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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

FORM 10-K

(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, 2003

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     |  | New York Stock Exchange                  
|5.25% Series B Convertible,
    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.  o

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

The aggregate market
value of the Common Shares held by non-affiliates of the
registrant as of June 30, 2003 (the last business day of
the registrants most recently completed second fiscal
quarter) was $9,984,726,873 based on the reported closing sale
price per Common Share on the New York Stock Exchange of $27.01.

On February 27,
2004, 401,322,247 Common Shares were outstanding.


DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the registrants proxy statement for the annual
shareholders meeting to be held in 2004 are incorporated
by reference into Part III. We expect to file our proxy
statement within 120 days after December 31, 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                                                                                      |  |      | 17  | 
|Item 4.                                            |  | Submission of Matters to a
    Vote of Security Holders                                                |  |      | 17  | 
|PART II.                                           |  |                                                                                                        |  |     
|Item 5.                                            |  | Market for Registrants
    Common Equity and Related Stockholder Matters                              |  |      | 18  | 
|Item 6.                                            |  | Selected Financial Data                                                                                |  |      | 19  | 
|Item 7.                                            |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations              |  |      | 20  | 
|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               |  |      | 101 | 
|Item 9A.                                           |  | Controls and Procedures                                                                                |  |      | 101 | 
|PART III.                                          |  |                                                                                                        |  |     
|Item 10.                                           |  | Directors and Executive
    Officers of the Registrant                                                 |  |      | 102 | 
|Item 11.                                           |  | Executive Compensation                                                                                 |  |      | 102 | 
|Item 12.                                           |  | Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters |  |      | 102 | 
|Item 13.                                           |  | Certain Relationships and
    Related Transactions                                                     |  |      | 102 | 
|Item 14.                                           |  | Principal Accountant Fees
    and Services                                                             |  |      | 102 | 
|PART IV.                                           |  |                                                                                                        |  |     
|Item 15.                                           |  | Exhibits, Financial
    Statement Schedules, and Reports on Form 8-K                                   |  |      | 103 | 
|3rd Amend to 3rd Amend & Rstd Agmt of Lmtd Ptnrshp
|Amended & Rstd '97 Non-Qualified Share Purchase Pl
|1st Amend to 1997 Non-Qualified Share Purchase Pln
|2nd Assumption & Amend. to Change in Control Agmt 
|Trustee Compensation Agreement                    
|Revolving Credit Agreement                        
|Guaranty of Payment dated as of 12/17/03          
|Consent of Independent Auditors                   
|Certifications                                    
|Section 1350 Certifications                       
|1997 Non-Qualified Employee Share Purchase Plan   



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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). We intend 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 report on Form 8-K filed
with the Securities and Exchange Commission (the
SEC) on July 15, 2003, 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 we have made assumptions are
the following:



| |   |                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to maintain occupancy and to timely
    lease or re-lease space at anticipated rents;                                                                                                                                              
|
| |  | changes in general economic conditions,
    including, in particular, those affecting industries in which
    our principal tenants and potential tenants compete and their
    demand for office space in markets in which we have a presence;
|
| |  | the extent of any tenant bankruptcies and
    insolvencies;                                                                                                                                                                                    
|
| |  | the extent of any early lease terminations and
    the amount of lease terminations fees, if any;                                                                                                                                              
|
| |  | the cost and availability of debt and equity
    financing;                                                                                                                                                                                    
|
| |  | the availability of new competitive supply, which
    may become available by way of sublease and new construction;                                                                                                                            
|
| |  | the extent of any disposition activity and our
    ability to complete any such dispositions in a timely manner and
    on acceptable terms;                                                                                                   
|
| |  | our ability to realize anticipated cost savings
    by creating and capturing benefits of scale;                                                                                                                                               
|
| |  | our ability to obtain, at a reasonable cost,
    adequate insurance coverage for catastrophic events, such as
    earthquakes and terrorist acts;                                                                                              
|
| |  | changes in operating costs, including real estate
    taxes, utilities, insurance and security costs; and                                                                                                                                      
|
| |  | other risks and uncertainties detailed from time
    to time in our filings with the SEC.                                                                                                                                                      

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Item 1. Business.

EQUITY OFFICE

As used herein, we, us
and our refer to Equity Office Properties Trust, a
Maryland real estate investment trust (REIT),
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. We were 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, 2003, an approximate 89.1%
interest in, EOP Partnership. We have elected to be taxed as a
REIT for federal income tax purposes, and generally will not be
subject to federal income tax if 100% of our taxable income is
distributed and we comply with a number of organizational and
operational requirements.

At December 31, 2003, we had a portfolio of
684 office properties comprising approximately
122.3 million square feet of commercial office space in 18
states and the District of Columbia (the Office
Properties), 75 industrial properties comprising
approximately 5.8 million square feet (the Industrial
Properties and, together with the Office Properties, the
Properties) and approximately 0.4 million
square feet of office properties under development.

Our internet site is http://www.equityoffice.com.
We provide to the public on our website, free of charge, our
annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and other
reports and amendments to those reports filed or furnished
pursuant to Section 13 or 15(d) of the Exchange Act as soon
as reasonably practicable after such material is electronically
filed with, or furnished to, the SEC.

KEY TRANSACTIONS IN 2003

During 2003, we completed the following key
transactions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we disposed of 53 office properties, two
    industrial properties and four vacant land parcels in various
    transactions to unaffiliated parties for approximately
    $933.1 million. The sold office properties consisted of
    approximately 5,182,707 square feet and 32 residential units,
    and the industrial properties consisted of approximately 216,900
    square feet. With these transactions, we exited the following
    markets: Salt Lake City, UT; Riverside, CA; Fort Worth, TX;
    Charlotte, NC; and San Antonio, TX;
|
| |  | we sold partial interests in 13 Office Properties
    consisting of approximately 3,284,431 square feet for
    approximately $596.5 million;                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | we acquired two Office Properties for
    approximately $183.2 million consisting of approximately
    829,293 square feet;                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | we placed into service four developments
    consisting of five buildings and approximately 1,218,215 square
    feet;                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | we entered into $500 million of
    forward-starting interest rate swaps;                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | we repaid $400 million of unsecured notes
    that matured in November 2003;                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | we issued $500 million of unsecured notes
    due January 2013 at an effective annual interest rate of 5.98%
    and used a portion of the net proceeds to repay
    $300 million of unsecured notes that matured in February
    2003;                                                                                                                                                                                                                                                                                                           
|
| |  | we obtained a new three-year $1.0 billion
    revolving credit facility in May 2003;                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | we obtained a $1.0 billion 364-day credit
    facility in December 2003;                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we announced the redemption of, and subsequently
    redeemed in 2004, 4,562,900 outstanding 8 5/8%
    Series C Cumulative Redeemable Preferred Shares of
    Beneficial Interest for approximately $114.6 million, which
    included approximately $0.6 million of accrued
    distributions;
|
| |  | we redeemed the 7.875% Series E Cumulative
    Redeemable Preferred Shares for approximately
    $151.9 million, which included approximately
    $1.9 million of accrued distributions;                                                                                                        
|
| |  | we redeemed the 8.00% Series F Cumulative
    Redeemable Preferred Shares for approximately
    $100.0 million; and                                                                                                                                                                             
|
| |  | we repurchased 14,236,400 Common Shares at an
    average price of $25.53 per share for a total of
    $363.5 million.                                                                                                                                                                          

BUSINESS STRATEGY

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.

Our business strategy involves:



| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increasing occupancy by leasing up vacant space
    on economically attractive terms, retaining tenants, reducing
    lease cycle time and improving customer service;                                           
|
| |  | concentrating our capital in 15 to 20 core
    markets with the best prospects for employment growth and where
    we believe we can best position ourselves to outperform our
    competition;                  
|
| |  | taking advantage of favorable market
    opportunities to exit non-core markets and selectively disposing
    of properties in certain of our core markets that do not fit
    within our long-term strategy; and
|
| |  | achieving economies of scale over time, including
    anticipated cost savings from the implementation of our new
    operating model.                                                                           

New Operating Model

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
streamline operations, improve customer service, reduce lease
cycle time, increase occupancy, retain tenants and reduce
operating expenses. The analysis resulted in a significant
reengineering effort called EOPlus. As part of this effort, many
of the activities that occurred at the property level have been
centralized into 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 provide higher service to our
customers at a lower cost. By consolidating our property
management offices, we made available for leasing almost 400,000
square feet of office space in 2003. As of December 31,
2003, we have approximately 15% fewer employees at the property
level than at the end of 2001. 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.

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ACQUISITION AND DISPOSITION ACTIVITY

Over the past five years, we have invested
approximately $12.9 billion, calculated on a cost basis,
and have disposed of approximately $3.7 billion, calculated
based on the sales price, of institutional quality office
properties, industrial properties, parking facilities and vacant
land parcels throughout the United States. In the past two years
we have taken advantage of the favorable market conditions for
property sales and we have been a net seller of real estate.

|     |  |                       |         |  |              |   |         | 
|---- |  | --------------------- | ------- |  | ------------ | - | ------- | 
|Year |  | Acquisitions          |         |  | Dispositions |  
|     |  |                       |         |  |              |  
|     |  |                      
|     |  | (Dollars in millions) |        
|2003 |  | $                     | 197.2   |  |              | $ | 1,529.6 | 
|2002 |  | $                     | 172.8   |  |              | $ | 508.3   | 
|2001 |  | $                     | 7,237.7 |  |              | $ | 541.2   | 
|2000 |  | $                     | 4,942.2 |  |              | $ | 536.0   | 
|1999 |  | $                     | 393.2   |  |              | $ | 631.9   | 

Management considers various factors when
evaluating potential property acquisitions. These factors
include but are not limited to:



| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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
    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 higher 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 core
    markets.                                                                                                                                                     

As part of our business strategy, assuming that
capital and acquisition opportunities are available to us on
reasonable terms, we intend to continue to acquire additional
office properties in our core markets. 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.

Management considers various factors when
evaluating potential property dispositions. These factors
include but are not limited to:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | the ability to sell the property at a price we
    believe would provide an attractive return to our shareholders;
|
| |  | our ability to recycle capital into core markets
    consistent with our business strategy;                       
|
| |  | our desire to exit markets that are not core
    markets;                                                         
|
| |  | whether the property is strategically located;                                                                    
|
| |  | tenant composition and lease rollover for the
    property;                                                       
|
| |  | general economic conditions and outlook,
    including job growth in the local market; and                        
|
| |  | the general quality of the asset.                                                                                 

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DEVELOPMENT ACTIVITY

At December 31, 2003, approximately
0.4 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.

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



| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | our assessment of the returns from such
    development;                                                
|
| |  | 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
    applicable.                                           

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 lines 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, 2003, approximately 96.8% 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. The
derivatives we enter into, and the only derivative transactions
approved by our Board of Trustees, are those which are used only
for hedging purposes rather than speculation. If an anticipated
hedged transaction does not occur, any positive or negative
value of the derivative will be recognized immediately in net
income.

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 we raise must be contributed to
EOP Partnership in exchange for additional interests in EOP
Partnership.

DIVIDEND POLICY

In order to qualify as a REIT for federal income
tax purposes, we must distribute at least 90% of our taxable
income (excluding capital gains) to our shareholders. We
currently distribute capital gains to our shareholders, however,
these gains may be retained by us and taxed at the corporate tax
rate. Accordingly, we currently intend, although we are not
legally obligated, to continue to make regular quarterly
distributions to holders of our common and preferred shares at
least at the level required to maintain our REIT status. The

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declaration of dividends on capital shares is at
the discretion of the Board of Trustees, which decision is made
from time to time by the Board of Trustees based on then
prevailing circumstances.


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, 2003, 2002 and 2001 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
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.

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, 2003, we had
approximately 2,400 employees that provide real estate
operations, leasing, legal, financial and accounting,
acquisition, disposition and marketing expertise throughout the
country.

Our seven executive officers have an average
tenure of six years with us or our affiliates or predecessors
and an average of 18 years experience in the real estate
industry.

EXECUTIVE AND SENIOR OFFICERS

As of March 15, 2004, the following
executive and senior officers held the offices indicated:

|                      |  |     |    |  |              |                                                                    
|--------------------- |  | --- | -- |  | ------------ | -------------------------------------------------------------------
|Name                  |  | Age |    |  | Offices Held
|                      |  |     |    |  |             
|Richard D. Kincaid    |  |     | 42 |  |              | President and Chief Executive Officer                              
|Jeffrey L. Johnson    |  |     | 44 |  |              | Executive Vice President and Chief Investment
    Officer          
|Lawrence J. Krema     |  |     | 43 |  |              | Executive Vice President  Human
    Resources and Communications  
|Peyton H. Owen, Jr.   |  |     | 46 |  |              | Executive Vice President and Chief Operating
    Officer           
|Stanley M. Stevens    |  |     | 55 |  |              | Executive Vice President, Chief Legal Counsel and
    Secretary    
|Marsha C. Williams    |  |     | 52 |  |              | Executive Vice President and Chief Financial
    Officer           
|Robert J. Winter, Jr. |  |     | 58 |  |              | Executive Vice President  Development
    and Portfolio Management
|Thomas Q. Bakke       |  |     | 49 |  |              | Senior Vice President  National
    Leasing and Marketing         
|James R. Bannon       |  |     | 47 |  |              | Senior Vice President  Operations                                 

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|                        |  |     |    |  |              |                                                                                        
|----------------------- |  | --- | -- |  | ------------ | ---------------------------------------------------------------------------------------
|Name                    |  | Age |    |  | Offices Held
|                        |  |     |    |  |             
|Stephen M. Briggs       |  |     | 45 |  |              | Senior Vice President  Chief
    Accounting Officer                                   
|M. Patrick Callahan     |  |     | 42 |  |              | Senior Vice President  Seattle Region                                                 
|Robert E. Dezzutti      |  |     | 43 |  |              | Senior Vice President  Los Angeles
    Region                                         
|Maureen Fear            |  |     | 47 |  |              | Senior Vice President and Treasurer                                                    
|Debra L. Ferruzzi       |  |     | 43 |  |              | Senior Vice President  Corporate
    Strategy                                         
|Frank Frankini          |  |     | 49 |  |              | Senior Vice President  Development and
    Energy Operations                          
|Mark P. Geisreiter      |  |     | 42 |  |              | Senior Vice President  San Francisco
    Region                                       
|Matthew T. Gworek       |  |     | 43 |  |              | Senior Vice President  Investments                                                    
|Donald J. Huffner, Jr.  |  |     | 46 |  |              | Senior Vice President  Atlanta Region                                                 
|Peter D. Johnston       |  |     | 47 |  |              | Senior Vice President  Houston Region                                                 
|Kim J. Koehn            |  |     | 48 |  |              | Senior Vice President  Denver Region                                                  
|Diane M. Morefield      |  |     | 45 |  |              | Senior Vice President  Investor
    Relations                                         
|Scott T. Morey          |  |     | 39 |  |              | Senior Vice President  Chief
    Information Officer                                  
|John W. Peterson        |  |     | 40 |  |              | Senior Vice President  San Jose Region                                                
|Arvid A. Povilaitis     |  |     | 43 |  |              | Senior Vice President  Chicago Region                                                 
|John C. Schneider       |  |     | 45 |  |              | Senior Vice President  Legal and
    Associate General Counsel for Property Operations
|Mark E. Scully          |  |     | 45 |  |              | Senior Vice President  National Leasing                                               
|Paul R. Sorensen        |  |     | 44 |  |              | Senior Vice President  Portfolio
    Management                                       
|Maryann Gilligan Suydam |  |     | 54 |  |              | Senior Vice President  Boston Region                                                  

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

Richard D. Kincaidhas been a trustee and President since November 2002 and Chief
Executive Officer since April 2003. Mr. Kincaid also has
held the following positions:



| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Executive Vice President from March 1997 until
    November 2002;                                                                                                    
|
| |  | Chief Operating Officer from September 2001 until
    November 2002;                                                                                                 
|
| |  | Chief Financial Officer from March 1997 until
    August 2002;                                                                                                       
|
| |  | Senior Vice President from October 1996 until
    March 1997;                                                                                                        
|
| |  | Senior Vice President and Chief Financial Officer
    of Equity Office Holdings, L.L.C., a predecessor of ours, from
    July 1995 until October 1997;               
|
| |  | Senior Vice President of Equity Group
    Investments, Inc., an owner and financier of real estate and
    corporate investments, 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.                                                                 

Jeffrey L. Johnsonhas been Executive Vice President and Chief Investment Officer
since May 2003. Mr. Johnson also has held the following
positions:



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Managing Partner and owner of Lakeshore Holdings,
    LLC, a private equity firm focusing on real estate investment
    founded by Mr. Johnson in conjunction with Lehman Brothers
    Holdings Inc., a global

9



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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | financial services firm, from December 2002 until
    May 2003 (in this capacity, Mr. Johnson was responsible for
    all aspects of the business);                                                                                                                                                                                                                                                                                                                   
|
| |  | Managing Director of Lehman Brothers Holdings
    Inc. from March 2000 until November 2002 (in this capacity,
    Mr. Johnson was a founding partner and co-head of domestic
    investments for Lehman Brothers first real estate private
    equity group and was instrumental in helping raise the
    companys $1.6 billion fund and developing the
    investment strategy for the fund, built the investment team and
    implemented its investment process);
|
| |  | Chief Investment Officer of Equity Office from
    March 1998 until June 1999; and                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Senior Vice President of Equity Office from March
    1997 until June 1999.                                                                                                                                                                                                                                                                                                                                                                                           

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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Senior Vice President  Human Resources
    from March 2001 until November 2002; and                                                                                                                                                                                                                                                                                                                             
|
| |  | Vice President of NEC Technologies, Inc., a
    supplier of presentation systems, computing and related
    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).

Peyton H.
Owen, Jr.has been Executive Vice
President and Chief Operating Officer since October 2003.
Mr. Owen also has held the following positions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Chief Operating Officer  Americas
    Region of Jones Lang LaSalle, a global provider of integrated
    real estate and investment management services, from April 1999
    until October 2003 (in this capacity, Mr. Owen oversaw
    5,500 people in 100 markets in the United States, Canada and
    Mexico; Investor Services, which included leasing and property
    management; Corporate Solutions, which included tenant
    representation, facility management and project management; and
    Capital Markets; and implemented standardized processes, new
    technologies and compliance measurements, and consolidated the
    organizational structure); and
|
| |  | Executive Vice President and Chief Operating
    Officer  Leasing and Management of LaSalle Partners,
    predecessor of Jones Lang LaSalle, from January 1996 until April
    1999 (in this capacity, Mr. Owen oversaw the leasing and
    management activities for a 200-million-square-foot investment
    property portfolio, restructured leasing and management across
    20 markets and led due diligence and integration in various
    corporate acquisitions.                                                                                                                                                                                                   

Stanley M. Stevenshas been Executive Vice President since September 1996 and Chief
Legal Counsel and Secretary since October 1996. Mr. Stevens
also was 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
since August 2002. Ms. Williams also has held the following
positions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Chief Administrative Officer of Crate and Barrel,
    a national Chicago-based retailer of 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.                                                                                                                                                                                                                                                                                                                                                                                                             

10



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##### Table of Contents



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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Senior Vice President  Development
    from June 2002 until November 2002;                                                                                                                                                                                                                                                                                                                                          
|
| |  | Senior Vice President  Development
    Investments 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).                                                                   




Item 2. Properties.

All capitalized terms used herein and not
otherwise defined shall have the meanings given in the financial
statements and notes thereto set forth in Item 8. Financial
Statements and Supplementary Data. 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, 2003. All of our
consolidated properties are held in fee simple interest, except
for approximately 79 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, 2003, we had a portfolio of 684 Office
Properties comprising approximately 122.3 million square
feet of commercial office space in 18 states and the District of
Columbia, 75 Industrial Properties comprising approximately
5.8 million square feet and approximately 0.4 million
square feet of office properties under development.
Approximately 42.3% of the total square feet of our office
properties is located in central business districts
(CBDs) and approximately 57.7% is located in
suburban markets. At December 31, 2003, our Office
Properties were approximately 86.3% occupied and our Industrial
Properties were approximately 86.6% occupied on a weighted
average basis. No single tenant accounts for more than 2.0% 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, 2003.

11



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##### Table of Contents



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. Our ten largest markets are
presented from greatest to least based on property net operating
income from continuing operations.

|                            |  |           |     |  |             |               |             |             |  |  |                 |   |               |                   |      |   |                 |   |           |                |  |  |       |   |  |   |       | 
|--------------------------- |  | --------- | --- |  | ----------- | ------------- | ----------- | ----------- |  |  | --------------- | - | ------------- | ----------------- | ---- | - | --------------- | - | --------- | -------------- |  |  | ----- | - |  | - | ----- | 
|                            |  |           |     |  |             | Percentage of |             |             |  |  |                 |   | Percentage of |                   |      |  
|                            |  |           |     |  |             | Office        |             |             |  |  | Annualized Rent |   |               | Office            |      |   |                
|                            |  |           |     |  |             | Portfolio     |             |             |  |  | for Occupied    |   |               | Portfolio         |      |   | Annualized Rent |  
|                            |  | 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               |  |           | 81  |  |             |               | 10,951,996  |             |  |  | 9.0             | % |               |                   | 72.9 | % |                 | $ | 344,338   |                |  |  | 10.7  | % |  | $ | 43.14 | 
|Boston                      |  |           | 51  |  |             |               | 12,567,429  |             |  |  | 10.3            | % |               |                   | 92.4 | % |                 |   | 446,844   |                |  |  | 13.9  | % |  |   | 38.46 | 
|San Jose                    |  |           | 128 |  |             |               | 8,726,796   |             |  |  | 7.1             | % |               |                   | 83.7 | % |                 |   | 273,736   |                |  |  | 8.5   | % |  |   | 37.48 | 
|Seattle                     |  |           | 54  |  |             |               | 9,974,085   |             |  |  | 8.2             | % |               |                   | 86.7 | % |                 |   | 236,287   |                |  |  | 7.4   | % |  |   | 27.32 | 
|New York                    |  |           | 6   |  |             |               | 4,986,407   |             |  |  | 4.1             | % |               |                   | 97.5 | % |                 |   | 252,339   |                |  |  | 7.9   | % |  |   | 51.93 | 
|Chicago                     |  |           | 30  |  |             |               | 11,190,188  |             |  |  | 9.2             | % |               |                   | 86.6 | % |                 |   | 260,501   |                |  |  | 8.1   | % |  |   | 26.87 | 
|Washington D.C.             |  |           | 25  |  |             |               | 6,041,210   |             |  |  | 4.9             | % |               |                   | 87.8 | % |                 |   | 179,655   |                |  |  | 5.6   | % |  |   | 33.87 | 
|Los Angeles                 |  |           | 43  |  |             |               | 6,786,081   |             |  |  | 5.6             | % |               |                   | 88.6 | % |                 |   | 179,691   |                |  |  | 5.6   | % |  |   | 29.87 | 
|Atlanta                     |  |           | 44  |  |             |               | 7,783,192   |             |  |  | 6.4             | % |               |                   | 79.4 | % |                 |   | 150,300   |                |  |  | 4.7   | % |  |   | 24.31 | 
|Orange County               |  |           | 31  |  |             |               | 5,872,834   |             |  |  | 4.8             | % |               |                   | 92.9 | % |                 |   | 134,963   |                |  |  | 4.2   | % |  |   | 24.74 | 
|All Others                  |  |           | 191 |  |             |               | 37,374,707  |             |  |  | 30.6            | % |               |                   | 86.8 | % |                 |   | 752,185   |                |  |  | 23.4  | % |  |   | 23.18 | 
|                            |  |           |     |  |             |               |             |             |  |  |                 |   |               |                   |      |   |                 |   |           |                | 
|Total/ Weighted
    Average |  |           | 684 |  |             |               | 122,254,925 |             |  |  | 100.0           | % |               |                   | 86.3 | % |                 | $ | 3,210,838 |                |  |  | 100.0 | % |  | $ | 30.43 | 
|                            |  |           |     |  |             |               |             |             |  |  |                 |   |               |                   |      |   |                 |   |           |                | 

Industrial Properties

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

|                            |  |           |    |  |             |               |           |             |  |  |                 |   |               |                   |      |   |                 |   |        |                |  |  |       |   |  |   |       | 
|--------------------------- |  | --------- | -- |  | ----------- | ------------- | --------- | ----------- |  |  | --------------- | - | ------------- | ----------------- | ---- | - | --------------- | - | ------ | -------------- |  |  | ----- | - |  | - | ----- | 
|                            |  |           |    |  |             | Percentage of |           |             |  |  |                 |   | Percentage of |                   |      |  
|                            |  |           |    |  |             | Industrial    |           |             |  |  | Annualized Rent |   |               | Industrial        |      |   |                
|                            |  |           |    |  |             | Portfolio     |           |             |  |  | for Occupied    |   |               | Portfolio         |      |   | Annualized Rent |  
|                            |  | 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) | 
|                            |  |           |    |  |             |               |           |             |  |  |                 |   |               |                   |      |   |                 |   |        |                | 
|Oakland-East Bay            |  |           | 46 |  |             |               | 3,764,586 |             |  |  | 65.5            | % |               |                   | 88.9 | % |                 | $ | 26,801 |                |  |  | 59.1  | % |  | $ | 8.00  | 
|San Jose                    |  |           | 28 |  |             |               | 1,855,673 |             |  |  | 32.3            | % |               |                   | 81.6 | % |                 |   | 18,099 |                |  |  | 39.9  | % |  |   | 11.96 | 
|Los Angeles                 |  |           | 1  |  |             |               | 130,600   |             |  |  | 2.3             | % |               |                   | 91.2 | % |                 |   | 461    |                |  |  | 1.0   | % |  |   | 3.87  | 
|                            |  |           |    |  |             |               |           |             |  |  |                 |   |               |                   |      |   |                 |   |        |                | 
|Total/ Weighted
    Average |  |           | 75 |  |             |               | 5,750,859 |             |  |  | 100.0           | % |               |                   | 86.6 | % |                 | $ | 45,361 |                |  |  | 100.0 | % |  | $ | 9.11  | 
|                            |  |           |    |  |             |               |           |             |  |  |                 |   |               |                   |      |   |                 |   |        |                | 

12



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##### Table of Contents



Lease Distribution

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

|                        |  |                |             |               |             |  |                 |                   |               |        |            |  |  |                 |       |   |  |   |       | 
|----------------------- |  | -------------- | ----------- | ------------- | ----------- |  | --------------- | ----------------- | ------------- | ------ | ---------- |  |  | --------------- | ----- | - |  | - | ----- | 
|                        |  |                |             | Percentage of |             |  |                 |                   | Percentage of |        |            | 
|                        |  |                |             | Office        |             |  | Annualized Rent |                   |               | Office |            |  | 
|                        |  | Total Occupied |             |               | Portfolio   |  |                 | for Occupied      |               |        | Portfolio  |  |  | Annualized Rent |      
|                        |  | Square         |             |               | Occupied    |  |                 | Square Feet       |               |        | Annualized |  |  | Per Occupied    |      
|Square Feet Under Lease |  | Feet(b)        |             |               | Square Feet |  |                 | (in thousands)(a) |               |        | Rent(a)    |  |  | Square Foot(a)  |      
|                        |  |                |             |               |             |  |                 |                   |               |        |            |  |  |                 |      
|2,500 or less           |  |                | 4,930,318   |               |             |  | 4.7             | %                 |               | $      | 136,258    |  |  |                 | 4.2   | % |  | $ | 27.64 | 
|2,501    5,000         |  |                | 7,565,356   |               |             |  | 7.2             | %                 |               |        | 212,500    |  |  |                 | 6.6   | % |  |   | 28.09 | 
|5,001    7,500         |  |                | 6,329,159   |               |             |  | 6.0             | %                 |               |        | 183,552    |  |  |                 | 5.7   | % |  |   | 29.00 | 
|7,501   10,000         |  |                | 5,055,378   |               |             |  | 4.8             | %                 |               |        | 143,913    |  |  |                 | 4.5   | % |  |   | 28.47 | 
|10,001   20,000        |  |                | 15,428,173  |               |             |  | 14.7            | %                 |               |        | 436,410    |  |  |                 | 13.6  | % |  |   | 28.29 | 
|20,001   40,000        |  |                | 17,062,916  |               |             |  | 16.3            | %                 |               |        | 510,802    |  |  |                 | 15.9  | % |  |   | 29.94 | 
|40,001   60,000        |  |                | 9,974,539   |               |             |  | 9.5             | %                 |               |        | 308,082    |  |  |                 | 9.6   | % |  |   | 30.89 | 
|60,001  100,000        |  |                | 10,927,854  |               |             |  | 10.4            | %                 |               |        | 338,834    |  |  |                 | 10.6  | % |  |   | 31.01 | 
|100,001 or greater      |  |                | 27,550,342  |               |             |  | 26.3            | %                 |               |        | 940,488    |  |  |                 | 29.3  | % |  |   | 34.14 | 
|                        |  |                |             |               |             |  |                 |                   |               |        |            |  |  |                 |      
|Total/ Weighted Average |  |                | 104,824,035 |               |             |  | 100.0           | %                 |               | $      | 3,210,838  |  |  |                 | 100.0 | % |  | $ | 30.43 | 
|                        |  |                |             |               |             |  |                 |                   |               |        |            |  |  |                 |      



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Annualized rent is the monthly contractual rent
    as of the reporting date, or if the current rent payable is $0
    then the first monthly rent payment due, under existing leases
    as of December 31, 2003 multiplied by 12 months
    (Annualized Rent). This amount reflects total base
    rent and estimated expense reimbursements from tenants as of
    December 31, 2003 without regard to any rent abatements and
    contractual increases or decreases in rent subsequent to
    December 31, 2003. Total rent abatements for leases in
    place as of December 31, 2003, for the period from
    January 1, 2004 to December 31, 2004, are
    approximately $38.2 million for Office Properties and
    approximately $0.1 million for Industrial Properties. We
    believe Annualized Rent is a useful measure because this
    information can be used for comparison to current market rents
    as published by various third party sources.
|   
|(b) |  | Reconciliation for total net rentable square feet
    for Office Properties is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                                |  |                |             |            |       |  |       |  
|--------------------------------------------------------------- |  | -------------- | ----------- | ---------- | ----- |  | ----- | -
|                                                                |  |                |             | Percent of |      
|                                                                |  | Square Footage |             |            | Total | 
|                                                                |  |                |             |            |       | 
|Square footage occupied by tenants                              |  |                | 104,824,035 |            |       |  | 85.7  | %
|Square footage used for management offices and
    building use |  |                | 685,098     |            |       |  | 0.6   | %
|                                                                |  |                |             |            |       | 
|Total occupied square feet                                      |  |                | 105,509,133 |            |       |  | 86.3  | %
|Leased and unoccupied square feet                               |  |                | 2,238,326   |            |       |  | 1.8   | %
|Unleased square feet                                            |  |                | 14,507,466  |            |       |  | 11.9  | %
|                                                                |  |                |             |            |       | 
|Total rentable square feet                                      |  |                | 122,254,925 |            |       |  | 100.0 | %
|                                                                |  |                |             |            |       | 

13



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##### Table of Contents



Office Lease Expiration Schedule(a)

December 31, 2003


The
following schedule is based upon the contractual termination
date of the leases, without regard to any lease termination
and/or renewal options. Some of our leases are subject to
various forms of lease termination options exercisable by
tenants. Depending on the form of the option, some of these
options may or may not require the payment of a fee and a notice
period as a condition to exercise. Although it is not possible
to predict which tenants are likely to exercise these options,
it has been our experience that markets in which the contractual
rents are significantly higher than current market rents incur
the greatest incidence of lease termination option exercises. As
a result of these lease termination options and other factors,
such as tenant insolvencies, the actual termination dates of
some portion of the leases may vary from the contractual
expiration date set forth in the schedule.

|                                            |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |      |           |   |      |   |           |   |  |   |           |  
|------------------------------------------- |  | ----------------------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ---- | --------- | - | ---- | - | --------- | - |  | - | --------- | -
|                                            |  | 2004 and                                              |           |   |      |   |           |      |  |   |           |   | 
|                                            |  | month to                                              |           |   |      |   |           |      |  |   |           |   | 
|                                            |  | month(b)                                              |           |   | 2005 |   |           | 2006 |  |   | 2007      |   |  | 2008 |           |   | 2009 |  
|                                            |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |      |           |   |      |  
|                                            |  |                                                      
|                                            |  | (Dollars in thousands except per square foot amounts) |          
|San Francisco                               |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |      |           |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 1,009,511 |   |      |   | 1,464,946 |      |  |   | 751,770   |   |  |      | 1,112,598 |   |      |   | 1,077,307 |   |  |   | 504,907   |  
|% Square Feet(d)                            |  |                                                       | 9.2       | % |      |   | 13.4      | %    |  |   | 6.9       | % |  |      | 10.2      | % |      |   | 9.8       | % |  |   | 4.6       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 39,893    |   |      | $ | 61,053    |      |  | $ | 36,794    |   |  | $    | 41,765    |   |      | $ | 45,072    |   |  | $ | 17,625    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 39.52     |   |      | $ | 41.68     |      |  | $ | 48.94     |   |  | $    | 37.54     |   |      | $ | 41.84     |   |  | $ | 34.91     |  
|Boston                                      |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |      |           |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 1,193,587 |   |      |   | 1,146,422 |      |  |   | 880,327   |   |  |      | 1,474,248 |   |      |   | 1,382,875 |   |  |   | 1,002,949 |  
|% Square Feet(d)                            |  |                                                       | 9.5       | % |      |   | 9.1       | %    |  |   | 7.0       | % |  |      | 11.7      | % |      |   | 11.0      | % |  |   | 8.0       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 39,702    |   |      | $ | 41,251    |      |  | $ | 29,101    |   |  | $    | 58,157    |   |      | $ | 51,963    |   |  | $ | 40,439    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 33.26     |   |      | $ | 35.98     |      |  | $ | 33.06     |   |  | $    | 39.45     |   |      | $ | 37.58     |   |  | $ | 40.32     |  
|San Jose                                    |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |      |           |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 831,826   |   |      |   | 1,694,765 |      |  |   | 987,895   |   |  |      | 674,406   |   |      |   | 371,645   |   |  |   | 256,563   |  
|% Square Feet(d)                            |  |                                                       | 9.5       | % |      |   | 19.4      | %    |  |   | 11.3      | % |  |      | 7.7       | % |      |   | 4.3       | % |  |   | 2.9       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 26,889    |   |      | $ | 52,910    |      |  | $ | 35,192    |   |  | $    | 25,508    |   |      | $ | 11,126    |   |  | $ | 7,303     |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 32.33     |   |      | $ | 31.22     |      |  | $ | 35.62     |   |  | $    | 37.82     |   |      | $ | 29.94     |   |  | $ | 28.46     |  
|Seattle                                     |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |      |           |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 1,105,585 |   |      |   | 1,099,859 |      |  |   | 1,062,424 |   |  |      | 770,384   |   |      |   | 1,221,543 |   |  |   | 777,771   |  
|% Square Feet(d)                            |  |                                                       | 11.1      | % |      |   | 11.0      | %    |  |   | 10.7      | % |  |      | 7.7       | % |      |   | 12.2      | % |  |   | 7.8       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 29,454    |   |      | $ | 34,443    |      |  | $ | 29,786    |   |  | $    | 22,108    |   |      | $ | 31,520    |   |  | $ | 18,142    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 26.64     |   |      | $ | 31.32     |      |  | $ | 28.04     |   |  | $    | 28.70     |   |      | $ | 25.80     |   |  | $ | 23.33     |  

[Additional columns below]

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

|                                            |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |           |   |        |   |           |   |  |   |            |  
|------------------------------------------- |  | ----------------------------------------------------- | --------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ------------- | --------- | - | ------ | - | --------- | - |  | - | ---------- | -
|                                            |  | 2010                                                  |           |   | 2011 |   |         | 2012 |  |   | 2013    |   |  | Thereafter(f) |           |   | Totals |  
|                                            |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |           |   |        |  
|                                            |  |                                                      
|                                            |  | (Dollars in thousands except per square foot amounts) |          
|San Francisco                               |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |           |   |        |   |           |   |  |   |            |  
|Square Feet(c)                              |  |                                                       | 886,179   |   |      |   | 337,684 |      |  |   | 49,195  |   |  |               | 240,878   |   |        |   | 546,662   |   |  |   | 7,981,637  |  
|% Square Feet(d)                            |  |                                                       | 8.1       | % |      |   | 3.1     | %    |  |   | 0.4     | % |  |               | 2.2       | % |        |   | 5.0       | % |  |   | 72.9       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 42,771    |   |      | $ | 16,533  |      |  | $ | 1,303   |   |  | $             | 9,134     |   |        | $ | 32,394    |   |  | $ | 344,338    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 48.26     |   |      | $ | 48.96   |      |  | $ | 26.49   |   |  | $             | 37.92     |   |        | $ | 59.26     |   |  | $ | 43.14      |  
|Boston                                      |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |           |   |        |   |           |   |  |   |            |  
|Square Feet(c)                              |  |                                                       | 1,208,855 |   |      |   | 188,018 |      |  |   | 758,869 |   |  |               | 1,325,699 |   |        |   | 1,056,279 |   |  |   | 11,618,128 |  
|% Square Feet(d)                            |  |                                                       | 9.6       | % |      |   | 1.5     | %    |  |   | 6.0     | % |  |               | 10.5      | % |        |   | 8.4       | % |  |   | 92.4       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 46,552    |   |      | $ | 9,579   |      |  | $ | 33,644  |   |  | $             | 53,569    |   |        | $ | 42,885    |   |  | $ | 446,844    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 38.51     |   |      | $ | 50.95   |      |  | $ | 44.33   |   |  | $             | 40.41     |   |        | $ | 40.60     |   |  | $ | 38.46      |  
|San Jose                                    |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |           |   |        |   |           |   |  |   |            |  
|Square Feet(c)                              |  |                                                       | 772,627   |   |      |   | 695,224 |      |  |   | 497,811 |   |  |               | 116,214   |   |        |   | 403,773   |   |  |   | 7,302,749  |  
|% Square Feet(d)                            |  |                                                       | 8.9       | % |      |   | 8.0     | %    |  |   | 5.7     | % |  |               | 1.3       | % |        |   | 4.6       | % |  |   | 83.7       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 31,097    |   |      | $ | 40,981  |      |  | $ | 31,153  |   |  | $             | 3,608     |   |        | $ | 7,969     |   |  | $ | 273,736    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 40.25     |   |      | $ | 58.95   |      |  | $ | 62.58   |   |  | $             | 31.04     |   |        | $ | 19.74     |   |  | $ | 37.48      |  
|Seattle                                     |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |           |   |        |   |           |   |  |   |            |  
|Square Feet(c)                              |  |                                                       | 876,223   |   |      |   | 325,447 |      |  |   | 371,868 |   |  |               | 396,924   |   |        |   | 642,192   |   |  |   | 8,650,220  |  
|% Square Feet(d)                            |  |                                                       | 8.8       | % |      |   | 3.3     | %    |  |   | 3.7     | % |  |               | 4.0       | % |        |   | 6.4       | % |  |   | 86.7       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 25,715    |   |      | $ | 9,782   |      |  | $ | 11,056  |   |  | $             | 9,708     |   |        | $ | 14,575    |   |  | $ | 236,287    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 29.35     |   |      | $ | 30.06   |      |  | $ | 29.73   |   |  | $             | 24.46     |   |        | $ | 22.70     |   |  | $ | 27.32      |  

14



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##### Table of Contents



|                                            |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|------------------------------------------- |  | ----------------------------------------------------- | --------- | - | ---- | - | ------- | ---- |  | - | --------- | - |  | ---- | ------- | - | ---- | - | --------- | - |  | - | --------- | -
|                                            |  | 2004 and                                              |           |   |      |   |         |      |  |   |           |   | 
|                                            |  | month to                                              |           |   |      |   |         |      |  |   |           |   | 
|                                            |  | month(b)                                              |           |   | 2005 |   |         | 2006 |  |   | 2007      |   |  | 2008 |         |   | 2009 |  
|                                            |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |  
|                                            |  |                                                      
|                                            |  | (Dollars in thousands except per square foot amounts) |          
|New York                                    |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 325,549   |   |      |   | 143,751 |      |  |   | 199,790   |   |  |      | 151,962 |   |      |   | 127,331   |   |  |   | 1,183,361 |  
|% Square Feet(d)                            |  |                                                       | 6.5       | % |      |   | 2.9     | %    |  |   | 4.0       | % |  |      | 3.0     | % |      |   | 2.6       | % |  |   | 23.7      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 15,059    |   |      | $ | 7,733   |      |  | $ | 12,141    |   |  | $    | 7,625   |   |      | $ | 7,616     |   |  | $ | 66,069    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 46.26     |   |      | $ | 53.80   |      |  | $ | 60.77     |   |  | $    | 50.18   |   |      | $ | 59.82     |   |  | $ | 55.83     |  
|Chicago                                     |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 1,093,803 |   |      |   | 969,846 |      |  |   | 1,353,517 |   |  |      | 822,915 |   |      |   | 1,692,289 |   |  |   | 633,073   |  
|% Square Feet(d)                            |  |                                                       | 9.8       | % |      |   | 8.7     | %    |  |   | 12.1      | % |  |      | 7.4     | % |      |   | 15.1      | % |  |   | 5.7       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 28,991    |   |      | $ | 27,199  |      |  | $ | 38,568    |   |  | $    | 22,090  |   |      | $ | 48,977    |   |  | $ | 19,916    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 26.50     |   |      | $ | 28.04   |      |  | $ | 28.49     |   |  | $    | 26.84   |   |      | $ | 28.94     |   |  | $ | 31.46     |  
|Washington D.C.                             |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 533,264   |   |      |   | 696,721 |      |  |   | 603,985   |   |  |      | 568,234 |   |      |   | 886,377   |   |  |   | 315,370   |  
|% Square Feet(d)                            |  |                                                       | 8.8       | % |      |   | 11.5    | %    |  |   | 10.0      | % |  |      | 9.4     | % |      |   | 14.7      | % |  |   | 5.2       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 16,242    |   |      | $ | 26,561  |      |  | $ | 21,954    |   |  | $    | 15,740  |   |      | $ | 29,214    |   |  | $ | 10,067    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 30.46     |   |      | $ | 38.12   |      |  | $ | 36.35     |   |  | $    | 27.70   |   |      | $ | 32.96     |   |  | $ | 31.92     |  
|Los Angeles                                 |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 413,414   |   |      |   | 705,164 |      |  |   | 912,461   |   |  |      | 858,479 |   |      |   | 504,390   |   |  |   | 404,406   |  
|% Square Feet(d)                            |  |                                                       | 6.1       | % |      |   | 10.4    | %    |  |   | 13.4      | % |  |      | 12.7    | % |      |   | 7.4       | % |  |   | 6.0       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 12,222    |   |      | $ | 21,637  |      |  | $ | 28,097    |   |  | $    | 28,345  |   |      | $ | 15,287    |   |  | $ | 10,657    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 29.56     |   |      | $ | 30.68   |      |  | $ | 30.79     |   |  | $    | 33.02   |   |      | $ | 30.31     |   |  | $ | 26.35     |  
|Atlanta                                     |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 514,867   |   |      |   | 537,442 |      |  |   | 1,335,908 |   |  |      | 780,908 |   |      |   | 560,938   |   |  |   | 600,417   |  
|% Square Feet(d)                            |  |                                                       | 6.6       | % |      |   | 6.9     | %    |  |   | 17.2      | % |  |      | 10.0    | % |      |   | 7.2       | % |  |   | 7.7       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 10,306    |   |      | $ | 12,721  |      |  | $ | 37,585    |   |  | $    | 16,663  |   |      | $ | 10,392    |   |  | $ | 18,007    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 20.02     |   |      | $ | 23.67   |      |  | $ | 28.13     |   |  | $    | 21.34   |   |      | $ | 18.53     |   |  | $ | 29.99     |  
|Orange County                               |  |                                                       |           |   |      |   |         |      |  |   |           |   |  |      |         |   |      |   |           |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 745,620   |   |      |   | 978,571 |      |  |   | 810,986   |   |  |      | 848,413 |   |      |   | 1,328,553 |   |  |   | 251,658   |  
|% Square Feet(d)                            |  |                                                       | 12.7      | % |      |   | 16.7    | %    |  |   | 13.8      | % |  |      | 14.4    | % |      |   | 22.6      | % |  |   | 4.3       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 19,007    |   |      | $ | 25,741  |      |  | $ | 20,982    |   |  | $    | 21,877  |   |      | $ | 29,782    |   |  | $ | 6,293     |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 25.49     |   |      | $ | 26.30   |      |  | $ | 25.87     |   |  | $    | 25.79   |   |      | $ | 22.42     |   |  | $ | 25.01     |  

[Additional columns below]

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

|                                            |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|------------------------------------------- |  | ----------------------------------------------------- | --------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ------------- | ------- | - | ------ | - | ------- | - |  | - | --------- | -
|                                            |  | 2010                                                  |           |   | 2011 |   |         | 2012 |  |   | 2013    |   |  | Thereafter(f) |         |   | Totals |  
|                                            |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |  
|                                            |  |                                                      
|                                            |  | (Dollars in thousands except per square foot amounts) |          
|New York                                    |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 152,239   |   |      |   | 734,960 |      |  |   | 485,978 |   |  |               | 404,601 |   |        |   | 950,089 |   |  |   | 4,859,611 |  
|% Square Feet(d)                            |  |                                                       | 3.1       | % |      |   | 14.7    | %    |  |   | 9.7     | % |  |               | 8.1     | % |        |   | 19.1    | % |  |   | 97.5      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 7,526     |   |      | $ | 35,688  |      |  | $ | 21,462  |   |  | $             | 20,663  |   |        | $ | 50,757  |   |  | $ | 252,339   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 49.44     |   |      | $ | 48.56   |      |  | $ | 44.16   |   |  | $             | 51.07   |   |        | $ | 53.42   |   |  | $ | 51.93     |  
|Chicago                                     |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 985,519   |   |      |   | 470,761 |      |  |   | 569,999 |   |  |               | 460,471 |   |        |   | 643,281 |   |  |   | 9,695,474 |  
|% Square Feet(d)                            |  |                                                       | 8.8       | % |      |   | 4.2     | %    |  |   | 5.1     | % |  |               | 4.1     | % |        |   | 5.7     | % |  |   | 86.6      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 25,605    |   |      | $ | 11,591  |      |  | $ | 16,391  |   |  | $             | 11,367  |   |        | $ | 9,807   |   |  | $ | 260,501   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 25.98     |   |      | $ | 24.62   |      |  | $ | 28.76   |   |  | $             | 24.69   |   |        | $ | 15.24   |   |  | $ | 26.87     |  
|Washington D.C.                             |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 251,275   |   |      |   | 458,056 |      |  |   | 298,406 |   |  |               | 232,322 |   |        |   | 460,714 |   |  |   | 5,304,724 |  
|% Square Feet(d)                            |  |                                                       | 4.2       | % |      |   | 7.6     | %    |  |   | 4.9     | % |  |               | 3.8     | % |        |   | 7.6     | % |  |   | 87.8      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 11,404    |   |      | $ | 14,505  |      |  | $ | 9,072   |   |  | $             | 8,042   |   |        | $ | 16,855  |   |  | $ | 179,655   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 45.38     |   |      | $ | 31.67   |      |  | $ | 30.40   |   |  | $             | 34.62   |   |        | $ | 36.58   |   |  | $ | 33.87     |  
|Los Angeles                                 |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 416,565   |   |      |   | 196,635 |      |  |   | 528,546 |   |  |               | 398,439 |   |        |   | 676,917 |   |  |   | 6,015,416 |  
|% Square Feet(d)                            |  |                                                       | 6.1       | % |      |   | 2.9     | %    |  |   | 7.8     | % |  |               | 5.9     | % |        |   | 10.0    | % |  |   | 88.6      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 10,990    |   |      | $ | 5,904   |      |  | $ | 16,259  |   |  | $             | 13,416  |   |        | $ | 16,877  |   |  | $ | 179,691   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 26.38     |   |      | $ | 30.03   |      |  | $ | 30.76   |   |  | $             | 33.67   |   |        | $ | 24.93   |   |  | $ | 29.87     |  
|Atlanta                                     |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 1,092,189 |   |      |   | 181,639 |      |  |   | 74,680  |   |  |               | 126,367 |   |        |   | 376,816 |   |  |   | 6,182,171 |  
|% Square Feet(d)                            |  |                                                       | 14.0      | % |      |   | 2.3     | %    |  |   | 1.0     | % |  |               | 1.6     | % |        |   | 4.8     | % |  |   | 79.4      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 27,443    |   |      | $ | 4,338   |      |  | $ | 1,704   |   |  | $             | 2,839   |   |        | $ | 8,301   |   |  | $ | 150,300   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 25.13     |   |      | $ | 23.88   |      |  | $ | 22.82   |   |  | $             | 22.46   |   |        | $ | 22.03   |   |  | $ | 24.31     |  
|Orange County                               |  |                                                       |           |   |      |   |         |      |  |   |         |   |  |               |         |   |        |   |         |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 120,430   |   |      |   | 76,442  |      |  |   | 114,571 |   |  |               | 138,583 |   |        |   | 42,068  |   |  |   | 5,455,895 |  
|% Square Feet(d)                            |  |                                                       | 2.1       | % |      |   | 1.3     | %    |  |   | 2.0     | % |  |               | 2.4     | % |        |   | 0.7     | % |  |   | 92.9      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 2,983     |   |      | $ | 2,004   |      |  | $ | 2,820   |   |  | $             | 3,117   |   |        | $ | 357     |   |  | $ | 134,963   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 24.77     |   |      | $ | 26.22   |      |  | $ | 24.62   |   |  | $             | 22.49   |   |        | $ | 8.48    |   |  | $ | 24.74     |  

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##### Table of Contents



|                                            |  |                                                       |            |   |      |   |            |      |  |   |            |   |  |      |            |   |      |   |            |   |  |   |           |  
|------------------------------------------- |  | ----------------------------------------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | - |  | ---- | ---------- | - | ---- | - | ---------- | - |  | - | --------- | -
|                                            |  | 2004 and                                              |            |   |      |   |            |      |  |   |            |   | 
|                                            |  | month to                                              |            |   |      |   |            |      |  |   |            |   | 
|                                            |  | month(b)                                              |            |   | 2005 |   |            | 2006 |  |   | 2007       |   |  | 2008 |            |   | 2009 |  
|                                            |  |                                                       |            |   |      |   |            |      |  |   |            |   |  |      |            |   |      |  
|                                            |  |                                                      
|                                            |  | (Dollars in thousands except per square foot amounts) |           
|All Others                                  |  |                                                       |            |   |      |   |            |      |  |   |            |   |  |      |            |   |      |   |            |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 4,420,733  |   |      |   | 4,143,014  |      |  |   | 5,085,172  |   |  |      | 4,336,768  |   |      |   | 4,494,584  |   |  |   | 3,740,854 |  
|% Square Feet(d)                            |  |                                                       | 11.8       | % |      |   | 11.1       | %    |  |   | 13.6       | % |  |      | 11.6       | % |      |   | 12.0       | % |  |   | 10.0      | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 99,875     |   |      | $ | 103,666    |      |  | $ | 122,662    |   |  | $    | 102,560    |   |      | $ | 99,245     |   |  | $ | 81,389    |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 22.59      |   |      | $ | 25.02      |      |  | $ | 24.12      |   |  | $    | 23.65      |   |      | $ | 22.08      |   |  | $ | 21.76     |  
|Total Portfolio                             |  |                                                       |            |   |      |   |            |      |  |   |            |   |  |      |            |   |      |   |            |   |  |   |           |  
|Square Feet(c)                              |  |                                                       | 12,187,759 |   |      |   | 13,580,501 |      |  |   | 13,984,235 |   |  |      | 12,399,315 |   |      |   | 13,647,832 |   |  |   | 9,671,329 |  
|% Square Feet(d)                            |  |                                                       | 10.0       | % |      |   | 11.1       | %    |  |   | 11.4       | % |  |      | 10.1       | % |      |   | 11.2       | % |  |   | 7.9       | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 337,639    |   |      | $ | 414,916    |      |  | $ | 412,863    |   |  | $    | 362,439    |   |      | $ | 380,194    |   |  | $ | 295,907   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 27.70      |   |      | $ | 30.55      |      |  | $ | 29.52      |   |  | $    | 29.23      |   |      | $ | 27.86      |   |  | $ | 30.60     |  

[Additional columns below]

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

|                                            |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |               |           |   |        |   |           |   |  |   |             |  
|------------------------------------------- |  | ----------------------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ------------- | --------- | - | ------ | - | --------- | - |  | - | ----------- | -
|                                            |  | 2010                                                  |           |   | 2011 |   |           | 2012 |  |   | 2013      |   |  | Thereafter(f) |           |   | Totals |  
|                                            |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |               |           |   |        |  
|                                            |  |                                                      
|                                            |  | (Dollars in thousands except per square foot amounts) |          
|All Others                                  |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |               |           |   |        |   |           |   |  |   |             |  
|Square Feet(c)                              |  |                                                       | 1,589,704 |   |      |   | 967,788   |      |  |   | 890,933   |   |  |               | 774,370   |   |        |   | 1,999,188 |   |  |   | 32,443,108  |  
|% Square Feet(d)                            |  |                                                       | 4.3       | % |      |   | 2.6       | %    |  |   | 2.4       | % |  |               | 2.1       | % |        |   | 5.3       | % |  |   | 86.8        | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 36,498    |   |      | $ | 25,592    |      |  | $ | 20,030    |   |  | $             | 21,151    |   |        | $ | 39,515    |   |  | $ | 752,185     |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 22.96     |   |      | $ | 26.44     |      |  | $ | 22.48     |   |  | $             | 27.31     |   |        | $ | 19.77     |   |  | $ | 23.18       |  
|Total Portfolio                             |  |                                                       |           |   |      |   |           |      |  |   |           |   |  |               |           |   |        |   |           |   |  |   |             |  
|Square Feet(c)                              |  |                                                       | 8,351,805 |   |      |   | 4,632,654 |      |  |   | 4,640,856 |   |  |               | 4,614,868 |   |        |   | 7,797,979 |   |  |   | 105,509,133 |  
|% Square Feet(d)                            |  |                                                       | 6.8       | % |      |   | 3.8       | %    |  |   | 3.8       | % |  |               | 3.8       | % |        |   | 6.4       | % |  |   | 86.3        | %
|Annualized Rent for occupied square feet(e) |  | $                                                     | 268,585   |   |      | $ | 176,498   |      |  | $ | 164,895   |   |  | $             | 156,613   |   |        | $ | 240,290   |   |  | $ | 3,210,838   |  
|Annualized Rent per occupied square foot(e) |  | $                                                     | 32.16     |   |      | $ | 38.10     |      |  | $ | 35.53     |   |  | $             | 33.94     |   |        | $ | 30.81     |   |  | $ | 30.43       |  



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Based on the contractual termination date of the
    lease without regard to any early lease termination and/or
    renewal options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(b) |  | Total square feet subject to month to month
    leases is approximately 955,976.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(c) |  | Total net rentable square feet represented by
    expiring leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(d) |  | Percentage of total net rentable square feet
    represented by expiring leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(e) |  | Based on annualized rent. Annualized rent is the
    monthly contractual rent as of the reporting date, or if the
    current rent payable is $0 then the first monthly rent payment
    due, under existing leases as of December 31, 2003
    multiplied by 12 months (Annualized Rent). This
    amount reflects total base rent and estimated expense
    reimbursements from tenants as of December 31, 2003 without
    regard to any rent abatements and contractual increases or
    decreases in rent subsequent to December 31, 2003. Total
    rent abatements for leases in place as of December 31,
    2003, for the period from January 1, 2004 to
    December 31, 2004, are approximately $38.2 million. We
    believe Annualized Rent is a useful measure because this
    information can be used for comparison to current market rents
    as published by various third party sources.
|   
|(f) |  | Management offices and building use square
    footage are included with $0 rent per square foot.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

16



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##### Table of Contents








|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.

Except as described below, we are not presently
subject to material litigation nor, to our knowledge, is any
material litigation threatened against us, 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 our financial condition, results of
operations, or liquidity.

On May 8, 2003, Broadband Office, Inc. and
the official committee of unsecured creditors of Broadband
Office Inc. (collectively, the Plaintiffs), filed a
complaint (the Complaint) in the United States
Bankruptcy Court for the District of Delaware against one
private and seven public real estate companies, various
affiliated entities (collectively the Corporate
Defendants) and certain individuals, including Equity
Office, David Helfand (a former executive vice president of
Equity Office), Spieker Properties, Inc. and Spieker Properties,
L.P. (which we acquired in 2001) and Craig Vought (formerly
co-chief executive officer of Spieker Properties, Inc. and a
former Equity Office trustee). Under the terms of our
indemnification agreements with Messrs. Helfand and Vought,
we may be responsible to reimburse them for the effect of any
judgment rendered against them personally as well as the costs
of their defense. We were an equity investor in, landlord to and
customer of Broadband Office, and Messrs. Helfand and
Vought were members of the board of directors of Broadband
Office until their resignations on May 1, 2001 and
May 2, 2001, respectively. Mr. Vought also served as a
member of Broadband Offices executive committee. Broadband
Office filed for bankruptcy protection on May 9, 2001. The
First Amended Complaint alleges, among other things, breaches of
fiduciary duty and seeks recovery of what it characterizes as
preferential payments and fraudulent transfers. It further seeks
to hold us liable for the outstanding debts of the corporation,
jointly and severally with all of the Corporate Defendants, as
an alleged general partner of Broadband Office. The
Plaintiffs allege that the amount of these claims exceeds
$300 million in the aggregate. Due to the inherent
uncertainties of the judicial process and the early stage of
this action, we are unable to predict the outcome of this matter
with certainty. We intend to vigorously defend this matter and
believe we have meritorious defenses. As a result, we have not
accrued for any potential liability in connection with this
litigation. As in any litigation, there can be no assurance that
we will prevail. Should the court not resolve this matter in our
favor it could have a material adverse effect on our financial
condition, results of operations and liquidity.






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

None.

17



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##### Table of Contents






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 February 27, 2004, the reported closing
sale price per Common Share on the NYSE was $28.54 and there
were approximately 3,363 holders of record. The high and low
sales prices and closing sales prices on the NYSE and
distributions for the Common Shares during 2003 and 2002 are set
forth in the table below:

|     |  |         |        |  |      |   |       |     |  |   |       |  |  |               |       |  |  |   |      | 
|---- |  | ------- | ------ |  | ---- | - | ----- | --- |  | - | ----- |  |  | ------------- | ----- |  |  | - | ---- | 
|Year |  | Quarter |        |  | High |   |       | Low |  |   | Close |  |  | Distributions |      
|     |  |         |        |  |      |   |       |     |  |   |       |  |  |               |      
|2003 |  |         | Fourth |  |      | $ | 29.30 |     |  | $ | 26.99 |  |  | $             | 28.65 |  |  | $ | 0.50 | 
|     |  |         | Third  |  |      | $ | 28.20 |     |  | $ | 26.46 |  |  | $             | 27.53 |  |  | $ | 0.50 | 
|     |  |         | Second |  |      | $ | 27.92 |     |  | $ | 25.52 |  |  | $             | 27.01 |  |  | $ | 0.50 | 
|     |  |         | First  |  |      | $ | 26.24 |     |  | $ | 23.31 |  |  | $             | 25.45 |  |  | $ | 0.50 | 
|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 | 

18



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##### Table of Contents






Item 6.     Selected
Financial Data.

The following sets forth our selected
consolidated financial and operating information on a historical
basis. The selected financial data has been derived from our
historical consolidated financial statements. The following
information should be read together with our consolidated
financial statements and notes thereto included in Item 8.
Financial Statements and Supplementary Data.

|                                                                                                 |  |                                               |            |  |      |   |            |         |  |   |            |  |  |      |            |  |  |   |            | 
|------------------------------------------------------------------------------------------------ |  | --------------------------------------------- | ---------- |  | ---- | - | ---------- | ------- |  | - | ---------- |  |  | ---- | ---------- |  |  | - | ---------- | 
|                                                                                                 |  |                                              
|                                                                                                 |  | For the years ended December 31,              |           
|                                                                                                 |  |                                               |           
|                                                                                                 |  | 2003                                          |            |  | 2002 |   |            | 2001(1) |  |   | 2000(2)    |  |  | 1999 |           
|                                                                                                 |  |                                               |            |  |      |   |            |         |  |   |            |  |  |      |           
|                                                                                                 |  |                                              
|                                                                                                 |  | (Dollars in thousands, except per share data) |           
|Operating Data:                                                                                  |  |                                               |            |  |      |   |            |         |  |   |            |  |  |      |            |  |  |   |            | 
|Total revenues                                                                                   |  | $                                             | 3,195,632  |  |      | $ | 3,359,766  |         |  | $ | 2,966,146  |  |  | $    | 2,164,707  |  |  | $ | 1,877,521  | 
|Lease termination income(3)                                                                      |  | $                                             | 68,408     |  |      | $ | 151,969    |         |  | $ | 41,230     |  |  | $    | 19,829     |  |  | $ | 15,948     | 
|Income from continuing operations                                                                |  | $                                             | 549,124    |  |      | $ | 670,905    |         |  | $ | 564,578    |  |  | $    | 447,834    |  |  | $ | 413,466    | 
|Net income available to common shareholders                                                      |  | $                                             | 603,190    |  |      | $ | 707,642    |         |  | $ | 563,796    |  |  | $    | 424,936    |  |  | $ | 382,092    | 
|Funds from Operations available to common
    shareholders  basic(4)                            |  | $                                             | 1,134,290  |  |      | $ | 1,336,114  |         |  | $ | 1,034,671  |  |  | $    | 797,695    |  |  | $ | 656,345    | 
|Funds from Operations available to common
    shareholders plus assumed conversions(4)           |  | $                                             | 1,289,547  |  |      | $ | 1,520,268  |         |  | $ | 1,190,174  |  |  | $    | 924,907    |  |  | $ | 754,843    | 
|Property net operating income(5)                                                                 |  | $                                             | 2,111,793  |  |      | $ | 2,305,323  |         |  | $ | 2,020,847  |  |  | $    | 1,410,705  |  |  | $ | 1,207,259  | 
|Income from continuing operations per share-basic                                                |  | $                                             | 1.27       |  |      | $ | 1.49       |         |  | $ | 1.43       |  |  | $    | 1.47       |  |  | $ | 1.45       | 
|Income from continuing operations per
    share-diluted                                          |  | $                                             | 1.26       |  |      | $ | 1.49       |         |  | $ | 1.42       |  |  | $    | 1.45       |  |  | $ | 1.44       | 
|Net income available to common shareholders per
    share-basic                                  |  | $                                             | 1.50       |  |      | $ | 1.71       |         |  | $ | 1.57       |  |  | $    | 1.53       |  |  | $ | 1.49       | 
|Net income available to common shareholders per
    share-diluted                                |  | $                                             | 1.50       |  |      | $ | 1.70       |         |  | $ | 1.55       |  |  | $    | 1.52       |  |  | $ | 1.48       | 
|Funds from Operations available to common
    shareholders per share  basic(4)                  |  | $                                             | 2.83       |  |      | $ | 3.22       |         |  | $ | 2.87       |  |  | $    | 2.88       |  |  | $ | 2.56       | 
|Funds from Operations available to common
    shareholders plus assumed conversions per share(4) |  | $                                             | 2.80       |  |      | $ | 3.18       |         |  | $ | 2.83       |  |  | $    | 2.82       |  |  | $ | 2.52       | 
|Cash distributions declared per Common Share                                                     |  | $                                             | 2.00       |  |      | $ | 2.00       |         |  | $ | 1.90       |  |  | $    | 1.74       |  |  | $ | 1.58       | 
|Balance Sheet Data (at end of year):                                                             |  |                                               |            |  |      |   |            |         |  |   |            |  |  |      |            |  |  |   |            | 
|Total assets                                                                                     |  | $                                             | 24,189,010 |  |      | $ | 25,246,783 |         |  | $ | 25,808,422 |  |  | $    | 18,794,253 |  |  | $ | 14,046,058 | 
|Mortgage debt net of any discounts and premiums                                                  |  | $                                             | 2,315,889  |  |      | $ | 2,507,890  |         |  | $ | 2,650,338  |  |  | $    | 2,915,801  |  |  | $ | 1,743,871  | 
|Unsecured notes net of any premiums and discounts                                                |  | $                                             | 8,828,912  |  |      | $ | 9,057,651  |         |  | $ | 9,093,987  |  |  | $    | 5,836,193  |  |  | $ | 3,655,047  | 
|Line of Credit                                                                                   |  | $                                             | 334,000    |  |      | $ | 205,700    |         |  | $ | 244,300    |  |  | $    | 51,000     |  |  | $ | 453,000    | 
|Mandatorily Redeemable Preferred Shares                                                          |  | $                                             | 299,500    |  |      | $ | 299,500    |         |  | $ | 299,500    |  |  | $    | 300,000    |  |  | $ | 300,000    | 

19



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##### Table of Contents



|                                                                |  |                                               |       |   |      |  |       |         |  |  |         |   |  |      |      |   |  |  |      |  
|--------------------------------------------------------------- |  | --------------------------------------------- | ----- | - | ---- |  | ----- | ------- |  |  | ------- | - |  | ---- | ---- | - |  |  | ---- | -
|                                                                |  |                                              
|                                                                |  | For the years ended December 31,              |      
|                                                                |  |                                               |      
|                                                                |  | 2003                                          |       |   | 2002 |  |       | 2001(1) |  |  | 2000(2) |   |  | 1999 |     
|                                                                |  |                                               |       |   |      |  |       |         |  |  |         |   |  |      |     
|                                                                |  |                                              
|                                                                |  | (Dollars in thousands, except per share data) |      
|Other Data (at end of year):                                    |  |                                               |       |   |      |  |       |         |  |  |         |   |  |      |      |   |  |  |      |  
|Number of Office Properties                                     |  |                                               | 684   |   |      |  | 734   |         |  |  | 774     |   |  |      | 381  |   |  |  | 294  |  
|Rentable square feet of Office Properties (in
    millions)     |  |                                               | 122.3 |   |      |  | 125.7 |         |  |  | 128.2   |   |  |      | 99.0 |   |  |  | 77.0 |  
|Occupancy of Office Properties                                  |  |                                               | 86.3  | % |      |  | 88.6  | %       |  |  | 91.8    | % |  |      | 94.6 | % |  |  | 93.7 | %
|Number of Industrial Properties                                 |  |                                               | 75    |   |      |  | 77    |         |  |  | 79      |   |  |      |     |   |  |  |     |  
|Rentable square feet of Industrial Properties (in
    millions) |  |                                               | 5.8   |   |      |  | 6.0   |         |  |  | 6.0     |   |  |      |     |   |  |  |     |  
|Occupancy of Industrial Properties                              |  |                                               | 86.6  | % |      |  | 89.3  | %       |  |  | 92.8    | % |  |      |     |   |  |  |     |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On July 2, 2001, we completed our
    acquisition by merger of Spieker Properties, Inc.
    (Spieker) at a cost of approximately
    $7.2 billion. As a result of the Spieker merger, we
    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.
|   
|(2) | On June 19, 2000, we completed our
    acquisition by merger of Cornerstone Properties Inc.
    (Cornerstone) at a cost of approximately
    $4.5 billion. As a result of the Cornerstone merger, we
    acquired an interest in 82 properties containing approximately
    18.9 million square feet.                                                                                   
|   
|(3) | These amounts are from continuing and
    discontinued operations and our share of unconsolidated joint
    ventures.                                                                                                                                                                                                                                                                     
|   
|(4) | Refer to Item 7. Managements
    Discussion and Analysis of Financial Condition  Funds
    from Operations for information regarding why we present funds
    from operations and for a reconciliation of this non-GAAP
    financial measure to net income.                                                                                                                            
|   
|(5) | 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.                                                                                                                      






|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|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, have
the meanings set forth in the notes to the financial statements
(See Item 8. Financial Statements and Supplementary Data).

Executive Summary

We are the largest office REIT and publicly held
owner of Office Properties in the nation based on market
capitalization and square footage. We receive our revenue
primarily from rental revenues generated by leases for our
office space. The key factors that affect our business and
financial results are the following:



| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | the current economic environment, including its
    effect on white-collar job growth in markets in which we have a
    presence;
|
| |  | the occupancy rates of our Office Properties;                                                                                    
|
| |  | rental rates on new Office Property leases;                                                                                      
|
| |  | tenant improvement and leasing costs incurred to
    retain and obtain tenants;                                                  
|
| |  | the extent of early lease terminations and any
    lease termination fees;                                                       

20



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##### Table of Contents





| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | operating expenses; and                                                  
|
| |  | the extent of any dispositions and acquisitions
    of Office Properties.

2003 was the third consecutive year of economic
slowdown marked by slow employment growth and the highest office
vacancy in the United States in over 10 years. The poor
economic environment and weak office markets adversely impacted
our financial results. Our overall office occupancy has declined
from 88.6% at December 31, 2002 to 86.3% at
December 31, 2003. This was due to early lease
terminations, which totaled approximately 5.4 million
square feet and equated to approximately 4.4% of occupancy lost
in our office portfolio. Market rental rates have continued to
decline during the last two years and have significantly
declined from their peak levels. Tenant improvement and leasing
costs have increased dramatically due to the competitive market
conditions for new leases. During 2003, we took advantage of
favorable market conditions for property sales by disposing of
approximately $933.1 million in non-core assets. In
addition, we entered into joint ventures and sold a 75% to 80%
interest in 13 Office Properties for approximately
$596.5 million. We used the proceeds from these asset sales
to pay down debt, redeem preferred shares, acquire strategic
assets in core markets, partially fund distributions to common
shareholders and unitholders and repurchase Common Shares and
Units.

On a macroeconomic level, we see office markets
beginning to recover and a minimal new supply of space in most
of our core markets. We expect net absorption of 25 to
30 million square feet in our top 20 markets in 2004. We
anticipate annual growth in the gross domestic product in the
range of 4% to 4.5% and office job growth of approximately 2.5%
which we believe will lead to an increase in our occupancy
level. Any changes in these assumptions could impact our
financial results.

As a result of the successful implementation of
our new operating model, we enter 2004 with a more efficient
operating platform. We intend to continue to refine our
operating model in an effort to obtain additional efficiencies
while improving customer service. Over the last two quarters,
our occupancy has been stable at approximately 86% and we expect
our average occupancy to increase approximately 1% to 2% during
2004. Although market rental rates have begun to stabilize in
many of our markets, the roll down of rents on our expiring
leases (assuming market rental rates do not recover from their
existing levels) will continue to adversely impact our rental
revenues, net income and funds from operations for the
foreseeable future. We expect the cost to obtain and keep
tenants, such as tenant improvements, leasing commissions, free
rent and other concessions to approximate 2003 levels during
2004. As part of our capital allocation strategy of taking
advantage of favorable market conditions to exit non-core
markets, we expect to be net sellers of real estate again in
2004, which will further reduce our income from continuing
operations and funds from operations, and may also result in
gains or losses on sales of properties and potential impairment
charges.

The remaining portion of our Managements
Discussion and Analysis of Financial Condition and Results of
Operations will help you understand:



| |   |                                                            
| | - | -----------------------------------------------------------
| |  | the key transactions that we completed during the
    year;
|
| |  | our critical accounting policies and estimates;            
|
| |  | our results of operations for the last three
    years;    
|
| |  | our liquidity and capital resources; and                   
|
| |  | our funds from operations.                                 

Key Transactions in 2003

During 2003, we completed the following key
transactions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we disposed of 53 office properties, two
    industrial properties and four vacant land parcels in various
    transactions to unaffiliated parties for approximately
    $933.1 million. The sold office properties consisted of
    approximately 5,182,707 square feet and 32 residential
    units, and the industrial properties consisted of approximately
    216,900 square feet. With these transactions, we exited the
    following markets: Salt Lake City, UT; Riverside, CA;
    Fort Worth, TX; Charlotte, NC; and San Antonio, TX;

21



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| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we sold partial interests in 13 Office Properties
    consisting of approximately 3,284,431 square feet for
    approximately $596.5 million;                                                                                                                                                   
|
| |  | we acquired two Office Properties for
    approximately $183.2 million consisting of approximately
    829,293 square feet;                                                                                                                                                                     
|
| |  | we placed into service four developments
    consisting of five buildings and approximately
    1,218,215 square feet;                                                                                                                                                                          
|
| |  | we entered into $500 million of
    forward-starting interest rate swaps;                                                                                                                                                                                                                       
|
| |  | we repaid $400 million of unsecured notes
    that matured in November 2003;                                                                                                                                                                                                                    
|
| |  | we issued $500 million of unsecured notes
    due January 2013 at an effective annual interest rate of 5.98%
    and used a portion of the net proceeds to repay
    $300 million of unsecured notes that matured in February
    2003;                                                         
|
| |  | we obtained a new three-year $1.0 billion
    revolving credit facility in May 2003;                                                                                                                                                                                                            
|
| |  | we obtained a $1.0 billion 364-day credit
    facility in December 2003;                                                                                                                                                                                                                        
|
| |  | we announced the redemption of, and subsequently
    redeemed in 2004, 4,562,900 outstanding 8 5/8%
    Series C Cumulative Redeemable Preferred Shares of
    Beneficial Interest for approximately $114.6 million, which
    included approximately $0.6 million of accrued
    distributions;
|
| |  | we redeemed the 7.875% Series E Cumulative
    Redeemable Preferred Shares for approximately
    $151.9 million, which included approximately
    $1.9 million of accrued distributions;                                                                                                        
|
| |  | we redeemed the 8.00% Series F Cumulative
    Redeemable Preferred Shares for approximately
    $100.0 million; and                                                                                                                                                                             
|
| |  | we repurchased 14,236,400 Common Shares at an
    average price of $25.53 per share for a total of
    $363.5 million.                                                                                                                                                                          

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 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.



| |                                    
| | -----------------------------------
| | 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
collectibility of accounts receivable from 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 continued to experience uncollectible
receivables, although at lower levels than prior periods,
relating to tenants in bankruptcy or tenants experiencing
financial difficulty. 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

22



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##### Table of Contents



condition and results of operations could be
adversely affected. Below is our bad debt expense from
continuing operations for each of the three years in the period
ended December 31, 2003.


|                                                                    |  |                                  |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                    |  |                                 
|                                                                    |  | For the years ended December 31, |          
|                                                                    |  |                                  |          
|                                                                    |  | 2003                             |           |   | 2002 |   |           | 2001 | 
|                                                                    |  |                                  |           |   |      |   |           |      | 
|                                                                    |  |                                 
|                                                                    |  | (Dollars in thousands)           |          
|Bad debt expense                                                    |  | $                                | 12,592    |   |      | $ | 27,767    |      |  | $ | 24,653    |  
|Property operating revenues                                         |  | $                                | 3,179,771 |   |      | $ | 3,343,859 |      |  | $ | 2,951,061 |  
|Bad debt expense as a percentage of property
    operating revenues |  |                                  | 0.40      | % |      |   | 0.83      | %    |  |   | 0.84      | %



| |                                    
| | -----------------------------------
| | Impairment of Long-Lived
    Assets

We review our long-lived assets for potential
impairment in accordance with FAS 144, Accounting for the
Impairment and Disposal of Long-Lived Assets. Under
FAS 144, an impairment loss must be recognized when the
carrying value of a long lived asset is not recoverable. The
carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to
result from the use and eventual disposition of the asset. If it
is determined that a permanent impairment of a long-lived asset
has occurred, the carrying value of the asset is reduced to its
fair value and an impairment loss is recognized for the
difference between the carrying value and the fair value.

Our estimate of the expected future cash flows
used in testing for impairment is highly subjective and based on
among other things, our estimates regarding current and future
market conditions, rental rates, occupancy levels, costs of
tenant improvements, leasing commissions and other tenant
concessions, and assumptions regarding the residual value of our
Properties at the end our anticipated holding period. These
assumptions could differ materially from actual results in
future periods. Since FAS 144 provides that the future cash
flows used in this analysis be considered on an undiscounted
basis, our historically established intent to hold properties
over the long term directly decreases the likelihood of
recording an impairment loss. If our strategy changes or if
market conditions otherwise dictate an earlier sale date, an
impairment loss could be recognized and such loss could be
material.

During 2003, we recognized an impairment of
approximately $7.5 million on an Office Property (See
Item 8. Financial Statements and Supplementary Data
Note 8  Impairment). 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 held for sale.



| |             
| | ------------
| | Depreciation

Statement of Financial Accounting Standards
No. 141 (SFAS No. 141) Business
Combinationswas effective July 1, 2001. Depreciation
expense on Properties acquired prior to July 1, 2001 was
computed using the straight-line method based on an estimated
useful life of 40 years. A significant portion of the
acquisition cost of each property was allocated to building
(usually 85% to 90% unless the property was subject to a ground
lease in which case 100% of the acquisition cost was allocated
to building). Depreciation expense on properties acquired
subsequent to the effective date of SFAS No. 141 is
based on the allocation of the acquisition cost to land,
building, tenant improvements and intangibles and the
determination of their useful lives are based on
managements estimates. If we do not appropriately allocate
to these components or we incorrectly estimate the useful lives
of these components, our computation of depreciation and
amortization expense may not appropriately reflect the actual
impact of these costs over future periods, which will affect net
income.



| |                                        
| | ---------------------------------------
| | 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

23



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##### Table of Contents



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, as well as the
underlying hedged liability, if applicable, to its fair value.
In determining the fair value of interest rate swaps, 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.

Accounting Policy Adopted in 2003

Effective January 1, 2003, we adopted
Statement of Financial Accounting Standards No. 123
(Statement 123) Accounting for Stock Based
Compensation,which requires a fair value based accounting
method for determining compensation expense associated with the
issuance of share options and other equity awards. See
Item 8. Financial Statements and Supplementary Data
Note 2  Summary of Significant Accounting
Policies for more information.

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.
The operating results of the properties sold in 2003 and 2002
have been classified as discontinued operations in the
consolidated statements of operations for each of the three
years in the period ended December 31, 2003 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, an
extraordinary loss of approximately $9.4 million in the
year ended December 31, 2001 was reclassified to
amortization of deferred financing costs and prepayment
expenses.

Impact of New Accounting Standards

See Item 8. Financial Statements and
Supplementary Data Note 3  Impact of New
Accounting Standards for the impact of new accounting standards
on our financial condition and results of operations.

24



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##### Table of Contents



Results of Operations



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Trends in Occupancy, Rental Rates, Lease
    Terminations, Tenant Improvements and Leasing Costs and
    Uncollectible Receivables

We receive our revenue primarily from rental
revenue generated by leases for office and industrial space for
which we are the lessor. Our revenues also include
reimbursements from our tenants for certain operating costs and
revenues from parking facilities. As a result of the slowdown in
economic activity and decline in white-collar employment, we
have experienced a decrease both in our occupancy rates and
overall market rental rates and an increase in costs to re-lease
space. Below is a summary of our leasing activity for tenants
taking occupancy for the periods presented for our Office
Properties. Our 10 largest markets in terms of property net
operating income from continuing operations in order from
greatest to least are San Francisco, Boston, San Jose,
Seattle, New York, Chicago, Washington D.C., Los Angeles,
Atlanta and Orange County. These markets accounted for
approximately 78.4% of our property net operating income from
continuing operations in the fourth quarter of 2003.

|                        |                                                                                                                |                     |   |            |      |  |   |            |  
|----------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------- | - | ---------- | ---- |  | - | ---------- | -
|                        |                                                                                                                |                    
|                        |                                                                                                                | For the years ended |  
|                        |                                                                                                                | December 31,        |  
|                        |                                                                                                                |                     |  
|                        |                                                                                                                | 2003                |   |            | 2002 | 
|                        |                                                                                                                |                     |   |            |      | 
|Office Property Data:   |                                                                                                                |                     |   |            |      |  |   |           
|10 Largest Markets:     |                                                                                                                |                     |   |            |      |  |   |           
|                        | Portion of total office portfolio based on square
    feet at end of year                                      |                     |   | 69.4       | %    |  |   | 68.1       | %
|                        | Occupancy at end of year                                                                                       |                     |   | 86.1       | %    |  |   | 88.8       | %
|                        | Gross square footage for tenants whose lease term
    commenced during the year                                |                     |   | 15,218,840 |      |  |   | 13,582,766 |  
|                        | Weighted average annual rent per square foot for
    tenants whose lease term commenced during the year (a)(b) |                     | $ | 27.93      |      |  | $ | 31.54      |  
|                        | Gross square footage for expiring and terminated
    leases during the year                                    |                     |   | 15,932,288 |      |  |   | 16,308,269 |  
|                        | Weighted average annual rent per square foot for
    expiring and terminated leases during the year(a)         |                     | $ | 31.12      |      |  | $ | 31.19      |  
|Total Office Portfolio: |                                                                                                                |                     |   |            |      |  |   |           
|                        | Portion of total portfolio based on square feet
    at end of year                                             |                     |   | 100.0      | %    |  |   | 100.0      | %
|                        | Occupancy at end of year                                                                                       |                     |   | 86.3       | %    |  |   | 88.6       | %
|                        | Gross square footage for tenants whose lease term
    commenced during the year                                |                     |   | 22,684,488 |      |  |   | 20,620,427 |  
|                        | Weighted average annual rent per square foot for
    tenants whose lease term commenced during the year (a)(b) |                     | $ | 25.68      |      |  | $ | 28.48      |  
|                        | Gross square footage for expiring and terminated
    leases during the year                                    |                     |   | 23,976,592 |      |  |   | 23,711,452 |  
|                        | Weighted average annual rent per square foot for
    expiring and terminated leases during the year(a)         |                     | $ | 28.14      |      |  | $ | 28.61      |  



---



|    |  |                                                                                                                                                                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | These weighted average rental rates are based on
    the average annual base rent per square foot over the term of
    each of the leases and the current estimated tenant
    reimbursements, if any.                                                                                                
|   
|(b) |  | Weighted 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.

A significant contributor to the decline in
occupancy for our Office Properties since the beginning of 2002
has been early lease terminations. From January 1, 2002
through December 31, 2003, early lease terminations
affected approximately 11.2 million square feet and we
received lease termination fees of approximately
$219.8 million. Although lease termination fees increase
current period income, future rental income will most likely be
reduced because, given the decline in market rents, it is
unlikely we will collect the full contracted amount which had
been payable under the terminated leases from new tenants who
may occupy the vacated

25



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##### Table of Contents



space. We will also often incur downtime and
additional costs to relet the space. Although there is no way of
predicting future lease terminations, we currently anticipate
that lease termination fees will be relatively stable in 2004 as
compared to 2003 and the affected square feet should be less in
2004 than 2003. The amount of lease termination fees are not
necessarily proportionate to the square footage of leases being
terminated. Although occupancy has declined since the beginning
of 2002, it has stabilized over the last two quarters at
approximately 86% and given the current rate of new leasing
activity, we expect our average occupancy to increase
approximately 1% to 2% in 2004. We estimate that for each 1%
change in the average occupancy of our Office Properties there
is a corresponding $30 million to $35 million change
in our net operating income.


As indicated in the table above, due to the weak
economy, there has been a general decline in market rental rates
for Office Properties in 2002 and 2003 as reflected by the
difference between the weighted average annual rent per square
foot for expiring and terminated leases compared to the weighted
average annual rent per square foot for tenants whose lease term
commenced during the same period. This roll down in rents
adversely affected our rental revenues in 2002 and 2003 and
unless the economy recovers and market rental rates increase
substantially from their current levels, is expected to
adversely affect our rental revenues in subsequent periods as we
enter into new leases. The actual rental rates at which
available space will be relet will depend on prevailing market
factors at the time. We currently estimate that the average
annual total rent of approximately $30.43 per square foot as of
December 31, 2003 for all our Office Properties (See
Item 2. Properties) is approximately $3.50 to $4.00 per
square foot above market rent and expect this trend to continue
in 2004. As of December 31, 2003, approximately
65.8 million square feet of occupied space (approximately
62.4% of the total occupied square feet) is scheduled to expire
through 2008. The square footage of leases scheduled to expire
in each of the next five years and the average annual rent per
square foot for these leases is presented below.

|              |  |                                    |            |                              |                 |   |       | 
|------------- |  | ---------------------------------- | ---------- | ---------------------------- | --------------- | - | ----- | 
|              |  |                                    |            | Annualized Rent per Occupied |                
|Year          |  | Square Feet of Expiring Leases (a) |            |                              | Square Foot (b) |  
|              |  |                                    |            |                              |                 |  
|2004          |  |                                    | 12,187,759 |                              |                 | $ | 27.70 | 
|2005          |  |                                    | 13,580,501 |                              |                 | $ | 30.55 | 
|2006          |  |                                    | 13,984,235 |                              |                 | $ | 29.52 | 
|2007          |  |                                    | 12,399,315 |                              |                 | $ | 29.23 | 
|2008          |  |                                    | 13,647,832 |                              |                 | $ | 27.86 | 
|              |  |                                    |            |                              |                 |  
|Total/Average |  |                                    | 65,799,642 |                              |                 | $ | 29.00 | 
|              |  |                                    |            |                              |                 |  



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Based on the contractual termination date of the
    lease without regard to any early lease termination and/or
    renewal options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b) |  | Based on annualized rent. Annualized rent is the
    monthly contractual rent as of the reporting date, or if the
    current rent payable is $0 then the first monthly rent payment
    due, under existing leases as of December 31, 2003
    multiplied by 12 months (Annualized Rent). This
    amount reflects total base rent and estimated expense
    reimbursements from tenants as of December 31, 2003 without
    regard to any rent abatements and contractual increases or
    decreases in rent subsequent to December 31, 2003. Total
    rent abatements for leases in place as of December 31,
    2003, for the period from January 1, 2004 to
    December 31, 2004 are approximately $38.2 million. We
    believe Annualized Rent is a useful measure because this
    information can be used for comparison to current market rents
    as published by various third party sources.

During 2003, we experienced material increases in
tenant improvement and leasing costs as a result of competitive
market conditions for new and renewal leases. The weighted
average tenant improvement and leasing cost per square foot
incurred for office leases which commenced during 2003 was
approximately $19.05, a substantial increase compared to the
cost of $13.59 per square foot incurred in 2002. These
increases in tenant improvement and leasing costs resulted in a
decrease in net effective rents (contract rents reduced by
tenant improvement costs, leasing commissions and any free rent
periods) for lease renewals and retenanted properties. We expect
tenant improvement and leasing costs to be approximately $18 to
$20 per square foot in 2004.

26



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##### Table of Contents



We have also continued to experience
uncollectible receivables, although at lower levels than prior
periods, relating to tenants in bankruptcy or tenants
experiencing financial difficulty. Bad debt expense relating to
uncollectible receivables (from continuing operations) was
approximately $12.6 million, $27.8 million and
$24.7 million in 2003, 2002 and 2001, respectively. We
anticipate that the level of uncollectible receivables in 2004
will be similar to 2003. Although we have collateral from many
of our tenants, mostly in the form of security deposits and
letters of credit, such collateral is generally not sufficient
to cover the full cost of releasing the space and additional
write-offs of tenant receivables may occur.



| |                                          
| | -----------------------------------------
| | Trends in Property Operating
    Expenses

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
streamline operations, improve customer service, reduce lease
cycle time, increase occupancy, retain tenants and reduce
operating expenses. The analysis resulted in a significant
reengineering effort called EOPlus. As part of this effort, many
of the activities that occurred at the property level have been
centralized into 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 provide higher service to our
customers at a lower cost. By consolidating our property
management offices, we made available for leasing almost
400,000 square feet of office space in 2003. As of
December 31, 2003, we have approximately 15% fewer
employees at the property level than at the end of 2001. 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.

Period-to-Period Comparisons

Acquisition and Disposition
Activity

Below is a summary of our acquisition and
disposition activity since January 1, 2002. The buildings
and total square feet shown include properties we own in joint
ventures with other partners that we either consolidate or
account for under the equity method. The total square feet of
these unconsolidated properties is included in the table.
Excluding the joint venture partners share of the square
feet of the office properties, we effectively owned 113,580,631
square feet of office space as of December 31, 2003.

|                        |                                  |                   |     |       |                       |  |             |            |       |  |             |    |   |  |           |          |  
|----------------------- | -------------------------------- | ----------------- | --- | ----- | --------------------- |  | ----------- | ---------- | ----- |  | ----------- | -- | - |  | --------- | -------- | -
|                        |                                  |                   |     |      
|                        |                                  | Office Properties |     |       | Industrial Properties | 
|                        |                                  |                   |     |       |                       | 
|                        |                                  |                   |     | Total |                       |  |             |            | Total | 
|                        |                                  | Buildings         |     |       | Square Feet           |  |             | Buildings  |       |  | Square Feet |   
|                        |                                  |                   |     |       |                       |  |             |            |       |  |             |   
|Properties owned as of: |                                  |                   |     |       |                       |  |             |            |       |  |             |    |   |  |           |         
|January 1, 2002         |                                  |                   | 774 |       |                       |  | 128,233,987 |            |       |  | 79          |    |   |  | 6,044,831 |         
|                        | Acquisitions                     |                   |     | 2     |                       |  |             | 260,372    |       |  |             |   |   |  |           |         |  
|                        | Developments placed in service   |                   |     | 3     |                       |  |             | 330,646    |       |  |             |   |   |  |           |         |  
|                        | Dispositions                     |                   |     | (45   | )                     |  |             | (3,113,189 | )     |  |             | (2 | ) |  |           | (77,072  | )
|                        | Building remeasurements          |                   |     |      |                       |  |             | 13,583     |       |  |             |   |   |  |           |         |  
|                        |                                  |                   |     |       |                       |  |             |            |       |  |             |   
|December 31, 2002       |                                  |                   | 734 |       |                       |  | 125,725,399 |            |       |  | 77          |    |   |  | 5,967,759 |         
|                        | Acquisitions                     |                   |     | 2     |                       |  |             | 829,293    |       |  |             |   |   |  |           |         |  
|                        | Developments placed in service   |                   |     | 5     |                       |  |             | 1,218,215  |       |  |             |   |   |  |           |         |  
|                        | Dispositions(a)                  |                   |     | (53   | )                     |  |             | (5,182,707 | )     |  |             | (2 | ) |  |           | (216,900 | )
|                        | Property taken out of service(b) |                   |     | (4    | )                     |  |             | (450,548   | )     |  |             |   |   |  |           |         |  
|                        | Building remeasurements          |                   |     |      |                       |  |             | 115,273    |       |  |             |   |   |  |           |         |  
|                        |                                  |                   |     |       |                       |  |             |            |       |  |             |   
|December 31, 2003       |                                  |                   | 684 |       |                       |  | 122,254,925 |            |       |  | 75          |    |   |  | 5,750,859 |         
|                        |                                  |                   |     |       |                       |  |             |            |       |  |             |   



---



|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Excludes partial sales of real estate because the
    properties are still included in our portfolio.                                                                              
|   
|(b) | Cambridge Science Center (f/k/a Riverview
    I) is now considered a development and 175 Wyman has been
    taken out of service and is being held for potential
    redevelopment.

27



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##### Table of Contents



The financial data presented in the consolidated
statements of operations show changes in revenues and expenses
from period-to-period. We do not believe our period-to-period
financial data are necessarily comparable because we acquire and
dispose of properties on an ongoing basis. The following tables
show results attributable to the Properties that were held
during both periods being compared (the Core
Portfolio) and the changes in our aggregate total
portfolio of Properties (the Total Portfolio).

Included in property operating revenues are
rental revenue, tenant reimbursements, parking and other.
Included in property operating expenses are insurance, repairs
and maintenance and property operating expenses.

28



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##### Table of Contents



Comparison of the year ended December 31,
2003 to the year ended December 31, 2002

The table below represents selected operating
information for the Total Portfolio and for the core portfolio
consisting of 647 consolidated Office Properties, 75 Industrial
Properties and 22 unconsolidated joint venture Properties
acquired or placed in service on or prior to January 1,
2002. The core portfolio results below include the results of
the 13 Office Properties in which we sold partial interests and
entered into joint venture agreements during the fourth quarter
2003 because these properties were sold on December 30,
2003.

|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |           |           |   |          |          |          |   |       |      |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ---------------- | --------- | --------- | -------------- | - | --------- | --------- | --------- | - | -------- | -------- | -------- | ---- | ----- | ---- | ----- | - | --------- | --------- | --------- | - | --------- | --------- | --------- | - | -------- | -------- | -------- | - | ----- | ---- | ----- | -
|                                                                                                                                                                            |                              |                  |           |          
|                                                                                                                                                                            |                              | Total Portfolio  |           |           | Core Portfolio |  
|                                                                                                                                                                            |                              |                  |           |           |                |  
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |          
|                                                                                                                                                                            |                              |                  |           | Change    |                |   |           |           | Change    |  
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |  
|                                                                                                                                                                            |                              | 2003             |           |           | 2002           |   |           | $         |           |   | %        |          |          | 2003 |       |      | 2002  |   |           | $         |           |   | %         |          
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|(Dollars in thousands)                                                                                                                                                      |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |           |           |   |          |          |          |   |       |     
|Property operating revenues                                                                                                                                                 |                              | $                | 3,179,771 |           |                | $ | 3,343,859 |           |           | $ | (164,088 | )        |          |      | (4.9  | )%   |       | $ | 3,138,385 |           |           | $ | 3,323,859 |           |           | $ | (185,474 | )        |          |   | (5.6  | )%  
|Fee income                                                                                                                                                                  |                              |                  | 15,861    |           |                |   | 15,907    |           |           |   | (46      | )        |          |      | (0.3  | )    |       |   |          |           |           |   |          |           |           |   |         |          |          |   |      |     
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|                                                                                                                                                                            | Total revenues               |                  |           | 3,195,632 |                |   |           | 3,359,766 |           |   |          | (164,134 | )        |      |       | (4.9 | )     |   |           | 3,138,385 |           |   |           | 3,323,859 |           |   |          | (185,474 | )        |   |       | (5.6 | )    
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Depreciation and amortization                                                                                                                                               |                              |                  | 715,548   |           |                |   | 662,875   |           |           |   | 52,673   |          |          |      | 7.9   |      |       |   | 689,611   |           |           |   | 648,531   |           |           |   | 41,080   |          |          |   | 6.3   |     
|Real estate taxes                                                                                                                                                           |                              |                  | 351,537   |           |                |   | 360,488   |           |           |   | (8,951   | )        |          |      | (2.5  | )    |       |   | 344,257   |           |           |   | 356,730   |           |           |   | (12,473  | )        |          |   | (3.5  | )   
|Property operating expenses                                                                                                                                                 |                              |                  | 775,042   |           |                |   | 788,207   |           |           |   | (13,165  | )        |          |      | (1.7  | )    |       |   | 759,568   |           |           |   | 782,195   |           |           |   | (22,627  | )        |          |   | (2.9  | )   
|Ground rent                                                                                                                                                                 |                              |                  | 20,287    |           |                |   | 20,325    |           |           |   | (38      | )        |          |      | (0.2  | )    |       |   | 18,624    |           |           |   | 20,075    |           |           |   | (1,451   | )        |          |   | (7.2  | )   
|General and administrative(a)                                                                                                                                               |                              |                  | 62,479    |           |                |   | 65,790    |           |           |   | (3,311   | )        |          |      | (5.0  | )    |       |   |          |           |           |   |          |           |           |   |         |          |          |   |      |     
|Impairment of long-lived asset                                                                                                                                              |                              |                  | 7,500     |           |                |   |          |           |           |   | 7,500    |          |          |      |      |      |       |   | 7,500     |           |           |   |          |           |           |   | 7,500    |          |          |   |      |     
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|                                                                                                                                                                            | Total expenses               |                  |           | 1,932,393 |                |   |           | 1,897,685 |           |   |          | 34,708   |          |      |       | 1.8  |       |   |           | 1,819,560 |           |   |           | 1,807,531 |           |   |          | 12,029   |          |   |       | 0.7  |      
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|                                                                                                                                                                            |                              | Operating income |           |           | 1,263,239      |   |           |           | 1,462,081 |   |          |          | (198,842 | )    |       |      | (13.6 | ) |           |           | 1,318,825 |   |           |           | 1,516,328 |   |          |          | (197,503 | ) |       |      | (13.0 | )
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Interest/dividend income                                                                                                                                                    |                              |                  | 12,583    |           |                |   | 22,148    |           |           |   | (9,565   | )        |          |      | (43.2 | )    |       |   | 3,839     |           |           |   | 3,771     |           |           |   | 68       |          |          |   | 1.8   |     
|Realized gain on sale of marketable securities                                                                                                                              |                              |                  | 9,286     |           |                |   |          |           |           |   | 9,286    |          |          |      |      |      |       |   |          |           |           |   |          |           |           |   |         |          |          |   |      |     
|Interest expense(b)                                                                                                                                                         |                              |                  | (827,335  | )         |                |   | (814,645  | )         |           |   | (12,690  | )        |          |      | 1.6   |      |       |   | (187,259  | )         |           |   | (198,110  | )         |           |   | 10,851   |          |          |   | (5.5  | )   
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|                                                                                                                                                                            | Total other income / expense |                  |           | (805,466  | )              |   |           | (792,497  | )         |   |          | (12,969  | )        |      |       | 1.6  |       |   |           | (183,420  | )         |   |           | (194,339  | )         |   |          | 10,919   |          |   |       | (5.6 | )    
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Income before income taxes, allocation to
    minority interests, income from investments in unconsolidated
    joint ventures and net gain on partial sales of real estate |                              |                  | 457,773   |           |                |   | 669,584   |           |           |   | (211,811 | )        |          |      | (31.6 | )    |       |   | 1,135,405 |           |           |   | 1,321,989 |           |           |   | (186,584 | )        |          |   | (14.1 | )   
|Income taxes                                                                                                                                                                |                              |                  | (5,373    | )         |                |   | (9,126    | )         |           |   | 3,753    |          |          |      | (41.1 | )    |       |   | (911      | )         |           |   | (1,999    | )         |           |   | 1,088    |          |          |   | (54.4 | )   
|Minority interests                                                                                                                                                          |                              |                  | (82,268   | )         |                |   | (96,405   | )         |           |   | 14,137   |          |          |      | (14.7 | )    |       |   | (9,307    | )         |           |   | (7,253    | )         |           |   | (2,054   | )        |          |   | 28.3  |     
|Income from investments in unconsolidated joint
    ventures                                                                                                                |                              |                  | 79,882    |           |                |   | 106,852   |           |           |   | (26,970  | )        |          |      | (25.2 | )    |       |   | 53,131    |           |           |   | 68,630    |           |           |   | (15,499  | )        |          |   | (22.6 | )   
|Net gain on partial sales of real estate                                                                                                                                    |                              |                  | 99,110    |           |                |   |          |           |           |   | 99,110   |          |          |      |      |      |       |   | 99,110    |           |           |   |          |           |           |   | 99,110   |          |          |   |      |     
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Income from continuing operations                                                                                                                                           |                              |                  | 549,124   |           |                |   | 670,905   |           |           |   | (121,781 | )        |          |      | (18.2 | )    |       |   | 1,277,428 |           |           |   | 1,381,367 |           |           |   | (103,939 | )        |          |   | (7.5  | )   
|Discontinued operations (including net gain on
    sales of real estate of $61,953 and $17,926, respectively)                                                               |                              |                  | 105,938   |           |                |   | 99,310    |           |           |   | 6,628    |          |          |      | 6.7   |      |       |   |          |           |           |   |          |           |           |   |         |          |          |   |      |     
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Net income                                                                                                                                                                  |                              | $                | 655,062   |           |                | $ | 770,215   |           |           | $ | (115,153 | )        |          |      | (15.0 | )%   |       | $ | 1,277,428 |           |           | $ | 1,381,367 |           |           | $ | (103,939 | )        |          |   | (7.5  | )%  
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Property net operating income from continuing
    operations(c)                                                                                                             |                              | $                | 2,053,192 |           |                | $ | 2,195,164 |           |           | $ | (141,972 | )        |          |      | (6.5  | )%   |       | $ | 2,034,560 |           |           | $ | 2,184,934 |           |           | $ | (150,374 | )        |          |   | (6.9  | )%  
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Deferred rental revenue                                                                                                                                                     |                              | $                | 73,082    |           |                | $ | 67,412    |           |           | $ | 5,670    |          |          |      | 8.4   | %    |       | $ | 70,298    |           |           | $ | 66,451    |           |           | $ | 3,847    |          |          |   | 5.8   | %   
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          
|Lease termination fees                                                                                                                                                      |                              | $                | 62,578    |           |                | $ | 104,178   |           |           | $ | (41,600  | )        |          |      | (39.9 | )%   |       | $ | 62,110    |           |           | $ | 103,469   |           |           | $ | (41,359  | )        |          |   | (40.0 | )%  
|                                                                                                                                                                            |                              |                  |           |           |                |   |           |           |           |   |          |          |          |      |       |      |       |   |           |           |           |   |           |          

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---



|    |                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Corporate general and administrative expense is
    not allocated to the Core Portfolio because these expenses are
    not directly incurred in connection with any specific Property.                                                                                                
|   
|(b) | Interest expense (including amortization of
    deferred financing costs and prepayment expenses) for the core
    portfolio represents interest expense on property secured
    mortgage debt and does not include interest expense on the
    unsecured notes or the line of credit.
|   
|(c) | Represents segment data. See Item 8.
    Financial Statements and Supplementary Data Note 20-Segment
    Information.                                                                                                                                                                 

Property Operating Revenues

The decrease in property operating revenues in
the Total Portfolio was primarily attributable to reduced
occupancy in the core portfolio from 91.8% at January 1,
2002 to 86.5% at December 31, 2003 and a decrease in lease
termination fees. A large portion of the decrease in occupancy
was due to early lease terminations. In addition to the decline
in occupancy, rental revenues declined as a result of decreased
average rental rates on new leases as compared to average rental
rates on expiring leases.

Depreciation and Amortization

Total Portfolio and core portfolio depreciation
and amortization expense increased from the prior period
primarily as a result of capital and tenant improvements made
since the beginning of the prior period and from an increase in
deferred leasing costs.

Real Estate Taxes

Real estate taxes decreased for the Total
Portfolio and core portfolio primarily due to a decrease in real
estate taxes in the California regions of approximately
$11.5 million and the Seattle region of approximately
$2.8 million, partially offset by an increase in real
estate taxes in the New York region of approximately
$6.3 million.

Property Operating Expenses

For the core portfolio, property operating
expenses decreased primarily as a result of lower utility
expense of approximately $13.8 million and lower insurance
expense of approximately $11.0 million. Insurance expense
decreased primarily as a result of changes in our insurance
program and favorable loss experience. In addition, repairs and
maintenance expense decreased by approximately $8.8 million
primarily due to lower occupancy and the renegotiation of
service contracts. Payroll expense decreased by approximately
$4.3 million due to staff reductions. These decreases in
property operating expenses were partially offset by increases
in property operating general and administrative expenses which
include legal, advertising, leasing and payroll costs and by
severance expense of approximately $5.4 million in 2003.

General and Administrative Expenses

We incurred approximately $4.2 million of
corporate level severance expense in 2003 compared to
$7.2 million in 2002. The severance expense consisted of
the accelerated vesting of share options and restricted shares
as well as cash payments.

Beginning in fiscal 2003, we reclassified
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 were classified as
property operating expenses and all prior periods have been
reclassified to provide for comparability. This reclassification
did not change the prior period results or shareholders
equity.

30



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##### Table of Contents



Impairment

During 2003, an Office Property was deemed to be
impaired due to an analysis of its future undiscounted cash
flows. As a result, we recognized a permanent impairment charge
of $7.5 million, which reduced the book value of the
property to its estimated fair value of $3.8 million.

Interest/Dividend Income

Interest and dividend income decreased for the
Total Portfolio by approximately $9.6 million primarily as
a result of lower interest and dividends from various notes
receivable and investments, which either matured or were
redeemed during the period.

Realized Gain on Sale of Marketable Securities

During 2002, we entered into an early lease
termination agreement with a tenant that was scheduled to occupy
an entire building. As part of the consideration for the lease
termination, we received five million shares of common stock.
These securities were sold during the first quarter of 2003 at a
gain of approximately $8.1 million. The remaining realized
gain of approximately $1.2 million was due to the sale of
other securities.

Interest Expense

Interest expense for the Total Portfolio
increased primarily as a result of a $10.4 million decrease
of capitalized interest related to several developments that
were completed and placed into service. Interest expense for the
core portfolio decreased primarily as a result of mortgage debt
repayments.

Income Taxes

Income taxes for the Total Portfolio decreased
because in 2002 we incurred approximately $5.0 million of
income taxes as a result of a $40.0 million lease
termination. (See Income from Investment in Unconsolidated
Joint Ventures below).

Minority Interests

Minority interests for the Total Portfolio
decreased because of the decrease in net income during 2003 as
compared to 2002.

Income from Investments in Unconsolidated Joint
Ventures

Income from investments in unconsolidated joint
ventures decreased for the Total Portfolio primarily due to a
decrease in lease termination fees from $46.4 million to
$3.7 million and a decrease in property operating revenues
at the core portfolio, partially offset by a $2.3 million
decrease in interest expense on variable rate mortgage debt at
the core portfolio and by a development property placed in
service in 2003. The decrease in property operating revenues at
the core portfolio was primarily attributable to reduced
occupancy and decreased average rental rates on new leases as
compared to average rental rates on expiring leases.

Net Gain on Partial Sales of Real Estate

The net gain in 2003 related to the partial sale
of our interests in 13 Office Properties. In accordance
with SFAS No. 144, the net income from these
Properties, which includes the net gain on sale, is not
classified as discontinued operations because we still maintain
an on-going involvement with the operation of these Properties.

Discontinued Operations

The increase in discontinued operations is a
result of a higher net gain on the sale of properties in 2003 as
compared to 2002, offset by the loss of net income due to the
sales. Discontinued operations in 2002 includes

31



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##### Table of Contents



the net income of properties sold in 2002 and in
2003 whereas the discontinued operations in 2003 only includes
the net income of properties sold in 2003.


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

The table below represents selected operating
information for the Total Portfolio and for the core portfolio
consisting of 355 consolidated Office Properties and 23
unconsolidated joint venture Office Properties acquired or
placed in service on or prior to January 1, 2001.

|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |           |   |   |          |         |   |  |        |       |  
|--------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------------- | --------- | --------- | -------------- | - | --------- | --------- | ------ | - | -------- | ------- | - | ---- | ------ | ---- | ---- | - | --------- | --------- | - | - | --------- | --------- | - | - | -------- | ------- | - |  | ------ | ----- | -
|                                                                                                                                  |                            |                 |           |          
|                                                                                                                                  |                            | Total Portfolio |           |           | Core Portfolio |  
|                                                                                                                                  |                            |                 |           |           |                |  
|                                                                                                                                  |                            |                 |           |           |                |   |           |          
|                                                                                                                                  |                            |                 |           | Change    |                |   |           |           | Change |  
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |  
|                                                                                                                                  |                            | 2002            |           |           | 2001           |   |           | $         |        |   | %        |         |   | 2002 |        |      | 2001 |   |           | $         |   |   | %         |          
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|(Dollars in thousands)                                                                                                            |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |     
|Property operating revenues                                                                                                       |                            | $               | 3,343,859 |           |                | $ | 2,951,061 |           |        | $ | 392,798  |         |   |      | 13.3   | %    |      | $ | 2,508,762 |           |   | $ | 2,567,558 |           |   | $ | (58,796  | )       |   |  | (2.3   | )%   
|Fee income                                                                                                                        |                            |                 | 15,907    |           |                |   | 15,085    |           |        |   | 822      |         |   |      | 5.4    |      |      |   |          |           |   |   |          |           |   |   |         |         |   |  |       |      
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|                                                                                                                                  | Total revenues             |                 |           | 3,359,766 |                |   |           | 2,966,146 |        |   |          | 393,620 |   |      |        | 13.3 |      |   |           | 2,508,762 |   |   |           | 2,567,558 |   |   |          | (58,796 | ) |  |        | (2.3  | )
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Depreciation and amortization                                                                                                     |                            |                 | 662,875   |           |                |   | 553,328   |           |        |   | 109,547  |         |   |      | 19.8   |      |      |   | 507,556   |           |   |   | 490,125   |           |   |   | 17,431   |         |   |  | 3.6    |      
|Real estate taxes                                                                                                                 |                            |                 | 360,488   |           |                |   | 331,182   |           |        |   | 29,306   |         |   |      | 8.8    |      |      |   | 303,730   |           |   |   | 298,532   |           |   |   | 5,198    |         |   |  | 1.7    |      
|Property operating expenses                                                                                                       |                            |                 | 788,207   |           |                |   | 677,440   |           |        |   | 110,767  |         |   |      | 16.4   |      |      |   | 627,711   |           |   |   | 605,120   |           |   |   | 22,591   |         |   |  | 3.7    |      
|Ground rent                                                                                                                       |                            |                 | 20,325    |           |                |   | 16,692    |           |        |   | 3,633    |         |   |      | 21.8   |      |      |   | 11,571    |           |   |   | 12,632    |           |   |   | (1,061   | )       |   |  | (8.4   | )    
|General and administrative(a)                                                                                                     |                            |                 | 65,790    |           |                |   | 42,321    |           |        |   | 23,469   |         |   |      | 55.5   |      |      |   |          |           |   |   |          |           |   |   |         |         |   |  |       |      
|Impairments                                                                                                                       |                            |                 |          |           |                |   | 135,220   |           |        |   | (135,220 | )       |   |      | (100.0 | )    |      |   |          |           |   |   |          |           |   |   |         |         |   |  |       |      
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|                                                                                                                                  | Total expenses             |                 |           | 1,897,685 |                |   |           | 1,756,183 |        |   |          | 141,502 |   |      |        | 8.1  |      |   |           | 1,450,568 |   |   |           | 1,406,409 |   |   |          | 44,159  |   |  |        | 3.1   |  
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Operating income                                                                                                                  |                            |                 | 1,462,081 |           |                |   | 1,209,963 |           |        |   | 252,118  |         |   |      | 20.8   |      |      |   | 1,058,194 |           |   |   | 1,161,149 |           |   |   | (102,955 | )       |   |  | (8.9   | )    
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Interest/dividend income                                                                                                          |                            |                 | 22,148    |           |                |   | 40,015    |           |        |   | (17,867  | )       |   |      | (44.7  | )    |      |   | 3,913     |           |   |   | 4,940     |           |   |   | (1,027   | )       |   |  | (20.8  | )    
|Interest expense(b)                                                                                                               |                            |                 | (814,645  | )         |                |   | (742,586  | )         |        |   | (72,059  | )       |   |      | 9.7    |      |      |   | (196,014  | )         |   |   | (220,213  | )         |   |   | 24,199   |         |   |  | (11.0  | )    
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|                                                                                                                                  | Total other income/expense |                 |           | (792,497  | )              |   |           | (702,571  | )      |   |          | (89,926 | ) |      |        | 12.8 |      |   |           | (192,101  | ) |   |           | (215,273  | ) |   |          | 23,172  |   |  |        | (10.8 | )
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures |                            |                 | 669,584   |           |                |   | 507,392   |           |        |   | 162,192  |         |   |      | 32.0   |      |      |   | 866,093   |           |   |   | 945,876   |           |   |   | (79,783  | )       |   |  | (8.4   | )    
|Income taxes                                                                                                                      |                            |                 | (9,126    | )         |                |   | (8,745    | )         |        |   | (381     | )       |   |      | 4.4    |      |      |   | (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 investments 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                                                                                                 |                            |                 | 670,905   |           |                |   | 564,578   |           |        |   | 106,327  |         |   |      | 18.8   |      |      |   | 929,712   |           |   |   | 1,008,160 |           |   |   | (78,448  | )       |   |  | (7.8   | )    
|Discontinued operations (including net gain on
    sales of real estate of $17,926 in 2002)                                       |                            |                 | 99,310    |           |                |   | 55,746    |           |        |   | 43,564   |         |   |      | 78.1   |      |      |   |          |           |   |   |          |           |   |   |         |         |   |  |       |      
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Income before extraordinary item and cumulative
    effect of a change in accounting principle                                    |                            |                 | 770,215   |           |                |   | 620,324   |           |        |   | 149,891  |         |   |      | 24.2   |      |      |   | 929,712   |           |   |   | 1,008,160 |           |   |   | (78,448  | )       |   |  | (7.8   | )    
|Extraordinary item                                                                                                                |                            |                 |          |           |                |   | (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   | %    |      | $ | 929,712   |           |   | $ | 1,007,892 |           |   | $ | (78,180  | )       |   |  | (7.8   | )%   
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Property net operating income from continuing
    operations(c)                                                                   |                            | $               | 2,195,164 |           |                | $ | 1,942,439 |           |        | $ | 252,725  |         |   |      | 13.0   | %    |      | $ | 1,577,321 |           |   | $ | 1,663,906 |           |   | $ | (86,585  | )       |   |  | (5.2   | )%   
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Deferred rental revenue                                                                                                           |                            | $               | 67,412    |           |                | $ | 66,530    |           |        | $ | 882      |         |   |      | 1.3    | %    |      | $ | 31,811    |           |   | $ | 49,951    |           |   | $ | (18,140  | )       |   |  | (36.3  | )%   
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          
|Lease termination fees                                                                                                            |                            | $               | 104,178   |           |                | $ | 39,438    |           |        | $ | 64,740   |         |   |      | 164.2  | %    |      | $ | 46,497    |           |   | $ | 34,732    |           |   | $ | 11,765   |         |   |  | 33.9   | %    
|                                                                                                                                  |                            |                 |           |           |                |   |           |           |        |   |          |         |   |      |        |      |      |   |           |           |   |   |           |          



---



|    |                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Corporate general and administrative expense is
    not allocated to the core portfolio because these expenses are
    not directly incurred in connection with any specific Property.                                                                                                
|   
|(b) | Interest expense (including amortization of
    deferred financing costs and prepayment expenses) for the core
    portfolio represents interest expense on property secured
    mortgage debt and does not include interest expense on the
    unsecured notes or the line of credit.

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|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(c) | Represents segment data. See Item 8.
    Financial Statements and Supplementary Data Note 20-Segment
    Information.

Property Operating Revenues

The increase in property operating revenues in
the Total Portfolio was 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 $104.2 million in 2002 as compared to
$39.4 million in 2001. Included in the lease termination
fees of $104.2 million in 2002 was approximately
$46.1 million from one tenant. The primary reason for the
increase in the lease termination fees and the decrease in
occupancy was the slowdown in economic activity. Lease
termination fees relate to specific tenants, each of which has
paid a fee to terminate its lease obligations before the end of
the contractual term of the lease.

The decrease in property operating revenues in
the core portfolio was 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 operating revenues was partially offset by
lease termination fees of $46.5 million in 2002 as compared
to $34.7 million in 2001.

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 and Real Estate Taxes

Total Portfolio property operating expenses and
real estate taxes increased primarily due to the Spieker merger.
Core portfolio property operating expenses and real estate taxes
increased primarily due to an increase of approximately
$4.5 million for safety and security expense and higher
insurance premiums of approximately $8.4 million 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 and real estate taxes 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.

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 and severance expense of
approximately $7.3 million in 2002. The total severance
consisted of severance payments and the accelerated vesting of
share options and restricted shares.

Beginning in fiscal 2003, we reclassified
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 were classified as
property operating expenses and all prior periods have been
reclassified to provide for comparability. This reclassification
did not change the prior period results or shareholders
equity.

Impairments

For information on this item refer to
Item 8. Financial Statements and Supplementary
Data  Note 8  Impairment.

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Interest/Dividend Income

Interest/ dividend income decreased for the Total
Portfolio as a result of an $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 of approximately
$90.2 million resulting from the settlement of the swaps
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.

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 was 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 was primarily due to the
gain on the sale of the properties sold in 2002 and properties
sold in 2003 that were acquired through the Spieker Merger in
July 2001. 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 Item

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.

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Discontinued Operations

The net income for properties sold subsequent to
December 31, 2001 is reflected in the consolidated
statements of operations as Discontinued Operations for the
periods presented. Below is a summary of the results of
operations of these properties through their respective
disposition dates:

|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |        |        |         |        |        |        | 
|------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------- | ---------------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | 
|                                                                    |                                                                                           |                                 
|                                                                    |                                                                                           | For the years ended December 31, |                 
|                                                                    |                                                                                           |                                  |                 
|                                                                    |                                                                                           | 2003                             |                  |        | 2002   |        |         | 2001   |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           |                                 
|                                                                    |                                                                                           | (Dollars in thousands)           |                 
|Total revenues                                                      |                                                                                           | $                                | 83,829           |        |        | $      | 164,425 |        |        | $      | 123,770 |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Expenses:                                                           |                                                                                           |                                  |                  |        |        |        |         |        |        |        |         |       
|                                                                    | Depreciation and amortization                                                             |                                  |                  | 14,803 |        |        |         | 28,129 |        |        |         | 21,702 |       
|                                                                    | Property operating                                                                        |                                  |                  | 25,228 |        |        |         | 54,266 |        |        |         | 45,362 |       
|                                                                    | Ground rent                                                                               |                                  |                  | 18     |        |        |         | 164    |        |        |         | 236    |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           | Total expenses                   |                  |        | 40,049 |        |         |        | 82,559 |        |         |        | 67,300 |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           |                                  | Operating income |        |        | 43,780 |         |        |        | 81,866 |         |        |        | 56,470 | 
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Other income / expense:                                             |                                                                                           |                                  |                  |        |        |        |         |        |        |        |         |       
|                                                                    | Interest / dividend income                                                                |                                  |                  | 158    |        |        |         | 233    |        |        |         | 217    |       
|                                                                    | Interest expense and amortization of deferred
    financing costs and prepayment expenses |                                  |                  | (20    | )      |        |         | (346   | )      |        |         | (849   | )     
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           | Total other income / expense     |                  |        | 138    |        |         |        | (113   | )      |         |        | (632   | )     
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Income before income taxes and net gain on sales
    of real estate |                                                                                           |                                  | 43,918           |        |        |        | 81,753  |        |        |        | 55,838  |       
|Income taxes                                                        |                                                                                           |                                  | 67               |        |        |        | (369    | )      |        |        | (92     | )     
|Net gain on sales of real estate                                    |                                                                                           |                                  | 61,953           |        |        |        | 17,926  |        |        |        |        |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Net income                                                          |                                                                                           | $                                | 105,938          |        |        | $      | 99,310  |        |        | $      | 55,746  |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Property net operating income from discontinued
    operations      |                                                                                           | $                                | 58,601           |        |        | $      | 110,159 |        |        | $      | 78,408  |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       

Segment Reporting

For segment reporting purposes, the office
properties, apartment properties 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.

Liquidity and Capital Resources

Liquidity

Our net cash provided by operating activities is
primarily 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. Our net cash provided by operating activities,
including our share of net cash provided by operating activities
from unconsolidated joint ventures, has been our primary source
of liquidity to fund debt service, capital improvements, tenant
improvements and leasing costs for operating properties as well
as distributions to our shareholders and unitholders. We expect
that our lines of credit will adequately provide for any
additional amounts which may be needed to fund working capital
and unanticipated cash needs as well as acquisitions and
development costs.

In order to qualify as a REIT for federal income
tax purposes, we must distribute at least 90% of our taxable
income (excluding capital gains) to our shareholders. We
currently distribute capital gains to our shareholders; however,
these gains can be retained by us and taxed at the corporate tax
rate. Accordingly, we currently intend, although we are not
legally obligated, to continue to make regular quarterly
distributions to holders of our common and preferred shares, at
least at the level required to maintain our REIT status. The

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declaration of dividends on capital shares is at
the discretion of the Board of Trustees, which decision is made
from time to time by the Board of Trustees based on then
prevailing circumstances.


A material adverse change in our net cash
provided by operating activities may affect our ability to fund
these items and may affect the financial performance covenants
under our lines of credit and unsecured notes. If we fail to
meet our financial performance covenants and to reach a
satisfactory resolution with our lenders, the maturity dates for
our unsecured notes could be accelerated, and our lines of
credit could become unavailable to us or the interest charged on
the line of credit could increase. Our interest charged on the
line of credit could also increase if our debt ratings adversely
change. Any of these circumstances could adversely affect our
ability to fund working capital and unanticipated cash needs,
acquisitions and development costs.

Lower occupancy levels, reduced rental rates, and
reduced revenues as a result of asset sales have had the effect
of reducing our net cash provided by operating activities. In
addition, our tenant improvement and leasing costs have
increased significantly due to competitive market conditions for
new and renewal leases. During the year ended December 31,
2003, our net free cash flow was insufficient to pay capital
improvements, tenant improvements and leasing costs and
distributions to our shareholders and unitholders by
approximately $179 million. We funded this net free cash
flow deficit primarily with a combination of borrowings under
our line of credit and proceeds from property dispositions. We
define net free cash flow as (a) net cash provided by
operating activities determined in accordance with GAAP plus
funds from operations from our joint venture activities and
minority interest (which we view as an integral part of our
business) plus changes in non-cash items, such as rents
receivable and accounts payable, which are expected to be
settled in cash but are not reflected in net cash provided by
operating activities determined in accordance with GAAP due to
timing differences between the accrual of the receivable or
payable and the cash settlement of such items, less
(b) expenditures for capital improvements, tenant
improvements and leasing costs and distributions to our
shareholders and unitholders. Net free cash flow is a non-GAAP
financial measure and is reconciled to net cash provided by
operating activities, the most directly comparable GAAP measure,
for the period presented below. Our calculation of net free cash
flow is not necessarily comparable to similar measures that may
be presented by other companies.

|                                                                                                                                                                                                                                               |  |              |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | -
|                                                                                                                                                                                                                                               |  | For the      |          
|                                                                                                                                                                                                                                               |  | year ended   |          
|                                                                                                                                                                                                                                               |  | December 31, |          
|(Dollars in thousands)                                                                                                                                                                                                                         |  | 2003         |          
|                                                                                                                                                                                                                                               |  |              |          
|Net cash provided by operating activities                                                                                                                                                                                                      |  | $            | 1,132,303 |  
|Plus: Net joint venture and minority interest FFO
    excluding non-cash items (deferred rent, loan amortization and
    non-real estate depreciation)                                                                                         |  |              | 112,800   |  
|Plus: Total changes in assets and liabilities in
    net cash provided by operating activities, net of provision for
    doubtful accounts and deferred rent                                                                                   |  |              | 31,249    |  
|Plus: Other timing differences and changes in
    non-cash items                                                                                                                                                                               |  |              | 11,665    |  
|Less: Capital improvements, tenant improvements
    and leasing costs (for leases which commenced during the period)
    and other costs including our share of joint ventures capital
    improvements, tenant improvements and leasing costs |  |              | (512,036  | )
|Less: Distributions to commons shareholders and
    unitholders                                                                                                                                                                                |  |              | (901,259  | )
|Less: Payment of preferred distributions                                                                                                                                                                                                       |  |              | (53,841   | )
|                                                                                                                                                                                                                                               |  |              |          
|Net Free Cash Flow Deficit                                                                                                                                                                                                                     |  | $            | (179,119  | )
|                                                                                                                                                                                                                                               |  |              |          

If our net cash from operating activities and
tenant improvements and leasing costs continue at these levels,
and if our Board of Trustees continues to declare distributions
on our common shares at current levels, our net free cash flow
deficit would continue in subsequent periods and we would fund
this deficit in a similar manner. We currently anticipate that
the deficit for 2004 will be similar to 2003. Beyond this, we
have $1.4 billion of debt maturing through
December 31, 2004. Because 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 operating activities,
we will be required to repay most of our maturing debt with
proceeds from asset sales and debt offerings. Although there can
be no assurance that such funding at acceptable terms will be
available to us, we believe

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that net cash provided by operating activities,
draws under our lines of credit, proceeds from other financing
sources that we expect to be available to us and proceeds from
anticipated asset sales will together provide sufficient
liquidity to meet our cash needs during this period.


Distributions

In 2003, the Board of Trustees declared dividends
on preferred shares as reflected below:

|                             |  |                        |           |  |                        |   |        | 
|---------------------------- |  | ---------------------- | --------- |  | ---------------------- | - | ------ | 
|                             |  | Annualized             |           |  | 2003 Distributions     |  
|Security(a)                  |  | Distribution Per Share |           |  | (Dollars in thousands) |  
|                             |  |                        |           |  |                        |  
|Series B Preferred Shares    |  | $                      | 2.625     |  |                        | $ | 15,724 | 
|Series C Preferred Shares(a) |  | $                      | 2.15625   |  |                        | $ | 9,839  | 
|Series E Preferred Shares(a) |  | $                      | 1.3015625 |  |                        | $ | 5,841  | 
|Series F Preferred Shares(a) |  | $                      | 1.00      |  |                        | $ | 4,000  | 
|Series G Preferred Shares    |  | $                      | 1.9375    |  |                        | $ | 16,469 | 



---



|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Series C Preferred Shares were redeemed
    in January 2004 and the Series E and Series F
    Preferred shares were redeemed in June 2003.

The Board of Trustees also declared dividends on
the common shares for the four quarters of 2003, at the rate of
$.50 per common share per quarter.

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Contractual Obligations

As of December 31, 2003, we were subject to
certain material contractual payment obligations as described in
the table below. We were not subject to any material capital
lease obligations or unconditional purchase obligations as of
December 31, 2003.

|                                                            |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |           | 
|----------------------------------------------------------- | ------------------ | ---------------------- | ---------- | --------- | ---- | - | --------- | ------- |  | - | --------- | ------- |  | ---- | --------- | ------- | ---- | - | --------- | ---------- |  | - | --------- | ------- |  | - | --------- | --------- | 
|                                                            |                    |                       
|                                                            |                    | Payments Due by Period |           
|                                                            |                    |                        |           
|Contractual Obligations:                                    |                    | Total                  |            |           | 2004 |   |           | 2005    |  |   | 2006      |         |  | 2007 |           |         | 2008 |   |           | Thereafter | 
|                                                            |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|                                                            |                    |                       
|                                                            |                    | (Dollars in thousands) |           
|Long-term debt:                                             |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |          
|                                                            | Mortgage debt(1)   |                        | $          | 2,329,552 |      |   | $         | 375,761 |  |   | $         | 568,787 |  |      | $         | 343,878 |      |   | $         | 237,024    |  |   | $         | 132,061 |  |   | $         | 672,041   | 
|                                                            | Unsecured notes(2) |                        |            | 8,816,500 |      |   |           | 880,000 |  |   |           | 675,000 |  |      |           | 650,000 |      |   |           | 976,500    |  |   |           | 775,000 |  |   |           | 4,860,000 | 
|Line of Credit                                              |                    |                        | 334,000    |           |      |   |          |         |  |   |          |         |  |      | 334,000   |         |      |   |          |            |  |   |          |         |  |   |          |          
|Series B Preferred Shares                                   |                    |                        | 299,500    |           |      |   |          |         |  |   |          |         |  |      |          |         |      |   |          |            |  |   | 299,500   |         |  |   |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                    |                        | 797,268    |           |      |   | 117,153   |         |  |   | 466,505   |         |  |      | 52,283    |         |      |   | 2,622     |            |  |   | 16,989    |         |  |   | 141,716   |          
|Operating leases                                            |                    |                        | 1,260,561  |           |      |   | 16,583    |         |  |   | 16,649    |         |  |      | 16,748    |         |      |   | 16,646    |            |  |   | 16,660    |         |  |   | 1,177,275 |          
|Share of ground leases of unconsolidated joint
    ventures |                    |                        | 128,566    |           |      |   | 1,216     |         |  |   | 1,216     |         |  |      | 1,258     |         |      |   | 1,294     |            |  |   | 1,294     |         |  |   | 122,288   |          
|Construction contracts on developments                      |                    |                        | 12,732     |           |      |   | 12,732    |         |  |   |          |         |  |      |          |         |      |   |          |            |  |   |          |         |  |   |          |          
|                                                            |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|Total Contractual Obligations                               |                    | $                      | 13,978,679 |           |      | $ | 1,403,445 |         |  | $ | 1,728,157 |         |  | $    | 1,398,167 |         |      | $ | 1,234,086 |            |  | $ | 1,241,504 |         |  | $ | 6,973,320 |          
|                                                            |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|Weighted Average Interest Rates on Maturing
    Debt:       |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |          
|Long-term debt:                                             |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            |  |   |           |         |  |   |           |          
|                                                            | Mortgage debt      |                        |            | 7.63%     |      |   |           | 7.15%   |  |   |           | 7.87%   |  |      |           | 7.15%   |      |   |           | 7.87%      |  |   |           | 7.48%   |  |   |           | 7.84%     | 
|                                                            | Unsecured notes    |                        |            | 6.95%     |      |   |           | 5.42%   |  |   |           | 5.67%   |  |      |           | 7.52%   |      |   |           | 7.52%      |  |   |           | 7.27%   |  |   |           | 7.17%     | 
|Line of credit                                              |                    |                        | 1.95%      |           |      |   |          |         |  |   |          |         |  |      | 1.95%     |         |      |   |          |            |  |   |          |         |  |   |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                    |                        | 6.27%      |           |      |   | 2.27%     |         |  |   | 7.30%     |         |  |      | 7.67%     |         |      |   |          |            |  |   | 6.92%     |         |  |   | 5.43%     |          
|                                                            |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 
|Total Weighted Average Interest Rates                       |                    |                        | 6.90%      |           |      |   | 5.60%     |         |  |   | 6.83%     |         |  |      | 6.08%     |         |      |   | 7.59%     |            |  |   | 7.29%     |         |  |   | 7.21%     |          
|                                                            |                    |                        |            |           |      |   |           |         |  |   |           |         |  |      |           |         |      |   |           |            | 



---



|    |                                                                  
|--- | -----------------------------------------------------------------
|(1) | Balance excludes a net unamortized discount of
    $13.7 million.
|   
|(2) | Balance excludes a net unamortized premium of
    $12.4 million. 

Forward-Starting Interest Rate Swaps

See Market Risk for information on
our forward-starting interest rate swaps.

Energy Contracts

In an ongoing effort to control energy costs,
from time to time we enter into contracts for the purchase of
gas or electricity for properties in states which have
deregulated their energy markets. Typically, these contracts
provide for a term of one to three years. Although all or a
portion of the commodity price under these contracts is
generally fixed, the amounts actually expended under these
contracts will vary in accordance with actual energy usage or
the timing of energy usage during the period. As a result, the
amounts to be expended under these contracts are difficult to
predict. During 2003 more than half of our energy expenditures
were made under various contracts of this nature and most of
these expenditures were reimbursable by our tenants as ordinary
operating expenses.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements
with any unconsolidated investments or joint ventures that we
believe have or are reasonably likely to have a material effect
on our financial condition, results of operations, liquidity or
capital resources.

Debt Financing

The table below summarizes our consolidated
mortgage debt, unsecured notes and line of credit indebtedness
at December 31, 2003 and 2002. The amounts shown include
unamortized discounts on mortgage debt of approximately
$13.7 million and $12.6 million, respectively, and
unamortized premiums on unsecured notes of $12.4 million
and $41.2 million, respectively. The discounts and premiums
were originally recorded in connection with certain property
acquisitions, mergers, issuances of unsecured notes and interest
rate swap settlements.

|                                         |                  |                         |   |            |            |  |   |            |            | 
|---------------------------------------- | ---------------- | ----------------------- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                         |                  |                        
|                                         |                  | December 31,            |  
|                                         |                  |                         |  
|                                         |                  | 2003                    |   |            | 2002       | 
|                                         |                  |                         |   |            |            | 
|(Dollars in thousands)                   |                  |                         |   |           
|                                         |                  |                         |   |           
|Balance                                  |                  |                         |   |            |            |  |   |           
|                                         | Fixed rate       |                         | $ | 11,108,801 |            |  | $ | 11,529,541 |           
|                                         | Variable rate(a) |                         |   | 370,000    |            |  |   | 241,700    |           
|                                         |                  |                         |   |            |            | 
|                                         |                  | Total                   |   | $          | 11,478,801 |  |   | $          | 11,771,241 | 
|                                         |                  |                         |   |            |            | 
|Percent of total debt                    |                  |                         |   |            |            |  |   |           
|                                         | Fixed rate       |                         |   | 96.8%      |            |  |   | 97.9%      |           
|                                         | Variable rate(a) |                         |   | 3.2%       |            |  |   | 2.1%       |           
|                                         |                  |                         |   |            |            | 
|                                         |                  | Total                   |   |            | 100.0%     |  |   |            | 100.0%     | 
|                                         |                  |                         |   |            |            | 
|Effective interest rate at end of period |                  |                         |   |            |            |  |   |           
|                                         | Fixed rate       |                         |   | 7.11%      |            |  |   | 7.17%      |           
|                                         | Variable rate(a) |                         |   | 1.93%      |            |  |   | 2.37%      |           
|                                         |                  |                         |   |            |            | 
|                                         |                  | Effective interest rate |   |            | 6.94%      |  |   |            | 7.08%      | 
|                                         |                  |                         |   |            |            | 



---



|    |                                                                              
|--- | -----------------------------------------------------------------------------
|(a) | The interest rate for these notes is based on
    various spreads over LIBOR.

Mortgage Debt

As of December 31, 2003, total mortgage debt
(excluding our share of the mortgage debt encumbering
unconsolidated properties of approximately $797.3 million)
consisted of approximately $2,279.9 million of fixed rate
debt with a weighted average interest rate of approximately
7.72% and $36.0 million of variable rate debt based on
LIBOR plus 55 basis points (1.72% as of December 31, 2003).
See Liquidity and Capital Resources  Contractual
Obligations for annual payment obligations under our
mortgage debt.

The instruments encumbering the properties
restrict title 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 include a requirement to obtain lender
consent to enter into material tenant leases.

Line of Credit

We have a $1.0 billion revolving credit
facility that was obtained in May 2003. As of March 12,
2004 and December 31, 2003, $921.7 million and
$334.0 million was outstanding under this facility,
respectively. The line of credit bears interest at LIBOR plus 60
basis points, has an annual facility fee of 20 basis points
payable quarterly and matures in May 2006. The effective rate on
the line of credit at December 31, 2003 was approximately
1.95%. In addition, a competitive bid option, whereby the
lenders participating in the credit

39



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facility may bid on the interest to be charged
resulting in an interest rate lower than LIBOR plus
60 basis points, is available for up to $350 million
of the borrowings under the credit facility.


364-Day Line of Credit

In December 2003, we obtained a $1.0 billion
364-day credit facility. The facility has a $200 million
revolving component and a $800 million term component. As
of December 31, 2003, no amounts were outstanding under
this facility. The line of credit bears interest at LIBOR plus
65 basis points, has an annual facility fee of 15 basis
points payable quarterly and matures in December 2004. In
addition, a competitive bid option, whereby the lenders
participating in the credit facility may bid on the interest to
be charged resulting in an interest rate lower than LIBOR plus
65 basis points, is available for up to $350 million
of the borrowings under the credit facility.

Unsecured Notes

Unsecured notes decreased to approximately
$8,828.9 million at December 31, 2003 compared to
approximately $9,057.7 million at December 31, 2002,
as a result of the repayment of $300 million 6.38%
unsecured notes in February 2003, the repayment of
$400 million 7.38% unsecured notes in November 2003 and
amortization of discounts and premiums, partially offset by the
issuance in January 2003 of $500 million 5.88% unsecured
notes due January 15, 2013.

40



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##### Table of Contents



The table below summarizes the unsecured notes
outstanding as of December 31, 2003:

|              |                            |                        |      |      |           |  |      |           |   |   |           |           |  |  |          |  | 
|------------- | -------------------------- | ---------------------- | ---- | ---- | --------- |  | ---- | --------- | - | - | --------- | --------- |  |  | -------- |  | 
|              |                            | Coupon                 |      |      | Effective |  |      | Principal |   |   | Maturity  |          
|Original Term |                            | Rate                   |      |      | Rate (a)  |  |      | Balance   |   |   | Date      |          
|              |                            |                        |      |      |           |  |      |           |   |   |           |          
|              |                            |                       
|              |                            | (Dollars in thousands) |     
|5 Years       |                            |                        | 6.50 | %    |           |  | 4.59 | %         |   | $ | 300,000   | (b)       |  |  | 01/15/04 | 
|9 Years       |                            |                        | 6.90 | %    |           |  | 6.27 | %         |   |   | 100,000   | (b)       |  |  | 01/15/04 | 
|5 Years       |                            |                        | 6.80 | %    |           |  | 6.10 | %         |   |   | 200,000   | (b)       |  |  | 05/01/04 | 
|6 Years       |                            |                        | 6.50 | %    |           |  | 5.31 | %         |   |   | 250,000   | (b)       |  |  | 06/15/04 | 
|7 Years       |                            |                        | 7.24 | %    |           |  | 7.26 | %         |   |   | 30,000    | (b)       |  |  | 09/01/04 | 
|8 Years       |                            |                        | 6.88 | %    |           |  | 6.40 | %         |   |   | 125,000   |           |  |  | 02/01/05 | 
|7 Years       |                            |                        | 6.63 | %    |           |  | 4.99 | %         |   |   | 400,000   |           |  |  | 02/15/05 | 
|7 Years       |                            |                        | 8.00 | %    |           |  | 6.49 | %         |   |   | 100,000   |           |  |  | 07/19/05 | 
|8 Years       |                            |                        | 7.36 | %    |           |  | 7.69 | %         |   |   | 50,000    |           |  |  | 09/01/05 | 
|6 Years       |                            |                        | 8.38 | %    |           |  | 7.65 | %         |   |   | 500,000   |           |  |  | 03/15/06 | 
|9 Years       |                            |                        | 7.44 | %    |           |  | 7.74 | %         |   |   | 50,000    |           |  |  | 09/01/06 | 
|10 Years      |                            |                        | 7.13 | %    |           |  | 6.74 | %         |   |   | 100,000   |           |  |  | 12/01/06 | 
|9 Years       |                            |                        | 7.00 | %    |           |  | 6.80 | %         |   |   | 1,500     |           |  |  | 02/02/07 | 
|9 Years       |                            |                        | 6.88 | %    |           |  | 6.83 | %         |   |   | 25,000    |           |  |  | 04/30/07 | 
|9 Years       |                            |                        | 6.76 | %    |           |  | 6.76 | %         |   |   | 300,000   |           |  |  | 06/15/07 | 
|10 Years      |                            |                        | 7.41 | %    |           |  | 7.70 | %         |   |   | 50,000    |           |  |  | 09/01/07 | 
|7 Years       |                            |                        | 7.75 | %    |           |  | 7.91 | %         |   |   | 600,000   |           |  |  | 11/15/07 | 
|10 Years      |                            |                        | 6.75 | %    |           |  | 6.97 | %         |   |   | 150,000   |           |  |  | 01/15/08 | 
|10 Years      |                            |                        | 6.75 | %    |           |  | 7.01 | %         |   |   | 300,000   |           |  |  | 02/15/08 | 
|8 Years(c)    |                            |                        | 7.25 | %    |           |  | 7.64 | %         |   |   | 325,000   |           |  |  | 11/15/08 | 
|10 Years      |                            |                        | 6.80 | %    |           |  | 6.94 | %         |   |   | 500,000   |           |  |  | 01/15/09 | 
|10 Years      |                            |                        | 7.25 | %    |           |  | 7.14 | %         |   |   | 200,000   |           |  |  | 05/01/09 | 
|11 Years      |                            |                        | 7.13 | %    |           |  | 6.97 | %         |   |   | 150,000   |           |  |  | 07/01/09 | 
|10 Years      |                            |                        | 8.10 | %    |           |  | 8.22 | %         |   |   | 360,000   |           |  |  | 08/01/10 | 
|10 Years      |                            |                        | 7.65 | %    |           |  | 7.20 | %         |   |   | 200,000   |           |  |  | 12/15/10 | 
|10 Years      |                            |                        | 7.00 | %    |           |  | 6.83 | %         |   |   | 1,100,000 |           |  |  | 07/15/11 | 
|10 Years      |                            |                        | 6.75 | %    |           |  | 7.02 | %         |   |   | 500,000   |           |  |  | 02/15/12 | 
|10 Years      |                            |                        | 5.88 | %    |           |  | 5.98 | %         |   |   | 500,000   |           |  |  | 01/15/13 | 
|20 Years      |                            |                        | 7.88 | %    |           |  | 8.08 | %         |   |   | 25,000    |           |  |  | 12/01/16 | 
|20 Years      |                            |                        | 7.35 | %    |           |  | 8.08 | %         |   |   | 200,000   |           |  |  | 12/01/17 | 
|20 Years      |                            |                        | 7.25 | %    |           |  | 7.54 | %         |   |   | 250,000   |           |  |  | 02/15/18 | 
|30 Years      |                            |                        | 7.50 | %    |           |  | 8.24 | %         |   |   | 150,000   |           |  |  | 10/01/27 | 
|30 Years      |                            |                        | 7.25 | %    |           |  | 7.31 | %         |   |   | 225,000   |           |  |  | 06/15/28 | 
|30 Years      |                            |                        | 7.50 | %    |           |  | 7.55 | %         |   |   | 200,000   |           |  |  | 04/19/29 | 
|30 Years      |                            |                        | 7.88 | %    |           |  | 7.94 | %         |   |   | 300,000   |           |  |  | 07/15/31 | 
|              |                            |                        |      |      |           |  |      |           |   |   |           |          
|              | Weighted Average/ Subtotal |                        |      | 7.15 | %         |  |      | 6.95      | % |   |           | 8,816,500 |  |  |          |  | 
|              |                            |                        |      |      |           |  |      |           |   |   |           |          
|Net premium   |                            |                        |      |      |           |  |      |           |   |   | 12,412    |           |  |  |          | 
|              |                            |                        |      |      |           |  |      |           |   |   |           |          
|Total         |                            |                        |      |      |           |  |      |           |   | $ | 8,828,912 |           |  |  |          | 
|              |                            |                        |      |      |           |  |      |           |   |   |           |          



---



|    |                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes the effect of settled interest rate
    protection and interest rate swap agreements, offering and
    transaction costs and premiums and discounts on certain
    unsecured notes.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Through 2004, $880 million of unsecured
    notes will mature and become payable, including the
    $400 million of unsecured notes that matured in January
    2004 and were repaid with our line of credit. Our options for
    repaying the remaining notes include proceeds from our lines of
    credit, proceeds from additional debt and/or equity offerings or
    proceeds from property dispositions.                                                                                                                            
|   
|(c) | The notes are exchangeable into Common Shares at
    an exchange rate of $34.00 per share. If the closing price of a
    Common Share 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.

As of March 12, 2004, $1.6 billion was
available for issuance under a previously filed
$4.0 billion shelf registration statement.

Restrictions and Covenants under Unsecured
Indebtedness

Agreements or instruments relating to our lines
of credit and unsecured notes contain certain financial
restrictions and requirements regarding total debt-to-assets
ratios, debt service coverage ratios, minimum ratio of
unencumbered assets to unsecured debt and other limitations. As
of December 31, 2003, we were in compliance with each of
these financial restrictions and requirements. If we fail to
comply with any of these restrictions and requirements, then the
indebtedness could become due and payable before its stated due
date.

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, 2003:

|                                                                                                             |  |                    |      | 
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ---- | 
|Covenants(a) (in each case as defined in the respective indenture)                                           |  | Actual Performance |     
|                                                                                                             |  |                    |     
|Debt to Adjusted Total Assets may not be greater
    than 60%                                                |  |                    | 47%  | 
|Secured Debt to Adjusted Total Assets may not be
    greater than 40%                                        |  |                    | 12%  | 
|Consolidated Income Available for Debt Service to
    Annual Debt Service charge may not be less than 1.50:1 |  |                    | 2.45 | 
|Total Unencumbered Assets to Unsecured Debt may
    not be less than 150%(b)                                 |  |                    | 219% | 



---



|    |                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|(a) | The calculations of our actual performance under
    each covenant are included as Appendix A to this
    Form 10-K.
|   
|(b) | The unsecured notes assumed in the merger with
    Spieker Partnership are subject to a minimum ratio of 165%.      

Equity Securities

The following table presents the changes in our
issued and outstanding Common Shares and EOP Partnerships
Units (exclusive of Units owned by us) since December 31,
2002:

|                                 |                                                                     |               |             |             |       |  |            |          |   |  |             |             |  
|-------------------------------- | ------------------------------------------------------------------- | ------------- | ----------- | ----------- | ----- |  | ---------- | -------- | - |  | ----------- | ----------- | -
|                                 |                                                                     | Common Shares |             |             | Units |  |            | Total    |  
|                                 |                                                                     |               |             |             |       |  |            |          |  
|Outstanding at December 31, 2002 |                                                                     |               | 411,200,998 |             |       |  | 50,206,731 |          |   |  | 461,407,729 |            
|                                 | Share options exercised                                             |               |             | 1,661,333   |       |  |            |         |   |  |             | 1,661,333   |  
|                                 | Common Shares repurchased/ retired(a)                               |               |             | (14,236,400 | )     |  |            |         |   |  |             | (14,236,400 | )
|                                 | Units redeemed for Common Shares                                    |               |             | 934,261     |       |  |            | (934,261 | ) |  |             |            |  
|                                 | Units redeemed for cash(b)                                          |               |             |            |       |  |            | (240,240 | ) |  |             | (240,240    | )
|                                 | Restricted shares and share awards issued, net of
    cancellations |               |             | 900,196     |       |  |            |         |   |  |             | 900,196     |  
|                                 |                                                                     |               |             |             |       |  |            |          |  
|Outstanding at December 31, 2003 |                                                                     |               | 400,460,388 |             |       |  | 49,032,230 |          |   |  | 449,492,618 |            
|                                 |                                                                     |               |             |             |       |  |            |          |  



---



|    |  |                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In July 2002, we 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 and to

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|    |  |                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | $600 million in March 2003, 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 2003, 14,236,400 Common Shares
    were repurchased at an average price of $25.53 for approximately
    $363.5 million in the aggregate.
|   
|(b) |  | During 2003, EOP Partnership redeemed 240,240
    Units at an average price of $26.76 for a total of approximately
    $6.4 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, 2003 and
2002

Cash and cash equivalents increased by
approximately $10.9 million to $69.4 million at
December 31, 2003, compared to $58.5 million at
December 31, 2002. This increase was the net result of
approximately $1,132.3 million provided by operating
activities, approximately $744.8 million provided by
investing activities (consisting primarily of approximately
$1,345.6 million provided by property dispositions
partially offset by approximately $577.6 million used for
capital and tenant improvements and lease acquisition costs) and
approximately $1,866.2 million used for financing
activities (consisting primarily of $619.9 million used for
Common Share, Unit and preferred share repurchases and
approximately $901.3 million used for distributions to
shareholders and unitholders).

Years Ended December 31, 2002 and
2001

Cash and cash equivalents decreased by
approximately $2.7 million to $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
$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.

Additional Items for 2003

Developments in Process

Developments in process decreased from
approximately $284.7 million at December 31, 2002 to
approximately $75.2 million at December 31, 2003 due
to three developments that were placed in service (Ferry
Building, Foundry Square II and Waters Edge of which total
costs incurred at December 31, 2002 were approximately
$269.0 million) partially offset by the effect of a
previously operational property being re-characterized as held
for development during 2003 (Cambridge Science Center of which
total costs incurred at December 31, 2003 were
approximately $31.6 million) and approximately
$27.9 million of expenditures during 2003 on current
developments.

Deferred Rent Receivable

Deferred rent receivable increased by
approximately $47.4 million to $379.3 million at
December 31, 2003, compared to $331.9 million at
December 31, 2002. This increase was a result of a
$72.2 million increase in receivables recorded from tenants
for the current difference between the straight-line rent and
the rent that is contractually due from tenants partially offset
by an approximate $17.8 million decrease due to the partial
sales of office properties in 2003.

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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 increased approximately $46.0 million to
$75.2 million at December 31, 2003 from
$29.2 million at December 31, 2002. The increase was
primarily due to proceeds of $50.0 million from the sale of
certain properties in 2003 that were deposited into an escrow
account pending a tax deferred like kind exchange pursuant to
section 1031 of the Internal Revenue Code.

Deferred Leasing Costs and Other Related
Intangibles

Deferred leasing costs and other related
intangibles increased by approximately $79.6 million to
$314.6 million at December 31, 2003, compared to
$235.0 million at December 31, 2002. This increase was
a result of approximately $142.3 million in new leasing
costs and approximately $21.9 million of intangibles
recorded in accordance with SFAS No. 141 related to the
acquisition of two properties in 2003, partially offset by
amortization expense of approximately $66.4 million, and
$20.2 million from the partial sales of office properties
sold in 2003.

Prepaid Expenses and Other
Assets

Prepaid expenses and other assets increased by
approximately $71.2 million to $344.9 million at
December 31, 2003, compared to $273.7 million at
December 31, 2002. This increase was primarily a result of
an $18.2 million increase in prepaid real estate taxes, an
$11.1 million increase in the market value of our
forward-starting interest rate swaps, a $25.0 million
equity investment in the joint venture that owns The John
Hancock Complex in Boston, Massachusetts, and a
$16.8 million increase in our Supplemental Employee
Retirement Plan.

Deferred Compensation

Deferred compensation decreased by approximately
$9.6 million to approximately $5.9 million at
December 31, 2003 compared to $15.5 million at
December 31, 2002. This decrease was a result of the
continued amortization of restricted shares issued prior to
2003, which were accounted for under APB 25 prior to our
adoption of SFAS No. 123.

Market Risk

Qualitative Information About Market
Risk

Our future earnings, cash flows and fair values
relevant to financial instruments depend 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 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.

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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.

|                  |  |                          |                         |  |                    |  |                |               |  |  |                      |  |  |  |                | 
|----------------- |  | ------------------------ | ----------------------- |  | ------------------ |  | -------------- | ------------- |  |  | -------------------- |  |  |  | -------------- | 
|                  |  | Hypothetical change in   |                         |  | Effect on Interest |  |                | Effect on Net |  |  | Effect on Fair Value | 
|As of             |  | market rates of interest |                         |  | Expense            |  |                | Income        |  |  | of Total Debt(a)     | 
|                  |  |                          |                         |  |                    |  |                |               |  |  |                      | 
|December 31, 2003 |  |                          | +10% or 12 basis points |  |                    |  | $0.4  million  |               |  |  | $(0.4) million       |  |  |  | $(213) million | 
|                  |  |                          | -10% or 12 basis points |  |                    |  | $(0.4) million |               |  |  | $0.4  million        |  |  |  | $223  million  | 
|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  | 



---



|    |                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As of December 31, 2003 and 2002, the fair
    value of our fixed-rate debt was approximately $1.3 billion
    and $1.0 billion higher than the book value of
    approximately $11.1 billion and $11.5 billion,
    respectively, primarily due to the general decrease in market
    interest rates on secured and unsecured debt.

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 corresponded to the interest
payment dates of the respective unsecured notes hedged. Each of
the interest rate swap agreements were to terminate on the
maturity date of the respective unsecured notes hedged. The
interest rate swap agreements were designated as fair value
hedges. As of December 31, 2002, these interest rate swaps
had been terminated.

Forward-Starting Interest Rate Swaps

As of December 31, 2003 and 2002, we had
$1.3 billion and $1.1 billion of forward-starting
interest rate swaps outstanding, respectively. The outstanding
swaps will hedge the future interest payments of debt
anticipated to be issued in 2004. The market value of the
forward-starting interest rate swaps at December 31, 2003
represented a net liability to us of approximately
$10.4 million (approximately $11.1 million is recorded
in other assets and $21.5 million is recorded in other
liabilities) and, as of December 31, 2002, was
approximately $18.6 million which is included in other
liabilities. The entire net market value is also included in
accumulated other comprehensive income. No hedge ineffectiveness
has been recorded in earnings as these swaps were perfectly
effective. As of March 5, 2004, the net market value of
these forward-starting interest rate swaps represented a net
liability to us of approximately $64.9 million. The market
value of the forward-starting interest rate swaps is dependent
upon existing market interest rates and swap spreads, which
change over time. If the market interest rates were 50 basis
points higher, the value of the swaps would have been
approximately $41.4 million and $33.3 million at
December 31, 2003 and 2002, respectively. If the market
interest rates were 50 basis points lower, our liability under
these swaps would have been approximately $65.0 million and
$60.5 million at December 31, 2003 and 2002,
respectively.

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. In
accordance with FASB Statement No. 133 Accounting for
Derivative Instruments and Hedging Activities, if the swaps
are deemed to be effective hedges upon settlement, any monies
paid or received will be amortized to interest expense over the
term of the respective hedged interest payments. If the swaps
are deemed to be only partially effective hedges upon

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settlement, a portion of the monies paid or
received will be immediately recognized in earnings and the
remainder will be amortized to interest expense over the term of
the respective hedged interest payments. If the swaps are deemed
to be completely ineffective hedges upon settlement, any monies
paid or received will be immediately recognized in earnings.


Capital Improvements, Tenant Improvements and
Leasing Costs

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, |  
|                      |                        |                                  |  
|                      |                        |                                  |   |                |             | 
|                      |                        | 2003                             |   |                | 2002        |  |   | 2001         |               
|                      |                        |                                  |   |                |             |  |   |              |               
|                      |                        |                                  |   | Unconsolidated |             |  |   |              | Unconsolidated |  |             |        |         | Unconsolidated |  
|                      |                        | Consolidated                     |   |                | Properties  |  |   | Consolidated |                |  | Properties  |        |         | Consolidated   |   |         | Properties  | 
|                      |                        | Properties                       |   |                | (our share) |  |   | Properties   |                |  | (our share) |        |         | Properties     |   |         | (our share) | 
|                      |                        |                                  |   |                |             |  |   |              |                |  |             |        |         |                |   |         |             | 
|                      |                        |                                 
|                      |                        | (Dollars in thousands)           |  
|Capital Improvements: |                        |                                  |   |                |             |  |   |              |                |  |             |        |         |                |   |         |             |  |   |         |         |  |   |        
|                      | Capital improvements   |                                  | $ | 64,052         |             |  | $ | 9,222        |                |  | $           | 46,662 |         |                | $ | 4,544   |             |  | $ | 67,536  |         |  | $ | 4,577   |        
|                      | Development costs      |                                  |   | 96,736         |             |  |   | 5,538        |                |  |             | 92,214 |         |                |   | 110,244 |             |  |   | 141,776 |         |  |   | 105,370 |        
|                      | Redevelopment costs(a) |                                  |   | 8,391          |             |  |   |             |                |  |             | 32,976 |         |                |   |        |             |  |   | 17,308  |         |  |   |        |        
|                      |                        |                                  |   |                |             |  |   |              |                |  |             |        |         |                |   |         |             | 
|                      |                        | Total capital improvements       |   | $              | 169,179     |  |   | $            | 14,760         |  |             | $      | 171,852 |                |   | $       | 114,788     |  |   | $       | 226,620 |  |   | $       | 109,947 | 
|                      |                        |                                  |   |                |             |  |   |              |                |  |             |        |         |                |   |         |             | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Properties included in redevelopment costs for
    2003 are the Tabor Center, the Polk and Taylor Buildings and
    Worldwide Plaza (amenities area). Redevelopments for 2002
    included the 500-600 City Parkway, the Tabor Center, the Polk
    and Taylor Buildings and Worldwide Plaza (amenities area).
    Redevelopments for 2001 included US Bancorp, 100 Summer and the
    Tabor Center.

Tenant Improvements and Leasing
Costs

Costs related to the renovation, alteration or
build-out of existing office space, as well as related leasing
costs, are capitalized and depreciated or amortized over the
lease term. These tenant improvements may include, but are not
limited to, floor coverings, ceilings, walls, HVAC, mechanical,
electrical, plumbing and fire protection systems.

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The amounts shown below represent the total
tenant improvement and leasing costs for leases which commenced
during the period, regardless of when such costs were actually
paid.

|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |         |  |   |       |       | 
|-------------------------------------------------------- | ---------------------------------------- | ----------------------------------------------------- | ------- | ---------- | ----------- | - | ----- | ----------- | ---------- | - | ----------- | ------- |  | ----------- | ----- | ----- | ----------- | - | ------- | ------- |  | - | ----- | ----- | 
|                                                         |                                          |                                                      
|                                                         |                                          | For the years ended December 31,                      |        
|                                                         |                                          |                                                       |        
|                                                         |                                          |                                                       |         |            |             |  
|                                                         |                                          | 2003                                                  |         |            | 2002        |   |       | 2001        |           
|                                                         |                                          |                                                       |         |            |             |   |       |             |           
|                                                         |                                          |                                                       |         | Total Cost |             |   |       |             | Total Cost |   |             |         |  | Total Cost  |      
|                                                         |                                          |                                                       |         | per Square |             |   |       |             | per Square |   |             |         |  | per Square  |      
|                                                         |                                          | Total Costs                                           |         |            | Foot Leased |   |       | Total Costs |            |   | Foot Leased |         |  | Total Costs |       |       | Foot Leased |  
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|                                                         |                                          |                                                      
|                                                         |                                          | (Dollars in thousands except per square foot amounts) |        
|Consolidated Properties:                                 |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |         |  |   |       |      
|Office Properties:                                       |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |         |  |   |       |      
|                                                         | Renewals                                 |                                                       | $       | 128,673    |             |   | $     | 13.07       |            |   | $           | 69,710  |  |             | $     | 8.14  |             |   | $       | 34,729  |  |   | $     | 6.71  | 
|                                                         | Retenanted                               |                                                       |         | 248,364    |             |   |       | 24.31       |            |   |             | 183,231 |  |             |       | 18.43 |             |   |         | 126,845 |  |   |       | 16.73 | 
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average                                  |                                          | $                                                     | 377,037 |            |             | $ | 18.79 |             |            | $ | 252,941     |         |  | $           | 13.67 |       |             | $ | 161,574 |         |  | $ | 12.67 |      
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Industrial Properties:                                   |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |         |  |   |       |      
|                                                         | Renewals                                 |                                                       | $       | 1,153      |             |   | $     | 3.10        |            |   | $           | 2,540   |  |             | $     | 2.13  |             |   |         |        |  |   |       |      | 
|                                                         | Retenanted                               |                                                       |         | 2,213      |             |   |       | 3.78        |            |   |             | 1,153   |  |             |       | 3.66  |             |   |         | 110     |  |   |       | 8.31  | 
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average                                  |                                          | $                                                     | 3,366   |            |             | $ | 3.51  |             |            | $ | 3,693       |         |  | $           | 2.45  |       |             | $ | 110     |         |  | $ | 8.31  |      
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Unconsolidated Joint
    Ventures(a):                    |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |         |  |   |       |      
|                                                         | Renewals                                 |                                                       | $       | 17,936     |             |   | $     | 24.09       |            |   | $           | 2,203   |  |             | $     | 7.80  |             |   | $       | 1,398   |  |   | $     | 5.42  | 
|                                                         | Retenanted                               |                                                       |         | 8,026      |             |   |       | 23.21       |            |   |             | 4,265   |  |             |       | 14.07 |             |   |         | 5,297   |  |   |       | 13.14 | 
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average                                  |                                          | $                                                     | 25,962  |            |             | $ | 23.81 |             |            | $ | 6,468       |         |  | $           | 11.05 |       |             | $ | 6,695   |         |  | $ | 10.13 |      
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total Properties (renewals and retenanted
    combined): |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |   |         |         |  |   |       |      
|                                                         | Office (consolidated and unconsolidated) |                                                       | $       | 402,999    |             |   | $     | 19.05       |            |   | $           | 259,409 |  |             | $     | 13.59 |             |   | $       | 168,269 |  |   | $     | 12.54 | 
|                                                         | Industrial                               |                                                       |         | 3,366      |             |   |       | 3.51        |            |   |             | 3,693   |  |             |       | 2.45  |             |   |         | 110     |  |   |       | 8.31  | 
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  
|Total/ Weighted Average                                  |                                          | $                                                     | 406,365 |            |             | $ | 18.38 |             |            | $ | 263,102     |         |  | $           | 12.77 |       |             | $ | 168,379 |         |  | $ | 12.54 |      
|                                                         |                                          |                                                       |         |            |             |   |       |             |            |   |             |         |  |             |       |       |             |  



---



|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents our share of unconsolidated joint
    venture tenant improvement and leasing costs. All joint venture
    information included above is from office properties.

During 2003, we saw evidence suggesting that
contract rents may have begun to stabilize. Tenant improvements
and leasing costs, however, have increased significantly due to
competitive market conditions for new leases. This has had the
effect of reducing net effective rents (contract rents reduced
by the impact of tenant improvement costs, leasing commissions
and any free rent periods) on lease renewals and retenanted
space. This adverse trend may continue until market conditions
improve.

47



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The above information includes capital
improvements, tenant improvements and leasing costs incurred for
leases which commenced during the period shown. The amounts
included in the consolidated statement of cash flows represent
the cash expenditures made during the period. The differences
between these amounts represent timing differences between the
lease commencement dates and the dates of the cash expenditures.
In addition, the figures below include expenditures for
corporate furniture, fixtures and equipment, software, 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 is as follows:

|                                                                                                                        |                       |                                  |         |         |      |   |         |         |  |   |         |         | 
|----------------------------------------------------------------------------------------------------------------------- | --------------------- | -------------------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                                                        |                       |                                 
|                                                                                                                        |                       | For the years ended December 31, |        
|                                                                                                                        |                       |                                  |        
|                                                                                                                        |                       | 2003                             |         |         | 2002 |   |         | 2001    | 
|                                                                                                                        |                       |                                  |         |         |      |   |         |         | 
|                                                                                                                        |                       |                                 
|                                                                                                                        |                       | (Dollars in thousands)           |        
|Total capital improvements                                                                                              |                       | $                                | 169,179 |         |      | $ | 171,852 |         |  | $ | 226,620 |        
|Tenant improvements and leasing
    costs:                                                                              |                       |                                  |         |         |      |   |         |         |  |   |         |        
|                                                                                                                        | Office Properties     |                                  |         | 377,037 |      |   |         | 252,941 |  |   |         | 161,574 | 
|                                                                                                                        | Industrial Properties |                                  |         | 3,366   |      |   |         | 3,693   |  |   |         | 110     | 
|Expenditures for corporate furniture, fixtures
    and equipment, software, leasehold improvements and other            |                       |                                  | 32,397  |         |      |   | 5,251   |         |  |   | 34,294  |        
|Timing differences                                                                                                      |                       |                                  | (4,399  | )       |      |   | (93     | )       |  |   | 15,106  |        
|                                                                                                                        |                       |                                  |         |         |      |   |         |         | 
|Total capital improvements, tenant improvements
    and leasing costs                                                   |                       | $                                | 577,580 |         |      | $ | 433,644 |         |  | $ | 437,704 |        
|                                                                                                                        |                       |                                  |         |         |      |   |         |         | 
|Capital and tenant improvements from consolidated
    statement of cash flows                                           |                       | $                                | 435,308 |         |      | $ | 328,930 |         |  | $ | 360,065 |        
|Lease commissions and other costs from
    consolidated statement of cash flows                                         |                       |                                  | 142,272 |         |      |   | 104,714 |         |  |   | 77,639  |        
|                                                                                                                        |                       |                                  |         |         |      |   |         |         | 
|Total capital improvements, tenant improvements
    and leasing costs from the consolidated statement of
    cash flows |                       | $                                | 577,580 |         |      | $ | 433,644 |         |  | $ | 437,704 |        
|                                                                                                                        |                       |                                  |         |         |      |   |         |         | 

Developments

We own directly several properties in various
stages of development or pre-development. These developments are
funded by working capital and our 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 incurred in
developing the property. The properties under development and
all figures stated below are as of December 31, 2003.

|                            |  |                        |         |  |          |  |                 |           |  |        |       |  |             |       |         |           |          |   |            |        |  |   |         |  |  |  |     | 
|--------------------------- |  | ---------------------- | ------- |  | -------- |  | --------------- | --------- |  | ------ | ----- |  | ----------- | ----- | ------- | --------- | -------- | - | ---------- | ------ |  | - | ------- |  |  |  | --- | 
|                            |  | Estimated              |         |  |          |  |                 |           |  |        | Costs |  |             | Total |         |           | Current  |  
|                            |  | Placed in              |         |  |          |  | Number of       |           |  | Square |       |  | Incurred To |       |         | Estimated |          |   | Percentage |       
|Wholly-Owned                |  | Service Date(a)        |         |  | Location |  |                 | Buildings |  |        | Feet  |  |             | Date  |         |           | Costs(b) |   |            | Leased | 
|                            |  |                        |         |  |          |  |                 |           |  |        |       |  |             |       |         |           |          |   |            |        | 
|                            |  |                       
|                            |  | (Dollars in thousands) |        
|Douglas Corporate Center II |  |                        | 3Q/2003 |  |          |  | Roseville, CA   |           |  |        | 1     |  |             |       | 108,000 |           |          | $ | 13,604     |        |  | $ | 16,800  |  |  |  | 73% | 
|Kruse Woods V               |  |                        | 4Q/2003 |  |          |  | Lake Oswego, OR |           |  |        | 1     |  |             |       | 184,000 |           |          |   | 30,029     |        |  |   | 33,900  |  |  |  | 59% | 
|Cambridge Science Center    |  |                        | 2Q/2004 |  |          |  | Cambridge, MA   |           |  |        | 1     |  |             |       | 131,000 |           |          |   | 31,599     |        |  |   | 52,400  |  |  |  | 19% | 
|                            |  |                        |         |  |          |  |                 |           |  |        |       |  |             |       |         |           |          |   |            |        | 
|                            |  |                        |         |  |          |  |                 |           |  |        | 3     |  |             |       | 423,000 |           |          | $ | 75,232     |        |  | $ | 103,100 |  |  |  | 50% | 
|                            |  |                        |         |  |          |  |                 |           |  |        |       |  |             |       |         |           |          |   |            |        | 



---



|    |                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.                                                      
|   
|(b) | The Total Estimated Costs represent 100% of the
    developments estimated costs, including the acquisition
    cost of the land and building, if any. The Total Estimated Costs
    are subject to change upon, or prior to, the completion of the
    development and include amounts required to lease the property.

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. These developments will be impacted by the timing and
likelihood of success of the

48



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##### Table of Contents



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 Corporate Centre, 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 I, San Francisco, CA; San Rafael Corporate
Center, San Rafael, CA; Station Landing, Walnut Creek, CA;
Parkshore Plaza, Folsom, CA; City Center Bellevue; Bellevue, WA;
and 8th Street, Bellevue, WA.


Subsequent Events

See Note 26  Subsequent Events for
transactions that occurred subsequent to December 31, 2003
through March 5, 2004.

Inflation

Substantially all of our office leases require
the tenant to pay, as additional rent, a portion of real estate
taxes and operating expenses. 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
(FFO)

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, for the reasons, and subject to
the qualifications, specified in footnote (a) below. The
following table reflects the reconciliation of FFO to net
income, the most directly comparable GAAP measure, for the
periods presented:

49



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##### Table of Contents



|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |       |   |                  |   |              |         |  |   |                  |              |  |         |         |   |                  |   |       |   |  |   |         |   |  |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ | --------- | ------------ | ---------------- | - | ----- | ------- | ------------ | - | ---------------- | - |  | ------------ | ----- | - | ---------------- | - | ------------ | ------- |  | - | ---------------- | ------------ |  | ------- | ------- | - | ---------------- | - | ----- | - |  | - | ------- | - |  | - | ----- | -
|                                                                                                                                                                                                                                  |  |                                                 
|                                                                                                                                                                                                                                  |  | For the years ended December 31,                 |          
|                                                                                                                                                                                                                                  |  |                                                  |          
|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |  
|                                                                                                                                                                                                                                  |  | 2003                                             |           |              | 2002             |   |       | 2001    |              |   | 2000             |   |  | 1999         |      
|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |      
|                                                                                                                                                                                                                                  |  |                                                  |           | Per Weighted |                  |   |       |         | Per Weighted |   |                  |   |  | Per Weighted |       |   |                  |   | Per Weighted |         |  |   |                  | Per Weighted | 
|                                                                                                                                                                                                                                  |  | Dollars                                          |           |              | Average Share(b) |   |       | Dollars |              |   | Average Share(b) |   |  | Dollars      |       |   | Average Share(b) |   |              | Dollars |  |   | Average Share(b) |              |  | Dollars |         |   | Average Share(b) |  
|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |       |   |                  |   |              |         |  |   |                  |              |  |         |         |   |                  |  
|                                                                                                                                                                                                                                  |  |                                                 
|                                                                                                                                                                                                                                  |  | (Dollars in thousands, except per share amounts) |          
|Reconciliation of net income to
    FFO(a):                                                                                                                                                                                       |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |       |   |                  |   |              |         |  |   |                  |              |  |         |         |   |                  |   |       |   |  |   |         |   |  |   |       |  
|                                                                                                                                                                                                                                 
|Net income                                                                                                                                                                                                                        |  | $                                                | 655,062   |              |                  | $ | 1.63  |         |              | $ | 770,215          |   |  | $            | 1.86  |   |                  | $ | 618,182      |         |  | $ | 1.72             |              |  | $       | 470,860 |   |                  | $ | 1.70  |   |  | $ | 431,353 |   |  | $ | 1.68  |  
|                                                                                                                                                                                                                                 
|Real estate related depreciation and amortization
    and net gain on sales of real estate, including our share of
    unconsolidated joint ventures and adjusted for minority
    interests share in partially owned properties |  |                                                  | 596,481   |              |                  |   | 1.49  |         |              |   | 707,697          |   |  |              | 1.71  |   |                  |   | 532,260      |         |  |   | 1.48             |              |  |         | 424,845 |   |                  |   | 1.53  |   |  |   | 308,829 |   |  |   | 1.21  |  
|                                                                                                                                                                                                                                 
|Extraordinary item                                                                                                                                                                                                                |  |                                                  |          |              |                  |   |      |         |              |   |                 |   |  |              |      |   |                  |   | 1,000        |         |  |   |                 |              |  |         |        |   |                  |   |      |   |  |   |        |   |  |   |      |  
|                                                                                                                                                                                                                                 
|Cumulative effect of a change in accounting
    principle                                                                                                                                                                         |  |                                                  |          |              |                  |   |      |         |              |   |                 |   |  |              |      |   |                  |   | 1,142        |         |  |   |                 |              |  |         |        |   |                  |   |      |   |  |   |        |   |  |   |      |  
|                                                                                                                                                                                                                                 
|Minority interests in EOP Partnership share of
    add back for real estate related depreciation and amortization
    and net gain on sales of real estate                                                                        |  |                                                  | (65,381   | )            |                  |   | (0.16 | )       |              |   | (79,225          | ) |  |              | (0.19 | ) |                  |   | (63,527      | )       |  |   | (0.18            | )            |  |         | (52,086 | ) |                  |   | (0.19 | ) |  |   | (34,576 | ) |  |   | (0.14 | )
|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |       |   |                  |   |              |         |  |   |                  |              |  |         |         |   |                  |  
|                                                                                                                                                                                                                                 
|FFO                                                                                                                                                                                                                               |  |                                                  | 1,186,162 |              |                  |   | 2.96  |         |              |   | 1,398,687        |   |  |              | 3.37  |   |                  |   | 1,089,057    |         |  |   | 3.02             |              |  |         | 843,619 |   |                  |   | 3.04  |   |  |   | 705,606 |   |  |   | 2.76  |  
|                                                                                                                                                                                                                                 
|Put option settlement                                                                                                                                                                                                             |  |                                                  |          |              |                  |   |      |         |              |   |                 |   |  |              |      |   |                  |   | 2,655        |         |  |   | 0.01             |              |  |         | (2,576  | ) |                  |   | (0.01 | ) |  |   | (5,658  | ) |  |   | (0.02 | )
|                                                                                                                                                                                                                                 
|Preferred distributions                                                                                                                                                                                                           |  |                                                  | (51,872   | )            |                  |   | (0.13 | )       |              |   | (62,573          | ) |  |              | (0.15 | ) |                  |   | (57,041      | )       |  |   | (0.16            | )            |  |         | (43,348 | ) |                  |   | (0.16 | ) |  |   | (43,603 | ) |  |   | (0.17 | )
|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |       |   |                  |   |              |         |  |   |                  |              |  |         |         |   |                  |  
|                                                                                                                                                                                                                                 
|FFO available to common shareholders 
    basic                                                                                                                                                                                  |  | $                                                | 1,134,290 |              |                  | $ | 2.83  |         |              | $ | 1,336,114        |   |  | $            | 3.22  |   |                  | $ | 1,034,671    |         |  | $ | 2.87             |              |  | $       | 797,695 |   |                  | $ | 2.88  |   |  | $ | 656,345 |   |  | $ | 2.56  |  
|                                                                                                                                                                                                                                  |  |                                                  |           |              |                  |   |       |         |              |   |                  |   |  |              |       |   |                  |   |              |         |  |   |                  |              |  |         |         |   |                  |  

|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |   |  |   |             |   |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ----------- | - | --- | - | ----------- | ---------- |  | - | ----------- | - |  | ---------- | ----------- | - | --- | - | ----------- | ---------- |  | - | ----------- | - |  | ---------- | ----------- | - | --- | - | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|Adjustments to arrive                                                                                                                                                                           |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |           
|at FFO available to                                                                                                                                                                             |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |           
|common shareholders                                                                                                                                                                             |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |           
|plus assumed                                                                                                                                                                                    |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |           
|conversions:                                                                                                                                                                                    |  | Net Income                                     |             |   | FFO |   |             | Net Income |  |   | FFO         |   |  | Net Income |             |   | FFO |   |             | Net Income |  |   | FFO         |   |  | Net Income |             |   | FFO |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Net income and FFO                                                                                                                                                                              |  | $                                              | 655,062     |   |     | $ | 1,186,162   |            |  | $ | 770,215     |   |  | $          | 1,398,687   |   |     | $ | 618,182     |            |  | $ | 1,089,057   |   |  | $          | 470,860     |   |     | $ | 843,619     |   |  | $ | 431,353     |   |  | $ | 705,606     |  
|Put option settlement                                                                                                                                                                           |  |                                                |            |   |     |   |            |            |  |   |            |   |  |            |            |   |     |   | 2,655       |            |  |   | 2,655       |   |  |            | (2,576      | ) |     |   | (2,576      | ) |  |   | (5,658      | ) |  |   | (5,658      | )
|Preferred distributions                                                                                                                                                                         |  |                                                | (51,872     | ) |     |   | (51,872     | )          |  |   | (62,573     | ) |  |            | (62,573     | ) |     |   | (57,041     | )          |  |   | (57,041     | ) |  |            | (43,348     | ) |     |   | (43,348     | ) |  |   | (43,603     | ) |  |   | (43,603     | )
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Net income and FFO available to common
    shareholders                                                                                                                                         |  |                                                | 603,190     |   |     |   | 1,134,290   |            |  |   | 707,642     |   |  |            | 1,336,114   |   |     |   | 563,796     |            |  |   | 1,034,671   |   |  |            | 424,936     |   |     |   | 797,695     |   |  |   | 382,092     |   |  |   | 656,345     |  
|Net income allocated to minority interests in EOP
    Partnership                                                                                                                               |  |                                                | 74,152      |   |     |   | 74,152      |            |  |   | 89,205      |   |  |            | 89,205      |   |     |   | 76,249      |            |  |   | 76,249      |   |  |            | 59,376      |   |     |   | 59,376      |   |  |   | 48,172      |   |  |   | 48,172      |  
|Minority interests in EOP Partnership share of
    add back for real estate related depreciation and amortization
    and net gain on sales of real estate                                      |  |                                                |            |   |     |   | 65,381      |            |  |   |            |   |  |            | 79,225      |   |     |   |            |            |  |   | 63,527      |   |  |            |            |   |     |   | 52,086      |   |  |   |            |   |  |   | 34,576      |  
|Preferred distributions on Series B
    preferred shares, of which is assumed to be converted into
    Common Shares                                                                            |  |                                                |            |   |     |   | 15,724      |            |  |   |            |   |  |            | 15,724      |   |     |   |            |            |  |   | 15,727      |   |  |            |            |   |     |   | 15,750      |   |  |   |            |   |  |   | 15,750      |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Net income and FFO available to common
    shareholders plus assumed conversions                                                                                                                |  | $                                              | 677,342     |   |     | $ | 1,289,547   |            |  | $ | 796,847     |   |  | $          | 1,520,268   |   |     | $ | 640,045     |            |  | $ | 1,190,174   |   |  | $          | 484,312     |   |     | $ | 924,907     |   |  | $ | 430,264     |   |  | $ | 754,843     |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Weighted average Common Shares, dilutive
    potential common shares plus assumed conversions outstanding                                                                                       |  |                                                | 452,561,353 |   |     |   | 460,950,707 |            |  |   | 469,138,720 |   |  |            | 477,528,074 |   |     |   | 411,986,897 |            |  |   | 420,379,753 |   |  |            | 318,997,407 |   |     |   | 327,400,767 |   |  |   | 291,157,204 |   |  |   | 299,560,564 |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Net income and FFO available to common
    shareholders plus assumed conversions per share                                                                                                      |  | $                                              | 1.50        |   |     | $ | 2.80        |            |  | $ | 1.70        |   |  | $          | 3.18        |   |     | $ | 1.55        |            |  | $ | 2.83        |   |  | $          | 1.52        |   |     | $ | 2.82        |   |  | $ | 1.48        |   |  | $ | 2.52        |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|                                                                                                                                                                                                |  | Common Shares and common share
    equivalents
|                                                                                                                                                                                                |  |                                               
|Weighted average Common Shares outstanding (used
    for both net income and FFO basic calculation)                                                                                             |  |                                                |             |   |     |   | 401,016,093 |            |  |   |             |   |  |            | 414,689,029 |   |     |   |             |            |  |   | 360,026,097 |   |  |            |             |   |     |   | 277,186,733 |   |  |   |             |   |  |   | 256,045,895 |  
|Redemption of Units for Common Shares                                                                                                                                                           |  |                                                |             |   |     |   | 49,578,372  |            |  |   |             |   |  |            | 52,445,745  |   |     |   |             |            |  |   | 48,893,485  |   |  |            |             |   |     |   | 38,880,961  |   |  |   |             |   |  |   | 32,280,652  |  
|Impact of options, restricted shares and put
    options which are dilutive to both net income and FFO                                                                                          |  |                                                |             |   |     |   | 1,966,888   |            |  |   |             |   |  |            | 2,003,946   |   |     |   |             |            |  |   | 3,067,315   |   |  |            |             |   |     |   | 2,929,713   |   |  |   |             |   |  |   | 2,830,657   |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Weighted average Common Shares and dilutive
    potential common shares used for net income available to common
    shareholders                                                                |  |                                                |             |   |     |   | 452,561,353 |            |  |   |             |   |  |            | 469,138,720 |   |     |   |             |            |  |   | 411,986,897 |   |  |            |             |   |     |   | 318,997,407 |   |  |   |             |   |  |   | 291,157,204 |  
|Impact of conversion of Series B preferred
    shares, which are dilutive to FFO, but not net income                                                                                            |  |                                                |             |   |     |   | 8,389,354   |            |  |   |             |   |  |            | 8,389,354   |   |     |   |             |            |  |   | 8,392,856   |   |  |            |             |   |     |   | 8,403,360   |   |  |   |             |   |  |   | 8,403,360   |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  
|Weighted average Common Shares, dilutive
    potential common shares plus assumed conversions used for the
    calculation of FFO available to common shareholders plus assumed
    conversions |  |                                                |             |   |     |   | 460,950,707 |            |  |   |             |   |  |            | 477,528,074 |   |     |   |             |            |  |   | 420,379,753 |   |  |            |             |   |     |   | 327,400,767 |   |  |   |             |   |  |   | 299,560,564 |  
|                                                                                                                                                                                                |  |                                                |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |            |             |   |     |  



---



|    |                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------
|(a) | FFO is a non-GAAP financial measure. The most
    directly comparable GAAP measure is net income, to which it is
    reconciled.



|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(b) | FFO per share may not total the sum of the per
    share components in the reconciliation due to rounding.

50



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##### Table of Contents



FFO Definition

FFO is defined as net income, computed in
accordance with accounting principles generally accepted in the
United States (GAAP), excluding gains or losses from
sales of properties, plus real estate related depreciation and
amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect funds
from operations on the same basis. We believe that FFO is
helpful to investors as one of several measures of the
performance of an equity REIT. We further believe that by
excluding the effect of depreciation, amortization and gains or
losses from sales of real estate, all of which are based on
historical costs and which may be of limited relevance in
evaluating current performance, FFO can facilitate comparisons
of operating performance between periods and between other
equity REITs. Investors should review FFO, along with GAAP net
income and cash flow from operating activities, investing
activities and financing activities, when trying to understand
an equity REITs operating performance. We compute 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 we
do. 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 our financial performance, or to cash
flow from operating activities, determined in accordance with
GAAP, as a measure of our liquidity, nor is it indicative of
funds available to fund our cash needs, including our 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



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##### Table of Contents






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, 2003 and 2002, 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, 2003. 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, 2003 and 2002, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2003, 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.

As discussed in Note 2 to the consolidated
financial statements, in 2003 Equity Office changed its method
of accounting for stock-based employee compensation. In
addition, in 2002 Equity Office changed its method of accounting
for discontinued operations.



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

Chicago, Illinois

February 5, 2004, except for Note 26


as to which the date is March 5, 2004


52



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##### Table of Contents



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS


|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |            |            |            |  
|---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | -
|                                                                                                           |                                                                                                                                       |                                                                                                                                                      
|                                                                                                           |                                                                                                                                       | December 31,                                                                                                                                          |                                                                                                                                                              
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                              
|                                                                                                           |                                                                                                                                       | 2003                                                                                                                                                  |                                                                                                                                                               |            | 2002       |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                      
|                                                                                                           |                                                                                                                                       | (Dollars in thousands,                                                                                                                                |                                                                                                                                                              
|                                                                                                           |                                                                                                                                       | except per share amounts)                                                                                                                             |                                                                                                                                                              
|Assets:                                                                                                    |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |           
|                                                                                                           | Investments in real estate                                                                                                            |                                                                                                                                                       | $                                                                                                                                                             | 23,985,839 |            |            | $ | 24,625,927 |           
|                                                                                                           | Developments in process                                                                                                               |                                                                                                                                                       |                                                                                                                                                               | 75,232     |            |            |   | 284,737    |           
|                                                                                                           | Land available for development                                                                                                        |                                                                                                                                                       |                                                                                                                                                               | 251,151    |            |            |   | 252,852    |           
|                                                                                                           | Accumulated depreciation                                                                                                              |                                                                                                                                                       |                                                                                                                                                               | (2,578,082 | )          |            |   | (2,077,613 | )         
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       | Investments in real estate, net of accumulated
    depreciation                                                                                       |                                                                                                                                                               |            | 21,734,140 |            |   |            | 23,085,903 |           
|                                                                                                           | Cash and cash equivalents                                                                                                             |                                                                                                                                                       |                                                                                                                                                               | 69,398     |            |            |   | 58,471     |           
|                                                                                                           | Tenant and other receivables (net of allowance
    for doubtful accounts of $6,490 and $11,695, respectively)                         |                                                                                                                                                       |                                                                                                                                                               | 79,880     |            |            |   | 77,597     |           
|                                                                                                           | Deferred rent receivable                                                                                                              |                                                                                                                                                       |                                                                                                                                                               | 379,329    |            |            |   | 331,932    |           
|                                                                                                           | Escrow deposits and restricted cash                                                                                                   |                                                                                                                                                       |                                                                                                                                                               | 75,186     |            |            |   | 29,185     |           
|                                                                                                           | Investments in unconsolidated joint ventures                                                                                          |                                                                                                                                                       |                                                                                                                                                               | 1,127,232  |            |            |   | 1,087,815  |           
|                                                                                                           | Deferred financing costs (net of accumulated
    amortization of $48,176 and $48,801, respectively)                                   |                                                                                                                                                       |                                                                                                                                                               | 64,337     |            |            |   | 67,151     |           
|                                                                                                           | Deferred leasing costs and other related
    intangibles (net of accumulated amortization of $157,445 and
    $115,710, respectively) |                                                                                                                                                       |                                                                                                                                                               | 314,568    |            |            |   | 235,002    |           
|                                                                                                           | Prepaid expenses and other assets (net of
    discounts of $66,200 and $66,557, respectively)                                         |                                                                                                                                                       |                                                                                                                                                               | 344,940    |            |            |   | 273,727    |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       | Total Assets                                                                                                                                          |                                                                                                                                                               | $          | 24,189,010 |            |   | $          | 25,246,783 |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|Liabilities, Minority Interests, Mandatorily
    Redeemable Preferred Shares and Shareholders
    Equity: |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |           
|Liabilities:                                                                                               |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |           
|                                                                                                           | Mortgage debt (including a net discount of
    $(13,663) and $(12,584), respectively)                                                 |                                                                                                                                                       | $                                                                                                                                                             | 2,315,889  |            |            | $ | 2,507,890  |           
|                                                                                                           | Unsecured notes (including a net premium of
    $12,412 and $41,151, respectively)                                                    |                                                                                                                                                       |                                                                                                                                                               | 8,828,912  |            |            |   | 9,057,651  |           
|                                                                                                           | Line of credit                                                                                                                        |                                                                                                                                                       |                                                                                                                                                               | 334,000    |            |            |   | 205,700    |           
|                                                                                                           | Accounts payable and accrued expenses                                                                                                 |                                                                                                                                                       |                                                                                                                                                               | 573,069    |            |            |   | 560,101    |           
|                                                                                                           | Distribution payable                                                                                                                  |                                                                                                                                                       |                                                                                                                                                               | 3,899      |            |            |   | 5,654      |           
|                                                                                                           | Other liabilities                                                                                                                     |                                                                                                                                                       |                                                                                                                                                               | 398,273    |            |            |   | 391,963    |           
|                                                                                                           | Commitments and contingencies                                                                                                         |                                                                                                                                                       |                                                                                                                                                               |           |            |            |   |           |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       | Total Liabilities                                                                                                                                     |                                                                                                                                                               |            | 12,454,042 |            |   |            | 12,728,959 |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           | Minority Interests:                                                                                                                   |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |            |           
|                                                                                                           |                                                                                                                                       | EOP Partnership                                                                                                                                       |                                                                                                                                                               |            | 1,191,741  |            |   |            | 1,246,543  |           
|                                                                                                           |                                                                                                                                       | Partially owned properties                                                                                                                            |                                                                                                                                                               |            | 183,863    |            |   |            | 185,809    |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       | Total Minority Interests                                                                                                                              |                                                                                                                                                               |            | 1,375,604  |            |   |            | 1,432,352  |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           | Mandatorily Redeemable Preferred Shares:                                                                                              |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |            |           
|                                                                                                           |                                                                                                                                       | 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    |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           | Shareholders Equity:                                                                                                                 |                                                                                                                                                       |                                                                                                                                                               |            |            |            |   |            |           
|                                                                                                           |                                                                                                                                       | Preferred Shares, 100,000,000 authorized:                                                                                                             |                                                                                                                                                               |            |            |            |   |            |            |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | 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, 0 and
    6,000,000 issued and outstanding, respectively |            |            |           |   |            |            | 150,000    |  
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | 8.0% Series F Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share, 0 and
    4,000,000 issued and outstanding, respectively   |            |            |           |   |            |            | 100,000    |  
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | 7.75% Series G Cumulative Redeemable
    Preferred Shares, liquidation preference $25.00 per share,
    8,500,000 issued and outstanding                      |            |            | 212,500    |   |            |            | 212,500    |  
|                                                                                                           |                                                                                                                                       | Common Shares, $0.01 par value; 750,000,000
    shares authorized, 400,460,388 and 411,200,998 issued and
    outstanding, respectively               |                                                                                                                                                               |            | 4,005      |            |   |            | 4,112      |           
|                                                                                                           |                                                                                                                                       | Other Shareholders Equity:                                                                                                                           |                                                                                                                                                               |            |            |            |   |            |            |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | Additional paid in capital                                                                                                                                    |            |            | 10,396,864 |   |            |            | 10,691,610 |  
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | Deferred compensation                                                                                                                                         |            |            | (5,889     | ) |            |            | (15,472    | )
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | Dividends in excess of accumulated earnings                                                                                                                   |            |            | (652,036   | ) |            |            | (452,636   | )
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       | Accumulated other comprehensive loss                                                                                                                          |            |            | (9,653     | ) |            |            | (18,215    | )
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       | Total Shareholders Equity                                                                                                                            |                                                                                                                                                               |            | 10,059,864 |            |   |            | 10,785,972 |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           
|                                                                                                           |                                                                                                                                       | Total Liabilities, Minority Interests,
    Mandatorily Redeemable Preferred Shares and
    Shareholders Equity                                       |                                                                                                                                                               | $          | 24,189,010 |            |   | $          | 25,246,783 |           
|                                                                                                           |                                                                                                                                       |                                                                                                                                                       |                                                                                                                                                               |            |            |           

See accompanying notes.

53



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##### Table of Contents



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |             |          |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ---------------------------- | ----------- | -------- | --------- | ------- | ----------- | -------- | --------- | ------- | ----------- | -------- | --------- | -
|                                                                                                                                                                    |                                                                                     |                                                                     
|                                                                                                                                                                    |                                                                                     | For the years ended December 31,                                     |                             
|                                                                                                                                                                    |                                                                                     |                                                                      |                             
|                                                                                                                                                                    |                                                                                     | 2003                                                                 |                              |             | 2002     |           |         | 2001        |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    |                                                                                     |                                                                     
|                                                                                                                                                                    |                                                                                     | (Dollars in thousands, except per share amounts)                     |                             
|Revenues:                                                                                                                                                           |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |            
|                                                                                                                                                                    | Rental                                                                              |                                                                      | $                            | 2,536,774   |          |           | $       | 2,616,884   |          |           | $       | 2,325,332   |         
|                                                                                                                                                                    | Tenant reimbursements                                                               |                                                                      |                              | 442,599     |          |           |         | 483,714     |          |           |         | 432,078     |         
|                                                                                                                                                                    | Parking                                                                             |                                                                      |                              | 111,455     |          |           |         | 113,151     |          |           |         | 123,207     |         
|                                                                                                                                                                    | Other                                                                               |                                                                      |                              | 88,943      |          |           |         | 130,110     |          |           |         | 70,444      |         
|                                                                                                                                                                    | Fee income                                                                          |                                                                      |                              | 15,861      |          |           |         | 15,907      |          |           |         | 15,085      |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    |                                                                                     |                                                                      | Total revenues               |             |          | 3,195,632 |         |             |          | 3,359,766 |         |             |          | 2,966,146 |  
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Expenses:                                                                                                                                                           |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |            
|                                                                                                                                                                    | Depreciation                                                                        |                                                                      |                              | 650,235     |          |           |         | 611,038     |          |           |         | 512,126     |         
|                                                                                                                                                                    | Amortization                                                                        |                                                                      |                              | 65,313      |          |           |         | 51,837      |          |           |         | 41,202      |         
|                                                                                                                                                                    | Real estate taxes                                                                   |                                                                      |                              | 351,537     |          |           |         | 360,488     |          |           |         | 331,182     |         
|                                                                                                                                                                    | Insurance                                                                           |                                                                      |                              | 29,973      |          |           |         | 39,626      |          |           |         | 20,461      |         
|                                                                                                                                                                    | Repairs and maintenance                                                             |                                                                      |                              | 335,529     |          |           |         | 339,556     |          |           |         | 289,347     |         
|                                                                                                                                                                    | Property operating                                                                  |                                                                      |                              | 409,540     |          |           |         | 409,025     |          |           |         | 367,632     |         
|                                                                                                                                                                    | Ground rent                                                                         |                                                                      |                              | 20,287      |          |           |         | 20,325      |          |           |         | 16,692      |         
|                                                                                                                                                                    | Corporate general and administrative                                                |                                                                      |                              | 62,479      |          |           |         | 65,790      |          |           |         | 42,321      |         
|                                                                                                                                                                    | Impairment                                                                          |                                                                      |                              | 7,500       |          |           |         |            |          |           |         | 135,220     |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    |                                                                                     |                                                                      | Total expenses               |             |          | 1,932,393 |         |             |          | 1,897,685 |         |             |          | 1,756,183 |  
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    |                                                                                     |                                                                      | Operating income             |             |          | 1,263,239 |         |             |          | 1,462,081 |         |             |          | 1,209,963 |  
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Other income / expense:                                                                                                                                             |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |            
|                                                                                                                                                                    | Interest / dividend income                                                          |                                                                      |                              | 12,583      |          |           |         | 22,148      |          |           |         | 40,015      |         
|                                                                                                                                                                    | Realized gain on sale of marketable securities                                      |                                                                      |                              | 9,286       |          |           |         |            |          |           |         |            |         
|                                                                                                                                                                    | Interest:                                                                           |                                                                      |                              |             |          |           |         |             |          |           |         |             |         
|                                                                                                                                                                    |                                                                                     | Expense incurred                                                     |                              |             | (820,359 | )         |         |             | (809,681 | )         |         |             | (727,560 | )        
|                                                                                                                                                                    |                                                                                     | Amortization of deferred financing costs and
    prepayment expenses |                              |             | (6,976   | )         |         |             | (4,964   | )         |         |             | (15,026  | )        
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    |                                                                                     |                                                                      | Total other income / expense |             |          | (805,466  | )       |             |          | (792,497  | )       |             |          | (702,571  | )
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Income before income taxes, allocation to
    minority interests, income from investments in unconsolidated
    joint ventures and net gain on sales of real estate |                                                                                     |                                                                      | 457,773                      |             |          |           | 669,584 |             |          |           | 507,392 |            
|Income taxes                                                                                                                                                        |                                                                                     |                                                                      | (5,373                       | )           |          |           | (9,126  | )           |          |           | (8,745  | )          
|Minority Interests:                                                                                                                                                 |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |            
|                                                                                                                                                                    | EOP Partnership                                                                     |                                                                      |                              | (74,152     | )        |           |         | (89,205     | )        |           |         | (76,249     | )       
|                                                                                                                                                                    | Partially owned properties                                                          |                                                                      |                              | (8,116      | )        |           |         | (7,200      | )        |           |         | (8,685      | )       
|Income from investments in unconsolidated joint
    ventures                                                                                                        |                                                                                     |                                                                      | 79,882                       |             |          |           | 106,852 |             |          |           | 69,203  |            
|Net gain on sales of real estate                                                                                                                                    |                                                                                     |                                                                      | 99,110                       |             |          |           |        |             |          |           | 81,662  |            
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Income from continuing operations                                                                                                                                   |                                                                                     |                                                                      | 549,124                      |             |          |           | 670,905 |             |          |           | 564,578 |            
|Discontinued operations (including net gain on
    sales of real estate of $61,953, $17,926 and $0, respectively)                                                   |                                                                                     |                                                                      | 105,938                      |             |          |           | 99,310  |             |          |           | 55,746  |            
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Income before extraordinary item and cumulative
    effect of change in accounting principle                                                                        |                                                                                     |                                                                      | 655,062                      |             |          |           | 770,215 |             |          |           | 620,324 |            
|Extraordinary item                                                                                                                                                  |                                                                                     |                                                                      |                             |             |          |           |        |             |          |           | (1,000  | )          
|Cumulative effect of change in accounting
    principle                                                                                                             |                                                                                     |                                                                      |                             |             |          |           |        |             |          |           | (1,142  | )          
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Net income                                                                                                                                                          |                                                                                     |                                                                      | 655,062                      |             |          |           | 770,215 |             |          |           | 618,182 |            
|Put option settlement                                                                                                                                               |                                                                                     |                                                                      |                             |             |          |           |        |             |          |           | 2,655   |            
|Preferred distributions                                                                                                                                             |                                                                                     |                                                                      | (51,872                      | )           |          |           | (62,573 | )           |          |           | (57,041 | )          
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Net income available to common shareholders                                                                                                                         |                                                                                     | $                                                                    | 603,190                      |             |          | $         | 707,642 |             |          | $         | 563,796 |            
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Earnings per share 
    basic:                                                                                                                                     |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |            
|                                                                                                                                                                    | Income from continuing operations per share                                         |                                                                      | $                            | 1.27        |          |           | $       | 1.49        |          |           | $       | 1.43        |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    | Net income available to common shareholders per
    share                           |                                                                      | $                            | 1.50        |          |           | $       | 1.71        |          |           | $       | 1.57        |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    | Weighted average Common Shares outstanding                                          |                                                                      |                              | 401,016,093 |          |           |         | 414,689,029 |          |           |         | 360,026,097 |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Earnings per share 
    diluted:                                                                                                                                   |                                                                                     |                                                                      |                              |             |          |           |         |             |          |           |         |            
|                                                                                                                                                                    | Income from continuing operations per share                                         |                                                                      | $                            | 1.26        |          |           | $       | 1.49        |          |           | $       | 1.42        |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    | Net income available to common shareholders per
    share                           |                                                                      | $                            | 1.50        |          |           | $       | 1.70        |          |           | $       | 1.55        |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|                                                                                                                                                                    | Weighted average Common Shares outstanding and
    dilutive potential common shares |                                                                      |                              | 452,561,353 |          |           |         | 469,138,720 |          |           |         | 411,986,897 |         
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         
|Distributions declared per Common Share
    outstanding                                                                                                             |                                                                                     | $                                                                    | 2.00                         |             |          | $         | 2.00    |             |          | $         | 1.90    |            
|                                                                                                                                                                    |                                                                                     |                                                                      |                              |             |          |           |         |             |         

See accompanying notes.

54



---



##### Table of Contents



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY


|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |           |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ---------- | -------- | ---- | - | ---------- | -------- | - | - | ---------- | --------- | -
|                                                     |                                                                                                                                                                               |                                 
|                                                     |                                                                                                                                                                               | For the years ended December 31, |           
|                                                     |                                                                                                                                                                               |                                  |           
|                                                     |                                                                                                                                                                               | 2003                             |            |          | 2002 |   |            | 2001     |  
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|                                                     |                                                                                                                                                                               |                                 
|                                                     |                                                                                                                                                                               | (Dollars in thousands)           |           
|Mandatorily Redeemable Preferred
    Shares:         |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |          
|Balance, beginning of period                         |                                                                                                                                                                               | $                                | 299,500    |          |      | $ | 299,500    |          |   | $ | 300,000    |          
|                                                     | Conversion of Series B Cumulative Redeemable
    Preferred Shares to Common Shares                                                                                            |                                  |            |         |      |   |            |         |   |   |            | (500      | )
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Balance, end of period                               |                                                                                                                                                                               | $                                | 299,500    |          |      | $ | 299,500    |          |   | $ | 299,500    |          
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Preferred Shares:                                    |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |          
|Balance, beginning of period                         |                                                                                                                                                                               | $                                | 576,573    |          |      | $ | 563,923    |          |   | $ | 313,923    |          
|                                                     | 9.45% Series D Cumulative Redeemable
    Preferred Shares issued in the Spieker merger                                                                                        |                                  |            |         |      |   |            |         |   |   |            | 106,250   |  
|                                                     | 7.875% Series E Cumulative Redeemable
    Preferred Shares issued in the Spieker merger                                                                                       |                                  |            |         |      |   |            |         |   |   |            | 150,000   |  
|                                                     | 8.0% Series F Cumulative Redeemable
    Preferred Shares issued in the Spieker merger                                                                                         |                                  |            |         |      |   |            |         |   |   |            | 100,000   |  
|                                                     | Issuance of 7.75% Series G Cumulative
    Redeemable Preferred Shares                                                                                                         |                                  |            |         |      |   |            | 212,500  |   |   |            |          |  
|                                                     | Redemptions                                                                                                                                                                   |                                  |            | (250,000 | )    |   |            | (199,850 | ) |   |            | (106,250  | )
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Balance, end of period                               |                                                                                                                                                                               | $                                | 326,573    |          |      | $ | 576,573    |          |   | $ | 563,923    |          
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Common Shares, $0.01 par Value Per
    Share:        |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |          
|Balance, beginning of period                         |                                                                                                                                                                               | $                                | 4,112      |          |      | $ | 4,145      |          |   | $ | 3,053      |          
|                                                     | Issuance of Common Shares for Spieker merger                                                                                                                                  |                                  |            |         |      |   |            |         |   |   |            | 1,015     |  
|                                                     | Issuance of Common Shares through exercise of
    share options                                                                                                               |                                  |            | 16       |      |   |            | 17       |   |   |            | 33        |  
|                                                     | Issuance of Common Shares in exchange for Units                                                                                                                               |                                  |            | 10       |      |   |            | 26       |   |   |            | 21        |  
|                                                     | 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                                     |                                  |            | 9        |      |   |            | 3        |   |   |            | 6         |  
|                                                     | Common Shares repurchased                                                                                                                                                     |                                  |            | (142     | )    |   |            | (79      | ) |   |            |          |  
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Balance, end of period                               |                                                                                                                                                                               | $                                | 4,005      |          |      | $ | 4,112      |          |   | $ | 4,145      |          
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Additional Paid in Capital:                          |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |          
|Balance, beginning of period                         |                                                                                                                                                                               | $                                | 10,691,610 |          |      | $ | 10,788,273 |          |   | $ | 7,595,918  |          
|                                                     | Issuance of Common Shares for Spieker merger                                                                                                                                  |                                  |            |         |      |   |            |         |   |   |            | 2,972,979 |  
|                                                     | Issuance of share options in the Spieker merger                                                                                                                               |                                  |            |         |      |   |            |         |   |   |            | 18,701    |  
|                                                     | Issuance of Common Shares through exercise of
    share options                                                                                                               |                                  |            | 37,728   |      |   |            | 39,998   |   |   |            | 72,326    |  
|                                                     | Issuance of Common Shares in exchange for Units                                                                                                                               |                                  |            | 23,855   |      |   |            | 62,163   |   |   |            | 57,850    |  
|                                                     | 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, net of cancellations |                                  |            | (9       | )    |   |            | 11,869   |   |   |            | 15,240    |  
|                                                     | Offering costs                                                                                                                                                                |                                  |            | (257     | )    |   |            | (7,042   | ) |   |            | (65       | )
|                                                     | Conversion of Series B preferred shares to
    Common Shares                                                                                                                  |                                  |            |         |      |   |            |         |   |   |            | 500       |  
|                                                     | Common Shares repurchased                                                                                                                                                     |                                  |            | (363,344 | )    |   |            | (196,803 | ) |   |            |          |  
|                                                     | Compensation expense related to restricted shares
    and stock options issued to employees                                                                                   |                                  |            | 7,500    |      |   |            |         |   |   |            |          |  
|                                                     | Adjustment for minority interests ownership in
    EOP Partnership                                                                                                            |                                  |            | (219     | )    |   |            | (6,848   | ) |   |            | 4,841     |  
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Balance, end of period                               |                                                                                                                                                                               | $                                | 10,396,864 |          |      | $ | 10,691,610 |          |   | $ | 10,788,273 |          
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Deferred Compensation:                               |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |          
|Balance, beginning of period                         |                                                                                                                                                                               | $                                | (15,472    | )        |      | $ | (19,822    | )        |   | $ | (14,871    | )        
|                                                     | Restricted shares granted                                                                                                                                                     |                                  |            |         |      |   |            | (17,060  | ) |   |            | (17,519   | )
|                                                     | Restricted shares retired                                                                                                                                                     |                                  |            |         |      |   |            | 7,669    |   |   |            | 3,328     |  
|                                                     | Amortization of restricted shares                                                                                                                                             |                                  |            | 9,583    |      |   |            | 13,741   |   |   |            | 9,240     |  
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Balance, end of period                               |                                                                                                                                                                               | $                                | (5,889     | )        |      | $ | (15,472    | )        |   | $ | (19,822    | )        
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Distributions in Excess of Accumulated
    Earnings: |                                                                                                                                                                               |                                  |            |          |      |   |            |          |   |   |            |          
|Balance, beginning of period                         |                                                                                                                                                                               | $                                | (452,636   | )        |      | $ | (327,537   | )        |   | $ | (152,695   | )        
|                                                     | Net income                                                                                                                                                                    |                                  |            | 655,062  |      |   |            | 770,215  |   |   |            | 618,182   |  
|                                                     | Put option settlement                                                                                                                                                         |                                  |            |         |      |   |            |         |   |   |            | 2,655     |  
|                                                     | Preferred distributions, net                                                                                                                                                  |                                  |            | (51,872  | )    |   |            | (62,573  | ) |   |            | (57,041   | )
|                                                     | Distributions to common shareholders                                                                                                                                          |                                  |            | (802,590 | )    |   |            | (832,741 | ) |   |            | (738,638  | )
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  
|Balance, end of period                               |                                                                                                                                                                               | $                                | (652,036   | )        |      | $ | (452,636   | )        |   | $ | (327,537   | )        
|                                                     |                                                                                                                                                                               |                                  |            |          |      |   |            |          |  

See accompanying notes.

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##### Table of Contents



EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF NET COMPREHENSIVE
INCOME


|                                   |                                                                                                 |                                  |         |        |      |   |         |         |   |   |         |        |  
|---------------------------------- | ----------------------------------------------------------------------------------------------- | -------------------------------- | ------- | ------ | ---- | - | ------- | ------- | - | - | ------- | ------ | -
|                                   |                                                                                                 |                                 
|                                   |                                                                                                 | For the years ended December 31, |        
|                                   |                                                                                                 |                                  |        
|                                   |                                                                                                 | 2003                             |         |        | 2002 |   |         | 2001    |  
|                                   |                                                                                                 |                                  |         |        |      |   |         |         |  
|                                   |                                                                                                 |                                 
|                                   |                                                                                                 | (Dollars in thousands)           |        
|Net income                         |                                                                                                 | $                                | 655,062 |        |      | $ | 770,215 |         |   | $ | 618,182 |       
|Other comprehensive income (loss): |                                                                                                 |                                  |         |        |      |   |         |         |   |   |         |       
|                                   | Unrealized holding gain (loss) on forward
    starting interest rate swaps                      |                                  |         | 2,220  |      |   |         | (18,611 | ) |   |         |       |  
|                                   | Reversal of unrealized holding loss on settlement
    of forward starting interest rate swap    |                                  |         | 5,942  |      |   |         |        |   |   |         |       |  
|                                   | Proceeds from settlement of forward starting
    interest rate swap                             |                                  |         | 768    |      |   |         |        |   |   |         |       |  
|                                   | Accumulated amortization of proceeds from
    settlement of forward starting interest rate swap |                                  |         | (73    | )    |   |         |        |   |   |         |       |  
|                                   | Unrealized holding gains (losses) from
    investments arising during the year                  |                                  |         | 848    |      |   |         | 396     |   |   |         | (2,699 | )
|                                   | Reclassification adjustment for realized
    (gains) losses included in net income              |                                  |         | (1,142 | )    |   |         | 116     |   |   |         |       |  
|                                   | Recognition of permanent impairment on marketable
    securities                                |                                  |         |       |      |   |         |        |   |   |         | 30,838 |  
|                                   |                                                                                                 |                                  |         |        |      |   |         |         |  
|Net comprehensive income           |                                                                                                 | $                                | 663,625 |        |      | $ | 752,116 |         |   | $ | 646,321 |       
|                                   |                                                                                                 |                                  |         |        |      |   |         |         |  

See accompanying notes.

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EQUITY OFFICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                      |                                                                                       |                                                                                                                                            |                                                                  |                                           |          |         |           |         |          |         |           |         |         |         |           | 
|--------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------- | ----------------------------------------- | -------- | ------- | --------- | ------- | -------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|                      |                                                                                       |                                                                                                                                           
|                      |                                                                                       | For the years ended December 31,                                                                                                           |                                                                 
|                      |                                                                                       |                                                                                                                                            |                                                                 
|                      |                                                                                       | 2003                                                                                                                                       |                                                                  |                                           | 2002     |         |           | 2001    |         
|                      |                                                                                       |                                                                                                                                            |                                                                  |                                           |          |         |           |         |         
|                      |                                                                                       |                                                                                                                                           
|                      |                                                                                       | (Dollars in thousands)                                                                                                                     |                                                                 
|Operating Activities: |                                                                                       |                                                                                                                                            |                                                                  |                                           |          |         |           |         |          |         |           |        
|                      | Net income                                                                            |                                                                                                                                            | $                                                                | 655,062                                   |          |         | $         | 770,215 |          |         | $         | 618,182 |        
|                      | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                                                                                            |                                                                  |                                           |          |         |           |         |          |         |           |         |        
|                      |                                                                                       | Revenue recognized related to acquired lease
    obligations, net                                                                          |                                                                  |                                           | (68      | )       |           |         |         |         |           |         |        |        
|                      |                                                                                       | Interest/dividend income accrued but not received                                                                                          |                                                                  |                                           |         |         |           |         |         |         |           |         | (9,852  | )      
|                      |                                                                                       | Amortization of discounts included in
    interest/dividend income                                                                         |                                                                  |                                           | (357     | )       |           |         | (856     | )       |           |         | (2,919  | )      
|                      |                                                                                       | Amortization of deferred revenue included in
    other income                                                                              |                                                                  |                                           |         |         |           |         |         |         |           |         | (3,073  | )      
|                      |                                                                                       | Depreciation and amortization (including
    discontinued operations)                                                                      |                                                                  |                                           | 737,102  |         |           |         | 695,892  |         |           |         | 590,214 |        
|                      |                                                                                       | Amortization of premiums/discounts on unsecured
    notes and settled interest rate protection agreements included
    in interest expense |                                                                  |                                           | (19,904  | )       |           |         | (7,183   | )       |           |         | 3,167   |        
|                      |                                                                                       | Compensation expense related to restricted shares
    and stock options issued to employees                                                |                                                                  |                                           | 17,094   |         |           |         | 14,961   |         |           |         | 9,240   |        
|                      |                                                                                       | Impairments                                                                                                                                |                                                                  |                                           | 7,500    |         |           |         |         |         |           |         | 135,220 |        
|                      |                                                                                       | Income from investments in unconsolidated joint
    ventures                                                                               |                                                                  |                                           | (79,882  | )       |           |         | (106,852 | )       |           |         | (69,203 | )      
|                      |                                                                                       | Net gain on sales of real estate (including
    discontinued operations)                                                                   |                                                                  |                                           | (161,063 | )       |           |         | (17,926  | )       |           |         | (81,662 | )      
|                      |                                                                                       | Extraordinary items                                                                                                                        |                                                                  |                                           |         |         |           |         |         |         |           |         | 1,000   |        
|                      |                                                                                       | Cumulative effect of a change in accounting
    principle                                                                                  |                                                                  |                                           |         |         |           |         |         |         |           |         | 1,142   |        
|                      |                                                                                       | Provision for doubtful accounts                                                                                                            |                                                                  |                                           | 12,803   |         |           |         | 27,995   |         |           |         | 26,124  |        
|                      |                                                                                       | Income allocated to minority interests                                                                                                     |                                                                  |                                           | 82,268   |         |           |         | 96,405   |         |           |         | 84,934  |        
|                      |                                                                                       | Changes in assets and liabilities:                                                                                                         |                                                                  |                                           |          |         |           |         |          |         |           |         |         |        
|                      |                                                                                       |                                                                                                                                            | (Increase) decrease in rents receivable                          |                                           |          | (6,893  | )         |         |          | 30,236  |           |         |         | (22,655 | )        
|                      |                                                                                       |                                                                                                                                            | (Increase) in deferred rent receivable                           |                                           |          | (72,240 | )         |         |          | (77,123 | )         |         |         | (75,555 | )        
|                      |                                                                                       |                                                                                                                                            | (Increase) in prepaid expenses and other assets                  |                                           |          | (8,409  | )         |         |          | (27,861 | )         |         |         | (5,051  | )        
|                      |                                                                                       |                                                                                                                                            | (Decrease) increase in accounts payable and
    accrued expenses |                                           |          | (17,487 | )         |         |          | (22,883 | )         |         |         | 21,434  |          
|                      |                                                                                       |                                                                                                                                            | (Decrease) increase in other liabilities                         |                                           |          | (13,223 | )         |         |          | 15,929  |           |         |         | 20,914  |          
|                      |                                                                                       |                                                                                                                                            |                                                                  |                                           |          |         |           |         |         
|                      |                                                                                       |                                                                                                                                            |                                                                  | Net cash provided by operating activities |          |         | 1,132,303 |         |          |         | 1,390,949 |         |         |         | 1,241,601 | 
|                      |                                                                                       |                                                                                                                                            |                                                                  |                                           |          |         |           |         |         

57



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EQUITY OFFICE PROPERTIES TRUST


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)


|                      |                                                                       |                                                          |   |            |            |   |   |            |            |   |   |            |            |  
|--------------------- | --------------------------------------------------------------------- | -------------------------------------------------------- | - | ---------- | ---------- | - | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                      |                                                                       |                                                         
|                      |                                                                       | For the years ended December 31,                         |  
|                      |                                                                       |                                                          |  
|                      |                                                                       | 2003                                                     |   |            | 2002       |   |   | 2001       |           
|                      |                                                                       |                                                          |   |            |            |   |   |            |           
|                      |                                                                       |                                                         
|                      |                                                                       | (Dollars in thousands)                                   |  
|Investing Activities: |                                                                       |                                                          |   |            |            |   |   |            |            |   |   |           
|                      | Property acquisitions                                                 |                                                          | $ | (189,415   | )          |   | $ | (53,067    | )          |   | $ | (104,748   | )         
|                      | Acquisition of Spieker Properties, Inc.                               |                                                          |   |           |            |   |   |           |            |   |   | (1,076,957 | )         
|                      | Property dispositions                                                 |                                                          |   | 1,345,554  |            |   |   | 377,150    |            |   |   | 361,353    |           
|                      | Capital and tenant improvements                                       |                                                          |   | (435,308   | )          |   |   | (328,930   | )          |   |   | (360,065   | )         
|                      | Lease commissions and other costs                                     |                                                          |   | (142,272   | )          |   |   | (104,714   | )          |   |   | (77,639    | )         
|                      | Decrease in escrow deposits and restricted cash                       |                                                          |   | 23,329     |            |   |   | 167,026    |            |   |   | 28,064     |           
|                      | Distributions from unconsolidated joint ventures                      |                                                          |   | 176,012    |            |   |   | 199,665    |            |   |   | 131,983    |           
|                      | Investments in unconsolidated joint ventures                          |                                                          |   | (34,378    | )          |   |   | (198,040   | )          |   |   | (249,893   | )         
|                      | Redemption of CT Convertible Trust I preferred
    stock              |                                                          |   |           |            |   |   | 20,086     |            |   |   |           |           
|                      | Investment in securities                                              |                                                          |   |           |            |   |   |           |            |   |   | (683       | )         
|                      | Repayments of notes receivable                                        |                                                          |   | 1,299      |            |   |   | 5,997      |            |   |   | 382        |           
|                      |                                                                       |                                                          |   |            |            |   |   |            |           
|                      |                                                                       | Net cash provided by (used for) investing
    activities |   |            | 744,821    |   |   |            | 85,173     |   |   |            | (1,348,203 | )
|                      |                                                                       |                                                          |   |            |            |   |   |            |           
|Financing Activities: |                                                                       |                                                          |   |            |            |   |   |            |            |   |   |           
|                      | Proceeds from mortgage debt                                           |                                                          |   |           |            |   |   | 14,427     |            |   |   | 140,000    |           
|                      | Principal payments on mortgage debt                                   |                                                          |   | (233,809   | )          |   |   | (156,052   | )          |   |   | (458,731   | )         
|                      | Prepayment penalties on early extinguishment of
    debt              |                                                          |   |           |            |   |   |           |            |   |   | (5,000     | )         
|                      | Proceeds from unsecured notes                                         |                                                          |   | 494,810    |            |   |   | 239,127    |            |   |   | 1,386,598  |           
|                      | Repayment of unsecured notes                                          |                                                          |   | (700,000   | )          |   |   | (310,000   | )          |   |   | (100,000   | )         
|                      | Proceeds from lines of credit                                         |                                                          |   | 5,215,400  |            |   |   | 1,336,350  |            |   |   | 3,206,050  |           
|                      | Principal payments on lines of credit                                 |                                                          |   | (5,087,100 | )          |   |   | (1,374,950 | )          |   |   | (3,152,036 | )         
|                      | Payments of loan costs                                                |                                                          |   | (8,678     | )          |   |   | (4,296     | )          |   |   | (10,481    | )         
|                      | Proceeds from settlement of interest rate swap
    agreements         |                                                          |   | 768        |            |   |   | 42,810     |            |   |   | 47,369     |           
|                      | Distributions to minority interests in partially
    owned properties |                                                          |   | (10,062    | )          |   |   | (10,401    | )          |   |   | (5,878     | )         
|                      | Payment of offering costs                                             |                                                          |   | (257       | )          |   |   | (187       | )          |   |   | (65        | )         
|                      | Proceeds from exercise of share options                               |                                                          |   | 37,744     |            |   |   | 40,015     |            |   |   | 71,835     |           
|                      | Distributions to common shareholders and
    unitholders              |                                                          |   | (901,259   | )          |   |   | (935,083   | )          |   |   | (837,659   | )         
|                      | Repurchase of Common Shares                                           |                                                          |   | (363,486   | )          |   |   | (196,882   | )          |   |   |           |           
|                      | Redemption of Units                                                   |                                                          |   | (6,427     | )          |   |   | (106,690   | )          |   |   | (1,245     | )         
|                      | Redemption of preferred shares                                        |                                                          |   | (250,000   | )          |   |   | (199,850   | )          |   |   | (106,250   | )         
|                      | Issuance of preferred shares                                          |                                                          |   |           |            |   |   | 205,645    |            |   |   |           |           
|                      | Put option settlement                                                 |                                                          |   |           |            |   |   |           |            |   |   | (1,467     | )         
|                      | Payment of preferred distributions                                    |                                                          |   | (53,841    | )          |   |   | (62,755    | )          |   |   | (58,573    | )         
|                      |                                                                       |                                                          |   |            |            |   |   |            |           
|                      |                                                                       | Net cash (used for) provided by financing
    activities |   |            | (1,866,197 | ) |   |            | (1,478,772 | ) |   |            | 114,467    |  
|                      |                                                                       |                                                          |   |            |            |   |   |            |           
|                      | Net increase (decrease) in cash and cash
    equivalents              |                                                          |   | 10,927     |            |   |   | (2,650     | )          |   |   | 7,865      |           
|                      | Cash and cash equivalents at the beginning of the
    year            |                                                          |   | 58,471     |            |   |   | 61,121     |            |   |   | 53,256     |           
|                      |                                                                       |                                                          |   |            |            |   |   |            |           
|                      | Cash and cash equivalents at the end of the year                      |                                                          | $ | 69,398     |            |   | $ | 58,471     |            |   | $ | 61,121     |           
|                      |                                                                       |                                                          |   |            |            |   |   |            |           

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##### Table of Contents



EQUITY OFFICE PROPERTIES TRUST


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)


|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |          |   |   |         |           |   | 
|------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------- | ------- | -------- | - | ------- | -------- | - | - | ------- | --------- | - | 
|                                                 |                                                                                                                                                           |                                                                                                                                                                                
|                                                 |                                                                                                                                                           | For the years ended December 31,                                                                                                                                                |                                                             
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                             
|                                                 |                                                                                                                                                           | 2003                                                                                                                                                                            |                                                              |         | 2002    |          |   | 2001    |         
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           |                                                                                                                                                                                
|                                                 |                                                                                                                                                           | (Dollars in thousands)                                                                                                                                                          |                                                             
|Supplemental Information:                        |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |          |   |   |        
|                                                 | Interest paid during the period, including a
    reduction of interest expense for capitalized interest of
    $10,089, $21,447 and $25,871, respectively |                                                                                                                                                                                 | $                                                            | 849,337 |         |          | $ | 836,573 |          |   | $ | 679,537 |          
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|Non-Cash Investing and Financing
    Activities: |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |          |   |   |        
|                                                 | Investing Activities:                                                                                                                                     |                                                                                                                                                                                 |                                                              |         |         |          |   |         |          |   |   |         |          
|                                                 |                                                                                                                                                           | Escrow deposits related to property dispositions                                                                                                                                |                                                              | $       | (69,330 | )        |   | $       | (70,025  | ) |   | $       | (184,458  | )
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | Mortgage loan repayment as a result of a property
    disposition                                                                                                               |                                                              | $       | (16,279 | )        |   | $       |         |   |   | $       |          |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | Mortgage loan assumed upon consolidation of
    property                                                                                                                        |                                                              | $       | 59,166  |          |   | $       |         |   |   | $       |          |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | Escrow deposits used for property acquisition                                                                                                                                   |                                                              | $       |        |          |   | $       | 70,030   |   |   | $       |          |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | Changes in accounts due to partial sales of real
    estate:                                                                                                                    |                                                              |         |         |          |   |         |          |   |   |         |           |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 | Increase in investments in unconsolidated joint
    ventures |         | $       | 155,710  |   |         | $        |  |   |         | $         |  | 
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 | Decrease in investment in real estate                        |         | $       | (169,390 | ) |         | $        |  |   |         | $         |  | 
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 | Decrease in accumulated depreciation                         |         | $       | 19,336   |   |         | $        |  |   |         | $         |  | 
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 | Decrease in other assets and liabilities                     |         | $       | (4,460   | ) |         | $        |  |   |         | $         |  | 
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 | Financing Activities:                                                                                                                                     |                                                                                                                                                                                 |                                                              |         |         |          |   |         |          |   |   |         |          
|                                                 |                                                                                                                                                           | Mortgage loan repayment as a result of a property
    disposition                                                                                                               |                                                              | $       | 16,279  |          |   | $       |         |   |   | $       |          |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | Mortgage loan assumed upon consolidation of
    property                                                                                                                        |                                                              | $       | (59,166 | )        |   | $       |         |   |   | $       |          |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | 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  |   |   | $       |          |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         
|                                                 |                                                                                                                                                           | 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 interests 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   |  
|                                                 |                                                                                                                                                           |                                                                                                                                                                                 |                                                              |         |         |          |   |         |         

See accompanying notes.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 1  BUSINESS AND FORMATION OF
EQUITY OFFICE

Equity Office Properties Trust (Equity
Office) is a Maryland real estate investment trust and is
the sole general partner of EOP Operating Limited Partnership, a
Delaware limited partnership (EOP Partnership). The
use of the word we, us, or
our refers to Equity Office and its subsidiaries,
including EOP Partnership, except where the context otherwise
requires. We were organized in 1996 to continue and expand the
national office property business organized by Mr. Samuel
Zell, the Chairman of our Board of Trustees, and to complete the
consolidation of our predecessors. We completed our initial
public offering (the IPO) on July 11, 1997,
having sold our 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).

We are a fully integrated, self-administered and
self-managed real estate company principally engaged, through
our subsidiaries, in owning, managing, leasing, acquiring and
developing office properties. At December 31, 2003, we
owned or had an interest in 684 office properties comprising
approximately 122.3 million rentable square feet of office
space in 18 states and the District of Columbia and were located
in 27 markets and 124 submarkets (the Office
Properties). On a weighted average basis, the Office
Properties were 86.3% occupied at December 31, 2003.
Approximately 42.3% of the rentable square feet is located in
central business districts and approximately 57.7% of the
rentable square feet is located in suburban markets. At
December 31, 2003, we also owned 75 industrial properties
comprising approximately 5.8 million square feet of
industrial space (the Industrial Properties and
together with the Office Properties, the Properties)
and approximately 0.4 million square feet of office
properties under development. On a weighted average basis, the
Industrial Properties were 86.6% occupied at December 31,
2003.

NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

Basis of Presentation

We own substantially all of our assets and
conduct substantially all of our operations through EOP
Partnership and its subsidiary entities. We are the sole general
partner of EOP Partnership. Through our ownership of Units, we
owned approximately 89.1% of EOP Partnership at
December 31, 2003 and 2002. All intercompany transactions
and balances have been eliminated in consolidation. Property
holding entities and other subsidiaries of which we own 100% of
the equity are consolidated. For those joint ventures of which
we own less than 100% of the equity interest, we consolidate the
property if we have the direct or indirect ability to make
decisions about the entities activities based on the terms
of the respective joint venture agreements which specify the
sharing of participating and protective rights such as decisions
regarding major leases, encumbering the entities with debt and
whether to dispose of entities. We would also consolidate
certain property holding entities and other subsidiaries if we
own less than a 100% equity interest if we are deemed to be the
primary beneficiary in a variable interest entity (as defined in
FASB Interpretation 46 Consolidation of Variable
Interest Entities, an Interpretation of
ARB No. 51, as revised (FIN 46)).

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


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

Investments in Real Estate

Rental property and improvements, including
interest and other costs capitalized during construction, are
included in investments 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 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               |  |                       | 23-40 years   | 
|Building improvements  |  |                       | 3-40 years    | 
|Tenant improvements    |  |                       | Term of lease | 
|Furniture and fixtures |  |                       | 3-12 years    | 

In accordance with Statement of Financial
Accounting Standards No. 141 Business Combinations(Statement 141), we allocate the purchase price
of real estate to land, building, tenant improvements and, if
determined to be material, intangibles, such as the value of
above, below and at-market leases, origination costs associated
with the in-place leases, and the value of tenant relationships,
if any. We depreciate the amount allocated to building and other
intangible assets over their estimated useful lives, which
generally range from three to 40 years. The values of the
above and below market leases are amortized and recorded as
either an increase (in the case of below market leases) or a
decrease (in the case of above market leases) to rental income
over the remaining term of the associated lease. The value
associated with in-place leases and tenant relationships is
amortized over the expected term, which includes an estimated
probability of the lease renewal, and its estimated term. If a
tenant vacates its space prior to the contractual termination of
the lease and no rental payments are being made on the lease,
any unamortized balance of the related intangible will be
written off. The tenant improvements and origination costs are
amortized as an expense over the remaining life of the lease (or
charged against earnings if the lease is terminated prior to its
contractual expiration date).

In accordance with Statement 141 and its
applicability to acquired in-place leases, we perform (or engage
a third party to perform) the following procedures for
properties we acquire:



| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) estimate the value of the real estate
    as if vacant as of the acquisition date;                                                                                                                   
|
| | 2) allocate that value among land, building
    improvements, building, and equipment and determine the
    associated asset life for each;                                                               
|
| | 3) compute the value of the difference
    between the as if vacant value and the purchase
    price, which will represent the total intangible assets;                                                 
|
| | 4) allocate the value of the above and below
    market leases to the intangible assets and determine the
    associated life of the above/below market leases;                                           
|
| | 5) calculate the value and associated life
    of the tenant relationships, if any, by taking the direct
    identifiable benefits of the customer relationship and
    discounting them to present value;
|
| | 6) estimate the fair value of the in-place
    tenant improvements and leasing commissions and calculate the
    associated asset life; and                                                               
|
| | 7) allocate the remaining intangible value
    to the in-place leases and their associated lives.                                                                                                         

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

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


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

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 we
have a commitment to sell the property which is not subject to
any significant contingencies. 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 we
do not have control over the activities of the investees. Our
net equity investment is reflected on the consolidated balance
sheets, and the consolidated statements of operations include
our share of net income or loss from the unconsolidated joint
ventures. Any difference between the carrying amount of these
investments on our consolidated balance sheet and the historical
cost of the underlying equity is depreciated as an adjustment to
income from unconsolidated joint ventures generally over 40
years.

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 and mortgage debt, 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. We also record deferred leasing costs in accordance with
Statement 141 when allocating the purchase price to acquired
in-place leases (see Investment in Real Estateabove).

Revenue Recognition

We record rental income for the full term of each
lease on a straight-line basis. 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. 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, 2003, 2002
and 2001 were approximately $73.1 million,
$67.4 million and $66.5 million from continuing
operations, respectively. Deferred rental revenue is not
recognized for income tax purposes.

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


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

Tenant reimbursements consisting of amounts due
from tenants for common area maintenance, real estate taxes and
other recoverable costs are recognized as revenue in the period
in which the expenses are incurred.

Lease termination income (included in other
revenue) represents amounts received from tenants in connection
with the early termination of their remaining lease obligation.
We will also record deferred revenue in connection with a lease
termination fee received if it is probable that a tenant will
file for bankruptcy within 90 days, if significant
contingencies in the lease termination agreement exist or if the
tenant has not yet vacated the building.

We recognize income from rent, tenant
reimbursements and lease termination fees and other income once
all of the following criteria are met in accordance with SEC
Staff Accounting Bulletin 104:



| |   |                                                         
| | - | --------------------------------------------------------
| |  | the agreement has been fully executed and
    delivered;
|
| |  | services have been rendered;                            
|
| |  | the amount is fixed or determinable; and                
|
| |  | the collectibility is reasonably assured.               

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. Management actively reviews tenant receivables and
determines the probability of collection for receivables
identified as potentially uncollectible. The amount of the
allowance takes into account any security deposits or
outstanding letters of credit.

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 property sales that were executed as a
tax-deferred disposition. Restricted cash represents amounts
committed for various utility deposits and security deposits.

Fair Value of Financial Instruments and Other
Assets

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

We have debt at fixed and variable rates. The
fair market value of variable rate debt approximates book value
because the interest rate is based on LIBOR plus a credit
premium, which represents a market rate. The fair value of the
fixed-rate mortgage debt and unsecured notes as of
December 31, 2003 was approximately $1.3 billion
higher than the book value of approximately $11.1 billion
primarily due to the general decrease in market interest rates
on secured and unsecured debt. As of December 31, 2002, the
fair value of our fixed-rate debt was approximately $1.0 billion
higher than the 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
interest rate swap agreements is determined using third party
valuations. In addition, 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 approximate
their fair value.

63



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




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


Derivatives and Hedging Activities

We may periodically enter into certain interest
rate protection and swap agreements to effectively convert
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 upon their periodic reset dates are recognized as an
adjustment to interest expense when such amounts are incurred or
earned. Settlement amounts paid or received in connection with
settled 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.

All derivative instruments are recorded at fair
value. Derivatives that are not hedges must be adjusted to fair
value through net income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value
of the derivative will be offset against the corresponding
change in fair value of the hedged asset, liability, or firm
commitments through net income or recognized in other
comprehensive income until the hedged item is recognized in net
income. The ineffective portion of a derivatives change in
fair value will be recognized in net income. We 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 as a result of adopting FASB Statement
No. 133 Accounting for Derivative Instruments and
Hedging Activities (SFAS No. 133).

Income Taxes

The Office Properties and Industrial Properties
are primarily owned by limited partnerships or limited liability
companies, which are substantially pass-through entities. 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, our property management business
which provides management services to Properties owned by third
parties and provides certain other services to many of our
Properties is owned by a corporation and is subject to federal
and state income and franchise taxes.

We have 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, we generally
will not be subject to federal income tax if we distribute 100%
of our annual taxable income to our shareholders. As a REIT, we
are subject to a number of organizational and operational
requirements. If we fail to qualify as a REIT in any taxable
year, we will be subject to federal income tax (including any
applicable alternative minimum tax) on our taxable income at
regular corporate tax rates. Even if we qualify for taxation as
a REIT, we may be subject to state and local income taxes and to
federal income tax and excise tax on our undistributed income.
In addition, taxable income from our 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, 2003 and 2002 was
approximately $14.4 billion and $14.8 billion,
respectively.

64



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##### Table of Contents



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, |          
|                                                                |                                                                                  |                                  |          
|                                                                |                                                                                  | 2003                             |           |          | 2002 |   |         | 2001    |  
|                                                                |                                                                                  |                                  |           |          |      |   |         |         |  
|                                                                |                                                                                  |                                 
|                                                                |                                                                                  | (Dollars in thousands)           |          
|Net income available to Common Shares                           |                                                                                  | $                                | 603,190   |          |      | $ | 707,642 |         |   | $ | 563,796 |         
|                                                                | Straight-line rent adjustments                                                   |                                  |           | (76,847  | )    |   |         | (72,891 | ) |   |         | (69,149  | )
|                                                                | Preferred distributions not deductible for tax                                   |                                  |           | 51,872   |      |   |         | 62,573  |   |   |         | 57,041   |  
|                                                                | Tax gain on sale of real estate in excess of GAAP
    gain                       |                                  |           | 262,026  |      |   |         | 72,658  |   |   |         | 82,219   |  
|                                                                | Excess of GAAP depreciation/amortization over tax
    depreciation/ amortization |                                  |           | 233,817  |      |   |         | 146,389 |   |   |         | 146,277  |  
|                                                                | Other adjustments                                                                |                                  |           | 23,246   |      |   |         | (74,635 | ) |   |         | (55,617  | )
|                                                                | Net operating loss utilization                                                   |                                  |           | (69,199  | )    |   |         |        |   |   |         |         |  
|                                                                |                                                                                  |                                  |           |          |      |   |         |         |  
|Taxable income                                                  |                                                                                  |                                  | 1,028,105 |          |      |   | 841,736 |         |   |   | 724,567 |         
|                                                                | Less capital gains                                                               |                                  |           | (423,089 | )    |   |         | (90,584 | ) |   |         | (163,881 | )
|                                                                |                                                                                  |                                  |           |          |      |   |         |         |  
|Adjusted taxable income subject to 90% dividend
    requirement |                                                                                  | $                                | 605,016   |          |      | $ | 751,152 |         |   | $ | 560,686 |         
|                                                                |                                                                                  |                                  |           |          |      |   |         |         |  



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

|                                               |  |                                  |           |  |      |   |         |      |  |   |         | 
|---------------------------------------------- |  | -------------------------------- | --------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                               |  |                                 
|                                               |  | For the years ended December 31, |          
|                                               |  |                                  |          
|                                               |  | 2003                             |           |  | 2002 |   |         | 2001 | 
|                                               |  |                                  |           |  |      |   |         |      | 
|                                               |  |                                 
|                                               |  | (Dollars in thousands)           |          
|Cash dividends paid                            |  | $                                | 854,462   |  |      | $ | 895,314 |      |  | $ | 795,679 | 
|Plus: Dividends designated from following year |  |                                  | 173,643   |  |      |   |        |      |  |   |        | 
|                                               |  |                                  |           |  |      |   |         |      | 
|Dividends paid deduction                       |  | $                                | 1,028,105 |  |      | $ | 895,314 |      |  | $ | 795,679 | 
|                                               |  |                                  |           |  |      |   |         |      | 



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

|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |   |         |  |  |  |       |  
|------------------------------ |  | -------------------------------- | ------- |  | ---- |  | ----- | ---- |  | - | ------- |  |  | - | ----- | - | - | - | ------- |  |  |  | ----- | -
|                               |  |                                 
|                               |  | For the years ended December 31, |        
|                               |  |                                  |        
|                               |  |                                  |         |  |      | 
|                               |  | 2003                             |         |  | 2002 |  |       | 2001 | 
|                               |  |                                  |         |  |      |  |       |      | 
|                               |  | $                                |         |  | %    |  |       | $    |  |   | %       |  |  | $ |       |   | % |  
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|                               |  |                                 
|                               |  | (Dollars in thousands)           |        
|Ordinary income                |  | $                                | 456,674 |  |      |  | 56.9  | %    |  | $ | 694,986 |  |  |   | 83.5  | % |   | $ | 516,782 |  |  |  | 70.0  | %
|Qualified dividends            |  |                                  | 3,210   |  |      |  | 0.4   | %    |  |   |        |  |  |   |      |   |   |   |        |  |  |  |      |  
|Return of capital              |  |                                  |        |  |      |  |      |      |  |   | 53,578  |  |  |   | 6.4   | % |   |   | 71,112  |  |  |  | 9.6   | %
|Capital gains                  |  |                                  | 227,133 |  |      |  | 28.3  | %    |  |   | 60,656  |  |  |   | 7.3   | % |   |   | 130,618 |  |  |  | 17.7  | %
|Unrecaptured section 1250 gain |  |                                  | 115,573 |  |      |  | 14.4  | %    |  |   | 23,521  |  |  |   | 2.8   | % |   |   | 20,126  |  |  |  | 2.7   | %
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|Common distributions           |  |                                  | 802,590 |  |      |  | 100.0 | %    |  |   | 832,741 |  |  |   | 100.0 | % |   |   | 738,638 |  |  |  | 100.0 | %
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|Preferred distributions        |  |                                  | 51,872  |  |      |  |       |      |  |   | 62,573  |  |  |   |       |   |   |   | 57,041  |  |  |  |       |  
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  
|Total REIT distributions       |  | $                                | 854,462 |  |      |  |       |      |  | $ | 895,314 |  |  |   |       |   |   | $ | 795,679 |  |  |  |       |  
|                               |  |                                  |         |  |      |  |       |      |  |   |         |  |  |   |       |   |   |  

65



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


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

Minority Interests



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

Net income is allocated to minority interests in
EOP Partnership based on their weighted average ownership
percentage during the period. The ownership percentage is
calculated by dividing the number of Units held by the minority
interests by the sum of our Units and the Units held by the
minority interests, all calculated based on the weighted average
days outstanding. For the years ended December 31, 2003 and
2002, we had an 89.0% and 88.8% weighted average interest in EOP
Partnership. Minority interest in EOP Partnership on the
consolidated balance sheets is calculated by dividing the number
of Units held by the minority interests by the sum of our Units
and the Units held by the minority interests, all calculated
based on the Units outstanding at the end of the year. As of
December 31, 2003 and 2002 we had an 89.1% interest in EOP
Partnership. Changes in the number of outstanding Common Shares
and Units will change our ownership interest and the ownership
interest of the minority interests.



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

We consolidate certain Properties that we
control, but do not wholly own. The minority interests share of
the equity of these consolidated Properties is reflected in the
consolidated balance sheets as Minority
interests  partially owned properties and
represents the minority interests share in the total
equity of these Properties. The net income from these properties
attributable to the minority interests is reflected as
Minority interests  Partially owned
properties in the consolidated statements of operations.

In May 2003, the Financial Accounting
Standards Board (FASB) issued Statement No. 150
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity(Statement 150). Statement 150 establishes
standards for classifying and measuring as liabilities certain
financial instruments that embody obligations of the issuer and
have characteristics of both liabilities and equity.
Statement 150 is effective for all financial instruments
created or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning
after June 15, 2003 (July 1, 2003 for calendar quarter
companies). We adopted Statement 150 on July 1, 2003,
which had no effect on our financial statements. Several of the
Properties that we consolidate but do not wholly own are subject
to finite life joint venture agreements. Statement 150
requires the disclosure of the estimated settlement value of
these noncontrolling interests. As of December 31, 2003 the
estimated settlement value of these noncontrolling interests
approximated the book value of approximately $169.7 million.

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 2002 and 2001 statements in order to provide
comparability with the 2003 statements reported herein. These
reclassifications have not changed the 2002 or 2001 results of
operations or combined shareholders equity and mandatorily
redeemable preferred shares.

66



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


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

Share Based Employee Compensation
Plans

Prior to January 1, 2003, we used the
accounting provisions provided by Accounting Principles Board
Opinion No. 25 (APB 25) to account for the
issuance of share options and other equity awards. Effective
January 1, 2003, we adopted Statement of Financial
Accounting Standards No. 123 (Statement 123)
Accounting for Stock Based Compensation, which requires a
fair value based accounting method for determining compensation
expense associated with the issuance of share options and other
equity awards. We adopted the accounting provisions of Statement
123 to reflect the cost of issuing share options and other
equity awards. Statement of Financial Accounting Standards
No. 148 (Statement 148) Accounting for
Stock-Based Compensation  Transition and
Disclosure  an Amendment of FASB Statement
No. 123, issued December 2002 and effective for interim
periods beginning after December 15, 2002, provided various
methods of applying Statement 123. In accordance with Statement
148, we employed the prospective method for adopting Statement
123, which requires the recognition of compensation expense
based on the fair value method for share options and other
equity awards granted on or after January 1, 2003 and for
certain modifications made subsequent to December 31, 2002
to share options and other equity awards that were outstanding
as of December 31, 2002. Compensation expense is recognized
ratably over the respective vesting period of the award.

The following table illustrates the unaudited
effect on net income available to common shareholders and
earnings per share if the fair value based method had been
applied to all outstanding and unvested share options for the
last three years. Compensation expense related to restricted
share awards is not presented in the table below because the
expense amount is the same under APB No. 25 and Statement
123 and therefore, is already reflected in net income.

|                                                                                                                           |                                                            |                                  |         |      |      |   |         |      |  |   |         |      | 
|-------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | -------------------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                                                                                                           |                                                            |                                 
|                                                                                                                           |                                                            | For the years ended December 31, |        
|                                                                                                                           |                                                            |                                  |        
|                                                                                                                           |                                                            | 2003                             |         |      | 2002 |   |         | 2001 | 
|                                                                                                                           |                                                            |                                  |         |      |      |   |         |      | 
|                                                                                                                           |                                                            |                                 
|                                                                                                                           |                                                            | (Dollars in thousands,           |        
|                                                                                                                           |                                                            | except per share data)           |        
|Historical net income available to common
    shareholders                                                                 |                                                            | $                                | 603,190 |      |      | $ | 707,642 |      |  | $ | 563,796 |     
|Add back compensation expense for share options
    included in historical net income available to common
    shareholders |                                                            |                                  | 2,907   |      |      |   | 1,265   |      |  |   |        |     
|Deduct compensation expense for share options
    determined under fair value based method                                 |                                                            |                                  | (10,916 | )    |      |   | (12,117 | )    |  |   | (11,928 | )   
|Allocation of expense to minority interest-EOP
    Partnership                                                             |                                                            |                                  | 877     |      |      |   | 1,215   |      |  |   | 1,421   |     
|                                                                                                                           |                                                            |                                  |         |      |      |   |         |      | 
|Pro forma net income available to common
    shareholders                                                                  |                                                            | $                                | 596,058 |      |      | $ | 698,005 |      |  | $ | 553,289 |     
|                                                                                                                           |                                                            |                                  |         |      |      |   |         |      | 
|Earnings per share  basic:                                                                                                |                                                            |                                  |         |      |      |   |         |      |  |   |         |     
|                                                                                                                           | Historical net income available to common
    shareholders |                                  | $       | 1.50 |      |   | $       | 1.71 |  |   | $       | 1.57 | 
|                                                                                                                           | Pro forma net income available to common
    shareholders  |                                  | $       | 1.49 |      |   | $       | 1.68 |  |   | $       | 1.54 | 
|Earnings per share  diluted:                                                                                              |                                                            |                                  |         |      |      |   |         |      |  |   |         |     
|                                                                                                                           | Historical net income available to common
    shareholders |                                  | $       | 1.50 |      |   | $       | 1.70 |  |   | $       | 1.55 | 
|                                                                                                                           | Pro forma net income available to common
    shareholders  |                                  | $       | 1.48 |      |   | $       | 1.68 |  |   | $       | 1.52 | 

NOTE 3  IMPACT OF NEW ACCOUNTING
STANDARDS

In January 2003, the Financial Accounting
Standards Board (FASB) issued Interpretation
No. 46 (FIN 46), Consolidation of Variable
Interest Entities. The objective of this Interpretation is to
provide guidance on how to identify a variable interest entity
(VIE) and determine when the assets, liabilities,
non-controlling interests, and results of operations of a VIE
need to be included in consolidated financial statements. A
company that holds variable interests in an entity will need to
consolidate such entity if the

67



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 3  IMPACT OF NEW
ACCOUNTING STANDARDS  (continued)


company absorbs a majority of the VIEs
expected losses or receive a majority of the entitys
expected residual returns if they occur, or both.

The provisions of FIN 46 apply upon initial
involvement with the respective entity for transactions created
after January 31, 2003. The adoption in 2003 had no effect
on us. The provisions of FIN 46 and related revised
interpretations apply no later than the end of the first interim
reporting period ending March 15, 2004 (March 31,
2004) for entities created before February 1, 2003.

In 1999, we invested in a 67% share of a
$202.2 million mezzanine-level debt position for
approximately $73.9 million as part of a debt restructuring
related to the SunAmerica Center office property located in
Century City, California which consists of approximately 780,000
square feet. The note accrues interest at 7.25% per annum and
matures in August 2014 and is payable based on cash flow. We
recognize interest income from this investment on a cash basis.
We also have an option to acquire 67% of the $15.0 million
face amount of two other subordinate notes from an affiliate of
the property owner. We have accounted for our investment as a
note receivable included in other assets.

Under the provisions of FIN 46, we are required
to consolidate the financial condition and results of operations
of SunAmerica Center effective January 1, 2004. Our maximum
exposure to loss as a result of the investment is equivalent to
the $73.9 million we invested in 1999. However, we may be
required to contribute additional funds to support the
operations of the property. Any additional funding will be in
the form of a shortfall note, which is repayable from available
cash flow. The shortfall notes may not exceed $2.5 million
in the aggregate. As of December 31, 2003, SunAmerica
Centers total assets were approximately $300 million
and total liabilities were approximately $235 million. Our
only recourse is against the mezzanine lender entitys sole
interest in the property-owning entity. The property is
encumbered by a $203 million first mortgage owed to a third
party.

NOTE 4  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
our 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.
We 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, 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.

68



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 4  SPIEKER
MERGER  (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 | )         
|                                                   |                           |                        |           

NOTE 5  INVESTMENTS IN REAL
ESTATE

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

|                               |                                  |                        |            |            |      |   |            |            | 
|------------------------------ | -------------------------------- | ---------------------- | ---------- | ---------- | ---- | - | ---------- | ---------- | 
|                               |                                  |                       
|                               |                                  | December 31,           |           
|                               |                                  |                        |           
|                               |                                  | 2003                   |            |            | 2002 |  
|                               |                                  |                        |            |            |      |  
|                               |                                  |                       
|                               |                                  | (Dollars in thousands) |           
|Land                           |                                  | $                      | 2,737,533  |            |      | $ | 2,878,102  |           
|Land available for development |                                  |                        | 251,151    |            |      |   | 252,852    |           
|Building                       |                                  |                        | 19,479,760 |            |      |   | 20,545,623 |           
|Building improvements          |                                  |                        | 691,111    |            |      |   | 446,808    |           
|Tenant improvements            |                                  |                        | 971,780    |            |      |   | 683,142    |           
|Furniture and fixtures         |                                  |                        | 105,655    |            |      |   | 72,252     |           
|Developments in process        |                                  |                        | 75,232     |            |      |   | 284,737    |           
|                               |                                  |                        |            |            |      |  
|                               | Gross investments in real estate |                        |            | 24,312,222 |      |   |            | 25,163,516 | 
|Accumulated depreciation       |                                  |                        | (2,578,082 | )          |      |   | (2,077,613 | )         
|                               |                                  |                        |            |            |      |  
|                               | Net investments in real estate   |                        | $          | 21,734,140 |      |   | $          | 23,085,903 | 
|                               |                                  |                        |            |            |      |  

During 2003, we acquired the U.S. Bank Tower and
225 West Santa Clara (a/k/a the Opus Center) office buildings
for approximately $183.2 million. The office properties are
located in Denver, Colorado and San Jose, California,
respectively, and consist of approximately 829,293 square feet.

In May 2003, we acquired approximately 8.1% of
the equity in the joint venture that owns The John Hancock
Complex in Boston, Massachusetts for approximately
$25.0 million. The investment in the joint venture is
accounted for under the cost method of accounting because we own
a noncontrolling interest in the property and is included in
prepaid expenses and other assets on the consolidated balance
sheet.

In September 2003, we acquired the remaining 20%
equity interest in Key Center (see Note 9 
Investments in Unconsolidated Joint Ventures for more
information).

69



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 5  INVESTMENTS IN REAL
ESTATE  (continued)


In September 2003, we acquired a vacant land
parcel in Folsom, California, for approximately
$3.4 million.

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

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

NOTE 6  SALES OF REAL
ESTATE

During 2003, we disposed of 53 office properties,
two industrial properties and four vacant land parcels in
separate transactions to various unaffiliated parties for
approximately $933.1 million. The total gain on the sale of
these properties was approximately $62.0 million which is
included in discontinued operations. The sold office properties
consisted of approximately 5,182,707 square feet and 32
residential units, and the industrial properties consisted of
approximately 216,900 square feet. We also sold partial
interests and entered into joint venture agreements on 13 office
properties consisting of approximately 3,284,431 square
feet. The total sales price to us from these partial sale
transactions was approximately $596.5 million. The net gain
on the interests sold totaled $99.1 million. The net income
of the properties that were partially sold is included in net
income from continuing operations.

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.

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.

During 2001, we also 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 consisted of approximately 4,052,476 square feet.

The net income for properties sold in 2002 and
2003 is reflected in the consolidated statements of operations
as Discontinued Operations for the periods presented. The
properties that were partially sold during 2003 are not required
to be reflected as discontinued operations in accordance with
Statement 144. Below is a

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 6  SALES OF REAL
ESTATE  (continued)


summary of the results of operations for the
properties sold in 2002 and 2003, except for the properties that
were partially sold, through their respective sale dates which
are classified as discontinued operations:

|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |        |        |         |        |        |        | 
|------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------- | ---------------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | 
|                                                                    |                                                                                           |                                 
|                                                                    |                                                                                           | For the years ended December 31, |                 
|                                                                    |                                                                                           |                                  |                 
|                                                                    |                                                                                           | 2003                             |                  |        | 2002   |        |         | 2001   |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           |                                 
|                                                                    |                                                                                           | (Dollars in thousands)           |                 
|Total revenues                                                      |                                                                                           | $                                | 83,829           |        |        | $      | 164,425 |        |        | $      | 123,770 |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Expenses:                                                           |                                                                                           |                                  |                  |        |        |        |         |        |        |        |         |       
|                                                                    | Depreciation and amortization                                                             |                                  |                  | 14,803 |        |        |         | 28,129 |        |        |         | 21,702 |       
|                                                                    | Property operating                                                                        |                                  |                  | 25,228 |        |        |         | 54,266 |        |        |         | 45,362 |       
|                                                                    | Ground rent                                                                               |                                  |                  | 18     |        |        |         | 164    |        |        |         | 236    |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           | Total expenses                   |                  |        | 40,049 |        |         |        | 82,559 |        |         |        | 67,300 |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           |                                  | Operating income |        |        | 43,780 |         |        |        | 81,866 |         |        |        | 56,470 | 
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Other income/expense:                                               |                                                                                           |                                  |                  |        |        |        |         |        |        |        |         |       
|                                                                    | Interest/dividend income                                                                  |                                  |                  | 158    |        |        |         | 233    |        |        |         | 217    |       
|                                                                    | Interest expense and amortization of deferred
    financing costs and prepayment expenses |                                  |                  | (20    | )      |        |         | (346   | )      |        |         | (849   | )     
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|                                                                    |                                                                                           | Total other income/expense       |                  |        | 138    |        |         |        | (113   | )      |         |        | (632   | )     
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Income before income taxes and net gain on sales
    of real estate |                                                                                           |                                  | 43,918           |        |        |        | 81,753  |        |        |        | 55,838  |       
|Income taxes                                                        |                                                                                           |                                  | 67               |        |        |        | (369    | )      |        |        | (92     | )     
|Net gain on sales of real estate                                    |                                                                                           |                                  | 61,953           |        |        |        | 17,926  |        |        |        |        |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Net income                                                          |                                                                                           | $                                | 105,938          |        |        | $      | 99,310  |        |        | $      | 55,746  |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       
|Property net operating income from discontinued
    operations      |                                                                                           | $                                | 58,601           |        |        | $      | 110,159 |        |        | $      | 78,408  |       
|                                                                    |                                                                                           |                                  |                  |        |        |        |         |        |       

Segment Reporting

For segment reporting purposes, the office
properties, apartment properties 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.

NOTE 7  INVESTMENT IN
PREFERRED STOCK

The following investment is included in Prepaid
Expenses and Other Assets:

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 was fixed
    through March 31, 2002. Thereafter, the rate increased 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

71



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 7  INVESTMENT IN
PREFERRED STOCK  (continued)




| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | 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. We
received approximately $20.1 million upon the redemption.
We still have an approximate $29.3 million investment in
the convertible portion of the preferred securities of CT
Convertible Trust I.

NOTE 8  IMPAIRMENT

During 2003, an Office Property was deemed to be
impaired due to an analysis of the undiscounted cash flows. As a
result, we recognized a permanent impairment charge of
$7.5 million, which reduced the book value of the property
to its fair value of $3.8 million. Fair value was
determined as the present value of the future cash flows. This
asset and the related impairment charge are reported under the
Office Properties segment for segment reporting
purposes.

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 total impairment consisted of the investment in HQ
Global Workplaces, Inc. preferred stock, including accrued but
unpaid dividends, of approximately $90.6 million,
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 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, we determined that our investment in HQ Global was not
recoverable and, therefore, recorded a permanent impairment on
100% of our investment. Subsequently, in March 2002 HQ Global
filed a voluntary petition for relief under Chapter 11 of
the U.S. Bankruptcy Code.

During 2001, our telecom, technology and
advertising related investments and full-service business center
joint venture investments experienced operating losses due, in
part, to the negative economic environment. These investments
were considered to be impaired based on their fair value as
compared to the carrying value. The fair value of the
investments was based on internally prepared valuations
considering the then present economic conditions. The impairment
represented our entire investment in the respective assets,
except for the internally developed software system, for which
the impairment represented 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, we recognized a $2.5 million
impairment on a parking facility that was held for sale because
the sales price less costs to sell was less than the carrying
amount of the property as of December 31, 2001. The asset
and the related impairment are reported under the
Corporate and Other segment for reporting purposes.

72



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 9  INVESTMENTS IN
UNCONSOLIDATED JOINT VENTURES

The entities listed below are owned in joint
ventures by us with unaffiliated parties and are accounted for
under the equity method.

|                                                        |  |          |                   |                |             |              |            |      |  |  |       |   |  |  |       |  
|------------------------------------------------------- |  | -------- | ----------------- | -------------- | ----------- | ------------ | ---------- | ---- |  |  | ----- | - |  |  | ----- | -
|                                                        |  |          |                   |                |             |             
|                                                        |  |          |                   |                |             | Economic     |           
|                                                        |  |          |                   |                |             | Interest(a)  |           
|                                                        |  |          |                   |                |             | as of        |           
|                                                        |  |          |                   |                |             | December 31, |           
|                                                        |  |          |                   | Total Rentable |             |              |            |     
|Office Property                                         |  | Location |                   |                | Square Feet |              |            | 2003 |  |  | 2002  |  
|                                                        |  |          |                   |                |             |              |            |      |  |  |       |  
|One Post Office Square                                  |  |          | Boston, MA        |                |             |              | 765,296    |      |  |  | 50    | % |  |  | 50    | %
|75-101 Federal Street                                   |  |          | Boston, MA        |                |             |              | 813,195    |      |  |  | 51.61 | % |  |  | 51.61 | %
|Rowes Wharf(b)                                          |  |          | Boston, MA        |                |             |              | 344,645    |      |  |  | 44    | % |  |  | 44    | %
|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       |                |             |              | 774,344    |      |  |  | 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 |                |             |              | 421,121    |      |  |  | 50    | % |  |  | 50    | %
|Key Center(c)                                           |  |          | Seattle, WA       |                |             |              | 472,929    |      |  |  | 100   | % |  |  | 80    | %
|1301 Avenue of the Americas (see Subsequent
    Events) |  |          | New York, NY      |                |             |              | 1,765,694  |      |  |  | 84.47 | % |  |  | 84.47 | %
|Concar                                                  |  |          | San Mateo, CA     |                |             |              | 219,318    |      |  |  | 79.96 | % |  |  | 79.96 | %
|Foundry Square IV(d)                                    |  |          | San Francisco, CA |                |             |              |           |      |  |  |      |   |  |  | 40    | %
|161 North Clark(e)                                      |  |          | Chicago, IL       |                |             |              | 1,010,520  |      |  |  | 25    | % |  |  |      |  
|Prominence in Buckhead(e)                               |  |          | Atlanta, GA       |                |             |              | 424,309    |      |  |  | 25    | % |  |  |      |  
|World Trade Center East(e)                              |  |          | Seattle, WA       |                |             |              | 186,912    |      |  |  | 25    | % |  |  |      |  
|Treat Towers(e)                                         |  |          | Walnut Creek, CA  |                |             |              | 367,313    |      |  |  | 25    | % |  |  |      |  
|Parkshore Plaza I(e)                                    |  |          | Folsom, CA        |                |             |              | 114,356    |      |  |  | 25    | % |  |  |      |  
|Parkshore Plaza II(e)                                   |  |          | Folsom, CA        |                |             |              | 155,497    |      |  |  | 25    | % |  |  |      |  
|Bridge Pointe Corporate Center I & II(e)                |  |          | San Diego, CA     |                |             |              | 372,653    |      |  |  | 25    | % |  |  |      |  
|1111 19th Street(e)                                     |  |          | Washington, DC    |                |             |              | 252,014    |      |  |  | 20    | % |  |  |      |  
|1620 L Street(e)                                        |  |          | Washington, DC    |                |             |              | 156,272    |      |  |  | 20    | % |  |  |      |  
|1333 H Street(e)                                        |  |          | Washington, DC    |                |             |              | 244,585    |      |  |  | 20    | % |  |  |      |  
|                                                        |  |          |                   |                |             |              |            |      |  |  |       |  
|                                                        |  |          | Total             |                |             |              | 15,261,528 |      |  |  |       |   |  |  |       |  
|                                                        |  |          |                   |                |             |              |            |      |  |  |       |  
|Other                                                   |  |          |                   |                |             |              |            |      |  |  |       |   |  |  |       |  
|Wright Runstad Associates Limited Partnership(c)        |  |          |                  |                |             |              |           |      |  |  |      |   |  |  | 30    | %
|Regus Equity Business Centers, LLC                      |  |          |                  |                |             |              |           |      |  |  |      |   |  |  | 50    | %
|HQ Global Workplaces                                    |  |          |                  |                |             |              |           |      |  |  |      |   |  |  | 50    | %



---



|    |                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents our approximate economic ownership
    interest for the periods presented. Net income, cash flow from
    operations and capital transactions are allocated to us and our
    joint venture partners in accordance with the respective
    partnership agreements. Our share of these items is subject to
    change

73



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 9  INVESTMENTS IN
UNCONSOLIDATED JOINT
VENTURES  (continued)




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | based upon, among other things, the operations of
    the Property and the timing and amount of capital transactions.
    Our legal ownership may differ.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(b) | In 2002, in connection with the restructuring of
    the partnership, we contributed approximately $30.9 million
    to the joint venture, which increased our economic ownership of
    Rowes Wharf to 44% from 39%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(c) | In 2003, we acquired the remaining 20% equity
    interest in the Key Center office building from Wright Runstad
    Associates Limited Partnership (WRALP) and
    affiliates in exchange for our 30% equity interest in WRALP and
    a cash payment by us of approximately $7.9 million. In
    connection with the acquisition of Key Center, we assumed and
    subsequently repaid the mortgage debt secured by the Property.
    As a result of the acquisition, the property is now consolidated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(d) | In 2000, we formed a joint venture with Wilson
    Investors-California (WI, of which William Wilson
    III, one of our trustees, is a principal), through its interest
    in Wilson/ Equity Office (W/ EO, of which 49.9% is
    owned by us and 50.1% is owned by WI), and an unaffiliated party
    to develop, construct, lease and manage Foundry Square IV, a
    225,490 square foot office building located in San Francisco,
    California. Through the sale of the office building in July
    2003, we disposed of our 40% indirect interest, which includes a
    10% indirect interest through W/ EO and WI disposed of its 10%
    indirect interest through W/ EO to an unaffiliated party. Our
    share of the gain on the sale of the property was approximately
    $7.1 million and is included in income from investments in
    unconsolidated joint ventures. Our share of the gross proceeds
    from the sale was approximately $56.6 million, which
    includes the repayment of a $44.5 million construction
    loan. WIs share of the proceeds was approximately
    $17.1 million.
|   
|(e) | In December 2003, we sold partial interests in
    these office properties and no longer consolidate their
    operations. See Note 6  Sales of Real Estate for more
    information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Combined summarized financial information for
these unconsolidated joint ventures is as follows:

|                                                                                                                                                                 |                                              |                                                              |           |           |           |   |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------------ | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                                                                                                                 |                                              |                                                             
|                                                                                                                                                                 |                                              | December 31,                                                 |          
|                                                                                                                                                                 |                                              |                                                              |          
|                                                                                                                                                                 |                                              | 2003                                                         |           |           | 2002      |  
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|                                                                                                                                                                 |                                              |                                                             
|                                                                                                                                                                 |                                              | (Dollars in thousands)                                       |          
|Balance Sheets:                                                                                                                                                  |                                              |                                                              |           |           |           |   |           |          
|                                                                                                                                                                 | Real estate, net of accumulated depreciation |                                                              | $         | 3,363,990 |           |   | $         | 2,757,699 |          
|                                                                                                                                                                 | Other assets                                 |                                                              |           | 220,837   |           |   |           | 207,740   |          
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|                                                                                                                                                                 |                                              | Total Assets                                                 |           | $         | 3,584,827 |   |           | $         | 2,965,439 | 
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|                                                                                                                                                                 | Mortgage debt                                |                                                              | $         | 1,308,782 |           |   | $         | 1,312,404 |          
|                                                                                                                                                                 | Other liabilities                            |                                                              |           | 127,242   |           |   |           | 112,968   |          
|                                                                                                                                                                 | Partners and shareholders equity           |                                                              |           | 2,148,803 |           |   |           | 1,540,067 |          
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|                                                                                                                                                                 |                                              | Total Liabilities and Partners and
    Shareholders Equity |           | $         | 3,584,827 |   |           | $         | 2,965,439 | 
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|Our share of equity                                                                                                                                              |                                              | $                                                            | 1,040,373 |           |           | $ | 966,773   |          
|Net excess of cost of investments over the net
    book value of underlying net assets, net of accumulated
    depreciation of $24,456 and $20,704, respectively |                                              |                                                              | 86,859    |           |           |   | 121,042   |          
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|Carrying value of investments in unconsolidated
    joint ventures                                                                                               |                                              | $                                                            | 1,127,232 |           |           | $ | 1,087,815 |          
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  
|Our share of unconsolidated non-recourse mortgage
    debt                                                                                                       |                                              | $                                                            | 797,268   | (a)       |           | $ | 818,975   |          
|                                                                                                                                                                 |                                              |                                                              |           |           |           |  

74



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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 9  INVESTMENTS IN
UNCONSOLIDATED JOINT
VENTURES  (continued)




|    |                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Our 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, 2003 is as follows:

|           |       |                      |         |         | 
|---------- | ----- | -------------------- | ------- | ------- | 
|Year       |       | Dollars in thousands |        
|           |       |                      |        
|2004       |       | $                    | 117,153 |        
|2005       |       |                      | 466,505 |        
|2006       |       |                      | 52,283  |        
|2007       |       |                      | 2,622   |        
|2008       |       |                      | 16,989  |        
|Thereafter |       |                      | 141,716 |        
|           |       |                      |        
|           | Total |                      | $       | 797,268 | 
|           |       |                      |        

|                          |                                                                                                             |                                             |                |         |         |         |   |         |         |         |   |         |         |         | 
|------------------------- | ----------------------------------------------------------------------------------------------------------- | ------------------------------------------- | -------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                          |                                                                                                             |                                            
|                          |                                                                                                             | For the years ended December 31,            |               
|                          |                                                                                                             |                                             |               
|                          |                                                                                                             | 2003                                        |                |         | 2002    |         |   | 2001    |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          |                                                                                                             |                                            
|                          |                                                                                                             | (Dollars in thousands)                      |               
|Statements of Operations: |                                                                                                             |                                             |                |         |         |         |   |         |         |         |   |        
|                          | Revenues                                                                                                    |                                             | $              | 472,124 |         |         | $ | 561,482 |         |         | $ | 509,238 |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          | Expenses:                                                                                                   |                                             |                |         |         |         |   |         |         |         |   |         |        
|                          |                                                                                                             | Interest expense and loan cost amortization |                |         | 71,618  |         |   |         | 77,020  |         |   |         | 95,389  |        
|                          |                                                                                                             | Depreciation and amortization               |                |         | 95,867  |         |   |         | 83,656  |         |   |         | 86,270  |        
|                          |                                                                                                             | Operating expenses                          |                |         | 180,087 |         |   |         | 196,936 |         |   |         | 212,202 |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          |                                                                                                             |                                             | Total expenses |         |         | 347,572 |   |         |         | 357,612 |   |         |         | 393,861 | 
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          | Net income before gain on sale of real estate and
    cumulative effect of a change in accounting principle |                                             |                | 124,552 |         |         |   | 203,870 |         |         |   | 115,377 |        
|                          | Gain on sale of real estate                                                                                 |                                             |                | 43,255  |         |         |   | 3,703   |         |         |   |        |        
|                          | Cumulative effect of a change in accounting
    principle                                                   |                                             |                |        |         |         |   |        |         |         |   | (2,279  | )      
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          | Net income                                                                                                  |                                             | $              | 167,807 |         |         | $ | 207,573 |         |         | $ | 113,098 |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|Our share of:             |                                                                                                             |                                             |                |         |         |         |   |         |         |         |   |        
|                          | Net income                                                                                                  |                                             | $              | 79,882  |         |         | $ | 106,852 |         |         | $ | 69,203  |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          | Interest expense and loan cost amortization                                                                 |                                             | $              | 50,059  |         |         | $ | 53,248  |         |         | $ | 63,105  |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          | Depreciation and amortization (real estate
    related)                                                     |                                             | $              | 53,208  |         |         | $ | 48,865  |         |         | $ | 51,021  |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        
|                          | Gain on sale of real estate                                                                                 |                                             | $              | 7,063   |         |         | $ | 429     |         |         | $ |        |        
|                          |                                                                                                             |                                             |                |         |         |         |   |         |        

NOTE 10  MORTGAGE
DEBT

We had outstanding fixed interest rate mortgage
debt of approximately $2.3 billion and $2.5 billion as
of December 31, 2003 and 2002, respectively and outstanding
variable interest rate mortgage debt of approximately
$36.0 million as of December 31, 2003 and 2002.
Payments are generally due in monthly installments of principal
and interest or interest only. As of December 31, 2003 and
2002, the effective interest rates on the fixed interest rate
mortgage debt ranged from 5.81% to 8.63%, and the weighted
average effective interest rate was approximately 7.72% and
7.70%, respectively. As of December 31, 2003 and 2002, the
weighted average variable effective interest rate was
approximately 1.72% and 1.98%, respectively. The historical
cost, net of accumulated depreciation, of encumbered properties
at December 31, 2003 and 2002 was approximately $4.9

75



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 10  MORTGAGE
DEBT  (continued)

billion and $5.2 billion, respectively.
During the years ended December 31, 2003 and 2002, the
following transactions occurred:

|                             |                                                                                                     |                        |           |          |      |   |           |          |  
|---------------------------- | --------------------------------------------------------------------------------------------------- | ---------------------- | --------- | -------- | ---- | - | --------- | -------- | -
|                             |                                                                                                     |                       
|                             |                                                                                                     | For the years ended    |          
|                             |                                                                                                     | December 31,           |          
|                             |                                                                                                     |                        |          
|                             |                                                                                                     | 2003                   |           |          | 2002 |  
|                             |                                                                                                     |                        |           |          |      |  
|                             |                                                                                                     |                       
|                             |                                                                                                     | (Dollars in thousands) |          
|Balance at beginning of year |                                                                                                     | $                      | 2,520,474 |          |      | $ | 2,662,099 |         
|                             | Repayments and scheduled principal amortization                                                     |                        |           | (233,809 | )    |   |           | (156,052 | )
|                             | Proceeds from financings                                                                            |                        |           |         |      |   |           | 14,427   |  
|                             | Assumed through property acquisitions (See Note 9
    Investments in Unconsolidated Joint Ventures) |                        |           | 59,166   |      |   |           |         |  
|                             | Repaid upon sale of property                                                                        |                        |           | (16,279  | )    |   |           |         |  
|                             |                                                                                                     |                        |           |          |      |  
|Balance at end of year(a)    |                                                                                                     | $                      | 2,329,552 |          |      | $ | 2,520,474 |         
|                             |                                                                                                     |                        |           |          |      |  



---



|    |                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------
|(a) | Excludes net discount on mortgage debt of
    approximately $13,663 and $12,584 as of December 31, 2003
    and 2002, respectively.

Repayment Schedule

Scheduled payments of principal for the next five
years and thereafter through maturity as of December 31,
2003 are as follows:

|           |  |                      |           | 
|---------- |  | -------------------- | --------- | 
|Year       |  | Dollars in thousands |          
|           |  |                      |          
|2004       |  | $                    | 375,761   | 
|2005       |  |                      | 568,787   | 
|2006       |  |                      | 343,878   | 
|2007       |  |                      | 237,024   | 
|2008       |  |                      | 132,061   | 
|Thereafter |  |                      | 672,041   | 
|           |  |                      |          
|Total      |  | $                    | 2,329,552 | 
|           |  |                      |          

NOTE 11  LINES OF
CREDIT

Our previous $1.0 billion line of credit
matured in May 2003 at which time we obtained a new
$1.0 billion line of credit. Our $1.0 billion line of
credit bears interest at LIBOR plus 60 basis points and
matures in May 2006. We also pay an annual facility fee of
$2.0 million payable quarterly. In addition, a competitive
bid option, whereby the lenders participating in the credit
facility may bid on the interest to be charged which may result
in an interest rate lower than LIBOR plus 60 basis points,
is available for up to $350 million of the borrowings under
the credit facility. As of December 31, 2003,
$334 million was outstanding.

In December 2003 we obtained a $1.0 billion
364-day credit facility. This credit facility bears interest at
LIBOR plus 65 basis points and matures in
December 2004. We also pay an annual facility fee of
$1.5 million payable quarterly. In addition, a competitive
bid option, whereby the lenders participating in the credit
facility bid on the interest to be charged which may result in
an interest rate lower than LIBOR plus 65 basis points, is
available for up to $350 million of the borrowings under
the credit facility.

Agreements or instruments relating to the lines
of credit contain certain financial restrictions and
requirements described below. As of December 31, 2003, we
were in compliance with each of these financial restrictions and
requirements.



| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | total liabilities to total asset value may not
    exceed 0.55:1 at any time;

76



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 11  LINES OF
CREDIT  (continued)




| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 $10.7 billion and 70% of all net offering
    proceeds received by us or EOP Partnership after
    December 31, 2002;                                     
|
| |  | 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.

77



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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 12  UNSECURED
NOTES

During 2003, we repaid $700 million of
unsecured notes upon their maturity and issued $500 million
5.88% unsecured notes due January 15, 2013. The table
below summarizes the unsecured notes outstanding as of
December 31, 2003:

|              |  |                        |      |           |      |  |      |           |  |   |           |     |  |  |          | 
|------------- |  | ---------------------- | ---- | --------- | ---- |  | ---- | --------- |  | - | --------- | --- |  |  | -------- | 
|              |  |                        |      | Effective |      |  |      |           | 
|              |  | Coupon                 |      |           | Rate |  |      | Principal |  |   | Maturity  |    
|Original Term |  | Rate                   |      |           | (a)  |  |      | Balance   |  |   | Date      |    
|              |  |                        |      |           |      |  |      |           |  |   |           |    
|              |  |                       
|              |  | (Dollars in thousands) |     
|5 Years       |  |                        | 6.50 | %         |      |  | 4.59 | %         |  | $ | 300,000   | (b) |  |  | 01/15/04 | 
|9 Years       |  |                        | 6.90 | %         |      |  | 6.27 | %         |  |   | 100,000   | (b) |  |  | 01/15/04 | 
|5 Years       |  |                        | 6.80 | %         |      |  | 6.10 | %         |  |   | 200,000   | (b) |  |  | 05/01/04 | 
|6 Years       |  |                        | 6.50 | %         |      |  | 5.31 | %         |  |   | 250,000   | (b) |  |  | 06/15/04 | 
|7 Years       |  |                        | 7.24 | %         |      |  | 7.26 | %         |  |   | 30,000    | (b) |  |  | 09/01/04 | 
|8 Years       |  |                        | 6.88 | %         |      |  | 6.40 | %         |  |   | 125,000   |     |  |  | 02/01/05 | 
|7 Years       |  |                        | 6.63 | %         |      |  | 4.99 | %         |  |   | 400,000   |     |  |  | 02/15/05 | 
|7 Years       |  |                        | 8.00 | %         |      |  | 6.49 | %         |  |   | 100,000   |     |  |  | 07/19/05 | 
|8 Years       |  |                        | 7.36 | %         |      |  | 7.69 | %         |  |   | 50,000    |     |  |  | 09/01/05 | 
|6 Years       |  |                        | 8.38 | %         |      |  | 7.65 | %         |  |   | 500,000   |     |  |  | 03/15/06 | 
|9 Years       |  |                        | 7.44 | %         |      |  | 7.74 | %         |  |   | 50,000    |     |  |  | 09/01/06 | 
|10 Years      |  |                        | 7.13 | %         |      |  | 6.74 | %         |  |   | 100,000   |     |  |  | 12/01/06 | 
|9 Years       |  |                        | 7.00 | %         |      |  | 6.80 | %         |  |   | 1,500     |     |  |  | 02/02/07 | 
|9 Years       |  |                        | 6.88 | %         |      |  | 6.83 | %         |  |   | 25,000    |     |  |  | 04/30/07 | 
|9 Years       |  |                        | 6.76 | %         |      |  | 6.76 | %         |  |   | 300,000   |     |  |  | 06/15/07 | 
|10 Years      |  |                        | 7.41 | %         |      |  | 7.70 | %         |  |   | 50,000    |     |  |  | 09/01/07 | 
|7 Years       |  |                        | 7.75 | %         |      |  | 7.91 | %         |  |   | 600,000   |     |  |  | 11/15/07 | 
|10 Years      |  |                        | 6.75 | %         |      |  | 6.97 | %         |  |   | 150,000   |     |  |  | 01/15/08 | 
|10 Years      |  |                        | 6.75 | %         |      |  | 7.01 | %         |  |   | 300,000   |     |  |  | 02/15/08 | 
|8 Years(c)    |  |                        | 7.25 | %         |      |  | 7.64 | %         |  |   | 325,000   |     |  |  | 11/15/08 | 
|10 Years      |  |                        | 6.80 | %         |      |  | 6.94 | %         |  |   | 500,000   |     |  |  | 01/15/09 | 
|10 Years      |  |                        | 7.25 | %         |      |  | 7.14 | %         |  |   | 200,000   |     |  |  | 05/01/09 | 
|11 Years      |  |                        | 7.13 | %         |      |  | 6.97 | %         |  |   | 150,000   |     |  |  | 07/01/09 | 
|10 Years      |  |                        | 8.10 | %         |      |  | 8.22 | %         |  |   | 360,000   |     |  |  | 08/01/10 | 
|10 Years      |  |                        | 7.65 | %         |      |  | 7.20 | %         |  |   | 200,000   |     |  |  | 12/15/10 | 
|10 Years      |  |                        | 7.00 | %         |      |  | 6.83 | %         |  |   | 1,100,000 |     |  |  | 07/15/11 | 
|10 Years      |  |                        | 6.75 | %         |      |  | 7.02 | %         |  |   | 500,000   |     |  |  | 02/15/12 | 
|10 Years      |  |                        | 5.88 | %         |      |  | 5.98 | %         |  |   | 500,000   |     |  |  | 01/15/13 | 
|20 Years      |  |                        | 7.88 | %         |      |  | 8.08 | %         |  |   | 25,000    |     |  |  | 12/01/16 | 
|20 Years      |  |                        | 7.35 | %         |      |  | 8.08 | %         |  |   | 200,000   |     |  |  | 12/01/17 | 
|20 Years      |  |                        | 7.25 | %         |      |  | 7.54 | %         |  |   | 250,000   |     |  |  | 02/15/18 | 
|30 Years      |  |                        | 7.50 | %         |      |  | 8.24 | %         |  |   | 150,000   |     |  |  | 10/01/27 | 
|30 Years      |  |                        | 7.25 | %         |      |  | 7.31 | %         |  |   | 225,000   |     |  |  | 06/15/28 | 

78



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 12  UNSECURED
NOTES  (continued)


|              |                            |                        |      |           |      |  |      |           |   |  |          |           |           |  |          |  |  | 
|------------- | -------------------------- | ---------------------- | ---- | --------- | ---- |  | ---- | --------- | - |  | -------- | --------- | --------- |  | -------- |  |  | 
|              |                            |                        |      | Effective |      |  |      |           |  
|              |                            | Coupon                 |      |           | Rate |  |      | Principal |   |  | Maturity |          
|Original Term |                            | Rate                   |      |           | (a)  |  |      | Balance   |   |  | Date     |          
|              |                            |                        |      |           |      |  |      |           |   |  |          |          
|              |                            |                       
|              |                            | (Dollars in thousands) |     
|30 Years      |                            |                        | 7.50 | %         |      |  | 7.55 | %         |   |  | 200,000  |           |           |  | 04/19/29 | 
|30 Years      |                            |                        | 7.88 | %         |      |  | 7.94 | %         |   |  | 300,000  |           |           |  | 07/15/31 | 
|              |                            |                        |      |           |      |  |      |           |   |  |          |          
|              | Weighted Average/ Subtotal |                        |      | 7.15      | %    |  |      | 6.95      | % |  |          | 8,816,500 |           |  |          |  | 
|              |                            |                        |      |           |      |  |      |           |   |  |          |          
|Net premium   |                            |                        |      |           |      |  |      |           |   |  | 12,412   |           |           |  |          | 
|              |                            |                        |      |           |      |  |      |           |   |  |          |          
|              |                            | Total                  |      |           |      |  |      |           |   |  |          | $         | 8,828,912 |  |          |  |  | 
|              |                            |                        |      |           |      |  |      |           |   |  |          |          



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes the effect of settled interest rate
    protection and interest rate swap agreements, offering and
    transaction costs and premiums and discounts on certain
    unsecured notes.                                                                                                                                                                                                                                                                                                                                                 
|   
|(b) | Through 2004, $880 million of unsecured
    notes will mature and become payable. The $400 million of
    unsecured notes that matured in January 2004 were repaid with
    our line of credit. We anticipate repaying the remaining notes
    with our lines of credit, proceeds from additional debt and/or
    equity offerings or proceeds from property dispositions.                                                                                                                                                                   
|   
|(c) | The notes are exchangeable into Common Shares at
    an exchange rate of $34.00 per share. If the closing price of a
    Common Share at the time a holder exercises their 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.

Restrictions and Covenants under Unsecured
Indebtedness

Agreements or instruments relating to our
unsecured notes contain certain financial restrictions and
requirements described below. As of December 31, 2003, we
were 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 our performance under each covenant as of
December 31, 2003:

|                                                                                                             |  |                    |      |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ---- | -
|Covenants(a) (in each case as defined in the respective indenture)                                           |  | Actual Performance |     
|                                                                                                             |  |                    |     
|Debt to Adjusted Total Assets may not be greater
    than 60%                                                |  |                    | 47   | %
|Secured Debt to Adjusted Total Assets may not be
    greater than 40%                                        |  |                    | 12   | %
|Consolidated Income Available for Debt Service to
    Annual Debt Service charge may not be less than 1.50:1 |  |                    | 2.45 |  
|Total Unencumbered Assets to Unsecured Debt may
    not be less than 150%(b)                                 |  |                    | 219  | %



---



|    |                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------
|(a) | The calculations of our actual performance under
    each covenant are included as Appendix A to this
    Form 10-K.          
|   
|(b) | The outstanding unsecured notes assumed in the
    merger with Spieker Partnership are subject to a minimum ratio
    of 165%.

79



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 13  DERIVATIVE FINANCIAL
INSTRUMENTS

Forward-Starting Interest Rate Swaps

As of December 31, 2003 and 2002, we had
$1.3 billion and $1.1 billion of forward-starting
interest rate swaps outstanding, respectively. The outstanding
swaps will hedge the future interest payments of debt
anticipated to be issued in 2004. The market value of the swaps
at December 31, 2003 represented a net liability to us of
approximately $10.4 million (approximately
$11.1 million is recorded in other assets and
$21.5 million is recorded in other liabilities). The market
value at December 31, 2002 was $18.6 million (all of
which is included in other liabilities). The net market value is
also included in accumulated other comprehensive income. No
hedge ineffectiveness has been recorded in earnings as these
swaps were perfectly effective. As of March 5, 2004, the
market value of these forward-starting interest rate swaps
represented a net liability to us of approximately
$64.9 million. The market value of the forward-starting
interest rate swaps is dependent upon existing market interest
rates and swap spreads, which change over time.

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. In
accordance with SFAS No. 133, if the swaps are deemed to be
effective hedges upon settlement, any monies paid or received
will be amortized to interest expense over the term of the
respective hedged interest payments. If the swaps are deemed to
be only partially effective hedges upon settlement, a portion of
the monies paid or received will be immediately recognized in
earnings and the remainder will be amortized to interest expense
over the term of the respective hedged interest payments. If the
swaps are deemed to be completely ineffective hedges upon
settlement, any monies paid or received will be immediately
recognized in earnings.

Interest Rate Swaps

During 2002 and 2001, we entered into and settled
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 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, 2002, all of the interest rate swaps
had been terminated.

NOTE 14  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. We consolidate these properties because we own at
least 50% of the respective ownership entities and control major
decisions. All of the Properties are Office Properties except
for Fremont Bayside, which is an Industrial Property. Our legal
ownership and economic interest in each Property is
substantially the same. We have additional Properties that are
partially owned by unaffiliated parties where our approximate
economic ownership is 100%.

80



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 14  MINORITY INTERESTS IN
PARTIALLY OWNED
PROPERTIES  (Continued)


The amounts shown below approximate our economic
ownership interest for the periods presented. Net income, cash
flow from operations and capital transactions are allocated to
us and our minority interest partners in accordance with the
respective partnership agreements. Our share of these items is
subject to change based upon, among other things, the operations
of the Property and the timing and amount of capital
transactions.

|                                                         |  |          |                   |                |             |                |           |      |  |  |       |   |  |  |       |  
|-------------------------------------------------------- |  | -------- | ----------------- | -------------- | ----------- | -------------- | --------- | ---- |  |  | ----- | - |  |  | ----- | -
|                                                         |  |          |                   |                |             |               
|                                                         |  |          |                   |                |             | Economic       |          
|                                                         |  |          |                   |                |             | Interest as of |          
|                                                         |  |          |                   |                |             | December 31,   |          
|                                                         |  |          |                   | Total Rentable |             |                |           |     
|Property                                                 |  | Location |                   |                | Square Feet |                |           | 2003 |  |  | 2002  |  
|                                                         |  |          |                   |                |             |                |           |      |  |  |       |  
|Joint Ventures with Contractual Termination
    Dates    |  |          |                   |                |             |                |           |      |  |  |       |   |  |  |       |  
|The Plaza at La Jolla Village                            |  |          | San Diego, CA     |                |             |                | 635,419   |      |  |  | 66.7  | % |  |  | 66.7  | %
|222 Berkley Street                                       |  |          | Boston, MA        |                |             |                | 519,608   |      |  |  | 91.5  | % |  |  | 91.5  | %
|500 Boylston Street                                      |  |          | Boston, MA        |                |             |                | 706,864   |      |  |  | 91.5  | % |  |  | 91.5  | %
|Washington Mutual Tower                                  |  |          | Seattle, WA       |                |             |                | 1,207,823 |      |  |  | 75.0  | % |  |  | 75.0  | %
|Wells Fargo Center                                       |  |          | Minneapolis, MN   |                |             |                | 1,117,439 |      |  |  | 75.0  | % |  |  | 75.0  | %
|Foundry Square II                                        |  |          | San Francisco, CA |                |             |                | 505,480   |      |  |  | 87.5  | % |  |  | 87.5  | %
|Ferry Building (a)                                       |  |          | San Francisco, CA |                |             |                | 243,812   |      |  |  | 100.0 | % |  |  | 100.0 | %
|2951 28th Street                                         |  |          | Santa Monica, CA  |                |             |                | 85,000    |      |  |  | 98.0  | % |  |  | 98.0  | %
|Fremont Bayside                                          |  |          | Oakland, CA       |                |             |                | 103,920   |      |  |  | 90.0  | % |  |  | 90.0  | %
|                                                         |  |          |                   |                |             |                |           |      |  |  |       |  
|                                                         |  |          |                   |                |             |                | 5,125,365 |      |  |  |       |   |  |  |       |  
|                                                         |  |          |                   |                |             |                |           |      |  |  |       |  
|Joint Ventures without Contractual Termination
    Dates |  |          |                   |                |             |                |           |      |  |  |       |   |  |  |       |  
|Waters Edge                                             |  |          | Los Angeles, CA   |                |             |                | 243,433   |      |  |  | 87.5  | % |  |  | 87.5  | %
|Park Avenue Tower                                        |  |          | New York, NY      |                |             |                | 568,060   |      |  |  | 94.0  | % |  |  | 94.0  | %
|850 Third Avenue                                         |  |          | New York, NY      |                |             |                | 568,867   |      |  |  | 94.0  | % |  |  | 94.0  | %
|                                                         |  |          |                   |                |             |                |           |      |  |  |       |  
|                                                         |  |          |                   |                |             |                | 1,380,360 |      |  |  |       |   |  |  |       |  
|                                                         |  |          |                   |                |             |                |           |      |  |  |       |  
|Total                                                    |  |          |                   |                |             |                | 6,505,725 |      |  |  |       |   |  |  |       |  
|                                                         |  |          |                   |                |             |                |           |      |  |  |       |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | A joint venture between us 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 redeveloped 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 has contributed
    approximately $21.3 million in equity and has committed to
    contribute an additional $3.5 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

81



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 14  MINORITY INTERESTS IN
PARTIALLY OWNED
PROPERTIES  (Continued)




| |                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

NOTE 15  SHAREHOLDERS
EQUITY AND MANDATORILY REDEEMABLE PREFERRED SHARES

Common Shares

The following table presents the changes in the
issued and outstanding Common Shares since January 1, 2002
(excluding 49,032,230 Units and 50,206,731 Units outstanding at
December 31, 2003 and 2002, respectively, which are
exchangeable for Common Shares on a one-for-one basis, or the
cash equivalent thereof, subject to certain restrictions):

|                            |                                                                     |                     |             |             |      |  |             |            |  
|--------------------------- | ------------------------------------------------------------------- | ------------------- | ----------- | ----------- | ---- |  | ----------- | ---------- | -
|                            |                                                                     |                    
|                            |                                                                     | For the years ended |            
|                            |                                                                     | December 31,        |            
|                            |                                                                     |                     |            
|                            |                                                                     | 2003                |             |             | 2002 | 
|                            |                                                                     |                     |             |             |      | 
|Outstanding at January 1,   |                                                                     |                     | 411,200,998 |             |      |  | 414,548,673 |           
|                            | Repurchases/retired(a)                                              |                     |             | (14,236,400 | )    |  |             | (7,920,854 | )
|                            | Share options exercised                                             |                     |             | 1,661,333   |      |  |             | 1,739,863  |  
|                            | Units redeemed for Common Shares                                    |                     |             | 934,261     |      |  |             | 2,555,646  |  
|                            | Restricted shares and share awards issued, net of
    cancellations |                     |             | 900,196     |      |  |             | 214,291    |  
|                            | Common Shares issued through the Dividend
    Reinvestment Program  |                     |             |            |      |  |             | 63,379     |  
|                            |                                                                     |                     |             |             |      | 
|Outstanding at December 31, |                                                                     |                     | 400,460,388 |             |      |  | 411,200,998 |           
|                            |                                                                     |                     |             |             |      | 



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In July 2002, we 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 and to $600 million in
    March 2003, 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 2003 and
    2002, 14,236,400 and 7,901,900 Common Shares were repurchased at
    an average price of $25.53 and $24.92 for approximately
    $363.5 million and $196.9 million in the aggregate,
    respectively.

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, 2003, 2002
and 2001, the per share distributions were $2.00, $2.00 and
$1.90, respectively.

Mandatorily Redeemable Preferred
Shares

The Series B Convertible, Cumulative
Redeemable Preferred Shares (PIERS) are convertible
at any time, at the option of the holder, into Common Shares at
a conversion price of $35.70 per Common Share (equivalent to a
conversion rate of 1.40056 common shares for each PIERS). The
PIERS are subject to mandatory redemption on February 15,
2008 at a price of $50.00 per share, plus accumulated and unpaid
distributions to the redemption date.

82



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 15  SHAREHOLDERS
EQUITY AND MANDATORILY REDEEMABLE PREFERRED
SHARES  (continued)

Preferred Shares

Listed below is a summary of our outstanding
preferred shares. We are the original issuer of our remaining
outstanding series of preferred shares (Series C and G) and
have recorded the deferred issuance costs associated with these
preferred shares to shareholders equity. Upon any
redemption of these preferred shares, we will recognize the
deferred issuance costs as an additional preferred distribution
in the determination of net income available for common shares
in accordance with EITF Topic D-42. The preferred
shareholders are entitled to receive, when and as authorized by
our Board of Trustees, cumulative preferential cash
distributions. We may redeem the preferred shares at certain
dates in whole or in part at a cash redemption price equal to
the liquidation preference plus all accrued dividends to the
redemption date:

|       |  |              |       |   |                |                 |       |             |  |   |                 |  |  |  |                       | 
|------ |  | ------------ | ----- | - | -------------- | --------------- | ----- | ----------- |  | - | --------------- |  |  |  | --------------------- | 
|       |  |              |       |   |                | Current Balance |       |             | 
|       |  | Annual       |       |   | Liquidation    |                 |       | Outstanding |  |   |                
|       |  | Distribution |       |   | Preference Per |                 |       | (Dollars in |  |   | Our Voluntary   | 
|Series |  | Rate         |       |   | Share          |                 |       | thousands)  |  |   | Redemption Date | 
|       |  |              |       |   |                |                 |       |             |  |   |                 | 
|C(a)   |  |              | 8.625 | % |                | $               | 25.00 |             |  | $ | 114,073         |  |  |  | on or after 12/8/2003 | 
|G(b)   |  |              | 7.75  | % |                | $               | 25.00 |             |  | $ | 212,500         |  |  |  | on or after 7/29/2007 | 

The annual per share distributions were as
follows:

|            |  |                                  |           |  |      |   |           |      |  |   |           | 
|----------- |  | -------------------------------- | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|            |  |                                 
|            |  | For the years ended December 31, |          
|            |  |                                  |          
|            |  | 2003                             |           |  | 2002 |   |           | 2001 | 
|            |  |                                  |           |  |      |   |           |      | 
|Series A(b) |  |                                  |          |  |      | $ | 1.3844167 |      |  | $ | 2.245     | 
|Series B    |  | $                                | 2.625     |  |      | $ | 2.625     |      |  | $ | 2.625     | 
|Series C(a) |  | $                                | 2.15625   |  |      | $ | 2.15625   |      |  | $ | 2.15625   | 
|Series D(c) |  |                                  |          |  |      |   |          |      |  | $ | 0.8728125 | 
|Series E(d) |  | $                                | 1.3015625 |  |      | $ | 1.96875   |      |  | $ | 0.984375  | 
|Series F(e) |  | $                                | 1.00      |  |      | $ | 2.00      |      |  | $ | 1.00      | 
|Series G(b) |  | $                                | 1.9375    |  |      | $ | 0.7427083 |      |  |   |          | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In January 2004, we redeemed our Series C
    Preferred Shares. See Note 26   Subsequent
    Events.                                                                                                                                                                                                                                                                                                                                            
|   
|(b) | In July 2002, we redeemed our 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, with the
    net proceeds from the issuance of our 8,500,000 7.75%
    Series G Cumulative Redeemable Preferred Shares.                                                                                                 
|   
|(c) | In November 2001, we redeemed all of our
    4,250,000 outstanding 9.45% Cumulative Redeemable Series D
    Preferred Shares, which were issued in connection with the
    Spieker Merger, 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.
|   
|(d) | On June 27, 2003, we redeemed our 6,000,000
    outstanding 7.875% Series E Cumulative Redeemable Preferred
    Shares, which were issued in connection with the Spieker Merger,
    at a redemption price of $25.00 per share for an aggregate
    redemption price of approximately $151.9 million, which
    includes approximately $1.9 million of accrued and unpaid
    distributions.                                                     
|   
|(e) | On June 30, 2003, we redeemed our 4,000,000
    outstanding 8.0% Series F Cumulative Redeemable Preferred
    Shares, which were issued in connection with the Spieker Merger,
    at a redemption price of $25.00 per share for an aggregate
    redemption price of $100.0 million.                                                                                                                                                            

83



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 15  SHAREHOLDERS
EQUITY AND MANDATORILY REDEEMABLE PREFERRED
SHARES  (continued)

Put Option Settlement

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, we paid approximately
$1.4 million in settlement of this put option. 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.

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, 2003 were as
follows:

|           |  |                      |            | 
|---------- |  | -------------------- | ---------- | 
|Year       |  | Dollars in thousands |           
|           |  |                      |           
|2004       |  | $                    | 2,352,633  | 
|2005       |  |                      | 2,120,951  | 
|2006       |  |                      | 1,813,667  | 
|2007       |  |                      | 1,520,989  | 
|2008       |  |                      | 1,244,579  | 
|Thereafter |  |                      | 3,540,284  | 
|           |  |                      |           
|Total      |  | $                    | 12,593,103 | 
|           |  |                      |           

We are 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 our investments 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. Any incremental changes in the
rental payments as a result of these adjustments are not
included in the table below because the amount of the change is
not determinable. Future minimum lease obligations under these
noncancelable leases as of December 31, 2003 were as
follows:

|           |  |                      |           | 
|---------- |  | -------------------- | --------- | 
|Year       |  | Dollars in thousands |          
|           |  |                      |          
|2004       |  | $                    | 16,583    | 
|2005       |  |                      | 16,649    | 
|2006       |  |                      | 16,748    | 
|2007       |  |                      | 16,646    | 
|2008       |  |                      | 16,660    | 
|Thereafter |  |                      | 1,177,275 | 
|           |  |                      |          
|Total      |  | $                    | 1,260,561 | 
|           |  |                      |          

Rental expense from continuing operations for the
years ended December 31, 2003, 2002 and 2001 was
approximately $24.2 million, $24.2 million and $19.7
million, respectively. These rental expense amounts include
ground rent and rent for our corporate offices.

84



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


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.

NOTE 19  EARNINGS PER
SHARE

The following table sets forth the computation of
basic and diluted earnings per share:

|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |            |   |             |            |            | 
|------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------ | --------------------------------------------- | ----------- | ---------- | ---------- | - | ----------- | ---------- | ---------- | - | ----------- | ---------- | ---------- | 
|                                                                                                                                     |                                                  |                                              
|                                                                                                                                     |                                                  | For the years ended December 31,              |            
|                                                                                                                                     |                                                  |                                               |            
|                                                                                                                                     |                                                  | 2003                                          |             |            | 2002       |   |             | 2001       |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|                                                                                                                                     |                                                  |                                              
|                                                                                                                                     |                                                  | (Dollars in thousands, except per share data) |            
|Numerator:                                                                                                                           |                                                  |                                               |             |            |            |   |             |            |            |   |             |           
|Income from continuing operations                                                                                                    |                                                  | $                                             | 549,124     |            |            | $ | 670,905     |            |            | $ | 564,578     |           
|Put option settlement                                                                                                                |                                                  |                                               |            |            |            |   |            |            |            |   | 2,655       |           
|Preferred distributions                                                                                                              |                                                  |                                               | (51,872     | )          |            |   | (62,573     | )          |            |   | (57,041     | )         
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Income from continuing operations available to
    common shareholders                                                               |                                                  |                                               | 497,252     |            |            |   | 608,332     |            |            |   | 510,192     |           
|Discontinued operations (including net gain on
    sales of real estate of $61,953, $17,926 and $0, respectively)                    |                                                  |                                               | 105,938     |            |            |   | 99,310      |            |            |   | 55,746      |           
|Extraordinary item                                                                                                                   |                                                  |                                               |            |            |            |   |            |            |            |   | (1,000      | )         
|Cumulative effect of a change in accounting
    principle                                                                            |                                                  |                                               |            |            |            |   |            |            |            |   | (1,142      | )         
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Numerator for basic earnings per
    share  net income available to common shareholders                                             |                                                  |                                               | 603,190     |            |            |   | 707,642     |            |            |   | 563,796     |           
|Net income available to common shareholders
    allocated to minority interests in EOP Partnership                                   |                                                  |                                               | 74,152      |            |            |   | 89,205      |            |            |   | 76,249      |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Numerator for diluted earnings per
    share  net income available to common shareholders                                           |                                                  | $                                             | 677,342     |            |            | $ | 796,847     |            |            | $ | 640,045     |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Denominator:                                                                                                                         |                                                  |                                               |             |            |            |   |             |            |            |   |             |           
|Denominator for basic earnings per
    share  weighted average Common Shares outstanding                                            |                                                  |                                               | 401,016,093 |            |            |   | 414,689,029 |            |            |   | 360,026,097 |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Effect of dilutive potential common shares:                                                                                          |                                                  |                                               |             |            |            |   |             |            |            |   |             |           
|                                                                                                                                     | Redemption of Units for Common Shares            |                                               |             | 49,578,372 |            |   |             | 52,445,745 |            |   |             | 48,893,485 |           
|                                                                                                                                     | Share options, put options and restricted shares |                                               |             | 1,966,888  |            |   |             | 2,003,946  |            |   |             | 3,067,315  |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|                                                                                                                                     |                                                  | Dilutive potential common shares              |             |            | 51,545,260 |   |             |            | 54,449,691 |   |             |            | 51,960,800 | 
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Denominator for diluted earnings per
    share  weighted average Common Shares outstanding and
    dilutive potential common shares |                                                  |                                               | 452,561,353 |            |            |   | 469,138,720 |            |            |   | 411,986,897 |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Earnings per share  basic                                                                                                           |                                                  |                                               |             |            |            |   |             |            |            |   |             |           
|Income from continuing operations available to
    common shareholders, net of minority interests                                    |                                                  | $                                             | 1.27        |            |            | $ | 1.49        |            |            | $ | 1.43        |           
|Discontinued operations, net of minority interests                                                                                   |                                                  |                                               | 0.24        |            |            |   | 0.21        |            |            |   | 0.14        |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           
|Net income available to common shareholders(a)                                                                                       |                                                  | $                                             | 1.50        |            |            | $ | 1.71        |            |            | $ | 1.57        |           
|                                                                                                                                     |                                                  |                                               |             |            |            |   |             |            |           

85



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 19  EARNINGS PER
SHARE  (continued)


|                                                                       |  |                                               |      |  |      |   |      |      |  |   |      | 
|---------------------------------------------------------------------- |  | --------------------------------------------- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|                                                                       |  |                                              
|                                                                       |  | For the years ended December 31,              |     
|                                                                       |  |                                               |     
|                                                                       |  | 2003                                          |      |  | 2002 |   |      | 2001 | 
|                                                                       |  |                                               |      |  |      |   |      |      | 
|                                                                       |  |                                              
|                                                                       |  | (Dollars in thousands, except per share data) |     
|Earnings per share 
    diluted                                       |  |                                               |      |  |      |   |      |      |  |   |      | 
|Income from continuing operations available to
    common shareholders |  | $                                             | 1.26 |  |      | $ | 1.49 |      |  | $ | 1.42 | 
|Discontinued operations                                                |  |                                               | 0.23 |  |      |   | 0.21 |      |  |   | 0.14 | 
|                                                                       |  |                                               |      |  |      |   |      |      | 
|Net income available to common shareholders(a)                         |  | $                                             | 1.50 |  |      | $ | 1.70 |      |  | $ | 1.55 | 
|                                                                       |  |                                               |      |  |      |   |      |      | 



---



|    |                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------
|(a) | Net income available to common shareholders per
    share may not total the sum of the per share components due to
    rounding.

The following securities were not included in the
diluted earnings per share computation because they would have
had an antidilutive effect:

|                                        |       |                  |        |                                  |      |  |            |            |  |  |            |            |  |  |           |            | 
|--------------------------------------- | ----- | ---------------- | ------ | -------------------------------- | ---- |  | ---------- | ---------- |  |  | ---------- | ---------- |  |  | --------- | ---------- | 
|                                        |       |                  |        |                                 
|                                        |       |                  |        | For the years ended December 31, |     
|                                        |       | Weighted Average |        |                                  |      | 
|Antidilutive Securities                 |       | Exercise Price   |        |                                  | 2003 |  |            | 2002       |  |  | 2001       |           
|                                        |       |                  |        |                                  |      |  |            |            |  |  |            |           
|Share options                           |       | $                | 29.220 |                                  |      |  | 13,436,967 |            |  |  |           |            |  |  |          |           
|Share options                           |       | $                | 29.240 |                                  |      |  |           |            |  |  | 13,032,648 |            |  |  |          |           
|Share options                           |       | $                | 30.350 |                                  |      |  |           |            |  |  |           |            |  |  | 4,849,148 |           
|Series B Preferred Shares               |       | $                | 35.700 |                                  |      |  | 8,389,354  |            |  |  | 8,389,354  |            |  |  | 8,389,354 |           
|Warrants (expired on December 17, 2002) |       | $                | 39.375 |                                  |      |  |           |            |  |  | 4,808,219  |            |  |  | 5,000,000 |           
|                                        |       |                  |        |                                  |      |  |            |            |  |  |            |           
|                                        | Total |                  |        |                                  |      |  |            | 21,826,321 |  |  |            | 26,230,221 |  |  |           | 18,238,502 | 
|                                        |       |                  |        |                                  |      |  |            |            |  |  |            |           

For additional disclosures regarding employee
share options and restricted shares, see Note 2 
Summary of Significant Accounting Policies  Share
Based Employee Compensation Plans and Note 23 
Share-Based Employee Compensation Plans.

86



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 20  SEGMENT
INFORMATION

As discussed in Note 1, our primary business
is the ownership and operation of Office Properties. We account
for each Office Property as an individual operating segment and
have aggregated the related operating accounts into a single
operating segment for financial reporting purposes due to the
fact that the individual operating segments have similar
economic characteristics. The net property operating income from
continuing operations generated at the Corporate and
Other segment consist primarily of the Industrial
Properties and stand-alone parking facilities that were sold in
2002 and 2001. 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, interest and dividend income from various investments
and realized gains on sale of certain marketable securities.

|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |          |   |            |           |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------- | ---------- | --------- | ------------------- | - | -------- | ------------ | -------- | - | ---------- | --------- | ---------- | -
|                                                                                                                                                                            |                                                              |                                              
|                                                                                                                                                                            |                                                              | As of or for the year ended December 31, 2003 |           
|                                                                                                                                                                            |                                                              |                                               |           
|                                                                                                                                                                            |                                                              | Office Properties                             |            |           | Corporate and Other |   |          | Consolidated |         
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|                                                                                                                                                                            |                                                              |                                              
|                                                                                                                                                                            |                                                              | (Dollars in thousands)                        |           
|Property operating revenues(a)                                                                                                                                              |                                                              | $                                             | 3,131,792  |           |                     | $ | 47,979   |              |          | $ | 3,179,771  |          
|Property operating expenses(b)                                                                                                                                              |                                                              |                                               | (1,116,062 | )         |                     |   | (10,517  | )            |          |   | (1,126,579 | )        
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|                                                                                                                                                                            | Property net operating income from continuing
    operations |                                               |            | 2,015,730 |                     |   |          | 37,462       |          |   |            | 2,053,192 |           
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|Adjustments to arrive at net income:                                                                                                                                        |                                                              |                                               |            |           |                     |   |          |              |          |   |            |          
|                                                                                                                                                                            | Other revenues                                               |                                               |            | 4,452     |                     |   |          | 33,278       |          |   |            | 37,730    |           
|                                                                                                                                                                            | Interest expense(c)                                          |                                               |            | (176,804  | )                   |   |          | (650,531     | )        |   |            | (827,335  | )         
|                                                                                                                                                                            | Depreciation and amortization                                |                                               |            | (691,412  | )                   |   |          | (24,136      | )        |   |            | (715,548  | )         
|                                                                                                                                                                            | Ground rent                                                  |                                               |            | (20,287   | )                   |   |          |             |          |   |            | (20,287   | )         
|                                                                                                                                                                            | General and administrative                                   |                                               |            | (4,395    | )                   |   |          | (58,084      | )        |   |            | (62,479   | )         
|                                                                                                                                                                            | Impairment                                                   |                                               |            | (7,500    | )                   |   |          |             |          |   |            | (7,500    | )         
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|                                                                                                                                                                            |                                                              | Total                                         |            |           | (895,946            | ) |          |              | (699,473 | ) |            |           | (1,595,419 | )
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|Income before income taxes, allocation to
    minority interests, income from investments in unconsolidated
    joint ventures and net gain on partial sales of real estate |                                                              |                                               | 1,119,784  |           |                     |   | (662,011 | )            |          |   | 457,773    |          
|Income taxes                                                                                                                                                                |                                                              |                                               | (909       | )         |                     |   | (4,464   | )            |          |   | (5,373     | )        
|Minority interests                                                                                                                                                          |                                                              |                                               | (8,080     | )         |                     |   | (74,188  | )            |          |   | (82,268    | )        
|Income from investments in unconsolidated joint
    ventures                                                                                                                |                                                              |                                               | 76,292     |           |                     |   | 3,590    |              |          |   | 79,882     |          
|Net gain on partial sales of real estate                                                                                                                                    |                                                              |                                               | 99,110     |           |                     |   |         |              |          |   | 99,110     |          
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|Income from continuing operations                                                                                                                                           |                                                              |                                               | 1,286,197  |           |                     |   | (737,073 | )            |          |   | 549,124    |          
|Discontinued operations (including net gain on
    sales of real estate of $61,953)                                                                                         |                                                              |                                               | 102,420    |           |                     |   | 3,518    |              |          |   | 105,938    |          
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         
|Net income                                                                                                                                                                  |                                                              | $                                             | 1,388,617  |           |                     | $ | (733,555 | )            |          | $ | 655,062    |          
|                                                                                                                                                                            |                                                              |                                               |            |           |                     |   |          |              |         

87



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 20  SEGMENT
INFORMATION  (continued)


|                                                                             |                                      |                                               |            |           |                     |   |         |              |  |   |            |           | 
|---------------------------------------------------------------------------- | ------------------------------------ | --------------------------------------------- | ---------- | --------- | ------------------- | - | ------- | ------------ |  | - | ---------- | --------- | 
|                                                                             |                                      |                                              
|                                                                             |                                      | As of or for the year ended December 31, 2003 |           
|                                                                             |                                      |                                               |           
|                                                                             |                                      | Office Properties                             |            |           | Corporate and Other |   |         | Consolidated | 
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|                                                                             |                                      |                                              
|                                                                             |                                      | (Dollars in thousands)                        |           
|Property net operating income:                                               |                                      |                                               |            |           |                     |   |         |              |  |   |            |          
|                                                                             | Continuing operations                |                                               | $          | 2,015,730 |                     |   | $       | 37,462       |  |   | $          | 2,053,192 | 
|                                                                             | Discontinued operations (see Note 6) |                                               |            | 58,302    |                     |   |         | 299          |  |   |            | 58,601    | 
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|Total property net operating income                                          |                                      | $                                             | 2,074,032  |           |                     | $ | 37,761  |              |  | $ | 2,111,793  |          
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|Property operating margin from continuing and
    discontinued operations(d) |                                      |                                               |            |           |                     |   |         |              |  |   | 64.7       | %        
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|Property operating margin from continuing
    operations(d)                  |                                      |                                               |            |           |                     |   |         |              |  |   | 64.6       | %        
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|Capital and tenant improvements                                              |                                      | $                                             | 401,061    |           |                     | $ | 34,247  |              |  | $ | 435,308    |          
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|Investments in unconsolidated joint ventures                                 |                                      | $                                             | 1,128,175  |           |                     | $ | (943    | )            |  | $ | 1,127,232  |          
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 
|Total Assets                                                                 |                                      | $                                             | 23,284,909 |           |                     | $ | 904,101 |              |  | $ | 24,189,010 |          
|                                                                             |                                      |                                               |            |           |                     |   |         |              | 



---



|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Included in property operating revenues are
    rental revenues, tenant reimbursements, parking income and other
    income.                                                                            
|   
|(b) | Included in property operating expenses are real
    estate taxes, insurance, repairs and maintenance and property
    operating expenses.                                                              
|   
|(c) | Interest expense for the Office Properties
    represents interest expense on property secured mortgage debt
    and does not include interest expense on the unsecured notes or
    the line of credit.
|   
|(d) | Property operating margin is calculated by
    dividing property net operating income by property operating
    revenues.                                                                               

|                                                             |                               |                                               |            |          |                     |   |         |              |          |   |            |          |            |  
|------------------------------------------------------------ | ----------------------------- | --------------------------------------------- | ---------- | -------- | ------------------- | - | ------- | ------------ | -------- | - | ---------- | -------- | ---------- | -
|                                                             |                               |                                              
|                                                             |                               | As of or for the year ended December 31, 2002 |           
|                                                             |                               |                                               |           
|                                                             |                               | Office Properties                             |            |          | Corporate and Other |   |         | Consolidated |         
|                                                             |                               |                                               |            |          |                     |   |         |              |         
|                                                             |                               |                                              
|                                                             |                               | (Dollars in thousands)                        |           
|Property operating revenues(a)                               |                               | $                                             | 3,290,424  |          |                     | $ | 53,435  |              |          | $ | 3,343,859  |         
|Property operating expenses(b)                               |                               |                                               | (1,138,460 | )        |                     |   | (10,235 | )            |          |   | (1,148,695 | )       
|                                                             |                               |                                               |            |          |                     |   |         |              |         
|Property net operating income from continuing
    operations |                               |                                               | 2,151,964  |          |                     |   | 43,200  |              |          |   | 2,195,164  |         
|                                                             |                               |                                               |            |          |                     |   |         |              |         
|Adjustments to arrive at net income:                         |                               |                                               |            |          |                     |   |         |              |          |   |            |         
|                                                             | Other revenues                |                                               |            | 2,542    |                     |   |         | 35,513       |          |   |            | 38,055   |           
|                                                             | Interest expense(c)           |                                               |            | (193,759 | )                   |   |         | (620,886     | )        |   |            | (814,645 | )         
|                                                             | Depreciation and amortization |                                               |            | (643,194 | )                   |   |         | (19,681      | )        |   |            | (662,875 | )         
|                                                             | Ground rent                   |                                               |            | (20,325  | )                   |   |         |             |          |   |            | (20,325  | )         
|                                                             | General and administrative    |                                               |            |         |                     |   |         | (65,790      | )        |   |            | (65,790  | )         
|                                                             |                               |                                               |            |          |                     |   |         |              |         
|                                                             |                               | Total                                         |            |          | (854,736            | ) |         |              | (670,844 | ) |            |          | (1,525,580 | )
|                                                             |                               |                                               |            |          |                     |   |         |              |         

88



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 20  SEGMENT
INFORMATION  (continued)


|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |        |   |            |           |           | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | --------------------------------------------- | ---------- | --------- | ------------------- | - | -------- | ------------ | ------ | - | ---------- | --------- | --------- | 
|                                                                                                                                  |                                      |                                              
|                                                                                                                                  |                                      | As of or for the year ended December 31, 2002 |           
|                                                                                                                                  |                                      |                                               |           
|                                                                                                                                  |                                      | Office Properties                             |            |           | Corporate and Other |   |          | Consolidated |       
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|                                                                                                                                  |                                      |                                              
|                                                                                                                                  |                                      | (Dollars in thousands)                        |           
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures |                                      |                                               | 1,297,228  |           |                     |   | (627,644 | )            |        |   | 669,584    |          
|Income taxes                                                                                                                      |                                      |                                               | (2,130     | )         |                     |   | (6,996   | )            |        |   | (9,126     | )        
|Minority interests                                                                                                                |                                      |                                               | (7,120     | )         |                     |   | (89,285  | )            |        |   | (96,405    | )        
|Income from investments in unconsolidated joint
    ventures                                                                      |                                      |                                               | 106,701    |           |                     |   | 151      |              |        |   | 106,852    |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Income from continuing operations                                                                                                 |                                      |                                               | 1,394,679  |           |                     |   | (723,774 | )            |        |   | 670,905    |          
|Discontinued operations (including net gain on
    sales of real estate of $17,926)                                               |                                      |                                               | 97,466     |           |                     |   | 1,844    |              |        |   | 99,310     |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Net income                                                                                                                        |                                      | $                                             | 1,492,145  |           |                     | $ | (721,930 | )            |        | $ | 770,215    |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Property net operating income:                                                                                                    |                                      |                                               |            |           |                     |   |          |              |        |   |            |          
|                                                                                                                                  | Continuing operations                |                                               | $          | 2,151,964 |                     |   | $        | 43,200       |        |   | $          | 2,195,164 |          
|                                                                                                                                  | Discontinued operations (see Note 6) |                                               |            | 108,757   |                     |   |          | 1,402        |        |   |            | 110,159   |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|                                                                                                                                  |                                      | Total property net operating income           |            | $         | 2,260,721           |   |          | $            | 44,602 |   |            | $         | 2,305,323 | 
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Property operating margin from continuing and
    discontinued operations(d)                                                      |                                      |                                               |            |           |                     |   |          |              |        |   | 65.7       | %        
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Property operating margin from continuing
    operations(d)                                                                       |                                      |                                               |            |           |                     |   |          |              |        |   | 65.6       | %        
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Capital and tenant improvements                                                                                                   |                                      | $                                             | 321,803    |           |                     | $ | 7,127    |              |        | $ | 328,930    |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Investments in unconsolidated joint ventures                                                                                      |                                      | $                                             | 1,077,273  |           |                     | $ | 10,542   |              |        | $ | 1,087,815  |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       
|Total Assets                                                                                                                      |                                      | $                                             | 24,394,552 |           |                     | $ | 852,231  |              |        | $ | 25,246,783 |          
|                                                                                                                                  |                                      |                                               |            |           |                     |   |          |              |       



---



|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Included in property operating revenues are
    rental revenues, tenant reimbursements, parking income and other
    income.                                                                            
|   
|(b) | Included in property operating expenses are real
    estate taxes, insurance, repairs and maintenance and property
    operating expenses.                                                              
|   
|(c) | Interest expense for the Office Properties
    represents interest expense on property secured mortgage debt
    and does not include interest expense on the unsecured notes or
    the line of credit.
|   
|(d) | Property operating margin is calculated by
    dividing property net operating income by property operating
    revenues.                                                                               

89



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 20  SEGMENT
INFORMATION  (continued)


|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |          |   |            |           |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------ | --------- | --------- | --------- | - | -------- | ------------ | -------- | - | ---------- | --------- | ---------- | -
|                                                                                                                                                                    |                                                              |                                     
|                                                                                                                                                                    |                                                              | For the year ended December 31, 2001 |          
|                                                                                                                                                                    |                                                              |                                      |          
|                                                                                                                                                                    |                                                              | Office                               |           |           | Corporate |   |          |             
|                                                                                                                                                                    |                                                              | Properties                           |           |           | and Other |   |          | Consolidated |         
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|                                                                                                                                                                    |                                                              |                                     
|                                                                                                                                                                    |                                                              | (Dollars in thousands)               |          
|Property operating revenues(a)                                                                                                                                      |                                                              | $                                    | 2,900,682 |           |           | $ | 50,379   |              |          | $ | 2,951,061  |          
|Property operating expenses(b)                                                                                                                                      |                                                              |                                      | (999,040  | )         |           |   | (9,582   | )            |          |   | (1,008,622 | )        
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|                                                                                                                                                                    | Property net operating income from continuing
    operations |                                      |           | 1,901,642 |           |   |          | 40,797       |          |   |            | 1,942,439 |           
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Adjustments to arrive at net income:                                                                                                                                |                                                              |                                      |           |           |           |   |          |              |          |   |            |          
|                                                                                                                                                                    | Other revenues                                               |                                      |           | 3,496     |           |   |          | 51,604       |          |   |            | 55,100    |           
|                                                                                                                                                                    | Interest expense(c)                                          |                                      |           | (208,398  | )         |   |          | (534,188     | )        |   |            | (742,586  | )         
|                                                                                                                                                                    | Depreciation and amortization                                |                                      |           | (535,565  | )         |   |          | (17,763      | )        |   |            | (553,328  | )         
|                                                                                                                                                                    | Ground rent                                                  |                                      |           | (16,692   | )         |   |          |             |          |   |            | (16,692   | )         
|                                                                                                                                                                    | General and administrative                                   |                                      |           | (11       | )         |   |          | (42,310      | )        |   |            | (42,321   | )         
|                                                                                                                                                                    | Impairments                                                  |                                      |           |          |           |   |          | (135,220     | )        |   |            | (135,220  | )         
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|                                                                                                                                                                    |                                                              | Total                                |           |           | (757,170  | ) |          |              | (677,877 | ) |            |           | (1,435,047 | )
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Income before income taxes, allocation to
    minority interests, income from investments in unconsolidated
    joint ventures and net gain on sales of real estate |                                                              |                                      | 1,144,472 |           |           |   | (637,080 | )            |          |   | 507,392    |          
|Income taxes                                                                                                                                                        |                                                              |                                      | (1,784    | )         |           |   | (6,961   | )            |          |   | (8,745     | )        
|Minority interests                                                                                                                                                  |                                                              |                                      | (8,685    | )         |           |   | (76,249  | )            |          |   | (84,934    | )        
|Income from investments 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                                                                                                                                   |                                                              |                                      | 1,223,484 |           |           |   | (658,906 | )            |          |   | 564,578    |          
|Discontinued operations                                                                                                                                             |                                                              |                                      | 54,959    |           |           |   | 787      |              |          |   | 55,746     |          
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Income before extraordinary item and cumulative
    effect of change in accounting principle                                                                        |                                                              |                                      | 1,278,443 |           |           |   | (658,119 | )            |          |   | 620,324    |          
|Extraordinary item                                                                                                                                                  |                                                              |                                      | (1,000    | )         |           |   |         |              |          |   | (1,000     | )        
|Cumulative effect of change in accounting
    principle                                                                                                             |                                                              |                                      | (1,142    | )         |           |   |         |              |          |   | (1,142     | )        
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Net income                                                                                                                                                          |                                                              | $                                    | 1,276,301 |           |           | $ | (658,119 | )            |          | $ | 618,182    |          
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Property net operating income:                                                                                                                                      |                                                              |                                      |           |           |           |   |          |              |          |   |            |          
|                                                                                                                                                                    | Continuing operations                                        |                                      | $         | 1,901,642 |           |   | $        | 40,797       |          |   | $          | 1,942,439 |           
|                                                                                                                                                                    | Discontinued operations (see Note 6)                         |                                      |           | 77,454    |           |   |          | 954          |          |   |            | 78,408    |           
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|                                                                                                                                                                    |                                                              | Total property net operating income  |           | $         | 1,979,096 |   |          | $            | 41,751   |   |            | $         | 2,020,847  |  
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Property operating margin from continuing and
    discontinued operations(d)                                                                                        |                                                              |                                      |           |           |           |   |          |              |          |   | 65.7       | %        
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Property operating margin from continuing
    operations(d)                                                                                                         |                                                              |                                      |           |           |           |   |          |              |          |   | 65.8       | %        
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         
|Capital and tenant improvements                                                                                                                                     |                                                              | $                                    | 325,215   |           |           | $ | 34,850   |              |          | $ | 360,065    |          
|                                                                                                                                                                    |                                                              |                                      |           |           |           |   |          |              |         



---



|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Included in property operating revenues are
    rental revenues, tenant reimbursements, parking income and other
    income.                                                                            
|   
|(b) | Included in property operating expenses are real
    estate taxes, insurance, repairs and maintenance and property
    operating expenses.                                                              
|   
|(c) | Interest expense for the Office Properties
    represents interest expense on property secured mortgage debt
    and does not include interest expense on the unsecured notes or
    the line of credit.
|   
|(d) | Property operating margin is calculated by
    dividing property net operating income by property operating
    revenues.                                                                               

90



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 21  QUARTERLY DATA
(UNAUDITED)

|                                     |                      |                                               |         |      |         |   |         |         |  |   |         |      |  |   |         |      | 
|------------------------------------ | -------------------- | --------------------------------------------- | ------- | ---- | ------- | - | ------- | ------- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                     |                      |                                              
|                                     |                      | For the three months ended                    |        
|                                     |                      |                                               |        
|                                     |                      | 12/31/03                                      |         |      | 9/30/03 |   |         | 6/30/03 |  |   | 3/31/03 |     
|                                     |                      |                                               |         |      |         |   |         |         |  |   |         |     
|                                     |                      |                                              
|                                     |                      | (Dollars in thousands, except per share data) |        
|Total revenues(a)                    |                      | $                                             | 828,748 |      |         | $ | 789,870 |         |  | $ | 787,687 |      |  | $ | 789,327 |     
|Income from continuing operations(a) |                      | $                                             | 188,857 |      |         | $ | 115,817 |         |  | $ | 109,045 |      |  | $ | 135,403 |     
|Discontinued operations(a)           |                      | $                                             | 23,087  |      |         | $ | 4,866   |         |  | $ | 56,211  |      |  | $ | 21,775  |     
|Net income                           |                      | $                                             | 211,944 |      |         | $ | 120,683 |         |  | $ | 165,256 |      |  | $ | 157,178 |     
|Earnings per share  basic:          |                      |                                               |         |      |         |   |         |         |  |   |         |      |  |   |         |     
|                                     | Net income per share |                                               | $       | 0.53 |         |   | $       | 0.30    |  |   | $       | 0.41 |  |   | $       | 0.38 | 
|Earnings per share  diluted:        |                      |                                               |         |      |         |   |         |         |  |   |         |      |  |   |         |     
|                                     | Net income per share |                                               | $       | 0.53 |         |   | $       | 0.30    |  |   | $       | 0.41 |  |   | $       | 0.38 | 



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The amounts presented for the three months ended
    September 30, 2003, June 30, 2003, and March 31, 2003
    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 2003.
    Total revenues presented for the three months ended
    June 30, 2003 and March 31, 2003 also differ from the
    same amounts previously reported in the Form 10-Q filed with the
    SEC for each period due to the reclassification of
    interest/dividend income and realized gain on sale of marketable
    securities previously reported as revenues to other income.
    Below is a reconciliation to the amounts previously reported in
    the Form 10-Q:

|                                                                                                                                |  |                            |         |   |         |   |         |         |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- | -
|                                                                                                                                |  |                           
|                                                                                                                                |  | For the three months ended |        
|                                                                                                                                |  |                            |        
|                                                                                                                                |  | 9/30/03                    |         |   | 6/30/03 |   |         | 3/31/03 | 
|                                                                                                                                |  |                            |         |   |         |   |         |         | 
|                                                                                                                                |  |                           
|                                                                                                                                |  | (Dollars in thousands,     |        
|                                                                                                                                |  | except per share data)     |        
|Total revenues previously reported in
    Form 10-Q                                                                             |  | $                          | 806,162 |   |         | $ | 810,959 |         |  | $ | 829,255 |  
|Revenues previously reported in Form 10-Q
    subsequently reclassified to other income                                         |  |                            |        |   |         |   | (3,695  | )       |  |   | (11,405 | )
|Revenues previously reported in Form 10-Q
    subsequently reclassified to discontinued operations                              |  |                            | (16,292 | ) |         |   | (19,577 | )       |  |   | (28,523 | )
|                                                                                                                                |  |                            |         |   |         |   |         |         | 
|Total revenues disclosed in Form 10-K                                                                                           |  | $                          | 789,870 |   |         | $ | 787,687 |         |  | $ | 789,327 |  
|                                                                                                                                |  |                            |         |   |         |   |         |         | 
|Income from continuing operations previously
    reported in Form 10-Q                                                          |  | $                          | 124,435 |   |         | $ | 119,090 |         |  | $ | 149,531 |  
|Income from continuing operations previously
    reported in Form 10-Q subsequently reclassified to
    discontinued operations |  |                            | (8,618  | ) |         |   | (10,045 | )       |  |   | (14,128 | )
|                                                                                                                                |  |                            |         |   |         |   |         |         | 
|Income from continuing operations disclosed in
    Form 10-K                                                                    |  | $                          | 115,817 |   |         | $ | 109,045 |         |  | $ | 135,403 |  
|                                                                                                                                |  |                            |         |   |         |   |         |         | 
|Discontinued operations previously reported in
    Form 10-Q                                                                    |  | $                          | (3,752  | ) |         | $ | 46,166  |         |  | $ | 7,647   |  
|Discontinued operations from properties sold
    subsequent to the respective reporting period                                  |  |                            | 8,618   |   |         |   | 10,045  |         |  |   | 14,128  |  
|                                                                                                                                |  |                            |         |   |         |   |         |         | 
|Discontinued operations disclosed in
    Form 10-K                                                                              |  | $                          | 4,866   |   |         | $ | 56,211  |         |  | $ | 21,775  |  
|                                                                                                                                |  |                            |         |   |         |   |         |         | 

91



---



##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




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


|                                     |                      |                                               |         |      |         |   |         |         |  |   |         |      |  |   |         |      | 
|------------------------------------ | -------------------- | --------------------------------------------- | ------- | ---- | ------- | - | ------- | ------- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                     |                      |                                              
|                                     |                      | For the three months ended                    |        
|                                     |                      |                                               |        
|                                     |                      | 12/31/02                                      |         |      | 9/30/02 |   |         | 6/30/02 |  |   | 3/31/02 |     
|                                     |                      |                                               |         |      |         |   |         |         |  |   |         |     
|                                     |                      |                                              
|                                     |                      | (Dollars in thousands, except per share data) |        
|Total revenues(b)                    |                      | $                                             | 848,627 |      |         | $ | 841,593 |         |  | $ | 833,347 |      |  | $ | 836,199 |     
|Income from continuing operations(b) |                      | $                                             | 160,429 |      |         | $ | 158,534 |         |  | $ | 154,631 |      |  | $ | 197,313 |     
|Discontinued operations(b)           |                      | $                                             | 26,664  |      |         | $ | 25,095  |         |  | $ | 27,681  |      |  | $ | 19,868  |     
|Net income                           |                      | $                                             | 187,093 |      |         | $ | 183,629 |         |  | $ | 182,312 |      |  | $ | 217,181 |     
|Earnings per share  basic:          |                      |                                               |         |      |         |   |         |         |  |   |         |      |  |   |         |     
|                                     | Net income per share |                                               | $       | 0.45 |         |   | $       | 0.44    |  |   | $       | 0.43 |  |   | $       | 0.52 | 
|Earnings per share  diluted:        |                      |                                               |         |      |         |   |         |         |  |   |         |      |  |   |         |     
|                                     | Net income per share |                                               | $       | 0.45 |         |   | $       | 0.43    |  |   | $       | 0.43 |  |   | $       | 0.52 | 



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | The amounts presented for the three months ended
    December 31, 2002, September 30, 2002, June 30, 2002,
    and March 31, 2002 are not equal to the same amounts
    previously reported in the Form 10-Q or Form 10-K
    filed with the SEC for each period as a result of discontinued
    operations consisting of properties sold in 2003. Total revenues
    presented for the three months ended December 31,
    2002, June 30, 2002 and March 31, 2002 also differ
    from the same amounts previously reported in the Form 10-Q
    or Form 10-K filed with the SEC for each period due to the
    reclassification of interest/dividend income and realized gain
    on sale of marketable securities previously reported as revenues
    to other income. Below is a reconciliation to the amounts
    previously reported in the Form 10-Q or Form 10-K:

|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                                             |  |                                              
|                                                                                                                                             |  | For the three months ended                    |        
|                                                                                                                                             |  |                                               |        
|                                                                                                                                             |  | 12/31/02                                      |         |   | 9/30/02 |   |         | 6/30/02 |  |   | 3/31/02 |  
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  
|                                                                                                                                             |  |                                              
|                                                                                                                                             |  | (Dollars in thousands, except per share data) |        
|Total revenues previously reported in
    Form 10-Q or Form 10-K                                                                             |  | $                                             | 884,511 |   |         | $ | 857,661 |         |  | $ | 861,889 |   |  | $ | 870,264 |  
|Revenues previously reported in Form 10-Q or
    Form 10-K subsequently reclassified to other income                                         |  |                                               | (5,223  | ) |         |   |        |         |  |   | (7,492  | ) |  |   | (6,841  | )
|Revenues previously reported in Form 10-Q or
    Form 10-K subsequently reclassified to discontinued
    operations                          |  |                                               | (30,661 | ) |         |   | (16,068 | )       |  |   | (21,050 | ) |  |   | (27,224 | )
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  
|Total revenues disclosed in Form 10-K                                                                                                        |  | $                                             | 848,627 |   |         | $ | 841,593 |         |  | $ | 833,347 |   |  | $ | 836,199 |  
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  
|Income from continuing operations previously
    reported in Form 10-Q or Form 10-K                                                          |  | $                                             | 175,436 |   |         | $ | 166,372 |         |  | $ | 165,715 |   |  | $ | 211,926 |  
|Income from continuing operations previously
    reported in Form 10-Q or Form 10-K subsequently
    reclassified to discontinued operations |  |                                               | (15,007 | ) |         |   | (7,838  | )       |  |   | (11,084 | ) |  |   | (14,613 | )
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  
|Income from continuing operations disclosed in
    Form 10-K                                                                                 |  | $                                             | 160,429 |   |         | $ | 158,534 |         |  | $ | 154,631 |   |  | $ | 197,313 |  
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  
|Discontinued operations previously reported in
    Form 10-Q or Form 10-K                                                                    |  | $                                             | 11,657  |   |         | $ | 17,257  |         |  | $ | 16,597  |   |  | $ | 5,255   |  
|Discontinued operations from properties sold
    subsequent to the respective reporting period                                               |  |                                               | 15,007  |   |         |   | 7,838   |         |  |   | 11,084  |   |  |   | 14,613  |  
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  
|Discontinued operations disclosed in
    Form 10-K                                                                                           |  | $                                             | 26,664  |   |         | $ | 25,095  |         |  | $ | 27,681  |   |  | $ | 19,868  |  
|                                                                                                                                             |  |                                               |         |   |         |   |         |         |  |   |         |  

92



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 22  RELATED PARTY
TRANSACTIONS

Fees and reimbursements paid to related parties
for the years ended December 31, 2003, 2002 and 2001 were
as follows:

|                                                                 |       |                                  |       |       |      |   |       |       |  |   |        |        | 
|---------------------------------------------------------------- | ----- | -------------------------------- | ----- | ----- | ---- | - | ----- | ----- |  | - | ------ | ------ | 
|                                                                 |       |                                 
|                                                                 |       | Paid in years ended December 31, |      
|                                                                 |       |                                  |      
|                                                                 |       | 2003                             |       |       | 2002 |   |       | 2001  | 
|                                                                 |       |                                  |       |       |      |   |       |       | 
|                                                                 |       |                                 
|                                                                 |       | (Dollars in thousands)           |      
|Development fees, leasing commissions and
    management fees(a) |       | $                                | 3,569 |       |      | $ | 4,727 |       |  | $ | 8,147  |       
|Interest and prepayment penalty on mortgage
    notes(b)         |       |                                  |      |       |      |   |      |       |  |   | 22,256 |       
|Office rent(c)                                                   |       |                                  | 3,959 |       |      |   | 3,904 |       |  |   | 2,964  |       
|                                                                 |       |                                  |       |       |      |   |       |       | 
|                                                                 | Total |                                  | $     | 7,528 |      |   | $     | 8,631 |  |   | $      | 33,367 | 
|                                                                 |       |                                  |       |       |      |   |       |       | 
|Payable to related parties at year end                           |       | $                                | 273   |       |      | $ | 1,748 |       |  | $ | 339    |       
|                                                                 |       |                                  |       |       |      |   |       |       | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Amounts paid in 2003 were paid to an affiliate of
    William Wilson III, one of our trustees. Amounts paid in
    2002 and 2001 were paid to W/EO. In 2000, we entered into a
    joint venture agreement with Wilson Investors 
    California, LLC (WIC) to form W/ EO for the purpose
    of developing, constructing, leasing and managing developments
    in northern California. We own 49.9% of W/ EO and WIC owns 50.1%
    of W/ EO. William Wilson III, through his ownership of WIC,
    indirectly owns approximately 22% of W/ EO and approximately 30%
    of any promote to which WIC is entitled under the joint venture
    agreement. We agreed to loan up to $25 million to WIC for
    its required contribution to W/ EO at a 15% interest rate per
    annum. In 2002, WIC repaid the outstanding loan balance of
    approximately $12.0 million of principal and $2.0 million
    of accrued interest. Upon this repayment and as a result of
    certain transactions with WIC the loan commitment has been
    terminated. Our investment in W/ EO as of December 31, 2003
    and 2002 was approximately $1.3 million and
    $3.6 million, respectively, which represents our indirect
    interest in Concar at December 31, 2003 and Concar and
    Foundry IV (which was sold in 2003) at December 31,
    2002.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We created joint ventures with W/ EO and, in
    certain cases, unaffiliated parties for the development of
    various office properties. We 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 our option, in the event alternative financing
    sources are available on terms reasonably acceptable to WIC 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 now reflected as investment in real estate). At
    December 31, 2002, we 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 $0.4 million in accrued
    interest was outstanding. The total principal and interest
    outstanding on these mortgage loans at December 31, 2003
    was approximately $40 million. The mortgage loan for
    Foundry Square IV was repaid in 2003.                                             
|
| | In December 2002, we completed a transaction with
    W/ EO and WIC pursuant to which we acquired
    W/EOs interests in various projects known as Foundry
    Square II, Foundry Square III (a land parcel that was
    under option), the Ferry Building, San Rafael Corporate Center I
    and San Rafael Corporate Center II (a land parcel). WIC
    acquired W/EOs interest in a project known as Larkspur (a
    land parcel under option) and WIC 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. W/EOs and our interests in
    Foundry Square IV and Concar remained unchanged as a result of
    this transaction. Joint ventures with other unaffiliated parties
    on the projects in which we acquired W/EOs interest also
    remain unchanged as a result of this transaction. This
    transaction was accounted for as a nonmonetary exchange because
    the assets included in the exchange were similar and because the
    cash consideration exchanged was minimal. No gain or loss was
    recognized in connection with the transaction. A WIC subsidiary
    will continue providing the development management services to
    Foundry Square II, the Ferry Building and

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 22  RELATED PARTY
TRANSACTIONS  (continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Concar until the earlier of project stabilization
    or June 2004. We also engaged a subsidiary of WIC to provide
    leasing brokerage services for Foundry Square II and the
    Ferry Building. These services for Foundry Square II were
    terminated by us and these services for the Ferry Building were
    terminated in part by us in January 2004. In July, 2003, Foundry
    Square IV was sold. Following this sale, W/ EOs sole asset
    is its ownership interest in Concar. In accordance with the W/
    EO operating agreement, we may, but are not required to,
    purchase the W/ EO interest in Concar subsequent to project
    stabilization.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | 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 Maatschappelijke Belangen
    (PGGM), of which Jan H.W.R. van der Vlist, one of
    our trustees, is a director of real estate. In October 2000, we
    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, we paid a
    $5.0 million prepayment penalty to PGGM.
|   
|(c) | We lease office space 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.                                                                                                                                                                                                                                                                                                                                                                                                             

Amounts Received from Related
Parties

As described in Note 7, we own, and receive
distributions from, preferred shares of CT Convertible Trust I,
of which Mr. Zell is Chairman of the Board.

We have 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 us for providing these
management services during 2003, 2002, and 2001 was
approximately $.8 million, $1.0 million, and
$1.5 million, respectively.

In addition, we provided real estate tax
consulting and risk management services to related parties for
which we received approximately $.3 million,
$1.6 million, and $1.7 million during 2003, 2002 and
2001, respectively.

We received approximately $0.8 million from
W/ EO during 2003 for lease commissions.

NOTE 23  SHARE-BASED EMPLOYEE
COMPENSATION PLANS

We have three share-based employee compensation
plans: the 1997 Share Option and Share Award Plan, as amended
(the 1997 Plan), the 2003 Share Option and Share
Incentive Plan, as amended (the 2003 Plan) and the
1997 Non-Qualified Share Purchase Plan, as amended (the
Non-Qualified Share Purchase Plan). We also have
assumed individual options in connection with prior merger
transactions.

The purpose of the 1997 Plan is to attract and
retain highly qualified executive officers, trustees and
employees. Through the 1997 Plan, eligible officers, trustees,
employees and consultants are offered the opportunity to acquire
Common Shares pursuant to grants of (a) options to purchase
Common Shares (Options) and (b) Share Awards
(defined below). The 1997 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 1997 Plan, adopts rules
relating thereto and determines the terms and provisions of
Options and Share Awards. In 2003, 2002, and 2001 the Common
Shares subject to Options and Share Awards under the 1997 Plan
were limited to 31,375,726, 32,030,650, and 23,733,869,
respectively. The maximum aggregate number of Options and Share
Awards that may be granted under the 1997 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

94



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 23  SHARE-BASED EMPLOYEE
COMPENSATION PLANS  (continued)


each calendar year. The issuance of awards or
shares under the 2003 Plan does not increase the number of
shares that may be issued under the 1997 Plan. No more than
one-half of the maximum aggregate number of Options and Share
Awards may 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 1997 Plan, unless the 1997 Plan has
terminated. The 1997 Plan has a 10-year term. The Board of
Trustees may at any time prior thereto amend or terminate the
1997 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, each vests evenly over a three year period,
one-third per year on each of the first three anniversaries of
the grant date. The exercise price for Options is equivalent to
the fair market value of the underlying Common Shares at the
grant date.

The 1997 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 (a) may be fully vested upon issuance
(Share Award) or (b) may vest over time
(Restricted Share Award). Generally, members of the
Board of Trustees have been granted Share Awards pursuant to the
1997 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 granted in 2003 and 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.

The fair value for Options granted in 2003, 2002,
and 2001 was estimated at the time the Options were granted
using the Black-Scholes option-pricing model with the following
weighted average assumptions:

|                                               |  |      |         |  |      |   |         |      |  |   |         | 
|---------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|Assumptions:                                   |  | 2003 |         |  | 2002 |   |         | 2001 | 
|                                               |  |      |         |  |      |   |         |      | 
|Risk-free interest rate                        |  |      | 3.2%    |  |      |   | 4.2%    |      |  |   | 4.2%    | 
|Expected dividend yield                        |  |      | 6.6%    |  |      |   | 7.0%    |      |  |   | 6.7%    | 
|Volatility                                     |  |      | 0.22    |  |      |   | 0.19    |      |  |   | 0.21    | 
|Weighted average expected life of the Options  |  |      | 7 years |  |      |   | 5 years |      |  |   | 5 years | 
|Weighted average fair value of Options granted |  | $    | 2.36    |  |      | $ | 2.29    |      |  | $ | 2.76    | 

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.

In 2003, 2002, and 2001, we recognized
compensation expense related to Restricted Shares and Options
issued to employees of $17.1 million, $15.0 million,
and $9.2 million, respectively.

95



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 23  SHARE-BASED EMPLOYEE
COMPENSATION PLANS  (continued)


The table below summarizes the Option activity of
the 1997 Plan for the last three years:

|                             |                    |                    |            |                  |                    |   |       |       | 
|---------------------------- | ------------------ | ------------------ | ---------- | ---------------- | ------------------ | - | ----- | ----- | 
|                             |                    |                    |            | Weighted Average |                   
|                             |                    | Common Shares      |            |                  | Exercise Price Per |  
|                             |                    | Subject to Options |            |                  | Option             |  
|                             |                    |                    |            |                  |                    |  
|Balance at December 31, 2000 |                    |                    | 13,221,371 |                  |                    | $ | 24.82 |      
|                             | Options granted(1) |                    |            | 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 |      
|                             | Options granted    |                    |            | 3,550,017        |                    |   |       | 24.70 | 
|                             | Options canceled   |                    |            | (1,358,070       | )                  |   |       | 27.78 | 
|                             | Options exercised  |                    |            | (1,661,333       | )                  |   |       | 22.72 | 
|                             |                    |                    |            |                  |                    |  
|Balance at December 31, 2003 |                    |                    | 21,025,707 |                  |                    |   | 27.10 |      
|                             |                    |                    |            |                  |                    |  

The following table summarizes information
regarding Options outstanding at December 31, 2003:

|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       |  |  |           |  |  |   |       | 
|------------------------ |  | ------------------- | ---------- | ---------------- | ------------------- |  | --------- | ----------------------- |  | - | ------- | --------- |  | ----- | ---------- |  | --------- | - | ----- | ----- |  |  | --------- |  |  | - | ----- | 
|                         |  |                     |            |                  |                     |  |           |                         |  |  
|                         |  | 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(2)         |  |           | price                   |  |   | Options |           |  | price |            |  | Options   |   |       | price | 
|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       | 
|$12.09 to $21.00         |  |                     | 1,253,104  |                  |                     |  | 3.6       |                         |  | $ | 20.74   |           |  |       | 1,253,104  |  |           | $ | 20.74 |       |  |  |          |  |  |   |      | 
|$21.07 to $23.40         |  |                     | 1,155,499  |                  |                     |  | 4.9       |                         |  |   | 23.25   |           |  |       | 1,155,499  |  |           |   | 23.25 |       |  |  |          |  |  |   |      | 
|$24.23 to $24.62         |  |                     | 5,472,977  |                  |                     |  | 7.6       |                         |  |   | 24.39   |           |  |       | 2,546,312  |  |           |   | 24.24 |       |  |  | 2,926,665 |  |  |   | 24.53 | 
|$24.88 to $28.36         |  |                     | 6,367,408  |                  |                     |  | 7.9       |                         |  |   | 28.20   |           |  |       | 2,798,154  |  |           |   | 28.20 |       |  |  | 3,569,254 |  |  |   | 28.19 | 
|$28.38 to $29.50         |  |                     | 2,131,864  |                  |                     |  | 4.6       |                         |  |   | 29.48   |           |  |       | 2,098,524  |  |           |   | 29.49 |       |  |  | 33,340    |  |  |   | 29.19 | 
|$29.76 to $33.00         |  |                     | 4,644,855  |                  |                     |  | 6.6       |                         |  |   | 30.35   |           |  |       | 3,491,425  |  |           |   | 30.47 |       |  |  | 1,153,430 |  |  |   | 29.99 | 
|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       | 
|$12.09 to $33.00         |  |                     | 21,025,707 |                  |                     |  | 6.8       |                         |  | $ | 27.10   |           |  |       | 13,343,018 |  |           | $ | 27.11 |       |  |  | 7,682,689 |  |  | $ | 27.07 | 
|                         |  |                     |            |                  |                     |  |           |                         |  |   |         |           |  |       |            |  |           |   |       |       | 



---



|    |                                                                                       
|--- | --------------------------------------------------------------------------------------
|(1) | Includes 1,890,648 non-plan options assumed in
    connection with the Spieker Merger.
|   
|(2) | Expiration dates ranged from January 2004 to
    December 2013.                       

During 2003, 2002 and 2001, there were 926,511,
541,055 and 602,666 Restricted Share Awards granted,
respectively. The Restricted Shares Awards issued in 2003, 2002
and 2001 were, on average, valued at an average of $24.56,
$28.01 and $20.61 each, respectively. The value of the
Restricted Share Awards is recognized as compensation expense
evenly over the vesting period.

Our shareholders approved the 2003 Plan at our
2003 annual meeting of shareholders. A total of 20,000,000
Common Shares are reserved for issuance under the 2003 Plan to
trustees, officers, employees and consultants of Equity Office
and its subsidiaries. The 2003 Plan provides for awards of share
options, restricted shares, unrestricted shares, share units,
dividend equivalent rights, share appreciation rights and
performance awards. No more than 10,000,000 of the Common Shares
reserved under the 2003 Plan may be issued in connection with
awards other than options. The maximum number of shares subject
to options and share appreciation rights that can be awarded to
any person is 750,000 per year, and the maximum number of shares
that can be awarded to any person, other than pursuant to an
option or share appreciation right, is 300,000 per year. The
2003 Plan is administered by the Compensation Committee. Subject
to the terms of the 2003 Plan, the Compensation Committee may
select participants to receive awards, determine the types of
awards and

96



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 23  SHARE-BASED EMPLOYEE
COMPENSATION PLANS  (continued)


the terms and conditions of awards, and interpret
the provisions of the 2003 Plan. The exercise price of each
share option awarded under the 2003 Plan may not be less than
100% of the fair market value of a Common Share on the date of
grant. The term of the 2003 Plan is 10 years. Prior
thereto, the Compensation Committee may terminate or amend the
2003 Plan at any time and for any reason, but termination will
not affect awards previously made. There were no awards made
under the 2003 Plan during 2003.

The Non-Qualified Purchase Plan was adopted to
encourage eligible employees and trustees to purchase Common
Shares. Under the Non-Qualified Purchase Plan, a total of
2,000,000 Common Shares are reserved for issuance. The minimum
amount an eligible employee can contribute is $10 per pay
period. The maximum amount an eligible employee can contribute
is 20% of gross pay per pay period, up to $100,000 per calendar
year. Trustees may contribute up to $100,000 per year.
Contributions are held as part of the general assets of Equity
Office. All contributions are fully vested. At the end of each
purchase period, participant contributions are used to purchase
Common Shares. The price for the Common Shares is 85% of the
lesser of: (a) the closing price of the Common Shares on
the last business day of the applicable purchase period and
(b) the average closing price of the Common Shares for the
purchase period. The number of Common Shares purchased is
calculated on a per participant basis by dividing the
contributions made by each participant during the Purchase
Period by the purchase price. Only whole Common Shares are
purchased, with any partial share of remaining cash being rolled
over to the next purchase period. Shares purchased under the
Non-Qualified Purchase Plan generally may not be sold,
transferred or disposed of until the first anniversary of the
purchase. If a participant violates this restriction, he or she
is required to pay Equity Office an amount equal to the discount
on the shares when purchased less, the excess, if any, of the
amount the participant paid for the shares over the then current
market price of the shares. At December 31, 2003, a total
of 1,509,443 Common Shares remained available for issuance under
the Non-Qualified Purchase Plan. Common Share purchases under
this plan totaled 93,815, 90,484 and 76,645 in 2003, 2002 and
2001, respectively.

NOTE 24  401(K) PLAN

Our 401(k) Plan was established to cover eligible
employees 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 upon
contribution to the 401(k) Plan. We match employee contributions
to the 401(k) Plan dollar for dollar up to 4% of the
employees annual salary. In addition, we may elect to make
an annual discretionary profit-sharing contribution.
Approximately $6.7 million, $4.2 million and $3.8
million was recognized as expense in each of the years ended
December 31, 2003, 2002 and 2001, respectively.

NOTE 25  COMMITMENTS AND
CONTINGENCIES

Concentration of Credit Risk

We maintain 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. We
believe the risk is not significant.

Environmental

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

97



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 25  COMMITMENTS AND
CONTINGENCIES  (continued)


Litigation

Except as described below, we are not presently
subject to material litigation nor, to our knowledge, is any
material litigation threatened against us, 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 our financial condition, results of
operations, or liquidity.

On May 8, 2003, Broadband Office, Inc. and
the official committee of unsecured creditors of Broadband
Office Inc. (collectively, the Plaintiffs), filed a
complaint (the Complaint) in the United States
Bankruptcy Court for the District of Delaware against one
private and seven public real estate companies, various
affiliated entities (collectively the Corporate
Defendants) and certain individuals, including Equity
Office, David Helfand (a former executive vice president of
Equity Office), Spieker Properties, Inc. and Spieker Properties,
L.P. (which we acquired in 2001) and Craig Vought (formerly
co-chief executive officer of Spieker Properties, Inc. and a
former Equity Office trustee). Under the terms of our
indemnification agreements with Messrs. Helfand and Vought, we
may be responsible to reimburse them for the effect of any
judgment rendered against them personally as well as the costs
of their defense. We were an equity investor in, landlord to and
customer of Broadband Office, and Messrs. Helfand and
Vought were members of the board of directors of Broadband
Office until their resignations on May 1, 2001 and
May 2, 2001, respectively. Mr. Vought also served as a
member of Broadband Offices executive committee. Broadband
Office filed for bankruptcy protection on May 9, 2001. The
First Amended Complaint alleges, among other things, breaches of
fiduciary duty and seeks recovery of what it characterizes as
preferential payments and fraudulent transfers. It further seeks
to hold us liable for the outstanding debts of the corporation,
jointly and severally with all of the Corporate Defendants, as
an alleged general partner of Broadband Office. The
Plaintiffs allege that the amount of these claims exceeds
$300 million in the aggregate. Due to the inherent
uncertainties of the judicial process and the early stage of
this action, we are unable to predict the outcome of this matter
with certainty. We intend to vigorously defend this matter and
believe we have meritorious defenses. As a result, we have not
accrued for any potential liability in connection with this
litigation. As in any litigation, there can be no assurance that
we will prevail. Should the court not resolve this matter in our
favor it could have a material adverse effect on our financial
condition, results of operations and liquidity.

Forward-Starting Interest Rate Swaps

See Note 13  Derivative Financial
Instruments for information on our forward-starting interest
rate swaps.

Contingencies

Certain joint venture agreements contain buy/
sell options in which each party has the option to acquire the
interest of the other party. Except for certain agreements in
which our partners in three of our Office Properties can require
us to buy their interests, such agreements do not generally
require that we buy our partners interest. The exceptions
allow our unaffiliated partners, at their election, to require
that we buy their interests during specified future time
periods, commencing in 2004 and at amounts that represent the
fair market value of their interest at that time or at amounts
based on formulas contained in the respective agreements. In
addition, we have granted options to each of two tenants to
purchase the Office Property it occupies.

In accordance with Statement of Accounting
Standards No. 5 Accounting for Contingencies,we
have not recorded a liability or the related asset that would
result from the acquisition in connection with the above
potential obligations because the probability of our
unaffiliated partners requiring us to buy their interest is not
currently determinable and we are unable to estimate the amount
of the payment required for that purpose.

98



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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)




NOTE 25  COMMITMENTS AND
CONTINGENCIES  (continued)


Approximately 260 of our properties, consisting
of 33.1 million square feet, are subject to restrictions on
taxable dispositions under tax protection agreements entered
into with some of the contributors of the properties. The
carrying value of these properties was approximately
$6.7 billion at December 31, 2003. The restrictions on
taxable dispositions are effective for periods expiring at
different times through 2021. The terms of these tax protection
agreements generally prevent us from selling specific properties
in taxable transactions unless we indemnify the contributing
partners for their income tax liability on the portion of the
gain on sale allocated to them as a result of the
propertys value at the time of its contribution to us or,
in some cases, to our predecessor. We do not believe that the
tax protection agreements materially affect the conduct of our
business or our decisions whether to dispose of restricted
properties during the restriction period because we generally
hold these and our other properties for investment purposes,
rather than for sale. Historically, however, where we have
deemed it to be in our shareholders best interests to
dispose of restricted properties, we have done so through
transactions structured as tax-deferred transactions under
section 1031 of the Internal Revenue Code. We anticipate
structuring any future dispositions of restricted properties as
transactions intended to qualify for tax-deferred treatment. We
therefore view the likelihood of incurring any such material
indemnification obligations to be remote. Were we to dispose of
a restricted property in a taxable transaction, we generally
would be required to pay to a partner that is a beneficiary of
one of the tax protection agreements an amount based on the
amount of income tax the partner would be required to pay on the
incremental gain allocated to such partner as a result of the
built-in gain that existed with respect to such property at the
time of its contribution to us, or in some cases, to our
predecessor. In some cases there is a further requirement to
reimburse any additional tax liability arising from the
indemnification payment itself. The exact amount that would be
payable with respect to any particular taxable sale of a
restricted property would depend on a number of factors, many of
which can only be calculated at the time of any future sale,
including the sale price of the property at the time of the
sale, the partnerships basis in the property at the time
of the sale, the partners basis in the assets at the time
of the contribution, the partners applicable rate of
federal, state and local taxation at the time of the sale, and
the timing of the sale itself.

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, 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.

|                         |  |                                                                                                                                                                                         |  |                                          
|------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Type of Insurance        |  |                                                                                                                                                                                         |  | Third-Party Coverage                     
|Coverage                 |  | Equity Office Loss Exposure/Deductible                                                                                                                                                  |  | Limitation                               
|                         |  |                                                                                                                                                                                         |  |                                          
|Property damage and      |  |                                                                                                                                                                                         |  |                                          
|business interruption(a) |  | $75 million annual aggregate exposure (which
    includes amounts paid for earthquake loss), plus $1 million
    per occurrence deductible                                              |  | $1.0 billion per occurrence(c)           
|Earthquake(a)(b)         |  | $75 million annual aggregate exposure (which
    includes amounts paid for property damage and business
    interruption loss), plus $1 million per occurrence
    deductible           |  | $325 million in the aggregate per year(c)
|Acts of terrorism(d)     |  | $2.8 million per occurrence deductible (plus
    10% of each and every loss with a maximum per occurrence
    exposure of $35.3 million which includes the
    $2.8 million deductible) |  | $825 million per occurrence(e)           

99



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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (continued)


NOTE 25  COMMITMENTS AND
CONTINGENCIES  (continued)



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | We retain up to $75 million of such loss
    calculated throughout the portfolio. In the event of a loss in
    excess of this retention limit, 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 our loss exposure of $75 million plus
    $1 million per occurrence deductible. There can be no
    assurance that the maximum probable loss studies have accurately
    estimated losses that may occur.



|    |                                                               
|--- | --------------------------------------------------------------
|(c) | These amounts include our loss
    exposure/deductible amount.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | The coverage includes nuclear, chemical and
    biological events. The coverage does not apply to non-TRIA
    (Terrorism Insurance Act of 2002) events (which are terrorism
    events that are not committed by a foreigner or a foreign
    country). We maintain separate insurance with a
    $325 million annual aggregate limit subject to a deductible
    of $1 million for non-TRIA events. This separate coverage
    for non-TRIA events excludes nuclear, biological and chemical
    events.



|    |                                                        
|--- | -------------------------------------------------------
|(e) | This amount is in excess of our deductible
    amounts.

Pollution:We have
pollution and remediation insurance coverage for both sudden and
gradual events. Limits for this exposure are $2 million per
loss and $10 million aggregate per year subject to a
deductible of $100,000.

Workers Compensation, Automobile Liability and
General Liability:We have per
occurrence deductible amounts for workers compensation of
$500,000, auto liability of $250,000 and general liability of
$1,000,000.

NOTE 26  SUBSEQUENT
EVENTS

The following transactions occurred subsequent to
December 31, 2003, through March 5, 2004:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | In January 2004, we redeemed all of our 4,562,900
    outstanding 8 5/8% Series C Cumulative Redeemable
    Preferred Shares of Beneficial Interest. The Series C
    Preferred Shares were redeemed at a redemption price of $25.00
    per share for an aggregate redemption price of approximately
    $114.6 million, including accrued distributions. The deferred
    issuance cost of approximately $4.1 million will be
    reflected as a preferred distribution and a reduction of net
    income available to common shareholders.
|
| | 2. | We repaid $300 million of 6.50% unsecured
    notes and $100 million of 6.90% unsecured notes that
    matured in January 2004.                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | 3. | We extended the cash settlement dates of two
    $400 million forward-starting interest rate swaps from
    January 2004 to April 2004.                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | 4. | We sold Cal Center located in Sacramento,
    California to an unaffiliated party for approximately
    $18.5 million. Cal Center consisted of approximately
    118,172 square feet.                                                                                                                                                                                                                                                                                                                                                        
|
| | 5. | We acquired the remaining interest in the 1301
    Avenue of the Americas office building for approximately
    $60.7 million. Our economic interest in the joint venture
    after the acquisition is 100% and as a result of the acquisition
    the property is now consolidated.                                                                                                                                                                                                                                                         
|
| | 6. | In February 2004, we prepaid the mortgage notes
    that were secured by 580 California for approximately
    $56.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                 

100



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

None.






|         |                         
|-------- | ------------------------
|Item 9A. | Controls and Procedures.

Evaluation of Disclosure Controls and
Procedures

Our principal executive officer, Richard D.
Kincaid, and our principal financial officer, Marsha C.
Williams, evaluated as of December 31, 2003 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 Control over Financial
Reporting

There were no changes in our internal control
over financial reporting identified in connection with the
evaluation referred to above that have materially affected, or
are reasonably likely to materially affect, our internal control
over financial reporting.

101



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PART III






|         |                                                        
|-------- | -------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant.

Information about Trustees of Equity Office and
Section 16(a) beneficial ownership reporting compliance is
incorporated by reference from the discussion under
Proposal 1 in our Proxy Statement for the 2004 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.

Information about our audit committee financial
expert is incorporated by reference to our Proxy Statement for
the 2004 Annual Meeting of Shareholders.

We have adopted a code of ethics that applies to
our principal officer, principal financial officer and principal
accounting officer, which is available on our website at:
http://www.equityoffice.com. Any amendment to, or waiver from, a
provision of such code of ethics will be posted on our website.






|         |                        
|-------- | -----------------------
|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 2004 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 2004 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 2004 Annual Meeting of Shareholders.






|         |                                            
|-------- | -------------------------------------------
|Item 14. | Principal Accountant Fees and
    Services.

Information about principal accountant fees and
services is incorporated by reference from the discussion under
the heading Independent Auditors in our Proxy
Statement for the 2004 Annual Meeting of Shareholders.

102



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##### Table of Contents






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, 2003 and 2002



| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Operations for the
    years ended December 31, 2003, 2002 and 2001                         
|
| | Consolidated Statements of Changes in
    Shareholders Equity for the years ended December 31,
    2003, 2002 and 2001
|
| | Consolidated Statements of Net Comprehensive
    Income for the years ended December 31, 2003, 2002 and 2001           
|
| | Consolidated Statements of Cash Flows for the
    years ended December 31, 2003, 2002 and 2001                         

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules:

Schedule III  Real Estate and
Accumulated Depreciation as of December 31, 2003

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 on Form 8-K was filed
    during the quarter ended December 31, 2003:

|                 |  |                                                           
|---------------- |  | ----------------------------------------------------------
|Date of Event    |  | Items Reported/Financial Statements Filed                 
|                 |  |                                                           
|November 3, 2003 |  | Item 12. Results of Operations and Financial
    Condition

(c) Exhibits:

See Item 15(a)(3) above.

(d) Financial Statement Schedules:

Schedule III  Real Estate and
Accumulated Depreciation as of December 31, 2003.

103



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Appendix A

FINANCIAL COVENANT CALCULATIONS AS OF DECEMBER
31, 2003


UNDER CERTAIN INDENTURE AGREEMENTS


EOP OPERATING LIMITED PARTNERSHIP

UNSECURED NOTES FINANCIAL COVENANT COMPLIANCE
AS OF DECEMBER 31, 2003


(Dollars in thousands)


Compliance with these financial covenants
requires EOP Partnership to apply specialized terms, the
definitions of which are set forth in the related unsecured note
indentures, and to calculate ratios in the manner prescribed in
the indentures.

This section presents such ratios as of
December 31, 2003 to show that EOP Partnership was in
compliance with the applicable financial covenants contained in
the unsecured note indentures, copies of which have been filed
as exhibits to the EOP Partnerships periodic reports
filed with the SEC. Management is not presenting these ratios
and the related calculations for any other purpose or for any
other period, and is not intending for these measures to
otherwise provide information about EOP Partnerships
financial condition or results of operations. Investors should
not rely on these measures other than for the purpose of testing
EOP Partnerships compliance with the financial covenants
contained in the unsecured note indentures as of
December 31, 2003.

Debt to Adjusted Total Assets

EOP Partnership may not, and may not permit a
subsidiary to, incur any Debt, other than intercompany Debt, if,
immediately after giving effect to the incurrence of such
additional Debt, the aggregate principal amount of all
outstanding Debt of EOP Partnership and its Subsidiaries on a
consolidated basis determined in accordance with GAAP is greater
than 60% of the sum of:



| |     |                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) | Total Assets as of the end of the fiscal quarter
    covered in EOP Partnerships Annual Report on
    Form 10-K or Quarterly Report on Form 10-Q, as the
    case may be, most recently filed with the SEC prior to the
    incurrence of such additional Debt and



| |      |                                                                                                                                                                                                                                                                                                                                    
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) | the increase or decrease in Total Assets from the
    end of such quarter including, without limitation, any increase
    in Total Assets resulting from the incurrence of such additional
    Debt (such increase or decrease together with EOP
    Partnerships Total Assets is referred to as the
    Adjusted Total Assets).

104



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##### Table of Contents



|                                                                                        |                       |   |            |            | 
|--------------------------------------------------------------------------------------- | --------------------- | - | ---------- | ---------- | 
|Mortgage debt (excluding a net discount of
    $(13,663))                               |                       | $ | 2,329,552  |           
|Unsecured notes (excluding a net premium of
    $12,412)                                |                       |   | 8,816,500  |           
|Line of credit                                                                          |                       |   | 334,000    |           
|EOP Partnerships share of unconsolidated
    non-recourse mortgage debt                |                       |   | 797,268    |           
|                                                                                        |                       |   |           
|                                                                                        | Debt                  |   | $          | 12,277,320 | 
|                                                                                        |                       |   |           
|Investments in real estate                                                              |                       | $ | 23,985,839 |           
|Developments in process                                                                 |                       |   | 75,232     |           
|Land available for development                                                          |                       |   | 251,151    |           
|Cash and cash equivalents                                                               |                       |   | 69,398     |           
|Escrow deposits and restricted cash                                                     |                       |   | 75,186     |           
|Investments in unconsolidated joint ventures                                            |                       |   | 1,127,232  |           
|Prepaid expenses and other assets (net of
    discount of $66,200)                      |                       |   | 344,940    |           
|Change in cash subsequent to December 31,
    2003 as a result of property dispositions |                       |   | 2,031      |           
|                                                                                        |                       |   |           
|                                                                                        | Adjusted Total Assets |   | $          | 25,931,009 | 
|                                                                                        |                       |   |           
|Ratio                                                                                   |                       |   | 47         | %         
|                                                                                        |                       |   |           
|Maximum Ratio                                                                           |                       |   | 60         | %         
|                                                                                        |                       |   |           

Secured Debt to Adjusted Total
Assets

EOP Partnership may not, and may not permit any
Subsidiary to, incur any Secured Debt of EOP Partnership or any
Subsidiary if, immediately after giving effect to the incurrence
of such additional Secured Debt, the aggregate principal amount
of all outstanding Secured Debt of EOP Partnership and its
Subsidiaries on a consolidated basis is greater than 40% of
Adjusted Total Assets.

|                                                                         |                       |   |           |            | 
|------------------------------------------------------------------------ | --------------------- | - | --------- | ---------- | 
|Mortgage debt (excluding a net discount of
    $(13,663))                |                       | $ | 2,329,552 |           
|EOP Partnerships share of unconsolidated
    non-recourse mortgage debt |                       |   | 797,268   |           
|                                                                         |                       |   |          
|                                                                         | Secured Debt          |   | $         | 3,126,820  | 
|                                                                         |                       |   |          
|                                                                         | Adjusted Total Assets |   | $         | 25,931,009 | 
|                                                                         |                       |   |          
|Ratio                                                                    |                       |   | 12        | %         
|                                                                         |                       |   |          
|Maximum Ratio                                                            |                       |   | 40        | %         
|                                                                         |                       |   |          

Consolidated Income Available for Debt Service
to Annual Debt Service Charge

EOP Partnership may not, and may not permit any
Subsidiary to, incur any Debt, other than intercompany Debt
(provided that, in the case of Debt owed to Subsidiaries, such
Debt is subordinate in right of payment to the debt securities),
if the ratio of Consolidated Income Available for Debt Service
to Annual Debt Service Charge (in each case as defined below)
for the period consisting of the four consecutive fiscal
quarters most recently ended prior to the date on which the
additional Debt is to be incurred shall have been less than 1.5
to 1 on a pro forma basis after giving effect to the incurrence
of such Debt and to the application of the proceeds therefrom,
and calculated on the assumption that:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | such Debt and any other Debt incurred by EOP
    Partnership or a Subsidiary since the first day of such
    four-quarter period, which was outstanding at the end of such
    period, had been incurred at the beginning of such period and
    continued to be outstanding throughout such period, and the
    application of the proceeds of such Debt, including to refinance
    other Debt, had occurred at the beginning of such period;

105



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the repayment or retirement of any other Debt by
    EOP Partnership or a Subsidiary since the first day of such
    four-quarter period had been repaid or retired at the beginning
    of such period, except that, in determining the amount of Debt
    so repaid or retired, the amount of Debt under any revolving
    credit facility is computed based upon the average daily balance
    of such Debt during such period;                                                                                                                                                                                                                                                   
|
| |  | in the case of Acquired Indebtedness or Debt
    incurred in connection with any acquisition since the first day
    of the four-quarter period, the related acquisition had occurred
    as of the first day of the period with the appropriate
    adjustments with respect to the acquisition being included in
    the pro forma calculation; and                                                                                                                                                                                                                                                                                                                                
|
| |  | in the case of any increase or decrease in Total
    Assets, or any other acquisition or disposition by EOP
    Partnership or any Subsidiary of any asset or group of assets,
    since the first day of such four-quarter period, including by
    merger, stock purchase or sale, or asset purchase or sale, such
    increase, decrease or other acquisition or disposition or any
    related repayment of Debt had occurred as of the first day of
    such period with the appropriate adjustments to revenues,
    expenses and Debt levels with respect to such increase, decrease
    or other acquisition or disposition being included in such pro
    forma calculation.

|                                                                            |                                                |   |         |           | 
|--------------------------------------------------------------------------- | ---------------------------------------------- | - | ------- | --------- | 
|Pro forma net income                                                        |                                                | $ | 476,622 |          
|Pro forma interest expense                                                  |                                                |   | 777,417 |          
|Pro forma amortization of mark to market
    discounts/premiums             |                                                |   | (4,737  | )        
|Pro forma provision for taxes                                               |                                                |   | 5,204   |          
|Pro forma amortization and depreciation                                     |                                                |   | 707,567 |          
|Less pro forma income from investments in
    unconsolidated joint ventures |                                                |   | (71,153 | )        
|                                                                            |                                                |   |        
|                                                                            | Consolidated Income Available for Debt Service |   | $       | 1,890,920 | 
|                                                                            |                                                |   |        
|Pro forma interest expense                                                  |                                                | $ | 777,417 |          
|Pro forma amortization of mark to market
    discounts/premiums             |                                                |   | (4,737  | )        
|                                                                            |                                                |   |        
|                                                                            | Annual Debt Service Charge                     |   | $       | 772,680   | 
|                                                                            |                                                |   |        
|Ratio                                                                       |                                                |   | 2.45    |          
|                                                                            |                                                |   |        
|Minimum Ratio                                                               |                                                |   | 1.50    |          
|                                                                            |                                                |   |        

Total Unencumbered Assets to Unsecured
Debt

EOP Partnership is required at all times to
maintain Total Unencumbered Assets of not less than 150% of the
aggregate outstanding principal amount of all outstanding
Unsecured Debt of EOP Partnership and its Subsidiaries on a
consolidated basis.

|                                                                        |                           |   |            |            | 
|----------------------------------------------------------------------- | ------------------------- | - | ---------- | ---------- | 
|Total undepreciated real estate assets                                  |                           | $ | 18,795,143 |           
|Cash and cash equivalents                                               |                           |   | 69,398     |           
|Escrow deposits and restricted cash                                     |                           |   | 75,186     |           
|Prepaid expenses and other assets (net of
    discount of $66,200)      |                           |   | 344,940    |           
|Unencumbered investments in unconsolidated joint
    venture properties |                           |   | 800,540    |           
|                                                                        |                           |   |           
|                                                                        | Total Unencumbered Assets |   | $          | 20,085,207 | 
|                                                                        |                           |   |           
|Unsecured notes (excluding a net premium of
    $12,412)                |                           | $ | 8,816,500  |           
|Line of credit                                                          |                           |   | 334,000    |           
|                                                                        |                           |   |           
|                                                                        | Unsecured Debt            |   | $          | 9,150,500  | 
|                                                                        |                           |   |           
|Ratio                                                                   |                           |   | 219        | %         
|                                                                        |                           |   |           
|Minimum Ratio(a)                                                        |                           |   | 150        | %         
|                                                                        |                           |   |           



---



|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(a) | The unsecured notes assumed in the merger with
    Spieker Partnership are subject to a minimum ratio of 165%.

106



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##### Table of Contents



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/ RICHARD D. KINCAID

| |                                      
| | -------------------------------------
| |                                      
| | Richard D. Kincaid                   
| | President and Chief Executive Officer
|
| | Date: March 15, 2004                 

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
indicated as of March 15, 2004.

|                                             |  |                                                                                          |  | 
|-------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | 
|                                             |  |                                                                                         
|Signature                                    |  | Title                                                                                   
|                                             |  |                                                                                         
|                                            
|/s/ RICHARD D. KINCAIDRichard D. Kincaid     |  | President, Chief Executive Officer and Trustee
    (principal executive officer)        
|                                            
|/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/ SAMUEL ZELLSamuel Zell                   |  | Chairman of the Board of Trustees                                                       
|                                            
|/s/ THOMAS E. DOBROWSKIThomas E. Dobrowski   |  | Trustee                                                                                 
|                                            
|/s/ WILLIAM M. GOODYEARWilliam M. Goodyear   |  | Trustee                                                                                 
|                                            
|/s/ JAMES D. HARPER, JR.James D. Harper, Jr. |  | Trustee                                                                                 
|                                            
|David K. McKown                              |  | Trustee                                                                                 
|                                            
|/s/ JOHN S. MOODY, SR.John S. Moody, Sr.     |  | Trustee                                                                                 
|                                            
|/s/ JERRY M. REINSDORFJerry M. Reinsdorf     |  | Trustee                                                                                 

107



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##### Table of Contents



|                                                     |  |         |  | 
|---------------------------------------------------- |  | ------- |  | 
|                                                     |  |        
|Signature                                            |  | Title  
|                                                     |  |        
|/s/ SHELI Z. ROSENBERGSheli Z. Rosenberg             |  | Trustee
|                                                    
|/s/ EDWIN N. SIDMANEdwin N. Sidman                   |  | Trustee
|                                                    
|/s/ WARREN E. SPIEKER, JR.Warren E. Spieker, Jr.     |  | Trustee
|                                                    
|/s/ JAN H.W.R. VAN DER VLISTJan H.W.R. van der Vlist |  | Trustee
|                                                    
|/s/ WILLIAM WILSON IIIWilliam Wilson III             |  | Trustee

108



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##### Table of Contents



EXHIBIT INDEX

|            |     |  |             |                                                                                                                                                                                                                                                                                                                |          |                                                                                                                  
|----------- | --- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -----------------------------------------------------------------------------------------------------------------
|Exhibit No. |     |  | Description |                                                                                                                                                                                                                                                                                                                | Location
|            |     |  |             |                                                                                                                                                                                                                                                                                                                |         
|            | 3.1 |  |             | Restated Declaration of Trust                                                                                                                                                                                                                                                                                  |          | Incorporated by reference to Exhibit 3.2 to
    Equity Offices 2003 Third Quarter Form l0-Q                     
|           
|            | 3.2 |  |             | Third Amended and Restated Bylaws                                                                                                                                                                                                                                                                              |          | Incorporated by reference to Exhibit 3.1 to
    Equity Offices 2003 First Quarter Form l0-Q                     
|           
|            | 4.1 |  |             | Indenture, dated as of September 2, 1997,
    between EOP Partnership and State Street Bank and Trust Company                                                                                                                                                                                                  |          | Incorporated by reference to Exhibit 4.1 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.2 |  |             | First Supplemental Indenture, dated as of
    February 9, 1998, between EOP Partnership and State Street
    Bank and Trust Company                                                                                                                                                                            |          | Incorporated by reference to Exhibit 4.2 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.3 |  |             | $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 1997 Annual Report on Form 10-K, as amended,
    has not been filed.                                                          |          | Incorporated by reference to Exhibit 4.4 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.4 |  |             | $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 1997 Annual Report on Form 10-K, as
    amended, has not been filed.                                    |          | Incorporated by reference to Exhibit 4.5 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.5 |  |             | $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. |          | Incorporated by reference to Exhibit 4.6 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.6 |  |             | $30,000,000 7.24% Senior Note due 2004                                                                                                                                                                                                                                                                         |          | Incorporated by reference to Exhibit 4.8 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.7 |  |             | $50,000,000 7.36% Senior Note due 2005                                                                                                                                                                                                                                                                         |          | Incorporated by reference to Exhibit 4.9 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended  
|           
|            | 4.8 |  |             | $50,000,000 7.44% Senior Note due 2006                                                                                                                                                                                                                                                                         |          | Incorporated by reference to Exhibit 4.10 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended 
|           
|            | 4.9 |  |             | $50,000,000 7.41% Senior Note due 2007                                                                                                                                                                                                                                                                         |          | Incorporated by reference to Exhibit 4.11 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended)



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##### Table of Contents



|            |      |  |             |                                                                                                                                                                      |          |                                                                                                                                              
|----------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      |  | Description |                                                                                                                                                                      | Location
|            |      |  |             |                                                                                                                                                                      |         
|           
|            | 4.10 |  |             | $250,000,000 6.50% Notes due 2004                                                                                                                                    |          | Incorporated by reference to Exhibit 4.12 to
    Equity Offices 2000 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.11 |  |             | $300,000,000 6.763% Notes due 2007                                                                                                                                   |          | Incorporated by reference to Exhibit 4.13 to
    Equity Offices 2000 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.12 |  |             | $225,000,000 7.25% Notes due 2028                                                                                                                                    |          | Incorporated by reference to Exhibit 4.14 to
    Equity Offices 2000 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.13 |  |             | $300,000,000 6.5% Notes due 2004                                                                                                                                     |          | Incorporated by reference to Exhibit 4.16 to
    Equity Offices 2000 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.14 |  |             | $500,000,000 6.8% Notes due 2009                                                                                                                                     |          | Incorporated by reference to Exhibit 4.17 to
    Equity Offices 2000 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.15 |  |             | $200,000,000 7.5% Notes due April 19,
    2029                                                                                                                       |          | Incorporated by reference to Exhibit 4.23 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on April 19, 1999       
|           
|            | 4.16 |  |             | $400,000,000 8.375% Note due March 15,
    2006                                                                                                                      |          | Incorporated by reference to Exhibit 4.24 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on March 24, 2000       
|           
|            | 4.17 |  |             | $100,000,000 8.375% Note due March 15,
    2006                                                                                                                      |          | Incorporated by reference to Exhibit 4.25 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on March 24, 2000       
|           
|            | 4.18 |  |             | $360,000,000 8.10% Note due August 1,
    2010 of EOP Partnership                                                                                                    |          | Incorporated by reference to Exhibit 4.1 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on August 8, 2000        
|           
|            | 4.19 |  |             | Indenture, dated August 23, 2000, by and
    among EOP Partnership, Equity Office and State Street Bank and
    Trust Company                                        |          | Incorporated by reference to Exhibit 4.1 to
    Equity Offices Registration Statement on Form S-3
    (SEC File No. 333-47754)              
|           
|            | 4.20 |  |             | $300,000,000 (or applicable lesser amount) Senior
    Exchangeable Note due November 15, 2008, and related
    Guarantee                                             |          | Incorporated by reference to Exhibit 4.23 to
    Equity Offices 2001 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.21 |  |             | $25,000,000 (or applicable lesser amount) Senior
    Exchangeable Note due November 15, 2008, and related
    Guarantee                                              |          | Incorporated by reference to Exhibit 4.24 to
    Equity Offices 2001 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.22 |  |             | $325,000,000 (or applicable lesser amount) Senior
    Exchangeable Notes due November 15, 2008, and related
    Guarantee                                            |          | Incorporated by reference to Exhibit 4.25 to
    Equity Offices 2001 Annual Report on Form 10-K, as
    amended                             
|           
|            | 4.23 |  |             | 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 by reference to Exhibit 4.1 to
    EOP Partnerships Registration Statement on Form S-3,
    as amended (SEC File No. 333-43530)



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##### Table of Contents



|            |      |  |             |                                                                                                                                                                                                 |          |                                                                                                                                             
|----------- | ---- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      |  | Description |                                                                                                                                                                                                 | Location
|            |      |  |             |                                                                                                                                                                                                 |         
|           
|            | 4.24 |  |             | 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 by reference to Exhibit 4.2 to
    Equity Offices Registration Statement on Form S-3, as
    amended (SEC File No. 333- 58976)
|           
|            | 4.25 |  |             | $400,000,000 7 3/4% Note due 2007                                                                                                                                                               |          | Incorporated by reference to Exhibit 4.5 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on November 20, 2000    
|           
|            | 4.26 |  |             | $200,000,000 7 3/4% Note due 2007                                                                                                                                                               |          | Incorporated by reference to Exhibit 4.6 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on November 20, 2000    
|           
|            | 4.27 |  |             | $500,000,000 7.000% Note due July 15, 2011,
    and related Guarantee                                                                                                                           |          | Incorporated by reference to Exhibit 4.4 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on July 18, 2001        
|           
|            | 4.28 |  |             | $500,000,000 7.000% Note due July 15, 2011,
    and related Guarantee                                                                                                                           |          | Incorporated by reference to Exhibit 4.5 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on July 18, 2001        
|           
|            | 4.29 |  |             | $100,000,000 7.000% Note due July 15,
    2011, and related Guarantee                                                                                                                           |          | Incorporated by reference to Exhibit 4.6 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on July 18, 2001        
|           
|            | 4.30 |  |             | $300,000,000 7.875% Note due July 15,
    2031, and related Guarantee                                                                                                                           |          | Incorporated by reference to Exhibit 4.7 to
    EOP Partnerships Current Report on Form 8-K filed
    with the SEC on July 18, 2001        
|           
|            | 4.31 |  |             | $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    
|           
|            | 4.32 |  |             | $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    
|           
|            | 4.33 |  |             | Indenture, dated as of December 6, 1995,
    among Spieker and State Street Bank and Trust, as Trustee                                                                                          |          | Incorporated 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       
|           
|            | 4.34 |  |             | Fourth Supplemental Indenture, dated as of
    January 24, 1996, among Spieker, Spieker Partnership and
    State Street                                                                        |          | Incorporated 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       
|           
|            | 4.35 |  |             | $100,000,000 6.90% Note due January 15, 2004                                                                                                                                                    |          | Incorporated 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       



---



##### Table of Contents



|            |      |  |             |                                                                                                                                                                            |          |                                                                                                                                       
|----------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      |  | Description |                                                                                                                                                                            | Location
|            |      |  |             |                                                                                                                                                                            |         
|           
|            | 4.36 |  |             | Fifth Supplemental Indenture, dated as of
    June 20, 1996, among Spieker, Spieker Partnership and State
    Street                                                       |          | Incorporated 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 
|           
|            | 4.37 |  |             | $100,000,000 Medium-Term Notes due nine months or
    more from July 19, 1996                                                                                              |          | Incorporated 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
|           
|            | 4.38 |  |             | Sixth Supplemental Indenture, dated as of
    December 10, 1996, among Spieker, Spieker Partnership and
    State Street                                                   |          | Incorporated 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
|           
|            | 4.39 |  |             | $100,000,000 7.125% Note due December 1, 2006                                                                                                                              |          | Incorporated 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
|           
|            | 4.40 |  |             | Seventh Supplemental Indenture, dated as of
    December 10, 1996, among Spieker, Spieker Partnership and
    State Street                                                 |          | Incorporated 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
|           
|            | 4.41 |  |             | $25,000,000 7.875% Note due December 1, 2016                                                                                                                               |          | Incorporated 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
|           
|            | 4.42 |  |             | Eighth Supplemental Indenture, dated as of
    July 14, 1997, among Spieker, Spieker Partnership and State
    Street                                                      |          | Incorporated 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
|           
|            | 4.43 |  |             | $150,000,000 7.125% Note due July 1, 2009                                                                                                                                  |          | Incorporated 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
|           
|            | 4.44 |  |             | Ninth Supplemental Indenture, dated as of
    September 29, 1997, among Spieker, Spieker Partnership,
    First Trust of California, National Association and State Street |          | Incorporated 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
|           
|            | 4.45 |  |             | $150,000,000 7.50% Debenture due October 1,
    2027                                                                                                                       |          | Incorporated 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
|           
|            | 4.46 |  |             | Tenth Supplemental Indenture, dated as of
    December 8, 1997, among Spieker, Spieker Partnership and
    First Trust of California, National Association                 |          | Incorporated 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
|           
|            | 4.47 |  |             | $200,000,000 7.35% Debenture due December 1,
    2017                                                                                                                      |          | Incorporated 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



---



##### Table of Contents



|            |      |  |             |                                                                                                                                                                                                           |          |                                                                                                                                       
|----------- | ---- |  | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      |  | Description |                                                                                                                                                                                                           | Location
|            |      |  |             |                                                                                                                                                                                                           |         
|           
|            | 4.48 |  |             | Eleventh Supplemental Indenture, dated as of
    January 27, 1998, among Spieker, Spieker Partnership and
    First Trust of California, National Association                                             |          | Incorporated 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
|           
|            | 4.49 |  |             | $150,000,000 6.75% Note due January 15, 2008                                                                                                                                                              |          | Incorporated 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
|           
|            | 4.50 |  |             | Twelfth Supplemental Indenture, dated as of
    February 2, 1998, among Spieker, Spieker Partnership and
    First Trust of California, National Association                                              |          | Incorporated 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
|           
|            | 4.51 |  |             | $125,000,000 6.875% Note due February 1, 2005                                                                                                                                                             |          | Incorporated 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
|           
|            | 4.52 |  |             | Thirteenth Supplemental Indenture, dated as of
    February 2, 1998, among Spieker, Spieker Partnership and
    First Trust of California, National Association                                           |          | Incorporated 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
|           
|            | 4.53 |  |             | $1,500,000 7.0% Note due February 1, 2005                                                                                                                                                                 |          | Incorporated 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
|           
|            | 4.54 |  |             | 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 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
|           
|            | 4.55 |  |             | $25,000,000 6.88% Note due April 30, 2007                                                                                                                                                                 |          | Incorporated 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
|           
|            | 4.56 |  |             | 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 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
|           
|            | 4.57 |  |             | $200,000,000 6.8% Note due May 1, 2004                                                                                                                                                                    |          | Incorporated 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
|           
|            | 4.58 |  |             | $200,000,000 7.25% Note due May 1, 2009                                                                                                                                                                   |          | Incorporated 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



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##### Table of Contents



|            |      |  |             |                                                                                                                                                                                                             |          |                                                                                                                                             
|----------- | ---- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      |  | Description |                                                                                                                                                                                                             | Location
|            |      |  |             |                                                                                                                                                                                                             |         
|           
|            | 4.59 |  |             | 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 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      
|           
|            | 4.60 |  |             | $200,000,000 7.65% Note due December 15, 2010                                                                                                                                                               |          | Incorporated 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      
|           
|            | 4.61 |  |             | Seventeenth Supplemental Indenture relating to
    the substitution of Equity Office and EOP Partnership as
    successor entities for Spieker and Spieker Partnership,
    respectively                    |          | Incorporated 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      
|           
|            | 4.62 |  |             | $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    
|           
|            | 4.63 |  |             | $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    
|           
|            | 4.64 |  |             | $400,000,000 5.875% Note due January 15,
    2013, and related Guarantee                                                                                                                                    |          | Incorporated 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
|           
|            | 4.65 |  |             | $100,000,000 5.875% Note due January 15,
    2013, and related Guarantee                                                                                                                                    |          | Incorporated 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 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                                                                                                                          |          | Incorporated by reference to Exhibit 4.1 to
    EOP Partnerships 2002 Third Quarter Form 1O-Q                                              
|           
|            | 10.3 |  |             | Second Amendment to the Third Amended and
    Restated Agreement of Limited Partnership                                                                                                                     |          | Incorporated by reference to Exhibit 10.1 to
    Equity Offices 2003 Second Quarter Form l0-Q                                              
|           
|            | 10.4 |  |             | Third Amendment to the Third Amended and Restated
    Agreement of Limited Partnership                                                                                                                      |          | Filed herewith                                                                                                                              
|           
|            | 10.5 |  |             | Registration Rights Agreement, dated as of
    July 11, 1997                                                                                                                                                |          | Incorporated by reference to Exhibit 10.2 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended                            



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##### Table of Contents



|            |        |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |                                                                                                                  
|----------- | ------ |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -----------------------------------------------------------------------------------------------------------------
|Exhibit No. |        |  | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                              | Location
|            |        |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                              |         
|           
|            | 10.6   |  |             | Noncompetition Agreement between Equity Office
    and Samuel Zell                                                                                                                                                                                                                                                                                                                                                                           |          | Incorporated by reference to Exhibit 10.3 to
    Equity Offices 1997 Annual Report on Form 10-K, as
    amended 
|           
|            | 10.7   |  |             | Amended and Restated Operating Agreement
    No. 1 of Wilson/ Equity Office, LLC                                                                                                                                                                                                                                                                                                                                                             |          | Incorporated by reference to Exhibit 10.13
    to Equity Offices 2000 Annual Report on Form 10-K, as
    amended
|           
|            | 10.8   |  |             | 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 2002 Second Quarter Form 10-Q                   
|           
|            | 10.9   |  |             | 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 Partnership, Equity Office,
    William Wilson III, Thomas P. Sullivan, Jacqueline U. Moore, A.
    Robert Paratte, H. Lee Van Boven, Terry Reagan, Scott Stephens
    and Jon Knorpp |          | Incorporated by reference to Exhibit 10.8 to
    Equity Offices 2002 Annual Report on Form 10-K                 
|           
|            | 10.10 |  |             | First Amended and Restated 1997 Share Option and
    Share Award Plan                                                                                                                                                                                                                                                                                                                                                                        |          | Incorporated by reference to Exhibit 10.2 to
    Equity Offices 2003 Second Quarter Form 10-Q                   
|           
|            | 10.11 |  |             | First Amendment to First Amended and Restated
    1997 Share Option and Share Award Plan                                                                                                                                                                                                                                                                                                                                                     |          | Incorporated by reference to Exhibit 10.1 to
    Equity Offices 2003 Third Quarter Form l0-Q                    
|           
|            | 10.12 |  |             | Form of Share Appreciation Rights Agreement
    between Equity Office and Jan H. W. R. van der Vlist                                                                                                                                                                                                                                                                                                                                         |          | Incorporated by reference to Exhibit 10.1 to
    Equity Offices 2002 First Quarter Form 10-Q                    
|           
|            | 10.13 |  |             | 2003 Share Option and Share Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                   |          | Incorporated by reference to Exhibit 10.3 to
    Equity Offices 2003 Second Quarter Form 10-Q                   
|           
|            | 10.14 |  |             | First Amendment to 2003 Share Option and Share
    Incentive Plan                                                                                                                                                                                                                                                                                                                                                                            |          | Incorporated by reference to Exhibit 10.2 to
    Equity Offices 2003 Third Quarter Form 10-Q                    
|           
|            | 10.15 |  |             | Second Amended and Restated Supplemental
    Retirement Savings Plan                                                                                                                                                                                                                                                                                                                                                                         |          | Incorporated by reference to Exhibit 10.3 to
    Equity Offices 2003 Third Quarter Form 10-Q                    
|           
|            | 10.l6 |  |             | First Amendment to Second Amended and Restated
    Supplemental Retirement Savings Plan                                                                                                                                                                                                                                                                                                                                                      |          | Incorporated by reference to Exhibit 10.4 to
    Equity Offices 2003 Third Quarter Form l0-Q                    
|           
|            | 10.17 |  |             | Amended and Restated 1997 Non-Qualified Share
    Purchase Plan                                                                                                                                                                                                                                                                                                                                                                              |          | Filed herewith                                                                                                   
|           
|            | 10.18 |  |             | First Amendment to Amended and Restated 1997
    Non-Qualified Share Purchase Plan                                                                                                                                                                                                                                                                                                                                                           |          | Filed herewith                                                                                                   



---



##### Table of Contents



|            |        |  |             |                                                                                                                                                                                 |          |                                                                                                         
|----------- | ------ |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------------------------------------------------------------------------------------------------------
|Exhibit No. |        |  | Description |                                                                                                                                                                                 | Location
|            |        |  |             |                                                                                                                                                                                 |         
|           
|            | 10.19 |  |             | Second Amendment to Second Amended and Restated
    1997 Non-Qualified Share Purchase Plan                                                                                      |          | Incorporated by reference to Exhibit 10.5 to
    Equity Offices 2003 Third Quarter Form l0-Q           
|           
|            | l0.20 |  |             | Third Amendment to Second Amended and Restated
    1997 Non-Qualified Share Purchase Plan                                                                                       |          | Incorporated by reference to Exhibit 10.6 to
    Equity Offices 2003 Third Quarter Form 10-Q           
|           
|            | 10.21 |  |             | Change in Control Agreement by and between Equity
    Office Management L.L.C., Equity Office and Richard D. Kincaid                                                            |          | Incorporated by reference to Exhibit 10.7 to
    Equity Offices 2003 Third Quarter Form 10-Q           
|           
|            | 10.22 |  |             | Change in Control Agreement by and between Equity
    Office Properties Management Corp., Equity Office and Peter H.
    Adams                                                  |          | Incorporated by reference to Exhibit 10.3 to
    Equity Offices 2001 Third Quarter Form l0-Q           
|           
|            | 10.23 |  |             | Assumption and Amendment to Change in Control
    Agreement 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 2002 Third Quarter Form 10-Q           
|           
|            | l0.24 |  |             | Change in Control Agreement 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 2001 Third Quarter
    Form l0-Q
|           
|            | l0.25 |  |             | Assumption and Amendment to Change in Control
    Agreement 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 2002 Third Quarter Form 10-Q           
|           
|            | 10.26 |  |             | Second Assumption and Amendment to Change in
    Control Agreement by and between Equity Office Management
    L.L.C., Equity Office, EOP Partnership and Stanley M. Stevens    |          | Filed herewith                                                                                          
|           
|            | 10.27 |  |             | Severance Agreement by and between David A.
    Helfand and Equity Office                                                                                                       |          | Incorporated by reference to Exhibit 10.4 to
    Equity Offices 2003 Second Quarter Form 10-Q          
|           
|            | 10.28 |  |             | Trustee Compensation Agreement between Sam Zell
    and Equity Office, as amended                                                                                               |          | Filed herewith                                                                                          
|           
|            | 10.29  |  |             | Revolving Credit Agreement for $1,000,000,000
    Revolving Credit Facility dated as of May 9, 2003 among EOP
    Operating Limited Partnership and the Banks listed therein    |          | Incorporated by reference to Exhibit 4.1 to
    Equity Offices 2003 First Quarter Form l0-Q            
|           
|            | 10.30  |  |             | Guaranty of Payment  No. 1 dated
    as of May 9, 2003                                                                                                                         |          | Incorporated by reference to Exhibit 4.2 to
    Equity Offices 2003 First Form 10-Q                    
|           
|            | 10.31  |  |             | Guaranty of Payment  No. 2 dated
    as of May 9, 2003                                                                                                                         |          | Incorporated by reference to Exhibit 4.3 to
    Equity Offices 2003 First Quarter Form 10-Q            



---



##### Table of Contents



|            |       |  |             |                                                                                                                                                                                        |          |                                                                                                
|----------- | ----- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -----------------------------------------------------------------------------------------------
|Exhibit No. |       |  | Description |                                                                                                                                                                                        | Location
|            |       |  |             |                                                                                                                                                                                        |         
|           
|            | 10.32 |  |             | Revolving Credit Agreement for $1,000,000,000
    Revolving Credit Facility dated as of December 17, 2003
    among EOP Operating Limited Partnership and the Banks listed
    therein |          | Filed herewith                                                                                 
|           
|            | 10.33 |  |             | Guaranty of Payment dated as of December 17,
    2003                                                                                                                                  |          | Filed herewith                                                                                 
|           
|            | 21.1  |  |             | List of Subsidiaries                                                                                                                                                                   |          | Incorporate by reference to Exhibit 21.1 to
    Equity Offices 2002 Annual Report on Form 10-K
|           
|            | 23.1  |  |             | Consent of Independent Auditors                                                                                                                                                        |          | Filed herewith                                                                                 
|            | 31.1  |  |             | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                |          | Filed herewith                                                                                 
|           
|            | 31.2  |  |             | Section 1350 Certifications                                                                                                                                                            |          | Filed herewith                                                                                 
|           
|            | 99.1  |  |             | 1997 Non-Qualified Employee Share Purchase Plan
    Financial Statements as of and for the years ended
    December 31, 2003, 2002 and 2001                                            |          | Filed herewith                                                                                 




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



---



##### Table of Contents



Schedule III  Real Estate and
Accumulated Depreciation as of December 31, 2003

|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|-- |  | -------------------------------------------------- |  | ----- | -------- | - | -------- | ------------ | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------- | - | ------- | ------------ |  | - | --- |  |  | - | ------ | 
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |  
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           | Costs Capitalized |              
|   |  |                                                    |  |       |          |   |          |              |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|   |  |                                                    |  |       |          |   |          |              |         |              |    | Equity Office   |           |                   | Acquisition   |  
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |  
|   |  |                                                    |  |       |          |   |          |              |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |        
|   |  | Description                                        |  | Notes |          |   | Location |              | State   |              |    | at 12/31/03     |           |                   | Land          |   |     | Improvements |        |              | Land    |   |         | Improvements | 
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              | 
|   |  | Office Properties:                                 |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|   |  | Atlanta Region                                     |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|1  |  | 200 Galleria                                       |  |       |          |   |          | Atlanta      |         |              | GA |                 |           | $                 |              |   |     | $            | 10,282 |              |         | $ | 58,266  |              |  | $ |    |  |  | $ | 3,571  | 
|2  |  | One Ninety One Peachtree Tower                     |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 46,500 |              |         |   | 263,500 |              |  |   |    |  |  |   | 1,461  | 
|3  |  | Central Park                                       |  |       | (3)      |   |          | Atlanta      |         |              | GA |                 |           |                   | (55,399       | ) |     |              | 9,163  |              |         |   | 82,463  |              |  |   |    |  |  |   | 5,592  | 
|4  |  | Lakeside Office Park                               |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 4,792  |              |         |   | 43,132  |              |  |   |    |  |  |   | 2,603  | 
|5  |  | Paces West                                         |  |       | (3)      |   |          | Atlanta      |         |              | GA |                 |           |                   |              |   |     |              | 8,336  |              |         |   | 75,025  |              |  |   |    |  |  |   | 6,828  | 
|6  |  | Perimeter Center                                   |  |       |          |   |          | Atlanta      |         |              | GA |                 |           |                   | (195,811      | ) |     |              | 52,374 |              |         |   | 415,161 |              |  |   | 279 |  |  |   | 30,301 | 
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              | 
|  
|   |  | Atlanta Region Totals                              |  |       | (251,210 | ) |          |              | 131,447 |              |    |                 | 937,547   |                   |               |   | 279 |              |        |              | 50,356  |  
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |    
|  
|   |  | Boston Region                                      |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|7  |  | Crosby Corporate Center                            |  |       |          |   |          | Bedford      |         |              | MA |                 |           |                   |              |   |     |              | 5,958  |              |         |   | 53,620  |              |  |   | 115 |  |  |   | 2,297  | 
|8  |  | Crosby Corporate Center II                         |  |       |          |   |          | Bedford      |         |              | MA |                 |           |                   |              |   |     |              | 9,385  |              |         |   | 27,584  |              |  |   | 9   |  |  |   | 5,226  | 
|9  |  | 125 Summer Street                                  |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   | (69,541       | ) |     |              | 18,000 |              |         |   | 102,000 |              |  |   |    |  |  |   | 7,585  | 
|10 |  | 222 Berkley Street                                 |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 25,593 |              |         |   | 145,029 |              |  |   |    |  |  |   | 4,067  | 
|11 |  | 500 Boylston Street                                |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 39,000 |              |         |   | 221,000 |              |  |   |    |  |  |   |       | 
|12 |  | Sixty State Street                                 |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   | (74,541       | ) |     |              |       |              |         |   | 256,000 |              |  |   |    |  |  |   | 3,166  | 
|13 |  | 100 Summer Street                                  |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 22,271 |              |         |   | 200,439 |              |  |   |    |  |  |   | 62,369 | 
|14 |  | 150 Federal Street                                 |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 14,131 |              |         |   | 127,182 |              |  |   |    |  |  |   | 15,994 | 
|15 |  | 175 Federal Street                                 |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 4,894  |              |         |   | 44,045  |              |  |   |    |  |  |   | 3,571  | 
|16 |  | 2 Oliver Street- 147 Milk Street                   |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 5,017  |              |         |   | 45,157  |              |  |   |    |  |  |   | 3,109  | 
|17 |  | 225 Franklin Street                                |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 34,608 |              |         |   | 311,471 |              |  |   |    |  |  |   | 10,434 | 
|18 |  | 28 State Street                                    |  |       | (3)      |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 9,513  |              |         |   | 85,623  |              |  |   |    |  |  |   | 41,649 | 
|19 |  | Center Plaza                                       |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 18,942 |              |         |   | 170,480 |              |  |   |    |  |  |   | 9,555  | 
|20 |  | Russia Wharf                                       |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              | 3,891  |              |         |   | 35,023  |              |  |   |    |  |  |   | 2,975  | 
|21 |  | South Station                                      |  |       |          |   |          | Boston       |         |              | MA |                 |           |                   |              |   |     |              |       |              |         |   | 31,074  |              |  |   |    |  |  |   | 1,284  | 
|22 |  | New England Executive Park                         |  |       |          |   |          | Burlington   |         |              | MA |                 |           |                   |              |   |     |              | 14,733 |              |         |   | 132,594 |              |  |   | 194 |  |  |   | 14,033 | 
|23 |  | New England Executive Park 17                      |  |       |          |   |          | Burlington   |         |              | MA |                 |           |                   |              |   |     |              | 904    |              |         |   | 8,135   |              |  |   | 9   |  |  |   | 872    | 
|24 |  | The Tower at New England Executive Park Burlington |  |       |          |   |          |              |         |              | MA |                 |           |                   |              |   |     |              | 2,793  |              |         |   | 31,462  |              |  |   | 5   |  |  |   | 11,390 | 
|25 |  | One Memorial Drive                                 |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   | (56,658       | ) |     |              | 14,862 |              |         |   | 88,216  |              |  |   |    |  |  |   | 2,286  | 
|26 |  | One Canal Park                                     |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   |              |   |     |              | 2,006  |              |         |   | 18,054  |              |  |   |    |  |  |   | 1,912  | 
|27 |  | 245 First Street (a/k/a Riverview II)              |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   |              |   |     |              | 3,978  |              |         |   | 35,804  |              |  |   | 6   |  |  |   | 1,818  | 
|28 |  | Ten Canal Park                                     |  |       |          |   |          | Cambridge    |         |              | MA |                 |           |                   |              |   |     |              | 2,383  |              |         |   | 21,448  |              |  |   |    |  |  |   | 152    | 
|29 |  | Riverside                                          |  |       |          |   |          | Newton       |         |              | MA |                 |           |                   |              |   |     |              | 24,000 |              |         |   | 69,849  |              |  |   |    |  |  |   | 19,876 | 
|30 |  | 175 Wyman Street                                   |  |       |          |   |          | Walthan      |         |              | MA |                 |           |                   |              |   |     |              | 14,600 |              |         |   | 5,400   |              |  |   | 3   |  |  |   | 1,425  | 
|31 |  | Wellesley Office Park 1-4                          |  |       |          |   |          | Wellesley    |         |              | MA |                 |           |                   | 0             |   |     |              | 5,518  |              |         |   | 49,662  |              |  |   | 6   |  |  |   | 4,620  | 
|32 |  | Wellesley 5-7                                      |  |       |          |   |          | Wellesley    |         |              | MA |                 |           |                   |              |   |     |              | 9,335  |              |         |   | 84,018  |              |  |   | 12  |  |  |   | 4,521  | 
|33 |  | Wellesley 8                                        |  |       |          |   |          | Wellesley    |         |              | MA |                 |           |                   |              |   |     |              | 1,639  |              |         |   | 14,754  |              |  |   | 2   |  |  |   | 193    | 
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              | 
|  
|   |  | Boston Region Totals                               |  |       | (200,740 | ) |          |              | 307,955 |              |    |                 | 2,415,125 |                   |               |   | 361 |              |        |              | 236,377 |  
|   |  |                                                    |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |    
|  
|   |  | Chicago Region                                     |  |       |          |   |          |              |         |              |    |                 |           |                   |               |   |     |              |        |              |         |   |         |              |  |   |     |  |  |   |        | 
|34 |  | 101 N. Wacker                                      |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 10,035 |              |         |   | 90,319  |              |  |   |    |  |  |   | 4,136  | 
|35 |  | 200 West Adams                                     |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 11,654 |              |         |   | 104,887 |              |  |   |    |  |  |   | 7,067  | 
|36 |  | 30 N. LaSalle Street                               |  |       | (3)      |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 12,489 |              |         |   | 112,401 |              |  |   |    |  |  |   | 7,788  | 
|37 |  | Civic Opera House                                  |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 12,771 |              |         |   | 114,942 |              |  |   |    |  |  |   | 7,663  | 
|38 |  | One North Franklin                                 |  |       | (3)      |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 9,830  |              |         |   | 88,474  |              |  |   |    |  |  |   | 7,209  | 
|39 |  | Presidents Plaza                                   |  |       |          |   |          | Chicago      |         |              | IL |                 |           |                   |              |   |     |              | 13,435 |              |         |   | 120,919 |              |  |   |    |  |  |   | 9,354  | 
|40 |  | BP Tower                                           |  |       | (3)      |   |          | Cleveland    |         |              | OH |                 |           |                   | (84,059       | ) |     |              | 17,403 |              |         |   | 157,260 |              |  |   |    |  |  |   | 9,066  | 
|41 |  | Community Corporate Center                         |  |       | (3)      |   |          | Columbus     |         |              | OH |                 |           |                   |              |   |     |              | 3,019  |              |         |   | 27,170  |              |  |   |    |  |  |   | 3,343  | 
|42 |  | One Crosswoods Center                              |  |       | (3)      |   |          | Columbus     |         |              | OH |                 |           |                   |              |   |     |              | 1,059  |              |         |   | 9,530   |              |  |   |    |  |  |   | 2,054  | 
|43 |  | Corporate 500 Centre                               |  |       |          |   |          | Deerfield    |         |              | IL |                 |           |                   | (75,836       | ) |     |              | 20,100 |              |         |   | 113,900 |              |  |   |    |  |  |   | 5,670  | 
|44 |  | 1700 Higgins                                       |  |       | (3)      |   |          | Des Plaines  |         |              | IL |                 |           |                   |              |   |     |              | 1,323  |              |         |   | 11,908  |              |  |   | 64  |  |  |   | 1,224  | 
|45 |  | Tri-State International                            |  |       |          |   |          | Lincolnshire |         |              | IL |                 |           |                   |              |   |     |              | 10,925 |              |         |   | 98,327  |              |  |   | 290 |  |  |   | 3,917  | 
|46 |  | 1111 West 22nd Street                              |  |       |          |   |          | Oak Brook    |         |              | IL |                 |           |                   |              |   |     |              | 4,834  |              |         |   | 43,508  |              |  |   | 48  |  |  |   | 2,071  | 
|47 |  | One Lincoln Centre                                 |  |       |          |   |          | Oakbrook     |         |              | IL |                 |           |                   |              |   |     |              | 7,350  |              |         |   | 41,650  |              |  |   |    |  |  |   | 2,720  | 

[Additional columns below]

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

|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           |  |          |  |  |    | 
|-- |  | ----------------------- | ------- | ------------ | ------------ | - | --------- | -------- | ----------- | - | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------- |  | -------- |  |  | -- | 
|   |  |                         |         |              |              |   |           |          |             |   |              |              
|   |  | Gross Amount Carried at |         |              |              |   |           |          |             |   |              |               | 
|   |  | Close of Period         |         |              |              |   |           |          |             |   |              |               | 
|   |  | 12/31/2003              |         |              |              |   |           |          |             |   |              |               | 
|   |  |                         |         |              |              |   |           |          | Date of     |   |              |               | 
|   |  |                         |         | Building and |              |   |           |          | Accumulated |   |              | Construction/ |  | Date       |          | Depreciable | 
|   |  | Land                    |         |              | Improvements |   |           | Total(1) |             |   | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)  | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|1  |  | $                       | 10,282  |              |              | $ | 61,838    |          |             | $ | 72,120       |               |  | $          | (5,970   | )           |  | 1985      |  | 06/19/00 |  |  | 40 | 
|2  |  |                         | 46,500  |              |              |   | 264,961   |          |             |   | 311,461      |               |  |            | (23,596  | )           |  | 1991      |  | 06/19/00 |  |  | 40 | 
|3  |  |                         | 9,163   |              |              |   | 88,055    |          |             |   | 97,218       |               |  |            | (15,726  | )           |  | 1986      |  | 10/17/95 |  |  | 40 | 
|4  |  |                         | 4,792   |              |              |   | 45,735    |          |             |   | 50,527       |               |  |            | (7,685   | )           |  | 1972-1978 |  | 12/19/97 |  |  | 40 | 
|5  |  |                         | 8,336   |              |              |   | 81,852    |          |             |   | 90,188       |               |  |            | (14,100  | )           |  | 1988      |  | 10/31/94 |  |  | 40 | 
|6  |  |                         | 52,653  |              |              |   | 445,462   |          |             |   | 498,115      |               |  |            | (74,591  | )           |  | 1970/1989 |  | 12/19/97 |  |  | 40 | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|   |  |                         | 131,727 |              |              |   | 987,903   |          |             |   | 1,119,630    |               |  |            | (141,667 | )           |  |           |  |          |  |  |    | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|7  |  |                         | 6,073   |              |              |   | 55,918    |          |             |   | 61,990       |               |  |            | (8,562   | )           |  | 1996      |  | 12/19/97 |  |  | 40 | 
|8  |  |                         | 9,393   |              |              |   | 32,810    |          |             |   | 42,204       |               |  |            | (6,540   | )           |  | 1998      |  | 12/19/97 |  |  | 40 | 
|9  |  |                         | 18,000  |              |              |   | 109,585   |          |             |   | 127,585      |               |  |            | (10,447  | )           |  | 1989      |  | 06/19/00 |  |  | 40 | 
|10 |  |                         | 25,593  |              |              |   | 149,096   |          |             |   | 174,689      |               |  |            | (13,701  | )           |  | 1991      |  | 06/19/00 |  |  | 40 | 
|11 |  |                         | 39,000  |              |              |   | 221,000   |          |             |   | 260,000      |               |  |            | (19,568  | )           |  | 1988      |  | 06/19/00 |  |  | 40 | 
|12 |  |                         |        |              |              |   | 259,166   |          |             |   | 259,166      |               |  |            | (22,958  | )           |  | 1979      |  | 06/19/00 |  |  | 40 | 
|13 |  |                         | 22,271  |              |              |   | 262,808   |          |             |   | 285,079      |               |  |            | (35,327  | )           |  | 1974/1990 |  | 03/18/98 |  |  | 40 | 
|14 |  |                         | 14,131  |              |              |   | 143,176   |          |             |   | 157,307      |               |  |            | (25,153  | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|15 |  |                         | 4,894   |              |              |   | 47,616    |          |             |   | 52,510       |               |  |            | (7,651   | )           |  | 1977      |  | 12/19/97 |  |  | 40 | 
|16 |  |                         | 5,017   |              |              |   | 48,266    |          |             |   | 53,283       |               |  |            | (8,605   | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|17 |  |                         | 34,608  |              |              |   | 321,905   |          |             |   | 356,513      |               |  |            | (49,711  | )           |  | 1966/1996 |  | 12/19/97 |  |  | 40 | 
|18 |  |                         | 9,513   |              |              |   | 127,272   |          |             |   | 136,784      |               |  |            | (30,712  | )           |  | 1968/1997 |  | 01/23/95 |  |  | 40 | 
|19 |  |                         | 18,942  |              |              |   | 180,036   |          |             |   | 198,978      |               |  |            | (28,293  | )           |  | 1969      |  | 12/19/97 |  |  | 40 | 
|20 |  |                         | 3,891   |              |              |   | 37,997    |          |             |   | 41,889       |               |  |            | (6,877   | )           |  | 1978-1982 |  | 12/19/97 |  |  | 40 | 
|21 |  |                         |        |              |              |   | 32,358    |          |             |   | 32,358       |               |  |            | (5,053   | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|22 |  |                         | 14,927  |              |              |   | 146,627   |          |             |   | 161,553      |               |  |            | (24,675  | )           |  | 1970/1985 |  | 12/19/97 |  |  | 40 | 
|23 |  |                         | 912     |              |              |   | 9,007     |          |             |   | 9,920        |               |  |            | (1,542   | )           |  | 1970/1985 |  | 12/19/97 |  |  | 40 | 
|24 |  |                         | 2,798   |              |              |   | 42,852    |          |             |   | 45,650       |               |  |            | (7,298   | )           |  | 1971/1999 |  | 03/31/98 |  |  | 40 | 
|25 |  |                         | 14,862  |              |              |   | 90,502    |          |             |   | 105,364      |               |  |            | (8,046   | )           |  | 1985      |  | 06/19/00 |  |  | 40 | 
|26 |  |                         | 2,006   |              |              |   | 19,966    |          |             |   | 21,972       |               |  |            | (3,225   | )           |  | 1987      |  | 12/19/97 |  |  | 40 | 
|27 |  |                         | 3,984   |              |              |   | 37,621    |          |             |   | 41,606       |               |  |            | (5,659   | )           |  | 1985-1986 |  | 12/19/97 |  |  | 40 | 
|28 |  |                         | 2,383   |              |              |   | 21,600    |          |             |   | 23,983       |               |  |            | (3,258   | )           |  | 1987      |  | 12/19/97 |  |  | 40 | 
|29 |  |                         | 24,000  |              |              |   | 89,726    |          |             |   | 113,726      |               |  |            | (11,421  | )           |  | 2000      |  | 12/19/97 |  |  | 40 | 
|30 |  |                         | 14,603  |              |              |   | 6,825     |          |             |   | 21,428       |               |  |            | (6,826   | )           |  | 1999      |  | 12/19/97 |  |  | 40 | 
|31 |  |                         | 5,524   |              |              |   | 54,282    |          |             |   | 59,805       |               |  |            | (8,465   | )           |  | 1963/1984 |  | 12/19/97 |  |  | 40 | 
|32 |  |                         | 9,348   |              |              |   | 88,539    |          |             |   | 97,887       |               |  |            | (13,929  | )           |  | 1963/1984 |  | 12/19/97 |  |  | 40 | 
|33 |  |                         | 1,641   |              |              |   | 14,947    |          |             |   | 16,589       |               |  |            | (2,249   | )           |  | 1963/1984 |  | 12/19/97 |  |  | 40 | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|   |  |                         | 308,315 |              |              |   | 2,651,502 |          |             |   | 2,959,818    |               |  |            | (375,751 | )           |  |           |  |          |  |  |    | 
|   |  |                         |         |              |              |   |           |          |             |   |              |               |  |            |          |             |  |           | 
|34 |  |                         | 10,035  |              |              |   | 94,455    |          |             |   | 104,491      |               |  |            | (15,636  | )           |  | 1980/1990 |  | 12/19/97 |  |  | 40 | 
|35 |  |                         | 11,654  |              |              |   | 111,954   |          |             |   | 123,608      |               |  |            | (19,460  | )           |  | 1985/1996 |  | 12/19/97 |  |  | 40 | 
|36 |  |                         | 12,489  |              |              |   | 120,189   |          |             |   | 132,678      |               |  |            | (21,380  | )           |  | 1974/1990 |  | 06/13/97 |  |  | 40 | 
|37 |  |                         | 12,771  |              |              |   | 122,604   |          |             |   | 135,376      |               |  |            | (20,533  | )           |  | 1929/1996 |  | 12/19/97 |  |  | 40 | 
|38 |  |                         | 9,830   |              |              |   | 95,684    |          |             |   | 105,514      |               |  |            | (15,866  | )           |  | 1991      |  | 12/31/92 |  |  | 40 | 
|39 |  |                         | 13,435  |              |              |   | 130,273   |          |             |   | 143,708      |               |  |            | (20,445  | )           |  | 1980-1982 |  | 12/19/97 |  |  | 40 | 
|40 |  |                         | 17,403  |              |              |   | 166,327   |          |             |   | 183,729      |               |  |            | (28,007  | )           |  | 1985      |  | 09/04/96 |  |  | 40 | 
|41 |  |                         | 3,019   |              |              |   | 30,513    |          |             |   | 33,532       |               |  |            | (5,822   | )           |  | 1987      |  | 06/14/90 |  |  | 40 | 
|42 |  |                         | 1,059   |              |              |   | 11,584    |          |             |   | 12,643       |               |  |            | (2,161   | )           |  | 1984      |  | 11/12/93 |  |  | 40 | 
|43 |  |                         | 20,100  |              |              |   | 119,570   |          |             |   | 139,670      |               |  |            | (11,283  | )           |  | 1986/1990 |  | 06/19/00 |  |  | 40 | 
|44 |  |                         | 1,387   |              |              |   | 13,132    |          |             |   | 14,519       |               |  |            | (2,503   | )           |  | 1986      |  | 11/12/93 |  |  | 40 | 
|45 |  |                         | 11,216  |              |              |   | 102,245   |          |             |   | 113,460      |               |  |            | (16,712  | )           |  | 1986      |  | 12/19/97 |  |  | 40 | 
|46 |  |                         | 4,882   |              |              |   | 45,579    |          |             |   | 50,461       |               |  |            | (7,762   | )           |  | 1984      |  | 12/19/97 |  |  | 40 | 
|47 |  |                         | 7,350   |              |              |   | 44,370    |          |             |   | 51,720       |               |  |            | (4,416   | )           |  | 1986      |  | 06/19/00 |  |  | 40 | 



---



##### Table of Contents



|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|-- |  | ------------------------------------ |  | ----- | -------- | - | -------- | ---------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------- |  | ------- | ------------ |  |  | --- |  |  |  | ------ | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |  
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           | Costs Capitalized |              
|   |  |                                      |  |       |          |   |          |                  |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|   |  |                                      |  |       |          |   |          |                  |         |              |    | Equity Office   |           |                   | Acquisition   |  
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |  
|   |  |                                      |  |       |          |   |          |                  |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |        
|   |  | Description                          |  | Notes |          |   | Location |                  | State   |              |    | at 12/31/03     |           |                   | Land          |   |     | Improvements |        |              | Land    |  |         | Improvements | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|48 |  | Oakbrook Terrace Tower               |  |       | (3)      |   |          | Oakbrook Terrace |         |              | IL |                 |           |                   |              |   |     |              | 11,950 |              |         |  | 107,552 |              |  |  | 486 |  |  |  | 7,497  | 
|49 |  | Westbrook Corporate Center           |  |       |          |   |          | Westchester      |         |              | IL |                 |           |                   | (97,864       | ) |     |              | 24,875 |              |         |  | 223,874 |              |  |  | 30  |  |  |  | 19,317 | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|  
|   |  | Chicago Region Totals                |  |       | (257,759 | ) |          |                  | 173,054 |              |    |                 | 1,466,621 |                   |               |   | 918 |              |        |              | 100,096 | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |    
|  
|   |  | Denver Region                        |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|50 |  | 410 17th Street                      |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 4,474  |              |         |  | 40,264  |              |  |  |    |  |  |  | 6,764  | 
|51 |  | 4949 S. Syracuse                     |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 822    |              |         |  | 7,401   |              |  |  | 22  |  |  |  | 1,086  | 
|52 |  | Denver Corporate
    Center II & III |  |       | (3)      |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 4,059  |              |         |  | 36,534  |              |  |  | 3   |  |  |  | 5,185  | 
|53 |  | Denver Post Tower                    |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              |       |              |         |  | 52,937  |              |  |  |    |  |  |  | 6,715  | 
|54 |  | Dominion Plaza                       |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 5,990  |              |         |  | 53,911  |              |  |  |    |  |  |  | 6,820  | 
|55 |  | Metropoint I                         |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 4,375  |              |         |  | 39,375  |              |  |  |    |  |  |  | 4,192  | 
|56 |  | Metropoint II                        |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 1,777  |              |         |  | 17,865  |              |  |  |    |  |  |  | 3,203  | 
|57 |  | US Bank Tower                        |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 6,301  |              |         |  | 65,842  |              |  |  |    |  |  |  | 42     | 
|58 |  | Tabor Center                         |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 12,948 |              |         |  | 116,536 |              |  |  |    |  |  |  | 36,642 | 
|59 |  | Trinity Place                        |  |       |          |   |          | Denver           |         |              | CO |                 |           |                   |              |   |     |              | 1,898  |              |         |  | 17,085  |              |  |  |    |  |  |  | 2,740  | 
|60 |  | Millennium Plaza                     |  |       |          |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 4,257  |              |         |  | 38,314  |              |  |  |    |  |  |  | 391    | 
|61 |  | Terrace Building                     |  |       |          |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 1,546  |              |         |  | 13,865  |              |  |  | 29  |  |  |  | 943    | 
|62 |  | The Quadrant                         |  |       | (3)      |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 4,357  |              |         |  | 39,215  |              |  |  |    |  |  |  | 4,045  | 
|63 |  | The Solarium                         |  |       |          |   |          | Englewood        |         |              | CO |                 |           |                   |              |   |     |              | 1,951  |              |         |  | 17,560  |              |  |  |    |  |  |  | 2,299  | 
|64 |  | Wells Fargo Center                   |  |       |          |   |          | Minneapolis      |         |              | MN |                 |           |                   | (111,662      | ) |     |              | 39,045 |              |         |  | 221,255 |              |  |  |    |  |  |  | 612    | 
|65 |  | LaSalle Plaza                        |  |       |          |   |          | Minneapolis      |         |              | MN |                 |           |                   |              |   |     |              | 9,681  |              |         |  | 87,127  |              |  |  |    |  |  |  | 4,581  | 
|66 |  | Northland Plaza                      |  |       |          |   |          | Bloomington      |         |              | MN |                 |           |                   |              |   |     |              | 4,705  |              |         |  | 42,346  |              |  |  |    |  |  |  | 3,940  | 
|67 |  | 49 East Thomas Road                  |  |       | (3)      |   |          | Phoenix          |         |              | AZ |                 |           |                   |              |   |     |              | 65     |              |         |  | 588     |              |  |  |    |  |  |  | 41     | 
|68 |  | One Phoenix Plaza                    |  |       | (3)      |   |          | Phoenix          |         |              | AZ |                 |           |                   |              |   |     |              | 6,192  |              |         |  | 55,727  |              |  |  |    |  |  |  |       | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|  
|   |  | Denver Region Totals                 |  |       | (111,662 | ) |          |                  | 114,446 |              |    |                 | 963,746   |                   |               |   | 55  |              |        |              | 90,239  | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |    
|  
|   |  | Houston Region                       |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|69 |  | One American Center                  |  |       | (3)      |   |          | Austin           |         |              | TX |                 |           |                   |              |   |     |              |       |              |         |  | 70,812  |              |  |  |    |  |  |  | 10,594 | 
|70 |  | One Congress Plaza                   |  |       | (3)      |   |          | Austin           |         |              | TX |                 |           |                   |              |   |     |              | 6,502  |              |         |  | 58,521  |              |  |  |    |  |  |  | 4,055  | 
|71 |  | San Jacinto Center                   |  |       | (3)      |   |          | Austin           |         |              | TX |                 |           |                   |              |   |     |              | 5,075  |              |         |  | 45,671  |              |  |  |    |  |  |  | 6,116  | 
|72 |  | 9400 NCX                             |  |       | (3)      |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 3,570  |              |         |  | 32,130  |              |  |  |    |  |  |  | 5,914  | 
|73 |  | Colonnade I & II                     |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 9,044  |              |         |  | 81,394  |              |  |  |    |  |  |  | 7,182  | 
|74 |  | Colonnade III                        |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 6,152  |              |         |  | 56,634  |              |  |  |    |  |  |  | 5,555  | 
|75 |  | Eighty-Eighty Central                |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 3,760  |              |         |  | 33,854  |              |  |  |    |  |  |  | 4,470  | 
|76 |  | Four Forest Plaza                    |  |       | (3)      |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 4,768  |              |         |  | 42,911  |              |  |  |    |  |  |  | 6,843  | 
|77 |  | Lakeside Square                      |  |       |          |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 5,262  |              |         |  | 47,369  |              |  |  | 24  |  |  |  | 5,722  | 
|78 |  | North Central Plaza Three            |  |       | (3)      |   |          | Dallas           |         |              | TX |                 |           |                   |              |   |     |              | 3,612  |              |         |  | 32,689  |              |  |  |    |  |  |  | 5,138  | 
|79 |  | 2500 CityWest                        |  |       |          |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 8,089  |              |         |  | 72,811  |              |  |  |    |  |  |  | 3,971  | 
|80 |  | Brookhollow Central                  |  |       |          |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 7,226  |              |         |  | 65,053  |              |  |  |    |  |  |  | 8,992  | 
|81 |  | Intercontinental Center              |  |       | (3)      |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 1,602  |              |         |  | 14,420  |              |  |  | 70  |  |  |  | 2,428  | 
|82 |  | Northborough Tower                   |  |       | (3)      |   |          | Houston          |         |              | TX |                 |           |                   |              |   |     |              | 1,355  |              |         |  | 12,199  |              |  |  | 37  |  |  |  | 5,657  | 
|83 |  | San Felipe Plaza                     |  |       | (3)      |   |          | Houston          |         |              | TX |                 |           |                   | (48,924       | ) |     |              | 13,471 |              |         |  | 117,984 |              |  |  | 20  |  |  |  | 11,534 | 
|84 |  | 909 E. Las Colinas Boulevard         |  |       |          |   |          | Irving           |         |              | TX |                 |           |                   |              |   |     |              | 5,129  |              |         |  | 46,164  |              |  |  | 13  |  |  |  | 2,873  | 
|85 |  | 545 E. John Carpenter Freeway        |  |       |          |   |          | Irving           |         |              | TX |                 |           |                   |              |   |     |              | 5,525  |              |         |  | 49,728  |              |  |  |    |  |  |  | 2,253  | 
|86 |  | One Lakeway Center                   |  |       | (3)      |   |          | Metairie         |         |              | LA |                 |           |                   |              |   |     |              | 2,804  |              |         |  | 25,235  |              |  |  |    |  |  |  | 4,156  | 
|87 |  | Three Lakeway Center                 |  |       | (3)      |   |          | Metairie         |         |              | LA |                 |           |                   |              |   |     |              | 4,695  |              |         |  | 43,661  |              |  |  | 59  |  |  |  | 4,053  | 
|88 |  | Two Lakeway Center                   |  |       | (3)      |   |          | Metairie         |         |              | LA |                 |           |                   |              |   |     |              | 4,644  |              |         |  | 41,792  |              |  |  | 49  |  |  |  | 4,282  | 
|89 |  | 601 Tchoupitoulas Garage             |  |       |          |   |          | New Orleans      |         |              | LA |                 |           |                   |              |   |     |              | 1,180  |              |         |  | 10,620  |              |  |  |    |  |  |  | 298    | 
|90 |  | LL&E Tower                           |  |       |          |   |          | New Orleans      |         |              | LA |                 |           |                   |              |   |     |              | 6,186  |              |         |  | 55,672  |              |  |  | 46  |  |  |  | 7,976  | 
|91 |  | Texaco Center                        |  |       |          |   |          | New Orleans      |         |              | LA |                 |           |                   |              |   |     |              | 6,686  |              |         |  | 60,177  |              |  |  | 10  |  |  |  | 5,076  | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|  
|   |  | Houston Region Totals                |  |       | (48,924  | ) |          |                  | 116,338 |              |    |                 | 1,117,502 |                   |               |   | 327 |              |        |              | 125,139 | 
|   |  |                                      |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |    
|  
|   |  | Los Angeles Region                   |  |       |          |   |          |                  |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |  |  |  |        | 
|92 |  | Stadium Towers                       |  |       |          |   |          | Anaheim          |         |              | CA |                 |           |                   |              |   |     |              | 6,683  |              |         |  | 37,868  |              |  |  |    |  |  |  | 1,361  | 
|93 |  | Brea Corporate Place                 |  |       |          |   |          | Brea             |         |              | CA |                 |           |                   |              |   |     |              |       |              |         |  | 35,129  |              |  |  |    |  |  |  | 1,207  | 
|94 |  | Brea Corporate Plaza                 |  |       |          |   |          | Brea             |         |              | CA |                 |           |                   |              |   |     |              | 1,902  |              |         |  | 10,776  |              |  |  |    |  |  |  | 748    | 
|95 |  | Brea Financial Commons               |  |       |          |   |          | Brea             |         |              | CA |                 |           |                   |              |   |     |              | 2,640  |              |         |  | 14,960  |              |  |  |    |  |  |  | 222    | 
|96 |  | Brea Park Centre                     |  |       |          |   |          | Brea             |         |              | CA |                 |           |                   |              |   |     |              | 2,682  |              |         |  | 15,198  |              |  |  |    |  |  |  | 1,826  | 
|97 |  | Cerritos Towne Center                |  |       |          |   |          | Cerritos         |         |              | CA |                 |           |                   |              |   |     |              |       |              |         |  | 60,368  |              |  |  |    |  |  |  | 2,366  | 

[Additional columns below]

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

|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  |  |          |  |  |    | 
|-- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | ---------------- |  | -------- |  |  | -- | 
|   |  |                         |         |              |              |  |           |          |             |  |              |              
|   |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|   |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|   |  | 12/31/2003              |         |              |              |  |           |          |             |  |              |               | 
|   |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|   |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|   |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)         | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|48 |  |                         | 12,436  |              |              |  | 115,048   |          |             |  | 127,484      |               |  |            | (20,519  | )           |  | 1988             |  | 04/16/97 |  |  | 40 | 
|49 |  |                         | 24,905  |              |              |  | 243,191   |          |             |  | 268,096      |               |  |            | (38,742  | )           |  | 1985/1996        |  | 12/19/97 |  |  | 40 | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|   |  |                         | 173,972 |              |              |  | 1,566,717 |          |             |  | 1,740,689    |               |  |            | (251,247 | )           |  |                  |  |          |  |  |    | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|50 |  |                         | 4,474   |              |              |  | 47,028    |          |             |  | 51,501       |               |  |            | (7,652   | )           |  | 1978             |  | 04/30/98 |  |  | 40 | 
|51 |  |                         | 845     |              |              |  | 8,487     |          |             |  | 9,331        |               |  |            | (1,388   | )           |  | 1982             |  | 07/15/98 |  |  | 40 | 
|52 |  |                         | 4,063   |              |              |  | 41,719    |          |             |  | 45,782       |               |  |            | (7,346   | )           |  | 1981/1993-1997   |  | 12/20/90 |  |  | 40 | 
|53 |  |                         |        |              |              |  | 59,652    |          |             |  | 59,652       |               |  |            | (10,363  | )           |  | 1984             |  | 04/21/98 |  |  | 40 | 
|54 |  |                         | 5,990   |              |              |  | 60,731    |          |             |  | 66,721       |               |  |            | (10,528  | )           |  | 1983             |  | 05/14/98 |  |  | 40 | 
|55 |  |                         | 4,375   |              |              |  | 43,566    |          |             |  | 47,941       |               |  |            | (6,385   | )           |  | 1987             |  | 07/15/98 |  |  | 40 | 
|56 |  |                         | 1,777   |              |              |  | 21,067    |          |             |  | 22,844       |               |  |            | (3,854   | )           |  | 1999             |  | 04/10/00 |  |  | 40 | 
|57 |  |                         | 6,301   |              |              |  | 65,884    |          |             |  | 72,185       |               |  |            | (1,283   | )           |  | 1974/2001        |  | 08/12/03 |  |  | 35 | 
|58 |  |                         | 12,948  |              |              |  | 153,178   |          |             |  | 166,126      |               |  |            | (20,120  | )           |  | 1985             |  | 04/30/98 |  |  | 40 | 
|59 |  |                         | 1,898   |              |              |  | 19,826    |          |             |  | 21,724       |               |  |            | (3,426   | )           |  | 1983             |  | 04/30/98 |  |  | 40 | 
|60 |  |                         | 4,257   |              |              |  | 38,705    |          |             |  | 42,962       |               |  |            | (5,449   | )           |  | 1982             |  | 05/19/98 |  |  | 40 | 
|61 |  |                         | 1,576   |              |              |  | 14,807    |          |             |  | 16,383       |               |  |            | (2,348   | )           |  | 1982             |  | 07/15/98 |  |  | 40 | 
|62 |  |                         | 4,357   |              |              |  | 43,260    |          |             |  | 47,617       |               |  |            | (7,894   | )           |  | 1985             |  | 12/01/92 |  |  | 40 | 
|63 |  |                         | 1,951   |              |              |  | 19,859    |          |             |  | 21,810       |               |  |            | (3,160   | )           |  | 1982             |  | 07/15/98 |  |  | 40 | 
|64 |  |                         | 39,045  |              |              |  | 221,867   |          |             |  | 260,912      |               |  |            | (19,677  | )           |  | 1988             |  | 06/19/00 |  |  | 40 | 
|65 |  |                         | 9,681   |              |              |  | 91,707    |          |             |  | 101,388      |               |  |            | (14,915  | )           |  | 1991             |  | 11/25/97 |  |  | 40 | 
|66 |  |                         | 4,705   |              |              |  | 46,286    |          |             |  | 50,991       |               |  |            | (7,080   | )           |  | 1985             |  | 07/02/98 |  |  | 40 | 
|67 |  |                         | 65      |              |              |  | 629       |          |             |  | 694          |               |  |            | (111     | )           |  | 1974/1993        |  | 12/11/96 |  |  | 40 | 
|68 |  |                         | 6,192   |              |              |  | 55,727    |          |             |  | 61,919       |               |  |            | (8,995   | )           |  | 1989             |  | 12/04/96 |  |  | 40 | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|   |  |                         | 114,500 |              |              |  | 1,053,985 |          |             |  | 1,168,485    |               |  |            | (141,971 | )           |  |                  |  |          |  |  |    | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|69 |  |                         |        |              |              |  | 81,405    |          |             |  | 81,405       |               |  |            | (14,168  | )           |  | 1984             |  | 11/01/95 |  |  | 40 | 
|70 |  |                         | 6,502   |              |              |  | 62,576    |          |             |  | 69,079       |               |  |            | (11,605  | )           |  | 1987             |  | 11/12/93 |  |  | 40 | 
|71 |  |                         | 5,075   |              |              |  | 51,787    |          |             |  | 56,861       |               |  |            | (9,197   | )           |  | 1987             |  | 12/13/91 |  |  | 40 | 
|72 |  |                         | 3,570   |              |              |  | 38,044    |          |             |  | 41,614       |               |  |            | (7,970   | )           |  | 1981/1995        |  | 06/24/94 |  |  | 40 | 
|73 |  |                         | 9,044   |              |              |  | 88,576    |          |             |  | 97,620       |               |  |            | (13,779  | )           |  | 1983-1985        |  | 09/30/98 |  |  | 40 | 
|74 |  |                         | 6,152   |              |              |  | 62,190    |          |             |  | 68,342       |               |  |            | (9,414   | )           |  | 1998             |  | 09/30/98 |  |  | 40 | 
|75 |  |                         | 3,760   |              |              |  | 38,324    |          |             |  | 42,083       |               |  |            | (6,681   | )           |  | 1984             |  | 10/01/97 |  |  | 40 | 
|76 |  |                         | 4,768   |              |              |  | 49,754    |          |             |  | 54,522       |               |  |            | (8,870   | )           |  | 1985             |  | 06/29/89 |  |  | 40 | 
|77 |  |                         | 5,286   |              |              |  | 53,091    |          |             |  | 58,378       |               |  |            | (8,964   | )           |  | 1987             |  | 11/24/97 |  |  | 40 | 
|78 |  |                         | 3,612   |              |              |  | 37,827    |          |             |  | 41,439       |               |  |            | (6,749   | )           |  | 1986/1994        |  | 04/21/92 |  |  | 40 | 
|79 |  |                         | 8,089   |              |              |  | 76,782    |          |             |  | 84,871       |               |  |            | (12,779  | )           |  | 1983             |  | 10/01/97 |  |  | 40 | 
|80 |  |                         | 7,226   |              |              |  | 74,044    |          |             |  | 81,271       |               |  |            | (13,249  | )           |  | 1979, 1981, 1995 |  | 10/01/97 |  |  | 40 | 
|81 |  |                         | 1,672   |              |              |  | 16,849    |          |             |  | 18,521       |               |  |            | (3,241   | )           |  | 1983/1991        |  | 06/28/89 |  |  | 40 | 
|82 |  |                         | 1,392   |              |              |  | 17,856    |          |             |  | 19,249       |               |  |            | (2,850   | )           |  | 1983/1990        |  | 08/03/89 |  |  | 40 | 
|83 |  |                         | 13,491  |              |              |  | 129,518   |          |             |  | 143,009      |               |  |            | (23,881  | )           |  | 1984             |  | 09/29/87 |  |  | 40 | 
|84 |  |                         | 5,142   |              |              |  | 49,037    |          |             |  | 54,180       |               |  |            | (6,006   | )           |  | 1988             |  | 01/07/99 |  |  | 40 | 
|85 |  |                         | 5,525   |              |              |  | 51,981    |          |             |  | 57,507       |               |  |            | (6,700   | )           |  | 1985             |  | 01/07/99 |  |  | 40 | 
|86 |  |                         | 2,804   |              |              |  | 29,391    |          |             |  | 32,195       |               |  |            | (5,895   | )           |  | 1981/1996        |  | 11/12/93 |  |  | 40 | 
|87 |  |                         | 4,754   |              |              |  | 47,714    |          |             |  | 52,469       |               |  |            | (8,301   | )           |  | 1987/1996        |  | 11/12/93 |  |  | 40 | 
|88 |  |                         | 4,693   |              |              |  | 46,074    |          |             |  | 50,767       |               |  |            | (8,614   | )           |  | 1984/1996        |  | 11/12/93 |  |  | 40 | 
|89 |  |                         | 1,180   |              |              |  | 10,917    |          |             |  | 12,097       |               |  |            | (1,764   | )           |  | 1982             |  | 09/03/97 |  |  | 40 | 
|90 |  |                         | 6,232   |              |              |  | 63,648    |          |             |  | 69,880       |               |  |            | (11,634  | )           |  | 1987             |  | 09/03/97 |  |  | 40 | 
|91 |  |                         | 6,696   |              |              |  | 65,253    |          |             |  | 71,949       |               |  |            | (11,502  | )           |  | 1984             |  | 09/03/97 |  |  | 40 | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|   |  |                         | 116,666 |              |              |  | 1,242,640 |          |             |  | 1,359,306    |               |  |            | (213,814 | )           |  |                  |  |          |  |  |    | 
|   |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|92 |  |                         | 6,683   |              |              |  | 39,229    |          |             |  | 45,912       |               |  |            | (2,579   | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|93 |  |                         |        |              |              |  | 36,335    |          |             |  | 36,335       |               |  |            | (2,359   | )           |  | 1987             |  | 07/02/01 |  |  | 40 | 
|94 |  |                         | 1,902   |              |              |  | 11,524    |          |             |  | 13,426       |               |  |            | (875     | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 
|95 |  |                         | 2,640   |              |              |  | 15,182    |          |             |  | 17,822       |               |  |            | (1,009   | )           |  | 1982/1989        |  | 07/02/01 |  |  | 40 | 
|96 |  |                         | 2,682   |              |              |  | 17,024    |          |             |  | 19,706       |               |  |            | (1,305   | )           |  | 1979-1982,1990   |  | 07/02/01 |  |  | 40 | 
|97 |  |                         |        |              |              |  | 62,734    |          |             |  | 62,734       |               |  |            | (3,977   | )           |  | 1989/1998        |  | 07/02/01 |  |  | 40 | 



---



##### Table of Contents



|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |         |              |         |  |         |              |  |  |     |  |  |  |        | 
|--- |  | --------------------------------- |  | ----- | -------- | - | -------- | ------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | -- | ------------ | ------- | ------------ | ------- |  | ------- | ------------ |  |  | --- |  |  |  | ------ | 
|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           | Costs Capitalized |              
|    |  |                                   |  |       |          |   |          |               |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                                   |  |       |          |   |          |               |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                                   |  |       |          |   |          |               |         | Encumbrances |    |                 |           |                   | Building and  |   |    |              |         | Building and |        
|    |  | Description                       |  | Notes |          |   | Location |               | State   |              |    | at 12/31/03     |           |                   | Land          |   |    | Improvements |         |              | Land    |  |         | Improvements | 
|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |         |              |         |  |         |              | 
|98  |  | 700 North Brand                   |  |       |          |   |          | Glendale      |         |              | CA |                 |           |                   | (24,180       | ) |    |              | 5,970   |              |         |  | 33,828  |              |  |  |    |  |  |  | 2,437  | 
|99  |  | 18301 Von Karman (Apple Building) |  |       |          |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 6,027   |              |         |  | 34,152  |              |  |  |    |  |  |  | 1,630  | 
|100 |  | 18581 Teller                      |  |       |          |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 1,485   |              |         |  | 8,415   |              |  |  |    |  |  |  | 1,632  | 
|101 |  | 2600 Michelson                    |  |       |          |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 11,291  |              |         |  | 63,984  |              |  |  |    |  |  |  | 1,957  | 
|102 |  | Fairchild Corporate Center        |  |       |          |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 2,363   |              |         |  | 13,388  |              |  |  |    |  |  |  | 655    | 
|103 |  | Inwood Park                       |  |       |          |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 3,543   |              |         |  | 20,079  |              |  |  |    |  |  |  | 714    | 
|104 |  | Tower 17                          |  |       |          |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 7,562   |              |         |  | 42,849  |              |  |  |    |  |  |  | 1,444  | 
|105 |  | 1920 Main Plaza                   |  |       | (3)      |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 5,281   |              |         |  | 47,526  |              |  |  |    |  |  |  | 4,018  | 
|106 |  | 2010 Main Plaza                   |  |       | (3)      |   |          | Irvine        |         |              | CA |                 |           |                   |              |   |    |              | 5,197   |              |         |  | 46,774  |              |  |  |    |  |  |  | 4,397  | 
|107 |  | The Tower in Westwood             |  |       |          |   |          | Los Angeles   |         |              | CA |                 |           |                   |              |   |    |              | 10,041  |              |         |  | 56,899  |              |  |  |    |  |  |  | 1,058  | 
|108 |  | 10880 Wilshire Boulevard          |  |       |          |   |          | Los Angeles   |         |              | CA |                 |           |                   |              |   |    |              | 28,009  |              |         |  | 149,841 |              |  |  |    |  |  |  | 9,153  | 
|109 |  | 10960 Wilshire Boulevard          |  |       |          |   |          | Los Angeles   |         |              | CA |                 |           |                   |              |   |    |              | 16,841  |              |         |  | 151,574 |              |  |  |    |  |  |  | 8,265  | 
|110 |  | 550 S. Hope                       |  |       |          |   |          | Los Angeles   |         |              | CA |                 |           |                   |              |   |    |              | 10,016  |              |         |  | 90,146  |              |  |  |    |  |  |  | 10,025 | 
|111 |  | Two California Plaza              |  |       | (3)      |   |          | Los Angeles   |         |              | CA |                 |           |                   |              |   |    |              |        |              |         |  | 156,197 |              |  |  |    |  |  |  | 51,634 | 
|112 |  | Waters Edge Phase I               |  |       | (6)      |   |          | Los Angeles   |         |              | CA |                 |           |                   |              |   |    |              | 16,697  |              |         |  |        |              |  |  |    |  |  |  | 44,000 | 
|113 |  | 1201 Dove Street                  |  |       |          |   |          | Newport Beach |         |              | CA |                 |           |                   |              |   |    |              | 1,998   |              |         |  | 11,320  |              |  |  |    |  |  |  | 419    | 
|114 |  | The City  3800 Chapman           |  |       |          |   |          | Orange        |         |              | CA |                 |           |                   |              |   |    |              | 3,019   |              |         |  | 17,107  |              |  |  |    |  |  |  | 239    | 
|115 |  | 500 Orange Tower                  |  |       |          |   |          | Orange        |         |              | CA |                 |           |                   |              |   |    |              | 2,944   |              |         |  | 32,561  |              |  |  |    |  |  |  | 3,509  | 
|116 |  | 500-600 City Parkway              |  |       |          |   |          | Orange        |         |              | CA |                 |           |                   |              |   |    |              | 7,296   |              |         |  | 41,342  |              |  |  |    |  |  |  | 15,871 | 
|117 |  | City Plaza                        |  |       |          |   |          | Orange        |         |              | CA |                 |           |                   |              |   |    |              | 6,809   |              |         |  | 38,584  |              |  |  |    |  |  |  | 3,780  | 
|118 |  | City Tower                        |  |       |          |   |          | Orange        |         |              | CA |                 |           |                   |              |   |    |              | 10,440  |              |         |  | 59,160  |              |  |  |    |  |  |  | 1,573  | 
|119 |  | 1100 Executive Tower              |  |       | (3)      |   |          | Orange        |         |              | CA |                 |           |                   |              |   |    |              | 4,622   |              |         |  | 41,599  |              |  |  |    |  |  |  | 1,866  | 
|120 |  | 3280 E. Foothill Boulevard        |  |       |          |   |          | Pasadena      |         |              | CA |                 |           |                   |              |   |    |              | 3,396   |              |         |  | 19,246  |              |  |  |    |  |  |  | 1,437  | 
|121 |  | 790 Colorado                      |  |       |          |   |          | Pasadena      |         |              | CA |                 |           |                   |              |   |    |              | 2,355   |              |         |  | 13,343  |              |  |  |    |  |  |  | 2,437  | 
|122 |  | Century Square                    |  |       |          |   |          | Pasadena      |         |              | CA |                 |           |                   |              |   |    |              | 6,787   |              |         |  | 38,457  |              |  |  |    |  |  |  | 23     | 
|123 |  | Pasadena Financial Center         |  |       |          |   |          | Pasadena      |         |              | CA |                 |           |                   |              |   |    |              | 4,779   |              |         |  | 27,084  |              |  |  |    |  |  |  | 346    | 
|124 |  | Centerside II                     |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   | (21,986       | ) |    |              | 5,777   |              |         |  | 32,737  |              |  |  |    |  |  |  | 1,467  | 
|125 |  | La Jolla Centre I & II            |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 12,904  |              |         |  | 73,122  |              |  |  |    |  |  |  | 2,483  | 
|126 |  | Nobel Corporate Plaza             |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 3,697   |              |         |  | 20,948  |              |  |  |    |  |  |  | 703    | 
|127 |  | One Pacific Heights               |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 3,072   |              |         |  | 17,408  |              |  |  |    |  |  |  | 746    | 
|128 |  | Pacific Corporate Plaza           |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 2,100   |              |         |  | 11,900  |              |  |  |    |  |  |  | 150    | 
|129 |  | Park Plaza                        |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 2,203   |              |         |  | 12,484  |              |  |  |    |  |  |  | 253    | 
|130 |  | Westridge                         |  |       |          |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 1,500   |              |         |  | 8,500   |              |  |  |    |  |  |  |       | 
|131 |  | Smith Barney Tower                |  |       | (3)      |   |          | San Diego     |         |              | CA |                 |           |                   |              |   |    |              | 2,658   |              |         |  | 23,919  |              |  |  |    |  |  |  | 4,614  | 
|132 |  | The Plaza at LaJolla Village      |  |       | (3)      |   |          | San Diego     |         |              | CA |                 |           |                   | (77,629       | ) |    |              | 10,916  |              |         |  | 98,243  |              |  |  | 19  |  |  |  | 4,239  | 
|133 |  | Griffin Towers                    |  |       |          |   |          | Santa Ana     |         |              | CA |                 |           |                   |              |   |    |              | 14,317  |              |         |  | 81,127  |              |  |  |    |  |  |  | 3,323  | 
|134 |  | Lincoln Town Center               |  |       |          |   |          | Santa Ana     |         |              | CA |                 |           |                   |              |   |    |              | 4,403   |              |         |  | 24,950  |              |  |  |    |  |  |  | 1,324  | 
|135 |  | 2951 28th Street                  |  |       |          |   |          | Santa Monica  |         |              | CA |                 |           |                   |              |   |    |              | 3,612   |              |         |  | 20,465  |              |  |  |    |  |  |  | 1,939  | 
|136 |  | 429 Santa Monica                  |  |       |          |   |          | Santa Monica  |         |              | CA |                 |           |                   |              |   |    |              | 2,523   |              |         |  | 14,298  |              |  |  |    |  |  |  | 975    | 
|137 |  | Arboretum Courtyard               |  |       |          |   |          | Santa Monica  |         |              | CA |                 |           |                   |              |   |    |              | 6,573   |              |         |  | 37,245  |              |  |  |    |  |  |  | 1,346  | 
|138 |  | Santa Monica Business Park        |  |       |          |   |          | Santa Monica  |         |              | CA |                 |           |                   | (7,947        | ) |    |              |        |              |         |  | 242,155 |              |  |  |    |  |  |  | 6,438  | 
|139 |  | Searise Office Tower              |  |       |          |   |          | Santa Monica  |         |              | CA |                 |           |                   |              |   |    |              | 4,380   |              |         |  | 24,818  |              |  |  |    |  |  |  | 1,341  | 
|140 |  | Wilshire Palisades                |  |       |          |   |          | Santa Monica  |         |              | CA |                 |           |                   | (39,392       | ) |    |              | 9,763   |              |         |  | 55,323  |              |  |  |    |  |  |  | 2,086  | 
|141 |  | Bixby Ranch                       |  |       |          |   |          | Seal Beach    |         |              | CA |                 |           |                   | (26,015       | ) |    |              | 6,450   |              |         |  | 36,550  |              |  |  |    |  |  |  | 1,810  | 
|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |         |              |         |  |         |              | 
|   
|    |  | Los Angeles Region Totals         |  |       | (197,149 | ) |          |               | 295,519 |              |    |                 | 2,265,947 |                   |               |   | 19 |              |         |              | 217,488 | 
|    |  |                                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |   
|   
|    |  | New York Region                   |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |         |              |         |  |         |              |  |  |     |  |  |  |        | 
|142 |  | 527 Madison Avenue                |  |       |          |   |          | New York      |         |              | NY |                 |           |                   |              |   |    |              | 9,155   |              |         |  | 51,877  |              |  |  |    |  |  |  | 4,303  | 
|143 |  | 850 Third Avenue                  |  |       | (3)(5)   |   |          | New York      |         |              | NY |                 |           |                   | (4,515        | ) |    |              | 9,606   |              |         |  | 86,453  |              |  |  | 30  |  |  |  | 5,894  | 
|144 |  | Park Avenue Tower                 |  |       | (5)      |   |          | New York      |         |              | NY |                 |           |                   | (180,000      | ) |    |              | 48,976  |              |         |  | 196,566 |              |  |  | 719 |  |  |  | 11,057 | 
|145 |  | Tower 56                          |  |       |          |   |          | New York      |         |              | NY |                 |           |                   | (22,428       | ) |    |              | 6,853   |              |         |  | 38,832  |              |  |  |    |  |  |  | 1,689  | 
|146 |  | Worldwide Plaza                   |  |       |          |   |          | New York      |         |              | NY |                 |           |                   | (214,856      | ) |    |              | 124,919 |              |         |  | 496,665 |              |  |  |    |  |  |  | 8,477  | 
|147 |  | Shelton Pointe                    |  |       | (3)      |   |          | Shelton       |         |              | CT |                 |           |                   |              |   |    |              | 1,514   |              |         |  | 13,625  |              |  |  |    |  |  |  | 1,430  | 
|148 |  | 177 Broad Street                  |  |       | (3)      |   |          | Stamford      |         |              | CT |                 |           |                   |              |   |    |              | 2,562   |              |         |  | 23,056  |              |  |  |    |  |  |  | 1,052  | 
|149 |  | 300 Atlantic Street               |  |       | (3)      |   |          | Stamford      |         |              | CT |                 |           |                   |              |   |    |              | 4,632   |              |         |  | 41,691  |              |  |  |    |  |  |  | 3,500  | 
|150 |  | Canterbury Green                  |  |       | (3) (4)  |   |          | Stamford      |         |              | CT |                 |           |                   |              |   |    |              | (0.0    | )            |         |  | 41,987  |              |  |  | 92  |  |  |  | 1,801  | 
|151 |  | Four Stamford Plaza               |  |       | (3)      |   |          | Stamford      |         |              | CT |                 |           |                   |              |   |    |              | 4,471   |              |         |  | 40,238  |              |  |  | 24  |  |  |  | 1,209  | 

[Additional columns below]

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

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | ---------------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2003              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)         | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|98  |  |                         | 5,970   |              |              |  | 36,265    |          |             |  | 42,235       |               |  |            | (3,687   | )           |  | 1981             |  | 06/19/00 |  |  | 40 | 
|99  |  |                         | 6,027   |              |              |  | 35,782    |          |             |  | 41,809       |               |  |            | (3,580   | )           |  | 1991             |  | 06/19/00 |  |  | 40 | 
|100 |  |                         | 1,485   |              |              |  | 10,047    |          |             |  | 11,532       |               |  |            | (725     | )           |  | 1983             |  | 07/02/01 |  |  | 40 | 
|101 |  |                         | 11,291  |              |              |  | 65,941    |          |             |  | 77,232       |               |  |            | (4,310   | )           |  | 1986             |  | 07/02/01 |  |  | 40 | 
|102 |  |                         | 2,363   |              |              |  | 14,043    |          |             |  | 16,405       |               |  |            | (962     | )           |  | 1979             |  | 07/02/01 |  |  | 40 | 
|103 |  |                         | 3,543   |              |              |  | 20,793    |          |             |  | 24,336       |               |  |            | (1,322   | )           |  | 1985/1996        |  | 07/02/01 |  |  | 40 | 
|104 |  |                         | 7,562   |              |              |  | 44,292    |          |             |  | 51,854       |               |  |            | (2,847   | )           |  | 1987             |  | 07/02/01 |  |  | 40 | 
|105 |  |                         | 5,281   |              |              |  | 51,544    |          |             |  | 56,825       |               |  |            | (10,158  | )           |  | 1988             |  | 09/29/94 |  |  | 40 | 
|106 |  |                         | 5,197   |              |              |  | 51,171    |          |             |  | 56,368       |               |  |            | (8,507   | )           |  | 1988             |  | 12/13/94 |  |  | 40 | 
|107 |  |                         | 10,041  |              |              |  | 57,956    |          |             |  | 67,997       |               |  |            | (3,662   | )           |  | 1989             |  | 07/02/01 |  |  | 40 | 
|108 |  |                         | 28,009  |              |              |  | 158,995   |          |             |  | 187,004      |               |  |            | (25,491  | )           |  | 1970/1992        |  | 12/19/97 |  |  | 40 | 
|109 |  |                         | 16,841  |              |              |  | 159,839   |          |             |  | 176,680      |               |  |            | (28,561  | )           |  | 1971/1992        |  | 12/19/97 |  |  | 40 | 
|110 |  |                         | 10,016  |              |              |  | 100,171   |          |             |  | 110,187      |               |  |            | (16,399  | )           |  | 1991             |  | 10/06/97 |  |  | 40 | 
|111 |  |                         |        |              |              |  | 207,831   |          |             |  | 207,831      |               |  |            | (46,188  | )           |  | 1992             |  | 08/23/96 |  |  | 40 | 
|112 |  |                         | 16,697  |              |              |  | 44,000    |          |             |  | 60,697       |               |  |            | (1,108   | )           |  | 2002             |  | 06/27/01 |  |  | 40 | 
|113 |  |                         | 1,998   |              |              |  | 11,739    |          |             |  | 13,737       |               |  |            | (736     | )           |  | 1975/1989        |  | 07/02/01 |  |  | 40 | 
|114 |  |                         | 3,019   |              |              |  | 17,346    |          |             |  | 20,365       |               |  |            | (1,073   | )           |  | 1984             |  | 07/02/01 |  |  | 40 | 
|115 |  |                         | 2,944   |              |              |  | 36,070    |          |             |  | 39,013       |               |  |            | (6,111   | )           |  | 1988             |  | 01/01/01 |  |  | 40 | 
|116 |  |                         | 7,296   |              |              |  | 57,213    |          |             |  | 64,508       |               |  |            | (4,282   | )           |  | 1974, 1978, 1998 |  | 07/02/01 |  |  | 40 | 
|117 |  |                         | 6,809   |              |              |  | 42,364    |          |             |  | 49,173       |               |  |            | (2,938   | )           |  | 1970             |  | 07/02/01 |  |  | 40 | 
|118 |  |                         | 10,440  |              |              |  | 60,733    |          |             |  | 71,173       |               |  |            | (3,935   | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|119 |  |                         | 4,622   |              |              |  | 43,465    |          |             |  | 48,087       |               |  |            | (7,728   | )           |  | 1987             |  | 12/15/94 |  |  | 40 | 
|120 |  |                         | 3,396   |              |              |  | 20,683    |          |             |  | 24,080       |               |  |            | (1,327   | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 
|121 |  |                         | 2,355   |              |              |  | 15,780    |          |             |  | 18,134       |               |  |            | (1,085   | )           |  | 1981             |  | 07/02/01 |  |  | 40 | 
|122 |  |                         | 6,787   |              |              |  | 38,481    |          |             |  | 45,267       |               |  |            | (2,367   | )           |  | 1984             |  | 07/02/01 |  |  | 40 | 
|123 |  |                         | 4,779   |              |              |  | 27,430    |          |             |  | 32,209       |               |  |            | (1,802   | )           |  | 1984/1996        |  | 07/02/01 |  |  | 40 | 
|124 |  |                         | 5,777   |              |              |  | 34,204    |          |             |  | 39,981       |               |  |            | (3,293   | )           |  | 1987             |  | 06/19/00 |  |  | 40 | 
|125 |  |                         | 12,904  |              |              |  | 75,605    |          |             |  | 88,509       |               |  |            | (4,818   | )           |  | 1986-1989        |  | 07/02/01 |  |  | 40 | 
|126 |  |                         | 3,697   |              |              |  | 21,651    |          |             |  | 25,348       |               |  |            | (1,383   | )           |  | 1985             |  | 07/02/01 |  |  | 40 | 
|127 |  |                         | 3,072   |              |              |  | 18,154    |          |             |  | 21,226       |               |  |            | (1,166   | )           |  | 1989             |  | 07/02/01 |  |  | 40 | 
|128 |  |                         | 2,100   |              |              |  | 12,050    |          |             |  | 14,150       |               |  |            | (737     | )           |  | 1988             |  | 07/02/01 |  |  | 40 | 
|129 |  |                         | 2,203   |              |              |  | 12,737    |          |             |  | 14,940       |               |  |            | (778     | )           |  | 1982             |  | 07/02/01 |  |  | 40 | 
|130 |  |                         | 1,500   |              |              |  | 8,500     |          |             |  | 10,000       |               |  |            | (522     | )           |  | 1980             |  | 07/02/01 |  |  | 40 | 
|131 |  |                         | 2,658   |              |              |  | 28,534    |          |             |  | 31,192       |               |  |            | (6,223   | )           |  | 1987             |  | 04/28/97 |  |  | 40 | 
|132 |  |                         | 10,935  |              |              |  | 102,482   |          |             |  | 113,418      |               |  |            | (18,103  | )           |  | 1987-1990        |  | 03/10/94 |  |  | 40 | 
|133 |  |                         | 14,317  |              |              |  | 84,450    |          |             |  | 98,767       |               |  |            | (3,854   | )           |  | 1987             |  | 07/02/01 |  |  | 40 | 
|134 |  |                         | 4,403   |              |              |  | 26,274    |          |             |  | 30,677       |               |  |            | (2,489   | )           |  | 1987             |  | 06/19/00 |  |  | 40 | 
|135 |  |                         | 3,612   |              |              |  | 22,405    |          |             |  | 26,016       |               |  |            | (1,337   | )           |  | 1971             |  | 07/02/01 |  |  | 40 | 
|136 |  |                         | 2,523   |              |              |  | 15,274    |          |             |  | 17,797       |               |  |            | (1,328   | )           |  | 1982             |  | 06/19/00 |  |  | 40 | 
|137 |  |                         | 6,573   |              |              |  | 38,591    |          |             |  | 45,164       |               |  |            | (2,382   | )           |  | 1999             |  | 07/02/01 |  |  | 40 | 
|138 |  |                         |        |              |              |  | 248,593   |          |             |  | 248,593      |               |  |            | (15,399  | )           |  | 1979-1981        |  | 07/02/01 |  |  | 40 | 
|139 |  |                         | 4,380   |              |              |  | 26,159    |          |             |  | 30,539       |               |  |            | (2,359   | )           |  | 1975             |  | 06/19/00 |  |  | 40 | 
|140 |  |                         | 9,763   |              |              |  | 57,410    |          |             |  | 67,173       |               |  |            | (5,170   | )           |  | 1981             |  | 06/19/00 |  |  | 40 | 
|141 |  |                         | 6,450   |              |              |  | 38,360    |          |             |  | 44,810       |               |  |            | (3,703   | )           |  | 1987             |  | 06/19/00 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|    |  |                         | 295,538 |              |              |  | 2,483,435 |          |             |  | 2,778,973    |               |  |            | (278,040 | )           |  |                  |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                  | 
|142 |  |                         | 9,155   |              |              |  | 56,179    |          |             |  | 65,334       |               |  |            | (5,034   | )           |  | 1986             |  | 06/19/00 |  |  | 40 | 
|143 |  |                         | 9,636   |              |              |  | 92,348    |          |             |  | 101,983      |               |  |            | (16,395  | )           |  | 1960/1996        |  | 03/20/95 |  |  | 40 | 
|144 |  |                         | 49,695  |              |              |  | 207,623   |          |             |  | 257,317      |               |  |            | (28,891  | )           |  | 1986             |  | 07/15/98 |  |  | 40 | 
|145 |  |                         | 6,853   |              |              |  | 40,521    |          |             |  | 47,373       |               |  |            | (3,794   | )           |  | 1983             |  | 06/19/00 |  |  | 40 | 
|146 |  |                         | 124,919 |              |              |  | 505,143   |          |             |  | 630,062      |               |  |            | (65,221  | )           |  | 1989             |  | 10/01/98 |  |  | 40 | 
|147 |  |                         | 1,514   |              |              |  | 15,055    |          |             |  | 16,569       |               |  |            | (2,705   | )           |  | 1985/1993        |  | 11/26/91 |  |  | 40 | 
|148 |  |                         | 2,562   |              |              |  | 24,108    |          |             |  | 26,670       |               |  |            | (4,045   | )           |  | 1989             |  | 01/29/97 |  |  | 40 | 
|149 |  |                         | 4,632   |              |              |  | 45,191    |          |             |  | 49,823       |               |  |            | (7,859   | )           |  | 1987/1996        |  | 03/30/93 |  |  | 40 | 
|150 |  |                         | 92      |              |              |  | 43,789    |          |             |  | 43,880       |               |  |            | (7,684   | )           |  | 1987             |  | 12/15/92 |  |  | 40 | 
|151 |  |                         | 4,495   |              |              |  | 41,447    |          |             |  | 45,942       |               |  |            | (6,959   | )           |  | 1979/1994        |  | 08/31/94 |  |  | 40 | 



---



##### Table of Contents



|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              |  |  |   |  |  |  |        |  
|--- |  | ---------------------------------------- |  | ----- | -------- | - | -------- | -------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------ |  | ------- | ------------ |  |  | - |  |  |  | ------ | -
|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           |                   |               |  
|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           | Costs Capitalized |              
|    |  |                                          |  |       |          |   |          |                |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                                          |  |       |          |   |          |                |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           |                   |               |  
|    |  |                                          |  |       |          |   |          |                |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |       
|    |  | Description                              |  | Notes |          |   | Location |                | State   |              |    | at 12/31/03     |           |                   | Land          |   |     | Improvements |        |              | Land   |  |         | Improvements | 
|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              | 
|152 |  | One and Two Stamford Plaza               |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   |              |   |     |              | 8,268  |              |        |  | 74,409  |              |  |  |  |  |  |  | 6,597  |  
|153 |  | Three Stamford Plaza                     |  |       | (3)      |   |          | Stamford       |         |              | CT |                 |           |                   |              |   |     |              | 3,957  |              |        |  | 35,610  |              |  |  |  |  |  |  | 865    |  
|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              | 
|   
|    |  | New York Region Totals                   |  |       | (421,800 | ) |          |                | 224,911 |              |    |                 | 1,141,009 |                   |               |   | 865 |              |        |              | 47,873 | 
|    |  |                                          |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |    
|   
|    |  | San Francisco Region                     |  |       |          |   |          |                |         |              |    |                 |           |                   |               |   |     |              |        |              |        |  |         |              |  |  |   |  |  |  |        |  
|154 |  | Golden Bear Center                       |  |       |          |   |          | Berkeley       |         |              | CA |                 |           |                   | (18,562       | ) |     |              | 4,500  |              |        |  | 25,500  |              |  |  |  |  |  |  | 1,362  |  
|155 |  | Sierra Point                             |  |       |          |   |          | Brisbane       |         |              | CA |                 |           |                   |              |   |     |              | 3,198  |              |        |  | 18,120  |              |  |  |  |  |  |  | 320    |  
|156 |  | Bay Park Plaza I & II                    |  |       |          |   |          | Burlingame     |         |              | CA |                 |           |                   |              |   |     |              | 12,906 |              |        |  | 73,133  |              |  |  |  |  |  |  | 1,298  |  
|157 |  | One Bay Plaza                            |  |       |          |   |          | Burlingame     |         |              | CA |                 |           |                   |              |   |     |              | 8,642  |              |        |  | 48,973  |              |  |  |  |  |  |  | 1,433  |  
|158 |  | One & Two Corporate Center               |  |       |          |   |          | Concord        |         |              | CA |                 |           |                   |              |   |     |              | 6,379  |              |        |  | 36,146  |              |  |  |  |  |  |  | 2,215  |  
|159 |  | 5813 Shellmound Street/5855 Christie Ave |  |       |          |   |          | Emeryville     |         |              | CA |                 |           |                   |              |   |     |              | 870    |              |        |  | 4,930   |              |  |  |  |  |  |  | 8      |  
|160 |  | Watergate Office Towers                  |  |       |          |   |          | Emeryville     |         |              | CA |                 |           |                   |              |   |     |              | 46,568 |              |        |  | 263,885 |              |  |  |  |  |  |  | (1,122 | )
|161 |  | Bayside Corporate Center                 |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 2,836  |              |        |  | 16,069  |              |  |  |  |  |  |  | 854    |  
|162 |  | Metro Center                             |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              |       |              |        |  | 282,329 |              |  |  |  |  |  |  | 3,806  |  
|163 |  | Parkside Towers                          |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 36,000 |              |        |  | 63,965  |              |  |  |  |  |  |  | 10,033 |  
|164 |  | Vintage Industrial Park                  |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 5,102  |              |        |  | 28,914  |              |  |  |  |  |  |  | 208    |  
|165 |  | Vintage Park Office                      |  |       |          |   |          | Foster City    |         |              | CA |                 |           |                   |              |   |     |              | 1,608  |              |        |  | 9,111   |              |  |  |  |  |  |  | 92     |  
|166 |  | Drakes Landing                          |  |       |          |   |          | Larkspur       |         |              | CA |                 |           |                   |              |   |     |              | 5,735  |              |        |  | 32,499  |              |  |  |  |  |  |  | 1,275  |  
|167 |  | Larkspur Landing Office Park             |  |       |          |   |          | Larkspur       |         |              | CA |                 |           |                   |              |   |     |              | 8,316  |              |        |  | 47,126  |              |  |  |  |  |  |  | 2,492  |  
|168 |  | Wood Island Office Complex               |  |       |          |   |          | Larkspur       |         |              | CA |                 |           |                   |              |   |     |              | 3,735  |              |        |  | 21,163  |              |  |  |  |  |  |  | 243    |  
|169 |  | PeopleSoft Plaza                         |  |       |          |   |          | Pleasanton     |         |              | CA |                 |           |                   |              |   |     |              | 7,039  |              |        |  | 39,887  |              |  |  |  |  |  |  | 3,372  |  
|170 |  | Redwood Shores                           |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 4,166  |              |        |  | 23,608  |              |  |  |  |  |  |  | 74     |  
|171 |  | Seaport Centre                           |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 24,000 |              |        |  | 136,000 |              |  |  |  |  |  |  | 1,762  |  
|172 |  | Seaport Plaza                            |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 10,132 |              |        |  | 26,108  |              |  |  |  |  |  |  | 2,850  |  
|173 |  | Towers@Shore Center                      |  |       |          |   |          | Redwood City   |         |              | CA |                 |           |                   |              |   |     |              | 35,578 |              |        |  | 69,054  |              |  |  |  |  |  |  | 6,450  |  
|174 |  | 555 Twin Dolphin Plaza                   |  |       |          |   |          | Redwood Shores |         |              | CA |                 |           |                   |              |   |     |              | 11,790 |              |        |  | 66,810  |              |  |  |  |  |  |  | 3,035  |  
|175 |  | Douglas Corporate Center                 |  |       |          |   |          | Roseville      |         |              | CA |                 |           |                   |              |   |     |              | 2,391  |              |        |  | 13,550  |              |  |  |  |  |  |  | 129    |  
|176 |  | Johnson Ranch Corp
    Centre I & II     |  |       |          |   |          | Roseville      |         |              | CA |                 |           |                   |              |   |     |              | 4,380  |              |        |  | 24,819  |              |  |  |  |  |  |  | 157    |  
|177 |  | Roseville Corporate Center               |  |       |          |   |          | Roseville      |         |              | CA |                 |           |                   |              |   |     |              | 3,008  |              |        |  | 17,046  |              |  |  |  |  |  |  |       |  
|178 |  | 3600-3620 American River Drive           |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 2,209  |              |        |  | 12,518  |              |  |  |  |  |  |  | 955    |  
|179 |  | 455 University Avenue                    |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 465    |              |        |  | 2,634   |              |  |  |  |  |  |  | 170    |  
|180 |  | 555 University Avenue                    |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 939    |              |        |  | 5,323   |              |  |  |  |  |  |  | 275    |  
|181 |  | 575 & 601 University Avenue              |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,159  |              |        |  | 6,569   |              |  |  |  |  |  |  | 472    |  
|182 |  | 655 University Avenue                    |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 672    |              |        |  | 3,806   |              |  |  |  |  |  |  | 305    |  
|183 |  | 701 University Avenue                    |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 934    |              |        |  | 5,294   |              |  |  |  |  |  |  | 206    |  
|184 |  | 740 University Avenue                    |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 212    |              |        |  | 1,199   |              |  |  |  |  |  |  | 47     |  
|185 |  | Cal Center                               |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 2,393  |              |        |  | 13,560  |              |  |  |  |  |  |  | 662    |  
|186 |  | Exposition Centre                        |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,200  |              |        |  | 7,800   |              |  |  |  |  |  |  | 384    |  
|187 |  | Fidelity Plaza                           |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,149  |              |        |  | 6,513   |              |  |  |  |  |  |  | 96     |  
|188 |  | Gateway Oaks I                           |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 2,391  |              |        |  | 13,546  |              |  |  |  |  |  |  | 251    |  
|189 |  | Gateway Oaks II                          |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,341  |              |        |  | 7,600   |              |  |  |  |  |  |  | 310    |  
|190 |  | Gateway Oaks III                         |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 936    |              |        |  | 5,305   |              |  |  |  |  |  |  | 140    |  
|191 |  | Gateway Oaks IV                          |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,658  |              |        |  | 9,395   |              |  |  |  |  |  |  | 103    |  
|192 |  | Point West Commercentre                  |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 2,321  |              |        |  | 13,154  |              |  |  |  |  |  |  | 791    |  
|193 |  | Point West Corporate Center I & II       |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 3,653  |              |        |  | 14,779  |              |  |  |  |  |  |  | 562    |  
|194 |  | Point West I  Response Road             |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 774    |              |        |  | 4,384   |              |  |  |  |  |  |  | 399    |  
|195 |  | Point West III  River
    Park Dr.      |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,141  |              |        |  | 6,467   |              |  |  |  |  |  |  | 812    |  
|196 |  | The Orchard                              |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 1,226  |              |        |  | 6,948   |              |  |  |  |  |  |  | 291    |  
|197 |  | Wells Fargo Center                       |  |       |          |   |          | Sacramento     |         |              | CA |                 |           |                   |              |   |     |              | 17,819 |              |        |  | 100,975 |              |  |  |  |  |  |  | 2,470  |  
|198 |  | Bayhill Office Center                    |  |       |          |   |          | San Bruno      |         |              | CA |                 |           |                   | (89,278       | ) |     |              | 24,010 |              |        |  | 136,055 |              |  |  |  |  |  |  | 4,199  |  
|199 |  | Skyway Landing I & II                    |  |       |          |   |          | San Carlos     |         |              | CA |                 |           |                   |              |   |     |              | 15,535 |              |        |  | 35,994  |              |  |  |  |  |  |  | 17,089 |  
|200 |  | 120 Montgomery                           |  |       |          |   |          | San Francisco  |         |              | CA |                 |           |                   |              |   |     |              | 17,564 |              |        |  | 99,532  |              |  |  |  |  |  |  | 2,873  |  
|201 |  | 150 California                           |  |       |          |   |          | San Francisco  |         |              | CA |                 |           |                   |              |   |     |              | 12,567 |              |        |  | 46,184  |              |  |  |  |  |  |  | 4,448  |  
|202 |  | 201 California                           |  |       |          |   |          | San Francisco  |         |              | CA |                 |           |                   | (39,546       | ) |     |              | 10,520 |              |        |  | 59,611  |              |  |  |  |  |  |  | 3,752  |  
|203 |  | 188 Embarcadero                          |  |       |          |   |          | San Francisco  |         |              | CA |                 |           |                   | (14,233       | ) |     |              | 4,108  |              |        |  | 23,280  |              |  |  |  |  |  |  | 1,651  |  
|204 |  | 201 Mission Street                       |  |       | (3)      |   |          | San Francisco  |         |              | CA |                 |           |                   |              |   |     |              | 8,871  |              |        |  | 79,837  |              |  |  |  |  |  |  | 4,983  |  
|205 |  | 301 Howard Street                        |  |       |          |   |          | San Francisco  |         |              | CA |                 |           |                   |              |   |     |              | 6,547  |              |        |  | 58,920  |              |  |  |  |  |  |  | 5,350  |  
|206 |  | 580 California                           |  |       | (3)      |   |          | San Francisco  |         |              | CA |                 |           |                   | (56,237       | ) |     |              | 7,491  |              |        |  | 67,421  |              |  |  | 8 |  |  |  | 4,196  |  

[Additional columns below]

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

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2003              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)        | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 | 
|152 |  |                         | 8,268   |              |              |  | 81,006    |          |             |  | 89,274       |               |  |            | (14,699  | )           |  | 1986/1994       |  | 03/30/93 |  |  | 40 | 
|   
|153 |  |                         | 3,957   |              |              |  | 36,475    |          |             |  | 40,431       |               |  |            | (6,073   | )           |  | 1980/1994       |  | 12/15/92 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 | 
|    |  |                         | 225,777 |              |              |  | 1,188,882 |          |             |  | 1,414,659    |               |  |            | (169,359 | )           |  |                 |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                 | 
|   
|154 |  |                         | 4,500   |              |              |  | 26,862    |          |             |  | 31,362       |               |  |            | (2,409   | )           |  | 1986            |  | 06/19/00 |  |  | 40 | 
|   
|155 |  |                         | 3,198   |              |              |  | 18,440    |          |             |  | 21,638       |               |  |            | (1,136   | )           |  | 1979/1983       |  | 07/02/01 |  |  | 40 | 
|156 |  |                         | 12,906  |              |              |  | 74,431    |          |             |  | 87,336       |               |  |            | (6,741   | )           |  | 1985/1998       |  | 06/19/00 |  |  | 40 | 
|   
|157 |  |                         | 8,642   |              |              |  | 50,406    |          |             |  | 59,049       |               |  |            | (4,661   | )           |  | 1979            |  | 06/19/00 |  |  | 40 | 
|158 |  |                         | 6,379   |              |              |  | 38,361    |          |             |  | 44,740       |               |  |            | (3,649   | )           |  | 1985-1987       |  | 06/19/00 |  |  | 40 | 
|   
|159 |  |                         | 870     |              |              |  | 4,938     |          |             |  | 5,808        |               |  |            | (303     | )           |  | 1970-1971       |  | 07/02/01 |  |  | 40 | 
|   
|160 |  |                         | 46,568  |              |              |  | 262,763   |          |             |  | 309,331      |               |  |            | (16,745  | )           |  | 1973/2001       |  | 07/02/01 |  |  | 40 | 
|   
|161 |  |                         | 2,836   |              |              |  | 16,923    |          |             |  | 19,759       |               |  |            | (1,098   | )           |  | 1986-1987       |  | 07/02/01 |  |  | 40 | 
|   
|162 |  |                         |        |              |              |  | 286,134   |          |             |  | 286,134      |               |  |            | (17,810  | )           |  | 1985-1988       |  | 07/02/01 |  |  | 40 | 
|163 |  |                         | 36,000  |              |              |  | 73,998    |          |             |  | 109,998      |               |  |            | (3,312   | )           |  | 2001            |  | 07/02/01 |  |  | 40 | 
|164 |  |                         | 5,102   |              |              |  | 29,122    |          |             |  | 34,225       |               |  |            | (1,792   | )           |  | 1985-1990       |  | 07/02/01 |  |  | 40 | 
|   
|165 |  |                         | 1,608   |              |              |  | 9,203     |          |             |  | 10,810       |               |  |            | (761     | )           |  | 1985-1990       |  | 07/02/01 |  |  | 40 | 
|   
|166 |  |                         | 5,735   |              |              |  | 33,774    |          |             |  | 39,509       |               |  |            | (2,262   | )           |  | 1986            |  | 07/02/01 |  |  | 40 | 
|167 |  |                         | 8,316   |              |              |  | 49,618    |          |             |  | 57,935       |               |  |            | (3,231   | )           |  | 1981-1982       |  | 07/02/01 |  |  | 40 | 
|   
|168 |  |                         | 3,735   |              |              |  | 21,406    |          |             |  | 25,141       |               |  |            | (1,326   | )           |  | 1978            |  | 07/02/01 |  |  | 40 | 
|   
|169 |  |                         | 7,039   |              |              |  | 43,259    |          |             |  | 50,298       |               |  |            | (3,868   | )           |  | 1984            |  | 06/19/00 |  |  | 40 | 
|   
|170 |  |                         | 4,166   |              |              |  | 23,682    |          |             |  | 27,848       |               |  |            | (1,457   | )           |  | 1986            |  | 07/02/01 |  |  | 40 | 
|171 |  |                         | 24,000  |              |              |  | 137,762   |          |             |  | 161,762      |               |  |            | (12,103  | )           |  | 1988            |  | 06/19/00 |  |  | 40 | 
|172 |  |                         | 10,132  |              |              |  | 28,958    |          |             |  | 39,090       |               |  |            | (2,056   | )           |  | 2000            |  | 06/19/00 |  |  | 40 | 
|173 |  |                         | 35,578  |              |              |  | 75,504    |          |             |  | 111,082      |               |  |            | (4,015   | )           |  | 2002            |  | 07/02/01 |  |  | 40 | 
|   
|174 |  |                         | 11,790  |              |              |  | 69,845    |          |             |  | 81,635       |               |  |            | (4,385   | )           |  | 1989            |  | 07/02/01 |  |  | 40 | 
|   
|175 |  |                         | 2,391   |              |              |  | 13,680    |          |             |  | 16,071       |               |  |            | (849     | )           |  | 1990            |  | 07/02/01 |  |  | 40 | 
|   
|176 |  |                         | 4,380   |              |              |  | 24,976    |          |             |  | 29,356       |               |  |            | (1,570   | )           |  | 1990-1998       |  | 07/02/01 |  |  | 40 | 
|   
|177 |  |                         | 3,008   |              |              |  | 17,046    |          |             |  | 20,054       |               |  |            | (1,048   | )           |  | 1999            |  | 07/02/01 |  |  | 40 | 
|   
|178 |  |                         | 2,209   |              |              |  | 13,473    |          |             |  | 15,682       |               |  |            | (832     | )           |  | 1977-1979/ 1997 |  | 07/02/01 |  |  | 40 | 
|   
|179 |  |                         | 465     |              |              |  | 2,803     |          |             |  | 3,268        |               |  |            | (190     | )           |  | 1973            |  | 07/02/01 |  |  | 40 | 
|   
|180 |  |                         | 939     |              |              |  | 5,598     |          |             |  | 6,538        |               |  |            | (382     | )           |  | 1974            |  | 07/02/01 |  |  | 40 | 
|   
|181 |  |                         | 1,159   |              |              |  | 7,040     |          |             |  | 8,199        |               |  |            | (445     | )           |  | 1977            |  | 07/02/01 |  |  | 40 | 
|   
|182 |  |                         | 672     |              |              |  | 4,111     |          |             |  | 4,783        |               |  |            | (252     | )           |  | 1979            |  | 07/02/01 |  |  | 40 | 
|   
|183 |  |                         | 934     |              |              |  | 5,499     |          |             |  | 6,434        |               |  |            | (351     | )           |  | 1990            |  | 07/02/01 |  |  | 40 | 
|   
|184 |  |                         | 212     |              |              |  | 1,246     |          |             |  | 1,458        |               |  |            | (78      | )           |  | 1973            |  | 07/02/01 |  |  | 40 | 
|   
|185 |  |                         | 2,393   |              |              |  | 14,222    |          |             |  | 16,615       |               |  |            | (908     | )           |  | 1989            |  | 07/02/01 |  |  | 40 | 
|186 |  |                         | 1,200   |              |              |  | 8,184     |          |             |  | 9,384        |               |  |            | (790     | )           |  | 1984            |  | 06/19/00 |  |  | 40 | 
|   
|187 |  |                         | 1,149   |              |              |  | 6,609     |          |             |  | 7,759        |               |  |            | (432     | )           |  | 1980            |  | 07/02/01 |  |  | 40 | 
|188 |  |                         | 2,391   |              |              |  | 13,797    |          |             |  | 16,187       |               |  |            | (874     | )           |  | 1990            |  | 07/02/01 |  |  | 40 | 
|189 |  |                         | 1,341   |              |              |  | 7,910     |          |             |  | 9,251        |               |  |            | (544     | )           |  | 1992            |  | 07/02/01 |  |  | 40 | 
|   
|190 |  |                         | 936     |              |              |  | 5,445     |          |             |  | 6,381        |               |  |            | (369     | )           |  | 1996            |  | 07/02/01 |  |  | 40 | 
|   
|191 |  |                         | 1,658   |              |              |  | 9,498     |          |             |  | 11,156       |               |  |            | (582     | )           |  | 1998            |  | 07/02/01 |  |  | 40 | 
|192 |  |                         | 2,321   |              |              |  | 13,946    |          |             |  | 16,267       |               |  |            | (950     | )           |  | 1983            |  | 07/02/01 |  |  | 40 | 
|   
|193 |  |                         | 3,653   |              |              |  | 15,340    |          |             |  | 18,994       |               |  |            | (1,016   | )           |  | 1984            |  | 07/02/01 |  |  | 40 | 
|   
|194 |  |                         | 774     |              |              |  | 4,783     |          |             |  | 5,556        |               |  |            | (283     | )           |  | 1976            |  | 07/02/01 |  |  | 40 | 
|   
|195 |  |                         | 1,141   |              |              |  | 7,279     |          |             |  | 8,421        |               |  |            | (497     | )           |  | 1978            |  | 07/02/01 |  |  | 40 | 
|   
|196 |  |                         | 1,226   |              |              |  | 7,239     |          |             |  | 8,465        |               |  |            | (465     | )           |  | 1987            |  | 07/02/01 |  |  | 40 | 
|197 |  |                         | 17,819  |              |              |  | 103,445   |          |             |  | 121,264      |               |  |            | (9,260   | )           |  | 1987            |  | 06/19/00 |  |  | 40 | 
|   
|198 |  |                         | 24,010  |              |              |  | 140,254   |          |             |  | 164,263      |               |  |            | (12,331  | )           |  | 1982/1987       |  | 06/19/00 |  |  | 40 | 
|   
|199 |  |                         | 15,535  |              |              |  | 53,083    |          |             |  | 68,617       |               |  |            | (3,188   | )           |  | 2000            |  | 07/02/01 |  |  | 40 | 
|   
|200 |  |                         | 17,564  |              |              |  | 102,405   |          |             |  | 119,969      |               |  |            | (9,204   | )           |  | 1956            |  | 06/19/00 |  |  | 40 | 
|201 |  |                         | 12,567  |              |              |  | 50,631    |          |             |  | 63,198       |               |  |            | (5,628   | )           |  | 2000            |  | 12/19/97 |  |  | 40 | 
|202 |  |                         | 10,520  |              |              |  | 63,363    |          |             |  | 73,883       |               |  |            | (5,616   | )           |  | 1980            |  | 06/19/00 |  |  | 40 | 
|203 |  |                         | 4,108   |              |              |  | 24,931    |          |             |  | 29,039       |               |  |            | (2,199   | )           |  | 1985            |  | 06/19/00 |  |  | 40 | 
|204 |  |                         | 8,871   |              |              |  | 84,820    |          |             |  | 93,691       |               |  |            | (14,345  | )           |  | 1981            |  | 04/30/97 |  |  | 40 | 
|   
|205 |  |                         | 6,547   |              |              |  | 64,270    |          |             |  | 70,817       |               |  |            | (10,512  | )           |  | 1988            |  | 04/29/98 |  |  | 40 | 
|   
|206 |  |                         | 7,500   |              |              |  | 71,617    |          |             |  | 79,117       |               |  |            | (13,365  | )           |  | 1984            |  | 12/21/95 |  |  | 40 | 



---



##### Table of Contents



|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              |  |  |     |   |  |  |         | 
|--- |  | ----------------------------- |  | ----- | -------- | - | -------- | ------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | -- | ------------ | ------ | ------------ | ------- |  | ------- | ------------ |  |  | --- | - |  |  | ------- | 
|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           | Costs Capitalized |              
|    |  |                               |  |       |          |   |          |               |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                               |  |       |          |   |          |               |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                               |  |       |          |   |          |               |         | Encumbrances |    |                 |           |                   | Building and  |   |    |              |        | Building and |        
|    |  | Description                   |  | Notes |          |   | Location |               | State   |              |    | at 12/31/03     |           |                   | Land          |   |    | Improvements |        |              | Land    |  |         | Improvements | 
|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              | 
|207 |  | 60 Spear Street               |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 2,125  |              |         |  | 19,126  |              |  |  | 15  |   |  |  | 3,272   | 
|208 |  | Maritime Plaza                |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 11,531 |              |         |  | 103,776 |              |  |  |    |   |  |  | 15,599  | 
|209 |  | One Market                    |  |       | (3)      |   |          | San Francisco |         |              | CA |                 |           |                   | (176,828      | ) |    |              | 34,814 |              |         |  | 313,330 |              |  |  |    |   |  |  | 38,285  | 
|210 |  | Ferry Building                |  |       | (6)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  |        |              |  |  |    |   |  |  | 104,245 | 
|211 |  | Foundry Square II             |  |       | (6)      |   |          | San Francisco |         |              | CA |                 |           |                   |              |   |    |              | 14,391 |              |         |  |        |              |  |  |    |   |  |  | 128,538 | 
|212 |  | Peninsula Office Park         |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   | (79,453       | ) |    |              | 27,275 |              |         |  | 154,561 |              |  |  |    |   |  |  | 2,798   | 
|213 |  | San Mateo BayCenter I         |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   |              |   |    |              | 5,382  |              |         |  | 30,498  |              |  |  |    |   |  |  | 799     | 
|214 |  | San Mateo BayCenter II        |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   | (10,098       | ) |    |              | 6,245  |              |         |  | 35,389  |              |  |  |    |   |  |  | 1,233   | 
|215 |  | San Mateo BayCenter III       |  |       |          |   |          | San Mateo     |         |              | CA |                 |           |                   |              |   |    |              | 3,357  |              |         |  | 19,023  |              |  |  |    |   |  |  | 291     | 
|216 |  | San Rafael Corporate Center   |  |       |          |   |          | San Rafael    |         |              | CA |                 |           |                   |              |   |    |              | 18,002 |              |         |  |        |              |  |  |    |   |  |  | 28,953  | 
|217 |  | Norris Tech Center            |  |       |          |   |          | San Ramon     |         |              | CA |                 |           |                   |              |   |    |              | 5,700  |              |         |  | 32,300  |              |  |  |    |   |  |  | 1,899   | 
|218 |  | One & Two ADP Plaza           |  |       |          |   |          | San Ramon     |         |              | CA |                 |           |                   |              |   |    |              | 7,460  |              |         |  | 42,273  |              |  |  |    |   |  |  | 4,083   | 
|219 |  | Fountaingrove Center          |  |       |          |   |          | Santa Rosa    |         |              | CA |                 |           |                   |              |   |    |              | 2,898  |              |         |  | 16,424  |              |  |  |    |   |  |  | 1,722   | 
|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              | 
|   
|    |  | San Francisco Region Totals   |  |       | (484,235 | ) |          |               | 539,865 |              |    |                 | 3,010,049 |                   |               |   | 23 |              |        |              | 432,305 | 
|    |  |                               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |   
|   
|    |  | San Jose Region               |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    |              |        |              |         |  |         |              |  |  |     |   |  |  |         | 
|220 |  | Pruneyard Office Towers       |  |       |          |   |          | Campbell      |         |              | CA |                 |           |                   |              |   |    |              | 16,502 |              |         |  | 154,783 |              |  |  |    |   |  |  | 5,174   | 
|221 |  | Cupertino Business Center     |  |       |          |   |          | Cupertino     |         |              | CA |                 |           |                   |              |   |    |              | 2,910  |              |         |  | 16,490  |              |  |  | (28 | ) |  |  | 1,799   | 
|222 |  | 1900 McCarthy                 |  |       |          |   |          | Milpitas      |         |              | CA |                 |           |                   |              |   |    |              | 1,998  |              |         |  | 11,319  |              |  |  |    |   |  |  | 416     | 
|223 |  | California Circle II          |  |       |          |   |          | Milpitas      |         |              | CA |                 |           |                   |              |   |    |              | 1,764  |              |         |  | 9,997   |              |  |  |    |   |  |  | 454     | 
|224 |  | Oak Creek I & II              |  |       |          |   |          | Milpitas      |         |              | CA |                 |           |                   |              |   |    |              | 1,309  |              |         |  | 7,417   |              |  |  |    |   |  |  |        | 
|225 |  | Shoreline Technology Park     |  |       |          |   |          | Mountain View |         |              | CA |                 |           |                   |              |   |    |              | 31,575 |              |         |  | 190,894 |              |  |  | 69  |   |  |  | 11,554  | 
|226 |  | Meier Mountain View           |  |       |          |   |          | Mountain View |         |              | CA |                 |           |                   |              |   |    |              | 13,950 |              |         |  | 79,050  |              |  |  |    |   |  |  | 795     | 
|227 |  | Ravendale at Central          |  |       |          |   |          | Mountain View |         |              | CA |                 |           |                   |              |   |    |              | 2,550  |              |         |  | 14,450  |              |  |  |    |   |  |  | 83      | 
|228 |  | 2180 Sand Hill Road           |  |       |          |   |          | Menlo Park    |         |              | CA |                 |           |                   |              |   |    |              | 3,408  |              |         |  | 19,314  |              |  |  |    |   |  |  | 1,506   | 
|229 |  | Embarcadero Place             |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   | (34,400       | ) |    |              | 10,500 |              |         |  | 59,500  |              |  |  |    |   |  |  | 733     | 
|230 |  | Palo Alto Square              |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 78,143  |              |  |  | 161 |   |  |  | 2,351   | 
|231 |  | Xerox Campus                  |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 132,810 |              |  |  |    |   |  |  |        | 
|232 |  | Foothill Research Center      |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 104,894 |              |  |  |    |   |  |  |        | 
|233 |  | Lockheed                      |  |       |          |   |          | Palo Alto     |         |              | CA |                 |           |                   |              |   |    |              |       |              |         |  | 27,712  |              |  |  |    |   |  |  | 70      | 
|234 |  | 10 Almaden                    |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 12,583 |              |         |  | 71,303  |              |  |  |    |   |  |  | 524     | 
|235 |  | 1740 Technology               |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   | (17,118       | ) |    |              | 8,766  |              |         |  | 49,673  |              |  |  |    |   |  |  | 1,125   | 
|236 |  | 2290 North First Street       |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 2,431  |              |         |  | 13,776  |              |  |  |    |   |  |  | 707     | 
|237 |  | Aspect Telecommunications     |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 2,925  |              |         |  | 16,575  |              |  |  |    |   |  |  |        | 
|238 |  | Central Park Plaza            |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 11,181 |              |         |  | 63,358  |              |  |  | 23  |   |  |  | 2,012   | 
|239 |  | Metro Plaza                   |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 18,029 |              |         |  | 102,164 |              |  |  |    |   |  |  | 2,021   | 
|240 |  | Ridder Park                   |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 2,012  |              |         |  | 11,402  |              |  |  |    |   |  |  |        | 
|241 |  | Skyport East and West         |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 6,779  |              |         |  | 87,193  |              |  |  |    |   |  |  | 25,538  | 
|242 |  | Concourse                     |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 49,279 |              |         |  | 279,248 |              |  |  | (51 | ) |  |  | 2,837   | 
|243 |  | Creekside                     |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 9,631  |              |         |  | 54,576  |              |  |  |    |   |  |  | 311     | 
|244 |  | San Jose Gateway Office II    |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 16,286 |              |         |  | 92,288  |              |  |  |    |   |  |  | 1,545   | 
|245 |  | San Jose Gateway Office III   |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 6,409  |              |         |  | 36,315  |              |  |  |    |   |  |  | 99      | 
|246 |  | North First Office Center     |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 6,395  |              |         |  | 36,239  |              |  |  |    |   |  |  | 68      | 
|247 |  | San Jose Gateway              |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 7,873  |              |         |  | 44,616  |              |  |  |    |   |  |  | 2,983   | 
|248 |  | 225 West Santa Clara Street   |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 8,600  |              |         |  | 78,891  |              |  |  |    |   |  |  |        | 
|249 |  | 1871 The Alameda              |  |       |          |   |          | San Jose      |         |              | CA |                 |           |                   |              |   |    |              | 1,129  |              |         |  | 6,399   |              |  |  |    |   |  |  | 255     | 
|250 |  | 2727 Augustine                |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 3,000  |              |         |  | 17,000  |              |  |  |    |   |  |  |        | 
|251 |  | 3001 Stender Way              |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 2,263  |              |         |  | 12,823  |              |  |  |    |   |  |  |        | 
|252 |  | 3045 Stender Way              |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 1,050  |              |         |  | 5,950   |              |  |  |    |   |  |  |        | 
|253 |  | 3281-3285 Scott Boulevard     |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 1,275  |              |         |  | 7,225   |              |  |  |    |   |  |  | 611     | 
|254 |  | Applied Materials I & II      |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 5,100  |              |         |  | 28,900  |              |  |  |    |   |  |  |        | 
|255 |  | Meier Central North           |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 2,880  |              |         |  | 16,320  |              |  |  |    |   |  |  | 25      | 
|256 |  | Meier Central South           |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 5,265  |              |         |  | 29,835  |              |  |  |    |   |  |  | 356     | 
|257 |  | Patrick Henry Drive           |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 2,475  |              |         |  | 14,025  |              |  |  |    |   |  |  | 4       | 
|258 |  | Santa Clara Office Center I   |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 2,010  |              |         |  | 11,391  |              |  |  |    |   |  |  | 230     | 
|259 |  | Santa Clara Office Center II  |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 2,870  |              |         |  | 16,261  |              |  |  |    |   |  |  | 216     | 
|260 |  | Santa Clara Office Center III |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 2,031  |              |         |  | 11,509  |              |  |  |    |   |  |  | 356     | 
|261 |  | Santa Clara Office Center IV  |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 186    |              |         |  | 1,057   |              |  |  |    |   |  |  |        | 
|262 |  | Lake Marriott Business Park   |  |       |          |   |          | Santa Clara   |         |              | CA |                 |           |                   |              |   |    |              | 9,091  |              |         |  | 84,967  |              |  |  | 297 |   |  |  | 2,757   | 

[Additional columns below]

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

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | --------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2003              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)  | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|207 |  |                         | 2,140   |              |              |  | 22,398    |          |             |  | 24,538       |               |  |            | (3,655   | )           |  | 1967/1987 |  | 09/29/87 |  |  | 40 | 
|208 |  |                         | 11,531  |              |              |  | 119,375   |          |             |  | 130,906      |               |  |            | (20,490  | )           |  | 1967/1990 |  | 04/21/97 |  |  | 40 | 
|209 |  |                         | 34,814  |              |              |  | 351,615   |          |             |  | 386,429      |               |  |            | (66,954  | )           |  | 1976/1995 |  | 11/22/94 |  |  | 40 | 
|210 |  |                         |        |              |              |  | 104,245   |          |             |  | 104,245      |               |  |            |         |             |  | 1898/2002 |  | 06/19/00 |  |  | 40 | 
|211 |  |                         | 14,391  |              |              |  | 128,538   |          |             |  | 142,929      |               |  |            | (2,176   | )           |  | 2002      |  | 06/19/00 |  |  | 40 | 
|212 |  |                         | 27,275  |              |              |  | 157,359   |          |             |  | 184,635      |               |  |            | (14,142  | )           |  | 1971/1998 |  | 06/19/00 |  |  | 40 | 
|213 |  |                         | 5,382   |              |              |  | 31,298    |          |             |  | 36,680       |               |  |            | (2,004   | )           |  | 1984      |  | 07/02/01 |  |  | 40 | 
|214 |  |                         | 6,245   |              |              |  | 36,622    |          |             |  | 42,867       |               |  |            | (2,230   | )           |  | 1984      |  | 07/02/01 |  |  | 40 | 
|215 |  |                         | 3,357   |              |              |  | 19,315    |          |             |  | 22,672       |               |  |            | (1,199   | )           |  | 1987      |  | 07/02/01 |  |  | 40 | 
|216 |  |                         | 18,002  |              |              |  | 28,953    |          |             |  | 46,955       |               |  |            | (785     | )           |  | 2002      |  | 07/02/01 |  |  | 40 | 
|217 |  |                         | 5,700   |              |              |  | 34,199    |          |             |  | 39,899       |               |  |            | (3,391   | )           |  | 1984/1990 |  | 06/19/00 |  |  | 40 | 
|218 |  |                         | 7,460   |              |              |  | 46,355    |          |             |  | 53,815       |               |  |            | (4,110   | )           |  | 1987-1989 |  | 06/19/00 |  |  | 40 | 
|219 |  |                         | 2,898   |              |              |  | 18,146    |          |             |  | 21,045       |               |  |            | (1,097   | )           |  | 1986/1991 |  | 07/02/01 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|    |  |                         | 539,887 |              |              |  | 3,442,353 |          |             |  | 3,982,241    |               |  |            | (316,708 | )           |  |           |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |           | 
|220 |  |                         | 16,502  |              |              |  | 159,958   |          |             |  | 176,460      |               |  |            | (14,452  | )           |  | 1971/1999 |  | 06/19/00 |  |  | 40 | 
|221 |  |                         | 2,882   |              |              |  | 18,289    |          |             |  | 21,171       |               |  |            | (1,017   | )           |  | 1974-1975 |  | 07/02/01 |  |  | 40 | 
|222 |  |                         | 1,998   |              |              |  | 11,735    |          |             |  | 13,732       |               |  |            | (757     | )           |  | 1984      |  | 07/02/01 |  |  | 40 | 
|223 |  |                         | 1,764   |              |              |  | 10,451    |          |             |  | 12,215       |               |  |            | (697     | )           |  | 1984      |  | 07/02/01 |  |  | 40 | 
|224 |  |                         | 1,309   |              |              |  | 7,417     |          |             |  | 8,726        |               |  |            | (456     | )           |  | 1982      |  | 07/02/01 |  |  | 40 | 
|225 |  |                         | 31,644  |              |              |  | 202,449   |          |             |  | 234,093      |               |  |            | (28,703  | )           |  | 1985/1991 |  | 12/19/97 |  |  | 40 | 
|226 |  |                         | 13,950  |              |              |  | 79,845    |          |             |  | 93,795       |               |  |            | (4,860   | )           |  | 1972/1980 |  | 07/02/01 |  |  | 40 | 
|227 |  |                         | 2,550   |              |              |  | 14,533    |          |             |  | 17,083       |               |  |            | (888     | )           |  | 1980      |  | 07/02/01 |  |  | 40 | 
|228 |  |                         | 3,408   |              |              |  | 20,819    |          |             |  | 24,228       |               |  |            | (1,303   | )           |  | 1976      |  | 07/02/01 |  |  | 40 | 
|229 |  |                         | 10,500  |              |              |  | 60,233    |          |             |  | 70,733       |               |  |            | (5,293   | )           |  | 1984      |  | 06/19/00 |  |  | 40 | 
|230 |  |                         | 161     |              |              |  | 80,494    |          |             |  | 80,655       |               |  |            | (12,763  | )           |  | 1971/1985 |  | 10/01/99 |  |  | 23 | 
|231 |  |                         |        |              |              |  | 132,810   |          |             |  | 132,810      |               |  |            | (8,372   | )           |  | 1991      |  | 07/02/01 |  |  | 40 | 
|232 |  |                         |        |              |              |  | 104,894   |          |             |  | 104,894      |               |  |            | (6,786   | )           |  | 1991      |  | 07/02/01 |  |  | 40 | 
|233 |  |                         |        |              |              |  | 27,782    |          |             |  | 27,782       |               |  |            | (1,753   | )           |  | 1991      |  | 07/02/01 |  |  | 40 | 
|234 |  |                         | 12,583  |              |              |  | 71,826    |          |             |  | 84,409       |               |  |            | (6,418   | )           |  | 1989      |  | 06/19/00 |  |  | 40 | 
|235 |  |                         | 8,766   |              |              |  | 50,799    |          |             |  | 59,565       |               |  |            | (3,270   | )           |  | 1986/1994 |  | 07/02/01 |  |  | 40 | 
|236 |  |                         | 2,431   |              |              |  | 14,483    |          |             |  | 16,914       |               |  |            | (943     | )           |  | 1984      |  | 07/02/01 |  |  | 40 | 
|237 |  |                         | 2,925   |              |              |  | 16,575    |          |             |  | 19,500       |               |  |            | (1,019   | )           |  | 1989      |  | 07/02/01 |  |  | 40 | 
|238 |  |                         | 11,204  |              |              |  | 65,370    |          |             |  | 76,574       |               |  |            | (4,389   | )           |  | 1984-1985 |  | 07/02/01 |  |  | 40 | 
|239 |  |                         | 18,029  |              |              |  | 104,185   |          |             |  | 122,214      |               |  |            | (6,431   | )           |  | 1986-1987 |  | 07/02/01 |  |  | 40 | 
|240 |  |                         | 2,012   |              |              |  | 11,402    |          |             |  | 13,415       |               |  |            | (701     | )           |  | 1966      |  | 07/02/01 |  |  | 40 | 
|241 |  |                         | 6,779   |              |              |  | 112,732   |          |             |  | 119,511      |               |  |            | (8,528   | )           |  | 2001      |  | 07/02/01 |  |  | 40 | 
|242 |  |                         | 49,229  |              |              |  | 282,086   |          |             |  | 331,314      |               |  |            | (17,740  | )           |  | 1980/2000 |  | 07/02/01 |  |  | 40 | 
|243 |  |                         | 9,631   |              |              |  | 54,888    |          |             |  | 64,519       |               |  |            | (3,438   | )           |  | 1986      |  | 07/02/01 |  |  | 40 | 
|244 |  |                         | 16,286  |              |              |  | 93,833    |          |             |  | 110,119      |               |  |            | (5,816   | )           |  | 1983-1984 |  | 07/02/01 |  |  | 40 | 
|245 |  |                         | 6,409   |              |              |  | 36,414    |          |             |  | 42,823       |               |  |            | (2,245   | )           |  | 1998      |  | 07/02/01 |  |  | 40 | 
|246 |  |                         | 6,395   |              |              |  | 36,307    |          |             |  | 42,702       |               |  |            | (2,237   | )           |  | 1985-1986 |  | 07/02/01 |  |  | 40 | 
|247 |  |                         | 7,873   |              |              |  | 47,599    |          |             |  | 55,472       |               |  |            | (2,972   | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|248 |  |                         | 8,600   |              |              |  | 78,891    |          |             |  | 87,491       |               |  |            | (112     | )           |  | 2001      |  | 12/31/03 |  |  | 35 | 
|249 |  |                         | 1,129   |              |              |  | 6,654     |          |             |  | 7,784        |               |  |            | (407     | )           |  | 1972      |  | 07/02/01 |  |  | 40 | 
|250 |  |                         | 3,000   |              |              |  | 17,000    |          |             |  | 20,000       |               |  |            | (1,045   | )           |  | 1975      |  | 07/02/01 |  |  | 40 | 
|251 |  |                         | 2,263   |              |              |  | 12,823    |          |             |  | 15,086       |               |  |            | (788     | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|252 |  |                         | 1,050   |              |              |  | 5,950     |          |             |  | 7,000        |               |  |            | (366     | )           |  | 1975      |  | 07/02/01 |  |  | 40 | 
|253 |  |                         | 1,275   |              |              |  | 7,836     |          |             |  | 9,111        |               |  |            | (445     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|254 |  |                         | 5,100   |              |              |  | 28,900    |          |             |  | 34,000       |               |  |            | (1,776   | )           |  | 1979      |  | 07/02/01 |  |  | 40 | 
|255 |  |                         | 2,880   |              |              |  | 16,345    |          |             |  | 19,225       |               |  |            | (1,003   | )           |  | 1972/1980 |  | 07/02/01 |  |  | 40 | 
|256 |  |                         | 5,265   |              |              |  | 30,191    |          |             |  | 35,456       |               |  |            | (2,012   | )           |  | 1972/1980 |  | 07/02/01 |  |  | 40 | 
|257 |  |                         | 2,475   |              |              |  | 14,029    |          |             |  | 16,504       |               |  |            | (862     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|258 |  |                         | 2,010   |              |              |  | 11,621    |          |             |  | 13,632       |               |  |            | (731     | )           |  | 1981      |  | 07/02/01 |  |  | 40 | 
|259 |  |                         | 2,870   |              |              |  | 16,477    |          |             |  | 19,347       |               |  |            | (1,036   | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|260 |  |                         | 2,031   |              |              |  | 11,865    |          |             |  | 13,896       |               |  |            | (734     | )           |  | 1980      |  | 07/02/01 |  |  | 40 | 
|261 |  |                         | 186     |              |              |  | 1,057     |          |             |  | 1,243        |               |  |            | (65      | )           |  | 1979      |  | 07/02/01 |  |  | 40 | 
|262 |  |                         | 9,388   |              |              |  | 87,724    |          |             |  | 97,112       |               |  |            | (13,782  | )           |  | 1981      |  | 12/19/97 |  |  | 40 | 



---



##### Table of Contents



|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |   |  |  |        | 
|--- |  | ------------------------------------- |  | ----- | -------- | - | -------- | ------------- | ------- | ------------ | -- | --------------- | --------- | ----------------- | ------------- | - | --- | ------------ | ------ | ------------ | ------- |  | ------- | ------------ |  |  | --- | - |  |  | ------ | 
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           | Costs Capitalized |              
|    |  |                                       |  |       |          |   |          |               |         |              |    | Initial Cost to |           |                   | Subsequent to |  
|    |  |                                       |  |       |          |   |          |               |         |              |    | Equity Office   |           |                   | Acquisition   |  
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |  
|    |  |                                       |  |       |          |   |          |               |         | Encumbrances |    |                 |           |                   | Building and  |   |     |              |        | Building and |        
|    |  | Description                           |  | Notes |          |   | Location |               | State   |              |    | at 12/31/03     |           |                   | Land          |   |     | Improvements |        |              | Land    |  |         | Improvements | 
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|263 |  | Sunnyvale Business Center             |  |       |          |   |          | Sunnyvale     |         |              | CA |                 |           |                   |              |   |     |              | 4,890  |              |         |  | 44,010  |              |  |  |    |   |  |  | 44     | 
|264 |  | Borregas Avenue                       |  |       |          |   |          | Sunnyvale     |         |              | CA |                 |           |                   |              |   |     |              | 1,095  |              |         |  | 6,205   |              |  |  |    |   |  |  | 228    | 
|265 |  | Meier Sunnyvale                       |  |       |          |   |          | Sunnyvale     |         |              | CA |                 |           |                   |              |   |     |              | 495    |              |         |  | 2,805   |              |  |  |    |   |  |  |       | 
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|   
|    |  | San Jose Region Totals                |  |       | (51,518  | ) |          |               | 302,751 |              |    |                 | 2,261,075 |                   |               |   | 472 |              |        |              | 69,788  | 
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    
|   
|    |  | Seattle Region                        |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |   |  |  |        | 
|266 |  | 10700 Building                        |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              |       |              |         |  | 15,958  |              |  |  |    |   |  |  | 92     | 
|267 |  | 110 Atrium Place                      |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   | (19,868       | ) |     |              | 6,333  |              |         |  | 35,888  |              |  |  |    |   |  |  | 2,594  | 
|268 |  | Bellefield Office Park                |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 12,232 |              |         |  | 69,312  |              |  |  | (1  | ) |  |  | 2,140  | 
|269 |  | Bellevue Gateway I                    |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 3,593  |              |         |  | 20,360  |              |  |  |    |   |  |  | 1,556  | 
|270 |  | Bellevue Gateway II                   |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 2,016  |              |         |  | 11,423  |              |  |  |    |   |  |  | 494    | 
|271 |  | Eastgate Office Park                  |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 6,468  |              |         |  | 36,650  |              |  |  | 3   |   |  |  | 2,652  | 
|272 |  | Gateway 405 Building                  |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 1,011  |              |         |  | 5,727   |              |  |  |    |   |  |  | 273    | 
|273 |  | I-90 Bellevue                         |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 3,725  |              |         |  | 21,108  |              |  |  |    |   |  |  | 237    | 
|274 |  | Lincoln Executive Center              |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 3,235  |              |         |  | 18,329  |              |  |  |    |   |  |  | 1,243  | 
|275 |  | Lincoln Executive
    Center II & III |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 4,918  |              |         |  | 27,868  |              |  |  |    |   |  |  | 273    | 
|276 |  | Main Street Building                  |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 1,398  |              |         |  | 7,922   |              |  |  |    |   |  |  | 311    | 
|277 |  | Plaza Center                          |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 16,680 |              |         |  | 94,521  |              |  |  |    |   |  |  | 1,066  | 
|278 |  | Plaza East                            |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 4,687  |              |         |  | 26,561  |              |  |  |    |   |  |  | 877    | 
|279 |  | Sunset North Corporate Campus         |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 17,031 |              |         |  | 79,249  |              |  |  |    |   |  |  | 12,869 | 
|280 |  | City Center Bellevue                  |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              | 10,349 |              |         |  | 93,142  |              |  |  |    |   |  |  | 8,651  | 
|281 |  | One Bellevue Center                   |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              |       |              |         |  | 56,223  |              |  |  |    |   |  |  | 2,737  | 
|282 |  | Rainier Plaza                         |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              |       |              |         |  | 79,928  |              |  |  |    |   |  |  | 4,447  | 
|283 |  | Key Center                            |  |       |          |   |          | Bellevue      |         |              | WA |                 |           |                   |              |   |     |              |       |              |         |  | 78,447  |              |  |  |    |   |  |  | 6,410  | 
|284 |  | 4000 Kruse Way Place                  |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              | 4,475  |              |         |  | 25,360  |              |  |  |    |   |  |  | 1,619  | 
|285 |  | 4004 Kruse Way Place                  |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              | 1,888  |              |         |  | 10,698  |              |  |  |    |   |  |  | 463    | 
|286 |  | 4800 Meadows                          |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              |       |              |         |  | 17,448  |              |  |  |    |   |  |  | 432    | 
|287 |  | 4900-5000 Meadows                     |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              |       |              |         |  | 30,528  |              |  |  |    |   |  |  | 1,181  | 
|288 |  | 4949 Meadows                          |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              |       |              |         |  | 26,941  |              |  |  |    |   |  |  | 1,086  | 
|289 |  | Kruse Oaks I                          |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              |       |              |         |  | 14,648  |              |  |  |    |   |  |  | 4,091  | 
|290 |  | Kruse Way Plaza I, II                 |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              | 2,866  |              |         |  | 16,239  |              |  |  |    |   |  |  | 1,060  | 
|291 |  | Kruse Woods                           |  |       |          |   |          | Lake Oswego   |         |              | OR |                 |           |                   |              |   |     |              | 10,812 |              |         |  | 80,977  |              |  |  |    |   |  |  | 2,664  | 
|292 |  | Island Corporate Center               |  |       |          |   |          | Mercer Island |         |              | WA |                 |           |                   | (12,330       | ) |     |              | 2,700  |              |         |  | 15,300  |              |  |  |    |   |  |  | 955    | 
|293 |  | 5550 Macadam Building                 |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 870    |              |         |  | 4,929   |              |  |  |    |   |  |  | 423    | 
|294 |  | Benjamin Franklin Plaza               |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 7,505  |              |         |  | 42,529  |              |  |  |    |   |  |  | 2,230  | 
|295 |  | Lincoln Center                        |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 18,760 |              |         |  | 106,307 |              |  |  |    |   |  |  | 6,372  | 
|296 |  | One Pacific Square                    |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 4,451  |              |         |  | 25,221  |              |  |  |    |   |  |  | 1,254  | 
|297 |  | River Forum I & II                    |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 4,038  |              |         |  | 22,881  |              |  |  |    |   |  |  | 3,140  | 
|298 |  | RiverSide Centre (Oregon)             |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 2,537  |              |         |  | 12,353  |              |  |  |    |   |  |  | 587    | 
|299 |  | Congress Center                       |  |       |          |   |          | Portland      |         |              | OR |                 |           |                   |              |   |     |              | 5,383  |              |         |  | 48,634  |              |  |  |    |   |  |  | 7,964  | 
|300 |  | Southgate Office Plaza I & II         |  |       |          |   |          | Renton        |         |              | WA |                 |           |                   |              |   |     |              | 4,794  |              |         |  | 27,163  |              |  |  |    |   |  |  | 3,779  | 
|301 |  | Washington Mutual Tower               |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   | (78,756       | ) |     |              | 51,000 |              |         |  | 289,000 |              |  |  |    |   |  |  | 741    | 
|302 |  | 1111 Third Avenue                     |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   |              |   |     |              | 9,900  |              |         |  | 89,571  |              |  |  |    |   |  |  | 3,733  | 
|303 |  | 10833-10845 NE 8th Street             |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   |              |   |     |              |       |              |         |  | 2,000   |              |  |  |    |   |  |  | 28     | 
|304 |  | Nordstrom Medical Tower               |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   |              |   |     |              | 1,700  |              |         |  | 15,450  |              |  |  |    |   |  |  | 565    | 
|305 |  | Second and Seneca                     |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   |              |   |     |              | 10,922 |              |         |  | 98,927  |              |  |  |    |   |  |  | 2,632  | 
|306 |  | Second and Spring Building            |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   |              |   |     |              | 1,968  |              |         |  | 17,716  |              |  |  |    |   |  |  | 2,848  | 
|307 |  | Wells Fargo Center                    |  |       |          |   |          | Seattle       |         |              | WA |                 |           |                   |              |   |     |              | 21,361 |              |         |  | 193,529 |              |  |  |    |   |  |  | 10,384 | 
|308 |  | Nimbus Corporate Center               |  |       |          |   |          | Tigard        |         |              | OR |                 |           |                   |              |   |     |              | 12,934 |              |         |  | 73,291  |              |  |  |    |   |  |  | 7,281  | 
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              | 
|   
|    |  | Seattle Region Totals                 |  |       | (110,954 | ) |          |               | 274,539 |              |    |                 | 2,086,257 |                   |               |   | 2   |              |        |              | 116,433 | 
|    |  |                                       |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |    
|   
|    |  | Washington D.C. Region                |  |       |          |   |          |               |         |              |    |                 |           |                   |               |   |     |              |        |              |         |  |         |              |  |  |     |   |  |  |        | 
|309 |  | Polk and Taylor Buildings             |  |       |          |   |          | Arlington     |         |              | VA |                 |           |                   |              |   |     |              | 16,943 |              |         |  | 152,483 |              |  |  |    |   |  |  | 23,753 | 
|310 |  | Four and Five Valley Square           |  |       |          |   |          | Blue Bell     |         |              | PA |                 |           |                   |              |   |     |              | 866    |              |         |  | 7,793   |              |  |  | (1  | ) |  |  | 1,735  | 
|311 |  | One Valley Square                     |  |       |          |   |          | Blue Bell     |         |              | PA |                 |           |                   |              |   |     |              | 717    |              |         |  | 6,457   |              |  |  |    |   |  |  | 1,308  | 
|312 |  | Three Valley Square                   |  |       |          |   |          | Blue Bell     |         |              | PA |                 |           |                   |              |   |     |              | 1,012  |              |         |  | 9,111   |              |  |  |    |   |  |  | 1,423  | 
|313 |  | Two Valley Square                     |  |       |          |   |          | Blue Bell     |         |              | PA |                 |           |                   |              |   |     |              | 879    |              |         |  | 7,913   |              |  |  |    |   |  |  | 647    | 
|314 |  | Four Falls                            |  |       |          |   |          | Conshohocken  |         |              | PA |                 |           |                   |              |   |     |              | 4,939  |              |         |  | 44,458  |              |  |  | 55  |   |  |  | 3,007  | 
|315 |  | Centerpointe I & II                   |  |       |          |   |          | Fairfax       |         |              | VA |                 |           |                   | 0             |   |     |              | 8,838  |              |         |  | 79,540  |              |  |  | 367 |   |  |  | 1,810  | 

[Additional columns below]

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

|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                     |  |          |  |  |    | 
|--- |  | ----------------------- | ------- | ------------ | ------------ |  | --------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | -------- | ----------- |  | ------------------- |  | -------- |  |  | -- | 
|    |  |                         |         |              |              |  |           |          |             |  |              |              
|    |  | Gross Amount Carried at |         |              |              |  |           |          |             |  |              |               | 
|    |  | Close of Period         |         |              |              |  |           |          |             |  |              |               | 
|    |  | 12/31/2003              |         |              |              |  |           |          |             |  |              |               | 
|    |  |                         |         |              |              |  |           |          | Date of     |  |              |               | 
|    |  |                         |         | Building and |              |  |           |          | Accumulated |  |              | Construction/ |  | Date       |          | Depreciable | 
|    |  | Land                    |         |              | Improvements |  |           | Total(1) |             |  | Depreciation |               |  | Renovation |          | Acquired    |  | Lives(2)            | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                     | 
|263 |  |                         | 4,890   |              |              |  | 44,054    |          |             |  | 48,944       |               |  |            | (6,652   | )           |  | 1990                |  | 12/19/97 |  |  | 40 | 
|264 |  |                         | 1,095   |              |              |  | 6,433     |          |             |  | 7,528        |               |  |            | (381     | )           |  | 1978                |  | 07/02/01 |  |  | 40 | 
|265 |  |                         | 495     |              |              |  | 2,805     |          |             |  | 3,300        |               |  |            | (172     | )           |  | 1979                |  | 07/02/01 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                     | 
|    |  |                         | 303,223 |              |              |  | 2,330,863 |          |             |  | 2,634,086    |               |  |            | (186,617 | )           |  |                     |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                     | 
|266 |  |                         |        |              |              |  | 16,050    |          |             |  | 16,050       |               |  |            | (985     | )           |  | 1981                |  | 07/02/01 |  |  | 40 | 
|267 |  |                         | 6,333   |              |              |  | 38,483    |          |             |  | 44,816       |               |  |            | (3,505   | )           |  | 1981                |  | 06/19/00 |  |  | 40 | 
|268 |  |                         | 12,231  |              |              |  | 71,452    |          |             |  | 83,682       |               |  |            | (4,652   | )           |  | 1980                |  | 07/02/01 |  |  | 40 | 
|269 |  |                         | 3,593   |              |              |  | 21,916    |          |             |  | 25,509       |               |  |            | (1,581   | )           |  | 1985                |  | 07/02/01 |  |  | 40 | 
|270 |  |                         | 2,016   |              |              |  | 11,917    |          |             |  | 13,933       |               |  |            | (791     | )           |  | 1988                |  | 07/02/01 |  |  | 40 | 
|271 |  |                         | 6,471   |              |              |  | 39,302    |          |             |  | 45,772       |               |  |            | (2,505   | )           |  | 1985                |  | 07/02/01 |  |  | 40 | 
|272 |  |                         | 1,011   |              |              |  | 6,000     |          |             |  | 7,011        |               |  |            | (376     | )           |  | 1986                |  | 07/02/01 |  |  | 40 | 
|273 |  |                         | 3,725   |              |              |  | 21,346    |          |             |  | 25,071       |               |  |            | (1,305   | )           |  | 1986                |  | 07/02/01 |  |  | 40 | 
|274 |  |                         | 3,235   |              |              |  | 19,572    |          |             |  | 22,807       |               |  |            | (1,303   | )           |  | 1983-1985           |  | 07/02/01 |  |  | 40 | 
|275 |  |                         | 4,918   |              |              |  | 28,141    |          |             |  | 33,059       |               |  |            | (1,783   | )           |  | 1983-1985           |  | 07/02/01 |  |  | 40 | 
|276 |  |                         | 1,398   |              |              |  | 8,233     |          |             |  | 9,631        |               |  |            | (522     | )           |  | 1980                |  | 07/02/01 |  |  | 40 | 
|277 |  |                         | 16,680  |              |              |  | 95,587    |          |             |  | 112,267      |               |  |            | (5,970   | )           |  | 1978/1983           |  | 07/02/01 |  |  | 40 | 
|278 |  |                         | 4,687   |              |              |  | 27,438    |          |             |  | 32,125       |               |  |            | (1,770   | )           |  | 1988                |  | 07/02/01 |  |  | 40 | 
|279 |  |                         | 17,031  |              |              |  | 92,118    |          |             |  | 109,149      |               |  |            | (11,741  | )           |  | 1999                |  | 06/30/00 |  |  | 40 | 
|280 |  |                         | 10,349  |              |              |  | 101,793   |          |             |  | 112,142      |               |  |            | (12,825  | )           |  | 1987                |  | 01/28/99 |  |  | 40 | 
|281 |  |                         |        |              |              |  | 58,960    |          |             |  | 58,960       |               |  |            | (9,564   | )           |  | 1983                |  | 12/17/97 |  |  | 40 | 
|282 |  |                         |        |              |              |  | 84,375    |          |             |  | 84,375       |               |  |            | (12,941  | )           |  | 1986                |  | 12/17/97 |  |  | 40 | 
|283 |  |                         |        |              |              |  | 84,857    |          |             |  | 84,857       |               |  |            | (1,352   | )           |  | 2000                |  | 06/19/00 |  |  | 40 | 
|284 |  |                         | 4,475   |              |              |  | 26,979    |          |             |  | 31,454       |               |  |            | (1,913   | )           |  | 1981/1986           |  | 07/02/01 |  |  | 40 | 
|285 |  |                         | 1,888   |              |              |  | 11,162    |          |             |  | 13,049       |               |  |            | (820     | )           |  | 1996                |  | 07/02/01 |  |  | 40 | 
|286 |  |                         |        |              |              |  | 17,880    |          |             |  | 17,880       |               |  |            | (1,110   | )           |  | 1998                |  | 07/02/01 |  |  | 40 | 
|287 |  |                         |        |              |              |  | 31,710    |          |             |  | 31,710       |               |  |            | (2,129   | )           |  | 1990                |  | 07/02/01 |  |  | 40 | 
|288 |  |                         |        |              |              |  | 28,027    |          |             |  | 28,027       |               |  |            | (1,756   | )           |  | 1997                |  | 07/02/01 |  |  | 40 | 
|289 |  |                         |        |              |              |  | 18,739    |          |             |  | 18,739       |               |  |            | (1,456   | )           |  | 2001                |  | 07/02/01 |  |  | 40 | 
|290 |  |                         | 2,866   |              |              |  | 17,298    |          |             |  | 20,164       |               |  |            | (1,138   | )           |  | 1984-1986           |  | 07/02/01 |  |  | 40 | 
|291 |  |                         | 10,812  |              |              |  | 83,641    |          |             |  | 94,454       |               |  |            | (5,565   | )           |  | 1986-1988           |  | 07/02/01 |  |  | 40 | 
|292 |  |                         | 2,700   |              |              |  | 16,255    |          |             |  | 18,955       |               |  |            | (1,483   | )           |  | 1987                |  | 06/19/00 |  |  | 40 | 
|293 |  |                         | 870     |              |              |  | 5,351     |          |             |  | 6,221        |               |  |            | (394     | )           |  | 1980                |  | 07/02/01 |  |  | 40 | 
|294 |  |                         | 7,505   |              |              |  | 44,759    |          |             |  | 52,264       |               |  |            | (3,117   | )           |  | 1974/1994           |  | 07/02/01 |  |  | 40 | 
|295 |  |                         | 18,760  |              |              |  | 112,678   |          |             |  | 131,438      |               |  |            | (7,253   | )           |  | 1980/1989           |  | 07/02/01 |  |  | 40 | 
|296 |  |                         | 4,451   |              |              |  | 26,475    |          |             |  | 30,926       |               |  |            | (1,731   | )           |  | 1983                |  | 07/02/01 |  |  | 40 | 
|297 |  |                         | 4,038   |              |              |  | 26,021    |          |             |  | 30,059       |               |  |            | (1,937   | )           |  | 1985                |  | 07/02/01 |  |  | 40 | 
|298 |  |                         | 2,537   |              |              |  | 12,940    |          |             |  | 15,477       |               |  |            | (1,479   | )           |  | 1947/1979           |  | 07/02/01 |  |  | 40 | 
|299 |  |                         | 5,383   |              |              |  | 56,598    |          |             |  | 61,981       |               |  |            | (9,325   | )           |  | 1980                |  | 12/17/97 |  |  | 40 | 
|300 |  |                         | 4,794   |              |              |  | 30,943    |          |             |  | 35,736       |               |  |            | (2,050   | )           |  | 1987/1991           |  | 07/02/01 |  |  | 40 | 
|301 |  |                         | 51,000  |              |              |  | 289,741   |          |             |  | 340,741      |               |  |            | (27,040  | )           |  | 1988                |  | 06/19/00 |  |  | 40 | 
|302 |  |                         | 9,900   |              |              |  | 93,304    |          |             |  | 103,204      |               |  |            | (16,156  | )           |  | 1980                |  | 12/17/97 |  |  | 40 | 
|303 |  |                         |        |              |              |  | 2,028     |          |             |  | 2,028        |               |  |            | (13      | )           |  | 1962,1978,1982,1987 |  | 07/02/01 |  |  | 40 | 
|304 |  |                         | 1,700   |              |              |  | 16,015    |          |             |  | 17,715       |               |  |            | (2,580   | )           |  | 1986                |  | 12/17/97 |  |  | 40 | 
|305 |  |                         | 10,922  |              |              |  | 101,559   |          |             |  | 112,482      |               |  |            | (16,293  | )           |  | 1991                |  | 12/17/97 |  |  | 40 | 
|306 |  |                         | 1,968   |              |              |  | 20,564    |          |             |  | 22,532       |               |  |            | (3,291   | )           |  | 1906/1989           |  | 07/29/98 |  |  | 40 | 
|307 |  |                         | 21,361  |              |              |  | 203,912   |          |             |  | 225,273      |               |  |            | (32,228  | )           |  | 1983                |  | 12/17/97 |  |  | 40 | 
|308 |  |                         | 12,934  |              |              |  | 80,572    |          |             |  | 93,505       |               |  |            | (5,142   | )           |  | 1991                |  | 07/02/01 |  |  | 40 | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                     | 
|    |  |                         | 274,541 |              |              |  | 2,202,689 |          |             |  | 2,477,230    |               |  |            | (222,870 | )           |  |                     |  |          |  |  |    | 
|    |  |                         |         |              |              |  |           |          |             |  |              |               |  |            |          |             |  |                     | 
|309 |  |                         | 16,943  |              |              |  | 176,236   |          |             |  | 193,179      |               |  |            | (24,467  | )           |  | 1970                |  | 05/22/98 |  |  | 40 | 
|310 |  |                         | 865     |              |              |  | 9,528     |          |             |  | 10,393       |               |  |            | (1,717   | )           |  | 1988                |  | 10/07/97 |  |  | 40 | 
|311 |  |                         | 717     |              |              |  | 7,765     |          |             |  | 8,482        |               |  |            | (1,568   | )           |  | 1982                |  | 11/21/97 |  |  | 40 | 
|312 |  |                         | 1,012   |              |              |  | 10,534    |          |             |  | 11,546       |               |  |            | (2,167   | )           |  | 1984                |  | 11/21/97 |  |  | 40 | 
|313 |  |                         | 879     |              |              |  | 8,560     |          |             |  | 9,439        |               |  |            | (1,386   | )           |  | 1990                |  | 10/07/97 |  |  | 40 | 
|314 |  |                         | 4,994   |              |              |  | 47,466    |          |             |  | 52,459       |               |  |            | (8,214   | )           |  | 1988                |  | 10/07/97 |  |  | 40 | 
|315 |  |                         | 9,205   |              |              |  | 81,350    |          |             |  | 90,555       |               |  |            | (12,803  | )           |  | 1990/1998           |  | 12/19/97 |  |  | 40 | 



---



##### Table of Contents



|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              |  |  |    |  |  |  |        | 
|--- |  | --------------------------------------- |  | ----- | ---------- | - | -------- | --------------- | --------- | ------------ | ---- | --------------- | ---------- | ----------------- | ------------- | - | ----- | ------------ | ------ | ------------ | --------- |  | ------- | ------------ |  |  | -- |  |  |  | ------ | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |  
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            | Costs Capitalized |              
|    |  |                                         |  |       |            |   |          |                 |           |              |      | Initial Cost to |            |                   | Subsequent to |  
|    |  |                                         |  |       |            |   |          |                 |           |              |      | Equity Office   |            |                   | Acquisition   |  
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |  
|    |  |                                         |  |       |            |   |          |                 |           | Encumbrances |      |                 |            |                   | Building and  |   |       |              |        | Building and |          
|    |  | Description                             |  | Notes |            |   | Location |                 | State     |              |      | at 12/31/03     |            |                   | Land          |   |       | Improvements |        |              | Land      |  |         | Improvements | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              | 
|316 |  | Fair Oaks Plaza                         |  |       |            |   |          | Fairfax         |           |              | VA   |                 |            |                   |              |   |       |              | 2,412  |              |           |  | 21,712  |              |  |  | 35 |  |  |  | 1,513  | 
|317 |  | Northridge I                            |  |       | (8)        |   |          | Herndon         |           |              | VA   |                 |            |                   | (12,901       | ) |       |              | 3,225  |              |           |  | 29,024  |              |  |  |   |  |  |  | 1,526  | 
|318 |  | Oak Hill Plaza                          |  |       |            |   |          | King of Prussia |           |              | PA   |                 |            |                   |              |   |       |              | 2,208  |              |           |  | 19,879  |              |  |  |   |  |  |  | 2,203  | 
|319 |  | Walnut Hill Plaza                       |  |       |            |   |          | King of Prussia |           |              | PA   |                 |            |                   | (13,651       | ) |       |              | 2,045  |              |           |  | 18,410  |              |  |  |   |  |  |  | 1,086  | 
|320 |  | John Marshall III                       |  |       |            |   |          | McLean          |           |              | VA   |                 |            |                   |              |   |       |              | 9,950  |              |           |  | 29,863  |              |  |  |   |  |  |  | 3,737  | 
|321 |  | E.J. Randolph                           |  |       | (8)        |   |          | McLean          |           |              | VA   |                 |            |                   | (14,223       | ) |       |              | 3,937  |              |           |  | 35,429  |              |  |  | 7  |  |  |  | 1,079  | 
|322 |  | John Marshall I                         |  |       |            |   |          | McLean          |           |              | VA   |                 |            |                   | (17,109       | ) |       |              | 5,216  |              |           |  | 46,814  |              |  |  | 24 |  |  |  | 461    | 
|323 |  | E.J. Randolph II                        |  |       |            |   |          | McLean          |           |              | VA   |                 |            |                   |              |   |       |              | 5,770  |              |           |  | 24,587  |              |  |  |   |  |  |  | 3,853  | 
|324 |  | 1601 Market                             |  |       | (3)        |   |          | Philadelphia    |           |              | PA   |                 |            |                   |              |   |       |              | 5,781  |              |           |  | 52,027  |              |  |  |   |  |  |  | 16,852 | 
|325 |  | 1700 Market                             |  |       |            |   |          | Philadelphia    |           |              | PA   |                 |            |                   |              |   |       |              | 9,389  |              |           |  | 84,498  |              |  |  |   |  |  |  | 26,529 | 
|326 |  | Reston Town Center Garage               |  |       | (3)        |   |          | Reston          |           |              | VA   |                 |            |                   |              |   |       |              | 1,943  |              |           |  | 9,792   |              |  |  |   |  |  |  | 1,812  | 
|327 |  | Reston Town Center                      |  |       | (3)        |   |          | Reston          |           |              | VA   |                 |            |                   | (114,657      | ) |       |              | 18,175 |              |           |  | 154,576 |              |  |  | 83 |  |  |  | 14,925 | 
|328 |  | 1300 North 17th Street                  |  |       |            |   |          | Rosslyn         |           |              | VA   |                 |            |                   |              |   |       |              | 9,811  |              |           |  | 88,296  |              |  |  |   |  |  |  | 3,884  | 
|329 |  | 1616 N. Fort Myer Drive                 |  |       |            |   |          | Rosslyn         |           |              | VA   |                 |            |                   |              |   |       |              | 6,961  |              |           |  | 62,646  |              |  |  |   |  |  |  | 3,551  | 
|330 |  | Army and Navy Club Building             |  |       |            |   |          | Washington      |           |              | D.C. |                 |            |                   |              |   |       |              | 3,773  |              |           |  | 33,954  |              |  |  |   |  |  |  | 177    | 
|331 |  | Market Square                           |  |       |            |   |          | Washington      |           |              | D.C. |                 |            |                   |              |   |       |              | 33,077 |              |           |  | 187,437 |              |  |  |   |  |  |  | 208    | 
|332 |  | One Lafayette Centre                    |  |       |            |   |          | Washington      |           |              | D.C. |                 |            |                   |              |   |       |              | 8,262  |              |           |  | 74,362  |              |  |  |   |  |  |  | 2,741  | 
|333 |  | Three Lafayette Centre                  |  |       |            |   |          | Washington      |           |              | D.C. |                 |            |                   |              |   |       |              | 6,871  |              |           |  | 61,841  |              |  |  |   |  |  |  | 4,893  | 
|334 |  | Two Lafayette Centre                    |  |       |            |   |          | Washington      |           |              | D.C. |                 |            |                   |              |   |       |              | 2,642  |              |           |  | 26,676  |              |  |  |   |  |  |  | 1,378  | 
|335 |  | Liberty Place                           |  |       |            |   |          | Washington      |           |              | D.C. |                 |            |                   |              |   |       |              | 5,625  |              |           |  | 50,625  |              |  |  |   |  |  |  | 876    | 
|336 |  | One Devon Square                        |  |       |            |   |          | Wayne           |           |              | PA   |                 |            |                   |              |   |       |              | 1,025  |              |           |  | 9,227   |              |  |  |   |  |  |  | 1,586  | 
|337 |  | Three Devon Square                      |  |       |            |   |          | Wayne           |           |              | PA   |                 |            |                   |              |   |       |              | 413    |              |           |  | 3,713   |              |  |  |   |  |  |  | 23     | 
|338 |  | Two Devon Square                        |  |       |            |   |          | Wayne           |           |              | PA   |                 |            |                   |              |   |       |              | 659    |              |           |  | 5,935   |              |  |  |   |  |  |  | 492    | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              | 
|   
|    |  | Washington D.C. Region Totals           |  |       | (172,540   | ) |          |                 | 183,362   |              |      |                 | 1,439,078  |                   |               |   | 570   |              |        |              | 129,070   | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |      
|   
|    |  | Subtotal Office Properties              |  |       | (2,308,491 | ) |          |                 | 2,664,186 |              |      |                 | 19,103,956 |                   |               |   | 3,892 |              |        |              | 1,615,163 | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |      
|   
|    |  | Development Properties:                 |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              |  |  |    |  |  |  |        | 
|339 |  | Kruse Woods V                           |  |       | (9)        |   |          | Lake Oswego     |           |              | OR   |                 |            |                   |              |   |       |              | 5,478  |              |           |  |        |              |  |  |   |  |  |  | 24,551 | 
|340 |  | Douglas Corporate Center II             |  |       | (9)        |   |          | Roseville       |           |              | CA   |                 |            |                   |              |   |       |              | 1,700  |              |           |  |        |              |  |  |   |  |  |  | 11,904 | 
|341 |  | Cambridge Science Center                |  |       | (9)        |   |          | Cambridge       |           |              | MA   |                 |            |                   |              |   |       |              | 1,959  |              |           |  | 17,635  |              |  |  |   |  |  |  | 12,005 | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              | 
|   
|    |  | Subtotal Development Properties         |  |       |           |   |          |                 | 9,137     |              |      |                 | 17,635     |                   |               |   |      |              |        |              | 48,460    | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |      
|   
|    |  | 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  |              |  |  |   |  |  |  | 655    | 
|4   |  | Cabot Boulevard Warehouse               |  |       |            |   |          | Hayward         |           |              | CA   |                 |            |                   |              |   |       |              | 1,905  |              |           |  | 10,795  |              |  |  |   |  |  |  | 43     | 
|5   |  | Eden Landing Business Center            |  |       |            |   |          | Hayward         |           |              | CA   |                 |            |                   |              |   |       |              | 945    |              |           |  | 5,355   |              |  |  |   |  |  |  | 297    | 
|6   |  | Hayward Business Park                   |  |       |            |   |          | Hayward         |           |              | CA   |                 |            |                   |              |   |       |              | 6,750  |              |           |  | 38,250  |              |  |  |   |  |  |  | 324    | 
|7   |  | Huntwood Business Center                |  |       |            |   |          | Hayward         |           |              | CA   |                 |            |                   |              |   |       |              | 2,625  |              |           |  | 14,875  |              |  |  |   |  |  |  | 380    | 
|8   |  | Keebler Warehouse                       |  |       |            |   |          | Hayward         |           |              | CA   |                 |            |                   |              |   |       |              | 630    |              |           |  | 3,570   |              |  |  |   |  |  |  | 762    | 
|9   |  | The Good Guys Distribution Center       |  |       |            |   |          | Hayward         |           |              | CA   |                 |            |                   |              |   |       |              | 3,525  |              |           |  | 19,975  |              |  |  |   |  |  |  |       | 
|10  |  | Independent Road Warehouse              |  |       |            |   |          | Oakland         |           |              | CA   |                 |            |                   |              |   |       |              | 900    |              |           |  | 5,100   |              |  |  |   |  |  |  | 7      | 
|11  |  | Port of Oakland                         |  |       |            |   |          | Oakland         |           |              | CA   |                 |            |                   |              |   |       |              | 2,025  |              |           |  | 11,475  |              |  |  |   |  |  |  | 256    | 
|12  |  | Doolittle Business Center               |  |       |            |   |          | San Leandro     |           |              | CA   |                 |            |                   |              |   |       |              | 1,320  |              |           |  | 7,480   |              |  |  |   |  |  |  | 78     | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              | 
|   
|    |  | San Francisco Region Totals             |  |       |           |   |          |                 | 29,115    |              |      |                 | 164,985    |                   |               |   |      |              |        |              | 2,861     | 
|    |  |                                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |      
|   
|    |  | San Jose Region                         |  |       |            |   |          |                 |           |              |      |                 |            |                   |               |   |       |              |        |              |           |  |         |              |  |  |    |  |  |  |        | 
|13  |  | Fremont Bayside                         |  |       | (7)        |   |          | Fremont         |           |              | CA   |                 |            |                   | (5,396        | ) |       |              | 2,025  |              |           |  | 11,475  |              |  |  |   |  |  |  | 89     | 
|14  |  | Fremont Commerce Centers                |  |       |            |   |          | Fremont         |           |              | CA   |                 |            |                   |              |   |       |              | 4,440  |              |           |  | 25,160  |              |  |  |   |  |  |  | 382    | 
|15  |  | Industrial Drive                        |  |       | (7)        |   |          | Fremont         |           |              | CA   |                 |            |                   | (2,002        | ) |       |              | 2,250  |              |           |  | 12,750  |              |  |  |   |  |  |  |       | 
|16  |  | Kato R & D                              |  |       |            |   |          | Fremont         |           |              | CA   |                 |            |                   |              |   |       |              | 1,095  |              |           |  | 6,205   |              |  |  |   |  |  |  |       | 
|17  |  | Milmont R & D                           |  |       |            |   |          | Fremont         |           |              | CA   |                 |            |                   |              |   |       |              | 900    |              |           |  | 5,100   |              |  |  |   |  |  |  | 20     | 
|18  |  | Cadillac Court I & II                   |  |       |            |   |          | Milpitas        |           |              | CA   |                 |            |                   |              |   |       |              | 1,460  |              |           |  | 8,272   |              |  |  |   |  |  |  | 181    | 
|19  |  | COG Warehouse                           |  |       |            |   |          | Milpitas        |           |              | CA   |                 |            |                   |              |   |       |              | 1,275  |              |           |  | 7,225   |              |  |  |   |  |  |  | 350    | 

[Additional columns below]

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

|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           |  |          |  |  |    | 
|--- |  | ----------------------- | --------- | ------------ | ------------ |  | ---------- | -------- | ----------- |  | ------------ | ------------- |  | ---------- | ---------- | ----------- |  | --------- |  | -------- |  |  | -- | 
|    |  |                         |           |              |              |  |            |          |             |  |              |              
|    |  | Gross Amount Carried at |           |              |              |  |            |          |             |  |              |               | 
|    |  | Close of Period         |           |              |              |  |            |          |             |  |              |               | 
|    |  | 12/31/2003              |           |              |              |  |            |          |             |  |              |               | 
|    |  |                         |           |              |              |  |            |          | Date of     |  |              |               | 
|    |  |                         |           | Building and |              |  |            |          | Accumulated |  |              | Construction/ |  | Date       |            | Depreciable | 
|    |  | Land                    |           |              | Improvements |  |            | Total(1) |             |  | Depreciation |               |  | Renovation |            | Acquired    |  | Lives(2)  | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|316 |  |                         | 2,447     |              |              |  | 23,225     |          |             |  | 25,672       |               |  |            | (3,941     | )           |  | 1986      |  | 11/24/97 |  |  | 40 | 
|317 |  |                         | 3,225     |              |              |  | 30,551     |          |             |  | 33,776       |               |  |            | (4,927     | )           |  | 1988      |  | 12/19/97 |  |  | 40 | 
|318 |  |                         | 2,208     |              |              |  | 22,081     |          |             |  | 24,290       |               |  |            | (3,471     | )           |  | 1982      |  | 10/07/97 |  |  | 40 | 
|319 |  |                         | 2,045     |              |              |  | 19,496     |          |             |  | 21,541       |               |  |            | (3,367     | )           |  | 1985      |  | 10/07/97 |  |  | 40 | 
|   
|320 |  |                         | 9,950     |              |              |  | 33,599     |          |             |  | 43,549       |               |  |            | (4,204     | )           |  | 2000      |  | 12/19/97 |  |  | 40 | 
|   
|321 |  |                         | 3,944     |              |              |  | 36,508     |          |             |  | 40,451       |               |  |            | (5,690     | )           |  | 1983      |  | 12/19/97 |  |  | 40 | 
|322 |  |                         | 5,240     |              |              |  | 47,275     |          |             |  | 52,515       |               |  |            | (7,172     | )           |  | 1981      |  | 12/19/97 |  |  | 40 | 
|323 |  |                         | 5,770     |              |              |  | 28,440     |          |             |  | 34,210       |               |  |            | (1,387     | )           |  | 2002      |  | 12/19/97 |  |  | 40 | 
|   
|324 |  |                         | 5,781     |              |              |  | 68,880     |          |             |  | 74,661       |               |  |            | (12,276    | )           |  | 1970      |  | 01/18/96 |  |  | 40 | 
|325 |  |                         | 9,389     |              |              |  | 111,028    |          |             |  | 120,417      |               |  |            | (21,773    | )           |  | 1969/1989 |  | 10/01/97 |  |  | 40 | 
|326 |  |                         | 1,943     |              |              |  | 11,604     |          |             |  | 13,547       |               |  |            | (1,573     | )           |  | 1999      |  | 10/22/96 |  |  | 40 | 
|   
|327 |  |                         | 18,258    |              |              |  | 169,502    |          |             |  | 187,759      |               |  |            | (26,484    | )           |  | 1990      |  | 10/22/96 |  |  | 40 | 
|   
|328 |  |                         | 9,811     |              |              |  | 92,180     |          |             |  | 101,991      |               |  |            | (14,151    | )           |  | 1980      |  | 12/19/97 |  |  | 40 | 
|   
|329 |  |                         | 6,961     |              |              |  | 66,197     |          |             |  | 73,158       |               |  |            | (10,150    | )           |  | 1974      |  | 12/19/97 |  |  | 40 | 
|   
|330 |  |                         | 3,773     |              |              |  | 34,131     |          |             |  | 37,904       |               |  |            | (1,372     | )           |  | 1986      |  | 05/24/02 |  |  | 40 | 
|   
|331 |  |                         | 33,077    |              |              |  | 187,645    |          |             |  | 220,722      |               |  |            | (15,712    | )           |  | 1990      |  | 06/19/00 |  |  | 40 | 
|332 |  |                         | 8,262     |              |              |  | 77,103     |          |             |  | 85,365       |               |  |            | (12,448    | )           |  | 1980/1993 |  | 10/17/97 |  |  | 40 | 
|   
|333 |  |                         | 6,871     |              |              |  | 66,734     |          |             |  | 73,606       |               |  |            | (3,603     | )           |  | 1986      |  | 10/17/01 |  |  | 40 | 
|   
|334 |  |                         | 2,642     |              |              |  | 28,053     |          |             |  | 30,695       |               |  |            | (2,507     | )           |  | 1985      |  | 07/11/00 |  |  | 40 | 
|   
|335 |  |                         | 5,625     |              |              |  | 51,501     |          |             |  | 57,126       |               |  |            | (1,635     | )           |  | 1991      |  | 09/17/02 |  |  | 40 | 
|336 |  |                         | 1,025     |              |              |  | 10,813     |          |             |  | 11,838       |               |  |            | (2,062     | )           |  | 1984      |  | 10/07/97 |  |  | 40 | 
|   
|337 |  |                         | 413       |              |              |  | 3,736      |          |             |  | 4,148        |               |  |            | (578       | )           |  | 1985      |  | 10/07/97 |  |  | 40 | 
|   
|338 |  |                         | 659       |              |              |  | 6,427      |          |             |  | 7,086        |               |  |            | (1,097     | )           |  | 1985      |  | 10/07/97 |  |  | 40 | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 183,931   |              |              |  | 1,568,148  |          |             |  | 1,752,079    |               |  |            | (213,902   | )           |  |           |  |          |  |  |    | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 2,668,078 |              |              |  | 20,719,119 |          |             |  | 23,387,197   |               |  |            | (2,511,945 | )           |  |           |  |          |  |  |    | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|339 |  |                         | 5,478     |              |              |  | 24,551     |          |             |  | 30,029       |               |  |            |           |             |  | N/A       |  | 07/02/01 |  |  |    | 
|340 |  |                         | 1,700     |              |              |  | 11,904     |          |             |  | 13,604       |               |  |            |           |             |  | N/A       |  | 07/02/01 |  |  |    | 
|   
|341 |  |                         | 1,959     |              |              |  | 29,640     |          |             |  | 31,599       |               |  |            | (2,305     | )           |  | N/A       |  | 12/19/97 |  |  |    | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 9,137     |              |              |  | 66,095     |          |             |  | 75,232       |               |  |            | (2,305     | )           |  |           |  |          |  |  |    | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|   
|1   |  |                         | 525       |              |              |  | 2,975      |          |             |  | 3,500        |               |  |            | (183       | )           |  | 1982      |  | 07/02/01 |  |  | 40 | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 525       |              |              |  | 2,975      |          |             |  | 3,500        |               |  |            | (183       | )           |  |           |  |          |  |  |    | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|2   |  |                         | 2,250     |              |              |  | 12,809     |          |             |  | 15,059       |               |  |            | (818       | )           |  | 1996      |  | 07/02/01 |  |  | 40 | 
|   
|3   |  |                         | 6,240     |              |              |  | 36,015     |          |             |  | 42,255       |               |  |            | (2,264     | )           |  | 1994      |  | 07/02/01 |  |  | 40 | 
|   
|4   |  |                         | 1,905     |              |              |  | 10,838     |          |             |  | 12,743       |               |  |            | (672       | )           |  | 1988      |  | 07/02/01 |  |  | 40 | 
|   
|5   |  |                         | 945       |              |              |  | 5,652      |          |             |  | 6,597        |               |  |            | (386       | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 
|   
|6   |  |                         | 6,750     |              |              |  | 38,574     |          |             |  | 45,324       |               |  |            | (2,407     | )           |  | 1980-1981 |  | 07/02/01 |  |  | 40 | 
|   
|7   |  |                         | 2,625     |              |              |  | 15,255     |          |             |  | 17,880       |               |  |            | (981       | )           |  | 1979      |  | 07/02/01 |  |  | 40 | 
|   
|8   |  |                         | 630       |              |              |  | 4,332      |          |             |  | 4,962        |               |  |            | (240       | )           |  | 1985      |  | 07/02/01 |  |  | 40 | 
|   
|9   |  |                         | 3,525     |              |              |  | 19,975     |          |             |  | 23,500       |               |  |            | (1,228     | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 
|   
|10  |  |                         | 900       |              |              |  | 5,107      |          |             |  | 6,007        |               |  |            | (313       | )           |  | 1972      |  | 07/02/01 |  |  | 40 | 
|   
|11  |  |                         | 2,025     |              |              |  | 11,731     |          |             |  | 13,756       |               |  |            | (743       | )           |  | 1977      |  | 07/02/01 |  |  | 40 | 
|12  |  |                         | 1,320     |              |              |  | 7,558      |          |             |  | 8,878        |               |  |            | (474       | )           |  | 1978      |  | 07/02/01 |  |  | 40 | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|    |  |                         | 29,115    |              |              |  | 167,846    |          |             |  | 196,961      |               |  |            | (10,527    | )           |  |           |  |          |  |  |    | 
|    |  |                         |           |              |              |  |            |          |             |  |              |               |  |            |            |             |  |           | 
|   
|13  |  |                         | 2,025     |              |              |  | 11,564     |          |             |  | 13,589       |               |  |            | (717       | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 
|14  |  |                         | 4,440     |              |              |  | 25,542     |          |             |  | 29,982       |               |  |            | (1,586     | )           |  | 1988      |  | 07/02/01 |  |  | 40 | 
|   
|15  |  |                         | 2,250     |              |              |  | 12,750     |          |             |  | 15,000       |               |  |            | (784       | )           |  | 1993      |  | 07/02/01 |  |  | 40 | 
|   
|16  |  |                         | 1,095     |              |              |  | 6,205      |          |             |  | 7,300        |               |  |            | (381       | )           |  | 1983      |  | 07/02/01 |  |  | 40 | 
|17  |  |                         | 900       |              |              |  | 5,120      |          |             |  | 6,020        |               |  |            | (314       | )           |  | 1990      |  | 07/02/01 |  |  | 40 | 
|18  |  |                         | 1,460     |              |              |  | 8,453      |          |             |  | 9,913        |               |  |            | (509       | )           |  | 1991      |  | 07/02/01 |  |  | 40 | 
|   
|19  |  |                         | 1,275     |              |              |  | 7,575      |          |             |  | 8,850        |               |  |            | (444       | )           |  | 1992      |  | 07/02/01 |  |  | 40 | 



---



##### Table of Contents



|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              |  |   |       |   |  |   |           | 
|-- |  | --------------------------------- |  | ----- | ---- |  | -------- | ----------- | ----- | ------------ | -- | --------------- |  | ----------------- | ------------- | - |  | ------------ | --------- | ------------ | ---- | - | ---------- | ------------ |  | - | ----- | - |  | - | --------- | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |  
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  | Costs Capitalized |              
|   |  |                                   |  |       |      |  |          |             |       |              |    | Initial Cost to |  |                   | Subsequent to |  
|   |  |                                   |  |       |      |  |          |             |       |              |    | Equity Office   |  |                   | Acquisition   |  
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |  
|   |  |                                   |  |       |      |  |          |             |       | Encumbrances |    |                 |  |                   | Building and  |   |  |              |           | Building and |     
|   |  | Description                       |  | Notes |      |  | Location |             | State |              |    | at 12/31/03     |  |                   | Land          |   |  | Improvements |           |              | Land |   |            | Improvements | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
|20 |  | Dixon Landing North I & II        |  |       |      |  |          | Milpitas    |       |              | CA |                 |  |                   |              |   |  |              | 3,922     |              |      |   | 22,222     |              |  |   |      |   |  |   | 261       | 
|21 |  | Okidata Distribution Center       |  |       |      |  |          | Milpitas    |       |              | CA |                 |  |                   |              |   |  |              | 1,613     |              |      |   | 9,138      |              |  |   |      |   |  |   | 157       | 
|22 |  | Charcot Business Center           |  |       |      |  |          | San Jose    |       |              | CA |                 |  |                   |              |   |  |              | 3,450     |              |      |   | 19,550     |              |  |   | 54    |   |  |   | 359       | 
|23 |  | Montague Industrial Center        |  |       |      |  |          | San Jose    |       |              | CA |                 |  |                   |              |   |  |              | 3,750     |              |      |   | 21,250     |              |  |   | 64    |   |  |   | 533       | 
|24 |  | North American Van Lines          |  |       |      |  |          | San Jose    |       |              | CA |                 |  |                   |              |   |  |              | 2,089     |              |      |   | 11,837     |              |  |   | (58   | ) |  |   | 58        | 
|25 |  | 2509-2909 Stender Way             |  |       |      |  |          | Santa Clara |       |              | CA |                 |  |                   |              |   |  |              | 1,275     |              |      |   | 7,225      |              |  |   |      |   |  |   |          | 
|26 |  | Walsh @ Lafayette Industrial Park |  |       |      |  |          | Santa Clara |       |              | CA |                 |  |                   |              |   |  |              | 5,250     |              |      |   | 29,750     |              |  |   |      |   |  |   | 24        | 
|27 |  | Kifer Road Industrial Park        |  |       |      |  |          | Sunnyvale   |       |              | CA |                 |  |                   |              |   |  |              | 4,869     |              |      |   | 27,220     |              |  |   | 93    |   |  |   | 231       | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
|   |  | San Jose Region Total             |  |       |      |  |          |             |       |              |    |                 |  |                   | (7,398        | ) |  |              | 39,662    |              |      |   | 224,379    |              |  |   | 154   |   |  |   | 2,643     | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
|   |  | Subtotal Industrial Properties    |  |       |      |  |          |             |       |              |    |                 |  |                   | (7,398        | ) |  |              | 69,302    |              |      |   | 392,339    |              |  |   | 154   |   |  |   | 5,504     | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
|   |  | Land Available for Development    |  |       |      |  |          | Various     |       |              |    |                 |  |                   |              |   |  |              | 251,151   |              |      |   |           |              |  |   |      |   |  |   | 2,398     | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
|   |  | Management Business               |  |       |      |  |          |             |       |              |    |                 |  |                   |              |   |  |              |          |              |      |   |           |              |  |   |      |   |  |   | 128,945   | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 
|   |  | Investment in Real Estate         |  |       | (10) |  |          |             |       |              |    |                 |  | $                 | (2,315,889    | ) |  | $            | 2,993,776 |              |      | $ | 19,513,930 |              |  | $ | 4,045 |   |  | $ | 1,800,471 | 
|   |  |                                   |  |       |      |  |          |             |       |              |    |                 |  |                   |               |   |  |              |           |              |      |   |            |              | 

[Additional columns below]

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

|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          |  |          |  |  |      | 
|-- |  | ----------------------- | --------- | ------------ | ------------ | - | ---------- | -------- | ----------- | - | ------------ | ------------- |  | ---------- | ---------- | ----------- |  | -------- |  | -------- |  |  | ---- | 
|   |  |                         |           |              |              |   |            |          |             |   |              |              
|   |  | Gross Amount Carried at |           |              |              |   |            |          |             |   |              |               | 
|   |  | Close of Period         |           |              |              |   |            |          |             |   |              |               | 
|   |  | 12/31/2003              |           |              |              |   |            |          |             |   |              |               | 
|   |  |                         |           |              |              |   |            |          | Date of     |   |              |               | 
|   |  |                         |           | Building and |              |   |            |          | Accumulated |   |              | Construction/ |  | Date       |            | Depreciable | 
|   |  | Land                    |           |              | Improvements |   |            | Total(1) |             |   | Depreciation |               |  | Renovation |            | Acquired    |  | Lives(2) | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
|20 |  |                         | 3,922     |              |              |   | 22,484     |          |             |   | 26,405       |               |  |            | (1,366     | )           |  | 1998     |  | 07/02/01 |  |  | 40   | 
|21 |  |                         | 1,613     |              |              |   | 9,294      |          |             |   | 10,907       |               |  |            | (568       | )           |  | 1993     |  | 07/02/01 |  |  | 40   | 
|22 |  |                         | 3,504     |              |              |   | 19,909     |          |             |   | 23,413       |               |  |            | (1,246     | )           |  | 1978     |  | 07/02/01 |  |  | 40   | 
|23 |  |                         | 3,814     |              |              |   | 21,783     |          |             |   | 25,597       |               |  |            | (1,465     | )           |  | 1993     |  | 07/02/01 |  |  | 40   | 
|24 |  |                         | 2,031     |              |              |   | 11,894     |          |             |   | 13,926       |               |  |            | (727       | )           |  | 1988     |  | 07/02/01 |  |  | 40   | 
|25 |  |                         | 1,275     |              |              |   | 7,225      |          |             |   | 8,500        |               |  |            | (444       | )           |  | 1995     |  | 07/02/01 |  |  | 40   | 
|26 |  |                         | 5,250     |              |              |   | 29,774     |          |             |   | 35,024       |               |  |            | (1,828     | )           |  | 1996     |  | 07/02/01 |  |  | 40   | 
|27 |  |                         | 4,962     |              |              |   | 27,451     |          |             |   | 32,413       |               |  |            | (1,682     | )           |  | 1979     |  | 07/02/01 |  |  | 40   | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
|   |  |                         | 39,816    |              |              |   | 227,022    |          |             |   | 266,838      |               |  |            | (14,061    | )           |  |          |  |          |  |  |      | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
|   |  |                         | 69,456    |              |              |   | 397,843    |          |             |   | 467,298      |               |  |            | (24,771    | )           |  |          |  |          |  |  |      | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
|   |  |                         | 251,151   |              |              |   | 2,398      |          |             |   | 253,550      |               |  |            |           |             |  |          |  | Various  |  |  | N/A  | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
|   |  |                         |          |              |              |   | 128,945    |          |             |   | 128,945      |               |  |            | (39,061    | )           |  |          |  | Various  |  |  | 3-40 | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 
|   |  | $                       | 2,997,822 |              |              | $ | 21,314,400 |          |             | $ | 24,312,222   |               |  | $          | (2,578,082 | )           |  |          |  |          |  |  |      | 
|   |  |                         |           |              |              |   |            |          |             |   |              |               |  |            |            |             |  |          | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The aggregate cost for Federal Income Tax
    purposes as of December 31, 2003 was approximately
    $14.4 billion.                                                                                                                                                                                                                                                                                                                                                                              
|   
|(2) | The life to compute depreciation on building is
    35-40 years, except for Palo Alto 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
    3-40 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) | This Property contains 106 residential units in
    addition to 226,197 square feet of office space.                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(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 2003.                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(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, 2003
    include a net premium of approximately $13.7 million.



---



##### Table of Contents



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

The changes in investment in real estate for the
years ended December 31, 2003, 2002, and 2001 are as
follows:

|                                 |                           |                                                                                  |            |  |                   |   |            |                   |          |   |            |  |           |  
|-------------------------------- | ------------------------- | -------------------------------------------------------------------------------- | ---------- |  | ----------------- | - | ---------- | ----------------- | -------- | - | ---------- |  | --------- | -
|                                 |                           | December 31, 2003                                                                |            |  | December 31, 2002 |   |            | December 31, 2001 |         
|                                 |                           |                                                                                  |            |  |                   |   |            |                   |         
|Balance, beginning of the period |                           | $                                                                                | 25,163,516 |  |                   | $ | 24,816,351 |                   |          | $ | 17,619,380 | 
|                                 | Additions during period:  |                                                                                  |            |  |                   |   |            |                   |          |   |            |  |          
|                                 |                           | Acquisitions                                                                     |            |  | 163,511           |   |            |                   | 121,986  |   |            |  | 7,323,459 |  
|                                 |                           | Consolidation of Properties previously accounted
    for under the equity method |            |  | 85,870            |   |            |                   | 377,532  |   |            |  |          |  
|                                 |                           | Improvements                                                                     |            |  | 471,638           |   |            |                   | 328,930  |   |            |  | 360,065   |  
|                                 |                           | Other(1)                                                                         |            |  |                  |   |            |                   |         |   |            |  | (4,516    | )
|                                 | Deductions during period: |                                                                                  |            |  |                   |   |            |                   |          |   |            |  |          
|                                 |                           | Properties disposed of                                                           |            |  | (1,545,598        | ) |            |                   | (457,077 | ) |            |  | (482,037  | )
|                                 |                           | Impairment on assets held for Sale                                               |            |  | (7,667            | ) |            |                   |         |   |            |  |          |  
|                                 |                           | Write-off of fully depreciated assets which are
    no longer in service         |            |  | (19,048           | ) |            |                   | (24,206  | ) |            |  |          |  
|                                 |                           |                                                                                  |            |  |                   |   |            |                   |         
|Balance, end of period           |                           | $                                                                                | 24,312,222 |  |                   | $ | 25,163,516 |                   |          | $ | 24,816,351 | 
|                                 |                           |                                                                                  |            |  |                   |   |            |                   |         

The changes in accumulated depreciation for the
years ended December 31, 2003, 2002, 2001 and 2000, are as
follows:

|                                 |                           |                                                                          |                                                                                  |   |                   |   |            |                   |          |      |            |   |          |   | 
|-------------------------------- | ------------------------- | ------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | - | ----------------- | - | ---------- | ----------------- | -------- | ---- | ---------- | - | -------- | - | 
|                                 |                           | December 31, 2003                                                        |                                                                                  |   | December 31, 2002 |   |            | December 31, 2001 |         
|                                 |                           |                                                                          |                                                                                  |   |                   |   |            |                   |         
|Balance, beginning of the period |                           | $                                                                        | (2,077,613                                                                       | ) |                   | $ | (1,494,301 | )                 |          | $    | (978,055   | )
|                                 | Additions during period:  |                                                                          |                                                                                  |   |                   |   |            |                   |          |      |            |   |         
|                                 |                           | Depreciation                                                             |                                                                                  |   | (663,935          | ) |            |                   | (637,633 | )    |            |   | (532,403 | )
|                                 |                           |                                                                          | Consolidation of Properties previously accounted
    for under the equity method |   |                   |  |            |                   |          | (617 | )          |   |          |  | 
|                                 | Deductions during period: |                                                                          |                                                                                  |   |                   |   |            |                   |          |      |            |   |         
|                                 |                           | Properties disposed of                                                   |                                                                                  |   | 144,251           |   |            |                   | 30,732   |      |            |   | 16,157   |  
|                                 |                           | Impairment on assets held for Sale                                       |                                                                                  |   | 167               |   |            |                   |         |      |            |   |         |  
|                                 |                           | Write-off of fully depreciated assets which are
    no longer in service |                                                                                  |   | 19,048            |   |            |                   | 24,206   |      |            |   |         |  
|                                 |                           |                                                                          |                                                                                  |   |                   |   |            |                   |         
|Balance, end of period           |                           | $                                                                        | (2,578,082                                                                       | ) |                   | $ | (2,077,613 | )                 |          | $    | (1,494,301 | )
|                                 |                           |                                                                          |                                                                                  |   |                   |   |            |                   |         



---



|    |                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.