##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

FORM 10-Q

|           |  |                                                                                                                                                              |  | 
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | 
|(Mark One) |  |                                                                                                                                                              |  | 
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended September 30, 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: 1-13625

EOP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its
charter)


|                                                                                                         |  |                                                   
|-------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware(State or other jurisdiction of
    incorporation or organization)                               |  | 36-4156801(I.R.S. Employer Identification
    No.)
|                                                                                                        
|Two North Riverside Plaza,
    Suite 2100, Chicago, Illinois(Address of principal executive
    offices) |  | 60606(Zip code)                                   

(312) 466-3300

(Registrants telephone number, including
area code)


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

On October 31, 2003, 448,944,149 Units were
outstanding.



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TABLE OF CONTENTS



|                                                |                               |  |  |  |  |  |  | 
|----------------------------------------------- | ----------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                  
|                                                | ITEM 1. Financial Statements.
|PART II. OTHER INFORMATION                     
|SIGNATURES                                     
|EXHIBIT INDEX                                  
|EX-10.1 Change in Control Agreement            
|Statement of Earnings                          
|EX-31.1 Rule 13a-14(a)/15d-14(a) Certifications
|EX-32.1 Section 1350 Certifications            



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##### Table of Contents






PART I.

FINANCIAL INFORMATION






|        |                      
|------- | ---------------------
|ITEM 1. | Financial Statements.

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |            |            |            |            |            |            | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------ | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                                                                                   |                                                                                                                                       | September 30,                                                                                                                                       |                                                                                                                                                             |                                                                                                         | December 31, |           
|(Dollars in thousands, except per unit amounts)                                                    |                                                                                                                                       | 2003                                                                                                                                                |                                                                                                                                                             |                                                                                                         | 2002         |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   |                                                                                                                                       | (Unaudited)                                                                                                                                         |                                                                                                                                                             |                                                                                                         |             
|Assets:                                                                                            |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |            |            |           
|                                                                                                   | Investments in real estate                                                                                                            |                                                                                                                                                     | $                                                                                                                                                           | 24,859,693                                                                                              |              |            | $          | 24,625,927 |           
|                                                                                                   | Developments in process                                                                                                               |                                                                                                                                                     |                                                                                                                                                             | 61,325                                                                                                  |              |            |            | 284,737    |           
|                                                                                                   | Land available for development                                                                                                        |                                                                                                                                                     |                                                                                                                                                             | 253,933                                                                                                 |              |            |            | 252,852    |           
|                                                                                                   | Accumulated depreciation                                                                                                              |                                                                                                                                                     |                                                                                                                                                             | (2,533,491                                                                                              | )            |            |            | (2,077,613 | )         
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   |                                                                                                                                       | Investments in real estate, net of accumulated
    depreciation                                                                                     |                                                                                                                                                             |                                                                                                         | 22,641,460   |            |            |            | 23,085,903 |           
|                                                                                                   | Cash and cash equivalents                                                                                                             |                                                                                                                                                     |                                                                                                                                                             | 105,785                                                                                                 |              |            |            | 58,471     |           
|                                                                                                   | Tenant and other receivables (net of allowance
    for doubtful accounts of $8,049 and $11,695, respectively)                         |                                                                                                                                                     |                                                                                                                                                             | 79,996                                                                                                  |              |            |            | 77,597     |           
|                                                                                                   | Deferred rent receivable                                                                                                              |                                                                                                                                                     |                                                                                                                                                             | 383,015                                                                                                 |              |            |            | 331,932    |           
|                                                                                                   | Escrow deposits and restricted cash                                                                                                   |                                                                                                                                                     |                                                                                                                                                             | 43,815                                                                                                  |              |            |            | 29,185     |           
|                                                                                                   | Investments in unconsolidated joint ventures                                                                                          |                                                                                                                                                     |                                                                                                                                                             | 978,150                                                                                                 |              |            |            | 1,087,815  |           
|                                                                                                   | Deferred financing costs (net of accumulated
    amortization of $46,190 and $48,801, respectively)                                   |                                                                                                                                                     |                                                                                                                                                             | 67,682                                                                                                  |              |            |            | 67,151     |           
|                                                                                                   | Deferred leasing costs and other related
    intangibles (net of accumulated amortization of $156,114 and
    $115,710, respectively) |                                                                                                                                                     |                                                                                                                                                             | 302,291                                                                                                 |              |            |            | 235,002    |           
|                                                                                                   | Prepaid expenses and other assets (net of
    discounts of $66,289 and $66,557, respectively)                                         |                                                                                                                                                     |                                                                                                                                                             | 281,175                                                                                                 |              |            |            | 273,727    |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | Total Assets                                                                                                                                                |                                                                                                         | $            | 24,883,369 |            |            | $          | 25,246,783 |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|Liabilities, Minority Interests, Mandatorily
    Redeemable Preferred Units and Partners Capital: |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |            |            |           
|                                                                                                   | Liabilities:                                                                                                                          |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |            |            |            |           
|                                                                                                   |                                                                                                                                       | Mortgage debt (including a net discount of
    $(13,428) and $(12,584), respectively)                                                               |                                                                                                                                                             | $                                                                                                       | 2,407,112    |            |            | $          | 2,507,890  |           
|                                                                                                   |                                                                                                                                       | Unsecured notes (including a net premium of
    $19,124 and $41,151, respectively)                                                                  |                                                                                                                                                             |                                                                                                         | 9,235,624    |            |            |            | 9,057,651  |           
|                                                                                                   |                                                                                                                                       | Line of credit                                                                                                                                      |                                                                                                                                                             |                                                                                                         | 421,000      |            |            |            | 205,700    |           
|                                                                                                   |                                                                                                                                       | Accounts payable and accrued expenses                                                                                                               |                                                                                                                                                             |                                                                                                         | 480,831      |            |            |            | 560,101    |           
|                                                                                                   |                                                                                                                                       | Distribution payable                                                                                                                                |                                                                                                                                                             |                                                                                                         | 227,459      |            |            |            | 5,654      |           
|                                                                                                   |                                                                                                                                       | Other liabilities                                                                                                                                   |                                                                                                                                                             |                                                                                                         | 413,628      |            |            |            | 391,963    |           
|                                                                                                   |                                                                                                                                       | Commitments and contingencies                                                                                                                       |                                                                                                                                                             |                                                                                                         |             |            |            |            |           |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | Total Liabilities                                                                                                                                           |                                                                                                         |              | 13,185,654 |            |            |            | 12,728,959 |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   | Minority interests  partially owned
    properties                                                                                   |                                                                                                                                                     |                                                                                                                                                             | 184,049                                                                                                 |              |            |            | 185,809    |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   | Mandatorily Redeemable Preferred Units:                                                                                               |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |            |            |            |           
|                                                                                                   |                                                                                                                                       | 5.25% Series B Convertible, Cumulative
    Redeemable Preferred Units, liquidation preference
    $50.00 per unit, 5,990,000 issued and outstanding |                                                                                                                                                             |                                                                                                         | 299,500      |            |            |            | 299,500    |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   | Partners Capital:                                                                                                                    |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |            |            |            |           
|                                                                                                   |                                                                                                                                       | Non-Mandatorily Redeemable Preferred Units:                                                                                                         |                                                                                                                                                             |                                                                                                         |              |            |            |            |            |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | 8.625% Series C Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    4,562,900 issued and outstanding                     |                                                                                                         |              | 114,073    |            |            |            | 114,073    |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | 7.875% Series E Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit, 0
    and 6,000,000 issued and outstanding, respectively |                                                                                                         |              |           |            |            |            | 150,000    |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | 8.0% Series F Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit, 0
    and 4,000,000 issued and outstanding, respectively   |                                                                                                         |              |           |            |            |            | 100,000    |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | 7.75% Series G Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    8,500,000 issued and outstanding                      |                                                                                                         |              | 212,500    |            |            |            | 212,500    |           
|                                                                                                   |                                                                                                                                       | Other Partners Capital:                                                                                                                            |                                                                                                                                                             |                                                                                                         |              |            |            |            |            |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | General Partners Capital                                                                                                                                    |                                                                                                         |              | 84,941     |            |            |            | 89,650     |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | Limited Partners Capital                                                                                                                                    |                                                                                                         |              | 10,835,840 |            |            |            | 11,399,979 |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | Deferred compensation                                                                                                                                       |                                                                                                         |              | (8,058     | )          |            |            | (15,472    | )         
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     | Accumulated other comprehensive loss                                                                                                                        |                                                                                                         |              | (25,130    | )          |            |            | (18,215    | )         
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             | Total Partners Capital                                                                                 |              |            | 11,214,166 |            |            |            | 12,032,515 | 
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             | Total Liabilities, Minority Interests,
    Mandatorily Redeemable Preferred Units and Partners Capital |              | $          | 24,883,369 |            |            | $          | 25,246,783 | 
|                                                                                                   |                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                             |                                                                                                         |              |           

See accompanying notes.

2



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF
OPERATIONS

(Unaudited)


|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |             |          |           |  
|------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------- | ----------- | ------------------------- | -------- | ------- | ----------- | -------- | -------- | ------- | ----------- | -------- | --------- | ------- | ----------- | -------- | --------- | -
|                                                                                                                                           |                                                                     |                                                                      |                             |            
|                                                                                                                                           |                                                                     | For the three months ended                                           |                             |             | For the nine months ended |         
|                                                                                                                                           |                                                                     | September 30,                                                        |                             |             | September 30,             |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |         
|(Dollars in thousands, except per unit amounts)                                                                                            |                                                                     | 2003                                                                 |                             |             | 2002                      |          |         | 2003        |          |          | 2002    |            
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Revenues:                                                                                                                                  |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |            
|                                                                                                                                           | Rental                                                              |                                                                      | $                           | 645,338     |                           |          | $       | 666,743     |          |          | $       | 1,941,837   |          |           | $       | 2,018,267   |         
|                                                                                                                                           | Tenant reimbursements                                               |                                                                      |                             | 108,285     |                           |          |         | 123,640     |          |          |         | 321,719     |          |           |         | 365,820     |         
|                                                                                                                                           | Parking                                                             |                                                                      |                             | 28,188      |                           |          |         | 28,207      |          |          |         | 83,473      |          |           |         | 85,915      |         
|                                                                                                                                           | Other                                                               |                                                                      |                             | 22,382      |                           |          |         | 35,372      |          |          |         | 57,767      |          |           |         | 78,041      |         
|                                                                                                                                           | Fee income                                                          |                                                                      |                             | 1,969       |                           |          |         | 3,699       |          |          |         | 10,431      |          |           |         | 11,754      |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           |                                                                     |                                                                      | Total revenues              |             |                           | 806,162  |         |             |          | 857,661  |         |             |          | 2,415,227 |         |             |          | 2,559,797 |  
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Expenses:                                                                                                                                  |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |            
|                                                                                                                                           | Depreciation                                                        |                                                                      |                             | 162,868     |                           |          |         | 154,836     |          |          |         | 480,724     |          |           |         | 466,087     |         
|                                                                                                                                           | Amortization                                                        |                                                                      |                             | 16,062      |                           |          |         | 13,729      |          |          |         | 45,626      |          |           |         | 37,987      |         
|                                                                                                                                           | Real estate taxes                                                   |                                                                      |                             | 86,032      |                           |          |         | 96,652      |          |          |         | 268,608     |          |           |         | 285,350     |         
|                                                                                                                                           | Insurance                                                           |                                                                      |                             | 8,356       |                           |          |         | 11,424      |          |          |         | 21,669      |          |           |         | 29,664      |         
|                                                                                                                                           | Repairs and maintenance                                             |                                                                      |                             | 80,762      |                           |          |         | 81,059      |          |          |         | 241,249     |          |           |         | 247,584     |         
|                                                                                                                                           | Property operating                                                  |                                                                      |                             | 110,300     |                           |          |         | 106,608     |          |          |         | 312,725     |          |           |         | 309,134     |         
|                                                                                                                                           | Ground rent                                                         |                                                                      |                             | 5,534       |                           |          |         | 4,956       |          |          |         | 15,000      |          |           |         | 15,753      |         
|                                                                                                                                           | Corporate general and administrative                                |                                                                      |                             | 13,515      |                           |          |         | 13,615      |          |          |         | 44,672      |          |           |         | 49,423      |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           |                                                                     |                                                                      | Total expenses              |             |                           | 483,429  |         |             |          | 482,879  |         |             |          | 1,430,273 |         |             |          | 1,440,982 |  
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           |                                                                     |                                                                      | Operating income            |             |                           | 322,733  |         |             |          | 374,782  |         |             |          | 984,954   |         |             |          | 1,118,815 |  
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Other income/expense:                                                                                                                      |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |            
|                                                                                                                                           | Interest/dividend income                                            |                                                                      |                             | 3,421       |                           |          |         | 2,754       |          |          |         | 10,375      |          |           |         | 17,085      |         
|                                                                                                                                           | Realized gain on sale of marketable securities                      |                                                                      |                             | 307         |                           |          |         |            |          |          |         | 8,450       |          |           |         |            |         
|                                                                                                                                           | Interest:                                                           |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |             |         
|                                                                                                                                           |                                                                     | Expense incurred                                                     |                             |             | (206,410                  | )        |         |             | (198,935 | )        |         |             | (618,337 | )         |         |             | (606,696 | )        
|                                                                                                                                           |                                                                     | Amortization of deferred financing costs and
    prepayment expenses |                             |             | (1,652                    | )        |         |             | (1,290   | )        |         |             | (5,435   | )         |         |             | (3,708   | )        
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           |                                                                     |                                                                      | Total other income/ expense |             |                           | (204,334 | )       |             |          | (197,471 | )       |             |          | (604,947  | )       |             |          | (593,319  | )
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures          |                                                                     |                                                                      | 118,399                     |             |                           |          | 177,311 |             |          |          | 380,007 |             |          |           | 525,496 |            
|Income taxes                                                                                                                               |                                                                     |                                                                      | 289                         |             |                           |          | (155    | )           |          |          | (2,282  | )           |          |           | (8,849  | )          
|Minority interests  partially owned
    properties                                                                                        |                                                                     |                                                                      | (1,821                      | )           |                           |          | (2,736  | )           |          |          | (6,188  | )           |          |           | (5,137  | )          
|Income from investments in unconsolidated joint
    ventures                                                                               |                                                                     |                                                                      | 21,208                      |             |                           |          | 12,218  |             |          |          | 62,918  |             |          |           | 92,143  |            
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Income from continuing operations                                                                                                          |                                                                     |                                                                      | 138,075                     |             |                           |          | 186,638 |             |          |          | 434,455 |             |          |           | 603,653 |            
|Discontinued operations (including net (loss)/
    gain on sales of real estate of $(6,326), $6,382, $45,399 and
    $8,872, respectively) |                                                                     |                                                                      | (3,752                      | )           |                           |          | 17,257  |             |          |          | 58,143  |             |          |           | 48,189  |            
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Net income                                                                                                                                 |                                                                     |                                                                      | 134,323                     |             |                           |          | 203,895 |             |          |          | 492,598 |             |          |           | 651,842 |            
|Preferred distributions                                                                                                                    |                                                                     |                                                                      | (10,508                     | )           |                           |          | (15,451 | )           |          |          | (41,364 | )           |          |           | (47,112 | )          
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Net income available to unitholders                                                                                                        |                                                                     | $                                                                    | 123,815                     |             |                           | $        | 188,444 |             |          | $        | 451,234 |             |          | $         | 604,730 |            
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Earnings per unit  basic:                                                                                                                 |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |            
|                                                                                                                                           | Income from continuing operations per unit                          |                                                                      | $                           | 0.29        |                           |          | $       | 0.37        |          |          | $       | 0.87        |          |           | $       | 1.19        |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           | Net income available to unitholders per unit                        |                                                                      | $                           | 0.28        |                           |          | $       | 0.40        |          |          | $       | 1.00        |          |           | $       | 1.29        |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           | Weighted average Units outstanding                                  |                                                                      |                             | 446,750,227 |                           |          |         | 468,263,813 |          |          |         | 451,731,474 |          |           |         | 469,485,606 |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Earnings per unit 
    diluted:                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |             |          |           |         |            
|                                                                                                                                           | Income from continuing operations per unit                          |                                                                      | $                           | 0.28        |                           |          | $       | 0.36        |          |          | $       | 0.87        |          |           | $       | 1.18        |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           | Net income available to unitholders per unit                        |                                                                      | $                           | 0.28        |                           |          | $       | 0.40        |          |          | $       | 1.00        |          |           | $       | 1.28        |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|                                                                                                                                           | Weighted average Units outstanding and dilutive
    potential units |                                                                      |                             | 448,805,388 |                           |          |         | 469,764,728 |          |          |         | 453,451,913 |          |           |         | 471,703,728 |         
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            
|Distributions declared per Unit
    outstanding                                                                                            |                                                                     | $                                                                    | 0.50                        |             |                           | $        | 0.50    |             |          | $        | 1.50    |             |          | $         | 1.50    |            
|                                                                                                                                           |                                                                     |                                                                      |                             |             |                           |          |         |             |          |          |         |            

See accompanying notes.

3



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF NET COMPREHENSIVE
INCOME

(Unaudited)


|                                   |                                                                                              |                      |         |        |                     |   |         |      |  |   |         |         |   |   |         |     | 
|---------------------------------- | -------------------------------------------------------------------------------------------- | -------------------- | ------- | ------ | ------------------- | - | ------- | ---- |  | - | ------- | ------- | - | - | ------- | --- | 
|                                   |                                                                                              |                      |         |       
|                                   |                                                                                              | For the three months |         |        | For the nine months |  
|                                   |                                                                                              | ended September 30,  |         |        | ended September 30, |  
|                                   |                                                                                              |                      |         |        |                     |  
|(Dollars in thousands)             |                                                                                              | 2003                 |         |        | 2002                |   |         | 2003 |  |   | 2002    |        
|                                   |                                                                                              |                      |         |        |                     |   |         |      |  |   |         |        
|Net income                         |                                                                                              | $                    | 134,323 |        |                     | $ | 203,895 |      |  | $ | 492,598 |         |   | $ | 651,842 |    
|Other comprehensive income (loss): |                                                                                              |                      |         |        |                     |   |         |      |  |   |         |         |   |   |         |    
|                                   | Unrealized holding gain/ (loss) on forward
    starting interest rate swaps                  |                      |         | 41,747 |                     |   |         |     |  |   |         | (14,156 | ) |   |         |    | 
|                                   | 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     |   |   |         |    | 
|                                   | Amortization of proceeds from settlement of
    forward starting interest rate swap          |                      |         | (19    | )                   |   |         |     |  |   |         | (54     | ) |   |         |    | 
|                                   | Unrealized holding gains from investments arising
    during the period                      |                      |         | 680    |                     |   |         | 204  |  |   |         | 892     |   |   |         | 313 | 
|                                   | Reclassification adjustment for realized gains
    included in net income                    |                      |         | (307   | )                   |   |         |     |  |   |         | (307    | ) |   |         | 116 | 
|                                   |                                                                                              |                      |         |        |                     |   |         |      |  |   |         |        
|Net comprehensive income           |                                                                                              | $                    | 176,424 |        |                     | $ | 204,099 |      |  | $ | 485,683 |         |   | $ | 652,271 |    
|                                   |                                                                                              |                      |         |        |                     |   |         |      |  |   |         |        

See accompanying notes.

4



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(Unaudited)


|                       |                                                                                       |                                                                                                                                            |                                                              |                                           |         |         |         |          |         |         |           | 
|---------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------ | ----------------------------------------- | ------- | ------- | ------- | -------- | ------- | ------- | --------- | 
|                       |                                                                                       |                                                                                                                                           
|                       |                                                                                       | For the nine months ended                                                                                                                  |                                                             
|                       |                                                                                       | September 30,                                                                                                                              |                                                             
|                       |                                                                                       |                                                                                                                                            |                                                             
|(Dollars in thousands) |                                                                                       | 2003                                                                                                                                       |                                                              |                                           | 2002    |        
|                       |                                                                                       |                                                                                                                                            |                                                              |                                           |         |        
|Operating Activities:  |                                                                                       |                                                                                                                                            |                                                              |                                           |         |         |         |         
|                       | Net income                                                                            |                                                                                                                                            | $                                                            | 492,598                                   |         |         | $       | 651,842  |        
|                       | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                                                                                            |                                                              |                                           |         |         |         |          |        
|                       |                                                                                       | Revenue recognized related to acquired lease
    obligations, net                                                                          |                                                              |                                           | 105     |         |         |          |        |        
|                       |                                                                                       | Amortization of discounts included in interest
    /dividend income                                                                        |                                                              |                                           | (268    | )       |         |          | (767    | )      
|                       |                                                                                       | Depreciation and amortization (including
    discontinued operations)                                                                      |                                                              |                                           | 535,459 |         |         |          | 520,874 |        
|                       |                                                                                       | Amortization of premiums/discounts on unsecured
    notes and settled interest rate protection agreements included
    in interest expense |                                                              |                                           | (14,898 | )       |         |          | (2,331  | )      
|                       |                                                                                       | Compensation expense related to restricted shares
    and stock options issued to employees by Equity Office                               |                                                              |                                           | 12,840  |         |         |          | 12,060  |        
|                       |                                                                                       | Income from investments in unconsolidated joint
    ventures                                                                               |                                                              |                                           | (62,918 | )       |         |          | (92,143 | )      
|                       |                                                                                       | Net gain on sales of real estate (included in
    discontinued operations)                                                                 |                                                              |                                           | (45,399 | )       |         |          | (8,872  | )      
|                       |                                                                                       | Provision for doubtful accounts                                                                                                            |                                                              |                                           | 11,082  |         |         |          | 19,578  |        
|                       |                                                                                       | Income allocated to minority interests                                                                                                     |                                                              |                                           | 6,188   |         |         |          | 5,137   |        
|                       |                                                                                       | Changes in assets and liabilities:                                                                                                         |                                                              |                                           |         |         |         |          |         |        
|                       |                                                                                       |                                                                                                                                            | (Increase) decrease in rents receivable                      |                                           |         | (7,503  | )       |          |         | 38,084  |          
|                       |                                                                                       |                                                                                                                                            | Increase in deferred rent receivable                         |                                           |         | (55,855 | )       |          |         | (59,738 | )        
|                       |                                                                                       |                                                                                                                                            | Decrease (increase) in prepaid expenses and other
    assets |                                           |         | 42,310  |         |          |         | (12,153 | )        
|                       |                                                                                       |                                                                                                                                            | Decrease in accounts payable and accrued expenses            |                                           |         | (79,584 | )       |          |         | (27,637 | )        
|                       |                                                                                       |                                                                                                                                            | (Decrease) increase in other liabilities                     |                                           |         | (6,339  | )       |          |         | 4,774   |          
|                       |                                                                                       |                                                                                                                                            |                                                              |                                           |         |        
|                       |                                                                                       |                                                                                                                                            |                                                              | Net cash provided by operating activities |         |         | 827,818 |          |         |         | 1,048,708 | 
|                       |                                                                                       |                                                                                                                                            |                                                              |                                           |         |        
|Investing Activities:  |                                                                                       |                                                                                                                                            |                                                              |                                           |         |         |         |         
|                       | Property acquisitions                                                                 |                                                                                                                                            |                                                              | (87,411                                   | )       |         |         | (23,947  | )      
|                       | Property dispositions                                                                 |                                                                                                                                            |                                                              | 398,979                                   |         |         |         | 218,239  |        
|                       | Capital and tenant improvements                                                       |                                                                                                                                            |                                                              | (264,628                                  | )       |         |         | (223,299 | )      
|                       | Lease commissions and other costs                                                     |                                                                                                                                            |                                                              | (108,001                                  | )       |         |         | (69,188  | )      
|                       | Decrease in escrow deposits and restricted cash                                       |                                                                                                                                            |                                                              | 4,709                                     |         |         |         | 159,222  |        
|                       | Distributions from unconsolidated joint ventures                                      |                                                                                                                                            |                                                              | 152,254                                   |         |         |         | 163,470  |        
|                       | Investments in unconsolidated joint ventures                                          |                                                                                                                                            |                                                              | (34,212                                   | )       |         |         | (123,897 | )      
|                       | Redemption of CT Convertible Trust I
    preferred stock                              |                                                                                                                                            |                                                              |                                          |         |         |         | 20,086   |        
|                       | Investments in notes receivable                                                       |                                                                                                                                            |                                                              | (96                                       | )       |         |         |         |        
|                       | Repayments of notes receivable                                                        |                                                                                                                                            |                                                              | 1,395                                     |         |         |         | 1,886    |        
|                       |                                                                                       |                                                                                                                                            |                                                              |                                           |         |        
|                       |                                                                                       |                                                                                                                                            |                                                              | Net cash provided by investing activities |         |         | 62,989  |          |         |         | 122,572   | 
|                       |                                                                                       |                                                                                                                                            |                                                              |                                           |         |        

5



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)

(Unaudited)


|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |          |   |            |          |          |  
|------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | ---------- | ------- | -------- | - | ---------- | -------- | -------- | -
|                                                 |                                                                                                                                                 |                                                                                                                                                                                
|                                                 |                                                                                                                                                 | For the nine months ended                                                                                                                                                       |                                       
|                                                 |                                                                                                                                                 | September 30,                                                                                                                                                                   |                                       
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                       
|(Dollars in thousands)                           |                                                                                                                                                 | 2003                                                                                                                                                                            |                                        |            | 2002    |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|Financing Activities:                            |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |          |   |           
|                                                 | Proceeds from mortgage debt                                                                                                                     |                                                                                                                                                                                 | $                                      |           |         |          | $ | 13,342     |         
|                                                 | Principal payments on mortgage debt                                                                                                             |                                                                                                                                                                                 |                                        | (142,821   | )       |          |   | (36,229    | )       
|                                                 | Proceeds from unsecured notes                                                                                                                   |                                                                                                                                                                                 |                                        | 494,810    |         |          |   | 239,127    |         
|                                                 | Repayment of unsecured notes                                                                                                                    |                                                                                                                                                                                 |                                        | (300,000   | )       |          |   | (200,000   | )       
|                                                 | Proceeds from lines of credit                                                                                                                   |                                                                                                                                                                                 |                                        | 3,577,600  |         |          |   | 805,050    |         
|                                                 | Principal payments on lines of credit                                                                                                           |                                                                                                                                                                                 |                                        | (3,362,300 | )       |          |   | (1,049,350 | )       
|                                                 | Payments of loan costs                                                                                                                          |                                                                                                                                                                                 |                                        | (8,548     | )       |          |   | (4,047     | )       
|                                                 | Settlement of interest rate swap agreements                                                                                                     |                                                                                                                                                                                 |                                        | 768        |         |          |   | 42,810     |         
|                                                 | Distributions to minority interests in partially
    owned properties                                                                           |                                                                                                                                                                                 |                                        | (7,948     | )       |          |   | (5,406     | )       
|                                                 | Payment of offering costs                                                                                                                       |                                                                                                                                                                                 |                                        | (194       | )       |          |   | (29        | )       
|                                                 | Proceeds from exercise of share options                                                                                                         |                                                                                                                                                                                 |                                        | 20,649     |         |          |   | 38,882     |         
|                                                 | Distributions to unitholders                                                                                                                    |                                                                                                                                                                                 |                                        | (453,060   | )       |          |   | (470,406   | )       
|                                                 | Repurchase of Units through Equity Offices
    common share repurchase program                                                                 |                                                                                                                                                                                 |                                        | (363,486   | )       |          |   | (4,947     | )       
|                                                 | Redemption of Units                                                                                                                             |                                                                                                                                                                                 |                                        | (5,630     | )       |          |   | (104,165   | )       
|                                                 | Repurchase of preferred units                                                                                                                   |                                                                                                                                                                                 |                                        | (250,000   | )       |          |   | (199,850   | )       
|                                                 | Issuance of preferred units                                                                                                                     |                                                                                                                                                                                 |                                        |           |         |          |   | 205,645    |         
|                                                 | Payment of preferred distributions                                                                                                              |                                                                                                                                                                                 |                                        | (43,333    | )       |          |   | (47,294    | )       
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 | Net cash used for financing activities |            |         | (843,493 | ) |            |          | (776,867 | )
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|                                                 | Net increase in cash and cash equivalents                                                                                                       |                                                                                                                                                                                 |                                        | 47,314     |         |          |   | 394,413    |         
|                                                 | Cash and cash equivalents at the beginning of the
    period                                                                                    |                                                                                                                                                                                 |                                        | 58,471     |         |          |   | 61,121     |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|                                                 | Cash and cash equivalents at the end of the period                                                                                              |                                                                                                                                                                                 | $                                      | 105,785    |         |          | $ | 455,534    |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|Supplemental Information:                        |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |          |   |           
|                                                 | Interest paid during the period, including a
    reduction of interest expense for capitalized interest of $7,017
    and $16,467, respectively |                                                                                                                                                                                 | $                                      | 675,424    |         |          | $ | 658,841    |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|Non-Cash Investing and Financing
    Activities: |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |          |   |           
|                                                 | Investing Activities:                                                                                                                           |                                                                                                                                                                                 |                                        |            |         |          |   |            |         
|                                                 |                                                                                                                                                 | Escrow deposits related to property dispositions                                                                                                                                |                                        | $          | (19,339 | )        |   | $          | (70,025  | )       
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|                                                 |                                                                                                                                                 | 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   |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         
|                                                 | 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  |         
|                                                 |                                                                                                                                                 |                                                                                                                                                                                 |                                        |            |         |         

See accompanying notes.

6



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)


Our consolidated financial statements have been
prepared pursuant to the Securities and Exchange
Commissions (SEC) rules and regulations. The
following notes, which present interim disclosures as required
by the SEC, highlight significant changes to the notes to our
December 31, 2002 audited consolidated financial statements
and should be read together with the financial statements and
notes thereto included in our Form 10-K.

NOTE 1  BUSINESS AND FORMATION OF
EOP PARTNERSHIP

EOP Operating Limited Partnership (EOP
Partnership) is a Delaware limited partnership. Our
general partner is Equity Office Properties Trust, a Maryland
real estate investment trust (Equity Office). The
use of the word we, us, or
our refers to EOP Partnership and its subsidiaries,
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 the
Board of Trustees of Equity Office, and to complete the
consolidation of our predecessors. Equity Office completed its
initial public offering (the IPO) on July 11,
1997, having sold its common shares of beneficial interest,
$0.01 par value per share (Common Shares). The
net proceeds from the IPO were contributed to us in exchange for
units of partnership interest (Units). Equity Office
has elected to be taxed as a real estate investment trust
(REIT) for federal income tax purposes and generally
will not be subject to federal income tax if it distributes 100%
of its taxable income and complies with a number of
organizational and operational requirements.

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 September 30, 2003, we
owned or had an interest in 709 office properties
comprising approximately 124.9 million rentable square feet
of office space in 19 states and the District of Columbia
and were located in 30 markets and 133 submarkets (the
Office Properties). On a weighted average basis, the
Office Properties were 86.3% occupied at September 30,
2003. Approximately 41.6% of the rentable square feet is located
in central business districts and approximately 58.4% of the
rentable square feet is located in suburban markets. At
September 30, 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). On a weighted average basis, the
Industrial Properties were 85.1% occupied at September 30,
2003.

NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



| |                      
| | ---------------------
| | Basis of Presentation

The consolidated financial statements represent
the financial condition and results of EOP Partnership and its
subsidiaries. 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 may 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 No. 46 Consolidation of Variable Interest
Entities).



| |                          
| | -------------------------
| | Investment in Real Estate

Rental property and improvements, including
interest and other costs capitalized during construction, are
included in investment in real estate and are stated at cost.
Expenditures for ordinary maintenance and repairs

7



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


are expensed to operations as they are incurred.
Significant renovations and improvements, which improve or
extend the useful life of the assets, are capitalized.

In accordance with Statement of Financial
Accounting Standards No. 141
(Statement 141) Business Combinations,
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 of the
relationship, 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, site
    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 market / 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 tenant
    improvements and leasing commissions and calculate the
    associated asset life; and                                                                        
|
| | (7) allocate the remaining intangible value
    to the in-place leases and the associated life of these assets.                                                                                            

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

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

8



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


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.



| |                    
| | -------------------
| | Revenue Recognition

Certain leases provide for tenant occupancy
during periods for which no rent is due or where minimum rent
payments increase during the term of the lease. Equity Office
records rental income for the full term of each lease on a
straight-line basis. Accordingly, a receivable is recorded from
tenants for the current difference between the straight-line
rent and the rent that is contractually due from the tenant
(Deferred Rent Receivable). When a property is
acquired, the term of existing leases is considered to commence
as of the acquisition date for purposes of this calculation. The
amounts included in rental income for the three months ended
September 30, 2003 and 2002, and the nine months ended
September 30, 2003 and 2002, which had not yet been billed
as of such dates, were approximately $20.8 million,
$17.6 million, $53.2 million and $55.8 million,
respectively. Deferred rental revenue is not recognized for
income tax purposes.

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 recognize the lease termination fee as income once all of the
following criteria are met in accordance with SEC Staff
Accounting Bulletin 101:



| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | the lease termination agreement has been fully
    executed and delivered;                                                
|
| |  | the tenant terminating its lease agreement has
    vacated the space to which the lease termination agreement
    applies;
|
| |  | the amount of the lease termination fee is fixed
    or determinable; and                                                 
|
| |  | the collectibility of the lease termination fee
    is reasonably assured.                                                



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



| |                             
| | ----------------------------
| | Unaudited Interim Statements

The consolidated financial statements as of and
for the three and nine months ended September 30, 2003 and
2002 and related footnote disclosures are unaudited. In the
opinion of management, such financial statements reflect all
adjustments necessary for a fair presentation of the results of
the interim periods. All such adjustments are of a normal and
recurring nature.

9



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)




| |                  
| | -----------------
| | Reclassifications

Certain reclassifications have been made to the
previously reported 2002 statements in order to provide
comparability with the 2003 statements reported herein.
These reclassifications have not changed the 2002 results of
operations or combined partners capital and mandatorily
redeemable preferred units.



| |                                            
| | -------------------------------------------
| | 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 by Equity
Office. 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 effect on net
income available to unitholders and earnings per unit if the
fair value based method had been applied to all outstanding and
unvested share options for the three and nine months ended
September 30, 2003 and 2002. 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 three months |         |      | For the nine months |  
|                                                                                                               |                                                | ended September 30,  |         |      | ended September 30, |  
|                                                                                                               |                                                |                      |         |      |                     |  
|(Dollars in thousands, except per unit data)                                                                   |                                                | 2003                 |         |      | 2002                |   |         | 2003 |  |   | 2002    |     
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     
|Historical net income available to unitholders                                                                 |                                                | $                    | 123,815 |      |                     | $ | 188,444 |      |  | $ | 451,234 |      |  | $ | 604,730 |     
|Add back compensation expense for share options
    included in historical net income available to unitholders |                                                |                      | 626     |      |                     |   |        |      |  |   | 2,001   |      |  |   | 1,265   |     
|Deduct compensation expense for share options
    determined under the fair value based method                 |                                                |                      | (2,595  | )    |                     |   | (2,846  | )    |  |   | (8,040  | )    |  |   | (9,267  | )   
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     
|Pro forma net income available to unitholders                                                                  |                                                | $                    | 121,846 |      |                     | $ | 185,598 |      |  | $ | 445,195 |      |  | $ | 596,728 |     
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     
|Earnings per unit  basic:                                                                                     |                                                |                      |         |      |                     |   |         |      |  |   |         |      |  |   |         |     
|                                                                                                               | Historical net income available to unitholders |                      | $       | 0.28 |                     |   | $       | 0.40 |  |   | $       | 1.00 |  |   | $       | 1.29 | 
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     
|                                                                                                               | Pro forma net income available to unitholders  |                      | $       | 0.27 |                     |   | $       | 0.40 |  |   | $       | 0.99 |  |   | $       | 1.27 | 
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     
|Earnings per unit  diluted:                                                                                   |                                                |                      |         |      |                     |   |         |      |  |   |         |      |  |   |         |     
|                                                                                                               | Historical net income available to unitholders |                      | $       | 0.28 |                     |   | $       | 0.40 |  |   | $       | 1.00 |  |   | $       | 1.28 | 
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     
|                                                                                                               | Pro forma net income available to unitholders  |                      | $       | 0.27 |                     |   | $       | 0.40 |  |   | $       | 0.98 |  |   | $       | 1.27 | 
|                                                                                                               |                                                |                      |         |      |                     |   |         |      |  |   |         |     

10



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


NOTE 3  IMPACT OF NEW ACCOUNTING
STANDARDS



| |                      
| | ---------------------
| | Financial Instruments

In May 2003, the 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 consolidate certain properties that are also
owned by unaffiliated parties that have noncontrolling
interests. In certain cases, the applicable joint venture
agreement provides for a contractual termination date of the
agreement based on certain specified events. Statement 150
requires the disclosure of the estimated settlement value of
these noncontrolling interests. As of September 30, 2003
the estimated settlement value of these noncontrolling interests
approximated the book value of approximately $169.9 million.

NOTE 4  ACQUISITIONS

In August 2003, we acquired the U.S. Bank
Tower office building for approximately $80.2 million. The
property is located in Denver, Colorado and consists of
approximately 485,902 square feet. In accordance with
Statement of Financial Accounting Standards No. 141
(Statement 141) Business Combinations,we
allocated approximately $6.4 million to intangible assets
which consists of above and below market leases, the value of
in-place leases and customer relationships, and the origination
costs (i.e. leasing costs) associated with the in-place leases.

In September 2003, we acquired the remaining 20%
equity interest in Key Center, see Note 6 
Investments in Unconsolidated Joint Ventures for more
information.

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

NOTE 5  DISCONTINUED
OPERATIONS

During the three months ended September 30,
2003, we sold 16 office properties, one industrial property
and two vacant land parcels in various transactions to
unaffiliated parties for approximately $137.6 million. The
total loss on the sale of these properties was approximately
$6.3 million. The sold office properties consisted of
approximately 496,063 square feet and the sold industrial
property consisted of approximately 156,600 square feet.

The net income and gain/(loss) on sales of real
estate for properties sold subsequent to December 31, 2001
are reflected in the consolidated statements of operations as
Discontinued Operations for the periods

11



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


presented. Below is a summary of the results of
operations of these properties through their respective sale
dates:

|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |       |        |        |        |        |        |        | 
|-------------------------------------------------------------------------- | ----------------------------- | -------------------------- | ---------------- | --- | ------------------- | ----- | ------ | ----- | ------ | ------ | ------ | ----- | ------ | ------ | ------ | ------ | ------ | ------ | 
|                                                                           |                               |                            |                  |    
|                                                                           |                               | For the three months       |                  |     | For the nine months |      
|                                                                           |                               | ended September 30,        |                  |     | ended September 30, |      
|                                                                           |                               |                            |                  |     |                     |      
|(Dollars in thousands)                                                     |                               | 2003                       |                  |     | 2002                |       |        | 2003  |        |        | 2002   |      
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|Total revenues                                                             |                               | $                          | 3,103            |     |                     | $     | 24,626 |       |        | $      | 24,208 |       |        | $      | 80,048 |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|Expenses:                                                                  |                               |                            |                  |     |                     |       |        |       |        |        |        |       |        |        |        |       
|                                                                           | Depreciation and amortization |                            |                  | 380 |                     |       |        | 4,214 |        |        |        | 3,900 |        |        |        | 13,150 |       
|                                                                           | Property operating            |                            |                  | 136 |                     |       |        | 9,239 |        |        |        | 7,528 |        |        |        | 27,287 |       
|                                                                           | Ground rent                   |                            |                  |    |                     |       |        | 30    |        |        |        | 18    |        |        |        | 134    |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|                                                                           |                               | Total expenses             |                  |     | 516                 |       |        |       | 13,483 |        |        |       | 11,446 |        |        |        | 40,571 |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|                                                                           |                               |                            | Operating income |     |                     | 2,587 |        |       |        | 11,143 |        |       |        | 12,762 |        |        |        | 39,477 | 
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|Other income/expense:                                                      |                               |                            |                  |     |                     |       |        |       |        |        |        |       |        |        |        |       
|                                                                           | Interest/dividend income      |                            |                  |    |                     |       |        | 38    |        |        |        | 7     |        |        |        | 63     |       
|                                                                           | Interest expense              |                            |                  |    |                     |       |        | (306  | )      |        |        | (10   | )      |        |        | (10    | )     
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|                                                                           |                               | Total other income/expense |                  |     |                    |       |        |       | (268   | )      |        |       | (3     | )      |        |        | 53     |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|Income before income taxes and net (loss)/gain on
    sales of real estate |                               |                            | 2,587            |     |                     |       | 10,875 |       |        |        | 12,759 |       |        |        | 39,530 |       
|Income taxes                                                               |                               |                            | (13              | )   |                     |       |       |       |        |        | (15    | )     |        |        | (213   | )     
|Net (loss)/gain on sales of real estate                                    |                               |                            | (6,326           | )   |                     |       | 6,382  |       |        |        | 45,399 |       |        |        | 8,872  |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|Net (loss)/income                                                          |                               | $                          | (3,752           | )   |                     | $     | 17,257 |       |        | $      | 58,143 |       |        | $      | 48,189 |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      
|Property net operating income from discontinued
    operations             |                               | $                          | 2,967            |     |                     | $     | 15,387 |       |        | $      | 16,680 |       |        | $      | 52,761 |       
|                                                                           |                               |                            |                  |     |                     |       |        |       |        |        |        |      



| |                       
| | ----------------------
| | Foundry Square IV Sale

See Note 6  Unconsolidated Joint
Ventures for more information. As a result of this sale, we
recognized a gain of approximately $7.1 million, which is
reflected in Income from Unconsolidated Joint Ventures.



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

12



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


NOTE 6  INVESTMENTS IN
UNCONSOLIDATED JOINT VENTURES

Several Office Properties are owned by us and
other unaffiliated parties in joint ventures we account for
using the equity method. Combined summarized financial
information for these unconsolidated joint ventures is as
follows:

|                                                                                                                                                                 |                                              |                                                              |         |           |                   |   |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------------ | ------- | --------- | ----------------- | - | --------- | --------- | --------- | 
|(Dollars in thousands)                                                                                                                                           |                                              | September 30, 2003                                           |         |           | December 31, 2002 |  
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|Balance Sheets:                                                                                                                                                  |                                              |                                                              |         |           |                   |   |           |          
|                                                                                                                                                                 | Real estate, net of accumulated depreciation |                                                              | $       | 2,567,764 |                   |   | $         | 2,757,699 |          
|                                                                                                                                                                 | Other assets                                 |                                                              |         | 226,011   |                   |   |           | 207,740   |          
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|                                                                                                                                                                 |                                              | Total Assets                                                 |         | $         | 2,793,775         |   |           | $         | 2,965,439 | 
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|                                                                                                                                                                 | Mortgage debt                                |                                                              | $       | 1,311,523 |                   |   | $         | 1,312,404 |          
|                                                                                                                                                                 | Other liabilities                            |                                                              |         | 114,158   |                   |   |           | 112,968   |          
|                                                                                                                                                                 | Partners and shareholders equity           |                                                              |         | 1,368,094 |                   |   |           | 1,540,067 |          
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|                                                                                                                                                                 |                                              | Total Liabilities and Partners and
    Shareholders Equity |         | $         | 2,793,775         |   |           | $         | 2,965,439 | 
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|Our share of equity                                                                                                                                              |                                              | $                                                            | 860,081 |           |                   | $ | 966,773   |          
|Net excess of cost of investments over the net
    book value of underlying net assets, net of accumulated
    depreciation of $23,470 and $20,704, respectively |                                              |                                                              | 118,069 |           |                   |   | 121,042   |          
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|Carrying value of investments in unconsolidated
    joint ventures                                                                                               |                                              | $                                                            | 978,150 |           |                   | $ | 1,087,815 |          
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  
|Our share of unconsolidated non-recourse mortgage
    debt                                                                                                       |                                              | $                                                            | 799,203 |           |                   | $ | 818,975   |          
|                                                                                                                                                                 |                                              |                                                              |         |           |                   |  

|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |         |         |         |   |         |         |         | 
|------------------------- | ------------------------------------------------------- | ----------------------------- | -------------- | ------- | ------------------- | ------ | - | ------- | ------ | ------ | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                          |                                                         |                               |                |        
|                          |                                                         | For the three months          |                |         | For the nine months |       
|                          |                                                         | ended September 30,           |                |         | ended September 30, |       
|                          |                                                         |                               |                |         |                     |       
|(Dollars in thousands)    |                                                         | 2003                          |                |         | 2002                |        |   | 2003    |        |        | 2002 |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|Statements of Operations: |                                                         |                               |                |         |                     |        |   |         |        |        |      |         |         |         |   |        
|                          | Revenues                                                |                               | $              | 114,126 |                     |        | $ | 114,358 |        |        | $    | 356,161 |         |         | $ | 450,930 |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|                          | Expenses:                                               |                               |                |         |                     |        |   |         |        |        |      |         |         |         |   |         |        
|                          |                                                         | Interest expense              |                |         | 17,688              |        |   |         | 19,404 |        |      |         | 52,658  |         |   |         | 58,311  |        
|                          |                                                         | Depreciation and amortization |                |         | 24,217              |        |   |         | 20,919 |        |      |         | 72,926  |         |   |         | 62,720  |        
|                          |                                                         | Operating expenses            |                |         | 40,435              |        |   |         | 47,236 |        |      |         | 142,443 |         |   |         | 148,413 |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|                          |                                                         |                               | Total expenses |         |                     | 82,340 |   |         |        | 87,559 |      |         |         | 268,027 |   |         |         | 269,444 | 
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|                          | Net income before gain on sale of real estate           |                               |                | 31,786  |                     |        |   | 26,799  |        |        |      | 88,134  |         |         |   | 181,486 |        
|                          | Gain on sale of real estate                             |                               |                | 43,255  |                     |        |   | 10      |        |        |      | 43,255  |         |         |   | 3,703   |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|                          | Net income                                              |                               | $              | 75,041  |                     |        | $ | 26,809  |        |        | $    | 131,389 |         |         | $ | 185,189 |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|Our share of:             |                                                         |                               |                |         |                     |        |   |         |        |        |      |         |         |         |   |        
|                          | Net income                                              |                               | $              | 21,208  |                     |        | $ | 12,218  |        |        | $    | 62,918  |         |         | $ | 92,143  |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|                          | Interest expense and loan cost amortization             |                               | $              | 12,449  |                     |        | $ | 13,458  |        |        | $    | 37,075  |         |         | $ | 40,119  |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        
|                          | Depreciation and amortization (real estate
    related) |                               | $              | 14,058  |                     |        | $ | 11,551  |        |        | $    | 40,992  |         |         | $ | 36,499  |        
|                          |                                                         |                               |                |         |                     |        |   |         |        |        |      |        



| |                                
| | -------------------------------
| | Investment in Foundry Square IV

In 2000, we formed a joint venture with Wilson
Investors (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

13



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


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% 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. Our share of the gross proceeds
from the sale was approximately $56.6 million, including
the repayment of a $44.5 million construction loan.
WIs share of the proceeds were approximately
$17.1 million.



| |                         
| | ------------------------
| | Investment in Key Center

In September 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
cash of approximately $7.9 million.



| |                                     
| | ------------------------------------
| | One Post Office Square Mortgage Debt

In August 2003, the $110.0 million 1.31%
variable interest rate mortgage note secured by One Post Office
Square matured. The note was replaced with a $175.0 million
5.7% fixed interest rate mortgage note that matures on
October 1, 2013. Our share of the mortgage note is
$87.5 million. The remaining cash proceeds after repayment
of the original note were distributed pro rata to us and our
partner.

NOTE 7  MORTGAGE DEBT

In August and September 2003, we prepaid the
mortgage notes that were secured by Canterbury Green, Three
Stamford Plaza, Four Stamford Plaza and Key Center for
approximately $111.2 million.

In September 2003, the mortgage notes secured by
Fremont Bayside and Industrial Drive Warehouse matured and were
extended for one year under the same terms. When the mortgage
notes were extended, the balances were approximately
$5.4 million and $2.0 million, respectively. The
interest rate on the notes is fixed at 7.6%.

NOTE 8  PARTNERS
CAPITAL



| |      
| | -----
| | Units

The following table presents the changes in the
issued and outstanding Units since June 30, 2003:

|                                       |                                                                                                        |  |             |          |  
|-------------------------------------- | ------------------------------------------------------------------------------------------------------ |  | ----------- | -------- | -
|Outstanding at June 30, 2003           |                                                                                                        |  | 448,716,179 |         
|                                       | Repurchases/retired(a)                                                                                 |  |             | (375,000 | )
|                                       | Units redeemed for cash                                                                                |  |             | (127,028 | )
|                                       | Issued to Equity Office related to common shares
    issued for share options exercised                |  |             | 582,272  |  
|                                       | Issued to Equity Office related to restricted
    shares and share awards issued, net of cancellations |  |             | (1,757   | )
|                                       |                                                                                                        |  |            
|Outstanding at September 30,
    2003. |                                                                                                        |  | 448,794,666 |         
|                                       |                                                                                                        |  |            






|    |  |                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Equity Office repurchased 375,000 Common Shares
    at an average price of $26.78 per share for a total of
    $10.0 million in the aggregate. In connection with the
    repurchases, we purchased from Equity Office and retired a
    corresponding number of Units for an aggregate purchase price
    equal to the aggregate purchase price for all Common Share
    repurchases.

14



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)




| |              
| | -------------
| | Distributions

|                         |  |              |          |  |           |                    |                        |  |                    | 
|------------------------ |  | ------------ | -------- |  | --------- | ------------------ | ---------------------- |  | ------------------ | 
|                         |  | Quarterly    |          |  |           |                    |                       
|                         |  | Distribution |          |  |           |                    |                       
|                         |  | Amount       |          |  |           |                    |                       
|                         |  | Per Unit     |          |  | Date Paid |                    | Unitholder Record Date | 
|                         |  |              |          |  |           |                    |                        | 
|Units                    |  | $            | .50      |  |           | October 14, 2003   |                        |  | September 30, 2003 | 
|Series B Preferred Units |  | $            | .65625   |  |           | August 15, 2003    |                        |  | August 1, 2003     | 
|Series C Preferred Units |  | $            | .5390625 |  |           | September 15, 2003 |                        |  | September 2, 2003  | 
|Series G Preferred Units |  | $            | .484375  |  |           | September 15, 2003 |                        |  | September 2, 2003  | 



| |                                           
| | ------------------------------------------
| | Mandatorily Redeemable Preferred
    Units

Beginning with the September 30, 2003
consolidated balance sheet, we have reclassified the
Series B Convertible, Cumulative Redeemable Preferred Units
(Series B Preferred Units) from Partners
Capital to Mandatorily Redeemable Preferred Units. Under the
terms of the Series B Preferred Units, in connection with
any redemption by Equity Office of its outstanding 5.25%
Series B Convertible, Cumulative Redeemable Preferred
Shares, we are obligated to provide to Equity Office cash equal
to the redemption price and one Series B Preferred Unit is
required to be canceled with respect to each Series B
Preferred Share redeemed by Equity Office. The Series B
Preferred Shares are mandatorily redeemable by Equity Office on
February 15, 2008 at a price of $50.00 per share, plus
accumulated and unpaid distributions to the redemption date.

NOTE 9  EARNINGS PER UNIT

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

|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |             |           |  |   |             |           | 
|-------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | - | ----------- | ------------------------- |  | - | ----------- | --------- |  | ---- | ----------- | --------- |  | - | ----------- | --------- | 
|                                             |                                                                                                                                           |                                                                                                    |   |            
|                                             |                                                                                                                                           | For the three months ended                                                                         |   |             | For the nine months ended | 
|                                             |                                                                                                                                           | September 30,                                                                                      |   |             | September 30,             | 
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           | 
|(Dollars in thousands, except per unit data) |                                                                                                                                           | 2003                                                                                               |   |             | 2002                      |  |   | 2003        |           |  | 2002 |            
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            
|Numerator:                                   |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |             |           |  |   |            
|                                             | Income from continuing operations                                                                                                         |                                                                                                    | $ | 138,075     |                           |  | $ | 186,638     |           |  | $    | 434,455     |           |  | $ | 603,653     |          
|                                             | Preferred distributions                                                                                                                   |                                                                                                    |   | (10,508     | )                         |  |   | (15,451     | )         |  |      | (41,364     | )         |  |   | (47,112     | )        
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            
|                                             | Income from continuing operations available to
    unitholders                                                                            |                                                                                                    |   | 127,567     |                           |  |   | 171,187     |           |  |      | 393,091     |           |  |   | 556,541     |          
|                                             | Discontinued operations (including net
    (loss)/gain on sales of real estate of $(6,326), $6,382, $45,399
    and $8,872, respectively) |                                                                                                    |   | (3,752      | )                         |  |   | 17,257      |           |  |      | 58,143      |           |  |   | 48,189      |          
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            
|                                             | Numerator for basic and diluted earnings per
    unit  net income available to unitholders                                               |                                                                                                    | $ | 123,815     |                           |  | $ | 188,444     |           |  | $    | 451,234     |           |  | $ | 604,730     |          
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            
|Denominator:                                 |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |             |           |  |   |            
|                                             | Denominator for basic earnings per
    unit  weighted average Units outstanding                                                          |                                                                                                    |   | 446,750,227 |                           |  |   | 468,263,813 |           |  |      | 451,731,474 |           |  |   | 469,485,606 |          
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            
|                                             | Effect of dilutive potential units:                                                                                                       |                                                                                                    |   |             |                           |  |   |             |           |  |      |             |           |  |   |             |          
|                                             |                                                                                                                                           | Units issuable upon exercise of Equity Office
    share options, put options and restricted shares |   |             | 2,055,161                 |  |   |             | 1,500,915 |  |      |             | 1,720,439 |  |   |             | 2,218,122 | 
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            
|                                             | Denominator for diluted earnings per
    unit  weighted average Units outstanding and dilutive
    potential units                       |                                                                                                    |   | 448,805,388 |                           |  |   | 469,764,728 |           |  |      | 453,451,913 |           |  |   | 471,703,728 |          
|                                             |                                                                                                                                           |                                                                                                    |   |             |                           |  |   |             |           |  |      |            

15



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


|                                             |                                                                |                            |   |       |                           |  |   |      |  |  |      |      |  |  |   |      | 
|-------------------------------------------- | -------------------------------------------------------------- | -------------------------- | - | ----- | ------------------------- |  | - | ---- |  |  | ---- | ---- |  |  | - | ---- | 
|                                             |                                                                |                            |   |      
|                                             |                                                                | For the three months ended |   |       | For the nine months ended | 
|                                             |                                                                | September 30,              |   |       | September 30,             | 
|                                             |                                                                |                            |   |       |                           | 
|(Dollars in thousands, except per unit data) |                                                                | 2003                       |   |       | 2002                      |  |   | 2003 |  |  | 2002 |     
|                                             |                                                                |                            |   |       |                           |  |   |      |  |  |      |     
|Earnings per unit  basic                    |                                                                |                            |   |       |                           |  |   |      |  |  |      |      |  |  |   |     
|                                             | Income from continuing operations available to
    unitholders |                            | $ | 0.29  |                           |  | $ | 0.37 |  |  | $    | 0.87 |  |  | $ | 1.19 | 
|                                             | Discontinued operations                                        |                            |   | (0.01 | )                         |  |   | 0.04 |  |  |      | 0.13 |  |  |   | 0.10 | 
|                                             |                                                                |                            |   |       |                           |  |   |      |  |  |      |     
|                                             | Net income available to unitholders(a)                         |                            | $ | 0.28  |                           |  | $ | 0.40 |  |  | $    | 1.00 |  |  | $ | 1.29 | 
|                                             |                                                                |                            |   |       |                           |  |   |      |  |  |      |     
|Earnings per unit 
    diluted              |                                                                |                            |   |       |                           |  |   |      |  |  |      |      |  |  |   |     
|                                             | Income from continuing operations available to
    unitholders |                            | $ | 0.28  |                           |  | $ | 0.36 |  |  | $    | 0.87 |  |  | $ | 1.18 | 
|                                             | Discontinued operations                                        |                            |   | (0.01 | )                         |  |   | 0.04 |  |  |      | 0.13 |  |  |   | 0.10 | 
|                                             |                                                                |                            |   |       |                           |  |   |      |  |  |      |     
|                                             | Net income available to unitholders(a)                         |                            | $ | 0.28  |                           |  | $ | 0.40 |  |  | $    | 1.00 |  |  | $ | 1.28 | 
|                                             |                                                                |                            |   |       |                           |  |   |      |  |  |      |     






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

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

|                                                                                     |       |                  |        |                            |      |  |                           |            |  |  |            |            |  |      |            |            |  |  |           |            | 
|------------------------------------------------------------------------------------ | ----- | ---------------- | ------ | -------------------------- | ---- |  | ------------------------- | ---------- |  |  | ---------- | ---------- |  | ---- | ---------- | ---------- |  |  | --------- | ---------- | 
|                                                                                     |       |                  |        |                            |      | 
|                                                                                     |       |                  |        | For the three months ended |      |  | For the nine months ended |           
|                                                                                     |       |                  |        | September 30,              |      |  | September 30,             |           
|                                                                                     |       | Weighted Average |        |                            |      |  |                           |            | 
|Antidilutive Securities                                                              |       | Exercise Price   |        |                            | 2003 |  |                           | 2002       |  |  | 2003       |            |  | 2002 |           
|                                                                                     |       |                  |        |                            |      |  |                           |            |  |  |            |            |  |      |           
|Share options                                                                        |       | $                | 29.250 |                            |      |  | 13,140,521                |            |  |  |           |            |  |      |           |            |  |  |          |           
|Share options                                                                        |       | $                | 29.260 |                            |      |  |                          |            |  |  |           |            |  |      | 13,466,685 |            |  |  |          |           
|Share options                                                                        |       | $                | 29.230 |                            |      |  |                          |            |  |  | 14,004,138 |            |  |      |           |            |  |  |          |           
|Share options                                                                        |       | $                | 30.060 |                            |      |  |                          |            |  |  |           |            |  |      |           |            |  |  | 7,293,181 |           
|Series B Preferred Units (each preferred
    unit is convertible into 1.40056 Units) |       | $                | 35.700 |                            |      |  | 8,389,354                 |            |  |  | 8,389,354  |            |  |      | 8,389,354  |            |  |  | 8,389,354 |           
|Warrants (expired on December 17, 2002)                                              |       | $                | 39.375 |                            |      |  |                          |            |  |  | 5,000,000  |            |  |      |           |            |  |  | 5,000,000 |           
|                                                                                     |       |                  |        |                            |      |  |                           |            |  |  |            |            |  |      |           
|                                                                                     | Total |                  |        |                            |      |  |                           | 21,529,875 |  |  |            | 27,393,492 |  |      |            | 21,856,039 |  |  |           | 20,682,535 | 
|                                                                                     |       |                  |        |                            |      |  |                           |            |  |  |            |            |  |      |           

NOTE 10  SEGMENT
INFORMATION

As discussed in Note 1, our primary business
is the ownership and operation of our 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 consists primarily of the Industrial
Properties. 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.

16



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


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.

|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |   |          |          |   |   |          |          |  
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------- | ---------- | -------- | --------- | - | -------- | ------------ | - | ------ | ---------- | -------- | --------- | --------- | -------- | -------- | ------------ | - | -------- | -------- | - | - | -------- | -------- | -
|                                                                                                                                  |                                                              |                                    
|                                                                                                                                  |                                                              | As of or for the three months ended |           
|                                                                                                                                  |                                                              | September 30,                       |           
|                                                                                                                                  |                                                              |                                     |           
|                                                                                                                                  |                                                              |                                     |            |         
|                                                                                                                                  |                                                              | 2003                                |            |          | 2002      |  
|                                                                                                                                  |                                                              |                                     |            |          |           |  
|                                                                                                                                  |                                                              | Office                              |            |          | Corporate |   |          |              |   | Office |            |          | Corporate |           |          |         
|(Dollars in thousands)                                                                                                            |                                                              | Properties                          |            |          | and Other |   |          | Consolidated |   |        | Properties |          |           | and Other |          |          | Consolidated |  
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Property operating revenues(a)                                                                                                    |                                                              | $                                   | 792,753    |          |           | $ | 11,440   |              |   | $      | 804,193    |          |           | $         | 841,147  |          |              | $ | 12,815   |          |   | $ | 853,962  |         
|Property operating expenses(b)                                                                                                    |                                                              |                                     | (283,038   | )        |           |   | (2,412   | )            |   |        | (285,450   | )        |           |           | (293,294 | )        |              |   | (2,449   | )        |   |   | (295,743 | )       
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|                                                                                                                                  | Property net operating income from continuing
    operations |                                     |            | 509,715  |           |   |          | 9,028        |   |        |            | 518,743  |           |           |          | 547,853  |              |   |          | 10,366   |   |   |          | 558,219  |  
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Adjustments to arrive at net income:                                                                                              |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |   |          |          |   |   |          |         
|                                                                                                                                  | Other revenues                                               |                                     |            | 2,125    |           |   |          | 3,572        |   |        |            | 5,697    |           |           |          | 718      |              |   |          | 5,735    |   |   |          | 6,453    |  
|                                                                                                                                  | Interest expense(c)                                          |                                     |            | (44,266  | )         |   |          | (163,796     | ) |        |            | (208,062 | )         |           |          | (48,144  | )            |   |          | (152,081 | ) |   |          | (200,225 | )
|                                                                                                                                  | Depreciation and amortization                                |                                     |            | (173,090 | )         |   |          | (5,840       | ) |        |            | (178,930 | )         |           |          | (163,498 | )            |   |          | (5,067   | ) |   |          | (168,565 | )
|                                                                                                                                  | Ground rent                                                  |                                     |            | (5,534   | )         |   |          |             |   |        |            | (5,534   | )         |           |          | (4,956   | )            |   |          |         |   |   |          | (4,956   | )
|                                                                                                                                  | Corporate general and administrative                         |                                     |            |         |           |   |          | (13,515      | ) |        |            | (13,515  | )         |           |          |         |              |   |          | (13,615  | ) |   |          | (13,615  | )
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|                                                                                                                                  | Total                                                        |                                     |            | (220,765 | )         |   |          | (179,579     | ) |        |            | (400,344 | )         |           |          | (215,880 | )            |   |          | (165,028 | ) |   |          | (380,908 | )
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures |                                                              |                                     | 288,950    |          |           |   | (170,551 | )            |   |        | 118,399    |          |           |           | 331,973  |          |              |   | (154,662 | )        |   |   | 177,311  |         
|Income taxes                                                                                                                      |                                                              |                                     | (585       | )        |           |   | 874      |              |   |        | 289        |          |           |           | 32       |          |              |   | (187     | )        |   |   | (155     | )       
|Minority interests                                                                                                                |                                                              |                                     | (1,821     | )        |           |   |         |              |   |        | (1,821     | )        |           |           | (2,716   | )        |              |   | (20      | )        |   |   | (2,736   | )       
|Income from investments in unconsolidated joint
    ventures                                                                      |                                                              |                                     | 19,550     |          |           |   | 1,658    |              |   |        | 21,208     |          |           |           | 14,135   |          |              |   | (1,917   | )        |   |   | 12,218   |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Income from continuing operations                                                                                                 |                                                              |                                     | 306,094    |          |           |   | (168,019 | )            |   |        | 138,075    |          |           |           | 343,424  |          |              |   | (156,786 | )        |   |   | 186,638  |         
|Discontinued operations (including net
    (loss)/gain on sales of real estate of $(6,326) and $6,382,
    respectively)          |                                                              |                                     | (7,264     | )        |           |   | 3,512    |              |   |        | (3,752     | )        |           |           | 16,974   |          |              |   | 283      |          |   |   | 17,257   |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Net income                                                                                                                        |                                                              | $                                   | 298,830    |          |           | $ | (164,507 | )            |   | $      | 134,323    |          |           | $         | 360,398  |          |              | $ | (156,503 | )        |   | $ | 203,895  |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Property net operating income:                                                                                                    |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |   |          |          |   |   |          |         
|                                                                                                                                  | Continuing operations                                        |                                     | $          | 509,715  |           |   | $        | 9,028        |   |        | $          | 518,743  |           |           | $        | 547,853  |              |   | $        | 10,366   |   |   | $        | 558,219  |  
|                                                                                                                                  | Discontinued operations (see Note 5)                         |                                     |            | 2,953    |           |   |          | 14           |   |        |            | 2,967    |           |           |          | 15,014   |              |   |          | 373      |   |   |          | 15,387   |  
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Total property net operating income                                                                                               |                                                              | $                                   | 512,668    |          |           | $ | 9,042    |              |   | $      | 521,710    |          |           | $         | 562,867  |          |              | $ | 10,739   |          |   | $ | 573,606  |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Property operating margin from continuing and
    discontinued operations(d)                                                      |                                                              |                                     |            |          |           |   |          |              |   |        | 64.6       | %        |           |           |          |          |              |   |          |          |   |   | 65.3     | %       
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Property operating margin from continuing
    operations(d)                                                                       |                                                              |                                     |            |          |           |   |          |              |   |        | 64.5       | %        |           |           |          |          |              |   |          |          |   |   | 65.4     | %       
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Capital and tenant improvements                                                                                                   |                                                              | $                                   | 108,177    |          |           | $ | 9,864    |              |   | $      | 118,041    |          |           | $         | 90,913   |          |              | $ | 1,945    |          |   | $ | 92,858   |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Investments in unconsolidated joint ventures                                                                                      |                                                              | $                                   | 979,529    |          |           | $ | (1,379   | )            |   | $      | 978,150    |          |           |           |          |          |              |   |          |          |   |   |          |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  
|Total Assets                                                                                                                      |                                                              | $                                   | 24,034,115 |          |           | $ | 849,254  |              |   | $      | 24,883,369 |          |           |           |          |          |              |   |          |          |   |   |          |         
|                                                                                                                                  |                                                              |                                     |            |          |           |   |          |              |   |        |            |          |           |           |          |          |              |  

17



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |   |          |          |          |   |           |           |            |  
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ---------- | --------- | --------- | - | -------- | ------------ | -------- | ------ | ---------- | --------- | ---------- | --------- | --------- | --------- | ------------ | - | -------- | -------- | -------- | - | --------- | --------- | ---------- | -
|                                                                                                                                  |                                                              |                          
|                                                                                                                                  |                                                              | For the nine months ended |           
|                                                                                                                                  |                                                              | September 30,             |           
|                                                                                                                                  |                                                              |                           |           
|                                                                                                                                  |                                                              |                           |            |          
|                                                                                                                                  |                                                              | 2003                      |            |           | 2002      |  
|                                                                                                                                  |                                                              |                           |            |           |           |  
|                                                                                                                                  |                                                              | Office                    |            |           | Corporate |   |          |              |          | Office |            |           | Corporate  |           |           |          
|(Dollars in thousands)                                                                                                            |                                                              | Properties                |            |           | and Other |   |          | Consolidated |          |        | Properties |           |            | and Other |           |           | Consolidated |  
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Property operating revenues(a)                                                                                                    |                                                              | $                         | 2,369,419  |           |           | $ | 35,377   |              |          | $      | 2,404,796  |           |            | $         | 2,507,735 |           |              | $ | 40,308   |          |          | $ | 2,548,043 |          
|Property operating expenses(b)                                                                                                    |                                                              |                           | (836,721   | )         |           |   | (7,530   | )            |          |        | (844,251   | )         |            |           | (863,907  | )         |              |   | (7,825   | )        |          |   | (871,732  | )        
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|                                                                                                                                  | Property net operating income from continuing
    operations |                           |            | 1,532,698 |           |   |          | 27,847       |          |        |            | 1,560,545 |            |           |           | 1,643,828 |              |   |          | 32,483   |          |   |           | 1,676,311 |           
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Adjustments to arrive at net income:                                                                                              |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |   |          |          |          |   |           |          
|                                                                                                                                  | Other revenues                                               |                           |            | 3,321     |           |   |          | 25,935       |          |        |            | 29,256    |            |           |           | 2,030     |              |   |          | 26,809   |          |   |           | 28,839    |           
|                                                                                                                                  | Interest expense(c)                                          |                           |            | (133,800  | )         |   |          | (489,972     | )        |        |            | (623,772  | )          |           |           | (145,547  | )            |   |          | (464,857 | )        |   |           | (610,404  | )         
|                                                                                                                                  | Depreciation and amortization                                |                           |            | (509,036  | )         |   |          | (17,314      | )        |        |            | (526,350  | )          |           |           | (488,840  | )            |   |          | (15,234  | )        |   |           | (504,074  | )         
|                                                                                                                                  | Ground rent                                                  |                           |            | (15,000   | )         |   |          |             |          |        |            | (15,000   | )          |           |           | (15,753   | )            |   |          |         |          |   |           | (15,753   | )         
|                                                                                                                                  | Corporate general and administrative                         |                           |            |          |           |   |          | (44,672      | )        |        |            | (44,672   | )          |           |           |          |              |   |          | (49,423  | )        |   |           | (49,423   | )         
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|                                                                                                                                  |                                                              | Total                     |            |           | (654,515  | ) |          |              | (526,023 | )      |            |           | (1,180,538 | )         |           |           | (648,110     | ) |          |          | (502,705 | ) |           |           | (1,150,815 | )
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures |                                                              |                           | 878,183    |           |           |   | (498,176 | )            |          |        | 380,007    |           |            |           | 995,718   |           |              |   | (470,222 | )        |          |   | 525,496   |          
|Income taxes                                                                                                                      |                                                              |                           | (970       | )         |           |   | (1,312   | )            |          |        | (2,282     | )         |            |           | (1,927    | )         |              |   | (6,922   | )        |          |   | (8,849    | )        
|Minority interests                                                                                                                |                                                              |                           | (6,168     | )         |           |   | (20      | )            |          |        | (6,188     | )         |            |           | (5,078    | )         |              |   | (59      | )        |          |   | (5,137    | )        
|Income from investments in unconsolidated joint
    ventures                                                                      |                                                              |                           | 60,041     |           |           |   | 2,877    |              |          |        | 62,918     |           |            |           | 94,307    |           |              |   | (2,164   | )        |          |   | 92,143    |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Income from continuing operations                                                                                                 |                                                              |                           | 931,086    |           |           |   | (496,631 | )            |          |        | 434,455    |           |            |           | 1,083,020 |           |              |   | (479,367 | )        |          |   | 603,653   |          
|Discontinued operations (including net gain on
    sales of real estate of $45,399 and $8,872, respectively)                      |                                                              |                           | 54,614     |           |           |   | 3,529    |              |          |        | 58,143     |           |            |           | 47,485    |           |              |   | 704      |          |          |   | 48,189    |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Net income                                                                                                                        |                                                              | $                         | 985,700    |           |           | $ | (493,102 | )            |          | $      | 492,598    |           |            | $         | 1,130,505 |           |              | $ | (478,663 | )        |          | $ | 651,842   |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Property net operating income:                                                                                                    |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |   |          |          |          |   |           |          
|                                                                                                                                  | Continuing operations                                        |                           | $          | 1,532,698 |           |   | $        | 27,847       |          |        | $          | 1,560,545 |            |           | $         | 1,643,828 |              |   | $        | 32,483   |          |   | $         | 1,676,311 |           
|                                                                                                                                  | Discontinued operations (see Note 5)                         |                           |            | 16,419    |           |   |          | 261          |          |        |            | 16,680    |            |           |           | 51,610    |              |   |          | 1,151    |          |   |           | 52,761    |           
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Total property net operating income                                                                                               |                                                              | $                         | 1,549,117  |           |           | $ | 28,108   |              |          | $      | 1,577,225  |           |            | $         | 1,695,438 |           |              | $ | 33,634   |          |          | $ | 1,729,072 |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Property operating margin from continuing and
    discontinued operations(d)                                                      |                                                              |                           |            |           |           |   |          |              |          |        | 64.9       | %         |            |           |           |           |              |   |          |          |          |   | 65.8      | %        
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Property operating margin from continuing
    operations(d)                                                                       |                                                              |                           |            |           |           |   |          |              |          |        | 64.9       | %         |            |           |           |           |              |   |          |          |          |   | 65.8      | %        
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Capital and tenant improvements                                                                                                   |                                                              | $                         | 245,167    |           |           | $ | 19,461   |              |          | $      | 264,628    |           |            | $         | 218,670   |           |              | $ | 4,629    |          |          | $ | 223,299   |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Investments in unconsolidated joint ventures                                                                                      |                                                              | $                         | 979,529    |           |           | $ | (1,379   | )            |          | $      | 978,150    |           |            |           |           |           |              |   |          |          |          |   |           |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  
|Total Assets                                                                                                                      |                                                              | $                         | 24,034,115 |           |           | $ | 849,254  |              |          | $      | 24,883,369 |           |            |           |           |           |              |   |          |          |          |   |           |          
|                                                                                                                                  |                                                              |                           |            |           |           |   |          |              |          |        |            |           |            |           |           |           |              |  




|    |  |                                                                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Included in property operating revenues are
    rental, tenant reimbursements, parking and other.                                                                                                       
|   
|(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.                                                                               

18



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


NOTE 11  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.



| |           
| | ----------
| | 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, EOP Partnership, 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.

19



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)




| |                                     
| | ------------------------------------
| | Forward-Starting Interest Rate Swaps

As of September 30, 2003 and
December 31, 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 September 30, 2003 and December 31, 2002
represented a net liability to us of approximately
$26.8 million (approximately $5.3 million is recorded
in other assets and $32.1 million is recorded in other
liabilities) and $18.6 million (all of which is included in
other liabilities), respectively. No hedge ineffectiveness has
been recorded in earnings as these swaps were perfectly
effective. As of October 31, 2003, the market value of
these forward-starting interest rate swaps represented a net
liability to us of approximately $0.1 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 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
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.



| |              
| | -------------
| | Contingencies

Certain joint venture agreements we have entered
into with unaffiliated partners contain buy/sell options in
which each party has the option to acquire the others
interest. 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
out our partners interest. The exceptions allow our
unaffiliated partners, at their election, to require that we buy
out their interests during specified future time periods,
commencing not earlier than 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.

Approximately 267 of our properties, consisting
of 34.6 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
$6.9 billion at September 30, 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 unitholders best interests to
dispose of restricted properties, we have done so through
transactions structured as tax-deferred transactions under
section 1031 of the Internal

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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)


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                            |  | EOP Partnership                                                                                                                                                               |  | Third-Party Coverage                     
|Coverage                                     |  | 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)                         |  | $750,000 per occurrence deductible (plus 10%
    of each and every loss with a maximum per occurrence exposure of
    $33.25 million which includes the $750,000 deductible)  |  | $825 million per occurrence(e)           

21



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Unaudited)




---



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



| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements



| |            
| | -----------
| | Commitments

In connection with the acquisition of the
remaining investment in Key Center (see Note 6 
Investments in Unconsolidated Joint Ventures), WRALPs
revolving line of credit (and our guarantee of their line of
credit) was terminated and replaced with a $6.7 million
term loan. We have guaranteed payment of WRALPs
$6.7 million term loan and any replacement credit facility
through 2007. The term loan has a balance of $6.7 million
at September 30, 2003. In accordance with FASB
Interpretation No. 45 (FIN 45)
Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness to
Others, the fair value of our guarantee was determined to be
approximately $0.2 million which was recorded as an
additional cost to acquiring the remaining interest in Key
Center and is also classified in other liabilities.

NOTE 12  SUBSEQUENT
EVENTS

The following transactions occurred subsequent to
September 30, 2003 through October 31, 2003:

1. We sold Summit Office Park located in
Fort Worth, Texas to an unaffiliated party for
approximately $17.2 million. Summit Office Park comprised
two properties and approximately 239,095 square feet.

2. We sold Wachovia Center located in
Charlotte, North Carolina to an unaffiliated party for
approximately $60.6 million. Wachovia Center comprised one
property and approximately 583,424 square feet.

22



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##### Table of Contents



ITEM 2. Managements Discussion
and Analysis of Financial Condition and Results of
Operations.

Forward-Looking Statements

Statements contained in this
Managements Discussion and Analysis of Financial
Condition and Results of Operations, which are not
historical fact may be forward-looking statements. 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-Q is filed with the
SEC. Among the factors about which we have made assumptions are
the following:



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

Overview

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

23



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##### Table of Contents



Key Transactions

During the nine months ended September 30,
2003, we completed the following key transactions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | disposed of 30 office properties, two
    industrial properties and three vacant land parcels in various
    transactions to unaffiliated parties for approximately
    $504.6 million. The sold office properties consisted of
    approximately 2,475,218 square feet and 32 residential
    units, and the industrial properties consisted of approximately
    216,900 square feet;                                                    
|
| |  | acquired one office property for approximately
    $80.2 million. The property is located in Denver, Colorado
    and consists of approximately 485,902 square feet;                                                                                                                                                                                                                                                                       
|
| |  | placed into service four developments consisting
    of five buildings and approximately 1,218,215 square feet;                                                                                                                                                                                                                                                                                                                            
|
| |  | issued $500 million of unsecured notes due
    January 2013 at an effective rate of 5.98% and used a portion of
    the net proceeds to repay $300 million of unsecured notes
    that matured in February 2003;                                                                                                                                                                                                                           
|
| |  | Equity Office repurchased 14,236,400 Common
    Shares at an average price of $25.53 per share for a total
    of $363.5 million in the aggregate. In connection with the
    repurchases, we purchased from Equity Office and retired a
    corresponding number of Units for an aggregate purchase price
    equal to the aggregate purchase price for all Common Share
    repurchases;                                                 
|
| |  | sold 5.0 million common shares of Inktomi
    Corporation received in connection with a lease termination in
    2002 for a gain of approximately $8.1 million;                                                                                                                                                                                                                                                                            
|
| |  | Equity Office redeemed the 6,000,000 outstanding
    7.875% Series E Cumulative Redeemable Preferred Shares 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. In connection with such redemption, we redeemed
    all of the Series E Preferred Units from Equity
    Office; and
|
| |  | Equity Office redeemed the 4,000,000 outstanding
    8.00% Series F Cumulative Redeemable Preferred Shares at a
    redemption price of $25.00 per share for an aggregate
    redemption price of $100.0 million. In connection with such
    redemption, we redeemed all of the Series F Preferred Units
    from Equity Office.                                                                                                          

Critical Accounting Policies and
Estimates

Refer to our 2002 Annual Report on Form 10-K
for a discussion of our critical accounting policies which
include revenue recognition and allowance for doubtful accounts,
impairment of long-lived assets, depreciation and the fair value
of financial instruments including derivative instruments. There
have been no material changes to these policies in 2003.

Accounting Policy Adopted in 2003



| |                                            
| | -------------------------------------------
| | Stock Based Employee Compensation
    Plans

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
Note 2  Summary of Significant Accounting
Policies for more information.

Impact of New Accounting Standards

See 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 Property Operating Revenues and
    Tenant Improvements and Leasing Costs

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 our
overall market rental rates and an increase in costs to release
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 Boston, San Francisco, San Jose,
Seattle, New York, Chicago, Washington D.C., Los
Angeles, Atlanta and Orange County. These markets accounted for
approximately 78.1% of our property net operating income from
continuing operations in the third quarter of 2003.

|                      |                                                                                                          |                      |   |           |                     |  |   |              |   |  |      |            |   |      |   |            |   |  |   |            |  
|--------------------- | -------------------------------------------------------------------------------------------------------- | -------------------- | - | --------- | ------------------- |  | - | ------------ | - |  | ---- | ---------- | - | ---- | - | ---------- | - |  | - | ---------- | -
|                      |                                                                                                          |                      |   |           |                     | 
|                      |                                                                                                          | For the three months |   |           | For the nine months |  |   | For the      |  
|                      |                                                                                                          | ended September 30,  |   |           | ended September 30, |  |   | year ended   |  
|                      |                                                                                                          |                      |   |           |                     |  |   | December 31, |  
|Office Property Data: |                                                                                                          | 2003                 |   |           | 2002                |  |   | 2003         |   |  | 2002 |            |   | 2002 |  
|                      |                                                                                                          |                      |   |           |                     |  |   |              |   |  |      |            |   |      |  
|10 Largest Markets:   |                                                                                                          |                      |   |           |                     |  |   |              |   |  |      |            |   |      |   |            |   |  |   |           
|                      | Portion of total office portfolio based on square
    feet at end of period                              |                      |   | 68.6      | %                   |  |   | 67.8         | % |  |      | 68.6       | % |      |   | 67.8       | % |  |   | 68.1       | %
|                      | Occupancy at end of period                                                                               |                      |   | 86.0      | %                   |  |   | 89.3         | % |  |      | 86.0       | % |      |   | 89.3       | % |  |   | 88.8       | %
|                      | Gross square footage for tenants taking occupancy
    during the period                                  |                      |   | 3,966,380 |                     |  |   | 3,791,949    |   |  |      | 11,153,993 |   |      |   | 10,387,311 |   |  |   | 13,582,766 |  
|                      | Weighted average annual rent per square foot for
    tenants taking occupancy during the period(a)(b)    |                      | $ | 26.54     |                     |  | $ | 28.06        |   |  | $    | 28.53      |   |      | $ | 32.35      |   |  | $ | 31.54      |  
|                      | Gross square footage for expiring and terminated
    leases during the period                            |                      |   | 3,935,474 |                     |  |   | 3,996,014    |   |  |      | 12,230,812 |   |      |   | 12,219,362 |   |  |   | 16,308,269 |  
|                      | Weighted average annual rent per square foot for
    expiring and terminated leases during the period(a) |                      | $ | 29.02     |                     |  | $ | 32.85        |   |  | $    | 30.71      |   |      | $ | 31.58      |   |  | $ | 31.19      |  

25



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|                        |                                                                                                          |                      |   |           |                     |  |   |              |   |  |      |            |   |      |   |            |   |  |   |            |  
|----------------------- | -------------------------------------------------------------------------------------------------------- | -------------------- | - | --------- | ------------------- |  | - | ------------ | - |  | ---- | ---------- | - | ---- | - | ---------- | - |  | - | ---------- | -
|                        |                                                                                                          |                      |   |           |                     | 
|                        |                                                                                                          | For the three months |   |           | For the nine months |  |   | For the      |  
|                        |                                                                                                          | ended September 30,  |   |           | ended September 30, |  |   | year ended   |  
|                        |                                                                                                          |                      |   |           |                     |  |   | December 31, |  
|Office Property Data:   |                                                                                                          | 2003                 |   |           | 2002                |  |   | 2003         |   |  | 2002 |            |   | 2002 |  
|                        |                                                                                                          |                      |   |           |                     |  |   |              |   |  |      |            |   |      |  
|Total Office Portfolio: |                                                                                                          |                      |   |           |                     |  |   |              |   |  |      |            |   |      |   |            |   |  |   |           
|                        | Portion of total portfolio based on square feet
    at end of period                                     |                      |   | 100.0     | %                   |  |   | 100.0        | % |  |      | 100.0      | % |      |   | 100.0      | % |  |   | 100.0      | %
|                        | Occupancy at end of period                                                                               |                      |   | 86.3      | %                   |  |   | 89.2         | % |  |      | 86.3       | % |      |   | 89.2       | % |  |   | 88.6       | %
|                        | Gross square footage for tenants taking occupancy
    during the period                                  |                      |   | 6,046,484 |                     |  |   | 5,613,487    |   |  |      | 16,564,918 |   |      |   | 15,733,706 |   |  |   | 20,620,427 |  
|                        | Weighted average annual rent per square foot for
    tenants taking occupancy during the period(a)(b)    |                      | $ | 24.24     |                     |  | $ | 26.53        |   |  | $    | 25.96      |   |      | $ | 29.21      |   |  | $ | 28.48      |  
|                        | Gross square footage for expiring and terminated
    leases during the period                            |                      |   | 6,159,294 |                     |  |   | 6,300,768    |   |  |      | 18,003,915 |   |      |   | 18,162,633 |   |  |   | 23,711,452 |  
|                        | Weighted average annual rent per square foot for
    expiring and terminated leases during the period(a) |                      | $ | 26.07     |                     |  | $ | 30.32        |   |  | $    | 27.82      |   |      | $ | 28.93      |   |  | $ | 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 has been early lease
terminations. Since January 1, 2002 through
September 30, 2003, we have had approximately
9.7 million square feet of early lease terminations and
received lease termination fees of approximately
$192.8 million. These amounts include approximately
1.1 million square feet of early lease terminations and
approximately $16.3 million of lease termination fees for
the three months ended September 30, 2003. Future rental
income may be affected by future lease terminations because it
is unlikely we will collect the full contracted amount payable
under the terminated leases. We will also incur 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 significantly lower in 2003 as compared
to 2002.

During the third quarter 2003, we experienced
material increases in tenant improvement and leasing costs as a
result of competitive market conditions for new leases. See
 Capital Improvements, Tenant Improvements and
Leasing Costs   Tenant Improvements and Leasing
Costs. This resulted in decreased net effective
rents (contract rents adjusted for the impact of tenant
improvement costs, leasing commissions and any free
rent periods) for lease renewals and retenanted
properties. This trend may continue until market conditions
improve.

As of September 30, 2003, approximately
56.7 million occupied square feet of office space
(approximately 52.6% of the total occupied square feet) is
expiring through 2007, including approximately 3.9 million
occupied square feet in the remainder of 2003 (which includes
approximately .9 million square feet subject to
month-to-month lease terms). If we are unable to release the
office space subject to the expiring leases in a timely manner
or at comparable rates, we will experience further declines in
occupancy and our revenues and results of operations in
subsequent periods will be adversely affected.

26



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##### Table of Contents



In addition to the downward trends in occupancy
and market rents, we have continued to experience uncollectible
receivables, although at lower levels than prior periods,
relating to tenants in bankruptcy or tenants experiencing
financial difficulty. For the three and nine months ended
September 30, 2003, bad debt expense was approximately
$(0.4) million and $11.1 million, respectively, and
$6.0 million and $19.6 million for the same periods in
2002. 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



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

In 2001, we initiated a comprehensive analysis of
our operating structure with the help of a management consulting
firm and our employees. The goal of the analysis was to
significantly reduce operating expenses, streamline operations,
improve customer service, reduce lease cycle time, increase
occupancy and retain tenants. The analysis resulted in a
significant reengineering effort called EOPlus. As part of this
effort, many of the activities that occurred at the property
have been and are being 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 expect to make available for leasing in
excess of 100,000 square feet of office space. All of the
regional office consolidations have been completed. By the end
of 2003, we expect to have 10-15% fewer employees than at the
end of 2001 as a result of staff reductions and attrition. We
expect that the related severance expenses in 2003 will be
approximately $2.7 million. 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. We estimate that we
will recognize approximately $10 million of cost savings in
2003, net of the associated severance cost and the impact of
lower tenant reimbursements. Beginning in 2004, after the new
model is fully implemented, we expect annual cost savings of
$75 million to $100 million as measured against
certain baseline operating expenses included in repairs and
maintenance and property operating expenses at the end of 2001,
adjusted for inflation. We estimate we will realize
approximately 45% to 50% of these annual cost savings and the
balance is expected to represent a benefit to tenants in savings
of pass-through expenses.

27



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##### Table of Contents





| |                                         
| | ----------------------------------------
| | 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
118,753,518 square feet of office space as of
September 30, 2003.

|                        |                                  |                   |     |              |                       |  |             |            |       |  |             |    |   |  |           |          |  
|----------------------- | -------------------------------- | ----------------- | --- | ------------ | --------------------- |  | ----------- | ---------- | ----- |  | ----------- | -- | - |  | --------- | -------- | -
|                        |                                  |                   |     |             
|                        |                                  | Office Properties |     |              | Industrial Properties | 
|                        |                                  |                   |     |              |                       | 
|                        |                                  |                   |     | Total Square |                       |  |             |            | Total | 
|                        |                                  | Buildings         |     |              | 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 |         
|                        | Developments placed in service   |                   |     | 1            |                       |  |             | 225,490    |       |  |             |   |   |  |           |         |  
|                        | Dispositions                     |                   |     | (13          | )                     |  |             | (1,753,665 | )     |  |             | (1 | ) |  |           | (60,300  | )
|                        | Property taken out of service(a) |                   |     | (1           | )                     |  |             | (115,340   | )     |  |             |   |   |  |           |         |  
|                        | Building remeasurements          |                   |     |             |                       |  |             | 52,520     |       |  |             |   |   |  |           |         |  
|                        |                                  |                   |     |              |                       |  |             |            |       |  |             |   
|June 30, 2003           |                                  |                   | 721 |              |                       |  | 124,134,404 |            |       |  | 76          |    |   |  | 5,907,459 |         
|                        | Acquisitions                     |                   |     | 1            |                       |  |             | 485,902    |       |  |             |   |   |  |           |         |  
|                        | Developments placed in service   |                   |     | 4            |                       |  |             | 992,725    |       |  |             |   |   |  |           |         |  
|                        | Dispositions                     |                   |     | (17          | )                     |  |             | (721,553   | )     |  |             | (1 | ) |  |           | (156,600 | )
|                        | Building remeasurements          |                   |     |             |                       |  |             | 40,366     |       |  |             |   |   |  |           |         |  
|                        |                                  |                   |     |              |                       |  |             |            |       |  |             |   
|September 30, 2003      |                                  |                   | 709 |              |                       |  | 124,931,844 |            |       |  | 75          |    |   |  | 5,750,859 |         
|                        |                                  |                   |     |              |                       |  |             |            |       |  |             |   






|    |  |                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------
|(a) |  | One building consisting of 115,340 square
    feet (Cambridge Science Center f/k/a Riverview I) is now
    under development.

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

28



---



##### Table of Contents





| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Comparison of the three months ended
    September 30, 2003 to the three months ended
    September 30, 2002

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 676 consolidated Office Properties and
75 Industrial Properties and 22 unconsolidated joint
venture Properties acquired or placed in service on or prior to
July 1, 2002.

|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |         |         |   |         |         |         |   |          |      |       |  
|--------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------------------- | -------- | --------- | -------------- | - | -------- | ---------- | -------- | - | --------- | ------- | ------- | ---- | ------ | ---- | ----- | - | ------- | ---------- | ------- | - | -------- | ------- | ------- | - | ------- | ------- | ------- | - | -------- | ---- | ----- | -
|                                                                                                                                  |                |                            |          |          
|                                                                                                                                  |                | Total Portfolio            |          |           | Core Portfolio |  
|                                                                                                                                  |                |                            |          |           |                |  
|                                                                                                                                  |                |                            |          | Increase/ |                |   |          |            |          |   | Increase/ |         |         |     
|(Dollars in thousands)                                                                                                            |                | 2003                       |          |           | 2002           |   |          | (Decrease) |          |   | % Change  |         |         | 2003 |        |      | 2002  |   |         | (Decrease) |         |   | % Change |        
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Property operating revenues                                                                                                       |                | $                          | 804,193  |           |                | $ | 853,962  |            |          | $ | (49,769   | )       |         |      | (5.8   | )%   |       | $ | 798,131 |            |         | $ | 851,142  |         |         | $ | (53,011 | )       |         |   | (6.2     | )%  
|Fee income                                                                                                                        |                |                            | 1,969    |           |                |   | 3,699    |            |          |   | (1,730    | )       |         |      | (46.8  | )    |       |   |        |            |         |   |         |         |         |   |        |         |         |   |         |     
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|                                                                                                                                  | Total revenues |                            |          | 806,162   |                |   |          | 857,661    |          |   |           | (51,499 | )       |      |        | (6.0 | )     |   |         | 798,131    |         |   |          | 851,142 |         |   |         | (53,011 | )       |   |          | (6.2 | )    
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Depreciation and amortization                                                                                                     |                |                            | 178,930  |           |                |   | 168,565  |            |          |   | 10,365    |         |         |      | 6.1    |      |       |   | 173,619 |            |         |   | 165,576  |         |         |   | 8,043   |         |         |   | 4.9      |     
|Real estate taxes                                                                                                                 |                |                            | 86,032   |           |                |   | 96,652   |            |          |   | (10,620   | )       |         |      | (11.0  | )    |       |   | 84,282  |            |         |   | 95,942   |         |         |   | (11,660 | )       |         |   | (12.2    | )   
|Property operating expenses                                                                                                       |                |                            | 199,418  |           |                |   | 199,091  |            |          |   | 327       |         |         |      | 0.2    |      |       |   | 196,427 |            |         |   | 198,631  |         |         |   | (2,204  | )       |         |   | (1.1     | )   
|Ground rent                                                                                                                       |                |                            | 5,534    |           |                |   | 4,956    |            |          |   | 578       |         |         |      | 11.7   |      |       |   | 4,700   |            |         |   | 5,130    |         |         |   | (430    | )       |         |   | (8.4     | )   
|Corporate general and administrative(b)                                                                                           |                |                            | 13,515   |           |                |   | 13,615   |            |          |   | (100      | )       |         |      | (0.7   | )    |       |   |        |            |         |   |         |         |         |   |        |         |         |   |         |     
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|                                                                                                                                  | Total expenses |                            |          | 483,429   |                |   |          | 482,879    |          |   |           | 550     |         |      |        | 0.1  |       |   |         | 459,028    |         |   |          | 465,279 |         |   |         | (6,251  | )       |   |          | (1.3 | )    
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|                                                                                                                                  |                | Operating income           |          |           | 322,733        |   |          |            | 374,782  |   |           |         | (52,049 | )    |        |      | (13.9 | ) |         |            | 339,103 |   |          |         | 385,863 |   |         |         | (46,760 | ) |          |      | (12.1 | )
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Interest/dividend income                                                                                                          |                |                            | 3,421    |           |                |   | 2,754    |            |          |   | 667       |         |         |      | 24.2   |      |       |   | 817     |            |         |   | 863      |         |         |   | (46     | )       |         |   | (5.3     | )   
|Realized gain on sale of marketable securities                                                                                    |                |                            | 307      |           |                |   |         |            |          |   | 307       |         |         |      |       |      |       |   |        |            |         |   |         |         |         |   |        |         |         |   |         |     
|Interest expense(a)                                                                                                               |                |                            | (208,062 | )         |                |   | (200,225 | )          |          |   | (7,837    | )       |         |      | 3.9    |      |       |   | (46,542 | )          |         |   | (49,333  | )       |         |   | 2,791   |         |         |   | (5.7     | )   
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|                                                                                                                                  |                | Total other income/expense |          |           | (204,334       | ) |          |            | (197,471 | ) |           |         | (6,863  | )    |        |      | 3.5   |   |         |            | (45,725 | ) |          |         | (48,470 | ) |         |         | 2,745   |   |          |      | (5.7  | )
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures |                |                            | 118,399  |           |                |   | 177,311  |            |          |   | (58,912   | )       |         |      | (33.2  | )    |       |   | 293,378 |            |         |   | 337,393  |         |         |   | (44,015 | )       |         |   | (13.0    | )   
|Income taxes                                                                                                                      |                |                            | 289      |           |                |   | (155     | )          |          |   | 444       |         |         |      | (286.5 | )    |       |   | (569    | )          |         |   | (3       | )       |         |   | (566    | )       |         |   | 18,866.7 |     
|Minority interests                                                                                                                |                |                            | (1,821   | )         |                |   | (2,736   | )          |          |   | 915       |         |         |      | (33.4  | )    |       |   | (2,253  | )          |         |   | (2,736   | )       |         |   | 483     |         |         |   | (17.7    | )   
|Income from investments in unconsolidated joint
    ventures                                                                      |                |                            | 21,208   |           |                |   | 12,218   |            |          |   | 8,990     |         |         |      | 73.6   |      |       |   | 10,115  |            |         |   | 17,086   |         |         |   | (6,971  | )       |         |   | (40.8    | )   
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Income from continuing operations                                                                                                 |                |                            | 138,075  |           |                |   | 186,638  |            |          |   | (48,563   | )       |         |      | (26.0  | )    |       |   | 300,671 |            |         |   | 351,740  |         |         |   | (51,069 | )       |         |   | (14.5    | )   
|Discontinued operations (including net
    (loss)/gain on sales of real estate of $(6,326) and $6,382,
    respectively)          |                |                            | (3,752   | )         |                |   | 17,257   |            |          |   | (21,009   | )       |         |      | (121.7 | )    |       |   |        |            |         |   |         |         |         |   |        |         |         |   |         |     
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Net income                                                                                                                        |                | $                          | 134,323  |           |                | $ | 203,895  |            |          | $ | (69,572   | )       |         |      | (34.1  | )%   |       | $ | 300,671 |            |         | $ | 351,740  |         |         | $ | (51,069 | )       |         |   | (14.5    | )%  
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Property net operating income from continuing
    operations(c)                                                                   |                | $                          | 518,743  |           |                | $ | 558,219  |            |          | $ | (39,476   | )       |         |      | (7.1   | )%   |       | $ | 517,422 |            |         | $ | 556,569  |         |         | $ | (39,147 | )       |         |   | (7.0     | )%  
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Deferred rental revenue                                                                                                           |                | $                          | 20,763   |           |                | $ | 17,560   |            |          | $ | 3,203     |         |         |      | 18.2   | %    |       | $ | 19,874  |            |         | $ | 17,536   |         |         | $ | 2,338   |         |         |   | 13.3     | %   
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        
|Lease termination fees                                                                                                            |                | $                          | 15,871   |           |                | $ | 30,323   |            |          | $ | (14,452   | )       |         |      | (47.7  | )%   |       | $ | 15,855  |            |         | $ | 30,322   |         |         | $ | (14,467 | )       |         |   | (47.7    | )%  
|                                                                                                                                  |                |                            |          |           |                |   |          |            |          |   |           |         |         |      |        |      |       |   |         |            |         |   |          |        






|    |  |                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | 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.
|   
|(b) |  | Corporate general and administrative expense is
    not allocated to the Core Portfolio because these expenses are
    not directly incurred in connection with specific Properties.                                                                                                  
|   
|(c) |  | Represents segment data. See Note 10-Segment
    Information.                                                                                                                                                                                                                         



| |                            
| | ---------------------------
| | Property Operating Revenues

The decrease in property operating revenues in
the Total Portfolio is primarily attributable to reduced
occupancy in the Core Portfolio from 89.9% at July 1, 2002
to 86.5% at September 30, 2003 and a decrease in lease
termination fees. A large portion of the decrease in occupancy
was due to early lease terminations. In

29



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##### Table of Contents



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 and
Core Portfolio primarily due to a decrease in real estate taxes
in the California region of approximately $6.6 million and
the Houston region of approximately $3.8 million, partially
offset by an increase in real estate taxes in the New York
region of approximately $2.2 million.



| |                            
| | ---------------------------
| | Property Operating Expenses

For the Core Portfolio, property operating
expenses decreased primarily as a result of lower utility
expense of approximately $3.4 million and lower insurance
expense of approximately $3.5 million primarily as a result
of changes in our insurance program and favorable loss
experience to date. In addition, for the Core Portfolio,
maintenance expense decreased by approximately $1.5 million
primarily due to lower occupancy and new contracts that were
renegotiated as part of our EOPlus initiative. Payroll expense
decreased by approximately $1.3 million due to staff
reductions. The decrease in property operating expenses was
partially offset by increases in property operating general and
administrative expense which includes legal, advertising,
leasing and payroll.



| |                 
| | ----------------
| | Interest Expense

Interest expense for the Total Portfolio
increased primarily as a result of higher average debt balances
outstanding during the periods and a $3.9 million decrease
in capitalized interest.



| |                                                             
| | ------------------------------------------------------------
| | Income from Investments in Unconsolidated
    Joint Ventures

Income from investments in unconsolidated joint
ventures for the Total Portfolio increased primarily due to a
$7.1 million gain on sale of an Office Property sold during
the current period and a development property recently placed
into service. The Core Portfolio decreased primarily because of
a decrease in occupancy and decreased average rental rates on
new leases as compared to average rental rates on expiring
leases.



| |                        
| | -----------------------
| | Discontinued Operations

The decrease in discontinued operations is
primarily due to the $6.3 million loss on the sale of the
properties sold during the current period as compared to the
$6.4 million gain on the sale of the properties sold during
the prior period. The net income of properties sold since
January 1, 2002 is included in discontinued operations up
to the respective disposition date.

30



---



##### Table of Contents





| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Comparison of the nine months ended
    September 30, 2003 to the nine months ended
    September 30, 2002

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 673 consolidated Office Properties and
75 Industrial Properties and 22 unconsolidated joint
venture Properties acquired or placed in service on or prior to
January 1, 2002.

|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |           |   |   |          |          |   |  |       |       |  
|--------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | --------------- | --------- | --------- | -------------- | - | --------- | ---------- | - | - | --------- | -------- | - | ---- | ----- | ----- | ---- | - | --------- | ---------- | - | - | --------- | --------- | - | - | -------- | -------- | - |  | ----- | ----- | -
|                                                                                                                                  |                             |                 |           |          
|                                                                                                                                  |                             | Total Portfolio |           |           | Core Portfolio |  
|                                                                                                                                  |                             |                 |           |           |                |  
|                                                                                                                                  |                             |                 |           | Increase/ |                |   |           |            |   |   | Increase/ |          |   |     
|(Dollars in thousands)                                                                                                            |                             | 2003            |           |           | 2002           |   |           | (Decrease) |   |   | % Change  |          |   | 2003 |       |       | 2002 |   |           | (Decrease) |   |   | % Change  |          
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Property operating revenues                                                                                                       |                             | $               | 2,404,796 |           |                | $ | 2,548,043 |            |   | $ | (143,247  | )        |   |      | (5.6  | )%    |      | $ | 2,376,934 |            |   | $ | 2,532,421 |           |   | $ | (155,487 | )        |   |  | (6.1  | )%   
|Fee income                                                                                                                        |                             |                 | 10,431    |           |                |   | 11,754    |            |   |   | (1,323    | )        |   |      | (11.3 | )     |      |   |          |            |   |   |          |           |   |   |         |          |   |  |      |      
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|                                                                                                                                  | Total revenues              |                 |           | 2,415,227 |                |   |           | 2,559,797  |   |   |           | (144,570 | ) |      |       | (5.6  | )    |   |           | 2,376,934  |   |   |           | 2,532,421 |   |   |          | (155,487 | ) |  |       | (6.1  | )
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Depreciation and amortization                                                                                                     |                             |                 | 526,350   |           |                |   | 504,074   |            |   |   | 22,276    |          |   |      | 4.4   |       |      |   | 510,122   |            |   |   | 493,761   |           |   |   | 16,361   |          |   |  | 3.3   |      
|Real estate taxes                                                                                                                 |                             |                 | 268,608   |           |                |   | 285,350   |            |   |   | (16,742   | )        |   |      | (5.9  | )     |      |   | 263,287   |            |   |   | 283,075   |           |   |   | (19,788  | )        |   |  | (7.0  | )    
|Property operating expenses                                                                                                       |                             |                 | 575,643   |           |                |   | 586,382   |            |   |   | (10,739   | )        |   |      | (1.8  | )     |      |   | 565,443   |            |   |   | 581,018   |           |   |   | (15,575  | )        |   |  | (2.7  | )    
|Ground rent                                                                                                                       |                             |                 | 15,000    |           |                |   | 15,753    |            |   |   | (753      | )        |   |      | (4.8  | )     |      |   | 13,949    |            |   |   | 15,566    |           |   |   | (1,617   | )        |   |  | (10.4 | )    
|Corporate general and administrative(b)                                                                                           |                             |                 | 44,672    |           |                |   | 49,423    |            |   |   | (4,751    | )        |   |      | (9.6  | )     |      |   |          |            |   |   |          |           |   |   |         |          |   |  |      |      
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|                                                                                                                                  | Total expenses              |                 |           | 1,430,273 |                |   |           | 1,440,982  |   |   |           | (10,709  | ) |      |       | (0.7  | )    |   |           | 1,352,801  |   |   |           | 1,373,420 |   |   |          | (20,619  | ) |  |       | (1.5  | )
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|                                                                                                                                  | Operating income            |                 |           | 984,954   |                |   |           | 1,118,815  |   |   |           | (133,861 | ) |      |       | (12.0 | )    |   |           | 1,024,133  |   |   |           | 1,159,001 |   |   |          | (134,868 | ) |  |       | (11.6 | )
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Interest/ dividend income                                                                                                         |                             |                 | 10,375    |           |                |   | 17,085    |            |   |   | (6,710    | )        |   |      | (39.3 | )     |      |   | 2,745     |            |   |   | 2,801     |           |   |   | (56      | )        |   |  | (2.0  | )    
|Realized gain on sale of marketable securities                                                                                    |                             |                 | 8,450     |           |                |   |          |            |   |   | 8,450     |          |   |      |      |       |      |   |          |            |   |   |          |           |   |   |         |          |   |  |      |      
|Interest expense(a)                                                                                                               |                             |                 | (623,772  | )         |                |   | (610,404  | )          |   |   | (13,368   | )        |   |      | 2.2   |       |      |   | (141,192  | )          |   |   | (149,393  | )         |   |   | 8,201    |          |   |  | (5.5  | )    
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|                                                                                                                                  | Total other income/ expense |                 |           | (604,947  | )              |   |           | (593,319   | ) |   |           | (11,628  | ) |      |       | 2.0   |      |   |           | (138,447   | ) |   |           | (146,592  | ) |   |          | 8,145    |   |  |       | (5.6  | )
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Income before income taxes, allocation to
    minority interests and income from investments in unconsolidated
    joint ventures |                             |                 | 380,007   |           |                |   | 525,496   |            |   |   | (145,489  | )        |   |      | (27.7 | )     |      |   | 885,686   |            |   |   | 1,012,409 |           |   |   | (126,723 | )        |   |  | (12.5 | )    
|Income taxes                                                                                                                      |                             |                 | (2,282    | )         |                |   | (8,849    | )          |   |   | 6,567     |          |   |      | (74.2 | )     |      |   | (905      | )          |   |   | (1,791    | )         |   |   | 886      |          |   |  | (49.5 | )    
|Minority interests                                                                                                                |                             |                 | (6,188    | )         |                |   | (5,137    | )          |   |   | (1,051    | )        |   |      | 20.5  |       |      |   | (7,028    | )          |   |   | (5,137    | )         |   |   | (1,891   | )        |   |  | 36.8  |      
|Income from investments in unconsolidated joint
    ventures                                                                      |                             |                 | 62,918    |           |                |   | 92,143    |            |   |   | (29,225   | )        |   |      | (31.7 | )     |      |   | 39,438    |            |   |   | 54,462    |           |   |   | (15,024  | )        |   |  | (27.6 | )    
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Income from continuing operations                                                                                                 |                             |                 | 434,455   |           |                |   | 603,653   |            |   |   | (169,198  | )        |   |      | (28.0 | )     |      |   | 917,191   |            |   |   | 1,059,943 |           |   |   | (142,752 | )        |   |  | (13.5 | )    
|Discontinued operations (including net gain on
    sales of real estate of $45,399 and $8,872, respectively)                      |                             |                 | 58,143    |           |                |   | 48,189    |            |   |   | 9,954     |          |   |      | 20.7  |       |      |   |          |            |   |   |          |           |   |   |         |          |   |  |      |      
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Net income                                                                                                                        |                             | $               | 492,598   |           |                | $ | 651,842   |            |   | $ | (159,244  | )        |   |      | (24.4 | )%    |      | $ | 917,191   |            |   | $ | 1,059,943 |           |   | $ | (142,752 | )        |   |  | (13.5 | )%   
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Property net operating income from continuing
    operations(c)                                                                   |                             | $               | 1,560,545 |           |                | $ | 1,676,311 |            |   | $ | (115,766  | )        |   |      | (6.9  | )%    |      | $ | 1,548,204 |            |   | $ | 1,668,328 |           |   | $ | (120,124 | )        |   |  | (7.2  | )%   
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Deferred rental revenue                                                                                                           |                             | $               | 53,199    |           |                | $ | 55,774    |            |   | $ | (2,575    | )        |   |      | (4.6  | )%    |      | $ | 51,706    |            |   | $ | 55,028    |           |   | $ | (3,322   | )        |   |  | (6.0  | )%   
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          
|Lease termination fees                                                                                                            |                             | $               | 38,229    |           |                | $ | 60,279    |            |   | $ | (22,050   | )        |   |      | (36.6 | )%    |      | $ | 37,854    |            |   | $ | 59,551    |           |   | $ | (21,697  | )        |   |  | (36.4 | )%   
|                                                                                                                                  |                             |                 |           |           |                |   |           |            |   |   |           |          |   |      |       |       |      |   |           |            |   |   |           |          






|    |  |                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | 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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|    |  |                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Corporate general and administrative expense is
    not allocated to the Core Portfolio because these expenses are
    not directly incurred in connection with specific Properties.
|   
|(c) |  | Represents segment data. See Note 10-Segment
    Information.                                                                                                                       



| |                            
| | ---------------------------
| | Property Operating Revenues

The decrease in property operating revenues in
the Total Portfolio is primarily attributable to reduced
occupancy in the Core Portfolio from 91.8% at January 1,
2002 to 86.5% at September 30, 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 and
Core Portfolio primarily due to a decrease in real estate taxes
in the California regions of approximately $12.3 million
and the Houston region of approximately $5.3 million,
partially offset by an increase in real estate taxes in the
New York region of approximately $5.5 million.



| |                            
| | ---------------------------
| | Property Operating Expenses

For the Core Portfolio, property operating
expenses decreased primarily as a result of lower utility
expense of approximately $6.2 million and lower insurance
expense of approximately $8.7 million primarily as a result
of changes in our insurance program and favorable loss
experience to date. In addition, for the Core Portfolio,
maintenance expense decreased by approximately $9.6 million
primarily due to lower occupancy and new contracts that were
renegotiated as part of our EOPlus initiative. Payroll expense
decreased by approximately $2.7 million due to staff
reductions. These decreases in property operating expenses were
partially offset by severance expense of approximately
$2.2 million incurred in the nine months ended
September 30, 2003. The decrease in property operating
expenses was also partially offset by increases in property
operating general and administrative expense which includes
legal, advertising, leasing and payroll.



| |                                                  
| | -------------------------------------------------
| | Corporate General and Administrative
    Expenses

We incurred approximately $4.2 million of
severance expense in the nine months ended September 30,
2003 compared to $7.4 million in the nine months ended
September 30, 2002. The severance expense consists of the
accelerated vesting of share options and restricted shares as
well as cash payments.



| |                          
| | -------------------------
| | Interest/ Dividend Income

Interest and dividend income decreased for the
Total Portfolio by approximately $6.7 million primarily
from interest and dividends from various notes receivable and
investments, which either matured or were redeemed.



| |                                                   
| | --------------------------------------------------
| | Realized Gain on Sale of Marketable
    Securities

During 2002, we entered into an early lease
termination with Inktomi Corporation for a 398,460-square-foot
building in Redwood Shores, California. As part of the
consideration for the lease termination, we received five
million shares of Inktomi Corporation common stock. These
securities were sold during the first quarter of 2003 at a gain
of approximately $8.1 million.

32



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##### Table of Contents





| |                 
| | ----------------
| | Interest Expense

Interest expense for the Total Portfolio
increased primarily as a result of higher average debt balances
outstanding during the period and a $9.5 million decrease
in capitalized interest.



| |             
| | ------------
| | Income Taxes

In 2002, we incurred approximately
$5.0 million of income taxes as a result of a
$40.0 million lease termination in the first quarter of
2002. (See Income from Investment in Unconsolidated Joint
Ventures below).



| |                                                             
| | ------------------------------------------------------------
| | 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 $46.1 million to
$2.7 million and a decrease in property operating revenues
at the Core Portfolio, partially offset by a $2.6 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 is primarily attributable to reduced
occupancy and decreased average rental rates on new leases as
compared to average rental rates on expiring leases.



| |                        
| | -----------------------
| | Discontinued Operations

The increase in discontinued operations is
primarily due to the $45.4 million gain on the sale of the
properties sold during the current period as compared to the
$8.9 million gain on the sale of the properties sold during
the prior period. The net income of properties sold since
January 1, 2002 is included in discontinued operations up
to the respective disposition date.

33



---



##### Table of Contents



Discontinued Operations

The net income and gain/(loss) on sales of real
estate for properties sold subsequent to December 31, 2001
are 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 three months       |        |       | For the nine months |  
|                                                                           |                  | ended September 30,        |        |       | ended September 30, |  
|                                                                           |                  |                            |        |       |                     |  
|(Dollars in thousands)                                                     |                  | 2003                       |        |       | 2002                |   |        | 2003   |      |   | 2002   |       
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|Total revenues                                                             |                  | $                          | 3,103  |       |                     | $ | 24,626 |        |      | $ | 24,208 |        |    | $ | 80,048 |       
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|Expenses:                                                                  |                  |                            |        |       |                     |   |        |        |      |   |        |        |    |   |        |       
|Depreciation and amortization                                              |                  |                            | 380    |       |                     |   | 4,214  |        |      |   | 3,900  |        |    |   | 13,150 |       
|Property operating                                                         |                  |                            | 136    |       |                     |   | 9,239  |        |      |   | 7,528  |        |    |   | 27,287 |       
|Ground rent                                                                |                  |                            |       |       |                     |   | 30     |        |      |   | 18     |        |    |   | 134    |       
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|                                                                           | Total expenses   |                            |        | 516   |                     |   |        | 13,483 |      |   |        | 11,446 |    |   |        | 40,571 |   
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|                                                                           | Operating income |                            |        | 2,587 |                     |   |        | 11,143 |      |   |        | 12,762 |    |   |        | 39,477 |   
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|Other income/expense:                                                      |                  |                            |        |       |                     |   |        |        |      |   |        |        |    |   |        |       
|Interest/dividend income                                                   |                  |                            |       |       |                     |   | 38     |        |      |   | 7      |        |    |   | 63     |       
|Interest expense                                                           |                  |                            |       |       |                     |   | (306   | )      |      |   | (10    | )      |    |   | (10    | )     
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|                                                                           |                  | Total other income/expense |        |       |                    |   |        |        | (268 | ) |        |        | (3 | ) |        |        | 53 | 
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|Income before income taxes and net (loss)/gain on
    sales of real estate |                  |                            | 2,587  |       |                     |   | 10,875 |        |      |   | 12,759 |        |    |   | 39,530 |       
|Income taxes                                                               |                  |                            | (13    | )     |                     |   |       |        |      |   | (15    | )      |    |   | (213   | )     
|Net (loss)/gain on sales of real estate                                    |                  |                            | (6,326 | )     |                     |   | 6,382  |        |      |   | 45,399 |        |    |   | 8,872  |       
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|Net (loss)/income                                                          |                  | $                          | (3,752 | )     |                     | $ | 17,257 |        |      | $ | 58,143 |        |    | $ | 48,189 |       
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       
|Property net operating income from discontinued
    operations             |                  | $                          | 2,967  |       |                     | $ | 15,387 |        |      | $ | 16,680 |        |    | $ | 52,761 |       
|                                                                           |                  |                            |        |       |                     |   |        |        |      |   |        |       



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

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 leases. Historically, 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 leasing costs and
tenant and capital improvements for operating properties as well
as distributions. During the nine months ended
September 30, 2003, our net cash flow provided by operating
activities (excluding changes in rents receivable, prepaid
expenses and other assets, accounts payable and accrued
liabilities and other liabilities), was insufficient to meet all
of these cash needs (including the unit dividend declared for
the third quarter 2003) by approximately $71 million. We
funded this shortfall primarily with a combination of borrowings
under our line of credit and proceeds from property
dispositions. If our net cash from operating activities
continues to decline and tenant improvements and leasing costs
continue at these high levels, and if Equity Offices Board
of Trustees continues to declare distributions on our units at
current levels, we expect that shortfalls would continue into
subsequent periods and that we would fund these shortfalls in a
similar manner. We currently anticipate that this shortfall for
the full year ending December 31, 2003, will be in the
range of $100

34



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##### Table of Contents



to $150 million. Beyond this, we have
$1.9 billion of debt maturing through December 31,
2004. We believe that net cash provided by operating activities,
draws under our line of credit, proceeds from other financing
sources 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 and to
maintain unit dividends at current levels, if Equity
Offices Board of Trustees continues to declare dividends
at this level.


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

In order to qualify as a REIT for federal income
tax purposes, Equity Office must distribute at least 90% of its
taxable income (excluding capital gains) to its shareholders.
Our partnership agreement generally requires us to distribute
substantially all of the net cash from operations each quarter
and to make reasonable efforts to distribute to Equity Office
enough cash for it to meet the 90% distribution requirement.
Accordingly, we currently intend, although we are not legally
obligated, to continue to make regular quarterly distributions
to holders of Units and preferred units.

The declaration of dividends on units is in the
discretion of Equity Offices Board of Trustees, which
decision is made from time to time by the Board of Trustees
based on then prevailing circumstances. For 2003, the Board of
Trustees declared dividends on preferred units as reflected
below:

|                       |   |                         |   |         | 
|---------------------- | - | ----------------------- | - | ------- | 
|                       |   | Annualized Distribution |  
|Security               |   | Per Unit                |  
|                       |   |                         |  
|Preferred Unit Series: |   |                         |   |        
|                       | B |                         | $ | 2.625   | 
|                       | C |                         | $ | 2.15625 | 
|                       | G |                         | $ | 1.9375  | 

Equity Offices Board of Trustees also
declared dividends on the units for the first three quarters of
2003, at the rate of $.50 per unit per quarter. This rate, if
continued, would annualize to a distribution of $2.00 per unit
for a full calendar year.

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

35



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##### Table of Contents





| |                        
| | -----------------------
| | Contractual Obligations

As of September 30, 2003, we were subject to
certain contractual payment obligations as described in the
table below. We were not subject to material capital lease
obligations or unconditional purchase obligations as of
September 30, 2003.

|                                                            |                    |                               |           |           |            |  |        |         |         |  |         |         |           |      |         |         |           |  |         |            |           |  |        |         |           |  |           |           |           | 
|----------------------------------------------------------- | ------------------ | ----------------------------- | --------- | --------- | ---------- |  | ------ | ------- | ------- |  | ------- | ------- | --------- | ---- | ------- | ------- | --------- |  | ------- | ---------- | --------- |  | ------ | ------- | --------- |  | --------- | --------- | --------- | 
|                                                            |                    |                              
|                                                            |                    | Payments Due by Period        |          
|                                                            |                    |                               |          
|                                                            |                    |                               |           | Through   |            |  |       
|Contractual Obligations:                                    |                    |                               |           | Remainder |            |  |       
|(Dollars in thousands)                                      |                    | Total                         |           |           | of 2003    |  |        | 2004    |         |  | 2005    |         |           | 2006 |         |         | 2007      |  |         | Thereafter |          
|                                                            |                    |                               |           |           |            |  |        |         |         |  |         |         |           |      |         |         |           |  |         |            |          
|Long-term debt:                                             |                    |                               |           |           |            |  |        |         |         |  |         |         |           |      |         |         |           |  |         |            |           |  |        |         |           |  |           |          
|                                                            | Mortgage debt(1)   |                               | $         | 2,420,540 |            |  | $      | 10,963  |         |  | $       | 455,762 |           |      | $       | 568,786 |           |  | $       | 343,878    |           |  | $      | 237,024 |           |  | $         | 804,127   |          
|                                                            | Unsecured notes(2) |                               |           | 9,216,500 |            |  |        | 400,000 |         |  |         | 880,000 |           |      |         | 675,000 |           |  |         | 650,000    |           |  |        | 976,500 |           |  |           | 5,635,000 |          
|Line of Credit                                              |                    |                               | 421,000   |           |            |  |       |         |         |  |        |         |           |      |        |         |           |  | 421,000 |            |           |  |       |         |           |  |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                    |                               | 799,203   |           |            |  | 1,697  |         |         |  | 117,153 |         |           |      | 466,754 |         |           |  | 52,283  |            |           |  | 2,622  |         |           |  | 158,694   |          
|Ground leases                                               |                    |                               | 1,265,019 |           |            |  | 4,751  |         |         |  | 16,565  |         |           |      | 16,631  |         |           |  | 16,730  |            |           |  | 16,628 |         |           |  | 1,193,714 |          
|Share of ground leases of unconsolidated joint
    ventures |                    |                               | 128,870   |           |            |  | 304    |         |         |  | 1,216   |         |           |      | 1,216   |         |           |  | 1,258   |            |           |  | 1,294  |         |           |  | 123,582   |          
|Construction contracts on developments                      |                    |                               | 22,064    |           |            |  | 10,247 |         |         |  | 11,817  |         |           |      |        |         |           |  |        |            |           |  |       |         |           |  |          |          
|                                                            |                    |                               |           |           |            |  |        |         |         |  |         |         |           |      |         |         |           |  |         |            |          
|                                                            |                    | Total Contractual Obligations |           | $         | 14,273,196 |  |        | $       | 427,962 |  |         | $       | 1,482,513 |      |         | $       | 1,728,387 |  |         | $          | 1,485,149 |  |        | $       | 1,234,068 |  |           | $         | 7,915,117 | 
|                                                            |                    |                               |           |           |            |  |        |         |         |  |         |         |           |      |         |         |           |  |         |            |          

|                                                            |                 |                                       |      |           |         |   |   |      |      |   |      |      |      |      |      |      |      |   |      |            |      |   |   |      |      |   |      |      |      |  
|----------------------------------------------------------- | --------------- | ------------------------------------- | ---- | --------- | ------- | - | - | ---- | ---- | - | ---- | ---- | ---- | ---- | ---- | ---- | ---- | - | ---- | ---------- | ---- | - | - | ---- | ---- | - | ---- | ---- | ---- | -
|                                                            |                 |                                      
|                                                            |                 | Payments Due by Period                |     
|                                                            |                 |                                       |     
|Weighted Average Interest Rates on                          |                 |                                       |      | Through   |         |   |  
|Maturing Debt:                                              |                 |                                       |      | Remainder |         |   |  
|(Dollars in thousands)                                      |                 | Total                                 |      |           | of 2003 |   |   | 2004 |      |   | 2005 |      |      | 2006 |      |      | 2007 |   |      | Thereafter |     
|                                                            |                 |                                       |      |           |         |   |   |      |      |   |      |      |      |      |      |      |      |   |      |            |     
|Long-term debt:                                             |                 |                                       |      |           |         |   |   |      |      |   |      |      |      |      |      |      |      |   |      |            |      |   |   |      |      |   |      |     
|                                                            | Mortgage debt   |                                       |      | 7.61      | %       |   |   |     |      |   |      | 7.11 | %    |      |      | 7.87 | %    |   |      | 7.15       | %    |   |   | 7.87 | %    |   |      | 7.79 | %   
|                                                            | Unsecured notes |                                       |      | 6.98      | %       |   |   | 7.55 | %    |   |      | 5.42 | %    |      |      | 5.67 | %    |   |      | 7.52       | %    |   |   | 7.52 | %    |   |      | 7.18 | %   
|Line of credit                                              |                 |                                       | 2.11 | %         |         |   |  |      |      |   |     |      |      |      |     |      |      |   | 2.11 | %          |      |   |  |      |      |   |     |     
|Share of mortgage debt of unconsolidated joint
    ventures |                 |                                       | 6.20 | %         |         |   |  |      |      |   | 1.84 | %    |      |      | 7.29 | %    |      |   | 7.67 | %          |      |   |  |      |      |   | 5.57 | %   
|                                                            |                 |                                       |      |           |         |   |   |      |      |   |      |      |      |      |      |      |      |   |      |            |     
|                                                            |                 | Total Weighted Average Interest Rates |      |           | 6.89    | % |   |      | 7.55 | % |      |      | 5.65 | %    |      |      | 6.83 | % |      |            | 5.89 | % |   |      | 7.59 | % |      |      | 7.22 | %
|                                                            |                 |                                       |      |           |         |   |   |      |      |   |      |      |      |      |      |      |      |   |      |            |     






|    |                                                                    
|--- | -------------------------------------------------------------------
|(1) | Balance excludes a net unamortized discount of
    $(13.4) million.
|   
|(2) | Balance excludes a net unamortized premium of
    $19.1 million.   



| |                                     
| | ------------------------------------
| | Forward-Starting Interest Rate Swaps

As of September 30, 2003 and
December 31, 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 September 30, 2003 and December 31, 2002
represented a net liability to us of approximately
$26.8 million (approximately $5.3 million is recorded
in other assets and $32.1 million is recorded in other
liabilities) and $18.6 million (all of which is included in
other liabilities), respectively. No hedge ineffectiveness has
been recorded in earnings as these swaps were perfectly
effective. As of October 31, 2003, the market value of
these forward-starting interest rate swaps represented a net
liability to us of approximately $0.1 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
entitled to receive settlement proceeds from the counterparties.
In accordance with FASB

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##### Table of Contents



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 note offering. 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.




| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements



| |            
| | -----------
| | Commitments

In connection with the acquisition of the
remaining investment in Key Center (see Note 6 
Investments in Unconsolidated Joint Ventures), WRALPs
revolving line of credit (and our guarantee of their line of
credit) was terminated and replaced with a $6.7 million
term loan. We have guaranteed payment of WRALPs
$6.7 million term loan and any replacement credit facility
through 2007. The term loan has a balance of $6.7 million
at September 30, 2003. In accordance with FASB
Interpretation No. 45 (FIN 45)
Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness to
Others, the fair value of our guarantee was determined to be
approximately $0.2 million which was recorded as an
additional cost to acquiring the remaining interest in Key
Center and is also classified in other liabilities.



| |               
| | --------------
| | Debt Financing

The table below summarizes our consolidated
mortgage debt, unsecured notes and line of credit indebtedness
at September 30, 2003 and December 31, 2002. The
amounts shown are net of unamortized discounts on mortgage debt
of approximately $(13.4) million and $(12.6) million,
respectively, and unamortized premiums on unsecured notes of
$19.1 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.

|                                         |                  |                         |   |            |              |   |   |            |            |  
|---------------------------------------- | ---------------- | ----------------------- | - | ---------- | ------------ | - | - | ---------- | ---------- | -
|                                         |                  | September 30,           |   |            | December 31, |  
|(Dollars in thousands)                   |                  | 2003                    |   |            | 2002         |  
|                                         |                  |                         |   |            |              |  
|Balance                                  |                  |                         |   |            |              |   |   |           
|                                         | Fixed rate       |                         | $ | 11,606,736 |              |   | $ | 11,529,541 |           
|                                         | Variable rate(a) |                         |   | 457,000    |              |   |   | 241,700    |           
|                                         |                  |                         |   |            |              |  
|                                         |                  | Total                   |   | $          | 12,063,736   |   |   | $          | 11,771,241 |  
|                                         |                  |                         |   |            |              |  
|Percent of total debt                    |                  |                         |   |            |              |   |   |           
|                                         | Fixed rate       |                         |   | 96.2       | %            |   |   | 97.9       | %         
|                                         | Variable rate(a) |                         |   | 3.8        | %            |   |   | 2.1        | %         
|                                         |                  |                         |   |            |              |  
|                                         |                  | Total                   |   |            | 100.0        | % |   |            | 100.0      | %
|                                         |                  |                         |   |            |              |  
|Effective interest rate at end of period |                  |                         |   |            |              |   |   |           
|                                         | Fixed rate       |                         |   | 7.13       | %            |   |   | 7.17       | %         
|                                         | Variable rate(a) |                         |   | 2.08       | %            |   |   | 2.37       | %         
|                                         |                  |                         |   |            |              |  
|                                         |                  | Effective interest rate |   |            | 6.93         | % |   |            | 7.08       | %
|                                         |                  |                         |   |            |              |  



---



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



| |              
| | -------------
| | Mortgage Debt

As of September 30, 2003, total mortgage
debt (excluding our share of the mortgage debt encumbering
unconsolidated properties of approximately $799.2 million)
consisted of approximately $2,371.1 million of fixed rate
debt, net of an unamortized discount of approximately
$13.4 million, with a weighted average

37



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##### Table of Contents



interest rate of approximately 7.70% and
$36.0 million of variable rate debt based on LIBOR plus
55 basis points (1.67% as of September 30, 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 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 September 30,
2003, $421.0 million was outstanding under this facility.
The line of credit bears interest at LIBOR plus 60 basis
points and an annual facility fee of 20 basis points and matures
in May 2006. The effective rate on the line of credit at
September 30, 2003 was approximately 2.11%.



| |                
| | ---------------
| | Unsecured Notes

Unsecured notes increased to approximately
$9,235.6 million at September 30, 2003 compared to
approximately $9,057.7 million at December 31, 2002,
as a result of the issuance in January 2003 of $500 million
5.875% unsecured notes due January 15, 2013, partially
offset by the repayment of $300 million 6.375% unsecured
notes and amortization of discounts and premiums.

The table below summarizes the unsecured notes
outstanding as of September 30, 2003:

|                          |  |                        |      |   |           |  |      |           |  |   |           |     |  |  |          | 
|------------------------- |  | ---------------------- | ---- | - | --------- |  | ---- | --------- |  | - | --------- | --- |  |  | -------- | 
|                          |  | Coupon                 |      |   | Effective |  |      | Principal |  |   | Maturity  |    
|Original Term             |  | Rate                   |      |   | Rate(a)   |  |      | Balance   |  |   | Date      |    
|                          |  |                        |      |   |           |  |      |           |  |   |           |    
|                          |  |                       
|                          |  | (Dollars in thousands) |     
|3 Year Unsecured Notes    |  |                        | 7.38 | % |           |  | 7.55 | %         |  | $ | 400,000   | (b) |  |  | 11/15/03 | 
|5 Year Unsecured Notes    |  |                        | 6.50 | % |           |  | 4.59 | %         |  |   | 300,000   | (b) |  |  | 01/15/04 | 
|9 Year Unsecured Notes    |  |                        | 6.90 | % |           |  | 6.27 | %         |  |   | 100,000   | (b) |  |  | 01/15/04 | 
|5 Year Unsecured Notes    |  |                        | 6.80 | % |           |  | 6.10 | %         |  |   | 200,000   | (b) |  |  | 05/01/04 | 
|6 Year Unsecured Notes    |  |                        | 6.50 | % |           |  | 5.31 | %         |  |   | 250,000   | (b) |  |  | 06/15/04 | 
|7 Year Unsecured Notes    |  |                        | 7.24 | % |           |  | 7.26 | %         |  |   | 30,000    | (b) |  |  | 09/01/04 | 
|8 Year Unsecured Notes    |  |                        | 6.88 | % |           |  | 6.40 | %         |  |   | 125,000   |     |  |  | 02/01/05 | 
|7 Year Unsecured Notes    |  |                        | 6.63 | % |           |  | 4.99 | %         |  |   | 400,000   |     |  |  | 02/15/05 | 
|7 Year Unsecured Notes    |  |                        | 8.00 | % |           |  | 6.49 | %         |  |   | 100,000   |     |  |  | 07/19/05 | 
|8 Year Unsecured Notes    |  |                        | 7.36 | % |           |  | 7.69 | %         |  |   | 50,000    |     |  |  | 09/01/05 | 
|6 Year Unsecured Notes    |  |                        | 8.38 | % |           |  | 7.65 | %         |  |   | 500,000   |     |  |  | 03/15/06 | 
|9 Year Unsecured Notes    |  |                        | 7.44 | % |           |  | 7.74 | %         |  |   | 50,000    |     |  |  | 09/01/06 | 
|10 Year Unsecured Notes   |  |                        | 7.13 | % |           |  | 6.74 | %         |  |   | 100,000   |     |  |  | 12/01/06 | 
|9 Year Unsecured Notes    |  |                        | 7.00 | % |           |  | 6.80 | %         |  |   | 1,500     |     |  |  | 02/02/07 | 
|9 Year Unsecured Notes    |  |                        | 6.88 | % |           |  | 6.83 | %         |  |   | 25,000    |     |  |  | 04/30/07 | 
|9 Year Unsecured Notes    |  |                        | 6.76 | % |           |  | 6.76 | %         |  |   | 300,000   |     |  |  | 06/15/07 | 
|10 Year Unsecured Notes   |  |                        | 7.41 | % |           |  | 7.70 | %         |  |   | 50,000    |     |  |  | 09/01/07 | 
|7 Year Unsecured Notes    |  |                        | 7.75 | % |           |  | 7.91 | %         |  |   | 600,000   |     |  |  | 11/15/07 | 
|10 Year Unsecured Notes   |  |                        | 6.75 | % |           |  | 6.97 | %         |  |   | 150,000   |     |  |  | 01/15/08 | 
|10 Year Unsecured Notes   |  |                        | 6.75 | % |           |  | 7.01 | %         |  |   | 300,000   |     |  |  | 02/15/08 | 
|8 Year Unsecured Notes(c) |  |                        | 7.25 | % |           |  | 7.64 | %         |  |   | 325,000   |     |  |  | 11/15/08 | 
|10 Year Unsecured Notes   |  |                        | 6.80 | % |           |  | 6.94 | %         |  |   | 500,000   |     |  |  | 01/15/09 | 
|10 Year Unsecured Notes   |  |                        | 7.25 | % |           |  | 7.14 | %         |  |   | 200,000   |     |  |  | 05/01/09 | 
|11 Year Unsecured Notes   |  |                        | 7.13 | % |           |  | 6.97 | %         |  |   | 150,000   |     |  |  | 07/01/09 | 
|10 Year Unsecured Notes   |  |                        | 8.10 | % |           |  | 8.22 | %         |  |   | 360,000   |     |  |  | 08/01/10 | 
|10 Year Unsecured Notes   |  |                        | 7.65 | % |           |  | 7.20 | %         |  |   | 200,000   |     |  |  | 12/15/10 | 
|10 Year Unsecured Notes   |  |                        | 7.00 | % |           |  | 6.83 | %         |  |   | 1,100,000 |     |  |  | 07/15/11 | 
|10 Year Unsecured Notes   |  |                        | 6.75 | % |           |  | 7.02 | %         |  |   | 500,000   |     |  |  | 02/15/12 | 
|10 Year Unsecured Notes   |  |                        | 5.88 | % |           |  | 5.98 | %         |  |   | 500,000   |     |  |  | 01/15/13 | 
|20 Year Unsecured Notes   |  |                        | 7.88 | % |           |  | 8.08 | %         |  |   | 25,000    |     |  |  | 12/01/16 | 
|20 Year Unsecured Notes   |  |                        | 7.35 | % |           |  | 8.08 | %         |  |   | 200,000   |     |  |  | 12/01/17 | 
|20 Year Unsecured Notes   |  |                        | 7.25 | % |           |  | 7.54 | %         |  |   | 250,000   |     |  |  | 02/15/18 | 
|30 Year Unsecured Notes   |  |                        | 7.50 | % |           |  | 8.24 | %         |  |   | 150,000   |     |  |  | 10/01/27 | 

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|              |                         |                        |           |      |           |   |  |           |      |   |          |         |           |  |  |          |  | 
|------------- | ----------------------- | ---------------------- | --------- | ---- | --------- | - |  | --------- | ---- | - | -------- | ------- | --------- |  |  | -------- |  | 
|              |                         | Coupon                 |           |      | Effective |   |  | Principal |      |   | Maturity |        
|Original Term |                         | Rate                   |           |      | Rate(a)   |   |  | Balance   |      |   | Date     |        
|              |                         |                        |           |      |           |   |  |           |      |   |          |        
|              |                         |                       
|              |                         | (Dollars in thousands) |          
|              | 30 Year Unsecured Notes |                        |           | 7.25 | %         |   |  | 7.31      | %    |   |          | 225,000 |           |  |  | 06/15/28 | 
|              | 30 Year Unsecured Notes |                        |           | 7.50 | %         |   |  | 7.55      | %    |   |          | 200,000 |           |  |  | 04/19/29 | 
|              | 30 Year Unsecured Notes |                        |           | 7.88 | %         |   |  | 7.94      | %    |   |          | 300,000 |           |  |  | 07/15/31 | 
|              |                         |                        |           |      |           |   |  |           |      |   |          |        
|              |                         | Total                  |           |      | 7.15      | % |  |           | 6.98 | % |          |         | 9,216,500 |  |  |          |  | 
|              |                         |                        |           |      |           |   |  |           |      |   |          |        
|Net premium   |                         |                        | 19,124    |      |           |   |  |          
|              |                         |                        |           |      |           |  
|Total         |                         | $                      | 9,235,624 |      |           |   |  |          
|              |                         |                        |           |      |           |  



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, $1.28 billion of unsecured
    notes will mature and become payable. We anticipate repaying the
    maturing unsecured notes with our line of credit, proceeds from
    debt and/or equity offerings or proceeds from property
    dispositions.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(c) |  | The notes are exchangeable into Equity Office
    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. Upon exchange of a $1,000 note for
    Common Shares of Equity Office, we would issue a corresponding
    number of Units to Equity Office on a one-for-one basis.

As of October 31, 2003, $1.6 billion
was available under a previously filed $4.0 billion shelf
registration statement for issuance of debt.



| |                                                            
| | -----------------------------------------------------------
| | Restrictions and Covenants under Unsecured
    Indebtedness

Agreements or instruments relating to our line 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 September 30, 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
September 30, 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%                                                |  |                    | 48%  | 
|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 |  |                    | 2.47 | 
|Total Unencumbered Assets to Unsecured Debt may
    not be less than 150%(b)                                 |  |                    | 214% | 



---



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

39



---



##### Table of Contents





| |                  
| | -----------------
| | Equity Securities

The following table presents the changes in
Equity Offices issued and outstanding Common Shares and
EOP Partnerships issued and outstanding Units (exclusive
of Units owned by Equity Office) since June 30, 2003:

|                                  |                                                                     |               |             |          |       |  |            |          |   |  |             |          |  
|--------------------------------- | ------------------------------------------------------------------- | ------------- | ----------- | -------- | ----- |  | ---------- | -------- | - |  | ----------- | -------- | -
|                                  |                                                                     | Common Shares |             |          | Units |  |            | Total    |  
|                                  |                                                                     |               |             |          |       |  |            |          |  
|Outstanding at June 30, 2003      |                                                                     |               | 399,263,583 |          |       |  | 49,452,596 |          |   |  | 448,716,179 |         
|                                  | Share options exercised                                             |               |             | 582,272  |       |  |            |         |   |  |             | 582,272  |  
|                                  | Common Shares repurchased/retired(a)                                |               |             | (375,000 | )     |  |            |         |   |  |             | (375,000 | )
|                                  | Units redeemed for cash                                             |               |             |         |       |  |            | (127,028 | ) |  |             | (127,028 | )
|                                  | Restricted shares and share awards issued, net of
    cancellations |               |             | (1,757   | )     |  |            |         |   |  |             | (1,757   | )
|                                  |                                                                     |               |             |          |       |  |            |          |  
|Outstanding at September 30, 2003 |                                                                     |               | 399,469,098 |          |       |  | 49,325,568 |          |   |  | 448,794,666 |         
|                                  |                                                                     |               |             |          |       |  |            |          |  



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Equity Office repurchased 375,000 Common Shares
    at an average price of $26.78 per share for a total of
    $10.0 million in the aggregate. In connection with the
    repurchases,we purchased from Equity Office and retired a
    corresponding number of Units for an aggregate purchase price
    equal to the aggregate purchase price for all Common Share
    repurchases.

Cash Flows

The following summary discussion of our cash
flows is based on the consolidated statements of cash flows in
Item 1.  Financial Statements and is
not meant to be an all-inclusive discussion of the changes in
our cash flows for the periods presented below.



| |                                         
| | ----------------------------------------
| | Nine Months Ended September 30,
    2003

Cash and cash equivalents increased by
approximately $47.3 million to approximately
$105.8 million at September 30, 2003, compared to
$58.5 million at December 31, 2002. This increase was
the result of approximately $827.8 million provided by
operating activities, approximately $63.0 million provided
by investing activities (consisting primarily of approximately
$399.0 million provided by property dispositions partially
offset by approximately $372.6 million used for capital and
tenant improvements and lease acquisition costs) and
approximately $843.5 million used for financing activities
(consisting primarily of approximately $613.5 million used
for Common Share and preferred share repurchases and
approximately $453.1 used for distributions to unitholders).

Additional Items



| |                        
| | -----------------------
| | Developments in Process

Developments in process decreased from
approximately $284.7 million at December 31, 2002 to
approximately $61.3 million at September 30, 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 was approximately
$237.6 million) partially offset by a previously
operational property placed into development during 2003
(Cambridge Science Center of which total costs incurred at
September 30, 2003 was approximately $24.8 million).



| |                     
| | --------------------
| | Distribution Payable

Distribution payable increased by approximately
$221.8 million to approximately $227.5 million at
September 30, 2003, compared to $5.7 million at
December 31, 2002. This increase was a result of the unit
distribution declaration for the third quarter 2003 which was
paid in October 2003 and, therefore, accrued for at
September 30, 2003. The fourth quarter 2002 distribution
was declared and paid in the fourth quarter of 2002 and thus not
accrued for at December 31, 2002.

40



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##### Table of Contents





| |                      
| | ---------------------
| | Deferred Compensation

Deferred compensation decreased by approximately
$7.4 million to approximately $8.1 million at
September 30, 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

Since December 31, 2002 there were no
material changes in the information regarding market risk that
was provided in the Form 10-K for the year ended
December 31, 2002, except as noted below:



| |                              
| | -----------------------------
| | Interest Rate Risk 
    Debt

As of September 30, 2003, the fair value of
our fixed-rate debt was approximately $1.5 billion higher
than the book value of approximately $11.6 billion primarily due
to the general decrease in market interest rates on secured and
unsecured debt.



| |                                         
| | ----------------------------------------
| | Forward-Starting Interest Rate
    Swaps

See  Contractual
Obligations for the current status of our outstanding
derivative financial instruments.

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 costs, 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 three months ended |   |                | For the three months ended | 
|                       |                        | September 30, 2003         |   |                | September 30, 2002         | 
|                       |                        |                            |   |                |                            | 
|                       |                        |                            |   | Unconsolidated |                            |  |   |              | Unconsolidated | 
|                       |                        | Consolidated               |   |                | Properties (EOP            |  |   | Consolidated |                |  | Properties (EOP      |       
|(Dollars in thousands) |                        | Properties                 |   |                | Partnerships share)       |  |   | Properties   |                |  | Partnerships share) |       
|                       |                        |                            |   |                |                            |  |   |              |                |  |                      |       
|Capital Improvements:  |                        |                            |   |                |                            |  |   |              |                |  |                      |        |        |  |   |       
|                       | Capital improvements   |                            | $ | 14,633         |                            |  | $ | 1,881        |                |  | $                    | 11,418 |        |  | $ | 1,729  |       
|                       | Development costs      |                            |   | 23,500         |                            |  |   | 1,336        |                |  |                      | 30,668 |        |  |   | 36,438 |       
|                       | Redevelopment costs(a) |                            |   | 1,668          |                            |  |   |             |                |  |                      | 8,198  |        |  |   |       |       
|                       |                        |                            |   |                |                            |  |   |              |                |  |                      |       
|                       |                        | Total capital improvements |   | $              | 39,801                     |  |   | $            | 3,217          |  |                      | $      | 50,284 |  |   | $      | 38,167 | 
|                       |                        |                            |   |                |                            |  |   |              |                |  |                      |       

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|                       |                        |                            |   |                |                           |  |   |              |                |  |                      |        |         |  |   |         |         | 
|---------------------- | ---------------------- | -------------------------- | - | -------------- | ------------------------- |  | - | ------------ | -------------- |  | -------------------- | ------ | ------- |  | - | ------- | ------- | 
|                       |                        |                            |   |               
|                       |                        | For the nine months ended  |   |                | For the nine months ended | 
|                       |                        | September 30, 2003         |   |                | September 30, 2002        | 
|                       |                        |                            |   |                |                           | 
|                       |                        |                            |   | Unconsolidated |                           |  |   |              | Unconsolidated | 
|                       |                        | Consolidated               |   |                | Properties (EOP           |  |   | Consolidated |                |  | Properties (EOP      |       
|(Dollars in thousands) |                        | Properties                 |   |                | Partnerships share)      |  |   | Properties   |                |  | Partnerships share) |       
|                       |                        |                            |   |                |                           |  |   |              |                |  |                      |       
|Capital Improvements:  |                        |                            |   |                |                           |  |   |              |                |  |                      |        |         |  |   |        
|                       | Capital improvements   |                            | $ | 28,440         |                           |  | $ | 3,557        |                |  | $                    | 26,395 |         |  | $ | 2,372   |        
|                       | Development costs      |                            |   | 69,267         |                           |  |   | 5,667        |                |  |                      | 85,929 |         |  |   | 101,891 |        
|                       | Redevelopment costs(a) |                            |   | 7,213          |                           |  |   |             |                |  |                      | 26,688 |         |  |   |        |        
|                       |                        |                            |   |                |                           |  |   |              |                |  |                      |       
|                       |                        | Total capital improvements |   | $              | 104,920                   |  |   | $            | 9,224          |  |                      | $      | 139,012 |  |   | $       | 104,263 | 
|                       |                        |                            |   |                |                           |  |   |              |                |  |                      |       



---



|    |  |                                                                                                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Properties included in redevelopment costs 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).



| |                                          
| | -----------------------------------------
| | 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 took
occupancy during the period, regardless of when such costs were
actually paid, which is a useful measure of the total tenant
improvement and leasing costs for the periods presented. During
the third quarter 2003, we saw evidence suggesting that contract
rents may have begun to stabilize. Tenant improvements and lease
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
adjusted for the impact of tenant improvement costs, leasing
commissions and any free rent periods) on lease
renewals and retenanted properties. This adverse trend may
continue until market conditions improve.

|                                                         |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|-------------------------------------------------------- |  | ------------------------ | ------- | ---------- | ------------------------ | - | ----- | ----------- | ---------- | - | ----------- |  |  | - | ----- | 
|                                                         |  |                          |         |           
|                                                         |  | For the three months     |         |            | For the three months     |  
|                                                         |  | ended September 30, 2003 |         |            | ended September 30, 2002 |  
|                                                         |  |                          |         |            |                          |  
|                                                         |  |                          |         | Total Cost |                          |   |       |             | Total Cost |  
|                                                         |  |                          |         | per Square |                          |   |       |             | per Square |  
|(Dollars in thousands except per square foot amounts)    |  | Total Costs              |         |            | Foot Leased              |   |       | Total Costs |            |   | Foot Leased | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Consolidated Properties:                                 |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Office Properties:                                       |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|Renewals                                                 |  | $                        | 32,912  |            |                          | $ | 13.90 |             |            | $ | 16,189      |  |  | $ | 7.17  | 
|Retenanted                                               |  |                          | 97,650  |            |                          |   | 29.39 |             |            |   | 57,505      |  |  |   | 20.41 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 130,562 |            |                          | $ | 22.94 |             |            | $ | 73,694      |  |  | $ | 14.52 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Industrial Properties:                                   |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|Renewals                                                 |  | $                        | 555     |            |                          | $ | 3.85  |             |            | $ | 845         |  |  | $ | 4.06  | 
|Retenanted                                               |  |                          | 437     |            |                          |   | 2.40  |             |            |   | 227         |  |  |   | 1.87  | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 992     |            |                          | $ | 3.04  |             |            | $ | 1,072       |  |  | $ | 3.25  | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Unconsolidated Joint
    Ventures(a):                    |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Renewals                                                 |  | $                        | 2,261   |            |                          | $ | 20.10 |             |            | $ | 754         |  |  | $ | 15.77 | 
|Retenanted                                               |  |                          | 1,031   |            |                          |   | 18.92 |             |            |   | 1,696       |  |  |   | 17.48 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 3,292   |            |                          | $ | 19.71 |             |            | $ | 2,450       |  |  | $ | 16.91 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total Properties (renewals and retenanted
    combined): |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Office (consolidated and unconsolidated)                 |  | $                        | 133,854 |            |                          | $ | 22.85 |             |            | $ | 76,144      |  |  | $ | 14.59 | 
|Industrial                                               |  |                          | 992     |            |                          |   | 3.04  |             |            |   | 1,072       |  |  |   | 3.25  | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 134,846 |            |                          | $ | 21.80 |             |            | $ | 77,216      |  |  | $ | 13.92 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 

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|                                                         |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|-------------------------------------------------------- |  | ------------------------ | ------- | ---------- | ------------------------ | - | ----- | ----------- | ---------- | - | ----------- |  |  | - | ----- | 
|                                                         |  |                          |         |           
|                                                         |  | For the nine months      |         |            | For the nine months      |  
|                                                         |  | ended September 30, 2003 |         |            | ended September 30, 2002 |  
|                                                         |  |                          |         |            |                          |  
|                                                         |  |                          |         | Total Cost |                          |   |       |             | Total Cost |  
|                                                         |  |                          |         | per Square |                          |   |       |             | per Square |  
|(Dollars in thousands except per square foot amounts)    |  | Total Costs              |         |            | Foot Leased              |   |       | Total Costs |            |   | Foot Leased | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Consolidated Properties:                                 |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Office Properties:                                       |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|Renewals                                                 |  | $                        | 89,227  |            |                          | $ | 11.72 |             |            | $ | 46,402      |  |  | $ | 6.86  | 
|Retenanted                                               |  |                          | 176,248 |            |                          |   | 23.83 |             |            |   | 128,720     |  |  |   | 18.22 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 265,475 |            |                          | $ | 17.69 |             |            | $ | 175,122     |  |  | $ | 12.66 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Industrial Properties:                                   |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|Renewals                                                 |  | $                        | 1,036   |            |                          | $ | 3.35  |             |            | $ | 1,116       |  |  | $ | 1.29  | 
|Retenanted                                               |  |                          | 1,030   |            |                          |   | 3.07  |             |            |   | 467         |  |  |   | 2.52  | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 2,066   |            |                          | $ | 3.20  |             |            | $ | 1,583       |  |  | $ | 1.51  | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Unconsolidated Joint
    Ventures(a):                    |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Renewals                                                 |  | $                        | 12,150  |            |                          | $ | 30.43 |             |            | $ | 1,677       |  |  | $ | 6.82  | 
|Retenanted                                               |  |                          | 3,861   |            |                          |   | 27.49 |             |            |   | 3,357       |  |  |   | 13.64 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 16,011  |            |                          | $ | 27.87 | (b)         |            | $ | 5,034       |  |  | $ | 10.23 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total Properties (renewals and retenanted
    combined): |  |                          |         |            |                          |   |       |             |            |   |             |  |  |   |       | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Office (consolidated and unconsolidated)                 |  | $                        | 281,486 |            |                          | $ | 18.07 |             |            | $ | 180,156     |  |  | $ | 12.58 | 
|Industrial                                               |  |                          | 2,066   |            |                          |   | 3.20  |             |            |   | 1,583       |  |  |   | 1.51  | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 
|Total/ Weighted Average                                  |  | $                        | 283,552 |            |                          | $ | 17.47 |             |            | $ | 181,739     |  |  | $ | 11.82 | 
|                                                         |  |                          |         |            |                          |   |       |             |            |   |             | 



---



|    |  |                                                                                                                                                                                                                                                                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Represents our share of unconsolidated joint
    venture tenant improvement and leasing costs. All joint venture
    information included above is from office properties.                                                                                                                       
|   
|(b) |  | This amount is significantly higher than costs
    incurred in prior periods and may not be indicative of future
    lease costs. The higher costs were due to several leases that
    required significant tenant improvements. The weighted average
    lease term was approximately 7.0 years.

The above information includes capital
improvements, tenant improvements and leasing costs incurred for
leases which took occupancy during the period shown. The amounts
included in the consolidated statement of cash flows represent
the cash expenditures made during the period shown. The
differences between these amounts represent timing differences
between the date of the cash expenditure and the move-in date of
the tenant, as well as expenditures for corporate furniture,
fixtures and equipment, software, leasehold improvements and
other non-tenant related costs that are capitalized. For the
consolidated properties, the reconcilia-

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##### Table of Contents



tion between the amounts above and the amounts
disclosed in the consolidated statements of cash flows is as
follows:


|                                                                                                                  |                       |                      |         |         |                     |   |         |        |  |   |         |         |  |   |         |         | 
|----------------------------------------------------------------------------------------------------------------- | --------------------- | -------------------- | ------- | ------- | ------------------- | - | ------- | ------ |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                                                  |                       |                      |         |        
|                                                                                                                  |                       | For the three months |         |         | For the nine months |  
|                                                                                                                  |                       | ended September 30,  |         |         | ended September 30, |  
|                                                                                                                  |                       |                      |         |         |                     |  
|(Dollars in thousands)                                                                                            |                       | 2003                 |         |         | 2002                |   |         | 2003   |  |   | 2002    |        
|                                                                                                                  |                       |                      |         |         |                     |   |         |        |  |   |         |        
|Total capital improvements                                                                                        |                       | $                    | 39,801  |         |                     | $ | 50,284  |        |  | $ | 104,920 |         |  | $ | 139,012 |        
|Tenant improvements and leasing
    costs:                                                                        |                       |                      |         |         |                     |   |         |        |  |   |         |         |  |   |         |        
|                                                                                                                  | Office Properties     |                      |         | 130,562 |                     |   |         | 73,694 |  |   |         | 265,475 |  |   |         | 175,122 | 
|                                                                                                                  | Industrial Properties |                      |         | 992     |                     |   |         | 1,072  |  |   |         | 2,066   |  |   |         | 1,583   | 
|Expenditures for corporate furniture, fixtures
    and equipment, software, leasehold improvements and other      |                       |                      | 9,079   |         |                     |   | 1,538   |        |  |   | 17,450  |         |  |   | 3,844   |        
|Timing differences                                                                                                |                       |                      | (26,458 | )       |                     |   | (6,265  | )      |  |   | (17,282 | )       |  |   | (27,074 | )      
|                                                                                                                  |                       |                      |         |         |                     |   |         |        |  |   |         |        
|Total capital improvements, tenant improvements
    and leasing costs on the consolidated statement of cash flows |                       | $                    | 153,976 |         |                     | $ | 120,323 |        |  | $ | 372,629 |         |  | $ | 292,487 |        
|                                                                                                                  |                       |                      |         |         |                     |   |         |        |  |   |         |        
|Capital and tenant improvements from consolidated
    statement of cash flows                                     |                       |                      | 118,041 |         |                     |   | 92,858  |        |  |   | 264,628 |         |  |   | 223,299 |        
|Lease commissions and other costs from
    consolidated statement of cash flows                                   |                       |                      | 35,935  |         |                     |   | 27,465  |        |  |   | 108,001 |         |  |   | 69,188  |        
|                                                                                                                  |                       |                      |         |         |                     |   |         |        |  |   |         |        
|Total capital improvements, tenant improvements
    and leasing costs on the consolidated statement of cash flows |                       | $                    | 153,976 |         |                     | $ | 120,323 |        |  | $ | 372,629 |         |  | $ | 292,487 |        
|                                                                                                                  |                       |                      |         |         |                     |   |         |        |  |   |         |        

Developments

We own directly several properties in various
stages of development or pre-development. These developments are
funded by working capital and the line of credit. Specifically
identifiable direct acquisition, development and construction
costs are capitalized, including, where applicable, salaries and
related costs, real estate taxes and interest incurred in
developing the property. The properties under development and
all figures stated below are as of September 30, 2003.

|                            |  |           |         |  |          |                 |           |  |   |                        |       |  |          |       |  |           |         |  |            |   |         |  |  |  |    |  
|--------------------------- |  | --------- | ------- |  | -------- | --------------- | --------- |  | - | ---------------------- | ----- |  | -------- | ----- |  | --------- | ------- |  | ---------- | - | ------- |  |  |  | -- | -
|                            |  |           |         |  |          |                 |           |  |   |                       
|                            |  |           |         |  |          |                 |           |  |   | EOP Partnerships      |      
|                            |  | Estimated |         |  |          |                 |           |  |   |                        |       | 
|                            |  | Placed in |         |  |          |                 |           |  |   |                        | Costs |  |          | Total |  |           | Current | 
|                            |  | Service   |         |  |          |                 | Number of |  |   | Square                 |       |  | Incurred |       |  | Estimated |         |  | Percentage |  
|                            |  | Date(a)   |         |  | Location |                 | Buildings |  |   | Feet                   |       |  | To Date  |       |  | Costs(b)  |         |  | Leased     |  
|                            |  |           |         |  |          |                 |           |  |   |                        |       |  |          |       |  |           |         |  |            |  
|                            |  |           |         |  |          |                 |           |  |   |                       
|                            |  |           |         |  |          |                 |           |  |   | (Dollars in thousands) |      
|Wholly-Owned                |  |           |         |  |          |                 |           |  |   |                        |       |  |          |       |  |           |         |  |            |   |         |  |  |  |    |  
|                            |  |           |         |  |          |                 |           |  |   |                        |       |  |          |       |  |           |         |  |            |  
|Douglas Corporate Center II |  |           | 3Q/2003 |  |          | Roseville, CA   |           |  | 1 |                        |       |  | 108,000  |       |  | $         | 11,914  |  |            | $ | 16,800  |  |  |  | 31 | %
|Kruse Woods V               |  |           | 4Q/2003 |  |          | Lake Oswego, OR |           |  | 1 |                        |       |  | 184,000  |       |  |           | 24,597  |  |            |   | 33,900  |  |  |  | 50 | %
|                            |  |           |         |  |          |                 |           |  |   |                        |       |  |          |       |  |           |         |  |            |  
|Cambridge Science Center    |  |           | 1Q/2004 |  |          | Cambridge, MA   |           |  | 1 |                        |       |  | 131,000  |       |  |           | 24,814  |  |            |   | 50,200  |  |  |  | 0  | %
|                            |  |           |         |  |          |                 |           |  | 3 |                        |       |  | 423,000  |       |  | $         | 61,325  |  |            | $ | 100,900 |  |  |  | 30 | %
|                            |  |           |         |  |          |                 |           |  |   |                        |       |  |          |       |  |           |         |  |            |  






|    |  |                                                                                                                                                                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 entitlement process, both of which
are uncertain. These various sites include, among others: Russia
Wharf,

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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,
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 NE 8th Street, Bellevue, WA.


Subsequent Events

See Note 12  Subsequent Events
for transactions that occurred subsequent to September 30,
2003 through October 31, 2003.

Inflation

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

Funds From Operations
(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 a real estate company, 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 (also included are the three months
ended June 30, 2003 and March 31, 2003 for comparative
purposes):

|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |         |          |   |         |   |  |          |       |   |         |   |          |         |  |   |         |   |  |   |           |   |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------- | -------- | --------------------------------------- | - | ----- | ------- | -------- | - | ------- | - |  | -------- | ----- | - | ------- | - | -------- | ------- |  | - | ------- | - |  | - | --------- | - |  | - | ----- | -
|                                                                                                                                                                                                                                         |  |                                          |         |         
|                                                                                                                                                                                                                                         |  | For the three months ended September 30, |         |          | For the nine months ended September 30, |  
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |  
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |        
|                                                                                                                                                                                                                                         |  | 2003                                     |         |          | 2002                                    |   |       | 2003    |          |   | 2002    |  
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |         |          |   |         |  
|                                                                                                                                                                                                                                         |  |                                          |         | Per      |                                         |   |       |         | Per      |   |         |   |  | Per      |       |   |         |   | Per      |        
|                                                                                                                                                                                                                                         |  |                                          |         | Weighted |                                         |   |       |         | Weighted |   |         |   |  | Weighted |       |   |         |   | Weighted |        
|(Dollars in thousands, except per unit                                                                                                                                                                                                   |  |                                          |         | Average  |                                         |   |       |         | Average  |   |         |   |  | Average  |       |   |         |   | Average  |        
|amounts)                                                                                                                                                                                                                                 |  | Dollars                                  |         |          | Unit(b)                                 |   |       | Dollars |          |   | Unit(b) |   |  | Dollars  |       |   | Unit(b) |   |          | Dollars |  |   | Unit(b) |  
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |         |          |   |         |   |  |          |       |   |         |   |          |         |  |   |         |  
|Reconciliation of net income to
    FFO(a):                                                                                                                                                                                              |  |                                          |         |          |                                         |   |       |         |          |   |         |   |  |          |       |   |         |   |          |         |  |   |         |   |  |   |           |   |  |   |       |  
|Net income                                                                                                                                                                                                                               |  | $                                        | 134,323 |          |                                         | $ | 0.30  |         |          | $ | 203,895 |   |  | $        | 0.44  |   |         | $ | 492,598  |         |  | $ | 1.09    |   |  | $ | 651,842   |   |  | $ | 1.39  |  
|Real estate related depreciation and amortization
    and net (loss)/gain on sales of real estate, including our share
    of unconsolidated joint ventures and adjusted for minority
    interests share in partially owned properties |  |                                          | 188,277 |          |                                         |   | 0.42  |         |          |   | 173,857 |   |  |          | 0.37  |   |         |   | 505,927  |         |  |   | 1.12    |   |  |   | 534,529   |   |  |   | 1.14  |  
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |         |          |   |         |   |  |          |       |   |         |   |          |         |  |   |         |  
|FFO                                                                                                                                                                                                                                      |  |                                          | 322,600 |          |                                         |   | 0.72  |         |          |   | 377,752 |   |  |          | 0.81  |   |         |   | 998,525  |         |  |   | 2.21    |   |  |   | 1,186,371 |   |  |   | 2.53  |  
|Preferred distributions                                                                                                                                                                                                                  |  |                                          | (10,508 | )        |                                         |   | (0.02 | )       |          |   | (15,451 | ) |  |          | (0.03 | ) |         |   | (41,364  | )       |  |   | (0.09   | ) |  |   | (47,112   | ) |  |   | (0.10 | )
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |         |          |   |         |   |  |          |       |   |         |   |          |         |  |   |         |  
|FFO available to unitholders  basic                                                                                                                                                                                                     |  | $                                        | 312,092 |          |                                         | $ | 0.70  |         |          | $ | 362,301 |   |  | $        | 0.77  |   |         | $ | 957,161  |         |  | $ | 2.12    |   |  | $ | 1,139,259 |   |  | $ | 2.43  |  
|                                                                                                                                                                                                                                         |  |                                          |         |          |                                         |   |       |         |          |   |         |   |  |          |       |   |         |   |          |         |  |   |         |  

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|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ----------- | - | --------------------------------------- | - | ----------- | ---------- |  | - | ----------- | - |  | ---------- | ----------- | - | --- | - | ----------- | ---------- |  | - | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                                                                                    |  |                                          |             |  
|                                                                                                                                                                    |  | For the three months ended September 30, |             |   | For the nine months ended September 30, |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |           
|(Dollars in thousands,                                                                                                                                              |  | 2003                                     |             |   | 2002                                    |   |             | 2003       |  |   | 2002        |  
|except per unit                                                                                                                                                     |  |                                          |             |   |                                         |   |             |            |  |   |             |  
|amounts)                                                                                                                                                            |  | Net Income                               |             |   | FFO                                     |   |             | Net Income |  |   | FFO         |   |  | Net Income |             |   | FFO |   |             | Net Income |  |   | FFO         |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Adjustment to arrive at FFO available to
    unitholders plus assumed conversions:                                                                                  |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |   |             |   |  |   |             |  
|Net income and FFO                                                                                                                                                  |  | $                                        | 134,323     |   |                                         | $ | 322,600     |            |  | $ | 203,895     |   |  | $          | 377,752     |   |     | $ | 492,598     |            |  | $ | 998,525     |   |  | $ | 651,842     |   |  | $ | 1,186,371   |  
|Preferred distributions                                                                                                                                             |  |                                          | (10,508     | ) |                                         |   | (10,508     | )          |  |   | (15,451     | ) |  |            | (15,451     | ) |     |   | (41,364     | )          |  |   | (41,364     | ) |  |   | (47,112     | ) |  |   | (47,112     | )
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Net income and FFO available to unitholders                                                                                                                         |  |                                          | 123,815     |   |                                         |   | 312,092     |            |  |   | 188,444     |   |  |            | 362,301     |   |     |   | 451,234     |            |  |   | 957,161     |   |  |   | 604,730     |   |  |   | 1,139,259   |  
|Preferred distributions on Series B
    preferred units, of which is assumed to be converted into Units                                                             |  |                                          |            |   |                                         |   | 3,931       |            |  |   |            |   |  |            | 3,931       |   |     |   |            |            |  |   | 11,793      |   |  |   |            |   |  |   | 11,793      |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Net income and FFO available to unitholders plus
    assumed conversions                                                                                            |  | $                                        | 123,815     |   |                                         | $ | 316,023     |            |  | $ | 188,444     |   |  | $          | 366,232     |   |     | $ | 451,234     |            |  | $ | 968,954     |   |  | $ | 604,730     |   |  | $ | 1,151,052   |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Weighted average Units, dilutive potential units
    plus assumed conversions outstanding                                                                           |  |                                          | 448,805,388 |   |                                         |   | 457,194,742 |            |  |   | 469,764,728 |   |  |            | 478,154,082 |   |     |   | 453,451,913 |            |  |   | 461,841,267 |   |  |   | 471,703,728 |   |  |   | 480,093,082 |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Net income and FFO available to unitholders plus
    assumed conversions per unit                                                                                   |  | $                                        | 0.28        |   |                                         | $ | 0.69        |            |  | $ | 0.40        |   |  | $          | 0.77        |   |     | $ | 1.00        |            |  | $ | 2.10        |   |  | $ | 1.28        |   |  | $ | 2.40        |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Units, dilutive potential units plus assumed
    conversions                                                                                                        |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |   |  |   |             |   |  |   |             |  
|Weighted average Units outstanding 
    (used for both net income and FFO basic calculation)                                                                       |  |                                          |             |   |                                         |   | 446,750,227 |            |  |   |             |   |  |            | 468,263,813 |   |     |   |             |            |  |   | 451,731,474 |   |  |   |             |   |  |   | 469,485,606 |  
|Impact of options, restricted shares and put
    options which are dilutive to both net income and FFO                                                              |  |                                          |             |   |                                         |   | 2,055,161   |            |  |   |             |   |  |            | 1,500,915   |   |     |   |             |            |  |   | 1,720,439   |   |  |   |             |   |  |   | 2,218,122   |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Weighted average Units and dilutive potential
    units used for net income available to unitholders                                                                |  |                                          |             |   |                                         |   | 448,805,388 |            |  |   |             |   |  |            | 469,764,728 |   |     |   |             |            |  |   | 453,451,913 |   |  |   |             |   |  |   | 471,703,728 |  
|Impact of conversion of Series B preferred
    units, which are dilutive to FFO, but not net income                                                                 |  |                                          |             |   |                                         |   | 8,389,354   |            |  |   |             |   |  |            | 8,389,354   |   |     |   |             |            |  |   | 8,389,354   |   |  |   |             |   |  |   | 8,389,354   |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  
|Weighted average Units, dilutive potential units
    plus assumed conversions used for the calculation of FFO
    available to unitholders plus assumed conversions |  |                                          |             |   |                                         |   | 457,194,742 |            |  |   |             |   |  |            | 478,154,082 |   |     |   |             |            |  |   | 461,841,267 |   |  |   |             |   |  |   | 480,093,082 |  
|                                                                                                                                                                    |  |                                          |             |   |                                         |   |             |            |  |   |             |   |  |            |             |   |     |   |             |            |  |   |             |  

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|                                                                                                                                                                                                                                          |  |                            |         |              |                |   |       |         |              |   |         |   |  |   |       |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | ------------ | -------------- | - | ----- | ------- | ------------ | - | ------- | - |  | - | ----- | -
|                                                                                                                                                                                                                                          |  |                           
|                                                                                                                                                                                                                                          |  | For the three months ended |        
|                                                                                                                                                                                                                                          |  |                            |        
|                                                                                                                                                                                                                                          |  |                            |         |             
|                                                                                                                                                                                                                                          |  | June 30, 2003              |         |              | March 30, 2003 |  
|                                                                                                                                                                                                                                          |  |                            |         |              |                |  
|                                                                                                                                                                                                                                          |  |                            |         | Per Weighted |                |   |       |         | Per Weighted |  
|                                                                                                                                                                                                                                          |  |                            |         | Average      |                |   |       |         | Average      |  
|(Dollars in thousands, except per unit amounts)                                                                                                                                                                                           |  | Dollars                    |         |              | Unit(b)        |   |       | Dollars |              |   | Unit(b) |  
|                                                                                                                                                                                                                                          |  |                            |         |              |                |   |       |         |              |   |         |  
|Reconciliation of net income to
    FFO(a):                                                                                                                                                                                               |  |                            |         |              |                |   |       |         |              |   |         |   |  |   |       |  
|Net income                                                                                                                                                                                                                                |  | $                          | 183,783 |              |                | $ | 0.41  |         |              | $ | 174,492 |   |  | $ | 0.38  |  
|Real estate related depreciation and amortization
    and net (loss)/ gain on sales of real estate, including our
    share of unconsolidated joint ventures and adjusted for minority
    interests share in partially owned properties |  |                            | 141,796 |              |                |   | 0.31  |         |              |   | 175,854 |   |  |   | 0.38  |  
|                                                                                                                                                                                                                                          |  |                            |         |              |                |   |       |         |              |   |         |  
|FFO                                                                                                                                                                                                                                       |  |                            | 325,579 |              |                |   | 0.72  |         |              |   | 350,346 |   |  |   | 0.76  |  
|Preferred distributions                                                                                                                                                                                                                   |  |                            | (15,395 | )            |                |   | (0.03 | )       |              |   | (15,461 | ) |  |   | (0.03 | )
|                                                                                                                                                                                                                                          |  |                            |         |              |                |   |       |         |              |   |         |  
|FFO available to unitholders  basic                                                                                                                                                                                                      |  | $                          | 310,184 |              |                | $ | 0.69  |         |              | $ | 334,885 |   |  | $ | 0.73  |  
|                                                                                                                                                                                                                                          |  |                            |         |              |                |   |       |         |              |   |         |  

|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | -------------- | - | ----------- | ---------- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                        |  |                           
|                                                                                                        |  | For the three months ended |            
|                                                                                                        |  |                            |            
|                                                                                                        |  |                            |             |  
|                                                                                                        |  | June 30, 2003              |             |   | March 30, 2003 |  
|                                                                                                        |  |                            |             |   |                |  
|(Dollars in thousands, except per unit amounts)                                                         |  | Net Income                 |             |   | FFO            |   |             | Net Income |  |   | FFO         |  
|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |  
|Adjustment to arrive at FFO available to
    unitholders plus assumed conversions:                      |  |                            |             |   |                |   |             |            |  |   |             |   |  |   |             |  
|Net income and FFO                                                                                      |  | $                          | 183,783     |   |                | $ | 325,579     |            |  | $ | 174,492     |   |  | $ | 350,346     |  
|Preferred distributions                                                                                 |  |                            | (15,395     | ) |                |   | (15,395     | )          |  |   | (15,461     | ) |  |   | (15,461     | )
|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |  
|Net income and FFO available to unitholders                                                             |  |                            | 168,388     |   |                |   | 310,184     |            |  |   | 159,031     |   |  |   | 334,885     |  
|Preferred distributions on Series B
    preferred units, of which is assumed to be converted into Units |  |                            |            |   |                |   | 3,931       |            |  |   |            |   |  |   | 3,931       |  
|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |  
|Net income and FFO available to unitholders plus
    assumed conversions                                |  | $                          | 168,388     |   |                | $ | 314,115     |            |  | $ | 159,031     |   |  | $ | 338,816     |  
|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |  
|Weighted average Units, dilutive potential units
    plus assumed conversions outstanding               |  |                            | 452,010,570 |   |                |   | 460,399,924 |            |  |   | 459,301,852 |   |  |   | 467,691,206 |  
|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |  
|Net income and FFO available to unitholders plus
    assumed conversions per unit                       |  | $                          | 0.37        |   |                | $ | 0.68        |            |  | $ | 0.35        |   |  | $ | 0.72        |  
|                                                                                                        |  |                            |             |   |                |   |             |            |  |   |             |  

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|                                                                                                                                                                    |  |                            |  |  |                |  |             |            |  |  |     |  |  |  |             | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- |  |  | -------------- |  | ----------- | ---------- |  |  | --- |  |  |  | ----------- | 
|                                                                                                                                                                    |  |                           
|                                                                                                                                                                    |  | For the three months ended | 
|                                                                                                                                                                    |  |                            | 
|                                                                                                                                                                    |  |                            |  | 
|                                                                                                                                                                    |  | June 30, 2003              |  |  | March 30, 2003 | 
|                                                                                                                                                                    |  |                            |  |  |                | 
|(Dollars in thousands, except per unit amounts)                                                                                                                     |  | Net Income                 |  |  | FFO            |  |             | Net Income |  |  | FFO | 
|                                                                                                                                                                    |  |                            |  |  |                |  |             |            |  |  |     | 
|Units, dilutive potential units plus assumed
    conversions                                                                                                        |  |                            |  |  |                |  |             |            |  |  |     |  |  |  |             | 
|Weighted average Units outstanding 
    (used for both net income and FFO basic calculation)                                                                       |  |                            |  |  |                |  | 450,216,263 |            |  |  |     |  |  |  | 458,337,480 | 
|Impact of options, restricted shares and put
    options which are dilutive to both net income and FFO                                                              |  |                            |  |  |                |  | 1,794,307   |            |  |  |     |  |  |  | 964,372     | 
|                                                                                                                                                                    |  |                            |  |  |                |  |             |            |  |  |     | 
|Weighted average Units and dilutive potential
    units used for net income available to unitholders                                                                |  |                            |  |  |                |  | 452,101,570 |            |  |  |     |  |  |  | 459,301,852 | 
|Impact of conversion of Series B preferred
    units, which are dilutive to FFO, but not net income                                                                 |  |                            |  |  |                |  | 8,389,354   |            |  |  |     |  |  |  | 8,389,354   | 
|                                                                                                                                                                    |  |                            |  |  |                |  |             |            |  |  |     | 
|Weighted average Units, dilutive potential units
    plus assumed conversions used for the calculation of FFO
    available to unitholders plus assumed conversions |  |                            |  |  |                |  | 460,399,924 |            |  |  |     |  |  |  | 467,691,206 | 
|                                                                                                                                                                    |  |                            |  |  |                |  |             |            |  |  |     | 






|    |  |                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | FFO is a non-GAAP financial measure. The most
    directly comparable GAAP measure is net income, to which it is
    reconciled. See definition below.
|   
|(b) |  | FFO per unit may not total the sum of the per
    unit components in the reconciliation due to rounding                                               



| |               
| | --------------
| | 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 a real estate company. 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 real
estate companies. Investors should review FFO, along with GAAP
net income and cash flow from operating activities, investing
activities and financing activities, when trying to understand a
real estate companys operating performance. We compute FFO
in accordance with standards established by NAREIT, which may
not be comparable to FFO reported by other real estate companies
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.

49



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Summary Cash Flow Information

|                                                         |                      |                            |        |          |                           |   |         |          |   |   |           |          |   |               |       |          |               |   |        |          |   |   |         |           |  
|-------------------------------------------------------- | -------------------- | -------------------------- | ------ | -------- | ------------------------- | - | ------- | -------- | - | - | --------- | -------- | - | ------------- | ----- | -------- | ------------- | - | ------ | -------- | - | - | ------- | --------- | -
|                                                         |                      |                            |        |         
|                                                         |                      | For the three months ended |        |          | For the nine months ended |  
|                                                         |                      |                            |        |          |                           |  
|                                                         |                      | September 30,              |        |          | September 30,             |   |         | June 30, |   |   | March 31, |          |   | September 30, |       |          | September 30, |  
|                                                         |                      | 2003                       |        |          | 2002                      |   |         | 2003     |   |   | 2003      |          |   | 2003          |       |          | 2002          |  
|                                                         |                      |                            |        |          |                           |   |         |          |   |   |           |         
|                                                         |                      |                           
|                                                         |                      |                            |       
|Cash flow provided by (used for):                        |                      |                            |        |          |                           |   |         |          |   |   |           |          |   |               |       |          |               |   |        |          |   |   |         |          
|                                                         | Operating Activities |                            | $      | 277,281  |                           |   | $       | 406,488  |   |   | $         | 298,950  |   |               | $     | 251,587  |               |   | $      | 827,818  |   |   | $       | 1,048,708 |  
|                                                         | Investing Activities |                            |        | (7,693   | )                         |   |         | (22,408  | ) |   |           | 127,251  |   |               |       | (56,569  | )             |   |        | 62,989   |   |   |         | 122,572   |  
|                                                         | Financing Activities |                            |        | (221,398 | )                         |   |         | (228,786 | ) |   |           | (431,929 | ) |               |       | (190,166 | )             |   |        | (843,493 | ) |   |         | (776,867  | )
|                                                         |                      |                           
|Net increase (decrease) in cash and cash
    equivalents |                      | $                          | 48,190 |          |                           | $ | 155,294 |          |   | $ | (5,728    | )        |   | $             | 4,852 |          |               | $ | 47,314 |          |   | $ | 394,413 |          
|                                                         |                      |                           

Ratio of Earnings to Combined Fixed Charges
and Preferred Distributions(a)

| |  |                            |     |   |                           |  |     |          |  |  |           |   |  |               |     |   |               |  |     |   |  |  |     |  
| |  | -------------------------- | --- | - | ------------------------- |  | --- | -------- |  |  | --------- | - |  | ------------- | --- | - | ------------- |  | --- | - |  |  | --- | -
| |  |                            |     |  
| |  | For the three months ended |     |   | For the nine months ended | 
| |  |                            |     |   |                           | 
| |  | September 30,              |     |   | September 30,             |  |     | June 30, |  |  | March 31, |   |  | September 30, |     |   | September 30, | 
| |  | 2003                       |     |   | 2002                      |  |     | 2003     |  |  | 2003      |   |  | 2003          |     |   | 2002          | 
| |  |                            |     |   |                           |  |     |          |  |  |           |  
| |  |                           
| |  |                            |    
| |  |                            | 1.6 | x |                           |  | 1.8 | x        |  |  | 1.6       | x |  |               | 1.6 | x |               |  | 1.6 | x |  |  | 1.9 | x

The term earnings is the amount
resulting from adding and subtracting the following items. Add
the following: (a) Pre-tax income from continuing
operations before adjustment for minority interests in
consolidated subsidiaries or income or loss from equity
investees, (b) fixed charges, (c) amortization of
capitalized interest, (d) distributed income of equity
investees, and (e) our share of pre-tax losses of equity
investees for which charges arising from guarantees are included
in fixed charges. From the total of the added items, subtract
the following: (a) capitalized interest,
(b) preference security dividend requirements of
consolidated subsidiaries and (c) the minority interest in
pre-tax income of subsidiaries that have not incurred fixed
charges. Equity investees are investments that we account for
using the equity method of accounting.

The term fixed charges and preferred
distributions means the sum of the following:
(a) interest expensed and capitalized interest,
(b) amortized premiums, discounts and capitalized expenses
related to indebtedness, (c) an estimate of the interest
within rental expense, and (d) preference security dividend
requirements of consolidated subsidiaries.






|    |  |                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The presentation of this ratio is required by the
    SEC and is calculated in accordance with the definition provided
    by the SEC.

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|        |                                                                
|------- | ---------------------------------------------------------------
|ITEM 3. | Quantitative and Qualitative Disclosures
    About Market Risk.

Quantitative and qualitative disclosures about
market risk are incorporated herein by reference from
Item 2.  Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Market Risk.



|        |                         
|------- | ------------------------
|ITEM 4. | Controls and Procedures.

Evaluation of Disclosure Controls and
Procedures

The principal executive officer of Equity Office,
Richard D. Kincaid, and the principal financial officer of
Equity Office, Marsha C. Williams, evaluated as of
September 30, 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 Controls over Financial
Reporting

There were no changes in our internal controls
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
controls over financial reporting.




PART II.     OTHER
INFORMATION



|        |                   
|------- | ------------------
|ITEM 1. | Legal Proceedings.

Legal proceedings are incorporated herein by
reference from Item 1.  Financial
Statements  Note 11  Commitments and
Contingencies.



|        |                                      
|------- | -------------------------------------
|ITEM 6. | Exhibits and Reports on
    Form 8-K.

(a) Exhibits:

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

(b) Reports on Form 8-K

The following reports on Form 8-K were filed
during the quarterly period ended September 30, 2003:

|              |  |                                              
|------------- |  | ---------------------------------------------
|Date of Event |  | Items Reported/Financial Statements Filed    
|              |  |                                              
|July 15, 2003 |  | Item 5. Other Events                         
|              |  | Item 7. Financial Statements and
    Exhibits

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APPENDIX A


FINANCIAL COVENANT CALCULATIONS AS OF
SEPTEMBER 30, 2003

UNDER CERTAIN INDENTURE AGREEMENTS


EOP OPERATING LIMITED PARTNERSHIP

UNSECURED NOTES FINANCIAL COVENANT COMPLIANCE
AS OF SEPTEMBER 30, 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
September 30, 2003 to show that EOP Partnership was in
compliance with the applicable financial covenants contained in
the unsecured not 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
September 30, 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).

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##### Table of Contents



|                                                                                         |                       |   |            |            | 
|---------------------------------------------------------------------------------------- | --------------------- | - | ---------- | ---------- | 
|Mortgage debt (excluding a net discount of
    $(13,428))                                |                       | $ | 2,420,540  |           
|Unsecured notes (excluding a net premium of
    $19,124)                                 |                       |   | 9,216,500  |           
|Line of credit                                                                           |                       |   | 421,000    |           
|EOP Partnerships share of unconsolidated
    non-recourse mortgage debt                 |                       |   | 799,203    |           
|                                                                                         |                       |   |           
|                                                                                         | Debt                  |   | $          | 12,857,243 | 
|                                                                                         |                       |   |           
|Investments in real estate                                                               |                       | $ | 24,859,693 |           
|Developments in process                                                                  |                       |   | 61,325     |           
|Land available for development                                                           |                       |   | 253,933    |           
|Cash and cash equivalents                                                                |                       |   | 105,785    |           
|Escrow deposits and restricted cash                                                      |                       |   | 43,815     |           
|Investments in unconsolidated joint ventures                                             |                       |   | 978,150    |           
|Prepaid expenses and other assets (net of
    discount of $66,289)                       |                       |   | 281,175    |           
|Change in cash subsequent to September 30,
    2003 as a result of property dispositions |                       |   | 7,137      |           
|                                                                                         |                       |   |           
|                                                                                         | Adjusted Total Assets |   | $          | 26,591,013 | 
|                                                                                         |                       |   |           
|Ratio                                                                                    |                       |   | 48         | %         
|                                                                                         |                       |   |           
|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
    $(13,428))                |                       | $ | 2,420,540 |           
|EOP Partnerships share of unconsolidated
    non-recourse mortgage debt |                       |   | 799,203   |           
|                                                                         |                       |   |          
|                                                                         | Secured Debt          |   | $         | 3,219,743  | 
|                                                                         |                       |   |          
|                                                                         | Adjusted Total Assets |   | $         | 26,591,013 | 
|                                                                         |                       |   |          
|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;
| 
|* | 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;             

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##### Table of Contents





|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | 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                                                        |                                                | $ | 556,411 |          
|Pro forma interest expense                                                  |                                                |   | 813,973 |          
|Pro forma amortization of mark to market
    discounts/premiums             |                                                |   | (5,116  | )        
|Pro forma provision for taxes                                               |                                                |   | 2,517   |          
|Pro forma amortization and depreciation                                     |                                                |   | 705,982 |          
|Less pro forma income from investments in
    unconsolidated joint ventures |                                                |   | (77,627 | )        
|                                                                            |                                                |   |        
|                                                                            | Consolidated Income Available for Debt Service |   | $       | 1,996,140 | 
|                                                                            |                                                |   |        
|Pro forma interest expense                                                  |                                                | $ | 813,973 |          
|Pro forma amortization of mark to market
    discounts/premiums             |                                                |   | (5,116  | )        
|                                                                            |                                                |   |        
|                                                                            | Annual Debt Service Charge                     |   | $       | 808,857   | 
|                                                                            |                                                |   |        
|Ratio                                                                       |                                                |   | 2.47    |          
|                                                                            |                                                |   |        
|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                                  |                           | $ | 19,542,042 |           
|Cash and cash equivalents                                               |                           |   | 105,785    |           
|Escrow deposits and restricted cash                                     |                           |   | 43,815     |           
|Prepaid expenses and other assets (net of
    discount of $66,289)      |                           |   | 281,175    |           
|Unencumbered investments in unconsolidated joint
    venture properties |                           |   | 639,521    |           
|                                                                        |                           |   |           
|                                                                        | Total Unencumbered Assets |   | $          | 20,612,338 | 
|                                                                        |                           |   |           
|Unsecured notes (excluding a net premium of
    $19,124)                |                           | $ | 9,216,500  |           
|Line of credit                                                          |                           |   | 421,000    |           
|                                                                        |                           |   |           
|                                                                        | Unsecured Debt            |   | $          | 9,637,500  | 
|                                                                        |                           |   |           
|Ratio                                                                   |                           |   | 214        | %         
|                                                                        |                           |   |           
|Minimum Ratio (a)                                                       |                           |   | 150        | %         
|                                                                        |                           |   |           






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

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##### Table of Contents






SIGNATURES

Pursuant to the requirements 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.



| |                                  
| | ---------------------------------
| | EOP OPERATING LIMITED PARTNERSHIP



| |     |                               
| | --- | ------------------------------
| | By: | EQUITY OFFICE PROPERTIES TRUST

| |                    
| | -------------------
| | its general partner

Date: November 14, 2003

| |     |                       
| | --- | ----------------------
| | By: | /s/ RICHARD D. KINCAID

| |                                          
| | -----------------------------------------
| |                                          
| | Richard D. Kincaid                       
| | President and Chief Executive
    Officer

Date: November 14, 2003

| |     |                       
| | --- | ----------------------
| | By: | /s/ MARSHA C. WILLIAMS

| |                            
| | ---------------------------
| |                            
| | Marsha C. Williams         
| | Executive Vice President   
| | and Chief Financial Officer





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##### Table of Contents






EXHIBIT INDEX

|            |  |                                                                                                                                                                      |  |          |  | 
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | 
|Exhibit No. |  | Description                                                                                                                                                          |  | Page No. | 
|            |  |                                                                                                                                                                      |  |          | 
|10.1       |  | Change in Control Agreement by and between Equity
    Office Management, L.L.C., Equity Office and Richard D. Kincaid
    entered into effective as of April 1, 2003 |  |          |  | 
|12.1        |  | Statement of Earnings to Combined Fixed Charges
    and Preferred Distributions                                                                                      |  |          |  | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                              |  |          |  | 
|32.1        |  | Section 1350 Certification                                                                                                                                           |  |          |  | 






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