |                                                                                               | $                                             | 884,511 |      |           | $ | 875,228 |           |  | $ | 872,928   |      |  | $ | 873,415 |     
|Income from continuing operations(a)   |                                                                                               | $                                             | 175,436 |      |           | $ | 172,311 |           |  | $ | 171,062   |      |  | $ | 213,202 |     
|Discontinued operations(a)             |                                                                                               | $                                             | 11,657  |      |           | $ | 11,318  |           |  | $ | 11,249    |      |  | $ | 3,980   |     
|Net income                             |                                                                                               | $                                             | 187,093 |      |           | $ | 183,629 |           |  | $ | 182,311   |      |  | $ | 217,182 |     
|Net income available for Common Shares |                                                                                               | $                                             | 171,632 |      |           | $ | 168,178 |           |  | $ | 166,481   |      |  | $ | 201,351 |     
|Earnings per share  basic:            |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |      |  |   |         |     
|                                       | Income from continuing operations                                                             |                                               | $       | 0.43 |           |   | $       | 0.41      |  |   | $         | 0.41 |  |   | $       | 0.51 | 
|                                       | Income before extraordinary items and cumulative
    effect of change in accounting principle |                                               | $       | 0.45 |           |   | $       | 0.44      |  |   | $         | 0.43 |  |   | $       | 0.52 | 
|                                       | Net income available for Common Shares                                                        |                                               | $       | 0.42 |           |   | $       | 0.40      |  |   | $         | 0.40 |  |   | $       | 0.48 | 
|Earnings per share  diluted:          |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |      |  |   |         |     
|                                       | Income from continuing operations                                                             |                                               | $       | 0.42 |           |   | $       | 0.41      |  |   | $         | 0.41 |  |   | $       | 0.51 | 
|                                       | Income before extraordinary items and cumulative
    effect of change in accounting principle |                                               | $       | 0.45 |           |   | $       | 0.43      |  |   | $         | 0.43 |  |   | $       | 0.52 | 
|                                       | Net income available for Common Shares                                                        |                                               | $       | 0.42 |           |   | $       | 0.40      |  |   | $         | 0.40 |  |   | $       | 0.48 | 



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The amounts presented for the three months ended
    September 30, 2002, June 30, 2002, and March 31,
    2002 are not equal to the same amounts previously reported in
    the Form 10-Q filed with the SEC for each period as a
    result of discontinued operations consisting of properties sold
    in 2002. Below is a reconciliation to the amounts previously
    reported in the Form 10-Q:

|                                                                                                                                |  |                            |         |   |           |   |         |           |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | --------- | - | ------- | --------- |  | - | ------- | -
|                                                                                                                                |  |                           
|                                                                                                                                |  | For the three months ended |        
|                                                                                                                                |  |                            |        
|                                                                                                                                |  | 9/30/2002                  |         |   | 6/30/2002 |   |         | 3/31/2002 | 
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Total revenues previously reported in
    Form 10-Q                                                                             |  | $                          | 881,450 |   |           | $ | 883,965 |           |  | $ | 885,759 |  
|Revenues previously reported in Form 10-Q
    subsequently reclassified to discontinued operations                              |  |                            | (6,222  | ) |           |   | (11,037 | )         |  |   | (12,344 | )
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Total revenues disclosed in Form 10-K                                                                                           |  | $                          | 875,228 |   |           | $ | 872,928 |           |  | $ | 873,415 |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Income from continuing operations previously
    reported in Form 10-Q                                                          |  | $                          | 175,184 |   |           | $ | 176,705 |           |  | $ | 219,746 |  
|Income from continuing operations previously
    reported in Form 10-Q subsequently reclassified to
    discontinued operations |  |                            | (2,873  | ) |           |   | (5,643  | )         |  |   | (6,544  | )
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Income from continuing operations disclosed in
    Form 10-K                                                                    |  | $                          | 172,311 |   |           | $ | 171,062 |           |  | $ | 213,202 |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Discontinued operations previously reported in
    Form 10-Q                                                                    |  | $                          | 8,445   |   |           | $ | 5,606   |           |  | $ | (2,564  | )
|Discontinued operations from properties sold
    subsequent to the respective reporting period                                  |  |                            | 2,873   |   |           |   | 5,643   |           |  |   | 6,544   |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Discontinued operations disclosed in
    Form 10-K                                                                              |  | $                          | 11,318  |   |           | $ | 11,249  |           |  | $ | 3,980   |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 

89



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 21  QUARTERLY DATA
(UNAUDITED)  (continued)


|                                                                                               |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |      |  |   |         |      | 
|---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------- | ------- | ---- | --------- | - | ------- | --------- |  | - | --------- | ---- |  | - | ------- | ---- | 
|                                                                                               |                                                                                               |                                              
|                                                                                               |                                                                                               | For the three months ended                    |        
|                                                                                               |                                                                                               |                                               |        
|                                                                                               |                                                                                               | 12/31/2001                                    |         |      | 9/30/2001 |   |         | 6/30/2001 |  |   | 3/31/2001 |     
|                                                                                               |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |     
|                                                                                               |                                                                                               |                                              
|                                                                                               |                                                                                               | (Dollars in thousands, except per share data) |        
|Total revenues(a)                                                                              |                                                                                               | $                                             | 885,573 |      |           | $ | 877,318 |           |  | $ | 660,104   |      |  | $ | 657,968 |     
|Income from continuing operations(a)                                                           |                                                                                               | $                                             | 128,388 |      |           | $ | 209,387 |           |  | $ | 130,684   |      |  | $ | 129,802 |     
|Discontinued operations(a)                                                                     |                                                                                               | $                                             | 7,504   |      |           | $ | 7,984   |           |  | $ | 3,495     |      |  | $ | 3,080   |     
|Income before extraordinary item and cumulative
    effect of a change in accounting principle |                                                                                               | $                                             | 135,892 |      |           | $ | 217,371 |           |  | $ | 134,179   |      |  | $ | 132,882 |     
|Extraordinary item(b)                                                                          |                                                                                               | $                                             | (1,000  | )    |           | $ |        |           |  | $ |          |      |  | $ |        |     
|Net income available for Common Shares                                                         |                                                                                               | $                                             | 117,862 |      |           | $ | 201,776 |           |  | $ | 123,302   |      |  | $ | 120,856 |     
|Earnings per share  basic:                                                                    |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |      |  |   |         |     
|                                                                                               | Income from continuing operations                                                             |                                               | $       | 0.31 |           |   | $       | 0.51      |  |   | $         | 0.42 |  |   | $       | 0.42 | 
|                                                                                               | Income before extraordinary items and cumulative
    effect of change in accounting principle |                                               | $       | 0.32 |           |   | $       | 0.52      |  |   | $         | 0.43 |  |   | $       | 0.43 | 
|                                                                                               | Net income available for Common Shares                                                        |                                               | $       | 0.29 |           |   | $       | 0.49      |  |   | $         | 0.40 |  |   | $       | 0.39 | 
|Earnings per share  diluted:                                                                  |                                                                                               |                                               |         |      |           |   |         |           |  |   |           |      |  |   |         |     
|                                                                                               | Income from continuing operations                                                             |                                               | $       | 0.31 |           |   | $       | 0.50      |  |   | $         | 0.42 |  |   | $       | 0.42 | 
|                                                                                               | Income before extraordinary items and cumulative
    effect of change in accounting principle |                                               | $       | 0.32 |           |   | $       | 0.52      |  |   | $         | 0.43 |  |   | $       | 0.42 | 
|                                                                                               | Net income available for Common Shares                                                        |                                               | $       | 0.28 |           |   | $       | 0.49      |  |   | $         | 0.40 |  |   | $       | 0.39 | 



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The amounts presented for the three months ended
    September 30, 2001, June 30, 2001 and March 31,
    2001 are not equal to the same amounts previously reported in
    the Form 10-Q filed with the SEC for each period as a
    result of discontinued operations consisting of properties sold
    in 2002. Below is a reconciliation to the amounts previously
    reported in the Form 10-Q:

|                                                                                                                                |  |                            |         |   |           |   |         |           |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | --------- | - | ------- | --------- |  | - | ------- | -
|                                                                                                                                |  |                           
|                                                                                                                                |  | For the three months ended |        
|                                                                                                                                |  |                            |        
|                                                                                                                                |  | 9/30/2001                  |         |   | 6/30/2001 |   |         | 3/31/2001 | 
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Total revenues previously reported in
    Form 10-Q                                                                             |  | $                          | 883,723 |   |           | $ | 664,039 |           |  | $ | 662,870 |  
|Revenues previously reported in Form 10-Q
    subsequently reclassified to discontinued operations                              |  |                            | (6,405  | ) |           |   | (3,935  | )         |  |   | (4,902  | )
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Total revenues disclosed in Form 10-K                                                                                           |  | $                          | 877,318 |   |           | $ | 660,104 |           |  | $ | 657,968 |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Income from continuing operations previously
    reported in Form 10-Q                                                          |  | $                          | 212,155 |   |           | $ | 132,191 |           |  | $ | 131,604 |  
|Income from continuing operations previously
    reported in Form 10-Q subsequently reclassified to
    discontinued operations |  |                            | (2,768  | ) |           |   | (1,507  | )         |  |   | (1,802  | )
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Income from continuing operations disclosed in
    Form 10-K                                                                    |  | $                          | 209,387 |   |           | $ | 130,684 |           |  | $ | 129,802 |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Discontinued operations in Form 10-Q                                                                                            |  | $                          | 5,216   |   |           | $ | 1,988   |           |  | $ | 1,278   |  
|Discontinued operations from properties sold
    subsequent to the respective reporting period                                  |  |                            | 2,768   |   |           |   | 1,507   |           |  |   | 1,802   |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 
|Discontinued operations disclosed in
    Form 10-K                                                                              |  | $                          | 7,984   |   |           | $ | 3,495   |           |  | $ | 3,080   |  
|                                                                                                                                |  |                            |         |   |           |   |         |           | 



|    |  |                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | The extraordinary item of $1.0 million
    related to costs on certain Office Properties located in
    Seattle,WA as a result of damage from an earthquake in February
    2001.

90



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 22  RELATED PARTY
TRANSACTIONS

Related parties provide various services to
Equity Office. Fees and reimbursements paid to related parties
for the years ended December 31, 2002, 2001 and 2000 were
as follows (there was approximately $1.7 million and
$0.3 million payable to related parties as of
December 31, 2002 and 2001, respectively:

|                                                                 |       |                        |       |       |      |   |        |        |  |   |       |        | 
|---------------------------------------------------------------- | ----- | ---------------------- | ----- | ----- | ---- | - | ------ | ------ |  | - | ----- | ------ | 
|                                                                 |       |                       
|                                                                 |       | Paid in years ended    |      
|                                                                 |       | December 31,           |      
|                                                                 |       |                        |      
|                                                                 |       | 2002                   |       |       | 2001 |   |        | 2000   | 
|                                                                 |       |                        |       |       |      |   |        |        | 
|                                                                 |       |                       
|                                                                 |       | (Dollars in thousands) |      
|Development fees, leasing commissions and
    management fees(1) |       | $                      | 4,727 |       |      | $ | 8,147  |        |  | $ | 3,770 |       
|Interest and prepayment penalty on mortgage
    notes(2)         |       |                        |      |       |      |   | 22,256 |        |  |   | 7,183 |       
|Office rent(3)                                                   |       |                        | 3,904 |       |      |   | 2,964  |        |  |   | 2,601 |       
|Development, management and leasing fees(4)                      |       |                        |      |       |      |   |       |        |  |   | 8,090 |       
|                                                                 |       |                        |       |       |      |   |        |        | 
|                                                                 | Total |                        | $     | 8,631 |      |   | $      | 33,367 |  |   | $     | 21,644 | 
|                                                                 |       |                        |       |       |      |   |        |        | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Equity Office and WI entered into a joint venture
    agreement to form W/EO for the purpose of developing,
    constructing, leasing and managing developments in northern
    California. W/EO is owned 49.9% by Equity Office and 50.1% by
    WI. William Wilson III, a trustee of Equity Office, through
    his ownership of WI, owns approximately 22% of W/EO and
    approximately 30% of any promote to which WI is entitled under
    the joint venture agreement. Equity Office has agreed to loan up
    to $25 million to WI for its required contribution to W/EO
    at a 15% interest rate per annum. In 2002, WI repaid the
    outstanding loan balance of approximately $12.0 million of
    principal and $2.0 million of accrued interest. As a result
    of the recent transactions with WI (refer to
    Note 8  Investment in Unconsolidated Joint
    Venture  subfootnote (5)) the loan commitment
    has been terminated. Equity Offices investment in W/EO as
    of December 31, 2002 and 2001 was approximately $3.6
    million and $32.3 million, respectively.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Equity Office created joint ventures with W/EO
    and, in certain cases, unaffiliated parties for the development
    of various office properties. Equity Office has agreed to
    provide first mortgage financing to the ownership entities of
    each of these developments at the greater of 6.5% or LIBOR plus
    3.25%, generally maturing 36 months after initial funding
    or earlier at the option of Equity Office in the event
    alternative financing sources are available on terms reasonably
    acceptable to WI and any unaffiliated party. The aggregate
    amount of any such financing would generally be capped at 70% of
    budgeted construction costs (76% in the case of Concar which, at
    12/31/02 had been completed and leased and as such is now
    reflected as investment in real estate). At December 31,
    2002, Equity Office had committed to make mortgage loans for
    Foundry Square IV and Concar totaling approximately
    $96 million, of which approximately $74 million in
    principal and approximately $.4 million in accrued interest
    was outstanding.                                                                                                                                                                                                                                                                                                                          
|
| | In December 2002, Equity Office, W/EO and WI
    completed a transaction pursuant to which Equity Office acquired
    W/EOs interests in various projects known as Foundry
    Square II, Foundry Square III (a land parcel under
    option), the Ferry Building, San Rafael Corporate Center I
    and San Rafael Corporate Center II (a land parcel). WI
    acquired W/EOs interest in a project known as Larkspur (a
    land parcel under option) and WI acquired the operating business
    and all assets of W/EO other than its ownership interests in the
    development projects known as Foundry Square IV and Concar.
    In accordance with the W/EO operating agreement, Equity Office
    may, but is not required to, purchase the W/EO interest in
    Foundry Square IV and Concar, subsequent to project
    stabilization. A WI subsidiary will continue providing the
    development management services to Foundry Square II, the
    Ferry Building and Concar. Equity Office also engaged a
    subsidiary of WI to provide leasing brokerage services for
    Foundry Square II and the Ferry Building. Equity
    Offices and W/EOs interests in Foundry
    Square IV and Concar remain unchanged as a result of this
    transaction. Joint ventures with other unaffiliated parties on
    the projects in which Equity Office acquired W/EOs
    interest also remain unchanged as a result of this transaction.

91



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 22  RELATED PARTY
TRANSACTIONS  (continued)



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In connection with the Cornerstone Merger, $250
    million of mortgage debt was assumed on certain properties
    payable to Stichting Pensioenfonds Voor de Gezondheid,
    Geestelijke en Maatcschappellijke Belangen (PGGM),
    of which Jan H.W.R. van der Vlist, a trustee of Equity Office,
    is a director of real estate. In October 2000, Equity
    Office repaid $65 million of mortgage debt encumbering,
    TransPotomac Plaza 5, upon its maturity. In December 2001,
    the remaining $185 million of mortgage debt encumbering several
    properties was prepaid. As a result of the prepayment, Equity
    Office paid a $5.0 million prepayment penalty to PGGM.                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | Equity Office leases office space at
    Two North Riverside Plaza, Chicago, Illinois from
    Two North Riverside Plaza Joint Venture, a partnership
    composed of trusts established for the benefit of the families
    of Samuel Zell and Robert Lurie, a deceased former business
    partner of Mr. Zell.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | H. Jon Runstad, a former trustee who resigned in
    July 2000, is a principal of Wright Runstad & Company, the
    general partner of Wright Runstad Associates Limited Partnership
    (WRALP), which provides property management, leasing
    and development services. Equity Office owns a 30% limited
    partnership interest in WRALP. During 2000, Equity Office
    received distributions of approximately $9.7 million from
    WRALP. Since December 1997, affiliates of WRALP served as the
    co-property manager with Equity Office and leasing agent for
    certain Office Properties acquired in December 1997 from WRALP
    and for several other Office Properties. In addition to the
    amounts paid above to WRALP for development and management fees,
    leasing commissions and related expense reimbursements with
    respect to some of our Properties, an additional
    $5.0 million was paid during 2000 to WRALP for the
    reimbursement of salaries of personnel in connection with such
    management services.



| |  |                                                                                                                                                                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | WRALP owned a 20% interest and Equity Office
    owned an 80% interest in Sunset North Corporate Campus, a
    three-building office complex located in Bellevue, Washington.
    WRALP served as developer of the project. In June 2000, Equity
    Office acquired the interest held by WRALP at a price based on a
    formula set forth in the joint venture agreement.
|
| |  | WRALP owns a 20% interest and Equity Office owns
    an 80% interest in Key Center, an Office Property located in
    Bellevue, Washington. WRALP served as developer of the project
    and currently serves as co-property manager with Equity Office
    and the leasing agent.                                                                                         

In September 2000, Equity Office purchased
the World Trade Center East located in Seattle, Washington, from
WRALP. WRALP served as the developer of the project.

See Note 25  Commitments and
Contingencies for information regarding Equity Offices
guarantee of WRALPs line of credit.

Transaction with Trustee

In connection with the Cornerstone Merger in
2000, Equity Office paid $5.0 million to John S. Moody to
enter into a non-compete agreement. Mr. Moody became a
trustee of Equity Office at the time of the Cornerstone Merger
and is the former president and chief executive officer of
Cornerstone.

Access Holdings

In October 2000, five current and previous
executive officers of Equity Office organized Access Holdings
Company, L.L.C. and on August 2000 organized its sister
company, AHC II, L.L.C., which Equity Office refers to
collectively as Access Holdings, to provide or
arrange for services for tenants that Equity Office could not
provide under the REIT tax rules then in effect and to make
certain investments that Equity Office was precluded from making
under the REIT rules then in effect. Equity Office made loans
totaling approximately $2.3 million in the aggregate at an
annual interest rate of 7.0% to certain current and previous
executive officers to finance their investment in Access
Holdings. Of this amount, approximately $0.3 million

92



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 22  RELATED PARTY
TRANSACTIONS  (continued)

was used by Access Holdings to purchase the
voting interests in various tenant service and management
companies owned by affiliates of Mr. Zell and the balance
was used to operate Access Holdings. In consideration of the
assumption of an outstanding capitalization note in the
principal amount of $1.0 million payable by certain
affiliates of Mr. Zell to EOP Office Company, Access
Holdings also acquired the voting interest in EOP Office
Company. EOP Office Company holds various assets, including
109,987 Units, a 10.2% interest in the Sunset North Property and
a 30% interest in WRALP.

In connection with the formation of Access
Holdings, Equity Office entered into an option agreement with
Access Holdings under which Access Holdings granted Equity
Office the right on or after January 1, 2001 to acquire its
assets, subject to its liabilities. Equity Office also granted
to Access Holdings the right to sell its assets to Equity Office
for a period of five years from the date of the tax law change.
Neither Equity Office nor Access Holdings was obligated to
exercise its respective contractual rights, and there was no
assurance prior to January 1, 2001 that either would do so.
The parties also entered into marketing and cost-sharing
agreements pursuant to which Access Holdings paid an affiliate a
total of $1.8 million during 2000. In 2001, Equity Office
determined that it was in Equity Offices best interests to
exercise its option to acquire the assets of Access Holdings
and, accordingly, submitted the matter to the Conflicts
Committee of Equity Offices Board of Trustees. The
Conflicts Committee engaged the services of a third party to
perform a valuation analysis of the assets and liabilities of
Access Holdings for purposes of calculating the applicable
purchase price under the option agreements. That firm delivered
its valuation report and, in reliance on such report and on
other factors it considered to be relevant, the Conflicts
Committee approved the exercise of the option effective as of
January 1, 2001 at a purchase price equal to the fair
market value of the assets plus the assumption of liabilities
and determined the applicable purchase prices under the option
agreements to be as follows: (a) $2.3 million for the
assets of Access Holdings Company, L.L.C., plus assumption of
liabilities of $1.4 million; and (b) $0.2 million
for the assets of AHC II Company, L.L.C., plus the
assumption of liabilities of $0.1 million. The executive
officers of Equity Office repaid their loans from Equity Office,
collectively totaling approximately $2.3 million, using a
portion of the purchase price paid by Equity Office for the
assets of Access Holdings. These executive officers each earned
a profit of approximately $52,000 on their investment in Access
Holdings.

As a result of these transactions, Equity Office
now owns interests through its subsidiaries in several tenant
service entities, interests in certain Office Properties and
minority voting securities of certain former non-controlled
subsidiaries engaged in real estate, insurance and management
businesses.

Amounts Received from Related
Parties

As described in Note 6, Equity Office owns
preferred shares of CT Convertible Trust I, of which
Mr. Zell is Chairman of the Board.

Equity Office has entered into third-party
management contracts and a licensing agreement to manage and
lease space at certain Properties owned or controlled by
affiliates of Mr. Zell. Income recognized by Equity Office
for providing these management services during 2002 and 2001 was
approximately $1.0 million and $1.5 million.

In addition, Equity Office provided real estate
tax consulting and risk management services to related parties
for which it received approximately $1.6 million, $1.7 million
and $1.4 million during 2002, 2001 and 2000, respectively.

NOTE 23  SHARE OPTION
PLAN AND SHARE AWARD PLAN

Equity Office has established the 1997 Share
Option and Share Award Plan, as amended (the Employee
Plan). The purpose of the Employee Plan is to attract and
retain highly qualified executive officers, trustees and
employees. Through the Employee Plan, certain officers,
trustees, employees and consultants of Equity

93



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 23  SHARE OPTION
PLAN AND SHARE AWARD PLAN  (continued)


Office are offered the opportunity to acquire
Common Shares pursuant to grants of (i) options to purchase
Common Shares (Options) and (ii) Share Awards
(defined below). The Employee Plan is administered by the
Compensation and Option Committee (the Compensation
Committee), which is appointed by the Board of Trustees.
The Compensation Committee determines those officers, trustees,
key employees and consultants to whom, and the time or times at
which, grants of Options and Share Awards will be made. The
Compensation Committee interprets the Employee Plan, adopts
rules relating thereto and determines the terms and provisions
of Options and Share Awards. In 2002, 2001, and 2000 the Common
Shares subject to Options and Share Awards under the Employee
Plan were limited to 32,030,650, 23,733,869 and 19,433,472,
respectively. The maximum aggregate number of Options and Share
Awards that may be granted under the Plan may not exceed 6.8% of
the outstanding Common Shares calculated on a fully diluted
basis and determined annually on the first day of each calendar
year. No more than one-half of the maximum aggregate number of
Options and Share Awards shall be granted as Share Awards. To
the extent that Options expire unexercised or are terminated,
surrendered or canceled, the Options and Share Awards become
available for future grants under the Plan, unless the Plan has
terminated. The Employee Plan will terminate at such time as all
of the unissued Common Shares reserved for the Plan have been
issued. The Board of Trustees may at any time amend or terminate
the Employee Plan, but termination will not affect Options and
Share Awards previously granted. Any Options or Share Awards
which vest prior to any such termination will continue to be
exercisable by the holder thereof.

The Compensation Committee determines the vesting
schedule of each Option and the term, which shall not exceed
10 years from the grant date. As to the Options that have
been granted through December 31, 2002, the vesting
schedules range from one-third of the Options being exercisable
as of the first anniversary of the grant date, an additional
one-third being exercisable as of the second anniversary of the
grant date and the remaining one-third being exercisable as of
the third anniversary of the grant date. The exercise price for
all Options under the Employee Plan shall not be less than the
fair market value of the underlying Common Shares at the time
the Option is granted.

Each non-employee member of the Board of Trustees
receives an annual grant of an Option to purchase 10,000 Common
Shares (other than Mr. van der Vlist, who receives a grant
of an equivalent share appreciation right exercisable for cash).
If an individual becomes a trustee other than at an annual
meeting, he or she is entitled to a prorated Option grant based
upon the number of days until the next annual meeting of
shareholders.

The Employee Plan permits the issuance of Share
Awards to executive officers, trustees and key employees upon
such terms and conditions as are determined by the Compensation
Committee in its sole discretion. A Share Award is an award of a
Common Share which (i) may be fully vested upon issuance
(Share Award) or (ii) may vest over time
(Restricted Share Award). Generally, members of the
Board of Trustees have been granted Share Awards pursuant to the
Employee Plan as payment of their board fees. In each case, the
number of Share Awards granted to trustees was equal to the
dollar value of the fee divided by the fair market value of a
Common Share on the date the fee would have been paid.
Restricted Share Awards were granted to certain officers and
employees in 2002, 2001 and 2000. Restricted Share Awards
granted in 2002 vest evenly over a five-year period, 20% per
year on each of the first five anniversaries of the grant date.
The Restricted Share Awards granted before 2002 vest over a
five-year period as follows: 50% on the third anniversary of the
grant date, 25% on the fourth anniversary of the grant date and
the remaining 25% on the fifth anniversary of the grant date.

Equity Office has elected to apply the accounting
provisions of Accounting Principles Board Opinion No. 25
Accounting for Stock Issued to Employees (APB
No. 25) in the computation of compensation expense.
Under APB No. 25, an intrinsic value method is used to
determine compensation expense by computing the excess of the
market price of the Common Shares subject to the Option or Share
Award over the exercise price on the grant date or the
measurement date. For Options, there is no intrinsic value on the

94



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 23  SHARE OPTION
PLAN AND SHARE AWARD PLAN  (continued)


grant date or measurement date because the option
exercise price equalled the Common Share market price. For Share
Awards, the intrinsic value equals the Common Share market price
on the grant date or measurement date because there is no
exercise price.

Statement of Financial Accounting Standards
No. 123 (SFAS No. 123) requires the
disclosure of pro forma net income and earnings per share as if
a fair value based accounting method had been used in the
computation of compensation expense. The fair value of the
Options computed under SFAS No. 123 would be recognized
over the vesting period of the Options. The fair value for
Options granted in 2002, 2001, and 2000 was estimated at the
time the Options were granted using the Black-Scholes
option-pricing model with the following weighted average
assumptions:

|                                               |  |      |         |  |      |   |         |      |  |   |         | 
|---------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|Assumptions:                                   |  | 2002 |         |  | 2001 |   |         | 2000 | 
|                                               |  |      |         |  |      |   |         |      | 
|Risk-free interest rate                        |  |      | 4.2%    |  |      |   | 4.2%    |      |  |   | 5.1%    | 
|Expected dividend yield                        |  |      | 7.0%    |  |      |   | 6.7%    |      |  |   | 5.5%    | 
|Volatility                                     |  |      | 0.19    |  |      |   | 0.21    |      |  |   | 0.33    | 
|Weighted average expected life of the Options  |  |      | 5 years |  |      |   | 5 years |      |  |   | 5 years | 
|Weighted average fair value of Options granted |  |      | $2.29   |  |      | $ | 2.76    |      |  | $ | 5.63    | 

The Black-Scholes option-pricing model was
developed for use in estimating the fair value of traded
options, which have no vesting restrictions and are fully
transferable. In addition, option-pricing models require the
input of highly subjective assumptions, including the expected
stock price volatility. Under the fair value method
approximately $11.1 million, $11.9 million and
$15.1 million would have been recognized as additional
compensation expense for 2002, 2001 and 2000, respectively. For
purposes of pro forma disclosures, the estimated fair value of
the Options is amortized to expense evenly over the
Options vesting period. The following is the unaudited pro
forma information for the years ended December 31, 2002,
2001 and 2000:

|                                                |  |                                  |         |  |      |   |         |      |  |   |         | 
|----------------------------------------------- |  | -------------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                                |  |                                 
|                                                |  | For the years ended December 31, |        
|                                                |  |                                  |        
|                                                |  | 2002                             |         |  | 2001 |   |         | 2000 | 
|                                                |  |                                  |         |  |      |   |         |      | 
|                                                |  |                                 
|                                                |  | (Dollars in thousands)           |        
|Pro forma net income available to Common Shares |  | $                                | 697,786 |  |      | $ | 553,289 |      |  | $ | 411,693 | 

|                                                  |  |                                  |      |  |         |   |      |       |  |   |         |  |  |       |      |  |         |   |      |  |  |   |      | 
|------------------------------------------------- |  | -------------------------------- | ---- |  | ------- | - | ---- | ----- |  | - | ------- |  |  | ----- | ---- |  | ------- | - | ---- |  |  | - | ---- | 
|                                                  |  |                                 
|                                                  |  | For the years ended December 31, |     
|                                                  |  |                                  |     
|                                                  |  |                                  |      |  |         |  
|                                                  |  | 2002                             |      |  | 2001    |   |      | 2000  | 
|                                                  |  |                                  |      |  |         |   |      |       | 
|Earnings per share                                |  | Basic                            |      |  | Diluted |   |      | Basic |  |   | Diluted |  |  | Basic |      |  | Diluted |  
|                                                  |  |                                  |      |  |         |   |      |       |  |   |         |  |  |       |      |  |         |  
|Historical net income available for Common Shares |  | $                                | 1.71 |  |         | $ | 1.70 |       |  | $ | 1.57    |  |  | $     | 1.55 |  |         | $ | 1.53 |  |  | $ | 1.52 | 
|                                                  |  |                                  |      |  |         |   |      |       |  |   |         |  |  |       |      |  |         |  
|Pro forma net income available for Common Shares  |  | $                                | 1.68 |  |         | $ | 1.67 |       |  | $ | 1.54    |  |  | $     | 1.52 |  |         | $ | 1.49 |  |  | $ | 1.47 | 
|                                                  |  |                                  |      |  |         |   |      |       |  |   |         |  |  |       |      |  |         |  

Effective January 1, 2003, Equity Office
adopted Statement of Financial Accounting Standards
No. 123, (SFAS No. 123) Accounting for
Stock Based Compensation,which requires a fair value based
accounting method for determining compensation expense
associated with the issuance of stock options and other equity
awards. Equity Office decided to adopt the accounting provisions
of SFAS No. 123 to reflect the cost to the company of
issuing stock options and other equity awards to certain
individuals in the consolidated financial statements. Equity
Office will employ the prospective method for adopting SFAS
No. 123 which requires the recognition of compensation
expense for stock options and other equity compensation granted
on or after January 1, 2003 and to record compensation
expense for modifications of stock options and other equity
awards that were outstanding as of December 31, 2002.
Equity Office anticipates recognizing compensation expense of
approximately $6.0 million, $12.0 million and
$18.0 million for the years ending December 31, 2003,
2004 and 2005, respectively, for both Option and Share Award
grants accounted for under SFAS

95



---



##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 23  SHARE OPTION
PLAN AND SHARE AWARD PLAN  (continued)


No. 123. These anticipated compensation
expense amounts are based on the existing compensation structure
for 2003 and assumes a similar level of Option and Share Award
compensation in future years. Future Option and Share Award
compensation is subject to change based on actual Options and
Share Award grants in future years and their respective fair
values.

Compensation expense related to Share Award
grants was previously recognized in accordance with APB
No. 25. The adoption of SFAS No. 123 does not
significantly change the amount of compensation expense
recognized for Share Awards.

The table below summarizes the Option activity of
the Employee Plan for the years ended December 31, 2002,
2001 and 2000:

|                             |                    |                    |            |                  |                |   |       |       | 
|---------------------------- | ------------------ | ------------------ | ---------- | ---------------- | -------------- | - | ----- | ----- | 
|                             |                    |                    |            | Weighted Average |               
|                             |                    | Common Shares      |            |                  | Exercise Price |  
|                             |                    | Subject to Options |            |                  | Per Option     |  
|                             |                    |                    |            |                  |                |  
|Balance at December 31, 1999 |                    |                    | 13,462,154 |                  |                | $ | 24.66 |      
|                             | Options granted(a) |                    |            | 3,916,460        |                |   |       | 23.63 | 
|                             | Options canceled   |                    |            | (572,114         | )              |   |       | 24.78 | 
|                             | Options exercised  |                    |            | (3,585,129       | )              |   |       | 22.81 | 
|                             |                    |                    |            |                  |                |  
|Balance at December 31, 2000 |                    |                    | 13,221,371 |                  |                |   | 24.82 |      
|                             | Options granted(b) |                    |            | 6,785,666        |                |   |       | 27.26 | 
|                             | Options canceled   |                    |            | (438,681         | )              |   |       | 27.53 | 
|                             | Options exercised  |                    |            | (3,282,003       | )              |   |       | 21.89 | 
|                             |                    |                    |            |                  |                |  
|Balance at December 31, 2001 |                    |                    | 16,286,353 |                  |                | $ | 26.41 |      
|                             | Options granted    |                    |            | 6,540,705        |                |   |       | 28.36 | 
|                             | Options canceled   |                    |            | (592,102         | )              |   |       | 28.98 | 
|                             | Options exercised  |                    |            | (1,739,863       | )              |   |       | 23.00 | 
|                             |                    |                    |            |                  |                |  
|Balance at December 31, 2002 |                    |                    | 20,495,093 |                  |                | $ | 27.18 |      
|                             |                    |                    |            |                  |                |  

The following table summarizes information
regarding Options outstanding at December 31, 2002:

|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       |  |  |           |  |  |   |       | 
|------------------------ |  | ------------------- | ---------- | ---------------- | ------------------- |  | --------- | ----------------------- |  | - | ------- | --------- |  | ----- | ---------- |  | --------- | - | ----- | ----- |  |  | --------- |  |  | - | ----- | 
|                         |  |                     |            |                  |                     |  |           |                         |  |  
|                         |  | Options Outstanding |            |                  |                     |  |          
|                         |  |                     |            |                  | Options Exercisable |  |           | Options Not Exercisable | 
|                         |  |                     |            | Weighted-        |                     |  |           |                         |  |   |         |           | 
|                         |  |                     |            | average          |                     |  | Weighted- |                         |  |   |         | Weighted- |  |       |            |  | Weighted- |  
|                         |  |                     |            | remaining        |                     |  | average   |                         |  |   |         | average   |  |       |            |  | average   |  
|                         |  |                     |            | contractual life |                     |  | exercise  |                         |  |   |         | exercise  |  |       |            |  | exercise  |  
|Range of Exercise Prices |  | Options             |            |                  | in years(c)         |  |           | price                   |  |   | Options |           |  | price |            |  | Options   |   |       | price | 
|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       | 
|$12.09 to $21.00         |  |                     | 2,015,855  |                  |                     |  | 4.6       |                         |  | $ | 20.79   |           |  |       | 2,015,855  |  |           | $ | 20.79 |       |  |  |          |  |  |   |      | 
|$21.07 to $23.40         |  |                     | 1,598,421  |                  |                     |  | 6.0       |                         |  |   | 23.22   |           |  |       | 1,598,421  |  |           |   | 23.22 |       |  |  |          |  |  |   |      | 
|$24.23 to $24.62         |  |                     | 3,091,379  |                  |                     |  | 7.0       |                         |  |   | 24.23   |           |  |       | 3,091,379  |  |           |   | 24.23 |       |  |  |          |  |  |   |      | 
|$24.88 to $28.36         |  |                     | 6,593,070  |                  |                     |  | 9.0       |                         |  |   | 28.30   |           |  |       | 888,664    |  |           |   | 27.99 |       |  |  | 5,704,406 |  |  | $ | 28.35 | 
|$28.38 to $29.50         |  |                     | 2,212,000  |                  |                     |  | 5.4       |                         |  |   | 29.47   |           |  |       | 2,125,329  |  |           |   | 29.49 |       |  |  | 86,671    |  |  |   | 29.19 | 
|$29.76 to $33.00         |  |                     | 4,984,368  |                  |                     |  | 7.7       |                         |  |   | 30.36   |           |  |       | 2,398,740  |  |           |   | 30.75 |       |  |  | 2,585,628 |  |  |   | 29.99 | 
|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       | 
|$12.09 to $33.00         |  |                     | 20,495,093 |                  |                     |  | 7.3       |                         |  | $ | 27.18   |           |  |       | 12,118,388 |  |           | $ | 26.01 |       |  |  | 8,376,705 |  |  | $ | 28.87 | 
|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       | 



---

|    |                                                                                  
|--- | ---------------------------------------------------------------------------------
|(a) | Includes 3,681,212 Options granted in connection
    with the Cornerstone Merger.
|   
|(b) | Includes 1,890,648 Options granted in connection
    with the Spieker Merger.    
|   
|(c) | Expiration dates ranged from May 2004 to
    September 2012.                     

During 2002, 2001 and 2000, there were 541,055,
602,666 and 555,100 Restricted Share Awards granted,
respectively. The Restricted Shares Awards issued in 2002, 2001
and 2000 were, on average, valued at an average of $28.01,
$20.61 and $23.91 each, respectively. The value of the
Restricted Share Awards is recognized as compensation expense
evenly over the vesting period.

96



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 24  401(K)
PLAN

The Equity Office Properties Trust
Section 401(k) Savings/ Retirement Plan (the 401(k)
Plan) was established to cover eligible employees of
Equity Office and employees of any designated affiliate. The
401(k) Plan permits eligible persons to defer up to 16% of their
annual compensation into the 401(k) Plan, subject to certain
limitations imposed by the Internal Revenue Code.
Employees elective deferrals are immediately vested and
nonforfeitable upon contribution to the 401(k) Plan. Equity
Office matches dollar for dollar employee contributions to the
401(k) Plan up to 4% of the employees annual salary. In
addition, Equity Office may elect to make an annual
discretionary profit-sharing contribution. Equity Office
expensed approximately $4.2 million, $3.8 million and
$3.6 million in each of the years ended December 31,
2002, 2001 and 2000, respectively, related to the 401(k) Plan.

NOTE 25  COMMITMENTS AND
CONTINGENCIES

Concentration of Credit Risk

Equity Office maintains its cash and cash
equivalents at financial institutions. The combined account
balances at each institution typically exceed FDIC insurance
coverage and, as a result, there is a concentration of credit
risk related to amounts on deposit in excess of FDIC insurance
coverage. Management of Equity Office believes that the risk is
not significant.

Environmental

Equity Office, as an owner of real estate, is
subject to various environmental laws of federal and local
governments. Compliance by Equity Office with existing laws has
not had a material adverse effect on Equity Offices
financial condition and results of operations, and management
does not believe it will have such an impact in the future.
However, Equity Office cannot predict the impact of unforeseen
environmental contingencies or new or changed laws or
regulations on its current Properties or on properties that it
may acquire in the future.

Litigation

Equity Office is not presently subject to
material litigation nor, to Equity Offices knowledge, is
any material litigation threatened against Equity Office, other
than routine actions for negligence and other claims and
administrative proceedings arising in the ordinary course of
business, some of which are expected to be covered by liability
insurance and all of which collectively are not expected to have
a material adverse effect on the liquidity, results of
operations, or financial condition of Equity Office.

Contingencies

Certain Properties owned in joint ventures with
unaffiliated parties have buy/sell options that may be exercised
to acquire the other partners interest by Equity Office or
its joint venture partner may acquire Equity Offices
interest if certain conditions are met as set forth in the
respective joint venture agreement. In addition, Equity Office
has granted options to a tenant to purchase two of its Office
Properties.

In connection with the acquisition of certain
Properties, Equity Office has agreed not to sell such Properties
in a taxable transaction for a period of time as defined in
their respective agreements or Equity Office may be obligated to
make additional payments to the respective sellers.

Insurance

Property Damage, Business Interruption,
Earthquake and Terrorism:The
insurance coverage provided through third-party insurance
carriers is subject to coverage limitations. For each type of
insurance coverage described below, should an uninsured or
underinsured loss occur, Equity Office could lose all or a
portion of its

97



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 25  COMMITMENTS AND
CONTINGENCIES  (continued)

investment in, and anticipated cash flows from,
one or more of the Properties. In addition, there can be no
assurance that third-party insurance carriers will be able to
maintain reinsurance sufficient to cover any losses that may be
incurred.

|                                             |  |                                                                                                                                                                                       |  |                                          
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Type of Insurance                            |  | Equity Office                                                                                                                                                                         |  | Third-Party                              
|Coverage                                     |  | Loss Exposure/Deductible                                                                                                                                                              |  | Coverage Limitation                      
|                                             |  |                                                                                                                                                                                       |  |                                          
|Property damage and business interruption(a) |  | $75 million in the aggregate (inclusive of
    retention amounts paid for earthquake loss), plus
    $1 million per occurrence deductible                                             |  | $1.0 billion per occurrence(c)           
|Earthquake(a)(b)                             |  | $75 million in the aggregate (inclusive of
    retention amounts paid for property damage and business
    interruption loss) per year, plus $1 million per occurrence
    deductible |  | $325 million in the aggregate per year(c)
|Acts of terrorism(d)                         |  | $1 million or 2% of total insurable value,
    whichever is greater, per occurrence deductible; and 30 day
    waiting period for loss of rent                                        |  | $270 million in the aggregate per year(e)




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In September 2002, Equity Office began
    retaining up to $75 million of such loss calculated
    throughout the Equity Office portfolio. In the event of a loss
    in excess of these retention limits, the third-party insurance
    carriers would be obligated to cover the losses up to the stated
    coverage amounts in the above table.                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(b) | The amount of the third-party insurance relating
    to earthquakes is based on maximum probable loss studies
    performed by independent third parties. The maximum annual
    aggregate payment amount for earthquake loss is
    $325 million, inclusive of Equity Offices loss
    exposure of $75 million plus $1 million per occurrence
    deductible. There can be no assurance that these actuarial
    studies have correctly estimated any losses that may occur.                                                                                                                                                                                                                                                                                
|   
|(c) | These amounts include Equity Offices loss
    exposure/deductible amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(d) | The third-party insurance coverage excludes
    nuclear, chemical or biological acts of terrorism. There can be
    no assurance that insurance coverage for acts of terrorism will
    be available in the future. It is also possible that the lenders
    under our unsecured credit facility and our secured mortgage
    indebtedness could seek to declare a default based on the
    absence of insurance coverage for terrorist acts for the type
    and amount in place. If one or more lenders were to declare such
    a default, Equity Office would challenge such conclusion as not
    being commercially reasonable in the context of the current
    marketplace. See Note 26. Subsequent Events for changes to
    the terrorism insurance.
|   
|(e) | This amount is in excess of Equity Offices
    deductible amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Workers Compensation, Automobile Liability and
General Liability:Equity Office has
per occurrence deductible amounts on workers compensation of
$500,000, auto liability of $250,000 and general liability of
$1,000,000.

Off-Balance Sheet Arrangements

Commitments

In accordance with the agreement governing the
investment in Wright Runstad Associates Limited Partnership
(WRALP) made in 1997, Equity Office agreed, for a
period generally continuing until December 31, 2007, to
make available to WRALP up to $20.0 million in additional
financing or credit support for future development. As of
December 31, 2002, no amounts have been funded pursuant to
this agreement. However, Equity Office has unconditionally
guaranteed payment of WRALPs $19.5 million revolving line
of

98



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##### 







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 25  COMMITMENTS AND
CONTINGENCIES  (continued)

credit which has an outstanding balance of
approximately $12.9 million as of December 31, 2002 in
the event of WRALPs non-payment. WRALPs current line
of credit matures in July 2003. Equity Office does not have a
liability accrued related to this guarantee. In the event Equity
Office makes payment on WRALPs line of credit and WRALP
does not repay Equity Office, Equity Office is entitled to
(i) terminate the credit facility provided to WRALP from
Equity Office and (ii) declare all amounts borrowed by
WRALP due and payable. Equity Office believes the risk of an
unrecovered loss is minimal at this time.

Letters of Credit

As of December 31, 2002, Equity Office had
provided approximately $3.3 million in letters of credit.
The letters of credit were required to be issued under the
provisions of our workers compensation insurance policies
and certain utility contracts.

NOTE 26  SUBSEQUENT
EVENTS

The following transactions occurred subsequent to
December 31, 2002, through March 13, 2003:


In January 2003, EOP Partnership issued
$500 million of 5.875% unsecured notes due January 15,
2013. Including all offering expenses, the all-in effective rate
of the unsecured notes is 5.98%. The notes are guaranteed by
Equity Office. Total cash proceeds net of selling commissions
and other expenses were approximately $494.9 million. The
net proceeds were used to repay $300 million of unsecured
notes that matured in February 2003. The remaining net proceeds
were used to repay outstanding balances on the line of credit
and for general business purposes, including working capital.

In January 2003, Equity Office sold the ABAM
Building, Washington Park and the Federal Way office buildings
to an unaffiliated party for approximately $13.5 million. The
properties comprised three office properties, approximately
114,527 square feet and are located in Seattle, Washington.

In February 2003, Equity Office sold the U.S.
West Dex Center office building to an unaffiliated party for
approximately $11.6 million. The property comprised one
office building, approximately 136,176 square feet and is
located in Salt Lake City, Utah.

In February 2003, Equity Office sold the Commerce
Park office building to an unaffiliated party for approximately
$16.1 million. The property comprised one office building,
approximately 94,367 square feet and is located in Santa Monica,
CA.

Effective in February 2003, Equity Office amended
its third-party insurance coverage for acts of terrorism as a
result of the Terrorism Risk Insurance Act of 2002
(TRIA) enacted by Congress and signed into law by
President Bush on November 26, 2002. Equity Office
cancelled the terrorism insurance program that provided a limit
of $270 million in the aggregate per year and replaced it
with a limit of $825 million in the current property
insurance program which provides coverage for chemical and
biological exposure, whereas the previous insurance coverage
excluded this exposure. Under TRIA, Equity Office has a per
occurrence deductible of $750,000 and retains 10% of each and
every loss up to a maximum of $33.25 million per
occurrence, inclusive of the deductible. The federal government
is obligated to cover the remaining 90% of the loss above the
deductible up to $100 billion in the aggregate annually.

In March 2003, Equity Office sold the Janss Court
office building to an unaffiliated party for approximately
$35.5 million. The property comprised one office building,
approximately 92,403 square feet, 32 residential units
and is located in Santa Monica, CA.

From January 1, 2003 through March 13,
2003, Equity Office had repurchased 2,518,100 Common Shares
under a share repurchase program at an average price of $23.82
for approximately $60.0 million in the aggregate.

99



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##### 



Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

100



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##### 



PART III

Item 10.     Directors
and Executive Officers of the Registrant.

Information about Trustees of Equity Office is
incorporated by reference from the discussion under
Proposal 1 in our Proxy Statement for the 2003 Annual
Meeting of Shareholders. The balance of the response to this
item is contained in the discussion entitled Executive and
Senior Officers of Equity Office under Item 1 of
Part I of this report.

Item 11.  Executive
Compensation.

Information about executive compensation is
incorporated by reference from the discussion under the heading
Executive Compensation in our Proxy Statement for
the 2003 Annual Meeting of Shareholders.



|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters.

Information about security ownership of certain
beneficial owners and management, and information about our
equity compensation plans, are incorporated by reference from
the discussion under the headings Common Share and Unit
Ownership by Trustees and Executive Officers and
Equity Compensation Plan Information in our Proxy
Statement for the 2003 Annual Meeting of Shareholders.

Item 13.  Certain Relationships
and Related Transactions.

Information about certain relationships and
transactions with related parties is incorporated herein by
reference from the discussion under the heading Certain
Relationships and Related Transactions in our Proxy
Statement for the 2003 Annual Meeting of Shareholders.

Item 14.  Controls and
Procedures.

Evaluation of Disclosure Controls and
Procedures

Our principal executive officer, Samuel Zell, and
our principal financial officer, Marsha C. Williams,
evaluated within 90 days prior to the filing of this
Form 10-K the effectiveness of the design and operation of
our disclosure controls and other procedures that are designed
to ensure that information required to be disclosed by us in the
reports that we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms. As
a result of this evaluation, these executive officers have
concluded that, as of such date, the design and operation of our
disclosure controls and procedures were effective.

Changes in Internal Controls

Since the date of the evaluation of our
disclosure controls and procedures by Mr. Zell and
Ms. Williams described above, there have been no
significant changes in our internal controls or in other factors
that could significantly affect our disclosure controls and
procedures.

101



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##### 



PART IV

Item 15.  Exhibits, Financial
Statement Schedules and Reports on Form 8-K.

(a)(1) Financial Statements

Report of Independent Auditors



| |                                                                 
| | ----------------------------------------------------------------
| | Consolidated Balance Sheets as of
    December 31, 2002 and 2001



| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Operations for the
    years ended December 31, 2002, 2001 and 2000                         
|
| | Consolidated Statements of Changes in
    Shareholders Equity for the years ended December 31,
    2002, 2001 and 2000
|
| | Consolidated Statement of Net Comprehensive
    Income for the years ended December 31, 2002, 2001 and 2000            
|
| | Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000                         

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules

Schedule III  Real Estate and
Accumulated Depreciation as of December 31, 2002

All other schedules for which provision is made
in the applicable accounting regulations of the SEC are not
required under the related instructions or are inapplicable and
therefore have been omitted.

(a)(3) Exhibits:



| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | The exhibits required by this item are set forth
    on the Exhibit Index attached hereto.

(b) Reports on Form 8-K:



| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | The following report(s) on Form 8-K were
    filed during the quarter ended December 31, 2002:

|                  |  |                    |  |             
|----------------- |  | ------------------ |  | ------------
|                  |  | Items              |  |             
|                  |  | Reported/Financial |  |             
|                  |  | Statements         |  |             
|Date of Event     |  | Filed              |  |             
|                  |  |                    |  |             
|November 18, 2002 |  | Item 5.            |  | Other Events

(c) Exhibits:

See Item 15(a)(3) above.

(d) Financial Statement Schedules:

None.

102



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##### 



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.



| |                               
| | ------------------------------
| | EQUITY OFFICE PROPERTIES TRUST



| |     |                
| | --- | ---------------
| | By: | /s/ SAMUEL ZELL

| |                                  
| | ---------------------------------
| |                                  
| | Samuel Zell                      
| | Chairman of the Board of Trustees
| | and Chief Executive Officer      
|
| | Date: March 28, 2003             

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 in the capacities
and on the dates indicated.

|                                             |  |                                                                                                 |  | 
|-------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | 
|                                             |  |                                                                                                
|Signature                                    |  | Title                                                                                          
|                                             |  |                                                                                                
|                                            
|/s/ SAMUEL ZELLSamuel Zell                   |  | Chairman of the Board of Trustees
    and Chief Executive Officer (principal executive officer)
|                                            
|/s/ RICHARD D. KINCAIDRichard D. Kincaid     |  | President and Trustee                                                                          
|                                            
|/s/ MARSHA C. WILLIAMSMarsha C. Williams     |  | Executive Vice President  Chief
    Financial Officer (principal financial officer)           
|                                            
|/s/ STEPHEN M. BRIGGSStephen M. Briggs       |  | Senior Vice President  Chief
    Accounting Officer (principal accounting officer)            
|                                            
|/s/ THOMAS E. DOBROWSKIThomas E. Dobrowski   |  | Trustee                                                                                        
|                                            
|/s/ JOHN A. FOSTERJohn A. Foster             |  | Trustee                                                                                        
|                                            
|/s/ WILLIAM M. GOODYEARWilliam M. Goodyear   |  | Trustee                                                                                        
|                                            
|/s/ JAMES D. HARPER, JR.James D. Harper, Jr. |  | Trustee                                                                                        
|                                            
|/s/ DAVID K. MCKOWNDavid K. McKown           |  | Trustee                                                                                        
|                                            
|/s/ JOHN S. MOODY, SR.John S. Moody, Sr.     |  | Trustee                                                                                        

103



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##### 



|                                                 |  |         |  | 
|------------------------------------------------ |  | ------- |  | 
|                                                 |  |        
|Signature                                        |  | Title  
|                                                 |  |        
|/s/ JERRY M. REINSDORFJerry M. Reinsdorf         |  | Trustee
|                                                
|/s/ SHELI Z. ROSENBERGSheli Z. Rosenberg         |  | Trustee
|                                                
|/s/ EDWIN N. SIDMANEdwin N. Sidman               |  | Trustee
|                                                
|/s/ WARREN E. SPIEKER, JR.Warren E. Spieker, Jr. |  | Trustee
|                                                
|Jan H.W.R. van der Vlist                         |  | Trustee
|                                                
|/s/ CRAIG G. VOUGHTCraig G. Vought               |  | Trustee
|                                                
|William Wilson III                               |  | Trustee

104



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##### 



CERTIFICATIONS

I, Samuel Zell, certify that:

1. I have reviewed this annual report on
Form 10-K of Equity Office Properties Trust;

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

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

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



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

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



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6. The registrants other certifying
officer and I have indicated in this annual report whether there
were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                                  
| | ---------------------------------
| | /s/ SAMUEL ZELL                  
| |                                  
| | Samuel Zell                      
| | Chief Executive Officer and      
| | Chairman of the Board of Trustees

Date: March 28, 2003

105



---



##### 



I, Marsha C. Williams, certify that:

1. I have reviewed this annual report on
Form 10-K of Equity Office Properties Trust;

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

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

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



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

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



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6. The registrants other certifying
officer and I have indicated in this annual report whether there
were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                             
| | ----------------------------
| | /s/ MARSHA C. WILLIAMS      
| |                             
| | Marsha C. Williams          
| | Executive Vice President and
| | Chief Financial Officer     

Date: March 28, 2003

106



---



##### 



EXHIBIT INDEX

|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |  |  | 
|----------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          | 
|            | 3.1  |  |             | Articles of Amendment and Restatement of
    Declaration of Trust of Equity Office (incorporated herein by
    reference to Exhibit 3.1 to Equity Offices
    Registration Statement on Form S-11, as amended (SEC File
    No. 333-26629))                                                                                                                                                                                                                   |          |  |  | 
|           
|            | 3.2* |  |             | Articles Supplementary Designating Equity Office
    8.98% Series A Cumulative Redeemable Preferred Shares,
    dated December 15, 1997 and filed with the Maryland State
    Department of Assessments and Taxation on December 17, 1997                                                                                                                                                                                                                      |          |  |  | 
|           
|            | 3.3* |  |             | Articles Supplementary Designating Equity Office
    5.25% Series B Convertible, Cumulative Preferred Shares,
    dated February 18, 1998 and filed with the Maryland State
    Department of Assessments and Taxation on February 19, 1998                                                                                                                                                                                                                    |          |  |  | 
|           
|            | 3.4  |  |             | Articles Supplementary Designating Equity Office
    8 5/8% Series C Cumulative Redeemable Preferred
    Shares, dated December 1, 1998, as filed with the Maryland
    State Department of Assessments and Taxation on December 4,
    1998 (incorporated herein by reference to the Exhibit 3.4
    to Equity Offices Annual Report on Form 10-K for the year
    ended December 31, 2000, as amended)                                                      |          |  |  | 
|           
|            | 3.5  |  |             | Articles Supplementary of Equity Office, dated
    February 28, 2000 and filed with the Maryland State
    Department of Assessments and Taxation on March 17, 2000
    (incorporated herein by reference to Exhibit 3.5 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1999, as amended)                                                                                                                               |          |  |  | 
|           
|            | 3.6  |  |             | Articles of Amendment to Equity Offices
    Declaration of Trust relating to amendments to Sections 8.2
    and 8.4 (incorporated herein by reference to Exhibit 3.1 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on May 12, 2000)                                                                                                                                                                                                |          |  |  | 
|           
|            | 3.7  |  |             | Exhibit A to the Maryland Articles of Merger
    filed by Equity Office on June 19, 2000 with the Maryland
    State Department of Assessments and Taxation setting forth
    amendments to Equity Offices Declaration of Trust effected
    as part of the merger of Cornerstone with and into Equity Office
    (incorporated herein by reference to Exhibit 99.4 to Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2000) |          |  |  | 
|           
|            | 3.8  |  |             | Exhibit A to Maryland Articles of Merger
    filed by Equity Office on July 2, 2001 with the Maryland
    State Department of Assessments and Taxation setting forth
    amendments to Equity Offices Declaration of Trust effected
    as part of the merger of Spieker with and into Equity Office
    (incorporated herein by reference to Exhibit 99.4 to Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2001)          |          |  |  | 
|           
|            | 3.9  |  |             | Articles Supplementary Designating Equity Office
    Series D Cumulative Redeemable Preferred Shares, dated
    July 2, 2001 and filed with the Maryland State Department
    of Assessments and Taxation on July 2, 2001 (incorporated
    herein by reference to Exhibit 99.5 to Equity Offices
    Current Report on Form 8-K filed with the SEC on
    July 5, 2001)                                                                                      |          |  |  | 



---



##### 



|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                    |          |  |  | 
|----------- | ---- |  | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                                                                                                                                    | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                    |          | 
|           
|            | 3.10 |  |             | Articles Supplementary Designating Equity Office
    Series E Cumulative Redeemable Preferred Shares, dated
    July 2, 2001 and filed with the Maryland State Department
    of Assessments and Taxation on July 2, 2001 (incorporated
    herein by reference to Exhibit 99.6 to Equity Offices
    Current Report on Form 8-K filed with the SEC on
    July 5, 2001)          |          |  |  | 
|           
|            | 3.11 |  |             | Articles Supplementary Designating Equity Office
    Series F Cumulative Redeemable Preferred Shares, dated
    July 2, 2001 and filed with the Maryland State Department
    of Assessments and Taxation on July 2, 2001 (incorporated
    herein by reference to Exhibit 99.7 to Equity Offices
    Current Report on Form 8-K filed with the SEC on
    July 5, 2001)          |          |  |  | 
|           
|            | 3.12 |  |             | Articles Supplementary Designating Equity Office
    Series G Cumulative Redeemable Preferred Shares, dated
    July 23, 2002 and filed with the Maryland State Department
    of Assessments and Taxation on July 23, 2002 (incorporated
    herein by reference to Exhibit 12 to Equity Offices
    Registration Statement on Form 8-A filed with the SEC on
    July 24, 2002) |          |  |  | 
|           
|            | 3.13 |  |             | Second Amended and Restated Bylaws (incorporated
    by reference to Exhibit 13 of Equity Offices Registration
    Statement on Form 8-A filed with the Commission on
    July 24, 2002)                                                                                                                                                                                          |          |  |  | 
|           
|            | 4.1* |  |             | Indenture, dated as of September 2, 1997,
    between EOP Partnership and State Street Bank and Trust Company                                                                                                                                                                                                                                                                      |          |  |  | 
|           
|            | 4.2* |  |             | First Supplemental Indenture, dated as of
    February 9, 1998, between EOP Partnership and State Street
    Bank and Trust Company                                                                                                                                                                                                                                                |          |  |  | 
|           
|            | 4.3* |  |             | $200,000,000 6.375% Note due 2003. A $100,000,000
    6.375% Note due 2003, identical in all material respects other
    than principal amount to the Note filed as Exhibit 4.3 to
    Equity Offices Annual Report on Form 10-K for the
    year ended December 31, 1997, as amended, has not been
    filed.                                                                    |          |  |  | 
|           
|            | 4.4* |  |             | $200,000,000 6.625% Note due 2005. Another
    $200,000,000 6.625% Note due 2005, identical in all material
    respects to the Note filed as Exhibit 4.4 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1997, as amended, has not been filed.                                                                                              |          |  |  | 
|           
|            | 4.5* |  |             | $200,000,000 6.750% Note due 2008. A $100,000,000
    6.750% Note due 2008, identical in all material respects other
    than principal amount to the Note filed as Exhibit 4.5 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1997, as amended, has not been filed.                                                                        |          |  |  | 
|           
|            | 4.6* |  |             | $200,000,000 7.250% Note due 2018. A $50,000,000
    7.250% Note due 2018, identical in all material respects other
    than principal amount to the Note filed as Exhibit 4.6 to
    Equity Offices Annual Report on Form 10-K for the
    year ended December 31, 1997, as amended, has not been
    filed.                                                                     |          |  |  | 
|           
|            | 4.7  |  |             | $30,000,000 7.24% Senior Note due 2004
    (incorporated herein by reference to Exhibit 4.8 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1997, as amended)                                                                                                                                                                                |          |  |  | 
|           
|            | 4.8  |  |             | $50,000,000 7.36% Senior Note due 2005
    (incorporated herein by reference to Exhibit 4.9 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1997, as amended)                                                                                                                                                                                |          |  |  | 
|           
|            | 4.9  |  |             | $50,000,000 7.44% Senior Note due 2006
    (incorporated herein by reference to Exhibit 4.10 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1997, as amended)                                                                                                                                                                               |          |  |  | 



---



##### 



|            |      |  |             |                                                                                                                                                                                                                                                                                   |          |  |  | 
|----------- | ---- |  | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                                   | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                                   |          | 
|           
|            | 4.10 |  |             | $50,000,000 7.41% Senior Note due 2007
    (incorporated herein by reference to Exhibit 4.11 to Equity
    Offices Annual Report on Form 10-K for the year ended
    December 31, 1997, as amended)                                                                              |          |  |  | 
|           
|            | 4.11 |  |             | $250,000,000 6.50% Notes due 2004 (incorporated
    herein by reference to Exhibit 4.12 to Equity Offices
    Annual Report on Form 10-K for the year ended
    December 31, 2000, as amended)                                                                                   |          |  |  | 
|           
|            | 4.12 |  |             | $300,000,000 6.763% Notes due 2007 (incorporated
    herein by reference to Exhibit 4.13 to Equity Offices
    Annual Report on Form 10-K for the year ended
    December 31, 2000, as amended)                                                                                  |          |  |  | 
|           
|            | 4.13 |  |             | $225,000,000 7.25% Notes due 2028 (incorporated
    herein by reference to Exhibit 4.14 to Equity Offices
    Annual Report on Form 10-K for the year ended
    December 31, 2000, as amended)                                                                                   |          |  |  | 
|           
|            | 4.14 |  |             | $300,000,000 6.5% Notes due 2004 (incorporated
    herein by reference to Exhibit 4.16 to Equity Offices
    Annual Report on Form 10-K for the year ended
    December 31, 2000, as amended)                                                                                    |          |  |  | 
|           
|            | 4.15 |  |             | $500,000,000 6.8% Notes due 2009 (incorporated
    herein by reference to Exhibit 4.17 to Equity Offices
    Annual Report on Form 10-K for the year ended
    December 31, 2000, as amended)                                                                                    |          |  |  | 
|           
|            | 4.16 |  |             | $200,000,000 7.5% Notes due April 19, 2029
    (incorporated herein by reference to Exhibit 4.23 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on April 19, 1999)                                                                                    |          |  |  | 
|           
|            | 4.17 |  |             | $400,000,000 8.375% Note due March 15, 2006
    (incorporated herein by reference to Exhibit 4.24 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on March 24, 2000)                                                                                   |          |  |  | 
|           
|            | 4.18 |  |             | $100,000,000 8.375% Note due March 15, 2006
    (incorporated herein by reference to Exhibit 4.25 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on March 24, 2000)                                                                                   |          |  |  | 
|           
|            | 4.19 |  |             | $360,000,000 8.10% Note due August 1, 2010
    of EOP Partnership (incorporated herein by reference to
    Exhibit 4.1 to EOP Partnerships Current Report on
    Form 8-K filed with the SEC on August 8, 2000)                                                                  |          |  |  | 
|           
|            | 4.20 |  |             | Indenture, dated August 23, 2000, by and
    among EOP Partnership, Equity Office and State Street Bank and
    Trust Company (incorporated herein by reference to
    Exhibit 4.1 to Equity Offices Registration Statement
    on Form S-3 (SEC File No. 333-47754))            |          |  |  | 
|           
|            | 4.21 |  |             | Registration Rights Agreement, dated as of
    August 23, 2000, among Equity Office, EOP Partnership and
    Salomon Smith Barney Inc. (incorporated herein by reference to
    Exhibit 4.2 to Equity Offices Registration Statement
    on Form S-3 (SEC File No. 333-47754))   |          |  |  | 
|           
|            | 4.22 |  |             | $300,000,000 (or applicable lesser amount) Senior
    Exchangeable Note due November 15, 2008, and related
    Guarantee (incorporated herein by reference to Exhibit 4.23
    to Equity Offices annual report on Form 10-K for the year
    ended December 31, 2001, as amended) |          |  |  | 
|           
|            | 4.23 |  |             | $25,000,000 (or applicable lesser amount) Senior
    Exchangeable Note due November 15, 2008, and related
    Guarantee (incorporated herein by reference to Exhibit 4.24
    to Equity Offices annual report on Form 10-K for the year
    ended December 31, 2001, as amended)  |          |  |  | 



---



##### 



|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                      |          |  |  | 
|----------- | ---- |  | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                                                                                                      | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                      |          | 
|           
|            | 4.24 |  |             | $325,000,000 (or applicable lesser amount) Senior
    Exchangeable Notes due November 15, 2008, and related
    Guarantee (incorporated herein by reference to Exhibit 4.25
    to Equity Offices annual report on Form 10-K for the year
    ended December 31, 2001, as amended)                                                                   |          |  |  | 
|           
|            | 4.25 |  |             | Indenture, dated August 29, 2000, by and
    between EOP Partnership and U.S. Bank National Association
    (formerly known as U.S. Bank Trust National Association)
    (incorporated herein by reference to Exhibit 4.1 to EOP
    Partnerships Registration Statement on Form S-3, as
    amended (SEC File No. 333-43530))                      |          |  |  | 
|           
|            | 4.26 |  |             | First Supplemental Indenture, dated June 18,
    2001, among EOP Partnership, Equity Office and U.S. Bank
    National Association (formerly known as U.S. Bank Trust National
    Association) (incorporated herein by reference to
    Exhibit 4.2 to Equity Offices Registration Statement
    on Form S-3, as amended (SEC File No. 333-58976)) |          |  |  | 
|           
|            | 4.27 |  |             | $400,000,000 7 3/8% Note due 2003
    (incorporated herein by reference to Exhibit 4.4 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on November 20, 2000)                                                                                                                                                              |          |  |  | 
|           
|            | 4.28 |  |             | $400,000,000 7 3/4% Note due 2007
    (incorporated herein by reference to Exhibit 4.5 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on November 20, 2000)                                                                                                                                                              |          |  |  | 
|           
|            | 4.29 |  |             | $200,000,000 7 3/4% Note due 2007
    (incorporated herein by reference to Exhibit 4.6 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on November 20, 2000)                                                                                                                                                              |          |  |  | 
|           
|            | 4.30 |  |             | Revolving Credit Agreement for $1,000,000,000
    Revolving Credit Facility, dated as of May 12, 2000, among
    EOP Partnership and the Banks listed therein (incorporated
    herein by reference to Exhibit 99.7.1 of Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2000)                                      |          |  |  | 
|           
|            | 4.31 |  |             | Guaranty of Payment  No. 1, made
    as of May 12, 2000, between Equity Office and Bank of
    America, N.A. (incorporated herein by reference to
    Exhibit 99.7.2 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2000)                                                                                          |          |  |  | 
|           
|            | 4.32 |  |             | Guaranty of Payment  No. 2, made
    as of May 12, 2000, between Equity Office and Bank of
    America, N.A. (incorporated herein by reference to
    Exhibit 99.7.3 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2000)                                                                                          |          |  |  | 
|           
|            | 4.33 |  |             | Fixed Rate Promissory Note with The Chase
    Manhattan Bank (incorporated herein by reference to
    Exhibit 4.22 to Equity Offices Annual Report on
    Form 10-K for the year ended December 31, 1999, as
    amended)                                                                                                                           |          |  |  | 
|           
|            | 4.34 |  |             | First Amendment to Revolving Credit Agreement and
    Consent Agreement, dated as of May 18, 2001, among EOP
    Partnership and the banks listed therein (incorporated herein by
    reference to Exhibit 10.3 to Equity Offices
    Registration Statement on Form S-4, as amended (SEC File
    No. 333-57526))                                  |          |  |  | 
|           
|            | 4.35 |  |             | $500,000,000 7.000% Note due July 15, 2011,
    and related Guarantee (incorporated herein by reference to
    Exhibit 4.4 to EOP Partnerships Current Report on
    Form 8-K filed with the SEC on July 18, 2001)                                                                                                                                  |          |  |  | 



---



##### 



|            |      |  |             |                                                                                                                                                                                                                                                                            |          |  |  | 
|----------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                            | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                            |          | 
|           
|            | 4.36 |  |             | $500,000,000 7.000% Note due July 15, 2011,
    and related Guarantee (incorporated herein by reference to
    Exhibit 4.5 to EOP Partnerships Current Report on
    Form 8-K filed with the SEC on July 18, 2001)                                                        |          |  |  | 
|           
|            | 4.37 |  |             | $100,000,000 7.000% Note due July 15, 2011,
    and related Guarantee (incorporated herein by reference to
    Exhibit 4.6 to EOP Partnerships Current Report on
    Form 8-K filed with the SEC on July 18, 2001)                                                        |          |  |  | 
|           
|            | 4.38 |  |             | $300,000,000 7.875% Note due July 15, 2031,
    and related Guarantee (incorporated herein by reference to
    Exhibit 4.7 to EOP Partnerships Current Report on
    Form 8-K filed with the SEC on July 18, 2001)                                                        |          |  |  | 
|           
|            | 4.39 |  |             | $400,000,000 6 3/4% Note due
    February 15, 2012, and related Guarantee (incorporated
    herein by reference to Exhibit 4.1 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on February 15, 2002)                                            |          |  |  | 
|           
|            | 4.40 |  |             | $100,000,000 6 3/4% Note due
    February 15, 2012, and related Guarantee (incorporated
    herein by reference to Exhibit 4.2 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on February 15, 2002)                                            |          |  |  | 
|           
|            | 4.41 |  |             | Indenture, dated as of December 6, 1995,
    among Spieker and State Street Bank and Trust, as Trustee
    (incorporated herein by reference to Exhibit 99.17.1 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                  |          |  |  | 
|           
|            | 4.42 |  |             | Fourth Supplemental Indenture, dated as of
    January 24, 1996, among Spieker, Spieker Partnership and
    State Street (incorporated herein by reference to Exhibit
    99.17.7 to Equity Offices Current Report on Form 8-K
    filed with the SEC on July 5, 2001)    |          |  |  | 
|           
|            | 4.43 |  |             | $100,000,000 6.90% Note due January 15, 2004
    (incorporated herein by reference to Exhibit 99.17.8 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                            |          |  |  | 
|           
|            | 4.44 |  |             | Fifth Supplemental Indenture, dated as of
    June 20, 1996, among Spieker, Spieker Partnership and State
    Street (incorporated herein by reference to Exhibit 99.17.9
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on July 5, 2001)        |          |  |  | 
|           
|            | 4.45 |  |             | $100,000,000 Medium-Term Notes due nine months or
    more from July 19, 1996 (incorporated herein by reference
    to Exhibit 99.17.10 to Equity Offices Current Report
    on Form 8-K filed with the SEC on July 5, 2001)                                              |          |  |  | 
|           
|            | 4.46 |  |             | Sixth Supplemental Indenture, dated as of
    December 10, 1996, among Spieker, Spieker Partnership and
    State Street (incorporated herein by reference to
    Exhibit 99.17.12 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001)   |          |  |  | 
|           
|            | 4.47 |  |             | $100,000,000 7.125% Note due December 1,
    2006 (incorporated herein by reference to Exhibit 99.17.13
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on July 5, 2001)                                                                          |          |  |  | 
|           
|            | 4.48 |  |             | Seventh Supplemental Indenture, dated as of
    December 10, 1996, among Spieker, Spieker Partnership and
    State Street (incorporated herein by reference to
    Exhibit 99.17.14 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001) |          |  |  | 
|           
|            | 4.49 |  |             | $25,000,000 7.875% Note due December 1, 2016
    (incorporated herein by reference to Exhibit 99.17.15 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                           |          |  |  | 



---



##### 



|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                           |          |  |  | 
|----------- | ---- |  | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                                                                                                           | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                           |          | 
|           
|            | 4.50 |  |             | Eighth Supplemental Indenture, dated as of
    July 14, 1997, among Spieker, Spieker Partnership and State
    Street (incorporated herein by reference to
    Exhibit 99.17.16 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001)                                                                                     |          |  |  | 
|           
|            | 4.51 |  |             | $150,000,000 7.125% Note due July 1, 2009
    (incorporated herein by reference to Exhibit 99.17.17 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                                                                                                             |          |  |  | 
|           
|            | 4.52 |  |             | Ninth Supplemental Indenture, dated as of
    September 29, 1997, among Spieker, Spieker Partnership,
    First Trust of California, National Association and State Street
    (incorporated herein by reference to Exhibit 99.17.18 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                            |          |  |  | 
|           
|            | 4.53 |  |             | $150,000,000 7.50% Debenture due October 1,
    2027 (incorporated herein by reference to Exhibit 99.17.19
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on July 5, 2001)                                                                                                                                                      |          |  |  | 
|           
|            | 4.54 |  |             | Tenth Supplemental Indenture, dated as of
    December 8, 1997, among Spieker, Spieker Partnership and
    First Trust of California, National Association (incorporated
    herein by reference to Exhibit 99.17.20 to Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2001)                                            |          |  |  | 
|           
|            | 4.55 |  |             | $200,000,000 7.35% Debenture due December 1,
    2017 (incorporated herein by reference to Exhibit 99.17.21
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on July 5, 2001)                                                                                                                                                     |          |  |  | 
|           
|            | 4.56 |  |             | Eleventh Supplemental Indenture, dated as of
    January 27, 1998, among Spieker, Spieker Partnership and
    First Trust of California, National Association (incorporated
    herein by reference to Exhibit 99.17.22 to Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2001)                                         |          |  |  | 
|           
|            | 4.57 |  |             | $150,000,000 6.75% Note due January 15, 2008
    (incorporated herein by reference to Exhibit 99.17.23 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                                                                                                          |          |  |  | 
|           
|            | 4.58 |  |             | Twelfth Supplemental Indenture, dated as of
    February 2, 1998, among Spieker, Spieker Partnership and
    First Trust of California, National Association (incorporated
    herein by reference to Exhibit 99.17.24 to Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2001)                                          |          |  |  | 
|           
|            | 4.59 |  |             | $125,000,000 6.875% Note due February 1,
    2005 (incorporated herein by reference to Exhibit 99.17.25
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on July 5, 2001)                                                                                                                                                         |          |  |  | 
|           
|            | 4.60 |  |             | Thirteenth Supplemental Indenture, dated as of
    February 2, 1998, among Spieker, Spieker Partnership and
    First Trust of California, National Association (incorporated
    herein by reference to Exhibit 99.17.26 to Equity
    Offices Current Report on Form 8-K filed with the SEC
    on July 5, 2001)                                       |          |  |  | 
|           
|            | 4.61 |  |             | $1,500,000 7.0% Note due February 1, 2007
    (incorporated herein by reference to Exhibit 99.17.27 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                                                                                                             |          |  |  | 
|           
|            | 4.62 |  |             | Fourteenth Supplemental Indenture, dated as of
    April 29, 1998, among Spieker, Spieker Partnership and U.S.
    Bank National Association (formerly known as U.S. Bank Trust
    National Association) (incorporated herein by reference to
    Exhibit 99.17.28 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001) |          |  |  | 



---



##### 



|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                             |          |  |  | 
|----------- | ---- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |      |  | Description |                                                                                                                                                                                                                                                                                                                                                             | Page No. | 
|            |      |  |             |                                                                                                                                                                                                                                                                                                                                                             |          | 
|           
|            | 4.63 |  |             | $25,000,000 6.88% Note due April 30, 2007
    (incorporated herein by reference to Exhibit 99.17.29 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                                                                                                               |          |  |  | 
|           
|            | 4.64 |  |             | Fifteenth Supplemental Indenture, dated as of
    May 11, 1999, among Spieker, Spieker Partnership and U.S.
    Bank National Association (formerly known as U.S. Bank Trust
    National Association) (incorporated herein by reference to
    Exhibit 99.17.30 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001)      |          |  |  | 
|           
|            | 4.65 |  |             | $200,000,000 6.8% Note due May 1, 2004
    (incorporated herein by reference to Exhibit 99.17.31 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                                                                                                                  |          |  |  | 
|           
|            | 4.66 |  |             | $200,000,000 7.25% Note due May 1, 2009
    (incorporated herein by reference to Exhibit 99.17.32 to
    Equity Offices Current Report on Form 8-K filed with
    the SEC on July 5, 2001)                                                                                                                                                                 |          |  |  | 
|           
|            | 4.67 |  |             | Sixteenth Supplemental Indenture, dated as of
    December 11, 2000, among Spieker, Spieker Partnership and
    U.S. Bank National Association (formerly known as U.S. Bank
    Trust National Association) (incorporated herein by reference to
    Exhibit 99.17.33 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001) |          |  |  | 
|           
|            | 4.68 |  |             | $200,000,000 7.65% Note due December 15,
    2010 (incorporated herein by reference to Exhibit 99.17.34
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on July 5, 2001)                                                                                                                                                           |          |  |  | 
|           
|            | 4.69 |  |             | Seventeenth Supplemental Indenture relating to
    the substitution of Equity Office and EOP Partnership as
    successor entities for Spieker and Spieker Partnership,
    respectively (incorporated herein by reference to
    Exhibit 99.17.35 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001)                    |          |  |  | 
|           
|            | 4.70 |  |             | $400,000,000 6 3/4% Note due
    February 15, 2012, and related Guarantee (incorporated by
    reference to Exhibit 4.1 to EOP Partnerships Current
    Report on Form 8-K filed with the SEC on February 15,
    2002)                                                                                                                                    |          |  |  | 
|           
|            | 4.71 |  |             | $100,000,000 6 3/4% Note due
    February 15, 2012, and related Guarantee (incorporated by
    reference to Exhibit 4.2 to EOP Partnerships Current
    Report on Form 8-K filed with the SEC on February 15,
    2002)                                                                                                                                    |          |  |  | 
|           
|            | 4.72 |  |             | $400,000,000 5.875% Note due January 15,
    2013, and related Guarantee (incorporated herein by reference to
    Exhibit 4.1 to the Current Report on Form 8-K of EOP
    Partnership filed with the SEC on January 15, 2003)                                                                                                                              |          |  |  | 
|           
|            | 4.73 |  |             | $100,000,000 5.875% Note due January 15,
    2003, and related Guarantee (incorporated herein by reference to
    Exhibit 4.2 to the Current Report on Form 8-K of EOP
    Partnership filed with the SEC on January 15, 2003)                                                                                                                              |          |  |  | 
|           
|            | 10.1 |  |             | Third Amended and Restated Agreement of Limited
    Partnership of EOP Partnership (incorporated herein by reference
    to Exhibit 99.8 to Equity Offices Current Report on
    Form 8-K filed with the SEC on July 5, 2001)                                                                                                                              |          |  |  | 
|           
|            | 10.2 |  |             | First Amendment to Third Amended and Restated
    Agreement of Limited Partnership of EOP Partnership
    (incorporated herein by reference to Exhibit 4.1 to EOP
    Partnerships Quarterly Report on Form 10-Q for the
    quarter ended September 30, 2002.)                                                                                            |          |  |  | 



---



##### 



|            |       |   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |          |  |  | 
|----------- | ----- | - | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |       |   | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Page No. | 
|            |       |   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |          | 
|           
|            | 10.3  |   |             | Registration Rights Agreement, dated as of
    July 11, 1997, among Equity Office and the persons named
    therein (incorporated herein by reference to Exhibit 10.2
    to Equity Offices Annual Report on Form 10-K for the
    year ended December 31, 1997, as amended)                                                                                                                                                                                                      |          |  |  | 
|           
|            | 10.4  |   |             | Noncompetition Agreement between Equity Office
    and Samuel Zell (incorporated herein by reference to
    Exhibit 10.3 to Equity Offices Annual Report on
    Form 10-K for the year ended December 31, 1997, as
    amended)                                                                                                                                                                                                                                                   |          |  |  | 
|           
|            | 10.5 |   |             | 1997 Share Option and Share Award Plan, as
    amended (incorporated herein by reference to Exhibit 10.1
    to Equity Offices Current Report on Form 8-K filed
    with the SEC on January 15, 2003)                                                                                                                                                                                                                                                                             |          |  |  | 
|           
|            | 10.6 |   |             | Equity Office Supplemental Retirement Savings
    Plan, including the first and second amendment (incorporated
    herein by reference to Exhibit 10.9 to Equity Offices
    Annual Report on Form 10-K for the year ended
    December 31, 1999, as amended)                                                                                                                                                                                                                     |          |  |  | 
|           
|            | 10.7  |   |             | Amended and Restated Operating Agreement
    No. 1 of Wilson/ Equity Office, LLC (incorporated herein by
    reference to Exhibit 10.13 to Equity Offices Annual
    Report on Form 10-K for the year ended December 31,
    2000, as amended)                                                                                                                                                                                                                                    |          |  |  | 
|           
|            | 10.8  |   |             | Separation Agreement dated as of
    December 24, 2002, by and between Wilson/Equity Office,
    LLC, Wilson Investors  California, LLC, EOP Investor,
    L.L.C., EOP  Concar Investor, L.L.C., Equity Office
    Properties Management Corp., EOP Operating Limited Partnership,
    Equity Office Properties Trust, William Wilson III, Thomas
    P. Sullivan, Jacqueline U. Moore, A. Robert Paratte,
    H. Lee Van Boven, Terry Reagan, Scott Stephens and Jon
    Knorpp |          |  |  | 
|           
|            | 10.9 |   |             | Change in Control Agreement entered into
    effective as of September 1, 2001 by and between Equity
    Office Properties Management Corp., Equity Office and
    Richard D. Kincaid (incorporated herein by reference to
    Exhibit 10.2 to Equity Offices Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2001)                                                                                                                                         |          |  |  | 
|           
|            | 10.10 |  |             | Change in Control Agreement entered into
    effective as of September 1, 2001 by and between Equity
    Office Properties Management Corp., Equity Office and
    Peter H. Adams (incorporated herein by reference to
    Exhibit 10.3 to Equity Offices Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2001)                                                                                                                                             |          |  |  | 
|           
|            | 10.11 |  |             | Change in Control Agreement entered into
    effective as of September 1, 2001 by and between Equity
    Office Properties Management Corp., Equity Office and
    David A. Helfand (incorporated herein by reference to
    Exhibit 10.5 to Equity Offices Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2001)                                                                                                                                           |          |  |  | 
|           
|            | 10.12 |  |             | Change in Control Agreement entered into
    effective as of September 1, 2001 by and between Equity
    Office Properties Management Corp., Equity Office and
    Stanley M. Stevens (incorporated herein by reference to
    Exhibit 10.8 to Equity Offices Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2001)                                                                                                                                         |          |  |  | 



---



##### 



|            |       |   |             |                                                                                                                                                                                                                                                                                                                                                                                                         |          |  |  | 
|----------- | ----- | - | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  |  | 
|Exhibit No. |       |   | Description |                                                                                                                                                                                                                                                                                                                                                                                                         | Page No. | 
|            |       |   |             |                                                                                                                                                                                                                                                                                                                                                                                                         |          | 
|           
|            | 10.13 |  |             | Assumption and Amendment to Change in Control
    Agreement entered into effective as of May 22, 2002 by and
    between Equity Office Properties Management Corp., Equity
    Office, EOP Partnership and Richard D. Kincaid (incorporated by
    reference to Exhibit 10.1 to Equity Offices Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002)                         |          |  |  | 
|           
|            | 10.14 |  |             | Assumption and Amendment to Change in Control
    Agreement entered into effective as of May 22, 2002 by and
    between Equity Office Properties Management Corp., Equity
    Office, EOP Partnership and Peter H. Adams (incorporated by
    reference to Exhibit 10.2 to Equity Offices Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002)                             |          |  |  | 
|           
|            | 10.15 |  |             | Assumption and Amendment to Change in Control
    Agreement entered into effective as of May 22, 2002 by and
    between Equity Office Properties Management Corp., Equity
    Office, EOP Partnership and David A. Helfand (incorporated by
    reference to Exhibit 10.3 to Equity Offices Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002)                           |          |  |  | 
|           
|            | 10.16 |  |             | Assumption and Amendment to Change in Control
    Agreement entered into effective as of May 22, 2002 by and
    between Equity Office Properties Management Corp., Equity
    Office, EOP Partnership and Stanley M. Stevens (incorporated by
    reference to Exhibit 10.4 to Equity Offices Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002)                         |          |  |  | 
|           
|            | 10.17 |   |             | Construction Loan Agreement, dated as of
    November 21, 2002, by and between WEO-Concar LLC, a
    California limited liability company, as Borrower and Riverside
    Finance L.L.C. a Delaware limited liability company, as Lender                                                                                                                                                                 |          |  |  | 
|           
|            | 10.18 |   |             | Construction Loan Agreement, dated as of
    April 30, 2002, between Foundry Square Associates IV, LLC,
    a California limited liability company, as Borrower and
    Riverside Finance Company, L.L.C., a Delaware limited liability
    company, as Lender (incorporated by reference to
    Exhibit 10.6 to Equity Offices Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2002) |          |  |  | 
|           
|            | 10.19 |  |             | Form of Share Appreciation Rights Agreement by
    and between Equity Office and Jan H. W. R. van der Vlist
    (incorporated by reference to Exhibit 10.1 to Equity
    Offices Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2002)                                                                                                                                               |          |  |  | 
|           
|            | 10.20 |  |             | Severance Agreement, dated June 24, 2002,
    with Timothy H. Callahan (incorporated by reference to
    Exhibit 10.1 to Equity Offices Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2002)                                                                                                                                                                                         |          |  |  | 
|           
|            | 12.1  |   |             | Statement of Earnings to Combined Fixed Charges
    and Preferred Distributions                                                                                                                                                                                                                                                                                                                         |          |  |  | 
|           
|            | 21.1  |   |             | List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                    |          |  |  | 
|           
|            | 23.1  |   |             | Consent of Independent Auditors                                                                                                                                                                                                                                                                                                                                                                         |          |  |  | 
|           
|            | 99.1  |   |             | Equity Office Properties Trust 1997 Non-Qualified
    Employee Share Purchase Plan Financial Statements as of and for
    the years ended December 31, 2002, 2001 and 2000                                                                                                                                                                                                                              |          |  |  | 




| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Incorporated herein by reference to the
    same-numbered exhibit to Equity Offices Annual Report on
    Form 10-K for the year ended December 31, 1997, as
    amended.



| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | Represents a management contract or compensatory
    plan, contract or agreement.



---



##### 



Schedule III  Real Estate and
Accumulated Depreciation as of December 31, 2002


|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|-- |  | --------------------------------------- |  | ----- | -------- | - | -------- | ------------ | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------- | - | ------- | ------------ |  | - | --- |  |  | - | ------ | 
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |  
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           | Costs Capitalized |              
|   |  |                                         |  |       |          |   |          |              |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|   |  |                                         |  |       |          |   |          |              |         |              |    | Equity Office   |           |                   | Acquisition   |  
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |  
|   |  |                                         |  |       |          |   |          |              |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |        
|   |  | Description                             |  | Notes |          |   | Location |              | State   |              |    | at 12/31/02     |           |                   | Land          |   |     | Improvements |        |              | Land    |   |         | Improvements | 
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              | 
|   |  | Office Properties:                      |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|   |  | Atlanta Region                          |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|1  |  | 200 Galleria                            |  |       |          |   |          | Atlanta      |         |              | GA |                 |           | $                 |              |   |     | $            | 10,282 |              |         | $ | 58,266  |              |  | $ |    |  |  | $ | 2,294  | 
|2  |  | Prominence in Buckhead                  |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 7,456  |              |         |   | 63,166  |              |  |   |    |  |  |   | 11,523 | 
|3  |  | One Ninety One Peachtree Tower          |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 46,500 |              |         |   | 263,500 |              |  |   |    |  |  |   | 1,980  | 
|4  |  | Central Park                            |  |       | (3)      |   |          | Atlanta      |         |              | GA |                 |           |                   | (55,718       | ) |     |              | 9,163  |              |         |   | 82,463  |              |  |   |    |  |  |   | 4,280  | 
|5  |  | Lakeside Office Park                    |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 4,792  |              |         |   | 43,132  |              |  |   |    |  |  |   | 2,118  | 
|6  |  | Paces West                              |  |       | (3)      |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 8,336  |              |         |   | 75,025  |              |  |   |    |  |  |   | 5,536  | 
|7  |  | Perimeter Center                        |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   | (200,373      | ) |     |              | 52,374 |              |         |   | 415,161 |              |  |   | 279 |  |  |   | 26,942 | 
|8  |  | Wachovia Center                         |  |       | (3)      |   |          | Charlotte    |         |              | NC |                 |           |                   |              |   |     |              | 5,061  |              |         |   | 45,549  |              |  |   |    |  |  |   | 1,560  | 
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              | 
|   |  | Atlanta Region Totals                   |  |       | (256,091 | ) |          |              | 143,964 |              |    |                 | 1,046,262 |                   |               |   | 279 |              |        |              | 56,233  |  
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |    
|   |  | Boston Region                           |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|9  |  | Crosby Corporate Center                 |  |       |          |   |          | Bedford      |         |              | MA |                 |           |                   |              |   |     |              | 5,958  |              |         |   | 53,620  |              |  |   | 115 |  |  |   | 2,256  | 
|10 |  | Crosby Corporate Center II              |  |       |          |   |          | Bedford      |         |              | MA |                 |           |                   |              |   |     |              | 9,385  |              |         |   | 27,584  |              |  |   | 9   |  |  |   | 5,390  | 
|11 |  | 125 Summer Street                       |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   | (70,312       | ) |     |              | 18,000 |              |         |   | 102,000 |              |  |   |    |  |  |   | 4,192  | 
|12 |  | 222 Berkeley Street                     |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 25,593 |              |         |   | 145,029 |              |  |   |    |  |  |   | 3,009  | 
|13 |  | 500 Boylston Street                     |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 39,000 |              |         |   | 221,000 |              |  |   |    |  |  |   |       | 
|14 |  | Sixty State Street                      |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   | (76,626       | ) |     |              |       |              |         |   | 256,000 |              |  |   |    |  |  |   | 3,104  | 
|15 |  | 100 Summer Street                       |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 22,271 |              |         |   | 200,439 |              |  |   |    |  |  |   | 41,214 | 
|16 |  | 150 Federal Street                      |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 14,131 |              |         |   | 127,182 |              |  |   |    |  |  |   | 13,777 | 
|17 |  | 175 Federal Street                      |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 4,894  |              |         |   | 44,045  |              |  |   |    |  |  |   | 2,613  | 
|18 |  | 2 Oliver Street- 147 Milk Street        |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 5,017  |              |         |   | 45,157  |              |  |   |    |  |  |   | 3,106  | 
|19 |  | 225 Franklin Street                     |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 34,608 |              |         |   | 311,471 |              |  |   |    |  |  |   | 7,456  | 
|20 |  | 28 State Street                         |  |       | (3)      |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 9,513  |              |         |   | 85,623  |              |  |   |    |  |  |   | 40,331 | 
|21 |  | Center Plaza                            |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 18,942 |              |         |   | 170,480 |              |  |   |    |  |  |   | 7,406  | 
|22 |  | Russia Wharf                            |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 3,891  |              |         |   | 35,023  |              |  |   |    |  |  |   | 3,014  | 
|23 |  | South Station                           |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              |       |              |         |   | 31,074  |              |  |   |    |  |  |   | 1,261  | 
|24 |  | New England Executive Park              |  |       |          |   |          | Burlington   |         |              | MA |                 |           |                   |              |   |     |              | 15,637 |              |         |   | 140,729 |              |  |   | 203 |  |  |   | 13,025 | 
|25 |  | The Tower at New England Executive Park |  |       |          |   |          | Burlington   |         |              | MA |                 |           |                   |              |   |     |              | 2,793  |              |         |   | 31,462  |              |  |   | 5   |  |  |   | 11,098 | 
|26 |  | One Memorial Drive                      |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   | (57,472       | ) |     |              | 14,862 |              |         |   | 88,216  |              |  |   |    |  |  |   | 1,706  | 
|27 |  | One Canal Park                          |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   |              |   |     |              | 2,006  |              |         |   | 18,054  |              |  |   |    |  |  |   | 1,153  | 
|28 |  | Riverview I & II                        |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   |              |   |     |              | 5,938  |              |         |   | 53,438  |              |  |   | 6   |  |  |   | 2,611  | 
|29 |  | Ten Canal Park                          |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   |              |   |     |              | 2,383  |              |         |   | 21,448  |              |  |   |    |  |  |   | 62     | 
|30 |  | Riverside Center                        |  |       |          |   |          | Newton       |         |              | MA |                 |           |                   |              |   |     |              | 24,000 |              |         |   | 69,849  |              |  |   |    |  |  |   | 19,773 | 
|31 |  | 175 Wyman                               |  |       |          |   |          | Walthan      |         |              | MA |                 |           |                   |              |   |     |              | 14,600 |              |         |   | 5,400   |              |  |   | 3   |  |  |   | 1,425  | 
|32 |  | Wellesley Office Park                   |  |       |          |   |          | Wellesley    |         |              | MA |                 |           |                   |              |   |     |              | 16,493 |              |         |   | 148,434 |              |  |   | 20  |  |  |   | 5,942  | 
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              | 
|   |  | Boston Region Totals                    |  |       | (204,410 | ) |          |              | 309,915 |              |    |                 | 2,432,757 |                   |               |   | 361 |              |        |              | 194,924 |  
|   |  |                                         |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |    
|   |  | Chicago Region                          |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|33 |  | 101 North Wacker                        |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 10,035 |              |         |   | 90,319  |              |  |   |    |  |  |   | 3,363  | 
|34 |  | 161 North Clark                         |  |       | (3)      |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 15,882 |              |         |   | 142,936 |              |  |   |    |  |  |   | 18,487 | 
|35 |  | 200 West Adams                          |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 11,654 |              |         |   | 104,887 |              |  |   |    |  |  |   | 7,100  | 
|36 |  | 30 North LaSalle Street                 |  |       | (3)      |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 12,489 |              |         |   | 112,401 |              |  |   |    |  |  |   | 7,432  | 
|37 |  | Civic Opera House                       |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 12,771 |              |         |   | 114,942 |              |  |   |    |  |  |   | 6,318  | 
|38 |  | One North Franklin                      |  |       | (3)      |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 9,830  |              |         |   | 88,474  |              |  |   |    |  |  |   | 4,066  | 
|39 |  | Presidents Plaza                        |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 13,435 |              |         |   | 120,919 |              |  |   |    |  |  |   | 7,041  | 
|40 |  | BP Tower                                |  |       | (3)      |   |          | Cleveland    |         |              | OH |                 |           |                   | (84,638       | ) |     |              | 17,403 |              |         |   | 157,260 |              |  |   |    |  |  |   | 5,790  | 
|41 |  | Community Corporate Center              |  |       | (3)      |   |          | Columbus     |         |              | OH |                 |           |                   |              |   |     |              | 3,019  |              |         |   | 27,170  |              |  |   |    |  |  |   | 2,557  | 
|42 |  | One Crosswoods                          |  |       | (3)      |   |          | Columbus     |         |              | OH |                 |           |                   |              |   |     |              | 1,059  |              |         |   | 9,530   |              |  |   |    |  |  |   | 1,833  | 
|43 |  | Corporate 500 Centre                    |  |       |          |   |          | Deerfield    |         |              | IL |                 |           |                   | (76,601       | ) |     |              | 20,100 |              |         |   | 113,900 |              |  |   |    |  |  |   | 4,251  | 
|44 |  | 1700 Higgins Centre                     |  |       | (3)      |   |          | Des Plaines  |         |              | IL |                 |           |                   |              |   |     |              | 1,323  |              |         |   | 11,908  |              |  |   | 64  |  |  |   | 1,037  | 
|45 |  | Tri-State International                 |  |       |          |   |          | Lincolnshire |         |              | IL |                 |           |                   |              |   |     |              | 10,925 |              |         |   | 98,327  |              |  |   | 290 |  |  |   | 2,400  | 
|46 |  | 1111 West 22nd Street                   |  |       |          |   |          | Oakbrook     |         |              | IL |                 |           |                   |              |   |     |              | 4,834  |              |         |   | 43,508  |              |  |   | 48  |  |  |   | 1,933  | 
|47 |  | One Lincoln Centre                      |  |       |          |   |          | Oakbrook     |         |              | IL |                 |           |                   |              |   |     |              | 7,350  |              |         |   | 41,650  |              |  |   |    |  |  |   | 1,947  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           |  |          |  |  |    | 
|-- |  | ----------------------- | ------- | ------------ | ------------ | - | --------- | -------- | ----------- | - | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------- |  | -------- |  |  | -- | 
|   |  |                         |         |              |              |   |           |          |             |   |              |              
|   |  | Gross Amount Carried at |         |              |              |   |           |          |             |   |              |               | 
|   |  | Close of Period         |         |              |              |   |           |          |             |   |              |               | 
|   |  | 12/31/2002              |         |              |              |   |           |          |             |   |              |               | 
|   |  |                         |         |              |              |   |           |          | Date of     |   |              |               | 
|   |  |                         |         | Building and |              |   |           |          | Accumulated |   |              | Construction/ |  | Date       |          | Depreciable | 
|   |  | Land                    |         |              | Improvements |   |           | Total(1) |             |   | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)  | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|1  |  | $                       | 10,282  |              |              | $ | 60,560    |          |             | $ | 70,842       |               |  | $          | (4,082   | )           |  | 1985      |  | 06/19/00 |  |  | 40 | 
|2  |  |                         | 7,456   |              |              |   | 74,689    |          |             |   | 82,145       |               |  |            | (7,898   | )           |  | 1999      |  | 07/13/99 |  |  | 40 | 
|3  |  |                         | 46,500  |              |              |   | 265,480   |          |             |   | 311,980      |               |  |            | (16,963  | )           |  | 1991      |  | 06/19/00 |  |  | 40 | 
|4  |  |                         | 9,163   |              |              |   | 86,743    |          |             |   | 95,906       |               |  |            | (13,110  | )           |  | 1986      |  | 10/17/95 |  |  | 40 | 
|5  |  |                         | 4,792   |              |              |   | 45,250    |          |             |   | 50,042       |               |  |            | (6,331   | )           |  | 1972-1978 |  | 12/19/97 |  |  | 40 | 
|6  |  |                         | 8,336   |              |              |   | 80,561    |          |             |   | 88,897       |               |  |            | (11,402  | )           |  | 1988      |  | 10/31/94 |  |  | 40 | 
|7  |  |                         | 52,653  |              |              |   | 442,103   |          |             |   | 494,756      |               |  |            | (61,250  | )           |  | 1970/1989 |  | 12/19/97 |  |  | 40 | 
|8  |  |                         | 5,061   |              |              |   | 47,109    |          |             |   | 52,170       |               |  |            | (6,570   | )           |  | 1972/1994 |  | 09/01/95 |  |  | 40 | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|   |  |                         | 144,243 |              |              |   | 1,102,495 |          |             |   | 1,246,738    |               |  |            | (127,606 | )           |  |           |  |          |  |  |    | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|9  |  |                         | 6,073   |              |              |   | 55,876    |          |             |   | 61,949       |               |  |            | (7,129   | )           |  | 1996      |  | 12/19/97 |  |  | 40 | 
|10 |  |                         | 9,394   |              |              |   | 32,974    |          |             |   | 42,368       |               |  |            | (5,237   | )           |  | 1998      |  | 12/19/97 |  |  | 40 | 
|11 |  |                         | 18,000  |              |              |   | 106,192   |          |             |   | 124,192      |               |  |            | (7,291   | )           |  | 1989      |  | 06/19/00 |  |  | 40 | 
|12 |  |                         | 25,593  |              |              |   | 148,038   |          |             |   | 173,631      |               |  |            | (9,564   | )           |  | 1991      |  | 06/19/00 |  |  | 40 | 
|13 |  |                         | 39,000  |              |              |   | 221,000   |          |             |   | 260,000      |               |  |            | (14,043  | )           |  | 1988      |  | 06/19/00 |  |  | 40 | 
|14 |  |                         |        |              |              |   | 259,104   |          |             |   | 259,104      |               |  |            | (16,509  | )           |  | 1979      |  | 06/19/00 |  |  | 40 | 
|15 |  |                         | 22,271  |              |              |   | 241,653   |          |             |   | 263,924      |               |  |            | (29,383  | )           |  | 1974/1990 |  | 03/18/98 |  |  | 40 | 
|16 |  |                         | 14,131  |              |              |   | 140,959   |          |             |   | 155,090      |               |  |            | (20,518  | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|17 |  |                         | 4,894   |              |              |   | 46,658    |          |             |   | 51,552       |               |  |            | (6,173   | )           |  | 1977      |  | 12/19/97 |  |  | 40 | 
|18 |  |                         | 5,017   |              |              |   | 48,263    |          |             |   | 53,280       |               |  |            | (7,069   | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|19 |  |                         | 34,608  |              |              |   | 318,927   |          |             |   | 353,535      |               |  |            | (41,408  | )           |  | 1966/1996 |  | 12/19/97 |  |  | 40 | 
|20 |  |                         | 9,513   |              |              |   | 125,954   |          |             |   | 135,467      |               |  |            | (25,823  | )           |  | 1968/1997 |  | 01/23/95 |  |  | 40 | 
|21 |  |                         | 18,942  |              |              |   | 177,886   |          |             |   | 196,828      |               |  |            | (23,138  | )           |  | 1969      |  | 12/19/97 |  |  | 40 | 
|22 |  |                         | 3,891   |              |              |   | 38,037    |          |             |   | 41,928       |               |  |            | (5,897   | )           |  | 1978-1982 |  | 12/19/97 |  |  | 40 | 
|23 |  |                         |        |              |              |   | 32,335    |          |             |   | 32,335       |               |  |            | (4,177   | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|24 |  |                         | 15,840  |              |              |   | 153,754   |          |             |   | 169,594      |               |  |            | (21,521  | )           |  | 1970/1985 |  | 12/19/97 |  |  | 40 | 
|25 |  |                         | 2,798   |              |              |   | 42,560    |          |             |   | 45,358       |               |  |            | (5,602   | )           |  | 1971/1999 |  | 03/31/98 |  |  | 40 | 
|26 |  |                         | 14,862  |              |              |   | 89,922    |          |             |   | 104,784      |               |  |            | (5,640   | )           |  | 1985      |  | 06/19/00 |  |  | 40 | 
|27 |  |                         | 2,006   |              |              |   | 19,207    |          |             |   | 21,213       |               |  |            | (2,585   | )           |  | 1987      |  | 12/19/97 |  |  | 40 | 
|28 |  |                         | 5,944   |              |              |   | 56,049    |          |             |   | 61,993       |               |  |            | (7,296   | )           |  | 1985-1986 |  | 12/19/97 |  |  | 40 | 
|29 |  |                         | 2,383   |              |              |   | 21,510    |          |             |   | 23,893       |               |  |            | (2,717   | )           |  | 1987      |  | 12/19/97 |  |  | 40 | 
|30 |  |                         | 24,000  |              |              |   | 89,622    |          |             |   | 113,622      |               |  |            | (8,205   | )           |  | 2000      |  | 12/19/97 |  |  | 40 | 
|31 |  |                         | 14,603  |              |              |   | 6,825     |          |             |   | 21,428       |               |  |            | (420     | )           |  | 1999      |  | 12/19/97 |  |  | 40 | 
|32 |  |                         | 16,513  |              |              |   | 154,376   |          |             |   | 170,889      |               |  |            | (20,166  | )           |  | 1963/1984 |  | 12/19/97 |  |  | 40 | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|   |  |                         | 310,276 |              |              |   | 2,627,681 |          |             |   | 2,937,957    |               |  |            | (297,511 | )           |  |           |  |          |  |  |    | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|33 |  |                         | 10,035  |              |              |   | 93,682    |          |             |   | 103,717      |               |  |            | (12,770  | )           |  | 1980/1990 |  | 12/19/97 |  |  | 40 | 
|34 |  |                         | 15,882  |              |              |   | 161,423   |          |             |   | 177,305      |               |  |            | (28,317  | )           |  | 1992      |  | 07/26/95 |  |  | 40 | 
|35 |  |                         | 11,654  |              |              |   | 111,987   |          |             |   | 123,641      |               |  |            | (15,974  | )           |  | 1985/1996 |  | 12/19/97 |  |  | 40 | 
|36 |  |                         | 12,489  |              |              |   | 119,833   |          |             |   | 132,322      |               |  |            | (17,848  | )           |  | 1974/1990 |  | 06/13/97 |  |  | 40 | 
|37 |  |                         | 12,771  |              |              |   | 121,260   |          |             |   | 134,031      |               |  |            | (16,979  | )           |  | 1929/1996 |  | 12/19/97 |  |  | 40 | 
|38 |  |                         | 9,830   |              |              |   | 92,540    |          |             |   | 102,370      |               |  |            | (13,031  | )           |  | 1991      |  | 12/31/92 |  |  | 40 | 
|39 |  |                         | 13,435  |              |              |   | 127,960   |          |             |   | 141,395      |               |  |            | (16,830  | )           |  | 1980-1982 |  | 12/19/97 |  |  | 40 | 
|40 |  |                         | 17,403  |              |              |   | 163,050   |          |             |   | 180,453      |               |  |            | (23,367  | )           |  | 1985      |  | 09/04/96 |  |  | 40 | 
|41 |  |                         | 3,019   |              |              |   | 29,727    |          |             |   | 32,746       |               |  |            | (4,703   | )           |  | 1987      |  | 06/14/90 |  |  | 40 | 
|42 |  |                         | 1,059   |              |              |   | 11,363    |          |             |   | 12,422       |               |  |            | (1,678   | )           |  | 1984      |  | 11/12/93 |  |  | 40 | 
|43 |  |                         | 20,100  |              |              |   | 118,151   |          |             |   | 138,251      |               |  |            | (7,793   | )           |  | 1986/1990 |  | 06/19/00 |  |  | 40 | 
|44 |  |                         | 1,387   |              |              |   | 12,945    |          |             |   | 14,332       |               |  |            | (2,003   | )           |  | 1986      |  | 11/12/93 |  |  | 40 | 
|45 |  |                         | 11,215  |              |              |   | 100,727   |          |             |   | 111,942      |               |  |            | (14,000  | )           |  | 1986      |  | 12/19/97 |  |  | 40 | 
|46 |  |                         | 4,882   |              |              |   | 45,441    |          |             |   | 50,323       |               |  |            | (6,357   | )           |  | 1984      |  | 12/19/97 |  |  | 40 | 
|47 |  |                         | 7,350   |              |              |   | 43,597    |          |             |   | 50,947       |               |  |            | (3,033   | )           |  | 1986      |  | 06/19/00 |  |  | 40 | 



---



##### 



|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|-- |  | -------------------------------- |  | ----- | -------- | - | -------- | ---------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------- |  | ------- | ------------ |  |  | --- |  |  |  | ------ | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |  
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           | Costs Capitalized |              
|   |  |                                  |  |       |          |   |          |                  |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|   |  |                                  |  |       |          |   |          |                  |         |              |    | Equity Office   |           |                   | Acquisition   |  
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |  
|   |  |                                  |  |       |          |   |          |                  |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |        
|   |  | Description                      |  | Notes |          |   | Location |                  | State   |              |    | at 12/31/02     |           |                   | Land          |   |     | Improvements |        |              | Land    |  |         | Improvements | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|48 |  | Oakbrook Terrace Tower           |  |       | (3)      |   |          | Oakbrook Terrace |         |              | IL |                 |           |                   |              |   |     |              | 11,950 |              |         |  | 107,552 |              |  |  | 486 |  |  |  | 7,042  | 
|49 |  | Westbrook Corporate Center       |  |       |          |   |          | Westchester      |         |              | IL |                 |           |                   | (100,494      | ) |     |              | 24,875 |              |         |  | 223,874 |              |  |  | 30  |  |  |  | 13,517 | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|   |  | Chicago Region Totals            |  |       | (261,733 | ) |          |                  | 188,934 |              |    |                 | 1,609,557 |                   |               |   | 918 |              |        |              | 96,114  | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |    
|   |  | Denver Region                    |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|50 |  | Northland Plaza                  |  |       |          |   |          | Bloomington      |         |              | MN |                 |           |                   |              |   |     |              | 4,705  |              |         |  | 42,346  |              |  |  |    |  |  |  | 2,239  | 
|51 |  | Metropoint II                    |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 1,777  |              |         |  | 17,865  |              |  |  |    |  |  |  | 3,207  | 
|52 |  | 410 17th Street                  |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 4,474  |              |         |  | 40,264  |              |  |  |    |  |  |  | 3,841  | 
|53 |  | 4949 South Syracuse              |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 822    |              |         |  | 7,401   |              |  |  | 22  |  |  |  | 1,022  | 
|54 |  | Denver Corporate Center II & III |  |       | (3)      |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 4,059  |              |         |  | 36,534  |              |  |  | 3   |  |  |  | 4,740  | 
|55 |  | Denver Post Tower                |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              |       |              |         |  | 52,937  |              |  |  |    |  |  |  | 6,335  | 
|56 |  | Dominion Plaza                   |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 5,990  |              |         |  | 53,911  |              |  |  |    |  |  |  | 5,834  | 
|57 |  | Metropoint                       |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 4,375  |              |         |  | 39,375  |              |  |  |    |  |  |  | 3,175  | 
|58 |  | Tabor Center                     |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 12,948 |              |         |  | 116,536 |              |  |  |    |  |  |  | 33,070 | 
|59 |  | Trinity Place                    |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 1,898  |              |         |  | 17,085  |              |  |  |    |  |  |  | 2,099  | 
|60 |  | Millennium Plaza                 |  |       |          |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 4,257  |              |         |  | 38,314  |              |  |  |    |  |  |  | 193    | 
|61 |  | Terrace Building                 |  |       |          |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 1,546  |              |         |  | 13,865  |              |  |  | 29  |  |  |  | 859    | 
|62 |  | The Quadrant                     |  |       | (3)      |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 4,357  |              |         |  | 39,215  |              |  |  |    |  |  |  | 3,069  | 
|63 |  | The Solarium                     |  |       |          |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 1,951  |              |         |  | 17,560  |              |  |  |    |  |  |  | 1,738  | 
|64 |  | Wells Fargo Center               |  |       |          |   |          | Minneapolis      |         |              | MN |                 |           |                   | (112,493      | ) |     |              | 39,045 |              |         |  | 221,255 |              |  |  |    |  |  |  | 502    | 
|65 |  | US Bancorp Center                |  |       |          |   |          | Minneapolis      |         |              | MN |                 |           |                   |              |   |     |              | 17,269 |              |         |  | 99,018  |              |  |  |    |  |  |  | 22,512 | 
|66 |  | LaSalle Plaza                    |  |       |          |   |          | Minneapolis      |         |              | MN |                 |           |                   |              |   |     |              | 9,681  |              |         |  | 87,127  |              |  |  |    |  |  |  | 3,233  | 
|67 |  | U.S. West Dex Center             |  |       |          |   |          | Salt Lake City   |         |              | UT |                 |           |                   |              |   |     |              | 1,725  |              |         |  | 9,775   |              |  |  | 49  |  |  |  | 306    | 
|68 |  | 49 East Thomas Road              |  |       | (3)      |   |          | Phoenix          |         |              | AZ |                 |           |                   |              |   |     |              | 65     |              |         |  | 588     |              |  |  |    |  |  |  | 35     | 
|69 |  | One Phoenix Plaza                |  |       | (3)      |   |          | Phoenix          |         |              | AZ |                 |           |                   |              |   |     |              | 6,192  |              |         |  | 55,727  |              |  |  |    |  |  |  |       | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|   |  | Denver Region Totals             |  |       | (112,493 | ) |          |                  | 127,136 |              |    |                 | 1,006,698 |                   |               |   | 103 |              |        |              | 98,009  | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |    
|   |  | Houston Region                   |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|70 |  | One American Center              |  |       | (3)      |   |          | Austin           |         |              | TX |                 |           |                   |              |   |     |              |       |              |         |  | 70,812  |              |  |  |    |  |  |  | 8,045  | 
|71 |  | One Congress Plaza               |  |       | (3)      |   |          | Austin           |         |              | TX |                 |           |                   |              |   |     |              | 6,502  |              |         |  | 58,521  |              |  |  |    |  |  |  | 3,933  | 
|72 |  | San Jacinto Center               |  |       | (3)      |   |          | Austin           |         |              | TX |                 |           |                   |              |   |     |              | 5,075  |              |         |  | 45,671  |              |  |  |    |  |  |  | 4,370  | 
|73 |  | 9400 NCX                         |  |       | (3)      |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 3,570  |              |         |  | 32,130  |              |  |  |    |  |  |  | 5,294  | 
|74 |  | Colonnade I & II                 |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 9,044  |              |         |  | 81,394  |              |  |  |    |  |  |  | 6,291  | 
|75 |  | Colonnade III                    |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 6,152  |              |         |  | 56,634  |              |  |  |    |  |  |  | 5,549  | 
|76 |  | Eighty Eighty Central            |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 3,760  |              |         |  | 33,854  |              |  |  |    |  |  |  | 3,541  | 
|77 |  | Four Forest Plaza                |  |       | (3)      |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 4,768  |              |         |  | 42,911  |              |  |  |    |  |  |  | 5,872  | 
|78 |  | Lakeside Square                  |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 5,262  |              |         |  | 47,369  |              |  |  | 24  |  |  |  | 4,375  | 
|79 |  | North Central Plaza Three        |  |       | (3)      |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 3,612  |              |         |  | 32,689  |              |  |  |    |  |  |  | 4,050  | 
|80 |  | Summit Office Park               |  |       | (3)      |   |          | Ft. Worth        |         |              | TX |                 |           |                   |              |   |     |              | 1,421  |              |         |  | 12,790  |              |  |  |    |  |  |  | 2,496  | 
|81 |  | 2500 CityWest                    |  |       |          |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 8,089  |              |         |  | 72,811  |              |  |  |    |  |  |  | 3,272  | 
|82 |  | Brookhollow Central              |  |       |          |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 7,226  |              |         |  | 65,053  |              |  |  |    |  |  |  | 8,155  | 
|83 |  | Intercontinental Center          |  |       | (3)      |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 1,602  |              |         |  | 14,420  |              |  |  | 70  |  |  |  | 2,033  | 
|84 |  | Northborough Tower               |  |       | (3)      |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 1,355  |              |         |  | 12,199  |              |  |  | 37  |  |  |  | 2,067  | 
|85 |  | San Felipe Plaza                 |  |       | (3)      |   |          | Houston          |         |              | TX |                 |           |                   | (49,500       | ) |     |              | 13,471 |              |         |  | 117,984 |              |  |  | 20  |  |  |  | 9,200  | 
|86 |  | 909 E. Las Colinas Boulevard     |  |       |          |   |          | Irving           |         |              | TX |                 |           |                   |              |   |     |              | 5,129  |              |         |  | 46,164  |              |  |  | 13  |  |  |  | 980    | 
|87 |  | 545 E. John Carpenter Freeway    |  |       |          |   |          | Irving           |         |              | TX |                 |           |                   |              |   |     |              | 5,525  |              |         |  | 49,728  |              |  |  |    |  |  |  | 1,596  | 
|88 |  | One Lakeway Center               |  |       | (3)      |   |          | Metairie         |         |              | LA |                 |           |                   |              |   |     |              | 2,804  |              |         |  | 25,235  |              |  |  |    |  |  |  | 3,813  | 
|89 |  | Three Lakeway Center             |  |       | (3)      |   |          | Metairie         |         |              | LA |                 |           |                   |              |   |     |              | 4,695  |              |         |  | 43,661  |              |  |  | 59  |  |  |  | 3,138  | 
|90 |  | Two Lakeway Center               |  |       | (3)      |   |          | Metairie         |         |              | LA |                 |           |                   |              |   |     |              | 4,644  |              |         |  | 41,792  |              |  |  | 49  |  |  |  | 3,698  | 
|91 |  | 601 Tchoupitoulas Garage         |  |       | (7)      |   |          | New Orleans      |         |              | LA |                 |           |                   |              |   |     |              | 1,180  |              |         |  | 10,620  |              |  |  |    |  |  |  | 298    | 
|92 |  | LL&E Tower                       |  |       | (7)      |   |          | New Orleans      |         |              | LA |                 |           |                   | (37,500       | ) |     |              | 6,186  |              |         |  | 55,672  |              |  |  | 46  |  |  |  | 7,507  | 
|93 |  | Texaco Center                    |  |       | (7)      |   |          | New Orleans      |         |              | LA |                 |           |                   | (42,500       | ) |     |              | 6,686  |              |         |  | 60,177  |              |  |  | 10  |  |  |  | 4,166  | 
|94 |  | Colonnade I                      |  |       | (3)      |   |          | San Antonio      |         |              | TX |                 |           |                   |              |   |     |              | 1,414  |              |         |  | 12,725  |              |  |  | 81  |  |  |  | 1,826  | 
|95 |  | Northwest Center                 |  |       | (3)      |   |          | San Antonio      |         |              | TX |                 |           |                   |              |   |     |              | 1,948  |              |         |  | 17,532  |              |  |  |    |  |  |  | 1,978  | 
|96 |  | Union Square                     |  |       | (3)      |   |          | San Antonio      |         |              | TX |                 |           |                   |              |   |     |              | 1,582  |              |         |  | 14,236  |              |  |  | 9   |  |  |  | 2,799  | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|   |  | Houston Region Totals            |  |       | (129,500 | ) |          |                  | 122,702 |              |    |                 | 1,174,784 |                   |               |   | 418 |              |        |              | 110,342 | 
|   |  |                                  |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |    

[Additional columns below]

[Continued from above table, first column(s) repeated]

|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  |  |          |  |  |    | 
|-- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | ---------------- |  | -------- |  |  | -- | 
|   |  |                         |         |              |              |  |           |          |             |  |              |              
|   |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|   |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|   |  | 12/31/2002              |         |              |              |  |           |          |             |  |              |               | 
|   |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|   |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|   |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)         | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|48 |  |                         | 12,436  |              |              |  | 114,594   |          |             |  | 127,030      |               |  |            | (17,160  | )           |  | 1988             |  | 04/16/97 |  |  | 40 | 
|  
|49 |  |                         | 24,905  |              |              |  | 237,391   |          |             |  | 262,296      |               |  |            | (31,909  | )           |  | 1985/1996        |  | 12/19/97 |  |  | 40 | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|   |  |                         | 189,852 |              |              |  | 1,705,671 |          |             |  | 1,895,523    |               |  |            | (233,752 | )           |  |                  |  |          |  |  |    | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|50 |  |                         | 4,705   |              |              |  | 44,585    |          |             |  | 49,290       |               |  |            | (5,545   | )           |  | 1985             |  | 07/02/98 |  |  | 40 | 
|51 |  |                         | 1,777   |              |              |  | 21,072    |          |             |  | 22,849       |               |  |            | (2,817   | )           |  | 1999             |  | 04/10/00 |  |  | 40 | 
|52 |  |                         | 4,474   |              |              |  | 44,105    |          |             |  | 48,579       |               |  |            | (6,127   | )           |  | 1978             |  | 04/30/98 |  |  | 40 | 
|53 |  |                         | 844     |              |              |  | 8,423     |          |             |  | 9,267        |               |  |            | (1,029   | )           |  | 1982             |  | 07/15/98 |  |  | 40 | 
|  
|54 |  |                         | 4,062   |              |              |  | 41,274    |          |             |  | 45,336       |               |  |            | (5,776   | )           |  | 1981/1993-1997   |  | 12/20/90 |  |  | 40 | 
|  
|55 |  |                         |        |              |              |  | 59,272    |          |             |  | 59,272       |               |  |            | (8,341   | )           |  | 1984             |  | 04/21/98 |  |  | 40 | 
|  
|56 |  |                         | 5,990   |              |              |  | 59,745    |          |             |  | 65,735       |               |  |            | (8,430   | )           |  | 1983             |  | 05/14/98 |  |  | 40 | 
|57 |  |                         | 4,375   |              |              |  | 42,550    |          |             |  | 46,925       |               |  |            | (4,985   | )           |  | 1987             |  | 07/15/98 |  |  | 40 | 
|58 |  |                         | 12,948  |              |              |  | 149,606   |          |             |  | 162,554      |               |  |            | (15,898  | )           |  | 1985             |  | 04/30/98 |  |  | 40 | 
|59 |  |                         | 1,898   |              |              |  | 19,184    |          |             |  | 21,082       |               |  |            | (2,694   | )           |  | 1983             |  | 04/30/98 |  |  | 40 | 
|60 |  |                         | 4,257   |              |              |  | 38,507    |          |             |  | 42,764       |               |  |            | (4,468   | )           |  | 1982             |  | 05/19/98 |  |  | 40 | 
|  
|61 |  |                         | 1,575   |              |              |  | 14,724    |          |             |  | 16,299       |               |  |            | (1,856   | )           |  | 1982             |  | 07/15/98 |  |  | 40 | 
|  
|62 |  |                         | 4,357   |              |              |  | 42,284    |          |             |  | 46,641       |               |  |            | (6,565   | )           |  | 1985             |  | 12/01/92 |  |  | 40 | 
|63 |  |                         | 1,951   |              |              |  | 19,298    |          |             |  | 21,249       |               |  |            | (2,469   | )           |  | 1982             |  | 07/15/98 |  |  | 40 | 
|64 |  |                         | 39,045  |              |              |  | 221,757   |          |             |  | 260,802      |               |  |            | (14,098  | )           |  | 1988             |  | 06/19/00 |  |  | 40 | 
|  
|65 |  |                         | 17,269  |              |              |  | 121,530   |          |             |  | 138,799      |               |  |            | (8,308   | )           |  | 2000             |  | 06/19/00 |  |  | 40 | 
|  
|66 |  |                         | 9,681   |              |              |  | 90,360    |          |             |  | 100,041      |               |  |            | (12,445  | )           |  | 1991             |  | 11/25/97 |  |  | 40 | 
|67 |  |                         | 1,774   |              |              |  | 10,081    |          |             |  | 11,855       |               |  |            | (718     | )           |  | 1985             |  | 06/19/00 |  |  | 40 | 
|  
|68 |  |                         | 65      |              |              |  | 623       |          |             |  | 688          |               |  |            | (90      | )           |  | 1974/1993        |  | 12/11/96 |  |  | 40 | 
|  
|69 |  |                         | 6,192   |              |              |  | 55,727    |          |             |  | 61,919       |               |  |            | (7,602   | )           |  | 1989             |  | 12/04/96 |  |  | 40 | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|   |  |                         | 127,239 |              |              |  | 1,104,707 |          |             |  | 1,231,946    |               |  |            | (120,261 | )           |  |                  |  |          |  |  |    | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|70 |  |                         |        |              |              |  | 78,857    |          |             |  | 78,857       |               |  |            | (11,791  | )           |  | 1984             |  | 11/01/95 |  |  | 40 | 
|  
|71 |  |                         | 6,502   |              |              |  | 62,454    |          |             |  | 68,956       |               |  |            | (9,882   | )           |  | 1987             |  | 11/12/93 |  |  | 40 | 
|  
|72 |  |                         | 5,075   |              |              |  | 50,041    |          |             |  | 55,116       |               |  |            | (7,530   | )           |  | 1987             |  | 12/13/91 |  |  | 40 | 
|  
|73 |  |                         | 3,570   |              |              |  | 37,424    |          |             |  | 40,994       |               |  |            | (6,581   | )           |  | 1981/1995        |  | 06/24/94 |  |  | 40 | 
|74 |  |                         | 9,044   |              |              |  | 87,685    |          |             |  | 96,729       |               |  |            | (10,792  | )           |  | 1983-1985        |  | 09/30/98 |  |  | 40 | 
|  
|75 |  |                         | 6,152   |              |              |  | 62,183    |          |             |  | 68,335       |               |  |            | (7,352   | )           |  | 1998             |  | 09/30/98 |  |  | 40 | 
|76 |  |                         | 3,760   |              |              |  | 37,395    |          |             |  | 41,155       |               |  |            | (5,348   | )           |  | 1984             |  | 10/01/97 |  |  | 40 | 
|  
|77 |  |                         | 4,768   |              |              |  | 48,783    |          |             |  | 53,551       |               |  |            | (7,267   | )           |  | 1985             |  | 06/29/89 |  |  | 40 | 
|  
|78 |  |                         | 5,286   |              |              |  | 51,744    |          |             |  | 57,030       |               |  |            | (7,470   | )           |  | 1987             |  | 11/24/97 |  |  | 40 | 
|79 |  |                         | 3,612   |              |              |  | 36,739    |          |             |  | 40,351       |               |  |            | (5,522   | )           |  | 1986/1994        |  | 04/21/92 |  |  | 40 | 
|  
|80 |  |                         | 1,421   |              |              |  | 15,286    |          |             |  | 16,707       |               |  |            | (2,588   | )           |  | 1974/1993        |  | 03/01/89 |  |  | 40 | 
|  
|81 |  |                         | 8,089   |              |              |  | 76,083    |          |             |  | 84,172       |               |  |            | (10,498  | )           |  | 1983             |  | 10/01/97 |  |  | 40 | 
|82 |  |                         | 7,226   |              |              |  | 73,208    |          |             |  | 80,434       |               |  |            | (10,960  | )           |  | 1979, 1981, 1995 |  | 10/01/97 |  |  | 40 | 
|  
|83 |  |                         | 1,672   |              |              |  | 16,453    |          |             |  | 18,125       |               |  |            | (2,607   | )           |  | 1983/1991        |  | 06/28/89 |  |  | 40 | 
|  
|84 |  |                         | 1,392   |              |              |  | 14,266    |          |             |  | 15,658       |               |  |            | (2,277   | )           |  | 1983/1990        |  | 08/03/89 |  |  | 40 | 
|  
|85 |  |                         | 13,491  |              |              |  | 127,184   |          |             |  | 140,675      |               |  |            | (19,783  | )           |  | 1984             |  | 09/29/87 |  |  | 40 | 
|  
|86 |  |                         | 5,142   |              |              |  | 47,144    |          |             |  | 52,286       |               |  |            | (4,710   | )           |  | 1988             |  | 01/07/99 |  |  | 40 | 
|  
|87 |  |                         | 5,525   |              |              |  | 51,324    |          |             |  | 56,849       |               |  |            | (5,284   | )           |  | 1985             |  | 01/07/99 |  |  | 40 | 
|  
|88 |  |                         | 2,804   |              |              |  | 29,048    |          |             |  | 31,852       |               |  |            | (4,751   | )           |  | 1981/1996        |  | 11/12/93 |  |  | 40 | 
|  
|89 |  |                         | 4,754   |              |              |  | 46,799    |          |             |  | 51,553       |               |  |            | (7,061   | )           |  | 1987/1996        |  | 11/12/93 |  |  | 40 | 
|  
|90 |  |                         | 4,693   |              |              |  | 45,490    |          |             |  | 50,183       |               |  |            | (7,190   | )           |  | 1984/1996        |  | 11/12/93 |  |  | 40 | 
|  
|91 |  |                         | 1,180   |              |              |  | 10,918    |          |             |  | 12,098       |               |  |            | (1,475   | )           |  | 1982             |  | 09/03/97 |  |  | 40 | 
|  
|92 |  |                         | 6,232   |              |              |  | 63,179    |          |             |  | 69,411       |               |  |            | (9,584   | )           |  | 1987             |  | 09/03/97 |  |  | 40 | 
|93 |  |                         | 6,696   |              |              |  | 64,343    |          |             |  | 71,039       |               |  |            | (9,497   | )           |  | 1984             |  | 09/03/97 |  |  | 40 | 
|94 |  |                         | 1,495   |              |              |  | 14,551    |          |             |  | 16,046       |               |  |            | (2,532   | )           |  | 1983             |  | 12/04/96 |  |  | 40 | 
|95 |  |                         | 1,948   |              |              |  | 19,510    |          |             |  | 21,458       |               |  |            | (3,235   | )           |  | 1984/1994        |  | 11/12/93 |  |  | 40 | 
|  
|96 |  |                         | 1,591   |              |              |  | 17,035    |          |             |  | 18,626       |               |  |            | (3,040   | )           |  | 1986             |  | 12/23/92 |  |  | 40 | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|   |  |                         | 123,120 |              |              |  | 1,285,126 |          |             |  | 1,408,246    |               |  |            | (186,607 | )           |  |                  |  |          |  |  |    | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 



---



##### 



|    |  |                                       |  |       |     |  |          |                  |       |              |    |                 |  |                   |               |   |  |              |        |              |      |  |         |              |  |  |     |   |  |  |        |  
|--- |  | ------------------------------------- |  | ----- | --- |  | -------- | ---------------- | ----- | ------------ | -- | --------------- |  | ----------------- | ------------- | - |  | ------------ | ------ | ------------ | ---- |  | ------- | ------------ |  |  | --- | - |  |  | ------ | -
|    |  |                                       |  |       |     |  |          |                  |       |              |    |                 |  |                   |               |  
|    |  |                                       |  |       |     |  |          |                  |       |              |    |                 |  | Costs Capitalized |              
|    |  |                                       |  |       |     |  |          |                  |       |              |    | Initial Cost to |  |                   | Subsequent to |  
|    |  |                                       |  |       |     |  |          |                  |       |              |    | Equity Office   |  |                   | Acquisition   |  
|    |  |                                       |  |       |     |  |          |                  |       |              |    |                 |  |                   |               |  
|    |  |                                       |  |       |     |  |          |                  |       | Encumbrances |    |                 |  |                   | Building and  |   |  |              |        | Building and |     
|    |  | Description                           |  | Notes |     |  | Location |                  | State |              |    | at 12/31/02     |  |                   | Land          |   |  | Improvements |        |              | Land |  |         | Improvements | 
|    |  |                                       |  |       |     |  |          |                  |       |              |    |                 |  |                   |               |   |  |              |        |              |      |  |         |              | 
|    |  | Los Angeles Region                    |  |       |     |  |          |                  |       |              |    |                 |  |                   |               |   |  |              |        |              |      |  |         |              |  |  |     |   |  |  |        |  
|97  |  | Stadium Towers                        |  |       |     |  |          | Anaheim          |       |              | CA |                 |  |                   |              |   |  |              | 6,683  |              |      |  | 37,868  |              |  |  |    |   |  |  | 783    |  
|98  |  | East Hills Office Park                |  |       |     |  |          | Anaheim Hills    |       |              | CA |                 |  |                   |              |   |  |              | 1,202  |              |      |  | 6,812   |              |  |  |    |   |  |  | 130    |  
|99  |  | Brea Corporate Place                  |  |       |     |  |          | Brea             |       |              | CA |                 |  |                   |              |   |  |              |       |              |      |  | 35,129  |              |  |  |    |   |  |  | 878    |  
|100 |  | Brea Corporate Plaza                  |  |       |     |  |          | Brea             |       |              | CA |                 |  |                   |              |   |  |              | 1,902  |              |      |  | 10,776  |              |  |  |    |   |  |  | 532    |  
|101 |  | Brea Financial Commons                |  |       |     |  |          | Brea             |       |              | CA |                 |  |                   |              |   |  |              | 2,640  |              |      |  | 14,960  |              |  |  |    |   |  |  | 216    |  
|102 |  | Brea Park Centre                      |  |       |     |  |          | Brea             |       |              | CA |                 |  |                   |              |   |  |              | 2,682  |              |      |  | 15,198  |              |  |  |    |   |  |  | 1,061  |  
|103 |  | Camino West Corporate Park            |  |       |     |  |          | Carlsbad         |       |              | CA |                 |  |                   |              |   |  |              | 1,030  |              |      |  | 5,835   |              |  |  |    |   |  |  | 2      |  
|104 |  | Carlsbad Airport Plaza                |  |       |     |  |          | Carlsbad         |       |              | CA |                 |  |                   |              |   |  |              | 1,396  |              |      |  | 7,909   |              |  |  |    |   |  |  | 127    |  
|105 |  | La Place Court                        |  |       |     |  |          | Carlsbad         |       |              | CA |                 |  |                   |              |   |  |              | 1,506  |              |      |  | 8,532   |              |  |  |    |   |  |  | 525    |  
|106 |  | Pacific Ridge Corporate Centre        |  |       |     |  |          | Carlsbad         |       |              | CA |                 |  |                   |              |   |  |              | 3,266  |              |      |  | 18,510  |              |  |  |    |   |  |  | 3      |  
|107 |  | Pacific View Plaza                    |  |       |     |  |          | Carlsbad         |       |              | CA |                 |  |                   |              |   |  |              | 1,205  |              |      |  | 6,827   |              |  |  |    |   |  |  | 45     |  
|108 |  | Cerritos Towne Center                 |  |       |     |  |          | Cerritos         |       |              | CA |                 |  |                   |              |   |  |              |       |              |      |  | 60,368  |              |  |  |    |   |  |  | 1,587  |  
|109 |  | Corona Corporate Center               |  |       |     |  |          | Corona           |       |              | CA |                 |  |                   |              |   |  |              | 758    |              |      |  | 4,293   |              |  |  |    |   |  |  | 46     |  
|110 |  | 700 North Brand                       |  |       |     |  |          | Glendale         |       |              | CA |                 |  |                   | (24,528       | ) |  |              | 5,970  |              |      |  | 33,828  |              |  |  |    |   |  |  | 2,028  |  
|111 |  | One Pacific Plaza                     |  |       |     |  |          | Huntington Beach |       |              | CA |                 |  |                   |              |   |  |              | 2,328  |              |      |  | 13,194  |              |  |  |    |   |  |  | 446    |  
|112 |  | 18301 Von Karman (Apple Building)     |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 6,027  |              |      |  | 34,152  |              |  |  |    |   |  |  | 1,449  |  
|113 |  | 18581 Teller                          |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 1,485  |              |      |  | 8,415   |              |  |  |    |   |  |  | 985    |  
|114 |  | 2600 Michelson                        |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 11,291 |              |      |  | 63,984  |              |  |  |    |   |  |  | 1,177  |  
|115 |  | Centerpointe Irvine I, II, & III      |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 1,253  |              |      |  | 7,100   |              |  |  |    |   |  |  | 395    |  
|116 |  | Fairchild Corporate Center            |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 2,363  |              |      |  | 13,388  |              |  |  |    |   |  |  | 269    |  
|117 |  | Inwood Park                           |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 3,543  |              |      |  | 20,079  |              |  |  |    |   |  |  | 108    |  
|118 |  | Tower 17                              |  |       |     |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 7,562  |              |      |  | 42,849  |              |  |  |    |   |  |  | 677    |  
|119 |  | 1920 Main Plaza                       |  |       | (3) |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 5,281  |              |      |  | 47,526  |              |  |  |    |   |  |  | 3,757  |  
|120 |  | 2010 Main Plaza                       |  |       | (3) |  |          | Irvine           |       |              | CA |                 |  |                   |              |   |  |              | 5,197  |              |      |  | 46,774  |              |  |  |    |   |  |  | 2,189  |  
|121 |  | Oakbrook Plaza                        |  |       |     |  |          | Laguna Hills     |       |              | CA |                 |  |                   |              |   |  |              | 2,778  |              |      |  | 15,745  |              |  |  | (21 | ) |  |  | 339    |  
|122 |  | Commerce Park                         |  |       |     |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              |       |              |      |  | 14,700  |              |  |  |    |   |  |  | 818    |  
|123 |  | Sepulveda Center                      |  |       |     |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              | 4,113  |              |      |  | 23,306  |              |  |  |    |   |  |  | 143    |  
|124 |  | The Tower in Westwood                 |  |       |     |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              | 10,041 |              |      |  | 56,899  |              |  |  |    |   |  |  | 606    |  
|125 |  | 10880 Wilshire Boulevard              |  |       |     |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              | 28,009 |              |      |  | 149,841 |              |  |  |    |   |  |  | 8,395  |  
|126 |  | 10960 Wilshire Boulevard              |  |       |     |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              | 16,841 |              |      |  | 151,574 |              |  |  |    |   |  |  | 7,666  |  
|127 |  | 550 South Hope Street                 |  |       |     |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              | 10,016 |              |      |  | 90,146  |              |  |  |    |   |  |  | 8,402  |  
|128 |  | Two California Plaza                  |  |       | (3) |  |          | Los Angeles      |       |              | CA |                 |  |                   |              |   |  |              |       |              |      |  | 156,197 |              |  |  |    |   |  |  | 48,402 |  
|129 |  | Marina Business Center Bldg 1-4       |  |       |     |  |          | Marina Del Rey   |       |              | CA |                 |  |                   |              |   |  |              | 7,890  |              |      |  | 44,710  |              |  |  |    |   |  |  | 329    |  
|130 |  | 1201 Dove Street                      |  |       |     |  |          | Newport Beach    |       |              | CA |                 |  |                   |              |   |  |              | 1,998  |              |      |  | 11,320  |              |  |  | (12 | ) |  |  | 109    |  
|131 |  | Ontario Corporate Center              |  |       |     |  |          | Ontario          |       |              | CA |                 |  |                   |              |   |  |              | 1,383  |              |      |  | 7,839   |              |  |  |    |   |  |  | 115    |  
|132 |  | Ontario Gateway I                     |  |       |     |  |          | Ontario          |       |              | CA |                 |  |                   |              |   |  |              | 830    |              |      |  | 4,703   |              |  |  |    |   |  |  | 340    |  
|133 |  | The City- 3800 Chapman                |  |       |     |  |          | Orange           |       |              | CA |                 |  |                   |              |   |  |              | 3,019  |              |      |  | 17,107  |              |  |  |    |   |  |  | 239    |  
|134 |  | 500 Orange Tower                      |  |       |     |  |          | Orange           |       |              | CA |                 |  |                   |              |   |  |              | 12,944 |              |      |  | 28,913  |              |  |  |    |   |  |  | 5,884  |  
|135 |  | 500-600 City Parkway                  |  |       |     |  |          | Orange           |       |              | CA |                 |  |                   |              |   |  |              | 7,296  |              |      |  | 41,342  |              |  |  |    |   |  |  | 12,329 |  
|136 |  | City Plaza                            |  |       |     |  |          | Orange           |       |              | CA |                 |  |                   |              |   |  |              | 6,809  |              |      |  | 38,584  |              |  |  |    |   |  |  | 2,277  |  
|137 |  | City Tower                            |  |       |     |  |          | Orange           |       |              | CA |                 |  |                   |              |   |  |              | 10,440 |              |      |  | 59,160  |              |  |  |    |   |  |  | 737    |  
|138 |  | 1100 Executive Tower                  |  |       | (3) |  |          | Orange           |       |              | CA |                 |  |                   |              |   |  |              | 4,622  |              |      |  | 41,599  |              |  |  |    |   |  |  | 1,708  |  
|139 |  | 3280 E. Foothill Boulevard            |  |       |     |  |          | Pasadena         |       |              | CA |                 |  |                   |              |   |  |              | 3,396  |              |      |  | 19,246  |              |  |  |    |   |  |  | 456    |  
|140 |  | 790 Colorado                          |  |       |     |  |          | Pasadena         |       |              | CA |                 |  |                   |              |   |  |              | 2,355  |              |      |  | 13,343  |              |  |  |    |   |  |  | 779    |  
|141 |  | Century Square                        |  |       |     |  |          | Pasadena         |       |              | CA |                 |  |                   |              |   |  |              | 6,787  |              |      |  | 38,457  |              |  |  |    |   |  |  | (55    | )
|142 |  | Pasadena Financial Center             |  |       |     |  |          | Pasadena         |       |              | CA |                 |  |                   |              |   |  |              | 4,779  |              |      |  | 27,084  |              |  |  |    |   |  |  | 282    |  
|143 |  | Regional Office Center III            |  |       |     |  |          | Redlands         |       |              | CA |                 |  |                   |              |   |  |              | 730    |              |      |  | 4,136   |              |  |  |    |   |  |  | 102    |  
|144 |  | Bridge Pointe Corporate Centre I & II |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   |              |   |  |              | 13,058 |              |      |  | 73,997  |              |  |  |    |   |  |  | 5      |  
|145 |  | Centerside II                         |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   | (22,337       | ) |  |              | 5,777  |              |      |  | 32,737  |              |  |  |    |   |  |  | 761    |  
|146 |  | La Jolla Centre I & II                |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   |              |   |  |              | 12,904 |              |      |  | 73,122  |              |  |  |    |   |  |  | 809    |  
|147 |  | Nobel Corporate Plaza                 |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   |              |   |  |              | 3,697  |              |      |  | 20,948  |              |  |  |    |   |  |  | 644    |  
|148 |  | One Pacific Heights                   |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   |              |   |  |              | 3,072  |              |      |  | 17,408  |              |  |  |    |   |  |  | 259    |  
|149 |  | Pacific Corporate Plaza               |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   |              |   |  |              | 2,100  |              |      |  | 11,900  |              |  |  |    |   |  |  |       |  
|150 |  | Park Plaza                            |  |       |     |  |          | San Diego        |       |              | CA |                 |  |                   |              |   |  |              | 2,203  |              |      |  | 12,484  |              |  |  |    |   |  |  | 88     |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|    |  |                         |        |              |              |  |         |          |             |  |              |               |  |            |         |             |  |                  |  |          |  |  |    | 
|--- |  | ----------------------- | ------ | ------------ | ------------ |  | ------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | ------- | ----------- |  | ---------------- |  | -------- |  |  | -- | 
|    |  |                         |        |              |              |  |         |          |             |  |              |              
|    |  | Gross Amount Carried at |        |              |              |  |         |          |             |  |              |               | 
|    |  | Close of Period         |        |              |              |  |         |          |             |  |              |               | 
|    |  | 12/31/2002              |        |              |              |  |         |          |             |  |              |               | 
|    |  |                         |        |              |              |  |         |          | Date of     |  |              |               | 
|    |  |                         |        | Building and |              |  |         |          | Accumulated |  |              | Construction/ |  | Date       |         | Depreciable | 
|    |  | Land                    |        |              | Improvements |  |         | Total(1) |             |  | Depreciation |               |  | Renovation |         | Acquired    |  | Lives(2)         | 
|    |  |                         |        |              |              |  |         |          |             |  |              |               |  |            |         |             |  |                  | 
|   
|97  |  |                         | 6,683  |              |              |  | 38,651  |          |             |  | 45,334       |               |  |            | (1,471  | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|98  |  |                         | 1,202  |              |              |  | 6,942   |          |             |  | 8,144        |               |  |            | (266    | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|   
|99  |  |                         |       |              |              |  | 36,007  |          |             |  | 36,007       |               |  |            | (1,338  | )           |  | 1987             |  | 07/02/01 |  |  | 40 | 
|   
|100 |  |                         | 1,902  |              |              |  | 11,308  |          |             |  | 13,210       |               |  |            | (471    | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 
|   
|101 |  |                         | 2,640  |              |              |  | 15,176  |          |             |  | 17,816       |               |  |            | (597    | )           |  | 1982/1989        |  | 07/02/01 |  |  | 40 | 
|   
|102 |  |                         | 2,682  |              |              |  | 16,259  |          |             |  | 18,941       |               |  |            | (659    | )           |  | 1979-1982,1990   |  | 07/02/01 |  |  | 40 | 
|   
|103 |  |                         | 1,030  |              |              |  | 5,837   |          |             |  | 6,867        |               |  |            | (213    | )           |  | 1991             |  | 07/02/01 |  |  | 40 | 
|   
|104 |  |                         | 1,396  |              |              |  | 8,036   |          |             |  | 9,432        |               |  |            | (318    | )           |  | 1987             |  | 07/02/01 |  |  | 40 | 
|   
|105 |  |                         | 1,506  |              |              |  | 9,057   |          |             |  | 10,563       |               |  |            | (369    | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|106 |  |                         | 3,266  |              |              |  | 18,513  |          |             |  | 21,779       |               |  |            | (675    | )           |  | 1999             |  | 07/02/01 |  |  | 40 | 
|   
|107 |  |                         | 1,205  |              |              |  | 6,872   |          |             |  | 8,077        |               |  |            | (256    | )           |  | 1986             |  | 07/02/01 |  |  | 40 | 
|   
|108 |  |                         |       |              |              |  | 61,955  |          |             |  | 61,955       |               |  |            | (2,238  | )           |  | 1989/1998        |  | 07/02/01 |  |  | 40 | 
|   
|109 |  |                         | 758    |              |              |  | 4,339   |          |             |  | 5,097        |               |  |            | (163    | )           |  | 1990             |  | 07/02/01 |  |  | 40 | 
|   
|110 |  |                         | 5,970  |              |              |  | 35,856  |          |             |  | 41,826       |               |  |            | (2,555  | )           |  | 1981             |  | 06/19/00 |  |  | 40 | 
|111 |  |                         | 2,328  |              |              |  | 13,640  |          |             |  | 15,968       |               |  |            | (520    | )           |  | 1982/1987        |  | 07/02/01 |  |  | 40 | 
|   
|112 |  |                         | 6,027  |              |              |  | 35,601  |          |             |  | 41,628       |               |  |            | (2,454  | )           |  | 1991             |  | 06/19/00 |  |  | 40 | 
|   
|113 |  |                         | 1,485  |              |              |  | 9,400   |          |             |  | 10,885       |               |  |            | (342    | )           |  | 1983             |  | 07/02/01 |  |  | 40 | 
|114 |  |                         | 11,291 |              |              |  | 65,161  |          |             |  | 76,452       |               |  |            | (2,427  | )           |  | 1986             |  | 07/02/01 |  |  | 40 | 
|115 |  |                         | 1,253  |              |              |  | 7,495   |          |             |  | 8,748        |               |  |            | (333    | )           |  | 1979-1980,1994   |  | 07/02/01 |  |  | 40 | 
|   
|116 |  |                         | 2,363  |              |              |  | 13,657  |          |             |  | 16,020       |               |  |            | (523    | )           |  | 1979             |  | 07/02/01 |  |  | 40 | 
|   
|117 |  |                         | 3,543  |              |              |  | 20,187  |          |             |  | 23,730       |               |  |            | (752    | )           |  | 1985/1996        |  | 07/02/01 |  |  | 40 | 
|118 |  |                         | 7,562  |              |              |  | 43,526  |          |             |  | 51,088       |               |  |            | (1,618  | )           |  | 1987             |  | 07/02/01 |  |  | 40 | 
|119 |  |                         | 5,281  |              |              |  | 51,283  |          |             |  | 56,564       |               |  |            | (8,341  | )           |  | 1988             |  | 09/29/94 |  |  | 40 | 
|120 |  |                         | 5,197  |              |              |  | 48,963  |          |             |  | 54,160       |               |  |            | (7,135  | )           |  | 1988             |  | 12/13/94 |  |  | 40 | 
|121 |  |                         | 2,757  |              |              |  | 16,084  |          |             |  | 18,841       |               |  |            | (583    | )           |  | 1984             |  | 07/02/01 |  |  | 40 | 
|122 |  |                         |       |              |              |  | 15,518  |          |             |  | 15,518       |               |  |            | (1,068  | )           |  | 1977             |  | 06/19/00 |  |  | 40 | 
|123 |  |                         | 4,113  |              |              |  | 23,449  |          |             |  | 27,562       |               |  |            | (866    | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 
|   
|124 |  |                         | 10,041 |              |              |  | 57,505  |          |             |  | 67,546       |               |  |            | (2,128  | )           |  | 1989             |  | 07/02/01 |  |  | 40 | 
|   
|125 |  |                         | 28,009 |              |              |  | 158,236 |          |             |  | 186,245      |               |  |            | (21,165 | )           |  | 1970/1992        |  | 12/19/97 |  |  | 40 | 
|   
|126 |  |                         | 16,841 |              |              |  | 159,240 |          |             |  | 176,081      |               |  |            | (22,414 | )           |  | 1971/1992        |  | 12/19/97 |  |  | 40 | 
|   
|127 |  |                         | 10,016 |              |              |  | 98,548  |          |             |  | 108,564      |               |  |            | (13,207 | )           |  | 1991             |  | 10/06/97 |  |  | 40 | 
|   
|128 |  |                         |       |              |              |  | 204,599 |          |             |  | 204,599      |               |  |            | (39,071 | )           |  | 1992             |  | 08/23/96 |  |  | 40 | 
|   
|129 |  |                         | 7,890  |              |              |  | 45,039  |          |             |  | 52,929       |               |  |            | (1,639  | )           |  | 1982-1984,1998   |  | 07/02/01 |  |  | 40 | 
|   
|130 |  |                         | 1,986  |              |              |  | 11,429  |          |             |  | 13,415       |               |  |            | (423    | )           |  | 1975/1989        |  | 07/02/01 |  |  | 40 | 
|   
|131 |  |                         | 1,383  |              |              |  | 7,954   |          |             |  | 9,337        |               |  |            | (300    | )           |  | 1989             |  | 07/02/01 |  |  | 40 | 
|   
|132 |  |                         | 830    |              |              |  | 5,043   |          |             |  | 5,873        |               |  |            | (178    | )           |  | 1984             |  | 07/02/01 |  |  | 40 | 
|   
|133 |  |                         | 3,019  |              |              |  | 17,346  |          |             |  | 20,365       |               |  |            | (634    | )           |  | 1984             |  | 07/02/01 |  |  | 40 | 
|   
|134 |  |                         | 12,944 |              |              |  | 34,797  |          |             |  | 47,741       |               |  |            | (5,039  | )           |  | 1988             |  | 01/01/01 |  |  | 40 | 
|   
|135 |  |                         | 7,296  |              |              |  | 53,671  |          |             |  | 60,967       |               |  |            | (1,653  | )           |  | 1974, 1978, 1998 |  | 07/02/01 |  |  | 40 | 
|   
|136 |  |                         | 6,809  |              |              |  | 40,861  |          |             |  | 47,670       |               |  |            | (1,469  | )           |  | 1970             |  | 07/02/01 |  |  | 40 | 
|137 |  |                         | 10,440 |              |              |  | 59,897  |          |             |  | 70,337       |               |  |            | (2,244  | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|138 |  |                         | 4,622  |              |              |  | 43,307  |          |             |  | 47,929       |               |  |            | (6,401  | )           |  | 1987             |  | 12/15/94 |  |  | 40 | 
|   
|139 |  |                         | 3,396  |              |              |  | 19,702  |          |             |  | 23,098       |               |  |            | (742    | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 
|   
|140 |  |                         | 2,355  |              |              |  | 14,122  |          |             |  | 16,477       |               |  |            | (525    | )           |  | 1981             |  | 07/02/01 |  |  | 40 | 
|141 |  |                         | 6,787  |              |              |  | 38,402  |          |             |  | 45,189       |               |  |            | (1,402  | )           |  | 1984             |  | 07/02/01 |  |  | 40 | 
|142 |  |                         | 4,779  |              |              |  | 27,366  |          |             |  | 32,145       |               |  |            | (1,055  | )           |  | 1984/1996        |  | 07/02/01 |  |  | 40 | 
|   
|143 |  |                         | 730    |              |              |  | 4,238   |          |             |  | 4,968        |               |  |            | (179    | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|   
|144 |  |                         | 13,058 |              |              |  | 74,002  |          |             |  | 87,060       |               |  |            | (2,698  | )           |  | 1998-2000        |  | 07/02/01 |  |  | 40 | 
|   
|145 |  |                         | 5,777  |              |              |  | 33,498  |          |             |  | 39,275       |               |  |            | (2,281  | )           |  | 1987             |  | 06/19/00 |  |  | 40 | 
|146 |  |                         | 12,904 |              |              |  | 73,931  |          |             |  | 86,835       |               |  |            | (2,714  | )           |  | 1986-1989        |  | 07/02/01 |  |  | 40 | 
|   
|147 |  |                         | 3,697  |              |              |  | 21,592  |          |             |  | 25,289       |               |  |            | (773    | )           |  | 1985             |  | 07/02/01 |  |  | 40 | 
|   
|148 |  |                         | 3,072  |              |              |  | 17,667  |          |             |  | 20,739       |               |  |            | (681    | )           |  | 1989             |  | 07/02/01 |  |  | 40 | 
|   
|149 |  |                         | 2,100  |              |              |  | 11,900  |          |             |  | 14,000       |               |  |            | (434    | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|   
|150 |  |                         | 2,203  |              |              |  | 12,572  |          |             |  | 14,775       |               |  |            | (458    | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 



---



##### 



|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |         |              |         |  |         |              |  |  |     |  |  |  |       |  
|--- |  | -------------------------------- |  | ----- | -------- | - | -------- | -------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------- | ------------ | ------- |  | ------- | ------------ |  |  | --- |  |  |  | ----- | -
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |  
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           | Costs Capitalized |              
|    |  |                                  |  |       |          |   |          |                |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                                  |  |       |          |   |          |                |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |  
|    |  |                                  |  |       |          |   |          |                |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |         | Building and |        
|    |  | Description                      |  | Notes |          |   | Location |                | State   |              |    | at 12/31/02     |           |                   | Land          |   |     | Improvements |         |              | Land    |  |         | Improvements | 
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |         |              |         |  |         |              | 
|151 |  | Westridge I                      |  |       |          |   |          | San Diego      |         |              | CA |                 |           |                   |              |   |     |              | 1,500   |              |         |  | 8,500   |              |  |  |    |  |  |  |      |  
|152 |  | Smith Barney Tower               |  |       | (3)      |   |          | San Diego      |         |              | CA |                 |           |                   |              |   |     |              | 2,658   |              |         |  | 23,919  |              |  |  |    |  |  |  | 4,622 |  
|153 |  | The Plaza at La Jolla Village    |  |       | (3)      |   |          | San Diego      |         |              | CA |                 |           |                   | (78,493       | ) |     |              | 10,916  |              |         |  | 98,243  |              |  |  | 19  |  |  |  | 4,089 |  
|154 |  | Griffin Towers                   |  |       |          |   |          | Santa Ana      |         |              | CA |                 |           |                   |              |   |     |              | 14,317  |              |         |  | 81,127  |              |  |  |    |  |  |  | 463   |  
|155 |  | Lincoln Town Center              |  |       |          |   |          | Santa Ana      |         |              | CA |                 |           |                   |              |   |     |              | 4,403   |              |         |  | 24,950  |              |  |  |    |  |  |  | 905   |  
|156 |  | 2951 28th Street                 |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   |              |   |     |              | 3,612   |              |         |  | 20,465  |              |  |  |    |  |  |  | 426   |  
|157 |  | 429 Santa Monica                 |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   |              |   |     |              | 2,523   |              |         |  | 14,298  |              |  |  |    |  |  |  | 313   |  
|158 |  | Arboretum Courtyard              |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   |              |   |     |              | 6,573   |              |         |  | 37,245  |              |  |  |    |  |  |  | 616   |  
|159 |  | Janss Court                      |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   | (16,542       | ) |     |              | 4,350   |              |         |  | 24,650  |              |  |  |    |  |  |  | 192   |  
|160 |  | Santa Monica Business Park       |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   | (8,431        | ) |     |              |        |              |         |  | 242,155 |              |  |  |    |  |  |  | 2,521 |  
|161 |  | Searise Office Tower             |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   |              |   |     |              | 4,380   |              |         |  | 24,818  |              |  |  |    |  |  |  | 917   |  
|162 |  | Wilshire Palisades               |  |       |          |   |          | Santa Monica   |         |              | CA |                 |           |                   | (39,853       | ) |     |              | 9,763   |              |         |  | 55,323  |              |  |  |    |  |  |  | 1,556 |  
|163 |  | Bixby Ranch                      |  |       |          |   |          | Seal Beach     |         |              | CA |                 |           |                   | (26,455       | ) |     |              | 6,450   |              |         |  | 36,550  |              |  |  |    |  |  |  | 1,541 |  
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |         |              |         |  |         |              | 
|    |  | Los Angeles Region Totals        |  |       | (216,639 | ) |          |                | 337,902 |              |    |                 | 2,555,096 |                   |               |   | (14 | )            |         |              | 140,544 | 
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |    
|    |  | New York Region                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |         |              |         |  |         |              |  |  |     |  |  |  |       |  
|164 |  | 527 Madison Avenue               |  |       |          |   |          | New York       |         |              | NY |                 |           |                   |              |   |     |              | 9,155   |              |         |  | 51,877  |              |  |  |    |  |  |  | 2,611 |  
|165 |  | 850 Third Avenue                 |  |       | (3)(5)   |   |          | New York       |         |              | NY |                 |           |                   | (6,287        | ) |     |              | 9,606   |              |         |  | 86,453  |              |  |  | 30  |  |  |  | 4,758 |  
|166 |  | Park Avenue Tower                |  |       | (5)      |   |          | New York       |         |              | NY |                 |           |                   | (180,000      | ) |     |              | 48,976  |              |         |  | 196,566 |              |  |  | 719 |  |  |  | 8,395 |  
|167 |  | Tower 56                         |  |       |          |   |          | New York       |         |              | NY |                 |           |                   | (22,733       | ) |     |              | 6,853   |              |         |  | 38,832  |              |  |  |    |  |  |  | 1,204 |  
|168 |  | Worldwide Plaza                  |  |       |          |   |          | New York       |         |              | NY |                 |           |                   | (225,808      | ) |     |              | 124,919 |              |         |  | 496,665 |              |  |  |    |  |  |  | 6,897 |  
|169 |  | Shelton Pointe                   |  |       | (3)      |   |          | Shelton        |         |              | CT |                 |           |                   |              |   |     |              | 1,514   |              |         |  | 13,625  |              |  |  |    |  |  |  | 862   |  
|170 |  | 177 Broad Street                 |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   |              |   |     |              | 2,562   |              |         |  | 23,056  |              |  |  |    |  |  |  | 873   |  
|171 |  | 300 Atlantic Street              |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   |              |   |     |              | 4,632   |              |         |  | 41,691  |              |  |  |    |  |  |  | 3,080 |  
|172 |  | Canterbury Green                 |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   | (19,217       | ) |     |              |        |              |         |  | 41,987  |              |  |  | 92  |  |  |  | 1,688 |  
|173 |  | Four Stamford Plaza              |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   | (15,977       | ) |     |              | 4,471   |              |         |  | 40,238  |              |  |  | 24  |  |  |  | 1,333 |  
|174 |  | One and Two Stamford Plaza       |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   |              |   |     |              | 8,268   |              |         |  | 74,409  |              |  |  |    |  |  |  | 5,594 |  
|175 |  | Three Stamford Plaza             |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   | (16,721       | ) |     |              | 3,957   |              |         |  | 35,610  |              |  |  |    |  |  |  | 592   |  
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |         |              |         |  |         |              | 
|    |  | New York Region Totals           |  |       | (486,743 | ) |          |                | 224,913 |              |    |                 | 1,141,009 |                   |               |   | 865 |              |         |              | 37,887  | 
|    |  |                                  |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |    
|    |  | San Francisco Region             |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |         |              |         |  |         |              |  |  |     |  |  |  |       |  
|176 |  | Golden Bear Center               |  |       |          |   |          | Berkeley       |         |              | CA |                 |           |                   | (18,858       | ) |     |              | 4,500   |              |         |  | 25,500  |              |  |  |    |  |  |  | 492   |  
|177 |  | Sierra Point                     |  |       |          |   |          | Brisbane       |         |              | CA |                 |           |                   |              |   |     |              | 3,198   |              |         |  | 18,120  |              |  |  |    |  |  |  | 38    |  
|178 |  | Bay Park Plaza I & II            |  |       |          |   |          | Burlingame     |         |              | CA |                 |           |                   |              |   |     |              | 12,906  |              |         |  | 73,133  |              |  |  |    |  |  |  | 1,020 |  
|179 |  | One Bay Plaza                    |  |       |          |   |          | Burlingame     |         |              | CA |                 |           |                   |              |   |     |              | 8,642   |              |         |  | 48,973  |              |  |  |    |  |  |  | 1,048 |  
|180 |  | One & Two Corporate Centre       |  |       |          |   |          | Concord        |         |              | CA |                 |           |                   |              |   |     |              | 6,379   |              |         |  | 36,146  |              |  |  |    |  |  |  | 716   |  
|181 |  | 5813 Shellmound /5855 Christie   |  |       |          |   |          | Emeryville     |         |              | CA |                 |           |                   |              |   |     |              | 870     |              |         |  | 4,930   |              |  |  |    |  |  |  | 8     |  
|182 |  | Watergate Office Towers          |  |       |          |   |          | Emeryville     |         |              | CA |                 |           |                   |              |   |     |              | 46,568  |              |         |  | 263,885 |              |  |  |    |  |  |  | 5,245 |  
|183 |  | Parkshore Plaza II               |  |       |          |   |          | Folsom         |         |              | CA |                 |           |                   |              |   |     |              | 4,082   |              |         |  | 23,130  |              |  |  |    |  |  |  | (107  | )
|184 |  | Parkshore Plaza I                |  |       |          |   |          | Folsom         |         |              | CA |                 |           |                   |              |   |     |              | 2,916   |              |         |  | 16,524  |              |  |  |    |  |  |  | 9     |  
|185 |  | Bayside Corporate Center         |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 2,836   |              |         |  | 16,069  |              |  |  |    |  |  |  | 589   |  
|186 |  | Metro Center                     |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              |        |              |         |  | 282,329 |              |  |  |    |  |  |  | 2,146 |  
|187 |  | Parkside Towers                  |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 36,000  |              |         |  | 63,965  |              |  |  |    |  |  |  | 8,695 |  
|188 |  | Vintage Industrial Park          |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 21,527  |              |         |  | 121,988 |              |  |  |    |  |  |  | 314   |  
|189 |  | Vintage Park Office              |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 5,719   |              |         |  | 32,406  |              |  |  |    |  |  |  | 233   |  
|190 |  | Lafayette Terrace                |  |       |          |   |          | Lafayette      |         |              | CA |                 |           |                   |              |   |     |              | 1,422   |              |         |  | 8,057   |              |  |  |    |  |  |  | 88    |  
|191 |  | Drakes Landing                  |  |       |          |   |          | Larkspur       |         |              | CA |                 |           |                   |              |   |     |              | 5,735   |              |         |  | 32,499  |              |  |  |    |  |  |  | 1,204 |  
|192 |  | Larkspur Landing Office Park     |  |       |          |   |          | Larkspur       |         |              | CA |                 |           |                   |              |   |     |              | 8,316   |              |         |  | 47,126  |              |  |  |    |  |  |  | 1,644 |  
|193 |  | Wood Island Office Complex       |  |       |          |   |          | Larkspur       |         |              | CA |                 |           |                   |              |   |     |              | 3,735   |              |         |  | 21,163  |              |  |  |    |  |  |  | 52    |  
|194 |  | PeopleSoft Plaza                 |  |       |          |   |          | Pleasanton     |         |              | CA |                 |           |                   |              |   |     |              | 7,039   |              |         |  | 39,887  |              |  |  |    |  |  |  | 708   |  
|195 |  | Redwood Shores                   |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 4,166   |              |         |  | 23,608  |              |  |  |    |  |  |  | 66    |  
|196 |  | Seaport Centre                   |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 24,000  |              |         |  | 136,000 |              |  |  |    |  |  |  | 129   |  
|197 |  | Seaport Plaza                    |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 10,132  |              |         |  | 26,108  |              |  |  |    |  |  |  | 2,845 |  
|198 |  | Towers@Shores                    |  |       | (6)      |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 35,578  |              |         |  | 69,054  |              |  |  |    |  |  |  | 3,003 |  
|199 |  | 555 Twin Dolphin Plaza           |  |       |          |   |          | Redwood Shores |         |              | CA |                 |           |                   |              |   |     |              | 11,790  |              |         |  | 66,810  |              |  |  |    |  |  |  | 1,105 |  
|200 |  | Douglas Corporate Center         |  |       |          |   |          | Roseville      |         |              | CA |                 |           |                   |              |   |     |              | 2,391   |              |         |  | 13,550  |              |  |  |    |  |  |  | 59    |  
|201 |  | Johnson Ranch Corp Centre I & II |  |       |          |   |          | Roseville      |         |              | CA |                 |           |                   |              |   |     |              | 4,380   |              |         |  | 24,819  |              |  |  |    |  |  |  | 139   |  
|202 |  | Roseville Corporate Center       |  |       |          |   |          | Roseville      |         |              | CA |                 |           |                   |              |   |     |              | 3,008   |              |         |  | 17,046  |              |  |  |    |  |  |  |      |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2002              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)  | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|151 |  |                         | 1,500   |              |              |  | 8,500     |          |             |  | 10,000       |               |  |            | (310     | )           |  | 1980      |  | 07/02/01 |  |  | 40 | 
|152 |  |                         | 2,658   |              |              |  | 28,541    |          |             |  | 31,199       |               |  |            | (5,146   | )           |  | 1987      |  | 04/28/97 |  |  | 40 | 
|153 |  |                         | 10,935  |              |              |  | 102,332   |          |             |  | 113,267      |               |  |            | (15,087  | )           |  | 1987-1990 |  | 03/10/94 |  |  | 40 | 
|154 |  |                         | 14,317  |              |              |  | 81,590    |          |             |  | 95,907       |               |  |            | (1,602   | )           |  | 1987      |  | 07/02/01 |  |  | 40 | 
|155 |  |                         | 4,403   |              |              |  | 25,855    |          |             |  | 30,258       |               |  |            | (1,684   | )           |  | 1987      |  | 06/19/00 |  |  | 40 | 
|156 |  |                         | 3,612   |              |              |  | 20,891    |          |             |  | 24,503       |               |  |            | (753     | )           |  | 1971      |  | 07/02/01 |  |  | 40 | 
|157 |  |                         | 2,523   |              |              |  | 14,611    |          |             |  | 17,134       |               |  |            | (933     | )           |  | 1982      |  | 06/19/00 |  |  | 40 | 
|158 |  |                         | 6,573   |              |              |  | 37,861    |          |             |  | 44,434       |               |  |            | (1,358   | )           |  | 1999      |  | 07/02/01 |  |  | 40 | 
|159 |  |                         | 4,350   |              |              |  | 24,842    |          |             |  | 29,192       |               |  |            | (1,580   | )           |  | 1989      |  | 06/19/00 |  |  | 40 | 
|160 |  |                         |        |              |              |  | 244,676   |          |             |  | 244,676      |               |  |            | (9,146   | )           |  | 1979-1981 |  | 07/02/01 |  |  | 40 | 
|161 |  |                         | 4,380   |              |              |  | 25,735    |          |             |  | 30,115       |               |  |            | (1,621   | )           |  | 1975      |  | 06/19/00 |  |  | 40 | 
|162 |  |                         | 9,763   |              |              |  | 56,879    |          |             |  | 66,642       |               |  |            | (3,618   | )           |  | 1981      |  | 06/19/00 |  |  | 40 | 
|163 |  |                         | 6,450   |              |              |  | 38,091    |          |             |  | 44,541       |               |  |            | (2,526   | )           |  | 1987      |  | 06/19/00 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|    |  |                         | 337,888 |              |              |  | 2,695,640 |          |             |  | 3,033,528    |               |  |            | (215,822 | )           |  |           |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|164 |  |                         | 9,155   |              |              |  | 54,488    |          |             |  | 63,643       |               |  |            | (3,503   | )           |  | 1986      |  | 06/19/00 |  |  | 40 | 
|165 |  |                         | 9,636   |              |              |  | 91,211    |          |             |  | 100,847      |               |  |            | (13,725  | )           |  | 1960/1996 |  | 03/20/95 |  |  | 40 | 
|166 |  |                         | 49,695  |              |              |  | 204,961   |          |             |  | 254,656      |               |  |            | (23,237  | )           |  | 1986      |  | 07/15/98 |  |  | 40 | 
|167 |  |                         | 6,853   |              |              |  | 40,036    |          |             |  | 46,889       |               |  |            | (2,635   | )           |  | 1983      |  | 06/19/00 |  |  | 40 | 
|168 |  |                         | 124,919 |              |              |  | 503,562   |          |             |  | 628,481      |               |  |            | (52,803  | )           |  | 1989      |  | 10/01/98 |  |  | 40 | 
|169 |  |                         | 1,514   |              |              |  | 14,487    |          |             |  | 16,001       |               |  |            | (2,276   | )           |  | 1985/1993 |  | 11/26/91 |  |  | 40 | 
|170 |  |                         | 2,562   |              |              |  | 23,929    |          |             |  | 26,491       |               |  |            | (3,386   | )           |  | 1989      |  | 01/29/97 |  |  | 40 | 
|171 |  |                         | 4,632   |              |              |  | 44,771    |          |             |  | 49,403       |               |  |            | (6,444   | )           |  | 1987/1996 |  | 03/30/93 |  |  | 40 | 
|172 |  |                         | 92      |              |              |  | 43,675    |          |             |  | 43,767       |               |  |            | (6,430   | )           |  | 1987      |  | 12/15/92 |  |  | 40 | 
|173 |  |                         | 4,495   |              |              |  | 41,571    |          |             |  | 46,066       |               |  |            | (6,132   | )           |  | 1979/1994 |  | 08/31/94 |  |  | 40 | 
|174 |  |                         | 8,268   |              |              |  | 80,003    |          |             |  | 88,271       |               |  |            | (11,970  | )           |  | 1986/1994 |  | 03/30/93 |  |  | 40 | 
|175 |  |                         | 3,957   |              |              |  | 36,202    |          |             |  | 40,159       |               |  |            | (5,124   | )           |  | 1980/1994 |  | 12/15/92 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|    |  |                         | 225,778 |              |              |  | 1,178,896 |          |             |  | 1,404,674    |               |  |            | (137,665 | )           |  |           |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|176 |  |                         | 4,500   |              |              |  | 25,992    |          |             |  | 30,492       |               |  |            | (1,649   | )           |  | 1986      |  | 06/19/00 |  |  | 40 | 
|177 |  |                         | 3,198   |              |              |  | 18,158    |          |             |  | 21,356       |               |  |            | (662     | )           |  | 1979/1983 |  | 07/02/01 |  |  | 40 | 
|178 |  |                         | 12,906  |              |              |  | 74,153    |          |             |  | 87,059       |               |  |            | (4,773   | )           |  | 1985/1998 |  | 06/19/00 |  |  | 40 | 
|179 |  |                         | 8,642   |              |              |  | 50,021    |          |             |  | 58,663       |               |  |            | (3,231   | )           |  | 1979      |  | 06/19/00 |  |  | 40 | 
|180 |  |                         | 6,379   |              |              |  | 36,862    |          |             |  | 43,241       |               |  |            | (2,521   | )           |  | 1985-1987 |  | 06/19/00 |  |  | 40 | 
|181 |  |                         | 870     |              |              |  | 4,938     |          |             |  | 5,808        |               |  |            | (180     | )           |  | 1970-1971 |  | 07/02/01 |  |  | 40 | 
|182 |  |                         | 46,568  |              |              |  | 269,130   |          |             |  | 315,698      |               |  |            | (9,845   | )           |  | 1973/2001 |  | 07/02/01 |  |  | 40 | 
|183 |  |                         | 4,082   |              |              |  | 23,023    |          |             |  | 27,105       |               |  |            | (843     | )           |  | 1999      |  | 07/02/01 |  |  | 40 | 
|184 |  |                         | 2,916   |              |              |  | 16,533    |          |             |  | 19,449       |               |  |            | (602     | )           |  | 1999      |  | 07/02/01 |  |  | 40 | 
|185 |  |                         | 2,836   |              |              |  | 16,658    |          |             |  | 19,494       |               |  |            | (586     | )           |  | 1986-1987 |  | 07/02/01 |  |  | 40 | 
|186 |  |                         |        |              |              |  | 284,475   |          |             |  | 284,475      |               |  |            | (10,442  | )           |  | 1985-1988 |  | 07/02/01 |  |  | 40 | 
|187 |  |                         | 36,000  |              |              |  | 72,660    |          |             |  | 108,660      |               |  |            | (1,666   | )           |  | 2001      |  | 07/02/01 |  |  | 40 | 
|188 |  |                         | 21,527  |              |              |  | 122,302   |          |             |  | 143,829      |               |  |            | (4,456   | )           |  | 1985-1990 |  | 07/02/01 |  |  | 40 | 
|189 |  |                         | 5,719   |              |              |  | 32,639    |          |             |  | 38,358       |               |  |            | (1,191   | )           |  | 1985-1990 |  | 07/02/01 |  |  | 40 | 
|190 |  |                         | 1,422   |              |              |  | 8,145     |          |             |  | 9,567        |               |  |            | (303     | )           |  | 1985      |  | 07/02/01 |  |  | 40 | 
|191 |  |                         | 5,735   |              |              |  | 33,703    |          |             |  | 39,438       |               |  |            | (1,269   | )           |  | 1986      |  | 07/02/01 |  |  | 40 | 
|192 |  |                         | 8,316   |              |              |  | 48,770    |          |             |  | 57,086       |               |  |            | (1,836   | )           |  | 1981-1982 |  | 07/02/01 |  |  | 40 | 
|193 |  |                         | 3,735   |              |              |  | 21,215    |          |             |  | 24,950       |               |  |            | (775     | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|194 |  |                         | 7,039   |              |              |  | 40,595    |          |             |  | 47,634       |               |  |            | (2,608   | )           |  | 1984      |  | 06/19/00 |  |  | 40 | 
|195 |  |                         | 4,166   |              |              |  | 23,674    |          |             |  | 27,840       |               |  |            | (863     | )           |  | 1986      |  | 07/02/01 |  |  | 40 | 
|196 |  |                         | 24,000  |              |              |  | 136,129   |          |             |  | 160,129      |               |  |            | (8,667   | )           |  | 1988      |  | 06/19/00 |  |  | 40 | 
|197 |  |                         | 10,132  |              |              |  | 28,953    |          |             |  | 39,085       |               |  |            | (1,202   | )           |  | 2000      |  | 06/19/00 |  |  | 40 | 
|198 |  |                         | 35,578  |              |              |  | 72,057    |          |             |  | 107,635      |               |  |            | (1,845   | )           |  | 2002      |  | 07/02/01 |  |  | 40 | 
|199 |  |                         | 11,790  |              |              |  | 67,915    |          |             |  | 79,705       |               |  |            | (2,537   | )           |  | 1989      |  | 07/02/01 |  |  | 40 | 
|200 |  |                         | 2,391   |              |              |  | 13,609    |          |             |  | 16,000       |               |  |            | (504     | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 
|201 |  |                         | 4,380   |              |              |  | 24,958    |          |             |  | 29,338       |               |  |            | (915     | )           |  | 1990-1998 |  | 07/02/01 |  |  | 40 | 
|202 |  |                         | 3,008   |              |              |  | 17,046    |          |             |  | 20,054       |               |  |            | (621     | )           |  | 1999      |  | 07/02/01 |  |  | 40 | 



---



##### 



|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              |  |  |     |   |  |  |        | 
|--- |  | ---------------------------------- |  | ----- | -------- | - | -------- | ------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | -- | ------------ | ------ | ------------ | ------- |  | ------- | ------------ |  |  | --- | - |  |  | ------ | 
|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           | Costs Capitalized |              
|    |  |                                    |  |       |          |   |          |               |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                                    |  |       |          |   |          |               |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                                    |  |       |          |   |          |               |         | Encumbrances |    |                 |           |                   | Building and  |   |    |              |        | Building and |        
|    |  | Description                        |  | Notes |          |   | Location |               | State   |              |    | at 12/31/02     |           |                   | Land          |   |    | Improvements |        |              | Land    |  |         | Improvements | 
|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              | 
|203 |  | 3600-3620 American River Drive     |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 2,209  |              |         |  | 12,518  |              |  |  |    |   |  |  | 395    | 
|204 |  | 455 University Avenue              |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 465    |              |         |  | 2,634   |              |  |  |    |   |  |  | 93     | 
|205 |  | 555 University Avenue              |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 939    |              |         |  | 5,323   |              |  |  |    |   |  |  | 136    | 
|206 |  | 575 & 601 University Avenue        |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,159  |              |         |  | 6,569   |              |  |  |    |   |  |  | 170    | 
|207 |  | 655 University Avenue              |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 672    |              |         |  | 3,806   |              |  |  |    |   |  |  | 45     | 
|208 |  | 701 University Avenue              |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 934    |              |         |  | 5,294   |              |  |  |    |   |  |  | 79     | 
|209 |  | 740 University Avenue              |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 212    |              |         |  | 1,199   |              |  |  |    |   |  |  | 33     | 
|210 |  | Cal Center                         |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 2,393  |              |         |  | 13,560  |              |  |  |    |   |  |  | 392    | 
|211 |  | Exposition Centre                  |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,200  |              |         |  | 7,800   |              |  |  |    |   |  |  | 205    | 
|212 |  | Fidelity Plaza                     |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,149  |              |         |  | 6,513   |              |  |  |    |   |  |  | 89     | 
|213 |  | Gateway Oaks I                     |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 2,391  |              |         |  | 13,546  |              |  |  |    |   |  |  | 170    | 
|214 |  | Gateway Oaks II                    |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,341  |              |         |  | 7,600   |              |  |  |    |   |  |  | 194    | 
|215 |  | Gateway Oaks III                   |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 936    |              |         |  | 5,305   |              |  |  |    |   |  |  | 128    | 
|216 |  | Gateway Oaks IV                    |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,658  |              |         |  | 9,395   |              |  |  |    |   |  |  |       | 
|217 |  | Point West Commercentre            |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 2,321  |              |         |  | 13,154  |              |  |  |    |   |  |  | 468    | 
|218 |  | Point West Corporate Center I & II |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 3,653  |              |         |  | 14,779  |              |  |  |    |   |  |  | 537    | 
|219 |  | Point West I - Response Road       |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 774    |              |         |  | 4,384   |              |  |  |    |   |  |  | 57     | 
|220 |  | Point West III - River Park Dr     |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,141  |              |         |  | 6,467   |              |  |  |    |   |  |  | 216    | 
|221 |  | The Orchard                        |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 1,226  |              |         |  | 6,948   |              |  |  |    |   |  |  | 185    | 
|222 |  | Wells Fargo Center                 |  |       |          |   |          | Sacramento    |         |              | CA |                 |           |                   |              |   |    |              | 17,819 |              |         |  | 100,975 |              |  |  |    |   |  |  | 885    | 
|223 |  | Bayhill Office Center              |  |       |          |   |          | San Bruno     |         |              | CA |                 |           |                   | (91,093       | ) |    |              | 24,010 |              |         |  | 136,055 |              |  |  |    |   |  |  | 1,003  | 
|224 |  | Skyway Landing I & II              |  |       |          |   |          | San Carlos    |         |              | CA |                 |           |                   |              |   |    |              | 15,535 |              |         |  | 35,994  |              |  |  |    |   |  |  | 16,775 | 
|225 |  | 120 Montgomery                     |  |       |          |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 17,564 |              |         |  | 99,532  |              |  |  |    |   |  |  | 1,948  | 
|226 |  | 150 California                     |  |       |          |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 12,567 |              |         |  | 46,184  |              |  |  |    |   |  |  | 4,423  | 
|227 |  | 188 Embarcadero                    |  |       |          |   |          | San Francisco |         |              | CA |                 |           |                   | (14,472       | ) |    |              | 4,108  |              |         |  | 23,280  |              |  |  |    |   |  |  | 841    | 
|228 |  | 201 California                     |  |       |          |   |          | San Francisco |         |              | CA |                 |           |                   | (40,048       | ) |    |              | 10,520 |              |         |  | 59,611  |              |  |  |    |   |  |  | 1,877  | 
|229 |  | 201 Mission Street                 |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 8,871  |              |         |  | 79,837  |              |  |  |    |   |  |  | 2,317  | 
|230 |  | 301 Howard Street                  |  |       |          |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 6,547  |              |         |  | 58,920  |              |  |  |    |   |  |  | 4,274  | 
|231 |  | 580 California                     |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   | (57,177       | ) |    |              | 7,491  |              |         |  | 67,421  |              |  |  | 8   |   |  |  | 4,038  | 
|232 |  | 60 Spear Street Building           |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 2,125  |              |         |  | 19,126  |              |  |  | 15  |   |  |  | 1,564  | 
|233 |  | Maritime Plaza                     |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 11,531 |              |         |  | 103,776 |              |  |  |    |   |  |  | 11,437 | 
|234 |  | One Market                         |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   | (179,896      | ) |    |              | 34,814 |              |         |  | 313,330 |              |  |  |    |   |  |  | 32,936 | 
|235 |  | Peninsula Office Park              |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   | (80,613       | ) |    |              | 27,275 |              |         |  | 154,561 |              |  |  |    |   |  |  | 1,850  | 
|236 |  | San Mateo BayCenter I              |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   |              |   |    |              | 5,382  |              |         |  | 30,498  |              |  |  |    |   |  |  | 214    | 
|237 |  | San Mateo BayCenter II             |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   | (10,571       | ) |    |              | 6,245  |              |         |  | 35,389  |              |  |  |    |   |  |  | 177    | 
|238 |  | San Mateo BayCenter III            |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   |              |   |    |              | 3,357  |              |         |  | 19,023  |              |  |  |    |   |  |  | 170    | 
|239 |  | San Rafael Corporate Center        |  |       | (6)      |   |          | San Rafael    |         |              | CA |                 |           |                   |              |   |    |              | 18,002 |              |         |  |        |              |  |  |    |   |  |  | 27,076 | 
|240 |  | Norris Tech Center                 |  |       |          |   |          | San Ramon     |         |              | CA |                 |           |                   |              |   |    |              | 5,700  |              |         |  | 32,300  |              |  |  |    |   |  |  | 1,618  | 
|241 |  | One & Two ADP Plaza                |  |       |          |   |          | San Ramon     |         |              | CA |                 |           |                   |              |   |    |              | 7,460  |              |         |  | 42,273  |              |  |  |    |   |  |  | 1,188  | 
|242 |  | Fountaingrove Center               |  |       |          |   |          | Santa Rosa    |         |              | CA |                 |           |                   |              |   |    |              | 2,898  |              |         |  | 16,424  |              |  |  |    |   |  |  | 225    | 
|243 |  | Treat Towers                       |  |       |          |   |          | Walnut Creek  |         |              | CA |                 |           |                   |              |   |    |              | 18,512 |              |         |  | 104,899 |              |  |  |    |   |  |  | 356    | 
|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              | 
|    |  | San Francisco Region Totals        |  |       | (492,728 | ) |          |               | 574,964 |              |    |                 | 3,279,027 |                   |               |   | 23 |              |        |              | 152,272 | 
|    |  |                                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |   
|    |  | San Jose Region                    |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              |  |  |     |   |  |  |        | 
|244 |  | Pruneyard Office Towers            |  |       |          |   |          | Campbell      |         |              | CA |                 |           |                   |              |   |    |              | 16,502 |              |         |  | 154,783 |              |  |  |    |   |  |  | 3,731  | 
|245 |  | Cupertino Business Center          |  |       |          |   |          | Cupertino     |         |              | CA |                 |           |                   |              |   |    |              | 2,910  |              |         |  | 16,490  |              |  |  | (28 | ) |  |  | 35     | 
|246 |  | 2180 Sand Hill Road                |  |       |          |   |          | Menlo Park    |         |              | CA |                 |           |                   |              |   |    |              | 3,408  |              |         |  | 19,314  |              |  |  |    |   |  |  | 871    | 
|247 |  | 1900 McCarthy                      |  |       |          |   |          | Milpitas      |         |              | CA |                 |           |                   |              |   |    |              | 1,998  |              |         |  | 11,319  |              |  |  |    |   |  |  | 201    | 
|248 |  | California Circle II               |  |       |          |   |          | Milpitas      |         |              | CA |                 |           |                   |              |   |    |              | 1,764  |              |         |  | 9,997   |              |  |  |    |   |  |  | 405    | 
|249 |  | Oak Creek I & II                   |  |       |          |   |          | Milpitas      |         |              | CA |                 |           |                   |              |   |    |              | 1,309  |              |         |  | 7,417   |              |  |  |    |   |  |  |       | 
|250 |  | Shoreline Technology Park          |  |       |          |   |          | Mountain View |         |              | CA |                 |           |                   |              |   |    |              | 31,575 |              |         |  | 190,894 |              |  |  | 69  |   |  |  | 810    | 
|251 |  | Meier Mountain View                |  |       |          |   |          | Mountain View |         |              | CA |                 |           |                   |              |   |    |              | 13,950 |              |         |  | 79,050  |              |  |  |    |   |  |  | 12     | 
|252 |  | Ravendale at Central               |  |       |          |   |          | Mountain View |         |              | CA |                 |           |                   |              |   |    |              | 2,550  |              |         |  | 14,450  |              |  |  |    |   |  |  |       | 
|253 |  | Embarcadero Place                  |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   | (34,900       | ) |    |              | 10,500 |              |         |  | 59,500  |              |  |  |    |   |  |  | 56     | 
|254 |  | Palo Alto Square                   |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 78,143  |              |  |  | 161 |   |  |  | 258    | 
|255 |  | Xerox Campus                       |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 132,810 |              |  |  |    |   |  |  |       | 
|256 |  | Foothill Research Center           |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 104,894 |              |  |  |    |   |  |  |       | 
|257 |  | Lockheed                           |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 27,712  |              |  |  |    |   |  |  | 61     | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2002              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)        | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 | 
|203 |  |                         | 2,209   |              |              |  | 12,913    |          |             |  | 15,122       |               |  |            | (495     | )           |  | 1977-1979/ 1997 |  | 07/02/01 |  |  | 40 | 
|   
|204 |  |                         | 465     |              |              |  | 2,727     |          |             |  | 3,192        |               |  |            | (100     | )           |  | 1973            |  | 07/02/01 |  |  | 40 | 
|   
|205 |  |                         | 939     |              |              |  | 5,459     |          |             |  | 6,398        |               |  |            | (220     | )           |  | 1974            |  | 07/02/01 |  |  | 40 | 
|   
|206 |  |                         | 1,159   |              |              |  | 6,739     |          |             |  | 7,898        |               |  |            | (257     | )           |  | 1977            |  | 07/02/01 |  |  | 40 | 
|   
|207 |  |                         | 672     |              |              |  | 3,851     |          |             |  | 4,523        |               |  |            | (143     | )           |  | 1979            |  | 07/02/01 |  |  | 40 | 
|   
|208 |  |                         | 934     |              |              |  | 5,373     |          |             |  | 6,307        |               |  |            | (196     | )           |  | 1990            |  | 07/02/01 |  |  | 40 | 
|   
|209 |  |                         | 212     |              |              |  | 1,232     |          |             |  | 1,444        |               |  |            | (44      | )           |  | 1973            |  | 07/02/01 |  |  | 40 | 
|   
|210 |  |                         | 2,393   |              |              |  | 13,952    |          |             |  | 16,345       |               |  |            | (506     | )           |  | 1989            |  | 07/02/01 |  |  | 40 | 
|211 |  |                         | 1,200   |              |              |  | 8,005     |          |             |  | 9,205        |               |  |            | (539     | )           |  | 1984            |  | 06/19/00 |  |  | 40 | 
|   
|212 |  |                         | 1,149   |              |              |  | 6,602     |          |             |  | 7,751        |               |  |            | (242     | )           |  | 1980            |  | 07/02/01 |  |  | 40 | 
|213 |  |                         | 2,391   |              |              |  | 13,716    |          |             |  | 16,107       |               |  |            | (507     | )           |  | 1990            |  | 07/02/01 |  |  | 40 | 
|214 |  |                         | 1,341   |              |              |  | 7,794     |          |             |  | 9,135        |               |  |            | (307     | )           |  | 1992            |  | 07/02/01 |  |  | 40 | 
|215 |  |                         | 936     |              |              |  | 5,433     |          |             |  | 6,369        |               |  |            | (209     | )           |  | 1996            |  | 07/02/01 |  |  | 40 | 
|   
|216 |  |                         | 1,658   |              |              |  | 9,395     |          |             |  | 11,053       |               |  |            | (343     | )           |  | 1998            |  | 07/02/01 |  |  | 40 | 
|217 |  |                         | 2,321   |              |              |  | 13,622    |          |             |  | 15,943       |               |  |            | (526     | )           |  | 1983            |  | 07/02/01 |  |  | 40 | 
|   
|218 |  |                         | 3,653   |              |              |  | 15,316    |          |             |  | 18,969       |               |  |            | (591     | )           |  | 1984            |  | 07/02/01 |  |  | 40 | 
|   
|219 |  |                         | 774     |              |              |  | 4,441     |          |             |  | 5,215        |               |  |            | (163     | )           |  | 1976            |  | 07/02/01 |  |  | 40 | 
|   
|220 |  |                         | 1,141   |              |              |  | 6,683     |          |             |  | 7,824        |               |  |            | (264     | )           |  | 1978            |  | 07/02/01 |  |  | 40 | 
|   
|221 |  |                         | 1,226   |              |              |  | 7,133     |          |             |  | 8,359        |               |  |            | (266     | )           |  | 1987            |  | 07/02/01 |  |  | 40 | 
|222 |  |                         | 17,819  |              |              |  | 101,860   |          |             |  | 119,679      |               |  |            | (6,530   | )           |  | 1987            |  | 06/19/00 |  |  | 40 | 
|   
|223 |  |                         | 24,010  |              |              |  | 137,058   |          |             |  | 161,068      |               |  |            | (8,711   | )           |  | 1982/1987       |  | 06/19/00 |  |  | 40 | 
|   
|224 |  |                         | 15,535  |              |              |  | 52,769    |          |             |  | 68,304       |               |  |            | (1,651   | )           |  | 2000            |  | 07/02/01 |  |  | 40 | 
|   
|225 |  |                         | 17,564  |              |              |  | 101,480   |          |             |  | 119,044      |               |  |            | (6,499   | )           |  | 1956            |  | 06/19/00 |  |  | 40 | 
|226 |  |                         | 12,567  |              |              |  | 50,607    |          |             |  | 63,174       |               |  |            | (3,928   | )           |  | 2000            |  | 12/19/97 |  |  | 40 | 
|227 |  |                         | 4,108   |              |              |  | 24,121    |          |             |  | 28,229       |               |  |            | (1,514   | )           |  | 1985            |  | 06/19/00 |  |  | 40 | 
|228 |  |                         | 10,520  |              |              |  | 61,488    |          |             |  | 72,008       |               |  |            | (3,956   | )           |  | 1980            |  | 06/19/00 |  |  | 40 | 
|229 |  |                         | 8,871   |              |              |  | 82,154    |          |             |  | 91,025       |               |  |            | (12,017  | )           |  | 1981            |  | 04/30/97 |  |  | 40 | 
|   
|230 |  |                         | 6,547   |              |              |  | 63,194    |          |             |  | 69,741       |               |  |            | (8,471   | )           |  | 1988            |  | 04/29/98 |  |  | 40 | 
|   
|231 |  |                         | 7,499   |              |              |  | 71,459    |          |             |  | 78,958       |               |  |            | (11,254  | )           |  | 1984            |  | 12/21/95 |  |  | 40 | 
|232 |  |                         | 2,140   |              |              |  | 20,690    |          |             |  | 22,830       |               |  |            | (3,015   | )           |  | 1967/1987       |  | 09/29/87 |  |  | 40 | 
|   
|233 |  |                         | 11,531  |              |              |  | 115,213   |          |             |  | 126,744      |               |  |            | (17,032  | )           |  | 1967/1990       |  | 04/21/97 |  |  | 40 | 
|234 |  |                         | 34,814  |              |              |  | 346,266   |          |             |  | 381,080      |               |  |            | (55,808  | )           |  | 1976/1995       |  | 11/22/94 |  |  | 40 | 
|235 |  |                         | 27,275  |              |              |  | 156,411   |          |             |  | 183,686      |               |  |            | (10,012  | )           |  | 1971/1998       |  | 06/19/00 |  |  | 40 | 
|   
|236 |  |                         | 5,382   |              |              |  | 30,712    |          |             |  | 36,094       |               |  |            | (1,147   | )           |  | 1984            |  | 07/02/01 |  |  | 40 | 
|   
|237 |  |                         | 6,245   |              |              |  | 35,566    |          |             |  | 41,811       |               |  |            | (1,307   | )           |  | 1984            |  | 07/02/01 |  |  | 40 | 
|   
|238 |  |                         | 3,357   |              |              |  | 19,193    |          |             |  | 22,550       |               |  |            | (708     | )           |  | 1987            |  | 07/02/01 |  |  | 40 | 
|   
|239 |  |                         | 18,002  |              |              |  | 27,076    |          |             |  | 45,078       |               |  |            |         |             |  | 2002            |  | 07/02/01 |  |  | 40 | 
|   
|240 |  |                         | 5,700   |              |              |  | 33,918    |          |             |  | 39,618       |               |  |            | (2,303   | )           |  | 1984/1990       |  | 06/19/00 |  |  | 40 | 
|   
|241 |  |                         | 7,460   |              |              |  | 43,461    |          |             |  | 50,921       |               |  |            | (2,788   | )           |  | 1987-1989       |  | 06/19/00 |  |  | 40 | 
|   
|242 |  |                         | 2,898   |              |              |  | 16,649    |          |             |  | 19,547       |               |  |            | (620     | )           |  | 1986/1991       |  | 07/02/01 |  |  | 40 | 
|   
|243 |  |                         | 18,512  |              |              |  | 105,255   |          |             |  | 123,767      |               |  |            | (3,842   | )           |  | 1998-1999       |  | 07/02/01 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 | 
|    |  |                         | 572,964 |              |              |  | 3,431,299 |          |             |  | 4,004,263    |               |  |            | (235,623 | )           |  |                 |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 | 
|   
|244 |  |                         | 16,502  |              |              |  | 158,514   |          |             |  | 175,016      |               |  |            | (10,168  | )           |  | 1971/1999       |  | 06/19/00 |  |  | 40 | 
|   
|245 |  |                         | 2,882   |              |              |  | 16,525    |          |             |  | 19,407       |               |  |            | (603     | )           |  | 1974-1975       |  | 07/02/01 |  |  | 40 | 
|   
|246 |  |                         | 3,408   |              |              |  | 20,185    |          |             |  | 23,593       |               |  |            | (704     | )           |  | 1976            |  | 07/02/01 |  |  | 40 | 
|   
|247 |  |                         | 1,998   |              |              |  | 11,520    |          |             |  | 13,518       |               |  |            | (432     | )           |  | 1984            |  | 07/02/01 |  |  | 40 | 
|248 |  |                         | 1,764   |              |              |  | 10,402    |          |             |  | 12,166       |               |  |            | (364     | )           |  | 1984            |  | 07/02/01 |  |  | 40 | 
|   
|249 |  |                         | 1,309   |              |              |  | 7,417     |          |             |  | 8,726        |               |  |            | (270     | )           |  | 1982            |  | 07/02/01 |  |  | 40 | 
|   
|250 |  |                         | 31,644  |              |              |  | 191,704   |          |             |  | 223,348      |               |  |            | (23,830  | )           |  | 1985/1991       |  | 12/19/97 |  |  | 40 | 
|   
|251 |  |                         | 13,950  |              |              |  | 79,062    |          |             |  | 93,012       |               |  |            | (2,883   | )           |  | 1972/1980       |  | 07/02/01 |  |  | 40 | 
|   
|252 |  |                         | 2,550   |              |              |  | 14,450    |          |             |  | 17,000       |               |  |            | (527     | )           |  | 1980            |  | 07/02/01 |  |  | 40 | 
|   
|253 |  |                         | 10,500  |              |              |  | 59,556    |          |             |  | 70,056       |               |  |            | (3,793   | )           |  | 1984            |  | 06/19/00 |  |  | 40 | 
|   
|254 |  |                         | 161     |              |              |  | 78,401    |          |             |  | 78,562       |               |  |            | (9,285   | )           |  | 1971/1985       |  | 10/01/99 |  |  | 23 | 
|   
|255 |  |                         |        |              |              |  | 132,810   |          |             |  | 132,810      |               |  |            | (4,966   | )           |  | 1991            |  | 07/02/01 |  |  | 40 | 
|256 |  |                         |        |              |              |  | 104,894   |          |             |  | 104,894      |               |  |            | (4,026   | )           |  | 1991            |  | 07/02/01 |  |  | 40 | 
|   
|257 |  |                         |        |              |              |  | 27,773    |          |             |  | 27,773       |               |  |            | (1,036   | )           |  | 1991            |  | 07/02/01 |  |  | 40 | 



---



##### 



|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              |  |  |     |   |  |  |        | 
|--- |  | --------------------------------- |  | ----- | ------- | - | -------- | ----------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------ |  | ------- | ------------ |  |  | --- | - |  |  | ------ | 
|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           |                   |               |  
|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           | Costs Capitalized |              
|    |  |                                   |  |       |         |   |          |             |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                                   |  |       |         |   |          |             |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           |                   |               |  
|    |  |                                   |  |       |         |   |          |             |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |       
|    |  | Description                       |  | Notes |         |   | Location |             | State   |              |    | at 12/31/02     |           |                   | Land          |   |     | Improvements |        |              | Land   |  |         | Improvements | 
|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              | 
|258 |  | 10 Almaden                        |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 12,583 |              |        |  | 71,303  |              |  |  |    |   |  |  | 392    | 
|259 |  | 1740 Technology                   |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   | (18,183       | ) |     |              | 8,766  |              |        |  | 49,673  |              |  |  |    |   |  |  | 788    | 
|260 |  | 2290 North First Street           |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 2,431  |              |        |  | 13,776  |              |  |  |    |   |  |  | 452    | 
|261 |  | 1871 The Alameda                  |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 1,129  |              |        |  | 6,399   |              |  |  |    |   |  |  | 158    | 
|262 |  | Aspect Telecommunications         |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 2,925  |              |        |  | 16,575  |              |  |  |    |   |  |  |       | 
|263 |  | Central Park Plaza                |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 11,181 |              |        |  | 63,358  |              |  |  | 23  |   |  |  | 1,466  | 
|264 |  | Metro Plaza                       |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 18,029 |              |        |  | 102,164 |              |  |  |    |   |  |  | 946    | 
|265 |  | Ridder Park                       |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 2,012  |              |        |  | 11,402  |              |  |  |    |   |  |  |       | 
|266 |  | Skyport East and West             |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 13,977 |              |        |  | 179,780 |              |  |  |    |   |  |  | 28,691 | 
|267 |  | Concourse                         |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 49,279 |              |        |  | 279,248 |              |  |  | (51 | ) |  |  | 1,723  | 
|268 |  | Creekside                         |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 9,631  |              |        |  | 54,576  |              |  |  |    |   |  |  | 311    | 
|269 |  | North First Office Center         |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 6,395  |              |        |  | 36,239  |              |  |  |    |   |  |  | 44     | 
|270 |  | San Jose Gateway                  |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 7,873  |              |        |  | 44,616  |              |  |  |    |   |  |  | 2,635  | 
|271 |  | San Jose Gateway II               |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 16,286 |              |        |  | 92,288  |              |  |  |    |   |  |  | 693    | 
|272 |  | San Jose Gateway III              |  |       |         |   |          | San Jose    |         |              | CA |                 |           |                   |              |   |     |              | 6,409  |              |        |  | 36,315  |              |  |  |    |   |  |  | 73     | 
|273 |  | 2727 Augustine                    |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 3,000  |              |        |  | 17,000  |              |  |  |    |   |  |  |       | 
|274 |  | 3001 Stender Way                  |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 2,263  |              |        |  | 12,823  |              |  |  |    |   |  |  |       | 
|275 |  | 3045 Stender Way                  |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 1,050  |              |        |  | 5,950   |              |  |  |    |   |  |  |       | 
|276 |  | 3281-3285 Scott Boulevard         |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 1,275  |              |        |  | 7,225   |              |  |  |    |   |  |  |       | 
|277 |  | Applied Materials I & II          |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 5,100  |              |        |  | 28,900  |              |  |  |    |   |  |  |       | 
|278 |  | Meier Central North               |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 2,880  |              |        |  | 16,320  |              |  |  |    |   |  |  |       | 
|279 |  | Meier Central South               |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 5,265  |              |        |  | 29,835  |              |  |  |    |   |  |  | 356    | 
|280 |  | Patrick Henry Drive               |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 2,475  |              |        |  | 14,025  |              |  |  |    |   |  |  | 4      | 
|281 |  | Santa Clara Office Center I       |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 2,010  |              |        |  | 11,391  |              |  |  |    |   |  |  | 122    | 
|282 |  | Santa Clara Office Center II      |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 2,870  |              |        |  | 16,261  |              |  |  |    |   |  |  | 176    | 
|283 |  | Santa Clara Office Center III     |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 2,031  |              |        |  | 11,509  |              |  |  |    |   |  |  | 169    | 
|284 |  | Santa Clara Office Center IV      |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 186    |              |        |  | 1,057   |              |  |  |    |   |  |  |       | 
|285 |  | Lake Marriott Business Park       |  |       |         |   |          | Santa Clara |         |              | CA |                 |           |                   |              |   |     |              | 9,091  |              |        |  | 84,967  |              |  |  | 297 |   |  |  | 2,470  | 
|286 |  | Sunnyvale Business Center         |  |       |         |   |          | Sunnyvale   |         |              | CA |                 |           |                   |              |   |     |              | 4,890  |              |        |  | 44,010  |              |  |  |    |   |  |  | 44     | 
|287 |  | Borregas Avenue                   |  |       |         |   |          | Sunnyvale   |         |              | CA |                 |           |                   |              |   |     |              | 1,095  |              |        |  | 6,205   |              |  |  |    |   |  |  |       | 
|288 |  | Meier Sunnyvale                   |  |       |         |   |          | Sunnyvale   |         |              | CA |                 |           |                   |              |   |     |              | 495    |              |        |  | 2,805   |              |  |  |    |   |  |  |       | 
|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              | 
|    |  | San Jose Region Totals            |  |       | (53,083 | ) |          |             | 301,348 |              |    |                 | 2,274,768 |                   |               |   | 471 |              |        |              | 48,153 | 
|    |  |                                   |  |       |         |   |          |             |         |              |    |                 |           |                   |               |   |    
|    |  | Seattle Region                    |  |       |         |   |          |             |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              |  |  |     |   |  |  |        | 
|289 |  | 10700 Building                    |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              |       |              |        |  | 15,958  |              |  |  |    |   |  |  | 82     | 
|290 |  | 110 Atrium Place                  |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   | (20,132       | ) |     |              | 6,333  |              |        |  | 35,888  |              |  |  |    |   |  |  | 886    | 
|291 |  | Bellefield Office Park            |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 12,232 |              |        |  | 69,312  |              |  |  | (1  | ) |  |  | 1,196  | 
|292 |  | Bellevue Gateway I                |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 3,593  |              |        |  | 20,360  |              |  |  |    |   |  |  | 847    | 
|293 |  | Bellevue Gateway II               |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 2,016  |              |        |  | 11,423  |              |  |  |    |   |  |  | 350    | 
|294 |  | Eastgate Office Park              |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 6,468  |              |        |  | 36,650  |              |  |  | 3   |   |  |  | 1,043  | 
|295 |  | Gateway 405 Building              |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 1,011  |              |        |  | 5,727   |              |  |  |    |   |  |  | 76     | 
|296 |  | I-90 Bellevue                     |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 3,725  |              |        |  | 21,108  |              |  |  |    |   |  |  | 153    | 
|297 |  | Lincoln Executive Center          |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 3,235  |              |        |  | 18,329  |              |  |  |    |   |  |  | 265    | 
|298 |  | Lincoln Executive Center II & III |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 4,918  |              |        |  | 27,868  |              |  |  |    |   |  |  | 198    | 
|299 |  | Main Street Building              |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 1,398  |              |        |  | 7,922   |              |  |  |    |   |  |  | 243    | 
|300 |  | Plaza Center                      |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 16,680 |              |        |  | 94,521  |              |  |  |    |   |  |  | 415    | 
|301 |  | Plaza East                        |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 4,687  |              |        |  | 26,561  |              |  |  |    |   |  |  | 540    | 
|302 |  | Sunset North Corporate Campus     |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 17,031 |              |        |  | 79,249  |              |  |  |    |   |  |  | 12,281 | 
|303 |  | City Center Bellevue              |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              | 10,349 |              |        |  | 93,142  |              |  |  |    |   |  |  | 4,715  | 
|304 |  | One Bellevue Center               |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              |       |              |        |  | 56,223  |              |  |  |    |   |  |  | 1,634  | 
|305 |  | Rainier Plaza                     |  |       |         |   |          | Bellevue    |         |              | WA |                 |           |                   |              |   |     |              |       |              |        |  | 79,928  |              |  |  |    |   |  |  | 1,701  | 
|306 |  | ABAM Building                     |  |       |         |   |          | Federal Way |         |              | WA |                 |           |                   |              |   |     |              | 804    |              |        |  | 4,555   |              |  |  |    |   |  |  | 429    | 
|307 |  | Federal Way Office Building       |  |       |         |   |          | Federal Way |         |              | WA |                 |           |                   |              |   |     |              | 173    |              |        |  | 979     |              |  |  |    |   |  |  |       | 
|308 |  | Washington Park                   |  |       |         |   |          | Federal Way |         |              | WA |                 |           |                   |              |   |     |              | 896    |              |        |  | 5,075   |              |  |  |    |   |  |  | 202    | 
|309 |  | 4000 Kruse Way Place              |  |       |         |   |          | Lake Oswego |         |              | OR |                 |           |                   |              |   |     |              | 4,475  |              |        |  | 25,360  |              |  |  |    |   |  |  | 937    | 
|310 |  | 4004 Kruse Way Place              |  |       |         |   |          | Lake Oswego |         |              | OR |                 |           |                   |              |   |     |              | 1,888  |              |        |  | 10,698  |              |  |  |    |   |  |  | 444    | 
|311 |  | 4800 Meadows                      |  |       |         |   |          | Lake Oswego |         |              | OR |                 |           |                   |              |   |     |              |       |              |        |  | 17,448  |              |  |  |    |   |  |  | 54     | 
|312 |  | 4900-5000 Meadows                 |  |       |         |   |          | Lake Oswego |         |              | OR |                 |           |                   |              |   |     |              |       |              |        |  | 30,528  |              |  |  |    |   |  |  | 633    | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2002              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)  | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|258 |  |                         | 12,583  |              |              |  | 71,695    |          |             |  | 84,278       |               |  |            | (4,580   | )           |  | 1989      |  | 06/19/00 |  |  | 40 | 
|259 |  |                         | 8,766   |              |              |  | 50,461    |          |             |  | 59,227       |               |  |            | (1,917   | )           |  | 1986/1994 |  | 07/02/01 |  |  | 40 | 
|260 |  |                         | 2,431   |              |              |  | 14,228    |          |             |  | 16,659       |               |  |            | (507     | )           |  | 1984      |  | 07/02/01 |  |  | 40 | 
|261 |  |                         | 1,129   |              |              |  | 6,557     |          |             |  | 7,686        |               |  |            | (233     | )           |  | 1972      |  | 07/02/01 |  |  | 40 | 
|262 |  |                         | 2,925   |              |              |  | 16,575    |          |             |  | 19,500       |               |  |            | (604     | )           |  | 1989      |  | 07/02/01 |  |  | 40 | 
|263 |  |                         | 11,204  |              |              |  | 64,824    |          |             |  | 76,028       |               |  |            | (2,421   | )           |  | 1984-1985 |  | 07/02/01 |  |  | 40 | 
|264 |  |                         | 18,029  |              |              |  | 103,110   |          |             |  | 121,139      |               |  |            | (3,758   | )           |  | 1986-1987 |  | 07/02/01 |  |  | 40 | 
|265 |  |                         | 2,012   |              |              |  | 11,402    |          |             |  | 13,414       |               |  |            | (416     | )           |  | 1966      |  | 07/02/01 |  |  | 40 | 
|266 |  |                         | 13,977  |              |              |  | 208,471   |          |             |  | 222,448      |               |  |            | (7,139   | )           |  | 2001      |  | 07/02/01 |  |  | 40 | 
|267 |  |                         | 49,228  |              |              |  | 280,971   |          |             |  | 330,199      |               |  |            | (10,585  | )           |  | 1980/2000 |  | 07/02/01 |  |  | 40 | 
|268 |  |                         | 9,631   |              |              |  | 54,887    |          |             |  | 64,518       |               |  |            | (2,039   | )           |  | 1986      |  | 07/02/01 |  |  | 40 | 
|269 |  |                         | 6,395   |              |              |  | 36,283    |          |             |  | 42,678       |               |  |            | (1,326   | )           |  | 1985-1986 |  | 07/02/01 |  |  | 40 | 
|270 |  |                         | 7,873   |              |              |  | 47,251    |          |             |  | 55,124       |               |  |            | (1,688   | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|271 |  |                         | 16,286  |              |              |  | 92,981    |          |             |  | 109,267      |               |  |            | (3,425   | )           |  | 1983-1984 |  | 07/02/01 |  |  | 40 | 
|272 |  |                         | 6,409   |              |              |  | 36,388    |          |             |  | 42,797       |               |  |            | (1,330   | )           |  | 1998      |  | 07/02/01 |  |  | 40 | 
|273 |  |                         | 3,000   |              |              |  | 17,000    |          |             |  | 20,000       |               |  |            | (620     | )           |  | 1975      |  | 07/02/01 |  |  | 40 | 
|274 |  |                         | 2,263   |              |              |  | 12,823    |          |             |  | 15,086       |               |  |            | (468     | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|275 |  |                         | 1,050   |              |              |  | 5,950     |          |             |  | 7,000        |               |  |            | (217     | )           |  | 1975      |  | 07/02/01 |  |  | 40 | 
|276 |  |                         | 1,275   |              |              |  | 7,225     |          |             |  | 8,500        |               |  |            | (263     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|277 |  |                         | 5,100   |              |              |  | 28,900    |          |             |  | 34,000       |               |  |            | (1,054   | )           |  | 1979      |  | 07/02/01 |  |  | 40 | 
|278 |  |                         | 2,880   |              |              |  | 16,320    |          |             |  | 19,200       |               |  |            | (595     | )           |  | 1972/1980 |  | 07/02/01 |  |  | 40 | 
|279 |  |                         | 5,265   |              |              |  | 30,191    |          |             |  | 35,456       |               |  |            | (1,156   | )           |  | 1972/1980 |  | 07/02/01 |  |  | 40 | 
|280 |  |                         | 2,475   |              |              |  | 14,029    |          |             |  | 16,504       |               |  |            | (511     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|281 |  |                         | 2,010   |              |              |  | 11,513    |          |             |  | 13,523       |               |  |            | (422     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|282 |  |                         | 2,870   |              |              |  | 16,437    |          |             |  | 19,307       |               |  |            | (607     | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|283 |  |                         | 2,031   |              |              |  | 11,678    |          |             |  | 13,709       |               |  |            | (422     | )           |  | 1980      |  | 07/02/01 |  |  | 40 | 
|284 |  |                         | 186     |              |              |  | 1,057     |          |             |  | 1,243        |               |  |            | (39      | )           |  | 1979      |  | 07/02/01 |  |  | 40 | 
|285 |  |                         | 9,388   |              |              |  | 87,437    |          |             |  | 96,825       |               |  |            | (11,311  | )           |  | 1981      |  | 12/19/97 |  |  | 40 | 
|286 |  |                         | 4,890   |              |              |  | 44,054    |          |             |  | 48,944       |               |  |            | (5,551   | )           |  | 1990      |  | 12/19/97 |  |  | 40 | 
|287 |  |                         | 1,095   |              |              |  | 6,205     |          |             |  | 7,300        |               |  |            | (226     | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|288 |  |                         | 495     |              |              |  | 2,805     |          |             |  | 3,300        |               |  |            | (102     | )           |  | 1979      |  | 07/02/01 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|    |  |                         | 301,819 |              |              |  | 2,322,921 |          |             |  | 2,624,740    |               |  |            | (128,419 | )           |  |           |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|289 |  |                         |        |              |              |  | 16,040    |          |             |  | 16,040       |               |  |            | (584     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|290 |  |                         | 6,333   |              |              |  | 36,774    |          |             |  | 43,107       |               |  |            | (2,369   | )           |  | 1981      |  | 06/19/00 |  |  | 40 | 
|291 |  |                         | 12,231  |              |              |  | 70,508    |          |             |  | 82,739       |               |  |            | (2,604   | )           |  | 1980      |  | 07/02/01 |  |  | 40 | 
|292 |  |                         | 3,593   |              |              |  | 21,207    |          |             |  | 24,800       |               |  |            | (867     | )           |  | 1985      |  | 07/02/01 |  |  | 40 | 
|293 |  |                         | 2,016   |              |              |  | 11,773    |          |             |  | 13,789       |               |  |            | (424     | )           |  | 1988      |  | 07/02/01 |  |  | 40 | 
|294 |  |                         | 6,471   |              |              |  | 37,693    |          |             |  | 44,164       |               |  |            | (1,411   | )           |  | 1985      |  | 07/02/01 |  |  | 40 | 
|295 |  |                         | 1,011   |              |              |  | 5,803     |          |             |  | 6,814        |               |  |            | (212     | )           |  | 1986      |  | 07/02/01 |  |  | 40 | 
|296 |  |                         | 3,725   |              |              |  | 21,261    |          |             |  | 24,986       |               |  |            | (773     | )           |  | 1986      |  | 07/02/01 |  |  | 40 | 
|297 |  |                         | 3,235   |              |              |  | 18,594    |          |             |  | 21,829       |               |  |            | (705     | )           |  | 1983-1985 |  | 07/02/01 |  |  | 40 | 
|298 |  |                         | 4,918   |              |              |  | 28,066    |          |             |  | 32,984       |               |  |            | (1,050   | )           |  | 1983-1985 |  | 07/02/01 |  |  | 40 | 
|299 |  |                         | 1,398   |              |              |  | 8,165     |          |             |  | 9,563        |               |  |            | (299     | )           |  | 1980      |  | 07/02/01 |  |  | 40 | 
|300 |  |                         | 16,680  |              |              |  | 94,936    |          |             |  | 111,616      |               |  |            | (3,500   | )           |  | 1978/1983 |  | 07/02/01 |  |  | 40 | 
|301 |  |                         | 4,687   |              |              |  | 27,101    |          |             |  | 31,788       |               |  |            | (1,000   | )           |  | 1988      |  | 07/02/01 |  |  | 40 | 
|302 |  |                         | 17,031  |              |              |  | 91,530    |          |             |  | 108,561      |               |  |            | (9,675   | )           |  | 1999      |  | 06/30/00 |  |  | 40 | 
|303 |  |                         | 10,349  |              |              |  | 97,857    |          |             |  | 108,206      |               |  |            | (9,828   | )           |  | 1987      |  | 01/28/99 |  |  | 40 | 
|304 |  |                         |        |              |              |  | 57,857    |          |             |  | 57,857       |               |  |            | (7,932   | )           |  | 1983      |  | 12/17/97 |  |  | 40 | 
|305 |  |                         |        |              |              |  | 81,629    |          |             |  | 81,629       |               |  |            | (10,761  | )           |  | 1986      |  | 12/17/97 |  |  | 40 | 
|306 |  |                         | 804     |              |              |  | 4,984     |          |             |  | 5,788        |               |  |            | (161     | )           |  | 1985      |  | 07/02/01 |  |  | 40 | 
|307 |  |                         | 173     |              |              |  | 979       |          |             |  | 1,152        |               |  |            | (35      | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|308 |  |                         | 896     |              |              |  | 5,277     |          |             |  | 6,173        |               |  |            | (179     | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 
|309 |  |                         | 4,475   |              |              |  | 26,297    |          |             |  | 30,772       |               |  |            | (1,053   | )           |  | 1981/1986 |  | 07/02/01 |  |  | 40 | 
|310 |  |                         | 1,888   |              |              |  | 11,142    |          |             |  | 13,030       |               |  |            | (441     | )           |  | 1996      |  | 07/02/01 |  |  | 40 | 
|311 |  |                         |        |              |              |  | 17,502    |          |             |  | 17,502       |               |  |            | (642     | )           |  | 1998      |  | 07/02/01 |  |  | 40 | 
|312 |  |                         |        |              |              |  | 31,161    |          |             |  | 31,161       |               |  |            | (1,171   | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 



---



##### 



|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |   |   |              |        |              |        |  |         |              |  |  |     |   |  |  |        |  
|--- |  | ----------------------------- |  | ----- | -------- | - | -------- | --------------- | ------- | ------------ | --- | --------------- | --------- | ----------------- | ------------- | - | - | ------------ | ------ | ------------ | ------ |  | ------- | ------------ |  |  | --- | - |  |  | ------ | -
|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |  
|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           | Costs Capitalized |              
|    |  |                               |  |       |          |   |          |                 |         |              |     | Initial Cost to |           |                   | Subsequent to |  
|    |  |                               |  |       |          |   |          |                 |         |              |     | Equity Office   |           |                   | Acquisition   |  
|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |  
|    |  |                               |  |       |          |   |          |                 |         | Encumbrances |     |                 |           |                   | Building and  |   |   |              |        | Building and |       
|    |  | Description                   |  | Notes |          |   | Location |                 | State   |              |     | at 12/31/02     |           |                   | Land          |   |   | Improvements |        |              | Land   |  |         | Improvements | 
|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |   |   |              |        |              |        |  |         |              | 
|313 |  | 4949 Meadows                  |  |       |          |   |          | Lake Oswego     |         |              | OR  |                 |           |                   |              |   |   |              |       |              |        |  | 26,941  |              |  |  |    |   |  |  | 224    |  
|314 |  | Kruse Oaks I                  |  |       |          |   |          | Lake Oswego     |         |              | OR  |                 |           |                   |              |   |   |              |       |              |        |  | 14,648  |              |  |  |    |   |  |  | 4,057  |  
|315 |  | Kruse Way Plaza I & II        |  |       |          |   |          | Lake Oswego     |         |              | OR  |                 |           |                   |              |   |   |              | 2,866  |              |        |  | 16,239  |              |  |  |    |   |  |  | 227    |  
|316 |  | Kruse Woods                   |  |       |          |   |          | Lake Oswego     |         |              | OR  |                 |           |                   |              |   |   |              | 10,812 |              |        |  | 80,977  |              |  |  |    |   |  |  | 1,345  |  
|317 |  | Island Corporate Center       |  |       |          |   |          | Mercer Island   |         |              | WA  |                 |           |                   | (12,359       | ) |   |              | 2,700  |              |        |  | 15,300  |              |  |  |    |   |  |  | 236    |  
|318 |  | 5550 Macadam Building         |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 870    |              |        |  | 4,929   |              |  |  |    |   |  |  | 213    |  
|319 |  | Benjamin Franklin Plaza       |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 7,505  |              |        |  | 42,529  |              |  |  |    |   |  |  | 1,624  |  
|320 |  | Congress Center               |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 5,383  |              |        |  | 48,634  |              |  |  |    |   |  |  | 7,301  |  
|321 |  | Lincoln Center                |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 18,760 |              |        |  | 106,307 |              |  |  |    |   |  |  | 3,380  |  
|322 |  | One Pacific Square            |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 4,451  |              |        |  | 25,221  |              |  |  |    |   |  |  | 422    |  
|323 |  | River Forum I & II            |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 4,038  |              |        |  | 22,881  |              |  |  |    |   |  |  | 1,262  |  
|324 |  | RiverSide Centre (Oregon)     |  |       |          |   |          | Portland        |         |              | OR  |                 |           |                   |              |   |   |              | 2,180  |              |        |  | 12,353  |              |  |  |    |   |  |  | 152    |  
|325 |  | Southgate Office Plaza I & II |  |       |          |   |          | Renton          |         |              | WA  |                 |           |                   |              |   |   |              | 4,794  |              |        |  | 27,163  |              |  |  |    |   |  |  | 2,621  |  
|326 |  | Washington Mutual Tower       |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   | (78,568       | ) |   |              | 51,000 |              |        |  | 289,000 |              |  |  |    |   |  |  | (3     | )
|327 |  | World Trade Center East       |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              |       |              |        |  | 38,567  |              |  |  |    |   |  |  | 229    |  
|328 |  | 1111 Third Avenue             |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              | 9,900  |              |        |  | 89,571  |              |  |  |    |   |  |  | 3,479  |  
|329 |  | 10833-10845 NE 8th Street     |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              |       |              |        |  | 2,000   |              |  |  |    |   |  |  | 28     |  
|330 |  | Nordstrom Medical Tower       |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              | 1,700  |              |        |  | 15,450  |              |  |  |    |   |  |  | 465    |  
|331 |  | Second and Seneca             |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              | 10,922 |              |        |  | 98,927  |              |  |  |    |   |  |  | 2,687  |  
|332 |  | Second and Spring Building    |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              | 1,968  |              |        |  | 17,716  |              |  |  |    |   |  |  | 2,565  |  
|333 |  | Wells Fargo Center            |  |       |          |   |          | Seattle         |         |              | WA  |                 |           |                   |              |   |   |              | 21,361 |              |        |  | 193,529 |              |  |  |    |   |  |  | 6,632  |  
|334 |  | Nimbus Corporate Center       |  |       |          |   |          | Tigard          |         |              | OR  |                 |           |                   |              |   |   |              | 12,934 |              |        |  | 73,291  |              |  |  |    |   |  |  | 2,189  |  
|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |   |   |              |        |              |        |  |         |              | 
|    |  | Seattle Region Totals         |  |       | (111,059 | ) |          |                 | 276,056 |              |     |                 | 2,056,985 |                   |               |   | 2 |              |        |              | 70,659 | 
|    |  |                               |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |   |  
|    |  | Washington D.C. Region        |  |       |          |   |          |                 |         |              |     |                 |           |                   |               |   |   |              |        |              |        |  |         |              |  |  |     |   |  |  |        |  
|335 |  | Polk and Taylor Buildings     |  |       |          |   |          | Arlington       |         |              | VA  |                 |           |                   |              |   |   |              | 16,943 |              |        |  | 152,483 |              |  |  |    |   |  |  | 13,852 |  
|336 |  | Four & Five Valley Square     |  |       |          |   |          | Blue Bell       |         |              | PA  |                 |           |                   |              |   |   |              | 866    |              |        |  | 7,793   |              |  |  | (1  | ) |  |  | 1,702  |  
|337 |  | One Valley Square             |  |       |          |   |          | Blue Bell       |         |              | PA  |                 |           |                   |              |   |   |              | 717    |              |        |  | 6,457   |              |  |  | (19 | ) |  |  | 784    |  
|338 |  | Three Valley Square           |  |       |          |   |          | Blue Bell       |         |              | PA  |                 |           |                   |              |   |   |              | 1,012  |              |        |  | 9,111   |              |  |  | (50 | ) |  |  | 1,271  |  
|339 |  | Two Valley Square             |  |       |          |   |          | Blue Bell       |         |              | PA  |                 |           |                   |              |   |   |              | 879    |              |        |  | 7,913   |              |  |  | (17 | ) |  |  | 572    |  
|340 |  | Four Falls                    |  |       |          |   |          | Conshohocken    |         |              | PA  |                 |           |                   |              |   |   |              | 4,939  |              |        |  | 44,458  |              |  |  | 55  |   |  |  | 2,778  |  
|341 |  | Centerpointe I & II           |  |       |          |   |          | Fairfax         |         |              | VA  |                 |           |                   |              |   |   |              | 8,838  |              |        |  | 79,540  |              |  |  | 367 |   |  |  | 1,749  |  
|342 |  | Fair Oaks Plaza               |  |       |          |   |          | Fairfax         |         |              | VA  |                 |           |                   |              |   |   |              | 2,412  |              |        |  | 21,712  |              |  |  | 35  |   |  |  | 1,048  |  
|343 |  | Northridge I                  |  |       | (4)      |   |          | Herndon         |         |              | VA  |                 |           |                   | (13,246       | ) |   |              | 3,225  |              |        |  | 29,024  |              |  |  |    |   |  |  | 1,526  |  
|344 |  | Oak Hill Plaza                |  |       |          |   |          | King of Prussia |         |              | PA  |                 |           |                   |              |   |   |              | 2,208  |              |        |  | 19,879  |              |  |  |    |   |  |  | 2,142  |  
|345 |  | Walnut Hill Plaza             |  |       |          |   |          | King of Prussia |         |              | PA  |                 |           |                   | (13,861       | ) |   |              | 2,045  |              |        |  | 18,410  |              |  |  |    |   |  |  | 845    |  
|346 |  | E.J. Randolph                 |  |       | (4)      |   |          | McLean          |         |              | VA  |                 |           |                   | (14,605       | ) |   |              | 3,937  |              |        |  | 35,429  |              |  |  | 7   |   |  |  | 791    |  
|347 |  | E.J. Randolph II              |  |       | (6)      |   |          | McLean          |         |              | VA  |                 |           |                   |              |   |   |              | 5,770  |              |        |  | 24,587  |              |  |  |    |   |  |  | 4,491  |  
|348 |  | John Marshall I               |  |       |          |   |          | McLean          |         |              | VA  |                 |           |                   | (17,912       | ) |   |              | 5,216  |              |        |  | 46,814  |              |  |  | 24  |   |  |  | 461    |  
|349 |  | John Marshall III             |  |       |          |   |          | McLean          |         |              | VA  |                 |           |                   |              |   |   |              | 9,950  |              |        |  | 29,863  |              |  |  |    |   |  |  | 3,737  |  
|350 |  | 1601 Market                   |  |       | (3)      |   |          | Philadelphia    |         |              | PA  |                 |           |                   |              |   |   |              | 5,781  |              |        |  | 52,027  |              |  |  |    |   |  |  | 11,571 |  
|351 |  | 1700 Market                   |  |       |          |   |          | Philadelphia    |         |              | PA  |                 |           |                   |              |   |   |              | 9,389  |              |        |  | 84,498  |              |  |  |    |   |  |  | 24,827 |  
|352 |  | Reston Town Center Garage     |  |       | (3)      |   |          | Reston          |         |              | VA  |                 |           |                   |              |   |   |              | 1,943  |              |        |  | 9,792   |              |  |  |    |   |  |  | 1,776  |  
|353 |  | Reston Town Center            |  |       | (3)      |   |          | Reston          |         |              | VA  |                 |           |                   | (116,199      | ) |   |              | 18,175 |              |        |  | 154,576 |              |  |  | 83  |   |  |  | 11,128 |  
|354 |  | 1300 North 17th Street        |  |       |          |   |          | Rosslyn         |         |              | VA  |                 |           |                   |              |   |   |              | 9,811  |              |        |  | 88,296  |              |  |  |    |   |  |  | 2,973  |  
|355 |  | 1616 N. Fort Myer Drive       |  |       |          |   |          | Rosslyn         |         |              | VA  |                 |           |                   |              |   |   |              | 6,961  |              |        |  | 62,646  |              |  |  |    |   |  |  | 2,657  |  
|356 |  | Army and Navy Club Building   |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 3,773  |              |        |  | 33,954  |              |  |  |    |   |  |  | 156    |  
|357 |  | 1111 19th Street              |  |       | (3)      |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 5,024  |              |        |  | 45,216  |              |  |  |    |   |  |  | 1,136  |  
|358 |  | 1333 H Street                 |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 6,715  |              |        |  | 60,438  |              |  |  |    |   |  |  | 2,526  |  
|359 |  | 1620 L Street                 |  |       | (3)      |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 2,708  |              |        |  | 24,374  |              |  |  |    |   |  |  | 1,396  |  
|360 |  | Market Square                 |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 33,077 |              |        |  | 187,437 |              |  |  |    |   |  |  | 1,114  |  
|361 |  | One Lafayette Centre          |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 8,262  |              |        |  | 74,362  |              |  |  |    |   |  |  | 2,434  |  
|362 |  | Three Lafayette Centre        |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 6,871  |              |        |  | 61,841  |              |  |  |    |   |  |  | 138    |  
|363 |  | Two Lafayette Centre          |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 2,642  |              |        |  | 26,676  |              |  |  |    |   |  |  | 717    |  
|364 |  | Liberty Place                 |  |       |          |   |          | Washington      |         |              | D.C |                 |           |                   |              |   |   |              | 5,625  |              |        |  | 50,625  |              |  |  |    |   |  |  |       |  
|365 |  | One Devon Square              |  |       |          |   |          | Wayne           |         |              | PA  |                 |           |                   |              |   |   |              | 1,025  |              |        |  | 9,227   |              |  |  |    |   |  |  | 1,614  |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                        |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | ---------------------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2002              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)               | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                        | 
|313 |  |                         |        |              |              |  | 27,165    |          |             |  | 27,165       |               |  |            | (985     | )           |  | 1997                   |  | 07/02/01 |  |  | 40 | 
|314 |  |                         |        |              |              |  | 18,705    |          |             |  | 18,705       |               |  |            | (652     | )           |  | 2001                   |  | 07/02/01 |  |  | 40 | 
|315 |  |                         | 2,866   |              |              |  | 16,466    |          |             |  | 19,332       |               |  |            | (601     | )           |  | 1984-1986              |  | 07/02/01 |  |  | 40 | 
|316 |  |                         | 10,812  |              |              |  | 82,322    |          |             |  | 93,134       |               |  |            | (3,095   | )           |  | 1986-1988              |  | 07/02/01 |  |  | 40 | 
|317 |  |                         | 2,700   |              |              |  | 15,536    |          |             |  | 18,236       |               |  |            | (1,004   | )           |  | 1987                   |  | 06/19/00 |  |  | 40 | 
|318 |  |                         | 870     |              |              |  | 5,142     |          |             |  | 6,012        |               |  |            | (202     | )           |  | 1980                   |  | 07/02/01 |  |  | 40 | 
|319 |  |                         | 7,505   |              |              |  | 44,153    |          |             |  | 51,658       |               |  |            | (1,721   | )           |  | 1974/1994              |  | 07/02/01 |  |  | 40 | 
|320 |  |                         | 5,383   |              |              |  | 55,935    |          |             |  | 61,318       |               |  |            | (7,378   | )           |  | 1980                   |  | 12/17/97 |  |  | 40 | 
|321 |  |                         | 18,760  |              |              |  | 109,687   |          |             |  | 128,447      |               |  |            | (4,008   | )           |  | 1980/1989              |  | 07/02/01 |  |  | 40 | 
|322 |  |                         | 4,451   |              |              |  | 25,643    |          |             |  | 30,094       |               |  |            | (954     | )           |  | 1983                   |  | 07/02/01 |  |  | 40 | 
|323 |  |                         | 4,038   |              |              |  | 24,143    |          |             |  | 28,181       |               |  |            | (963     | )           |  | 1985                   |  | 07/02/01 |  |  | 40 | 
|324 |  |                         | 2,180   |              |              |  | 12,505    |          |             |  | 14,685       |               |  |            | (996     | )           |  | 1947/1979              |  | 07/02/01 |  |  | 40 | 
|325 |  |                         | 4,794   |              |              |  | 29,784    |          |             |  | 34,578       |               |  |            | (1,008   | )           |  | 1987/1991              |  | 07/02/01 |  |  | 40 | 
|326 |  |                         | 51,000  |              |              |  | 288,997   |          |             |  | 339,997      |               |  |            | (19,413  | )           |  | 1988                   |  | 06/19/00 |  |  | 40 | 
|327 |  |                         |        |              |              |  | 38,796    |          |             |  | 38,796       |               |  |            | (2,225   | )           |  | 2000                   |  | 09/08/00 |  |  | 40 | 
|328 |  |                         | 9,900   |              |              |  | 93,050    |          |             |  | 102,950      |               |  |            | (13,479  | )           |  | 1980                   |  | 12/17/97 |  |  | 40 | 
|329 |  |                         |        |              |              |  | 2,028     |          |             |  | 2,028        |               |  |            | (2       | )           |  | 1962, 1978, 1982, 1987 |  | 07/02/01 |  |  | 40 | 
|330 |  |                         | 1,700   |              |              |  | 15,915    |          |             |  | 17,615       |               |  |            | (2,128   | )           |  | 1986                   |  | 12/17/97 |  |  | 40 | 
|331 |  |                         | 10,922  |              |              |  | 101,614   |          |             |  | 112,536      |               |  |            | (13,542  | )           |  | 1991                   |  | 12/17/97 |  |  | 40 | 
|332 |  |                         | 1,968   |              |              |  | 20,281    |          |             |  | 22,249       |               |  |            | (2,611   | )           |  | 1906/1989              |  | 07/29/98 |  |  | 40 | 
|333 |  |                         | 21,361  |              |              |  | 200,161   |          |             |  | 221,522      |               |  |            | (26,345  | )           |  | 1983                   |  | 12/17/97 |  |  | 40 | 
|334 |  |                         | 12,934  |              |              |  | 75,480    |          |             |  | 88,414       |               |  |            | (2,805   | )           |  | 1991                   |  | 07/02/01 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                        | 
|    |  |                         | 276,058 |              |              |  | 2,127,644 |          |             |  | 2,403,702    |               |  |            | (163,793 | )           |  |                        |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                        | 
|335 |  |                         | 16,943  |              |              |  | 166,335   |          |             |  | 183,278      |               |  |            | (20,653  | )           |  | 1970                   |  | 05/22/98 |  |  | 40 | 
|336 |  |                         | 865     |              |              |  | 9,495     |          |             |  | 10,360       |               |  |            | (1,356   | )           |  | 1988                   |  | 10/07/97 |  |  | 40 | 
|337 |  |                         | 698     |              |              |  | 7,241     |          |             |  | 7,939        |               |  |            | (1,296   | )           |  | 1982                   |  | 11/21/97 |  |  | 40 | 
|338 |  |                         | 962     |              |              |  | 10,382    |          |             |  | 11,344       |               |  |            | (1,735   | )           |  | 1984                   |  | 11/21/97 |  |  | 40 | 
|339 |  |                         | 862     |              |              |  | 8,485     |          |             |  | 9,347        |               |  |            | (1,259   | )           |  | 1990                   |  | 10/07/97 |  |  | 40 | 
|340 |  |                         | 4,994   |              |              |  | 47,236    |          |             |  | 52,230       |               |  |            | (6,785   | )           |  | 1988                   |  | 10/07/97 |  |  | 40 | 
|341 |  |                         | 9,205   |              |              |  | 81,289    |          |             |  | 90,494       |               |  |            | (10,541  | )           |  | 1990/1998              |  | 12/19/97 |  |  | 40 | 
|342 |  |                         | 2,447   |              |              |  | 22,760    |          |             |  | 25,207       |               |  |            | (3,210   | )           |  | 1986                   |  | 11/24/97 |  |  | 40 | 
|343 |  |                         | 3,225   |              |              |  | 30,550    |          |             |  | 33,775       |               |  |            | (4,066   | )           |  | 1988                   |  | 12/19/97 |  |  | 40 | 
|344 |  |                         | 2,208   |              |              |  | 22,021    |          |             |  | 24,229       |               |  |            | (2,755   | )           |  | 1982                   |  | 10/07/97 |  |  | 40 | 
|345 |  |                         | 2,045   |              |              |  | 19,255    |          |             |  | 21,300       |               |  |            | (2,775   | )           |  | 1985                   |  | 10/07/97 |  |  | 40 | 
|346 |  |                         | 3,944   |              |              |  | 36,220    |          |             |  | 40,164       |               |  |            | (4,675   | )           |  | 1983                   |  | 12/19/97 |  |  | 40 | 
|347 |  |                         | 5,770   |              |              |  | 29,078    |          |             |  | 34,848       |               |  |            | (767     | )           |  | 2002                   |  | 12/19/97 |  |  | 40 | 
|348 |  |                         | 5,240   |              |              |  | 47,275    |          |             |  | 52,515       |               |  |            | (5,966   | )           |  | 1981                   |  | 12/19/97 |  |  | 40 | 
|349 |  |                         | 9,950   |              |              |  | 33,600    |          |             |  | 43,550       |               |  |            | (3,142   | )           |  | 2000                   |  | 12/19/97 |  |  | 40 | 
|350 |  |                         | 5,781   |              |              |  | 63,598    |          |             |  | 69,379       |               |  |            | (10,016  | )           |  | 1970                   |  | 01/18/96 |  |  | 40 | 
|351 |  |                         | 9,389   |              |              |  | 109,325   |          |             |  | 118,714      |               |  |            | (17,577  | )           |  | 1969/1989              |  | 10/01/97 |  |  | 40 | 
|352 |  |                         | 1,943   |              |              |  | 11,568    |          |             |  | 13,511       |               |  |            | (1,134   | )           |  | 1999                   |  | 10/22/96 |  |  | 40 | 
|353 |  |                         | 18,258  |              |              |  | 165,704   |          |             |  | 183,962      |               |  |            | (22,160  | )           |  | 1990                   |  | 10/22/96 |  |  | 40 | 
|354 |  |                         | 9,811   |              |              |  | 91,269    |          |             |  | 101,080      |               |  |            | (11,581  | )           |  | 1980                   |  | 12/19/97 |  |  | 40 | 
|355 |  |                         | 6,961   |              |              |  | 65,303    |          |             |  | 72,264       |               |  |            | (8,391   | )           |  | 1974                   |  | 12/19/97 |  |  | 40 | 
|356 |  |                         | 3,773   |              |              |  | 34,110    |          |             |  | 37,883       |               |  |            | (495     | )           |  | 1986                   |  | 05/24/02 |  |  | 40 | 
|357 |  |                         | 5,024   |              |              |  | 46,352    |          |             |  | 51,376       |               |  |            | (6,605   | )           |  | 1979/1993              |  | 12/18/91 |  |  | 40 | 
|358 |  |                         | 6,715   |              |              |  | 62,964    |          |             |  | 69,679       |               |  |            | (8,192   | )           |  | 1982                   |  | 12/19/97 |  |  | 40 | 
|359 |  |                         | 2,708   |              |              |  | 25,770    |          |             |  | 28,478       |               |  |            | (4,079   | )           |  | 1989                   |  | 02/05/93 |  |  | 40 | 
|360 |  |                         | 33,077  |              |              |  | 188,551   |          |             |  | 221,628      |               |  |            | (12,048  | )           |  | 1990                   |  | 06/19/00 |  |  | 40 | 
|361 |  |                         | 8,262   |              |              |  | 76,796    |          |             |  | 85,058       |               |  |            | (10,337  | )           |  | 1980/1993              |  | 10/17/97 |  |  | 40 | 
|362 |  |                         | 6,871   |              |              |  | 61,979    |          |             |  | 68,850       |               |  |            | (1,871   | )           |  | 1986                   |  | 10/17/01 |  |  | 40 | 
|363 |  |                         | 2,642   |              |              |  | 27,393    |          |             |  | 30,035       |               |  |            | (1,730   | )           |  | 1985                   |  | 07/11/00 |  |  | 40 | 
|364 |  |                         | 5,625   |              |              |  | 50,625    |          |             |  | 56,250       |               |  |            | (369     | )           |  | 1991                   |  | 09/17/02 |  |  | 40 | 
|365 |  |                         | 1,025   |              |              |  | 10,841    |          |             |  | 11,866       |               |  |            | (1,715   | )           |  | 1984                   |  | 10/07/97 |  |  | 40 | 



---



##### 



|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              |  |  |     |   |  |  |     |  
|--- |  | ----------------------------------- |  | ----- | ---------- | - | -------- | ------------- | --------- | ------------ | -- | --------------- | ---------- | ----------------- | ------------- | - | ----- | ------------ | ------ | ------------ | --------- | - | ------- | ------------ |  |  | --- | - |  |  | --- | -
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            | Costs Capitalized |              
|    |  |                                     |  |       |            |   |          |               |           |              |    | Initial Cost to |            |                   | Subsequent to |  
|    |  |                                     |  |       |            |   |          |               |           |              |    | Equity Office   |            |                   | Acquisition   |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |  
|    |  |                                     |  |       |            |   |          |               |           | Encumbrances |    |                 |            |                   | Building and  |   |       |              |        | Building and |          
|    |  | Description                         |  | Notes |            |   | Location |               | State     |              |    | at 12/31/02     |            |                   | Land          |   |       | Improvements |        |              | Land      |   |         | Improvements | 
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              | 
|366 |  | Three Devon Square                  |  |       |            |   |          | Wayne         |           |              | PA |                 |            |                   |              |   |       |              | 413    |              |           |   | 3,713   |              |  |  |    |   |  |  | 23  |  
|367 |  | Two Devon Square                    |  |       |            |   |          | Wayne         |           |              | PA |                 |            |                   |              |   |       |              | 659    |              |           |   | 5,935   |              |  |  |    |   |  |  | 307 |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              | 
|    |  | Washington D.C. Region Totals       |  |       | (175,823   | ) |          |               | 197,811   |              |    |                 | 1,569,106  |                   |               |   | 484   |              |        |              | 104,242   |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      
|    |  | Subtotal Office Properties          |  |       | (2,500,302 | ) |          |               | 2,803,622 |              |    |                 | 20,146,049 |                   |               |   | 3,910 |              |        |              | 1,109,379 |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      
|    |  | Development Properties:             |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              |  |  |     |   |  |  |     |  
|368 |  | Kruse Woods V                       |  |       | (9)        |   |          | Lake Oswego   |           |              | OR |                 |            |                   |              |   |       |              | 5,478  |              |           |   | 5,173   |              |  |  |    |   |  |  |    |  
|369 |  | Douglas Corporate Center II         |  |       | (9)        |   |          | Roseville     |           |              | CA |                 |            |                   |              |   |       |              | 1,700  |              |           |   | 3,347   |              |  |  |    |   |  |  |    |  
|370 |  | Ferry Building                      |  |       | (9)        |   |          | San Francisco |           |              | CA |                 |            |                   |              |   |       |              |       |              |           |   | 81,268  |              |  |  |    |   |  |  |    |  
|371 |  | Foundry Square II                   |  |       | (9)        |   |          | San Francisco |           |              | CA |                 |            |                   |              |   |       |              | 14,391 |              |           |   | 115,298 |              |  |  |    |   |  |  | (2  | )
|372 |  | Waters Edge Phase I                |  |       | (9)        |   |          | Los Angeles   |           |              | CA |                 |            |                   |              |   |       |              | 16,697 |              |           |   | 41,387  |              |  |  |    |   |  |  |    |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              | 
|    |  | Subtotal Development Properties     |  |       |           |   |          |               | 38,266    |              |    |                 | 246,473    |                   |               |   |      |              |        |              | (2        | )
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      
|    |  | Industrial Properties:              |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              |  |  |     |   |  |  |     |  
|    |  | Los Angeles Region                  |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              |  |  |     |   |  |  |     |  
|1   |  | Airport Commerce Center             |  |       |            |   |          | Bakersfield   |           |              | CA |                 |            |                   |              |   |       |              | 525    |              |           |   | 2,975   |              |  |  |    |   |  |  |    |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              | 
|    |  | Los Angeles Region Totals           |  |       |           |   |          |               | 525       |              |    |                 | 2,975      |                   |               |   |      |              |        |              |          |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      
|    |  | San Francisco Region                |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              |  |  |     |   |  |  |     |  
|2   |  | Benicia Ind II & III                |  |       |            |   |          | Benicia       |           |              | CA |                 |            |                   |              |   |       |              | 2,250  |              |           |   | 12,750  |              |  |  |    |   |  |  | 59  |  
|3   |  | BayCenter Business Park I, II & III |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 6,240  |              |           |   | 35,360  |              |  |  |    |   |  |  | 87  |  
|4   |  | Cabot Boulevard Warehouse           |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 1,905  |              |           |   | 10,795  |              |  |  |    |   |  |  | 43  |  
|5   |  | Eden Landing Business Center        |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 945    |              |           |   | 5,355   |              |  |  |    |   |  |  | 240 |  
|6   |  | Hayward Business Park               |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 6,750  |              |           |   | 38,250  |              |  |  |    |   |  |  | 156 |  
|7   |  | Huntwood Business Center            |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 2,625  |              |           |   | 14,875  |              |  |  |    |   |  |  | 208 |  
|8   |  | Huntwood Business Park              |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 675    |              |           |   | 3,825   |              |  |  |    |   |  |  |    |  
|9   |  | Keebler Warehouse                   |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 630    |              |           |   | 3,570   |              |  |  |    |   |  |  | 102 |  
|10  |  | The Good Guys Distribution Center   |  |       |            |   |          | Hayward       |           |              | CA |                 |            |                   |              |   |       |              | 3,525  |              |           |   | 19,975  |              |  |  |    |   |  |  |    |  
|11  |  | Independent Road Warehouse          |  |       |            |   |          | Oakland       |           |              | CA |                 |            |                   |              |   |       |              | 900    |              |           |   | 5,100   |              |  |  |    |   |  |  |    |  
|12  |  | Port of Oakland                     |  |       |            |   |          | Oakland       |           |              | CA |                 |            |                   |              |   |       |              | 2,025  |              |           |   | 11,475  |              |  |  |    |   |  |  | 205 |  
|13  |  | Montgomery Ward                     |  |       |            |   |          | Pleasant Hill |           |              | CA |                 |            |                   |              |   |       |              | 600    |              |           |   | 3,400   |              |  |  |    |   |  |  |    |  
|14  |  | Doolittle Business Center           |  |       |            |   |          | San Leandro   |           |              | CA |                 |            |                   |              |   |       |              | 1,320  |              |           |   | 7,480   |              |  |  |    |   |  |  | 23  |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              | 
|    |  | San Francisco Region Totals         |  |       |           |   |          |               | 30,390    |              |    |                 | 172,210    |                   |               |   |      |              |        |              | 1,123     |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      
|    |  | San Jose Region                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              |  |  |     |   |  |  |     |  
|15  |  | Fremont Bayside                     |  |       | (8)        |   |          | Fremont       |           |              | CA |                 |            |                   | (5,535        | ) |       |              | 2,025  |              |           |   | 11,475  |              |  |  |    |   |  |  | 59  |  
|16  |  | Fremont Commerce Centers            |  |       |            |   |          | Fremont       |           |              | CA |                 |            |                   |              |   |       |              | 4,440  |              |           |   | 25,160  |              |  |  |    |   |  |  | 108 |  
|17  |  | Industrial Drive                    |  |       | (8)        |   |          | Fremont       |           |              | CA |                 |            |                   | (2,053        | ) |       |              | 2,250  |              |           |   | 12,750  |              |  |  |    |   |  |  |    |  
|18  |  | Kato R & D                          |  |       |            |   |          | Fremont       |           |              | CA |                 |            |                   |              |   |       |              | 1,095  |              |           |   | 6,205   |              |  |  |    |   |  |  |    |  
|19  |  | Milmont R & D                       |  |       |            |   |          | Fremont       |           |              | CA |                 |            |                   |              |   |       |              | 900    |              |           |   | 5,100   |              |  |  |    |   |  |  |    |  
|20  |  | Cadillac Court I & II               |  |       |            |   |          | Milpitas      |           |              | CA |                 |            |                   |              |   |       |              | 1,460  |              |           |   | 8,272   |              |  |  |    |   |  |  |    |  
|21  |  | COG Warehouse                       |  |       |            |   |          | Milpitas      |           |              | CA |                 |            |                   |              |   |       |              | 1,275  |              |           |   | 7,225   |              |  |  |    |   |  |  |    |  
|22  |  | Dixon Landing North I & II          |  |       |            |   |          | Milpitas      |           |              | CA |                 |            |                   |              |   |       |              | 3,922  |              |           |   | 22,222  |              |  |  |    |   |  |  |    |  
|23  |  | Okidata Distribution Center         |  |       |            |   |          | Milpitas      |           |              | CA |                 |            |                   |              |   |       |              | 1,613  |              |           |   | 9,138   |              |  |  |    |   |  |  | 22  |  
|24  |  | Charcot Business Center             |  |       |            |   |          | San Jose      |           |              | CA |                 |            |                   |              |   |       |              | 3,450  |              |           |   | 19,550  |              |  |  |    |   |  |  | 184 |  
|25  |  | Montague Industrial Center          |  |       |            |   |          | San Jose      |           |              | CA |                 |            |                   |              |   |       |              | 3,750  |              |           |   | 21,250  |              |  |  |    |   |  |  | 431 |  
|26  |  | North American Van Lines            |  |       |            |   |          | San Jose      |           |              | CA |                 |            |                   |              |   |       |              | 2,089  |              |           |   | 11,837  |              |  |  | (58 | ) |  |  | 58  |  
|27  |  | 2509-2909 Stender Way               |  |       |            |   |          | Santa Clara   |           |              | CA |                 |            |                   |              |   |       |              | 1,275  |              |           |   | 7,225   |              |  |  |    |   |  |  |    |  
|28  |  | Walsh @ Lafayette Industrial Park   |  |       |            |   |          | Santa Clara   |           |              | CA |                 |            |                   |              |   |       |              | 5,250  |              |           |   | 29,750  |              |  |  |    |   |  |  |    |  
|29  |  | Kifer Road Industrial Park          |  |       |            |   |          | Sunnyvale     |           |              | CA |                 |            |                   |              |   |       |              | 4,830  |              |           |   | 27,370  |              |  |  |    |   |  |  | 9   |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |       |              |        |              |           |   |         |              | 
|    |  | San Jose Region Total               |  |       | (7,588     | ) |          |               | 39,624    |              |    |                 | 224,529    |                   |               |   | (58   | )            |        |              | 871       |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      
|    |  | Subtotal Industrial Properties      |  |       | (7,588     | ) |          |               | 70,539    |              |    |                 | 399,714    |                   |               |   | (58   | )            |        |              | 1,994     |  
|    |  |                                     |  |       |            |   |          |               |           |              |    |                 |            |                   |               |   |      

[Additional columns below]

[Continued from above table, first column(s) repeated]

|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           |  |          |  |  |     | 
|--- |  | ----------------------- | --------- | ------------ | ------------ |  | ---------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | ---------- | ----------- |  | --------- |  | -------- |  |  | --- | 
|    |  |                         |           |              |              |  |            |          |             |  |              |              
|    |  | Gross Amount Carried at |           |              |              |  |            |          |             |  |              |               | 
|    |  | Close of Period         |           |              |              |  |            |          |             |  |              |               | 
|    |  | 12/31/2002              |           |              |              |  |            |          |             |  |              |               | 
|    |  |                         |           |              |              |  |            |          | Date of     |  |              |               | 
|    |  |                         |           | Building and |              |  |            |          | Accumulated |  |              | Construction/ |  | Date       |            | Depreciable | 
|    |  | Land                    |           |              | Improvements |  |            | Total(1) |             |  | Depreciation |               |  | Renovation |            | Acquired    |  | Lives(2)  | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|366 |  |                         | 413       |              |              |  | 3,736      |          |             |  | 4,149        |               |  |            | (484       | )           |  | 1985      |  | 10/07/97 |  |  | 40  | 
|   
|367 |  |                         | 659       |              |              |  | 6,242      |          |             |  | 6,901        |               |  |            | (908       | )           |  | 1985      |  | 10/07/97 |  |  | 40  | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 198,295   |              |              |  | 1,673,348  |          |             |  | 1,871,643    |               |  |            | (190,673   | )           |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 2,807,532 |              |              |  | 21,255,428 |          |             |  | 24,062,960   |               |  |            | (2,037,732 | )           |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|368 |  |                         | 5,478     |              |              |  | 5,173      |          |             |  | 10,651       |               |  |            |           |             |  | N/A       |  | 07/02/01 |  |  | N/A | 
|369 |  |                         | 1,700     |              |              |  | 3,347      |          |             |  | 5,047        |               |  |            |           |             |  | N/A       |  | 07/02/01 |  |  | N/A | 
|   
|370 |  |                         |          |              |              |  | 81,268     |          |             |  | 81,268       |               |  |            |           |             |  | 1898      |  | 06/19/00 |  |  | N/A | 
|371 |  |                         | 14,391    |              |              |  | 115,296    |          |             |  | 129,687      |               |  |            |           |             |  | N/A       |  | 06/19/00 |  |  | N/A | 
|   
|372 |  |                         | 16,697    |              |              |  | 41,387     |          |             |  | 58,084       |               |  |            |           |             |  | N/A       |  | 06/27/01 |  |  | N/A | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 38,266    |              |              |  | 246,471    |          |             |  | 284,737      |               |  |            |           |             |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|   
|1   |  |                         | 525       |              |              |  | 2,975      |          |             |  | 3,500        |               |  |            | (108       | )           |  | 1982      |  | 07/02/01 |  |  | 40  | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 525       |              |              |  | 2,975      |          |             |  | 3,500        |               |  |            | (108       | )           |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|2   |  |                         | 2,250     |              |              |  | 12,809     |          |             |  | 15,059       |               |  |            | (492       | )           |  | 1996      |  | 07/02/01 |  |  | 40  | 
|   
|3   |  |                         | 6,240     |              |              |  | 35,447     |          |             |  | 41,687       |               |  |            | (1,294     | )           |  | 1994      |  | 07/02/01 |  |  | 40  | 
|   
|4   |  |                         | 1,905     |              |              |  | 10,838     |          |             |  | 12,743       |               |  |            | (397       | )           |  | 1988      |  | 07/02/01 |  |  | 40  | 
|   
|5   |  |                         | 945       |              |              |  | 5,595      |          |             |  | 6,540        |               |  |            | (195       | )           |  | 1990      |  | 07/02/01 |  |  | 40  | 
|   
|6   |  |                         | 6,750     |              |              |  | 38,406     |          |             |  | 45,156       |               |  |            | (1,403     | )           |  | 1980-1981 |  | 07/02/01 |  |  | 40  | 
|   
|7   |  |                         | 2,625     |              |              |  | 15,083     |          |             |  | 17,708       |               |  |            | (562       | )           |  | 1979      |  | 07/02/01 |  |  | 40  | 
|   
|8   |  |                         | 675       |              |              |  | 3,825      |          |             |  | 4,500        |               |  |            | (139       | )           |  | 1980-1985 |  | 07/02/01 |  |  | 40  | 
|   
|9   |  |                         | 630       |              |              |  | 3,672      |          |             |  | 4,302        |               |  |            | (130       | )           |  | 1985      |  | 07/02/01 |  |  | 40  | 
|   
|10  |  |                         | 3,525     |              |              |  | 19,975     |          |             |  | 23,500       |               |  |            | (728       | )           |  | 1990      |  | 07/02/01 |  |  | 40  | 
|   
|11  |  |                         | 900       |              |              |  | 5,100      |          |             |  | 6,000        |               |  |            | (186       | )           |  | 1972      |  | 07/02/01 |  |  | 40  | 
|   
|12  |  |                         | 2,025     |              |              |  | 11,680     |          |             |  | 13,705       |               |  |            | (423       | )           |  | 1977      |  | 07/02/01 |  |  | 40  | 
|13  |  |                         | 600       |              |              |  | 3,400      |          |             |  | 4,000        |               |  |            | (124       | )           |  | 1989      |  | 07/02/01 |  |  | 40  | 
|14  |  |                         | 1,320     |              |              |  | 7,503      |          |             |  | 8,823        |               |  |            | (278       | )           |  | 1978      |  | 07/02/01 |  |  | 40  | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 30,390    |              |              |  | 173,333    |          |             |  | 203,723      |               |  |            | (6,351     | )           |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|15  |  |                         | 2,025     |              |              |  | 11,534     |          |             |  | 13,559       |               |  |            | (420       | )           |  | 1990      |  | 07/02/01 |  |  | 40  | 
|16  |  |                         | 4,440     |              |              |  | 25,268     |          |             |  | 29,708       |               |  |            | (936       | )           |  | 1988      |  | 07/02/01 |  |  | 40  | 
|   
|17  |  |                         | 2,250     |              |              |  | 12,750     |          |             |  | 15,000       |               |  |            | (465       | )           |  | 1993      |  | 07/02/01 |  |  | 40  | 
|   
|18  |  |                         | 1,095     |              |              |  | 6,205      |          |             |  | 7,300        |               |  |            | (226       | )           |  | 1983      |  | 07/02/01 |  |  | 40  | 
|19  |  |                         | 900       |              |              |  | 5,100      |          |             |  | 6,000        |               |  |            | (186       | )           |  | 1990      |  | 07/02/01 |  |  | 40  | 
|20  |  |                         | 1,460     |              |              |  | 8,272      |          |             |  | 9,732        |               |  |            | (302       | )           |  | 1991      |  | 07/02/01 |  |  | 40  | 
|   
|21  |  |                         | 1,275     |              |              |  | 7,225      |          |             |  | 8,500        |               |  |            | (263       | )           |  | 1992      |  | 07/02/01 |  |  | 40  | 
|22  |  |                         | 3,922     |              |              |  | 22,222     |          |             |  | 26,144       |               |  |            | (810       | )           |  | 1998      |  | 07/02/01 |  |  | 40  | 
|   
|23  |  |                         | 1,613     |              |              |  | 9,160      |          |             |  | 10,773       |               |  |            | (337       | )           |  | 1993      |  | 07/02/01 |  |  | 40  | 
|   
|24  |  |                         | 3,450     |              |              |  | 19,734     |          |             |  | 23,184       |               |  |            | (733       | )           |  | 1978      |  | 07/02/01 |  |  | 40  | 
|   
|25  |  |                         | 3,750     |              |              |  | 21,681     |          |             |  | 25,431       |               |  |            | (828       | )           |  | 1993      |  | 07/02/01 |  |  | 40  | 
|   
|26  |  |                         | 2,031     |              |              |  | 11,895     |          |             |  | 13,926       |               |  |            | (432       | )           |  | 1988      |  | 07/02/01 |  |  | 40  | 
|   
|27  |  |                         | 1,275     |              |              |  | 7,225      |          |             |  | 8,500        |               |  |            | (263       | )           |  | 1995      |  | 07/02/01 |  |  | 40  | 
|   
|28  |  |                         | 5,250     |              |              |  | 29,750     |          |             |  | 35,000       |               |  |            | (1,085     | )           |  | 1996      |  | 07/02/01 |  |  | 40  | 
|   
|29  |  |                         | 4,830     |              |              |  | 27,379     |          |             |  | 32,209       |               |  |            | (998       | )           |  | 1979      |  | 07/02/01 |  |  | 40  | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 39,566    |              |              |  | 225,400    |          |             |  | 264,966      |               |  |            | (8,284     | )           |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 70,481    |              |              |  | 401,708    |          |             |  | 472,189      |               |  |            | (14,743    | )           |  |           |  |          |  |  |     | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 



---



##### 



| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |   |  |              |           |              |      |   |            |              |  |   |       |  |  |   |           | 
| |  | ------------------------------ |  | ----- | ---- |  | -------- | ------- | ----- | ------------ |  | --------------- |  | ----------------- | ------------- | - |  | ------------ | --------- | ------------ | ---- | - | ---------- | ------------ |  | - | ----- |  |  | - | --------- | 
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |  
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  | Costs Capitalized |              
| |  |                                |  |       |      |  |          |         |       |              |  | Initial Cost to |  |                   | Subsequent to |  
| |  |                                |  |       |      |  |          |         |       |              |  | Equity Office   |  |                   | Acquisition   |  
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |  
| |  |                                |  |       |      |  |          |         |       | Encumbrances |  |                 |  |                   | Building and  |   |  |              |           | Building and |     
| |  | Description                    |  | Notes |      |  | Location |         | State |              |  | at 12/31/02     |  |                   | Land          |   |  | Improvements |           |              | Land |   |            | Improvements | 
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
| |  | Land Available for Development |  |       |      |  |          | Various |       |              |  |                 |  |                   |              |   |  |              | 252,852   |              |      |   |           |              |  |   |      |  |  |   | 1,305     | 
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
| |  | Management Business and Other  |  |       |      |  |          |         |       |              |  |                 |  |                   |              |   |  |              |          |              |      |   |           |              |  |   |      |  |  |   | 89,473    | 
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
| |  | Investment in Real Estate      |  |       | (10) |  |          |         |       |              |  |                 |  | $                 | (2,507,890    | ) |  | $            | 3,165,279 |              |      | $ | 20,792,236 |              |  | $ | 3,852 |  |  | $ | 1,202,149 | 
| |  |                                |  |       |      |  |          |         |       |              |  |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

| |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          |  |         |  |  |      | 
| |  | ----------------------- | --------- | ------------ | ------------ | - | ---------- | -------- | ----------- | - | ------------ | ------------- |  | ---------- | ---------- | ----------- |  | -------- |  | ------- |  |  | ---- | 
| |  |                         |           |              |              |   |            |          |             |   |              |              
| |  | Gross Amount Carried at |           |              |              |   |            |          |             |   |              |               | 
| |  | Close of Period         |           |              |              |   |            |          |             |   |              |               | 
| |  | 12/31/2002              |           |              |              |   |            |          |             |   |              |               | 
| |  |                         |           |              |              |   |            |          | Date of     |   |              |               | 
| |  |                         |           | Building and |              |   |            |          | Accumulated |   |              | Construction/ |  | Date       |            | Depreciable | 
| |  | Land                    |           |              | Improvements |   |            | Total(1) |             |   | Depreciation |               |  | Renovation |            | Acquired    |  | Lives(2) | 
| |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
| |  |                         | 252,852   |              |              |   | 1,305      |          |             |   | 254,157      |               |  |            |           |             |  | N/A      |  | Various |  |  | N/A  | 
| |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
| |  |                         |          |              |              |   | 89,473     |          |             |   | 89,465       |               |  |            | (25,138    | )           |  | N/A      |  | Various |  |  | 3-40 | 
| |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
| |  | $                       | 3,169,131 |              |              | $ | 21,994,385 |          |             | $ | 25,163,516   |               |  | $          | (2,077,613 | )           |  |          |  |         |  |  |      | 
| |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The aggregate cost for federal income tax
    purposes as of December 31, 2002 was approximately
    $14.8 billion net of accumulated depreciation.                                                                                                                                                                                                                                                                                                                                              
|   
|(2) | The life to compute depreciation on building is
    40 years, except for Palo Alto Square (#254) which is
    subject to a ground lease that terminates in 2023. Therefore,
    the building is depreciated over the remaining term of the
    ground lease. The life to compute depreciation on building
    improvements is 4-40 years.                                                                                                                                                        
|   
|(3) | The date acquired represents the date these
    Properties were acquired by Equity Office Predecessors. The
    acquisition of the Properties, or interest therein, by the
    Company from Equity Office Predecessors in connection with the
    Consolidation on July 11, 1997, was accounted for using the
    purchase method of accounting in accordance with Accounting
    Principles Board Opinion No. 16. Accordingly, the assets
    were recorded by the Company at their fair values.
|   
|(4) | These loans are subject to cross default and
    collateralization provisions.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(5) | These loans are subject to cross default and
    collateralization provisions.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(6) | These properties were previously under
    development and have been placed into service during 2002.                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(7) | These loans are subject to cross default and
    collateralization provisions.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(8) | These loans are subject to cross default and
    collateralization provisions.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(9) | These properties are in various development
    stages. During the development period certain operating costs,
    including real estate taxes together with interest incurred
    during the development stages will be capitalized.                                                                                                                                                                                                                                                            



|     |                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | The encumbrances at December 31, 2002
    include a net discount (net of accumulated amortization of
    approximately $6.4 million) of approximately
    $12.6 million.



---



##### 



A summary of activity of investment in real
estate and accumulated depreciation is as follows:

The changes in investment in real estate for each
of the years presented below are as follows:

|                                 |                           |                                                                                  |            |  |              |   |            |              |           |   |            |  |           |  
|-------------------------------- | ------------------------- | -------------------------------------------------------------------------------- | ---------- |  | ------------ | - | ---------- | ------------ | --------- | - | ---------- |  | --------- | -
|                                 |                           | December 31,                                                                     |            |  | December 31, |   |            | December 31, |          
|                                 |                           | 2002                                                                             |            |  | 2001         |   |            | 2000         |          
|                                 |                           |                                                                                  |            |  |              |   |            |              |          
|Balance, beginning of the period |                           | $                                                                                | 24,816,351 |  |              | $ | 17,619,380 |              |           | $ | 13,202,540 | 
|                                 | Additions during period:  |                                                                                  |            |  |              |   |            |              |           |   |            |  |          
|                                 |                           | Acquisitions                                                                     |            |  | 121,986      |   |            |              | 7,323,459 |   |            |  | 4,864,976 |  
|                                 |                           | Consolidation of Properties previously accounted
    for under the equity method |            |  | 377,532      |   |            |              |          |   |            |  |          |  
|                                 |                           | Improvements                                                                     |            |  | 328,930      |   |            |              | 360,065   |   |            |  | 293,711   |  
|                                 |                           | Other(1)                                                                         |            |  |             |   |            |              | (4,516    | ) |            |  |          |  
|                                 | Deductions during period: |                                                                                  |            |  |              |   |            |              |           |   |            |  |          
|                                 |                           | Properties disposed of(2)                                                        |            |  | (457,077     | ) |            |              | (482,037  | ) |            |  | (722,828  | )
|                                 |                           | Write-off of fully depreciated assets which are
    no longer in service         |            |  | (24,206      | ) |            |              |          |   |            |  | (19,019   | )
|                                 |                           |                                                                                  |            |  |              |   |            |              |          
|Balance, end of period           |                           | $                                                                                | 25,163,516 |  |              | $ | 24,816,351 |              |           | $ | 17,619,380 | 
|                                 |                           |                                                                                  |            |  |              |   |            |              |          

The changes in accumulated depreciation for each
of the years presented below are as follows:

|                                 |                           |                                                                                  |            |   |              |   |            |              |          |   |          |   |          |  
|-------------------------------- | ------------------------- | -------------------------------------------------------------------------------- | ---------- | - | ------------ | - | ---------- | ------------ | -------- | - | -------- | - | -------- | -
|                                 |                           | December 31,                                                                     |            |   | December 31, |   |            | December 31, |         
|                                 |                           | 2002                                                                             |            |   | 2001         |   |            | 2000         |         
|                                 |                           |                                                                                  |            |   |              |   |            |              |         
|Balance, beginning of the period |                           | $                                                                                | (1,494,301 | ) |              | $ | (978,055   | )            |          | $ | (630,387 | )
|                                 | Additions during period:  |                                                                                  |            |   |              |   |            |              |          |   |          |   |         
|                                 |                           | Depreciation                                                                     |            |   | (637,633     | ) |            |              | (532,403 | ) |          |   | (399,768 | )
|                                 |                           | Consolidation of Properties previously accounted
    for under the equity method |            |   | (617         | ) |            |              |         |   |          |   |         |  
|                                 | Deductions during period: |                                                                                  |            |   |              |   |            |              |          |   |          |   |         
|                                 |                           | Properties disposed of (2)                                                       |            |   | 30,732       |   |            |              | 16,157   |   |          |   | 33,081   |  
|                                 |                           | Write-off of fully depreciated assets which are
    no longer in service         |            |   | 24,206       |   |            |              |         |   |          |   | 19,019   |  
|                                 |                           |                                                                                  |            |   |              |   |            |              |         
|Balance, end of period           |                           | $                                                                                | (2,077,613 | ) |              | $ | (1,494,301 | )            |          | $ | (978,055 | )
|                                 |                           |                                                                                  |            |   |              |   |            |              |         



---



|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Approximately $3.7 million relates to the
    value of building equipment received in exchange for Equity
    Offices equity position in a telecom company and the
    remainder relates to the write-off of internally developed
    software.                                   
|   
|(2) | The 2000 Properties disposed of amounts include
    approximately $.4 billion of disposed assets related to the
    partial sale of interests in various Properties. The related
    accumulated depreciation on the partially sold Properties was
    approximately $18.7 million.