##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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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 June 30, 2002 or   |  | 
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period
    from            to |  | 

COMMISSION FILE NUMBER: 1-13625



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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)




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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     þ     No     o

APPLICABLE ONLY TO CORPORATE
ISSUERS:

On July 31, 2002, 469,524,465 Units were
outstanding.



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TABLE OF CONTENTS



|                                                                                         |                                                                                                |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                                           
|                                                                                         | ITEM 1. Financial Statements.                                                                 
|EOP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)     
|EOP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)     
|EOP OPERATING LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
|                                                                                         | NOTE 8 -- SEGMENT INFORMATION                                                                 
|                                                                                         | NOTE 9 -- COMMITMENTS AND CONTINGENCIES                                                       
|                                                                                         | Concentration of Credit Risk                                                                  
|                                                                                         | Environmental                                                                                 
|                                                                                         | Litigation                                                                                    
|                                                                                         | Contingencies                                                                                 
|                                                                                         | Insurance                                                                                     
|                                                                                         | Commitments                                                                                   
|                                                                                         | NOTE 10 -- SUBSEQUENT EVENTS                                                                  
|                                                                                         | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                                                                         | Critical Accounting Policies and Estimates                                                    
|                                                                                         | Results of Operations                                                                         
|                                                                                         | General                                                                                       
|                                                                                         | Comparison of the three months ended June 30, 2002 to June 30, 2001                           
|                                                                                         | Property Dispositions                                                                         
|                                                                                         | Liquidity and Capital Resources                                                               
|                                                                                         | Liquidity                                                                                     
|                                                                                         | Unsecured Notes                                                                               
|                                                                                         | Restrictions and Covenants under Unsecured Indebtedness                                       
|                                                                                         | Equity Securities                                                                             
|                                                                                         | Cash Flows                                                                                    
|                                                                                         | Six Months Ended June 30, 2002                                                                
|                                                                                         | Additional Items                                                                              
|                                                                                         | Deferred Rent Receivable                                                                      
|                                                                                         | Escrow Deposits and Restricted Cash                                                           
|                                                                                         | Market Risk                                                                                   
|                                                                                         | Interest Rate Risk -- Derivatives                                                             
|                                                                                         | Capital Improvements, Tenant Improvements and Leasing Commissions                             
|                                                                                         | Capital Improvements                                                                          
|                                                                                         | Tenant Improvements and Leasing Commissions                                                   
|                                                                                         | Developments                                                                                  
|                                                                                         | Consolidated Developments:                                                                    
|                                                                                         | Impact of New Accounting Standards                                                            
|                                                                                         | Inflation                                                                                     
|                                                                                         | Funds From Operations (FFO)                                                                 
|                                                                                         | ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.                           
|PART II. OTHER INFORMATION                                                              
|                                                                                         | ITEM 6. Exhibits and Reports on Form 8-K.                                                     
|SIGNATURES                                                                              
|EXHIBIT INDEX                                                                           
|Statement of Earnings                                                                   



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##### Table of Contents








PART I.


FINANCIAL INFORMATION






ITEM 1. Financial
Statements.


EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |            |            |            | 
|---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------------ | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                                           |                                                                                                               | June 30,                                                                                                                                            |                                                                 | December 31,
|(Dollars in thousands, except per unit amounts)            |                                                                                                               | 2002                                                                                                                                                |                                                                 | 2001        
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |             
|                                                           |                                                                                                               | (Unaudited)                                                                                                                                         |                                                                 |             
|Assets:                                                    |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           | Investment in real estate                                                                                     |                                                                                                                                                     | $                                                               | 24,518,241   |            |            | $ | 24,399,658 |           
|                                                           | Developments in process                                                                                       |                                                                                                                                                     |                                                                 | 159,646      |            |            |   | 164,997    |           
|                                                           | Land available for development                                                                                |                                                                                                                                                     |                                                                 | 244,810      |            |            |   | 251,696    |           
|                                                           | Accumulated depreciation                                                                                      |                                                                                                                                                     |                                                                 | (1,785,737   | )          |            |   | (1,494,301 | )         
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           |                                                                                                               | Investment in real estate, net of accumulated
    depreciation                                                                                      |                                                                 |              | 23,136,960 |            |   |            | 23,322,050 |           
|                                                           | Cash and cash equivalents                                                                                     |                                                                                                                                                     |                                                                 | 300,240      |            |            |   | 61,121     |           
|                                                           | Tenant and other receivables (net of allowance
    for doubtful accounts of $12,299 and $7,794, respectively) |                                                                                                                                                     |                                                                 | 102,964      |            |            |   | 120,425    |           
|                                                           | Deferred rent receivable                                                                                      |                                                                                                                                                     |                                                                 | 305,756      |            |            |   | 269,796    |           
|                                                           | Escrow deposits and restricted cash                                                                           |                                                                                                                                                     |                                                                 | 45,579       |            |            |   | 196,289    |           
|                                                           | Investment in unconsolidated joint ventures                                                                   |                                                                                                                                                     |                                                                 | 1,237,095    |            |            |   | 1,321,127  |           
|                                                           | Deferred financing costs (net of accumulated
    amortization of $41,323 and $36,198, respectively)           |                                                                                                                                                     |                                                                 | 74,465       |            |            |   | 77,880     |           
|                                                           | Deferred leasing costs (net of accumulated
    amortization of $95,364 and $78,600, respectively)             |                                                                                                                                                     |                                                                 | 201,807      |            |            |   | 187,336    |           
|                                                           | Prepaid expenses and other assets (net of
    discounts of $67,220 and $67,413, respectively)                 |                                                                                                                                                     |                                                                 | 276,984      |            |            |   | 252,398    |           
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           |                                                                                                               |                                                                                                                                                     | Total Assets                                                    |              | $          | 25,681,850 |   |            | $          | 25,808,422 | 
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|Liabilities, Minority Interests and
    Partners Capital: |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           | Mortgage debt (including a net discount of
    $(12,172) and $(11,761), respectively)                         |                                                                                                                                                     | $                                                               | 2,624,361    |            |            | $ | 2,650,338  |           
|                                                           | Unsecured notes (including a net premium of
    $22,645 and $17,487, respectively)                            |                                                                                                                                                     |                                                                 | 9,149,145    |            |            |   | 9,093,987  |           
|                                                           | Line of credit                                                                                                |                                                                                                                                                     |                                                                 |             |            |            |   | 244,300    |           
|                                                           | Accounts payable and accrued expenses                                                                         |                                                                                                                                                     |                                                                 | 530,641      |            |            |   | 570,744    |           
|                                                           | Distribution payable                                                                                          |                                                                                                                                                     |                                                                 | 242,381      |            |            |   | 6,060      |           
|                                                           | Other liabilities                                                                                             |                                                                                                                                                     |                                                                 | 315,830      |            |            |   | 330,277    |           
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           |                                                                                                               |                                                                                                                                                     | Total Liabilities                                               |              |            | 12,862,358 |   |            |            | 12,895,706 | 
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           | Commitments and contingencies                                                                                 |                                                                                                                                                     |                                                                 |             |            |            |   |           |           
|                                                           | Minority interest  partially owned
    properties                                                            |                                                                                                                                                     |                                                                 | 180,425      |            |            |   | 181,017    |           
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           | Preferred Units, 100,000,000 authorized:                                                                      |                                                                                                                                                     |                                                                 |              |            |            |   |            |           
|                                                           |                                                                                                               | 8.98% Series A Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    7,994,000 issued and outstanding              |                                                                 |              | 199,850    |            |   |            | 199,850    |           
|                                                           |                                                                                                               | 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    |           
|                                                           |                                                                                                               | 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,
    6,000,000 issued and outstanding             |                                                                 |              | 150,000    |            |   |            | 150,000    |           
|                                                           |                                                                                                               | 8.0% Series F Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    4,000,000 issued and outstanding               |                                                                 |              | 100,000    |            |   |            | 100,000    |           
|                                                           | General Partners Capital                                                                                      |                                                                                                                                                     |                                                                 | 92,285       |            |            |   | 93,010     |           
|                                                           | Limited Partners Capital                                                                                      |                                                                                                                                                     |                                                                 | 11,704,332   |            |            |   | 11,795,204 |           
|                                                           | Deferred compensation                                                                                         |                                                                                                                                                     |                                                                 | (21,082      | )          |            |   | (19,822    | )         
|                                                           | Accumulated other comprehensive income (loss)                                                                 |                                                                                                                                                     |                                                                 | 109          |            |            |   | (116       | )         
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           |                                                                                                               |                                                                                                                                                     | Total Partners Capital                                         |              |            | 12,639,067 |   |            |            | 12,731,699 | 
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           
|                                                           |                                                                                                               |                                                                                                                                                     | Total Liabilities, Minority Interests and
    Partners Capital |              | $          | 25,681,850 |   |            | $          | 25,808,422 | 
|                                                           |                                                                                                               |                                                                                                                                                     |                                                                 |              |            |            |   |           

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              
|                                                                                                                                                          |                                                | June 30,                                
|                                                                                                                                                          |                                                |                                         
|(Dollars in thousands, except per unit amounts)                                                                                                           |                                                | 2002                                     |                | 2001   
|                                                                                                                                                          |                                                |                                          |                |        
|Revenues:                                                                                                                                                 |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                          | Rental                                         |                                          | $              | 695,764 |         |         | $           | 511,156 |        
|                                                                                                                                                          | Tenant reimbursements                          |                                          |                | 128,847 |         |         |             | 99,448  |        
|                                                                                                                                                          | Parking                                        |                                          |                | 29,355  |         |         |             | 30,806  |        
|                                                                                                                                                          | Other                                          |                                          |                | 18,509  |         |         |             | 8,444   |        
|                                                                                                                                                          | Fee income                                     |                                          |                | 3,977   |         |         |             | 4,365   |        
|                                                                                                                                                          | Interest/ dividends                            |                                          |                | 7,513   |         |         |             | 9,820   |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                          |                                                |                                          | Total revenues |         |         | 883,965 |             |         |         | 664,039 | 
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Expenses:                                                                                                                                                 |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                          | Interest:                                      |                                          |                |         |         |         |             |         |        
|                                                                                                                                                          |                                                | Expense incurred                         |                |         | 202,683 |         |             |         | 156,848 |        
|                                                                                                                                                          |                                                | Amortization of deferred financing costs |                |         | 1,097   |         |             |         | 2,703   |        
|                                                                                                                                                          | Depreciation                                   |                                          |                | 161,330 |         |         |             | 114,068 |        
|                                                                                                                                                          | Amortization                                   |                                          |                | 12,635  |         |         |             | 8,879   |        
|                                                                                                                                                          | Real estate taxes                              |                                          |                | 96,716  |         |         |             | 79,277  |        
|                                                                                                                                                          | Insurance                                      |                                          |                | 11,625  |         |         |             | 4,329   |        
|                                                                                                                                                          | Repairs and maintenance                        |                                          |                | 87,935  |         |         |             | 65,988  |        
|                                                                                                                                                          | Property operating                             |                                          |                | 87,963  |         |         |             | 64,583  |        
|                                                                                                                                                          | Ground rent                                    |                                          |                | 5,317   |         |         |             | 3,347   |        
|                                                                                                                                                          | General and administrative                     |                                          |                | 38,163  |         |         |             | 23,701  |        
|                                                                                                                                                          | Impairment on securities and other investments |                                          |                |        |         |         |             | 5,499   |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                          |                                                |                                          | Total expenses |         |         | 705,464 |             |         |         | 529,222 | 
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and discontinued operations |                                                |                                          | 178,501        |         |         |         | 134,817     |        
|Income taxes                                                                                                                                              |                                                |                                          | (1,926         | )       |         |         | (3,056      | )      
|Minority interests  partially owned
    properties                                                                                                       |                                                |                                          | (995           | )       |         |         | (1,353      | )      
|Income from investment in unconsolidated joint
    ventures                                                                                               |                                                |                                          | 22,297         |         |         |         | 17,864      |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Income from continuing operations                                                                                                                         |                                                |                                          | 197,877        |         |         |         | 148,272     |        
|Discontinued operations (including net gain on
    disposal of $5,499 and $0, respectively)                                                               |                                                |                                          | 5,606          |         |         |         | 1,988       |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Net income                                                                                                                                                |                                                |                                          | 203,483        |         |         |         | 150,260     |        
|Preferred distributions                                                                                                                                   |                                                |                                          | (15,831        | )       |         |         | (10,877     | )      
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Net income available for Units                                                                                                                            |                                                | $                                        | 187,652        |         |         | $       | 139,383     |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Net income available per weighted average Unit
    outstanding  basic                                                                                    |                                                | $                                        | 0.40           |         |         | $       | 0.40        |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Weighted average Units outstanding 
    basic                                                                                                            |                                                |                                          | 470,109,997    |         |         |         | 348,782,348 |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Net income available per weighted average Unit
    and unit equivalent outstanding  diluted                                                              |                                                | $                                        | 0.40           |         |         | $       | 0.40        |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Weighted average Units and unit equivalents
    outstanding  diluted                                                                                     |                                                |                                          | 472,610,590    |         |         |         | 351,519,782 |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        
|Distributions declared per Unit outstanding                                                                                                               |                                                | $                                        | 0.50           |         |         | $       | 0.45        |        
|                                                                                                                                                          |                                                |                                          |                |         |         |         |             |        

See accompanying notes.

3



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##### Table of Contents








EOP OPERATING LIMITED PARTNERSHIP


CONSOLIDATED STATEMENTS OF
OPERATIONS

(Unaudited)


|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |           |         |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ---------------------------------------- | -------------- | --------- | ------- | --------- | ----------- | --------- | ------- | --------- | 
|                                                                                                                                                                                                                     |                                                |                                         
|                                                                                                                                                                                                                     |                                                | For the six months ended                
|                                                                                                                                                                                                                     |                                                | June 30,                                
|                                                                                                                                                                                                                     |                                                |                                         
|(Dollars in thousands, except per unit amounts)                                                                                                                                                                      |                                                | 2002                                     |                | 2001     
|                                                                                                                                                                                                                     |                                                |                                          |                |          
|Revenues:                                                                                                                                                                                                            |                                                |                                          |                |           |         |           |             |          
|                                                                                                                                                                                                                     | Rental                                         |                                          | $              | 1,391,287 |         |           | $           | 1,016,603 |        
|                                                                                                                                                                                                                     | Tenant reimbursements                          |                                          |                | 252,606   |         |           |             | 196,514   |        
|                                                                                                                                                                                                                     | Parking                                        |                                          |                | 58,677    |         |           |             | 61,032    |        
|                                                                                                                                                                                                                     | Other                                          |                                          |                | 43,428    |         |           |             | 24,562    |        
|                                                                                                                                                                                                                     | Fee income                                     |                                          |                | 8,055     |         |           |             | 6,537     |        
|                                                                                                                                                                                                                     | Interest/ dividends                            |                                          |                | 14,356    |         |           |             | 20,653    |        
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|                                                                                                                                                                                                                     |                                                |                                          | Total revenues |           |         | 1,768,409 |             |           |         | 1,325,901 | 
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Expenses:                                                                                                                                                                                                            |                                                |                                          |                |           |         |           |             |          
|                                                                                                                                                                                                                     | Interest:                                      |                                          |                |           |         |           |             |           |        
|                                                                                                                                                                                                                     |                                                | Expense incurred                         |                |           | 407,529 |           |             |           | 314,715 |          
|                                                                                                                                                                                                                     |                                                | Amortization of deferred financing costs |                |           | 2,379   |           |             |           | 4,029   |          
|                                                                                                                                                                                                                     | Depreciation                                   |                                          |                | 319,223   |         |           |             | 227,805   |        
|                                                                                                                                                                                                                     | Amortization                                   |                                          |                | 24,620    |         |           |             | 17,889    |        
|                                                                                                                                                                                                                     | Real estate taxes                              |                                          |                | 194,688   |         |           |             | 155,571   |        
|                                                                                                                                                                                                                     | Insurance                                      |                                          |                | 20,159    |         |           |             | 7,602     |        
|                                                                                                                                                                                                                     | Repairs and maintenance                        |                                          |                | 170,756   |         |           |             | 130,985   |        
|                                                                                                                                                                                                                     | Property operating                             |                                          |                | 171,382   |         |           |             | 132,884   |        
|                                                                                                                                                                                                                     | Ground rent                                    |                                          |                | 10,858    |         |           |             | 6,399     |        
|                                                                                                                                                                                                                     | General and administrative                     |                                          |                | 71,117    |         |           |             | 47,823    |        
|                                                                                                                                                                                                                     | Impairment on securities and other investments |                                          |                |          |         |           |             | 8,499     |        
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|                                                                                                                                                                                                                     |                                                |                                          | Total expenses |           |         | 1,392,711 |             |           |         | 1,054,201 | 
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                |                                          | 375,698        |           |         |           | 271,700     |          
|Income taxes                                                                                                                                                                                                         |                                                |                                          | (8,932         | )         |         |           | (4,573      | )        
|Minority interests  partially owned
    properties                                                                                                                                                                  |                                                |                                          | (2,401         | )         |         |           | (4,606      | )        
|Income from investment in unconsolidated joint
    ventures                                                                                                                                                          |                                                |                                          | 79,925         |           |         |           | 33,290      |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Income from continuing operations                                                                                                                                                                                    |                                                |                                          | 444,290        |           |         |           | 295,811     |          
|Discontinued operations (including net gain on
    disposal of $2,490 and $0, respectively)                                                                                                                          |                                                |                                          | 3,657          |           |         |           | 3,613       |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Income before cumulative effect of a change in
    accounting principle                                                                                                                                              |                                                |                                          | 447,947        |           |         |           | 299,424     |          
|Cumulative effect of change in accounting
    principle                                                                                                                                                              |                                                |                                          |               |           |         |           | (1,142      | )        
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Net income                                                                                                                                                                                                           |                                                |                                          | 447,947        |           |         |           | 298,282     |          
|Preferred distributions                                                                                                                                                                                              |                                                |                                          | (31,661        | )         |         |           | (21,761     | )        
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Net income available for Units                                                                                                                                                                                       |                                                | $                                        | 416,286        |           |         | $         | 276,521     |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Net income available per weighted average Unit
    outstanding  basic                                                                                                                                               |                                                | $                                        | 0.89           |           |         | $         | 0.79        |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Weighted average Units outstanding 
    basic                                                                                                                                                                       |                                                |                                          | 470,132,017    |           |         |           | 348,630,252 |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Net income available per weighted average Unit
    and unit equivalent outstanding  diluted                                                                                                                         |                                                | $                                        | 0.88           |           |         | $         | 0.79        |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Weighted average Units and unit equivalents
    outstanding  diluted                                                                                                                                                |                                                |                                          | 472,726,956    |           |         |           | 351,452,397 |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          
|Distributions declared per Unit outstanding                                                                                                                                                                          |                                                | $                                        | 1.00           |           |         | $         | 0.90        |          
|                                                                                                                                                                                                                     |                                                |                                          |                |           |         |           |             |          

See accompanying notes.

4



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF NET COMPREHENSIVE
INCOME

(Unaudited)


|                                   |                                                                                   |                      |         |                    |   |      |         |       |  |   |         |     |  |   |         |        |  
|---------------------------------- | --------------------------------------------------------------------------------- | -------------------- | ------- | ------------------ | - | ---- | ------- | ----- |  | - | ------- | --- |  | - | ------- | ------ | -
|                                   |                                                                                   |                      |         |                   
|                                   |                                                                                   | For the three months |         | For the six months
|                                   |                                                                                   | ended June 30,       |         | ended June 30,    
|                                   |                                                                                   |                      |         |                   
|(Dollars in thousands)             |                                                                                   | 2002                 |         | 2001               |   | 2002 |         | 2001 
|                                   |                                                                                   |                      |         |                    |   |      |         |      
|Net income                         |                                                                                   | $                    | 203,483 |                    |   | $    | 150,260 |       |  | $ | 447,947 |     |  | $ | 298,282 |       
|Other comprehensive income (loss): |                                                                                   |                      |         |                    |   |      |         |       |  |   |         |     |  |   |         |       
|                                   | Unrealized holding gains/losses arising during
    the period                     |                      |         | (152               | ) |      |         |      |  |   |         | 109 |  |   |         | (1,416 | )
|                                   | Reclassification adjustment for realized gains/
    losses included in net income |                      |         |                   |   |      |         |      |  |   |         | 116 |  |   |         |       |  
|                                   | Recognition of permanent impairment on marketable
    securities                  |                      |         |                   |   |      |         | 5,587 |  |   |         |    |  |   |         | 29,671 |  
|                                   |                                                                                   |                      |         |                    |   |      |         |       |  |   |         |     |  |   |         |       
|Net comprehensive income           |                                                                                   | $                    | 203,331 |                    |   | $    | 155,847 |       |  | $ | 448,172 |     |  | $ | 326,537 |       
|                                   |                                                                                   |                      |         |                    |   |      |         |       |  |   |         |     |  |   |         |       

See accompanying notes.

5



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(Unaudited)


|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |            |          |         |         | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | -------- | ------- | ------- | ---------- | -------- | ------- | ------- | 
|                                                 |                                                                                                                                                                                 |                                                                                                                                                
|                                                 |                                                                                                                                                                                 | For the six months                                                                                                                             
|                                                 |                                                                                                                                                                                 | ended June 30,                                                                                                                                 
|                                                 |                                                                                                                                                                                 |                                                                                                                                                
|(Dollars in thousands)                           |                                                                                                                                                                                 | 2002                                                                                                                                            |                                                              | 2001                                     
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                          
|Operating Activities:                            |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Net income                                                                                                                                                                      |                                                                                                                                                 | $                                                            | 447,947                                   |          |         | $       | 298,282    |         
|                                                 | Adjustments to reconcile net income to net cash
    provided by operating activities:                                                                                           |                                                                                                                                                 |                                                              |                                           |          |         |         |            |         
|                                                 |                                                                                                                                                                                 | Interest/dividend income accrued but not received                                                                                               |                                                              |                                           |         |         |         |            | (7,856   | )      
|                                                 |                                                                                                                                                                                 | Amortization of discounts included in interest /
    dividend income                                                                            |                                                              |                                           | (193     | )       |         |            | (1,034   | )      
|                                                 |                                                                                                                                                                                 | Amortization of deferred revenue included in
    other income                                                                                   |                                                              |                                           |         |         |         |            | (3,073   | )      
|                                                 |                                                                                                                                                                                 | Depreciation and amortization (including
    discontinued operations)                                                                           |                                                              |                                           | 346,824  |         |         |            | 251,583  |        
|                                                 |                                                                                                                                                                                 | Amortization of premiums / discounts on unsecured
    notes and terminated interest rate protection agreements
    included in interest expense |                                                              |                                           | (744     | )       |         |            | 2,343    |        
|                                                 |                                                                                                                                                                                 | Impairment on securities and other investments                                                                                                  |                                                              |                                           |         |         |         |            | 8,499    |        
|                                                 |                                                                                                                                                                                 | Compensation related to restricted shares issued
    to employees by Equity Office                                                              |                                                              |                                           | 9,154    |         |         |            | 4,958    |        
|                                                 |                                                                                                                                                                                 | Income from unconsolidated joint ventures                                                                                                       |                                                              |                                           | (79,925  | )       |         |            | (33,290  | )      
|                                                 |                                                                                                                                                                                 | Net gain on sales of real estate (included in
    discontinued operations)                                                                      |                                                              |                                           | (2,490   | )       |         |            |         |        
|                                                 |                                                                                                                                                                                 | Cumulative effect of a change in accounting
    principle                                                                                       |                                                              |                                           |         |         |         |            | 1,142    |        
|                                                 |                                                                                                                                                                                 | Provision for doubtful accounts                                                                                                                 |                                                              |                                           | 13,558   |         |         |            | 8,031    |        
|                                                 |                                                                                                                                                                                 | Income allocation to minority interests                                                                                                         |                                                              |                                           | 2,401    |         |         |            | 4,606    |        
|                                                 |                                                                                                                                                                                 | Changes in assets and liabilities:                                                                                                              |                                                              |                                           |          |         |         |            |          |        
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 | Decrease in rents receivable                                 |                                           |          | 11,509  |         |            |          | 14,114  |        
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 | (Increase) in deferred rent receivables                      |                                           |          | (43,278 | )       |            |          | (34,259 | )      
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 | (Increase) decrease in prepaid expenses and other
    assets |                                           |          | (5,779  | )       |            |          | 2,490   |        
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 | (Decrease) in accounts payable and accrued
    expenses      |                                           |          | (41,026 | )       |            |          | (74,031 | )      
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 | (Decrease) increase in other liabilities                     |                                           |          | (15,738 | )       |            |          | 13,947  |        
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              | Net cash provided by operating activities |          |         | 642,220 |            |          |         | 456,452 | 
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|Investing Activities:                            |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Property acquisitions                                                                                                                                                           |                                                                                                                                                 |                                                              | (16,458                                   | )        |         |         | (35,699    | )       
|                                                 | Property dispositions                                                                                                                                                           |                                                                                                                                                 |                                                              | 121,632                                   |          |         |         | 8,600      |         
|                                                 | Payments for capital and tenant improvements                                                                                                                                    |                                                                                                                                                 |                                                              | (130,441                                  | )        |         |         | (128,745   | )       
|                                                 | Payments of lease acquisition costs                                                                                                                                             |                                                                                                                                                 |                                                              | (41,723                                   | )        |         |         | (33,144    | )       
|                                                 | Decrease (increase) in escrow deposits and
    restricted cash                                                                                                                  |                                                                                                                                                 |                                                              | 150,710                                   |          |         |         | (3,502     | )       
|                                                 | Distributions from unconsolidated joint ventures                                                                                                                                |                                                                                                                                                 |                                                              | 140,674                                   |          |         |         | 69,008     |         
|                                                 | Investments in unconsolidated joint ventures                                                                                                                                    |                                                                                                                                                 |                                                              | (80,902                                   | )        |         |         | (56,246    | )       
|                                                 | Investment in securities                                                                                                                                                        |                                                                                                                                                 |                                                              |                                          |          |         |         | (683       | )       
|                                                 | Repayments of notes receivable                                                                                                                                                  |                                                                                                                                                 |                                                              | 1,488                                     |          |         |         | 4,382      |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 |                                                                                                                                                                                 | Net cash provided by (used for) investing
    activities                                                                                        |                                                              |                                           | 144,980  |         |         |            | (176,029 | )      
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|Financing Activities:                            |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Principal payments on mortgage debt                                                                                                                                             |                                                                                                                                                 |                                                              | (25,566                                   | )        |         |         | (186,764   | )       
|                                                 | Proceeds from unsecured notes                                                                                                                                                   |                                                                                                                                                 |                                                              | 239,127                                   |          |         |         |           |         
|                                                 | Repayment of unsecured notes                                                                                                                                                    |                                                                                                                                                 |                                                              | (200,000                                  | )        |         |         |           |         
|                                                 | Proceeds from lines of credit                                                                                                                                                   |                                                                                                                                                 |                                                              | 805,050                                   |          |         |         | 2,928,250  |         
|                                                 | Principal payments on lines of credit                                                                                                                                           |                                                                                                                                                 |                                                              | (1,049,350                                | )        |         |         | (2,979,250 | )       
|                                                 | Payment of offering costs                                                                                                                                                       |                                                                                                                                                 |                                                              |                                          |          |         |         | (34        | )       
|                                                 | Proceeds from mortgage debt                                                                                                                                                     |                                                                                                                                                 |                                                              |                                          |          |         |         | 140,000    |         
|                                                 | Payments of loan costs                                                                                                                                                          |                                                                                                                                                 |                                                              | (3,906                                    | )        |         |         | (553       | )       
|                                                 | Termination of interest rate swap agreement                                                                                                                                     |                                                                                                                                                 |                                                              | 3,193                                     |          |         |         |           |         
|                                                 | Distributions to minority interests in partially
    owned properties                                                                                                           |                                                                                                                                                 |                                                              | (2,993                                    | )        |         |         | (3,365     | )       
|                                                 | Proceeds from exercise of share options                                                                                                                                         |                                                                                                                                                 |                                                              | 36,611                                    |          |         |         | 27,778     |         
|                                                 | Redemption of Units                                                                                                                                                             |                                                                                                                                                 |                                                              | (84,852                                   | )        |         |         |           |         
|                                                 | Distributions to unitholders                                                                                                                                                    |                                                                                                                                                 |                                                              | (235,734                                  | )        |         |         | (157,901   | )       
|                                                 | Payment of preferred distributions                                                                                                                                              |                                                                                                                                                 |                                                              | (29,661                                   | )        |         |         | (21,761    | )       
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 |                                                                                                                                                                                 | Net cash (used for) financing activities                                                                                                        |                                                              |                                           | (548,081 | )       |         |            | (253,600 | )      
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Net increase in cash and cash equivalents                                                                                                                                       |                                                                                                                                                 |                                                              | 239,119                                   |          |         |         | 26,823     |         
|                                                 | Cash and cash equivalents at the beginning of the
    period                                                                                                                    |                                                                                                                                                 |                                                              | 61,121                                    |          |         |         | 53,256     |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Cash and cash equivalents at the end of the period                                                                                                                              |                                                                                                                                                 | $                                                            | 300,240                                   |          |         | $       | 80,079     |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|Supplemental Information:                        |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Interest paid during the period, including
    capitalized interest of $10,385 and $9,658, respectively                                                                         |                                                                                                                                                 | $                                                            | 420,923                                   |          |         | $       | 324,436    |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|Non-Cash Investing and Financing
    Activities: |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Escrow deposits used for property acquisition                                                                                                                                   |                                                                                                                                                 | $                                                            | 21,269                                    |          |         |         |           |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Escrow deposits provided by property acquisition                                                                                                                                |                                                                                                                                                 | $                                                            | (21,269                                   | )        |         |         |           |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | Note receivable and accrued interest receivable
    contributed for investment in real estate                                                                                   |                                                                                                                                                 |                                                              |                                          |          |         | $       | 23,797     |         
|                                                 |                                                                                                                                                                                 |                                                                                                                                                 |                                                              |                                           |          |         |         |           
|                                                 | 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.

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##### Table of Contents








EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)


The consolidated financial statements of EOP
Partnership have been prepared pursuant to the Securities and
Exchange Commission (SEC) rules and regulations. The
following notes, which present interim disclosures as required
by the SEC, highlight significant changes to the notes to the
December 31, 2001 audited consolidated financial statements of
EOP Partnership and should be read together with the financial
statements and notes thereto included in the Form 10-K.

NOTE 1  BUSINESS AND FORMATION OF
EOP PARTNERSHIP

As used herein, EOP Partnership means
EOP Operating Limited Partnership, a Delaware limited
partnership, together with its subsidiaries, and the
predecessors thereof (EOP Partnership Predecessors).
EOP Partnership is a subsidiary of Equity Office Properties
Trust (Equity Office), a Maryland real estate
investment trust. EOP Partnership was organized in 1996 to
continue and expand the national office property business
organized by Mr. Samuel Zell, President, Chief Executive
Officer and Chairman of the Board of Trustees of Equity Office,
and to complete the consolidation of the EOP Partnership
Predecessors (the Consolidation). Equity Office
completed its initial public offering (the IPO) on
July 11, 1997, having sold its common shares of beneficial
interest, $0.01 par value per share (Common Shares).
The net proceeds from the IPO were contributed to EOP
Partnership in exchange for units of partnership interest
(Units). EOP Partnership is a fully integrated,
self-administered and self-managed real estate company
principally engaged in acquiring, owning, managing, developing
and leasing office properties. 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. At June 30, 2002, EOP Partnership owned or
had an interest in 766 office properties (the Office
Properties) comprising approximately 127.5 million
rentable square feet of office space and 79 industrial
properties (the Industrial Properties) comprising
approximately 6.0 million rentable square feet of
industrial space (together with the Office Properties, the
Properties). The Office Properties were, on a
weighted average basis, 90.0% occupied at June 30, 2002,
and are located in 146 submarkets in 34 markets in 21 states and
the District of Columbia. The Office Properties, by rentable
square feet, are located approximately 40.3% in central business
districts (CBDs) and approximately 59.7% in suburban
markets.

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.

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 six months ended June 30, 2002 and 2001
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, recurring nature.

7



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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 2001 statements in order to provide
comparability with the 2002 statements reported herein. These
reclassifications have not changed the 2001 results or
partners capital.

NOTE 3  ACQUISITIONS

In May 2002, EOP Partnership acquired the Army
and Navy Club office building for approximately
$37.4 million in cash from an unaffiliated party. The
property is located in Washington, D.C., and consists of
approximately 170,000 square feet of which 102,822 square feet
is office space.

NOTE 4  DISPOSITIONS

During the three months ended June 30, 2002,
EOP Partnership sold three office properties and two vacant land
parcels in separate transactions to various unaffiliated parties
for approximately $36.6 million. The total gain on the sale
of the wholly owned properties was approximately
$5.5 million. The two office properties and two vacant land
parcels sold were:

|                              |  |          |                 |          |  |              |   |  |  |  |         | 
|----------------------------- |  | -------- | --------------- | -------- |  | ------------ | - |  |  |  | ------- | 
|                              |  |          |                 | Building |  | Total Square
|Property                      |  | Location |                 | Count    |  | Footage     
|                              |  |          |                 |          |  |             
|Calais Office Center I and II |  |          | Anchorage, AK   |          |  |              | 2 |  |  |  | 190,599 | 
|Airport Service Center        |  |          | Burlingame, CA  |          |  |              | 1 |  |  |  | 36,310  | 
|Carlsbad Land                 |  |          | Carlsbad, CA    |          |  |              |  |  |  |  |        | 
|Wilsonville Land              |  |          | Wilsonville, OR |          |  |              |  |  |  |  |        | 
|                              |  |          |                 |          |  |              |   |  |  |  |         | 
|                              |  |          | Total           |          |  |              | 3 |  |  |  | 226,909 | 
|                              |  |          |                 |          |  |              |   |  |  |  |         | 

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, 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 both periods
presented. Below is a summary of the results of operations of
these properties through their respective disposition dates:

|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |       | 
|------------------------------------------------------------ | -------------- | ------------- | ----- | ------------ |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                                             |                |               |       |             
|                                                             |                | For the three |       | For the six 
|                                                             |                | months ended  |       | months ended
|                                                             |                | June 30,      |       | June 30,    
|                                                             |                |               |       |             
|(Dollars in thousands)                                       |                | 2002          |       | 2001         |  | 2002 |       | 2001 
|                                                             |                |               |       |              |  |      |       |      
|Property revenues                                            |                | $             | 585   |              |  | $    | 4,856 |       |  | $ | 3,505 |       |  | $ | 9,208 |      
|Interest income                                              |                |               |      |              |  |      | 2     |       |  |   |      |       |  |   | 4     |      
|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |      
|                                                             | Total revenues |               |       | 585          |  |      |       | 4,858 |  |   |       | 3,505 |  |   |       | 9,212 | 
|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |      
|Interest expense                                             |                |               |      |              |  |      | 73    |       |  |   | (25   | )     |  |   | 146   |      
|Depreciation and amortization                                |                |               | 26    |              |  |      | 959   |       |  |   | 602   |       |  |   | 1,860 |      
|Property operating expenses                                  |                |               | 463   |              |  |      | 1,809 |       |  |   | 1,743 |       |  |   | 3,535 |      
|Ground rent                                                  |                |               | 14    |              |  |      | 29    |       |  |   | 43    |       |  |   | 58    |      
|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |      
|                                                             | Total expenses |               |       | 503          |  |      |       | 2,870 |  |   |       | 2,363 |  |   |       | 5,599 | 
|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |      
|Income before taxes and net gain on sales of real
    estate |                |               | 82    |              |  |      | 1,988 |       |  |   | 1,142 |       |  |   | 3,613 |      
|Income taxes                                                 |                |               | 25    |              |  |      |      |       |  |   | 25    |       |  |   |      |      
|Net gain on sales of real estate                             |                |               | 5,499 |              |  |      |      |       |  |   | 2,490 |       |  |   |      |      
|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |      
|Net income                                                   |                | $             | 5,606 |              |  | $    | 1,988 |       |  | $ | 3,657 |       |  | $ | 3,613 |      
|                                                             |                |               |       |              |  |      |       |       |  |   |       |       |  |   |       |      

8



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


NOTE 5  INVESTMENT IN
UNCONSOLIDATED JOINT VENTURES

EOP Partnership has several investments in
unconsolidated joint ventures consisting of Office Properties
and property management and development companies and two
companies that provide fully furnished office space to tenants.
Combined summarized financial information of the unconsolidated
joint ventures is as follows:

|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------------------------------ | --------- | ----------------- | --------- | - | --------- | --------- | --------- | 
|(Dollars in thousands)                                                                                                                                           |                                    | June 30, 2002                                                |           | December 31, 2001
|                                                                                                                                                                 |                                    |                                                              |           |                  
|Balance Sheets:                                                                                                                                                  |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 | Real estate, net                   |                                                              | $         | 3,022,096         |           |   | $         | 3,135,250 |          
|                                                                                                                                                                 | Other assets                       |                                                              |           | 239,884           |           |   |           | 276,322   |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 |                                    | Total Assets                                                 |           | $                 | 3,261,980 |   |           | $         | 3,411,572 | 
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 | Mortgage debt                      |                                                              | $         | 1,309,037         |           |   | $         | 1,370,025 |          
|                                                                                                                                                                 | Other liabilities                  |                                                              |           | 149,442           |           |   |           | 169,987   |          
|                                                                                                                                                                 | Partners and shareholders equity |                                                              |           | 1,803,501         |           |   |           | 1,871,560 |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 |                                    | Total Liabilities and Partners and
    Shareholders Equity |           | $                 | 3,261,980 |   |           | $         | 3,411,572 | 
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|EOP Partnerships share of equity                                                                                                                                |                                    | $                                                            | 1,113,049 |                   |           | $ | 1,194,441 |          
|Net excess of cost of investments over the net
    book value of underlying net assets, net of accumulated
    depreciation of $18,616 and $17,517, respectively |                                    |                                                              | 124,046   |                   |           |   | 126,686   |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|Carrying value of investments in unconsolidated
    joint ventures                                                                                               |                                    | $                                                            | 1,237,095 |                   |           | $ | 1,321,127 |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|EOP Partnerships share of unconsolidated
    non-recourse mortgage debt                                                                                         |                                    | $                                                            | 817,656   |                   |           | $ | 848,944   |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          

|                          |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |         |         |         | 
|------------------------- | ----------------------------------------------------------------------------------------------------------- | ----------------------------- | -------------- | ------------------------ | ------ | ------ | - | ------- | ------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                          |                                                                                                             |                               |                |                         
|                          |                                                                                                             | For the three months ended    |                | For the six months ended
|                          |                                                                                                             | June 30,                      |                | June 30,                
|                          |                                                                                                             |                               |                |                         
|(Dollars in thousands)    |                                                                                                             | 2002                          |                | 2001                     |        | 2002   |   | 2001   
|                          |                                                                                                             |                               |                |                          |        |        |   |        
|Statements of Operations: |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |        
|                          | Revenues                                                                                                    |                               | $              | 126,730                  |        |        | $ | 119,836 |        |        | $ | 336,572 |         |         | $ | 250,655 |        
|                          |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |        
|                          | Expenses:                                                                                                   |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |         |        
|                          |                                                                                                             | Interest expense              |                |                          | 19,390 |        |   |         | 24,906 |        |   |         | 38,907  |         |   |         | 50,216  |        
|                          |                                                                                                             | Depreciation and amortization |                |                          | 20,683 |        |   |         | 20,208 |        |   |         | 41,801  |         |   |         | 41,188  |        
|                          |                                                                                                             | Operating expenses            |                |                          | 44,659 |        |   |         | 48,173 |        |   |         | 101,177 |         |   |         | 103,816 |        
|                          |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |        
|                          |                                                                                                             |                               | Total expenses |                          |        | 84,732 |   |         |        | 93,287 |   |         |         | 181,885 |   |         |         | 195,220 | 
|                          |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |        
|                          | Net income before gain on sale of real estate and
    cumulative effect of a change in accounting principle |                               |                | 41,998                   |        |        |   | 26,549  |        |        |   | 154,687 |         |         |   | 55,435  |        
|                          | Gain on sale of real estate                                                                                 |                               |                | 140                      |        |        |   |        |        |        |   | 3,693   |         |         |   |        |        
|                          | Cumulative effect of a change in accounting
    principle                                                   |                               |                |                         |        |        |   |        |        |        |   |        |         |         |   | (2,279  | )      
|                          |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |        
|                          | Net income                                                                                                  |                               | $              | 42,138                   |        |        | $ | 26,549  |        |        | $ | 158,380 |         |         | $ | 53,156  |        
|                          |                                                                                                             |                               |                |                          |        |        |   |         |        |        |   |         |         |         |   |        

9



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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 six months ended
|                            |                                                         | June 30,                   |   | June 30,                
|                            |                                                         |                            |   |                         
|(Dollars in thousands)      |                                                         | 2002                       |   | 2001                     |  | 2002 |   | 2001  
|                            |                                                         |                            |   |                          |  |      |   |       
|EOP Partnerships share of: |                                                         |                            |   |                          |  |      |   |        |  |  |   |        |  |  |   |       
|                            | Net income                                              |                            | $ | 22,297                   |  |      | $ | 17,864 |  |  | $ | 79,925 |  |  | $ | 33,290 | 
|                            |                                                         |                            |   |                          |  |      |   |        |  |  |   |        |  |  |   |       
|                            | Interest expense and loan cost amortization             |                            | $ | 13,407                   |  |      | $ | 15,406 |  |  | $ | 26,661 |  |  | $ | 31,821 | 
|                            |                                                         |                            |   |                          |  |      |   |        |  |  |   |        |  |  |   |       
|                            | Depreciation and amortization (real estate
    related) |                            | $ | 12,138                   |  |      | $ | 12,593 |  |  | $ | 24,948 |  |  | $ | 25,270 | 
|                            |                                                         |                            |   |                          |  |      |   |        |  |  |   |        |  |  |   |       

NOTE 6  PARTNERS
CAPITAL

Units

The following table presents the changes in the
issued and outstanding Units since March 31, 2002:

|                              |                                                                                           |  |             |            |  
|----------------------------- | ----------------------------------------------------------------------------------------- |  | ----------- | ---------- | -
|Outstanding at March 31, 2002 |                                                                                           |  | 472,586,361 |           
|                              | Issued to Equity Office related to Common Shares
    issued for share option exercises    |  |             | 553,599    |  
|                              | Units redeemed for cash                                                                   |  |             | (2,948,453 | )
|                              | Restricted shares issued / cancelled, net                                                 |  |             | (8,000     | )
|                              | Units issued to Equity Office for Common Shares
    issued through dividend reinvestments |  |             | 25,751     |  
|                              |                                                                                           |  |             |           
|Outstanding at June 30, 2002. |                                                                                           |  | 470,209,258 |           
|                              |                                                                                           |  |             |           

Distributions

|                         |  |              |          |           |  |             |                |  |  |  |                | 
|------------------------ |  | ------------ | -------- | --------- |  | ----------- | -------------- |  |  |  | -------------- | 
|                         |  | Quarterly    |          |           |  |            
|                         |  | Distribution |          |           |  |            
|                         |  | Amount       |          |           |  | Unitholder 
|                         |  | Per Unit     |          | Date Paid |  | Record Date
|                         |  |              |          |           |  |            
|Units                    |  |              | $.50     |           |  |             | July 15, 2002  |  |  |  | June 28, 2002  | 
|Series A Preferred Units |  |              | .56125   |           |  |             | June 17, 2002  |  |  |  | June 3, 2002   | 
|Series B Preferred Units |  |              | .65625   |           |  |             | May 15, 2002   |  |  |  | May 1, 2002    | 
|Series C Preferred Units |  |              | .5390625 |           |  |             | June 17, 2002  |  |  |  | June 3, 2002   | 
|Series E Preferred Units |  |              | .4921875 |           |  |             | April 30, 2002 |  |  |  | April 15, 2002 | 
|Series F Preferred Units |  |              | .50      |           |  |             | July 1, 2002   |  |  |  | June 14, 2002  | 

10



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


NOTE 7  EARNINGS PER
UNIT

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

|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |             |           | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | - | --------------------------------- | --------- | ---- | - | ----------- | --------- |  | - | ----------- | --------- |  | - | ----------- | --------- | 
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                  
|                                                                                              |                                                                                                                                 | For the three months ended June 30,                                                              |   | For the six months ended June 30,
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                  
|(Dollars in thousands, except per unit data)                                                  |                                                                                                                                 | 2002                                                                                             |   | 2001                              |           | 2002 |   | 2001       
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |            
|Numerator:                                                                                    |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Net income available for Units before
    discontinued operations and cumulative effect of a change in
    accounting principle |                                                                                                  | $ | 182,046                           |           |      | $ | 137,395     |           |  | $ | 412,629     |           |  | $ | 274,050     |          
|                                                                                              | Discontinued operations                                                                                                         |                                                                                                  |   | 5,606                             |           |      |   | 1,988       |           |  |   | 3,657       |           |  |   | 3,613       |          
|                                                                                              | Cumulative effect of a change in accounting
    principle                                                                       |                                                                                                  |   |                                  |           |      |   |            |           |  |   |            |           |  |   | (1,142      | )        
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Numerator for basic earnings per Unit 
    net income available for Units and unit equivalents                                 |                                                                                                  | $ | 187,652                           |           |      | $ | 139,383     |           |  | $ | 416,286     |           |  | $ | 276,521     |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|Denominator:                                                                                  |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Denominator for net income available per weighted
    average Unit outstanding  basic                                          |                                                                                                  |   | 470,109,997                       |           |      |   | 348,782,348 |           |  |   | 470,132,017 |           |  |   | 348,630,252 |          
|                                                                                              | Effect of dilutive securities:                                                                                                  |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |             |          
|                                                                                              |                                                                                                                                 | Units issued upon exercise of Equity Office share
    options, put options and restricted shares |   |                                   | 2,500,593 |      |   |             | 2,737,434 |  |   |             | 2,594,939 |  |   |             | 2,822,145 | 
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Denominator for net income available per weighted
    average Unit and unit equivalent outstanding  diluted                    |                                                                                                  |   | 472,610,590                       |           |      |   | 351,519,782 |           |  |   | 472,726,956 |           |  |   | 351,452,397 |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|Net income available per weighted average Unit
    outstanding  basic:                       |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Net income before discontinued operations and
    cumulative effect of a change in accounting principle                         |                                                                                                  | $ | 0.39                              |           |      | $ | 0.39        |           |  | $ | 0.88        |           |  | $ | 0.79        |          
|                                                                                              | Discontinued operations                                                                                                         |                                                                                                  |   | 0.01                              |           |      |   | 0.01        |           |  |   | 0.01        |           |  |   | 0.01        |          
|                                                                                              | Cumulative effect of a change in accounting
    principle                                                                       |                                                                                                  |   |                                  |           |      |   |            |           |  |   |            |           |  |   | (0.01       | )        
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Net income available per weighted average Unit
    outstanding  basic                                                          |                                                                                                  | $ | 0.40                              |           |      | $ | 0.40        |           |  | $ | 0.89        |           |  | $ | 0.79        |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|Net income available per weighted average Unit
    and unit equivalent outstanding  diluted: |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Net income before discontinued operations and
    cumulative effect of a change in accounting principle                         |                                                                                                  | $ | 0.39                              |           |      | $ | 0.39        |           |  | $ | 0.87        |           |  | $ | 0.78        |          
|                                                                                              | Discontinued operations                                                                                                         |                                                                                                  |   | 0.01                              |           |      |   | 0.01        |           |  |   | 0.01        |           |  |   | 0.01        |          
|                                                                                              | Cumulative effect of a change in accounting
    principle                                                                       |                                                                                                  |   |                                  |           |      |   |            |           |  |   |            |           |  |   |            |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            
|                                                                                              | Net income available per weighted average Unit
    and unit equivalent outstanding  diluted                                    |                                                                                                  | $ | 0.40                              |           |      | $ | 0.40        |           |  | $ | 0.88        |           |  | $ | 0.79        |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |                                   |           |      |   |             |           |  |   |             |           |  |   |            

11



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


The following securities on a weighted average
basis were not included in the computation of net income
available per weighted average Unit and unit equivalent
outstanding since they would have an antidilutive effect:

|                         |       |                  |        |                            |      |  |                          |            |  |  |           |            |  |      |           |            |  |  |           |            | 
|------------------------ | ----- | ---------------- | ------ | -------------------------- | ---- |  | ------------------------ | ---------- |  |  | --------- | ---------- |  | ---- | --------- | ---------- |  |  | --------- | ---------- | 
|                         |       |                  |        |                            |      | 
|                         |       |                  |        | For the three months ended |      |  | For the six months ended |           
|                         |       |                  |        | June 30,                   |      |  | June 30,                 |           
|                         |       | Weighted Average |        |                            |      |  |                          |            | 
|Antidilutive Securities  |       | Exercise Price   |        |                            | 2002 |  |                          | 2001       |  |  | 2002      |            |  | 2001 |          
|                         |       |                  |        |                            |      |  |                          |            |  |  |           |            |  |      |          
|Share options            |       | $                | 30.320 |                            |      |  | 5,107,942                |            |  |  |          |            |  |      | 5,190,424 |            |  |  |          |           
|Share options            |       | $                | 30.100 |                            |      |  |                         |            |  |  | 7,717,882 |            |  |      |          |            |  |  | 6,560,240 |           
|Series B Preferred Units |       | $                | 35.700 |                            |      |  | 5,990,000                |            |  |  | 5,990,000 |            |  |      | 5,990,000 |            |  |  | 5,994,807 |           
|Warrants                 |       | $                | 39.375 |                            |      |  | 5,000,000                |            |  |  | 5,000,000 |            |  |      | 5,000,000 |            |  |  | 5,000,000 |           
|                         |       |                  |        |                            |      |  |                          |            |  |  |           |            |  |      |          
|                         | Total |                  |        |                            |      |  |                          | 16,097,942 |  |  |           | 18,707,882 |  |      |           | 16,180,424 |  |  |           | 17,555,047 | 
|                         |       |                  |        |                            |      |  |                          |            |  |  |           |            |  |      |          




NOTE 8  SEGMENT
INFORMATION

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

12



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |   |          |          |   |   |          |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------- | --------- | ---------- | --------- | - | -------- | ------------ | - | ------ | ---------- | ---------- | --------- | --------- | -------- | -------- | ------------ | - | -------- | -------- | - | - | -------- | -------- | -
|                                                                                                                                                          |                                                |                                    
|                                                                                                                                                          |                                                | For the three months ended June 30, |          
|                                                                                                                                                          |                                                |                                     |          
|                                                                                                                                                          |                                                |                                     |           |           
|                                                                                                                                                          |                                                | 2002                                |           |            | 2001      |  
|                                                                                                                                                          |                                                |                                     |           |            |           |  
|                                                                                                                                                          |                                                | Office                              |           |            | Corporate |   |          |              |   | Office |            |            | Corporate |           |          |         
|(Dollars in thousands)                                                                                                                                    |                                                | Properties                          |           |            | and Other |   |          | Consolidated |   |        | Properties |            |           | and Other |          |          | Consolidated |  
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|Property operating revenues                                                                                                                               |                                                | $                                   | 858,731   |            |           | $ | 13,744   |              |   | $      | 872,475    |            |           | $         | 645,919  |          |              | $ | 3,935    |          |   | $ | 649,854  |         
|Property operating expenses                                                                                                                               |                                                |                                     | (281,667  | )          |           |   | (2,572   | )            |   |        | (284,239   | )          |           |           | (212,914 | )        |              |   | (1,263   | )        |   |   | (214,177 | )       
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|                                                                                                                                                          | Net operating income                           |                                     |           | 577,064    |           |   |          | 11,172       |   |        |            | 588,236    |           |           |          | 433,005  |              |   |          | 2,672    |   |   |          | 435,677  |  
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|Adjustments to arrive at net income:                                                                                                                      |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |   |          |          |   |   |          |         
|                                                                                                                                                          | Other revenues                                 |                                     |           | 816        |           |   |          | 10,674       |   |        |            | 11,490     |           |           |          | 1,395    |              |   |          | 12,790   |   |   |          | 14,185   |  
|                                                                                                                                                          | Interest expense (1)                           |                                     |           | (48,706    | )         |   |          | (153,977     | ) |        |            | (202,683   | )         |           |          | (51,258  | )            |   |          | (105,590 | ) |   |          | (156,848 | )
|                                                                                                                                                          | Depreciation and amortization                  |                                     |           | (168,888   | )         |   |          | (6,174       | ) |        |            | (175,062   | )         |           |          | (120,798 | )            |   |          | (4,852   | ) |   |          | (125,650 | )
|                                                                                                                                                          | Ground rent                                    |                                     |           | (5,317     | )         |   |          |             |   |        |            | (5,317     | )         |           |          | (3,347   | )            |   |          |         |   |   |          | (3,347   | )
|                                                                                                                                                          | General and administrative                     |                                     |           |           |           |   |          | (38,163      | ) |        |            | (38,163    | )         |           |          | 37       |              |   |          | (23,738  | ) |   |          | (23,701  | )
|                                                                                                                                                          | Impairment on securities and other investments |                                     |           |           |           |   |          |             |   |        |            |           |           |           |          |         |              |   |          | (5,499   | ) |   |          | (5,499   | )
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|                                                                                                                                                          | Total adjustments to arrive at net income      |                                     |           | (222,095   | )         |   |          | (187,640     | ) |        |            | (409,735   | )         |           |          | (173,971 | )            |   |          | (126,889 | ) |   |          | (300,860 | )
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and discontinued operations |                                                |                                     | 354,969   |            |           |   | (176,468 | )            |   |        | 178,501    |            |           |           | 259,034  |          |              |   | (124,217 | )        |   |   | 134,817  |         
|Income taxes                                                                                                                                              |                                                |                                     | (2,152    | )          |           |   | 226      |              |   |        | (1,926     | )          |           |           | (1,216   | )        |              |   | (1,840   | )        |   |   | (3,056   | )       
|Minority interests                                                                                                                                        |                                                |                                     | (975      | )          |           |   | (20      | )            |   |        | (995       | )          |           |           | (1,353   | )        |              |   |         |          |   |   | (1,353   | )       
|Income from investment in unconsolidated joint
    ventures                                                                                               |                                                |                                     | 21,520    |            |           |   | 777      |              |   |        | 22,297     |            |           |           | 16,341   |          |              |   | 1,523    |          |   |   | 17,864   |         
|Discontinued operations (including net gain on
    disposal of $5,499 and $0, respectively)                                                               |                                                |                                     | 5,606     |            |           |   |         |              |   |        | 5,606      |            |           |           | 1,988    |          |              |   |         |          |   |   | 1,988    |         
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|Net income                                                                                                                                                |                                                | $                                   | 378,968   |            |           | $ | (175,485 | )            |   | $      | 203,483    |            |           | $         | 274,794  |          |              | $ | (124,534 | )        |   | $ | 150,260  |         
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|Capital and tenant improvements                                                                                                                           |                                                | $                                   | 70,792    |            |           | $ | 1,434    |              |   | $      | 72,226     |            |           | $         | 59,115   |          |              | $ | 15,720   |          |   | $ | 74,835   |         
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|Investment in unconsolidated joint ventures                                                                                                               |                                                | $                                   | 1,212,438 |            |           | $ | 24,657   |              |   | $      | 1,237,095  |            |           |           |          |          |              |   |          |          |   |   |          |         
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  
|                                                                                                                                                          | Total Assets                                   |                                     | $         | 24,470,909 |           |   | $        | 1,210,941    |   |        | $          | 25,681,850 |           |           |          |          |              |   |          |          |   |   |          |          |  
|                                                                                                                                                          |                                                |                                     |           |            |           |   |          |              |   |        |            |            |           |           |          |          |              |  




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

13



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |   |          |          |   |   |           |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------------------------- | --------- | ---------- | --------- | - | -------- | ------------ | - | ------ | ---------- | ---------- | --------- | --------- | --------- | -------- | ------------ | - | -------- | -------- | - | - | --------- | -------- | -
|                                                                                                                                                                                                                     |                                                |                                  
|                                                                                                                                                                                                                     |                                                | For the six months ended June 30, |          
|                                                                                                                                                                                                                     |                                                |                                   |          
|                                                                                                                                                                                                                     |                                                |                                   |           |           
|                                                                                                                                                                                                                     |                                                | 2002                              |           |            | 2001      |  
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |  
|                                                                                                                                                                                                                     |                                                | Office                            |           |            | Corporate |   |          |              |   | Office |            |            | Corporate |           |           |         
|(Dollars in thousands)                                                                                                                                                                                               |                                                | Properties                        |           |            | and Other |   |          | Consolidated |   |        | Properties |            |           | and Other |           |          | Consolidated |  
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|Property operating revenues                                                                                                                                                                                          |                                                | $                                 | 1,717,538 |            |           | $ | 28,460   |              |   | $      | 1,745,998  |            |           | $         | 1,290,029 |          |              | $ | 8,682    |          |   | $ | 1,298,711 |         
|Property operating expenses                                                                                                                                                                                          |                                                |                                   | (551,422  | )          |           |   | (5,563   | )            |   |        | (556,985   | )          |           |           | (424,603  | )        |              |   | (2,439   | )        |   |   | (427,042  | )       
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|                                                                                                                                                                                                                     | Net operating income                           |                                   |           | 1,166,116  |           |   |          | 22,897       |   |        |            | 1,189,013  |           |           |           | 865,426  |              |   |          | 6,243    |   |   |           | 871,669  |  
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|Adjustments to arrive at net income:                                                                                                                                                                                 |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |   |          |          |   |   |           |         
|                                                                                                                                                                                                                     | Other revenues                                 |                                   |           | 1,337      |           |   |          | 21,074       |   |        |            | 22,411     |           |           |           | 2,526    |              |   |          | 24,664   |   |   |           | 27,190   |  
|                                                                                                                                                                                                                     | Interest expense (1)                           |                                   |           | (97,071    | )         |   |          | (310,458     | ) |        |            | (407,529   | )         |           |           | (103,786 | )            |   |          | (210,929 | ) |   |           | (314,715 | )
|                                                                                                                                                                                                                     | Depreciation and amortization                  |                                   |           | (333,461   | )         |   |          | (12,761      | ) |        |            | (346,222   | )         |           |           | (240,278 | )            |   |          | (9,445   | ) |   |           | (249,723 | )
|                                                                                                                                                                                                                     | Ground rent                                    |                                   |           | (10,858    | )         |   |          |             |   |        |            | (10,858    | )         |           |           | (6,399   | )            |   |          |         |   |   |           | (6,399   | )
|                                                                                                                                                                                                                     | General and administrative                     |                                   |           |           |           |   |          | (71,117      | ) |        |            | (71,117    | )         |           |           |         |              |   |          | (47,823  | ) |   |           | (47,823  | )
|                                                                                                                                                                                                                     | Impairment on securities and other investments |                                   |           |           |           |   |          |             |   |        |            |           |           |           |           |         |              |   |          | (8,499   | ) |   |           | (8,499   | )
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|                                                                                                                                                                                                                     | Total adjustments to arrive at net income      |                                   |           | (440,053   | )         |   |          | (373,262     | ) |        |            | (813,315   | )         |           |           | (347,937 | )            |   |          | (252,032 | ) |   |           | (599,969 | )
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                |                                   | 726,063   |            |           |   | (350,365 | )            |   |        | 375,698    |            |           |           | 517,489   |          |              |   | (245,789 | )        |   |   | 271,700   |         
|Income taxes                                                                                                                                                                                                         |                                                |                                   | (2,197    | )          |           |   | (6,735   | )            |   |        | (8,932     | )          |           |           | (1,226    | )        |              |   | (3,347   | )        |   |   | (4,573    | )       
|Minority interests                                                                                                                                                                                                   |                                                |                                   | (2,361    | )          |           |   | (40      | )            |   |        | (2,401     | )          |           |           | (4,606    | )        |              |   |         |          |   |   | (4,606    | )       
|Income from investment in unconsolidated joint
    ventures                                                                                                                                                          |                                                |                                   | 81,218    |            |           |   | (1,293   | )            |   |        | 79,925     |            |           |           | 31,456    |          |              |   | 1,834    |          |   |   | 33,290    |         
|Discontinued operations (including net gain on
    disposal of $2,490 and $0, respectively)                                                                                                                          |                                                |                                   | 3,657     |            |           |   |         |              |   |        | 3,657      |            |           |           | 3,613     |          |              |   |         |          |   |   | 3,613     |         
|Cumulative effect of a change in accounting
    principle                                                                                                                                                            |                                                |                                   |          |            |           |   |         |              |   |        |           |            |           |           | (1,142    | )        |              |   |         |          |   |   | (1,142    | )       
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|Net income                                                                                                                                                                                                           |                                                | $                                 | 806,380   |            |           | $ | (358,433 | )            |   | $      | 447,947    |            |           | $         | 545,584   |          |              | $ | (247,302 | )        |   | $ | 298,282   |         
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|Capital and tenant improvements                                                                                                                                                                                      |                                                | $                                 | 127,757   |            |           | $ | 2,684    |              |   | $      | 130,441    |            |           | $         | 106,861   |          |              | $ | 21,884   |          |   | $ | 128,745   |         
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|Investment in unconsolidated joint ventures                                                                                                                                                                          |                                                | $                                 | 1,212,438 |            |           | $ | 24,657   |              |   | $      | 1,237,095  |            |           |           |           |          |              |   |          |          |   |   |           |         
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  
|                                                                                                                                                                                                                     | Total Assets                                   |                                   | $         | 24,470,909 |           |   | $        | 1,210,941    |   |        | $          | 25,681,850 |           |           |           |          |              |   |          |          |   |   |           |          |  
|                                                                                                                                                                                                                     |                                                |                                   |           |            |           |   |          |              |   |        |            |            |           |           |           |          |              |  




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

14



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)







NOTE 9  COMMITMENTS AND
CONTINGENCIES




Concentration of
Credit Risk

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




Environmental

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




Litigation

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




Contingencies

Certain Properties owned in joint ventures with
unaffiliated parties have buy/sell options that may be exercised
to acquire the other partners interest by either EOP
Partnership or its joint venture partner if certain conditions
are met as set forth in the respective joint venture agreement.

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




Insurance

EOP Partnership has deductible amounts on
insurance policies related to property damage, business
interruption, workers compensation, auto liability and general
liability losses that may be incurred at the Properties and is
insured through third-party carriers for losses in excess of the
deductible amounts subject to certain limits. Should an
uninsured or underinsured loss occur, EOP Partnership could lose
its investment in, and anticipated income and cash flows from,
one or more of the Properties. In addition, there can be no

15



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


assurance that third party insurers will be able
to maintain reinsurance sufficient to cover any losses that may
be incurred. The following summarizes EOP Partnerships
insurance coverage:

|                                          |  |                   |                                     |  |                       |  |                         | 
|----------------------------------------- |  | ----------------- | ----------------------------------- |  | --------------------- |  | ----------------------- | 
|                                          |  | EOP Partnerships |                                     |  |                      
|                                          |  | Per Occurrence    |                                     |  | Third Party Insurance | 
|Insurance Coverage                        |  | Deductible Limit  |                                     |  | Carrier Coverage      | 
|                                          |  |                   |                                     |  |                       | 
|Property damage and business interruption |  |                   | $50,000 for property damage         |  |                       |  | $ 50,000 - $1 billion   | 
|                                          |  |                   | 5% of building value for earthquake |  |                       |  | $300 million            | 
|Workers compensation                      |  |                   | $250,000                            |  |                       |  | $250,000 - $300 million | 
|Automobile liability                      |  |                   | $250,000                            |  |                       |  | $250,000 - $300 million | 
|General liability                         |  |                   | $500,000                            |  |                       |  | $500,000 - $300 million | 
|Acts of terrorism                         |  |                   | 2% of building value                |  |                       |  | $200 million            | 

The commercial insurance coverage with third
party insurance carriers includes coverage for acts of terrorism
for up to $200 million in the aggregate for all of the
Properties. EOP Partnerships current coverage for
terrorist insurance excludes nuclear, chemical or biological
acts of terrorism. There can be no assurance, however, that
insurance coverage for acts of terrorism will be available in
the future. It is also possible that the lenders under our
unsecured credit facility and our secured mortgage indebtedness
could declare a default based on the absence of insurance
coverage for terrorist acts of the type and amount in place
before September 11, 2001. If one or more of our lenders
were to declare such a default, we would challenge such
conclusion as not being commercially reasonable in the context
of the current marketplace.

EOP Partnership carries earthquake insurance on
all the Properties, including those in California and
Washington, subject to coverage limitations, which EOP
Partnership believes are commercially reasonable. There can be
no assurance that earthquakes may not seriously damage the
Properties or that the recoverable amount of insurance proceeds
will be sufficient to fully cover reconstruction costs and other
losses suffered.




Commitments

In accordance with the agreement governing the
investment in Wright Runstad Associates Limited Partnership
(WRALP), EOP Partnership agreed, for a period
generally continuing until December 31, 2007, to make
available to WRALP up to $20.0 million in additional
financing or credit support for future development. As of
June 30, 2002, no amounts have been funded pursuant to this
agreement. However, EOP Partnership has guaranteed WRALPs
line of credit, which has an outstanding balance of
approximately $12.9 million as of June 30, 2002.
WRALPs current line of credit matures in July 2003.

EOP Partnership has agreed to loan up to
$25 million to Wilson Investors (WI) for its
required contribution to Wilson/Equity Office (W/
EO) at a 15% return per annum. W/ EO is owned 49.9% by EOP
Partnership and 50.1% by WI. William Wilson III, a trustee
of Equity Office, through his ownership of WI, owns
approximately 22% of W/ EO (and approximately 30% of any promote
to which WI is entitled under the joint venture agreement). As
of June 30, 2002, all amounts lent to WI were repaid and
the remaining commitment amount is $13 million. As a result of
the recently enacted Sarbanes-Oxley Act of 2002, it is possible
(depending on the scope of the regulations to be adopted by the
SEC) that EOP Partnership could be prohibited from lending
further amounts to WI under this arrangement or from modifying
or renewing this arrangement.




NOTE 10  SUBSEQUENT
EVENTS



| |    |                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | In July, Equity Office redeemed its 7,994,000
    outstanding 8.98% Series A Cumulative Redeemable Preferred
    Shares and EOP Partnership cancelled a corresponding number of
    8.98% Series A Cumulative Redeemable Preferred Units. On
    the same date, Equity Office issued 8,500,000 7.75%
    Series G Cumulative Redeemable Preferred Shares and EOP
    Partnership issued a corresponding

16



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##### Table of Contents



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)




| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | number of Series G Cumulative Redeemable
    Preferred Units. Substantially all of the net proceeds from the
    issuance of the Series G preferred shares totaling
    approximately $206 million were used to redeem the
    Series A preferred shares.                                                                                                                                                                                                                                                                                                                                                                                 
|
| | 2. | In July, Equity Office announced approval of a
    common share repurchase program under which Equity Office may
    purchase up to $200 million of Common Shares over the next
    12 months, at the discretion of management. Management
    intends to initially execute $100 million of this share
    repurchase program, as market conditions warrant, and will
    evaluate the balance of the program at a later date. The Common
    Shares may be repurchased in the open market or privately
    negotiated transactions. For each Common Share purchased in this
    program EOP Partnership will cancel a corresponding Unit.

17



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##### Table of Contents








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

Overview

The following discussion and analysis of the
consolidated financial condition and consolidated results of
operations should be read together with the consolidated
financial statements of EOP Partnership and 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. Statements
contained in this Managements Discussion and
Analysis of Financial Condition and Results of
Operations, including, without limitation, the
Market Risk and
Developments disclosures, and elsewhere in
this Form 10-Q, 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 Reports on Form 8-K filed with the
Securities and Exchange Commission on February 12, 2002 and
June 27, 2002. 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 EOP Partnership has made assumptions are
the following:



| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Future economic conditions which may impact the
    demand for office space as well as current or prospective
    tenants abilities or willingness to pay rent, either at
    current or increased levels;
|
| |  | The extent of any tenant bankruptcies or defaults
    that may occur;                                                                                                                                      
|
| |  | The availability of new competitive supply,
    including competitive supply which may be available by way of
    sublease;                                                                                
|
| |  | The extent of future demand for high-rise and
    other office space in the markets in which EOP Partnership has a
    presence;                                                                           
|
| |  | The costs to complete and lease-up pending
    developments at anticipated rents;                                                                                                                          
|
| |  | Future demand for EOP Partnerships debt and
    equity securities;                                                                                                                                        
|
| |  | EOP Partnerships continued access to
    adequate credit facilities or other debt financing on acceptable
    terms;                                                                                      
|
| |  | EOP Partnerships ability to achieve
    economies of scale over time;                                                                                                                                     
|
| |  | EOP Partnerships ability to attract and
    retain high quality personnel at a reasonable cost;                                                                                                           
|
| |  | Changes in interest rates;                                                                                                                                                                                 
|
| |  | Changes in operating expenses, including utility,
    insurance and security costs;                                                                                                                        
|
| |  | EOP Partnerships continuing ability to pay
    amounts due to its noteholders and preferred noteholders before
    any distribution to holders of Units; and                                              
|
| |  | EOP Partnerships ability to secure adequate
    insurance for occurrences such as terrorist acts and earthquakes.                                                                                         

During the six months ended June 30, 2002,
we completed the following key transactions:



| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Issued $500 million of unsecured notes due
    February 2012 at an all-in cost of 7.0% and exchanged
    approximately $260.0 million of these notes for the
    previously outstanding $250.0 million MandatOry Par Put
    Remarketed SecuritiesSM which were subject to
    mandatory redemption;
|
| |  | Sold ten office properties, two vacant land
    parcels and a 50% interest in four parking facilities for
    approximately $193.4 million;                                                                                                                                                         
|
| |  | Received a lease termination fee of approximately
    $40 million in connection with a previously proposed office
    building development;                                                                                                                                                         

18



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##### Table of Contents





| |   |                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Acquired the Army and Navy Club office building
    for approximately $37.4 million. The property is located in
    Washington, D.C., and consists of approximately 170,000 square
    feet of which 102,822 square feet is office space; and
|
| |  | Equity Office called for redemption its 7,994,000
    outstanding 8.98% Series A Cumulative Redeemable Preferred
    Shares. The redemption date was July 29, 20002.                                                                         




Critical Accounting Policies and
Estimates

Refer to our 2001 Annual Report on Form 10-K
for a discussion of our critical accounting policies, which
include revenue recognition, allowance for doubtful accounts,
impairment of long-lived assets, depreciation and fair value of
financial instruments. During the second quarter of 2002, there
were no material changes to these policies.






Results of Operations







General


The following discussion is based primarily on
the consolidated financial statements as of June 30, 2002
and for the three and six months ended June 30, 2002 and
2001.

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

|                                            |                                                                              |               |  |           |                |  |  |                 |   |  |  |            |  
|------------------------------------------- | ---------------------------------------------------------------------------- | ------------- |  | --------- | -------------- |  |  | --------------- | - |  |  | ---------- | -
|Office Property Data:                       |                                                                              | Top 5 Markets |  |           | Top 10 Markets |  |  | Total Portfolio |  
|                                            |                                                                              |               |  |           |                |  |  |                 |  
|For the six months ended June 30,
    2002: |                                                                              |               |  |           |                |  |  |                 |   |  |  |           
|                                            | Portion of total portfolio based on square feet
    at end of period         |               |  | 42.2      | %              |  |  | 67.3            | % |  |  | 100.0      | %
|                                            | Weighted average occupancy at end of period                                  |               |  | 90.1      | %              |  |  | 90.4            | % |  |  | 90.0       | %
|                                            | Gross square footage leased during the period                                |               |  | 4,073,843 |                |  |  | 6,595,362       |   |  |  | 10,120,219 |  
|                                            | Weighted average annual rent per square foot
    leased during the period(a) |               |  | $38.10    |                |  |  | $34.82          |   |  |  | $30.77     |  
|For the six months ended June 30,
    2001: |                                                                              |               |  |           |                |  |  |                 |   |  |  |           
|                                            | Portion of total portfolio based on square feet
    at end of period(b)      |               |  | 40.6      | %              |  |  | 66.2            | % |  |  | 100.0      | %
|                                            | Weighted average occupancy at end of period(b)                               |               |  | 96.5      | %              |  |  | 95.7            | % |  |  | 94.7       | %
|                                            | Gross square footage leased during the period                                |               |  | 2,695,490 |                |  |  | 4,501,389       |   |  |  | 7,220,082  |  
|                                            | Weighted average annual rent per square foot
    leased during the period(a) |               |  | $51.94    |                |  |  | $45.96          |   |  |  | $37.40     |  
|For the year ended December 31,
    2001:   |                                                                              |               |  |           |                |  |  |                 |   |  |  |           
|                                            | Portion of total portfolio based on square feet
    at end of period         |               |  | 42.0      | %              |  |  | 66.9            | % |  |  | 100.0      | %
|                                            | Weighted average occupancy at end of period                                  |               |  | 92.5      | %              |  |  | 92.7            | % |  |  | 91.8       | %
|                                            | Gross square footage leased during the period                                |               |  | 5,288,539 |                |  |  | 8,944,907       |   |  |  | 14,711,018 |  
|                                            | Weighted average annual rent per square foot
    leased during the period(a) |               |  | $46.36    |                |  |  | $41.48          |   |  |  | $34.17     |  




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

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|    |  |                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------
|(b) |  | These amounts include the Office Properties
    acquired in the Spieker Merger on July 2, 2001.

As of June 30, 2002, approximately
68,548,754 occupied square feet (approximately 53.8% of the
total office portfolio) is expiring through 2006. The average
annual rent per square foot for these leases is presented in the
table below. Upon expiration, we may be unable to release this
space at rents at or above the current rent or be able to
re-lease all of this space within a reasonable time period.

|      |  |                 |            |  |                     |   |       | 
|----- |  | --------------- | ---------- |  | ------------------- | - | ----- | 
|      |  | Square Feet of  |            |  | Average Annual Rent |  
|Year  |  | Expiring Leases |            |  | per Square Foot     |  
|      |  |                 |            |  |                     |  
|2002  |  |                 | 9,190,904  |  |                     | $ | 26.62 | 
|2003  |  |                 | 15,528,558 |  |                     |   | 28.50 | 
|2004  |  |                 | 13,762,386 |  |                     |   | 27.61 | 
|2005  |  |                 | 15,620,888 |  |                     |   | 29.39 | 
|2006  |  |                 | 14,446,018 |  |                     |   | 29.07 | 
|      |  |                 |            |  |                     |  
|Total |  |                 | 68,548,754 |  |                     | $ | 28.39 | 
|      |  |                 |            |  |                     |  

We believe that it is not currently possible to
draw any conclusions about where occupancy levels or market
rents ultimately will stabilize. Further decreases in occupancy
rates and/ or declines in rents could adversely affect our
revenues and results of operations in subsequent periods.

In addition to the downward trend in occupancy,
we have experienced an increase in the amount of uncollectible
receivables relating to tenants in bankruptcy and tenants that
are having financial difficulties. For the three and six months
ended June 30, 2002, bad debt expense was approximately
$6.7 million and $13.6 million, respectively, as
compared to $4.1 million and $8.0 million for the same
periods in 2001. Although we have substantial collateral from
many of our tenants, additional write-offs may occur in
subsequent periods. Future rental income may also be affected by
early lease terminations. In either of these circumstances, we
may not be able to collect the full amount that was due under
the leases and would incur additional cost in re-leasing the
space.

As a result of the terrorist acts on
September 11, 2001, we have realized increased costs for
property insurance and safety and security. We believe that
these increased costs will remain higher than similar costs
incurred in previous periods for the foreseeable future.
Substantially all of the office leases require the tenant to
pay, as additional rent, a portion of any increases in these
operating expenses over a base amount. We believe a significant
portion of any increase in these operating expenses will be
offset by expense reimbursements from tenants.

Below is a summary of our acquisition and
disposition activity since January 1, 2001. The buildings
and total square feet shown include properties we own in joint
ventures with other partners and reflects the total

20



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##### Table of Contents



square feet of the properties. Excluding the
joint venture partners share of the square feet of these
properties, we effectively owned 121.4 million square feet
of office space as of June 30, 2002.


|                                  |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        |  |   |    |   |  |        |        |  
|--------------------------------- | --------------------------------- | ----------------- | --- | ----- | --------------------- |  | ----------- | ------------------ | ----- |  | ----------- | --- | - | ------- | --------- | ---------- | ------ |  | - | -- | - |  | ------ | ------ | -
|                                  |                                   |                   |     |       |                       | 
|                                  |                                   | Office Properties |     |       | Industrial Properties |  |             | Parking Facilities |      
|                                  |                                   |                   |     |       |                       |  |             |                    |      
|                                  |                                   |                   |     | Total |                       |  |             |                    | Total |  |             |    
|                                  |                                   | Buildings         |     |       | Square Feet           |  |             | Buildings          |       |  | Square Feet |     |   | Garages |           |            | Spaces | 
|                                  |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|Properties owned as of:           |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        |  |   |    |   |  |        |       
|January 1, 2001                   |                                   |                   | 381 |       |                       |  | 98,995,994  |                    |       |  |            |     |   |         |          |            |        |  | 9 |    |   |  | 14,244 |       
|                                  | Spieker Merger                    |                   |     | 293   |                       |  |             | 26,080,670         |       |  |             | 100 |   |         |           | 12,306,053 |        |  |   |   |   |  |        |       |  
|                                  | Acquisitions                      |                   |     | 1     |                       |  |             | 259,441            |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  | Developments placed in service    |                   |     | 9     |                       |  |             | 1,497,014          |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  | Dispositions                      |                   |     | (8    | )                     |  |             | (879,388           | )     |  |             | (19 | ) |         |           | (4,052,476 | )      |  |   | (4 | ) |  |        | (3,721 | )
|                                  | Reclass from industrial to office |                   |     | 44    |                       |  |             | 2,208,837          |       |  |             | (44 | ) |         |           | (2,208,837 | )      |  |   |   |   |  |        |       |  
|                                  | Building remeasurements(a)        |                   |     | 54    |                       |  |             | 71,419             |       |  |             | 42  |   |         |           | 91         |        |  |   |   |   |  |        | 242    |  
|                                  |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|December 31, 2001                 |                                   |                   | 774 |       |                       |  | 128,233,987 |                    |       |  | 79          |     |   |         | 6,044,831 |            |        |  | 5 |    |   |  | 10,765 |       
|                                  | Dispositions                      |                   |     | (7    | )                     |  |             | (804,590           | )     |  |             |    |   |         |           |           |        |  |   | (4 | ) |  |        | (7,464 | )
|                                  | Building remeasurements           |                   |     |      |                       |  |             | 47,216             |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|March 31, 2002                    |                                   |                   | 767 |       |                       |  | 127,476,613 |                    |       |  | 79          |     |   |         | 6,044,831 |            |        |  | 1 |    |   |  | 3,301  |       
|                                  | Acquisitions                      |                   |     | 1     |                       |  |             | 102,822            |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  | Developments placed in service    |                   |     | 1     |                       |  |             | 125,646            |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  | Dispositions                      |                   |     | (3    | )                     |  |             | (226,909           | )     |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  | Building remeasurements           |                   |     |      |                       |  |             | 42,100             |       |  |             |    |   |         |           |           |        |  |   |   |   |  |        |       |  
|                                  |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 
|June 30, 2002 (Total Portfolio) |                                   |                   | 766 |       |                       |  | 127,520,272 |                    |       |  | 79          |     |   |         | 6,044,831 |            |        |  | 1 |    |   |  | 3,301  |       
|                                  |                                   |                   |     |       |                       |  |             |                    |       |  |             |     |   |         |           |            |        | 




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

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

As reflected in the tables below, property
revenues include rental revenues, reimbursements from tenants
for certain expenses, parking revenue and other property
operating revenues. Property operating expenses include real
estate taxes, insurance, repairs and maintenance and other
property operating expenses.

21



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##### Table of Contents






Comparison of the three months
ended June 30, 2002 to June 30, 2001

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 381 Office Properties acquired or placed in
service on or prior to January 1, 2001.

|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |         |  |   |         |         |   |  |        |      |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | --------------- | ------- | --------- | -------------- | - | ------- | ---------- |  | - | ------- | --------- |  | ---- | ------ | ---- | ---- | - | ------- | ---------- |  | - | ------- | ------- |  | - | ------- | ------- | - |  | ------ | ---- | -
|                                                                                                                                                                  |                |                 |         |          
|                                                                                                                                                                  |                | Total Portfolio |         |           | Core Portfolio |  
|                                                                                                                                                                  |                |                 |         |           |                |  
|                                                                                                                                                                  |                |                 |         | Increase/ |                |   | %       |            |  |   |         | Increase/ |  |      | %      |     
|(Dollars in thousands)                                                                                                                                            |                | 2002            |         |           | 2001           |   |         | (Decrease) |  |   | Change  |           |  | 2002 |        |      | 2001 |   |         | (Decrease) |  |   | Change  |        
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Property revenues                                                                                                                                                 |                | $               | 872,475 |           |                | $ | 649,854 |            |  | $ | 222,621 |           |  |      | 34.3   | %    |      | $ | 629,554 |            |  | $ | 641,778 |         |  | $ | (12,224 | )       |   |  | (1.9   | )%  
|Fee income                                                                                                                                                        |                |                 | 3,977   |           |                |   | 4,365   |            |  |   | (388    | )         |  |      | (8.9   | )    |      |   |        |            |  |   |        |         |  |   |        |         |   |  |       |     
|Interest/dividend income                                                                                                                                          |                |                 | 7,513   |           |                |   | 9,820   |            |  |   | (2,307  | )         |  |      | (23.5  | )    |      |   | 1,016   |            |  |   | 1,475   |         |  |   | (459    | )       |   |  | (31.1  | )   
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|                                                                                                                                                                  | Total revenues |                 |         | 883,965   |                |   |         | 664,039    |  |   |         | 219,926   |  |      |        | 33.1 |      |   |         | 630,570    |  |   |         | 643,253 |  |   |         | (12,683 | ) |  |        | (2.0 | )
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Interest expense                                                                                                                                                  |                |                 | 202,683 |           |                |   | 156,848 |            |  |   | 45,835  |           |  |      | 29.2   |      |      |   | 49,144  |            |  |   | 52,821  |         |  |   | (3,677  | )       |   |  | (7.0   | )   
|Depreciation and amortization                                                                                                                                     |                |                 | 175,062 |           |                |   | 125,650 |            |  |   | 49,412  |           |  |      | 39.3   |      |      |   | 128,807 |            |  |   | 120,224 |         |  |   | 8,583   |         |   |  | 7.1    |     
|Property operating expenses                                                                                                                                       |                |                 | 284,239 |           |                |   | 214,177 |            |  |   | 70,062  |           |  |      | 32.7   |      |      |   | 218,277 |            |  |   | 211,840 |         |  |   | 6,437   |         |   |  | 3.0    |     
|Ground rent                                                                                                                                                       |                |                 | 5,317   |           |                |   | 3,347   |            |  |   | 1,970   |           |  |      | 58.9   |      |      |   | 3,099   |            |  |   | 3,347   |         |  |   | (248    | )       |   |  | (7.4   | )   
|General and administrative                                                                                                                                        |                |                 | 38,163  |           |                |   | 23,701  |            |  |   | 14,462  |           |  |      | 61.0   |      |      |   |        |            |  |   | (37     | )       |  |   | 37      |         |   |  | (100.0 | )   
|Impairment on securities and other investments                                                                                                                    |                |                 |        |           |                |   | 5,499   |            |  |   | (5,499  | )         |  |      | (100.0 | )    |      |   |        |            |  |   |        |         |  |   |        |         |   |  |       |     
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|                                                                                                                                                                  | Total expenses |                 |         | 705,464   |                |   |         | 529,222    |  |   |         | 176,242   |  |      |        | 33.3 |      |   |         | 399,327    |  |   |         | 388,195 |  |   |         | 11,132  |   |  |        | 2.9  |  
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and discontinued operations         |                |                 | 178,501 |           |                |   | 134,817 |            |  |   | 43,684  |           |  |      | 32.4   |      |      |   | 231,243 |            |  |   | 255,058 |         |  |   | (23,815 | )       |   |  | (9.3   | )   
|Income taxes                                                                                                                                                      |                |                 | (1,926  | )         |                |   | (3,056  | )          |  |   | 1,130   |           |  |      | (37.0  | )    |      |   | (748    | )          |  |   | (1,073  | )       |  |   | 325     |         |   |  | (30.3  | )   
|Minority interests                                                                                                                                                |                |                 | (995    | )         |                |   | (1,353  | )          |  |   | 358     |           |  |      | (26.5  | )    |      |   | (966    | )          |  |   | (1,353  | )       |  |   | 387     |         |   |  | (28.6  | )   
|Income from investment in unconsolidated joint
    ventures                                                                                                       |                |                 | 22,297  |           |                |   | 17,864  |            |  |   | 4,433   |           |  |      | 24.8   |      |      |   | 21,877  |            |  |   | 16,341  |         |  |   | 5,536   |         |   |  | 33.9   |     
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Income from continuing operations                                                                                                                                 |                |                 | 197,877 |           |                |   | 148,272 |            |  |   | 49,605  |           |  |      | 33.5   |      |      |   | 251,406 |            |  |   | 268,973 |         |  |   | (17,567 | )       |   |  | (6.5   | )   
|Discontinued operations                                                                                                                                           |                |                 | 5,606   |           |                |   | 1,988   |            |  |   | 3,618   |           |  |      | 182.0  |      |      |   |        |            |  |   |        |         |  |   |        |         |   |  |       |     
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Net income                                                                                                                                                        |                | $               | 203,483 |           |                | $ | 150,260 |            |  | $ | 53,223  |           |  |      | 35.4   | %    |      | $ | 251,406 |            |  | $ | 268,973 |         |  | $ | (17,567 | )       |   |  | (6.5   | )%  
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Property revenues less property operating
    expenses before interest, depreciation and amortization, ground
    rent and general and administrative expense (a) |                | $               | 588,358 |           |                | $ | 438,724 |            |  | $ | 149,634 |           |  |      | 34.1   | %    |      | $ | 411,277 |            |  | $ | 429,938 |         |  | $ | (18,661 | )       |   |  | (4.3   | )%  
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Deferred rental revenue (a)                                                                                                                                       |                | $               | 19,413  |           |                | $ | 12,045  |            |  | $ | 7,368   |           |  |      | 61.2   | %    |      | $ | 6,909   |            |  | $ | 11,893  |         |  | $ | (4,984  | )       |   |  | (41.9  | )%  
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        
|Lease termination fees (a)                                                                                                                                        |                | $               | 12,238  |           |                | $ | 1,814   |            |  | $ | 10,424  |           |  |      | 574.6  | %    |      | $ | 9,997   |            |  | $ | 1,748   |         |  | $ | 8,249   |         |   |  | 471.9  | %   
|                                                                                                                                                                  |                |                 |         |           |                |   |         |            |  |   |         |           |  |      |        |      |      |   |         |            |  |   |         |        




|    |  |                                                   
|--- |  | --------------------------------------------------
|(a) |  | These amounts include the properties sold in 2002.

Property
Revenues

The increase in property revenues in the Total
Portfolio is primarily due to the properties acquired in the
Spieker Merger in 2001. As a result of the current slowdown in
economic activity, we have experienced an increase in the amount
of lease termination fees and uncollectible receivables relating
to tenants in bankruptcy and tenants that are having financial
difficulties. The amount of bad debts written off in the Total
Portfolio for the three months ended June 30, 2002 was
approximately $6.7 million as compared to $4.1 million
for the prior period. Although we have substantial collateral
from many of our tenants, additional write-offs may occur in
subsequent periods. Included in property revenues are
approximately $12.2 million of lease termination fees
representing an increase of approximately $10.4 million
from the prior period. These fees relate to specific tenants,
each of whom has paid a fee to terminate its lease obligations
before the end of the contractual term of the lease. Although we
have historically received such termination fees, there is no
way of predicting the timing or amounts of future lease
termination fees. The decrease in property revenues in the Core
Portfolio resulted primarily from a decrease in occupancy and an
increase in bad debt expense, partially

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##### Table of Contents



offset by a slight increase in rental rates and
an increase in lease termination fees. The weighted average
occupancy of the Core Portfolio decreased from 94.2% at
April 1, 2001 to 90.6% at June 30, 2002, mainly due to
tenant rollover and early lease terminations at various
properties where the space was not re-leased due to the current
slowdown in economic activity.


Interest
Expense

Total Portfolio interest expense increased from
the prior period as a result of having a higher average
outstanding debt balance as compared to the prior period, mainly
as a result of the Spieker Merger. This increase was partially
offset by interest rate swap agreements which converted the
fixed interest rate to a variable rate for a portion of the
unsecured notes. In addition, set forth below are additional
statistics for the Total Portfolio relating to our interest
expense during the periods:



| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total debt to total assets decreased to 45.8% as
    of June 30, 2002 from 46.4% as of June 30, 2001;                                                                                                      
|
| |  | Interest coverage ratio (calculated as EBITDA
    divided by interest expense, including our share of interest
    expense of unconsolidated joint ventures) increased to 2.8 times
    from 2.7 times; and
|
| |  | Weighted average interest rate decreased to 7.0%
    from 7.5%.                                                                                                                                            

Interest expense on unsecured notes and the line
of credit are not reflected in the Core Portfolio.

Depreciation
and Amortization

Total Portfolio depreciation and amortization
expense increased from the prior period primarily as a result of
the Spieker Merger and capital and tenant improvements made
during the periods. Core Portfolio depreciation and amortization
expense increased as a result of capital and tenant improvements
made during the periods.

Property
Operating Expenses

Total Portfolio property operating expenses
increased mainly as a result of the Spieker Merger in 2001. Core
Portfolio property operating expenses increased as a result of
increases in repairs and maintenance of approximately
$4.3 million primarily due to higher safety and security
expense, increases in insurance expense of approximately
$1.0 million due to higher premiums, partially offset by a
decrease in utilities of $0.9 million. Substantially all of
the office leases require the tenant to pay, as additional rent,
a portion of any increases in operating expenses over a base
amount. We believe a substantial portion of any future increase
in operating expenses will be offset by expense reimbursements
from tenants, which are included in property revenues.

General
and Administrative Expenses

General and administrative expenses increased by
approximately $14.5 million due to an increase in the
number of employees at the corporate and regional offices as a
result of the Spieker Merger, consulting fees of approximately
$3.2 million relating to a review of our property
operations structure and severance expense of approximately
$4.3 million for a former executive vice president and the
former president and chief executive officer. Approximately
$0.9 million of this amount related to the severance for
the former president and chief executive officer. The total
severance of $4.3 million consists of the acceleration of
vesting of share options and restricted shares and severance
payments.

Income
from Investment in Unconsolidated Joint Ventures

Income from investment in unconsolidated joint
ventures increased for the Total Portfolio and the Core
Portfolio primarily due to our share of a lease termination at a
property of approximately $5.6 million during the three
months ended June 30, 2002.

23



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##### Table of Contents



Discontinued
Operations

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, 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 both periods
presented. The increase in discontinued operations is primarily
due to the gain on the sale of the properties sold in 2002.

Comparison of the six months
ended June 30, 2002 to June 30, 2001

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 381 Office Properties acquired or placed in
service on or prior to January 1, 2001.

|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |           |  |   |         |         |   |  |        |      |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | --------------- | --------- | --------- | -------------- | - | --------- | ---------- |  | - | ------- | --------- |  | ---- | ------ | ---- | ---- | - | --------- | ---------- |  | - | --------- | --------- |  | - | ------- | ------- | - |  | ------ | ---- | -
|                                                                                                                                                                                                                     |                |                 |           |          
|                                                                                                                                                                                                                     |                | Total Portfolio |           |           | Core Portfolio |  
|                                                                                                                                                                                                                     |                |                 |           |           |                |  
|                                                                                                                                                                                                                     |                |                 |           | Increase/ |                |   | %         |            |  |   |         | Increase/ |  |      | %      |     
|(Dollars in thousands)                                                                                                                                                                                               |                | 2002            |           |           | 2001           |   |           | (Decrease) |  |   | Change  |           |  | 2002 |        |      | 2001 |   |           | (Decrease) |  |   | Change    |          
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Property revenues                                                                                                                                                                                                    |                | $               | 1,745,998 |           |                | $ | 1,298,711 |            |  | $ | 447,287 |           |  |      | 34.4   | %    |      | $ | 1,268,347 |            |  | $ | 1,281,589 |           |  | $ | (13,242 | )       |   |  | (1.0   | )%  
|Fee income                                                                                                                                                                                                           |                |                 | 8,055     |           |                |   | 6,537     |            |  |   | 1,518   |           |  |      | 23.2   |      |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|Interest/dividend income                                                                                                                                                                                             |                |                 | 14,356    |           |                |   | 20,653    |            |  |   | (6,297  | )         |  |      | (30.5  | )    |      |   | 1,959     |            |  |   | 2,866     |           |  |   | (907    | )       |   |  | (31.6  | )   
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|                                                                                                                                                                                                                     | Total revenues |                 |           | 1,768,409 |                |   |           | 1,325,901  |  |   |         | 442,508   |  |      |        | 33.4 |      |   |           | 1,270,306  |  |   |           | 1,284,455 |  |   |         | (14,149 | ) |  |        | (1.1 | )
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Interest expense                                                                                                                                                                                                     |                |                 | 407,529   |           |                |   | 314,715   |            |  |   | 92,814  |           |  |      | 29.5   |      |      |   | 98,217    |            |  |   | 107,000   |           |  |   | (8,783  | )       |   |  | (8.2   | )   
|Depreciation and amortization                                                                                                                                                                                        |                |                 | 346,222   |           |                |   | 249,723   |            |  |   | 96,499  |           |  |      | 38.6   |      |      |   | 257,470   |            |  |   | 239,147   |           |  |   | 18,323  |         |   |  | 7.7    |     
|Property operating expenses                                                                                                                                                                                          |                |                 | 556,985   |           |                |   | 427,042   |            |  |   | 129,943 |           |  |      | 30.4   |      |      |   | 428,699   |            |  |   | 421,831   |           |  |   | 6,868   |         |   |  | 1.6    |     
|Ground rent                                                                                                                                                                                                          |                |                 | 10,858    |           |                |   | 6,399     |            |  |   | 4,459   |           |  |      | 69.7   |      |      |   | 6,192     |            |  |   | 6,399     |           |  |   | (207    | )       |   |  | (3.2   | )   
|General and administrative                                                                                                                                                                                           |                |                 | 71,117    |           |                |   | 47,823    |            |  |   | 23,294  |           |  |      | 48.7   |      |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|Impairment on securities and other investments                                                                                                                                                                       |                |                 |          |           |                |   | 8,499     |            |  |   | (8,499  | )         |  |      | (100.0 | )    |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|                                                                                                                                                                                                                     | Total expenses |                 |           | 1,392,711 |                |   |           | 1,054,201  |  |   |         | 338,510   |  |      |        | 32.1 |      |   |           | 790,578    |  |   |           | 774,377   |  |   |         | 16,201  |   |  |        | 2.1  |  
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                |                 | 375,698   |           |                |   | 271,700   |            |  |   | 103,998 |           |  |      | 38.3   |      |      |   | 479,728   |            |  |   | 510,078   |           |  |   | (30,350 | )       |   |  | (6.0   | )   
|Income taxes                                                                                                                                                                                                         |                |                 | (8,932    | )         |                |   | (4,573    | )          |  |   | (4,359  | )         |  |      | 95.3   |      |      |   | (793      | )          |  |   | (1,078    | )         |  |   | 285     |         |   |  | (26.4  | )   
|Minority interests                                                                                                                                                                                                   |                |                 | (2,401    | )         |                |   | (4,606    | )          |  |   | 2,205   |           |  |      | (47.9  | )    |      |   | (2,344    | )          |  |   | (4,606    | )         |  |   | 2,262   |         |   |  | (49.1  | )   
|Income from investment in unconsolidated joint
    ventures                                                                                                                                                          |                |                 | 79,925    |           |                |   | 33,290    |            |  |   | 46,635  |           |  |      | 140.1  |      |      |   | 40,445    |            |  |   | 31,455    |           |  |   | 8,990   |         |   |  | 28.6   |     
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Income from continuing operations                                                                                                                                                                                    |                |                 | 444,290   |           |                |   | 295,811   |            |  |   | 148,479 |           |  |      | 50.2   |      |      |   | 517,036   |            |  |   | 535,849   |           |  |   | (18,813 | )       |   |  | (3.5   | )   
|Discontinued operations                                                                                                                                                                                              |                |                 | 3,657     |           |                |   | 3,613     |            |  |   | 44      |           |  |      | 1.2    |      |      |   |          |            |  |   |          |           |  |   |        |         |   |  |       |     
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Income before cumulative effect of a change in
    accounting principle                                                                                                                                              |                |                 | 447,947   |           |                |   | 299,424   |            |  |   | 148,523 |           |  |      | 49.6   |      |      |   | 517,036   |            |  |   | 535,849   |           |  |   | (18,813 | )       |   |  | (3.5   | )   
|Cumulative effect of a change in accounting
    principle                                                                                                                                                            |                |                 |          |           |                |   | (1,142    | )          |  |   | 1,142   |           |  |      | (100   | )    |      |   |          |            |  |   | (1,142    | )         |  |   | 1,142   |         |   |  | (100.0 | )   
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Net income                                                                                                                                                                                                           |                | $               | 447,947   |           |                | $ | 298,282   |            |  | $ | 149,665 |           |  |      | 50.2   | %    |      | $ | 517,036   |            |  | $ | 534,707   |           |  | $ | (17,671 | )       |   |  | (3.3   | )%  
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Property revenues less property operating
    expenses before interest, depreciation and amortization, ground
    rent and general and administrative expense (a)                                                    |                | $               | 1,190,775 |           |                | $ | 877,342   |            |  | $ | 313,433 |           |  |      | 35.7   | %    |      | $ | 839,648   |            |  | $ | 859,758   |           |  | $ | (20,110 | )       |   |  | (2.3   | )%  
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Deferred rental revenue (a)                                                                                                                                                                                          |                | $               | 39,841    |           |                | $ | 27,030    |            |  | $ | 12,811  |           |  |      | 47.4   | %    |      | $ | 16,056    |            |  | $ | 26,755    |           |  | $ | (10,699 | )       |   |  | (40.0  | )%  
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          
|Lease termination fees (a)                                                                                                                                                                                           |                | $               | 30,486    |           |                | $ | 8,564     |            |  | $ | 21,922  |           |  |      | 256.0  | %    |      | $ | 26,952    |            |  | $ | 8,497     |           |  | $ | 18,455  |         |   |  | 217.2  | %   
|                                                                                                                                                                                                                     |                |                 |           |           |                |   |           |            |  |   |         |           |  |      |        |      |      |   |           |            |  |   |           |          




|    |  |                                                   
|--- |  | --------------------------------------------------
|(a) |  | These amounts include the properties sold in 2002.

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Property
Revenues

The increase in property revenues in the Total
Portfolio is primarily due to the properties acquired in the
Spieker Merger in 2001. As a result of the current slowdown in
economic activity, we have experienced an increase in the amount
of lease termination fees and uncollectible receivables relating
to tenants in bankruptcy and tenants that are having financial
difficulties. The amount of bad debts written off in the Total
Portfolio for the six months ended June 30, 2002 was
approximately $13.6 million as compared to
$8.0 million for the prior period. Although we have
substantial collateral from many of our tenants, additional
write-offs may occur in subsequent periods. Included in property
revenues are approximately $30.5 million of lease
termination fees representing an increase of approximately
$21.9 million from the prior period. These fees relate to
specific tenants, each of whom has paid a fee to terminate its
lease obligations before the end of the contractual term of the
lease. Although we have historically received such termination
fees, there is no way of predicting the timing or amounts of
future lease termination fees. The decrease in property revenues
in the Core Portfolio resulted primarily from a decrease in
occupancy and an increase in bad debt expense, partially offset
by a slight increase in rental rates and an increase in lease
termination fees. The weighted average occupancy of the Core
Portfolio decreased from 94.7% at January 1, 2001 to 90.6%
at June 30, 2002, mainly due to tenant rollover and early
lease terminations at various properties where the space was not
re-leased due to the current slowdown in economic activity.

Interest
Expense

Total Portfolio interest expense increased from
the prior period as a result of having a higher average
outstanding debt balance as compared to the prior period, mainly
as a result of the Spieker Merger. This increase was partially
offset by interest rate swap agreements which converted the
fixed interest rate to a variable rate for a portion of the
unsecured notes. In addition, set forth below are additional
statistics for the Total Portfolio relating to our interest
expense during the periods:



| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total debt to total assets decreased to 45.8% as
    of June 30, 2002 from 46.4% as of June 30, 2001;                                                                                                      
|
| |  | Interest coverage ratio (calculated as EBITDA
    divided by interest expense, including our share of interest
    expense of unconsolidated joint ventures) increased to 2.9 times
    from 2.7 times; and
|
| |  | Weighted average interest rate decreased to 7.0%
    from 7.5%.                                                                                                                                            

Interest expense on unsecured notes and the line
of credit are not reflected in the Core Portfolio.

Depreciation
and Amortization

Total Portfolio depreciation and amortization
expense increased from the prior period primarily as a result of
the Spieker Merger and capital and tenant improvements made
during the periods. Core Portfolio depreciation and amortization
expense increased as a result of capital and tenant improvements
made during the periods.

Property
Operating Expenses

Total Portfolio property operating expenses
increased mainly as a result of the Spieker Merger in 2001. Core
Portfolio property operating expenses increased as a result of
increases in repairs and maintenance of approximately
$5.2 million primarily due to higher safety and security
expense, increases in insurance expenses of approximately
$2.0 million due to higher premiums, an increase in real
estate taxes of approximately $2.1 million partially offset
by a decrease in utilities of $4.3 million. Substantially
all of the office leases require the tenant to pay, as
additional rent, a portion of any increases in operating
expenses over a base amount. We believe a substantial portion of
any future increase in operating expenses will be offset by
expense reimbursements from tenants, which are included in
property revenues.

25



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##### Table of Contents



General
and Administrative Expenses

General and administrative expenses increased by
approximately $23.3 million due to an increase in the number of
employees at the corporate and regional offices as a result of
the Spieker Merger, consulting fees of approximately
$6.5 million relating to a review of our property
operations structure and severance expense of approximately
$7.4 million for two executive vice presidents and the
former president and chief executive officer. Approximately
$0.9 million of this amount related to the severance for
the former president and chief executive officer. The total
severance of $7.4 million consists of the acceleration of
vesting of share options and restricted shares and severance
payments.

Income
Taxes

A corporate subsidiary of ours had an indirect
interest in the Foundry Square I joint venture and will
incur income taxes as a result of this transaction of
approximately $5.1 million. See Income from
Investment in Unconsolidated Joint Ventures below.

Income
from Investment in Unconsolidated Joint Ventures

Income from investment in unconsolidated joint
ventures increased for the Total Portfolio primarily due to a
$40.0 million lease termination fee at Foundry Square I and
a lease termination fee of $5.6 million at another property
during the six months ended June 30, 2002. Foundry
Square I was a planned 327,000 square foot office
building project that was scheduled to be completed in the third
quarter of 2003. The project was 94% preleased to a single
tenant which terminated its lease in March 2002. The development
site is now classified as land available for development.

Discontinued
Operations

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, 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 both periods
presented. The increase in discontinued operations is primarily
due to the gain on the sale of the properties sold in 2002.

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##### Table of Contents






Property Dispositions

EOP Partnership has disposed or partially
disposed of the following office properties consisting of
approximately 1.9 million square feet, industrial
properties consisting of approximately 4.1 million square
feet and eight parking facilities since January 1, 2001:

|     |      |  |                   |                                   |                          |                                     |                    |                             
|---- | ---- |  | ----------------- | --------------------------------- | ------------------------ | ----------------------------------- | ------------------ | ----------------------------
|Year |      |  | Office Properties |                                   | Industrial Properties(1) |                                     | Parking Facilities
|     |      |  |                   |                                   |                          |                                     |                   
|     | 2002 |  |                   | Park Place Shopping Center        |                          |                                     |                    | St. Louis parking garages(2)
|     |      |  |                   | Dominion Tower                    |                          |                                     |                    |                             
|     |      |  |                   | One Park Square(3)                |                          |                                     |                    |                             
|     |      |  |                   | Santa Monica Gateway              |                          |                                     |                    |                             
|     |      |  |                   | Calais Office Center I  and II(4) |                          |                                     |                    |                             
|     |      |  |                   | Airport Service Center            |                          |                                     |                    |                             
|     | 2001 |  |                   | Warner Park Center                |                          | Nelson Business Center              |                    | Theatre District Parking    
|     |      |  |                   | Transpotomac Plaza 5(4)           |                          | Vasco Business Center               |                    | 203 N. LaSalle              
|     |      |  |                   | 11 Canal Center Plaza             |                          | Marine Drive Distribution Center I, |                    | Adams Wabash                
|     |      |  |                   | Port Plaza                        |                          | II and III                          |                    | Rand Tower Garage           
|     |      |  |                   | 99 Canal Center Plaza             |                          | Kelley Point I & II                 |                    |                             
|     |      |  |                   | Biltmore Apartments(5)            |                          | Wilsonville Business Center I-IV    |                    |                             
|     |      |  |                   | 1600 Duke Street                  |                          | 158th Commerce Park                 |                    |                             
|     |      |  |                   | Bank of America Plaza             |                          | Columbia Commerce Park I and IV     |                    |                             
|     |      |  |                   |                                   |                          | Striker Avenue                      |                    |                             
|     |      |  |                   |                                   |                          | Airway Business Center              |                    |                             
|     |      |  |                   |                                   |                          | 360 Industrial Court                |                    |                             
|     |      |  |                   |                                   |                          | 363 Industrial Way                  |                    |                             
|     |      |  |                   |                                   |                          | 437 Industrial Way                  |                    |                             




|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(1) | The industrial properties were all acquired in
    the Spieker Merger.                                  
|   
|(2) | Sold our remaining interest in these four garages.                                                      
|   
|(3) | Consists of four office properties.                                                                     
|   
|(4) | Consists of two office properties.                                                                      
|   
|(5) | Biltmore Apartments is a residential property
    which is part of the 177 Broad Street Office Property.

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, 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 both periods
presented. Below is a

27



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summary of the results of operations of these
properties along with those properties sold prior to 2002
through their respective disposition dates:


|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |   |       |       |  |   |        |        | 
|-------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------------- | ----- | --- | ------------------ | - | ----- | ---------- |  | - | ------- | ----- |  | ------- | ----- | ----- | ---------- | - | ----- | ----- |  | - | ------ | ------ | 
|                                                                                                                                 |                |                      |       |    
|                                                                                                                                 |                | For the three months |       |     | For the six months |  
|                                                                                                                                 |                | ended June 30,       |       |     | ended June 30,     |  
|                                                                                                                                 |                |                      |       |     |                    |  
|                                                                                                                                 |                |                      |       |     |                    |   |       |           
|                                                                                                                                 |                | 2002                 |       |     | 2001               |   |       | 2002       |  |   | 2001    |      
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |      
|                                                                                                                                 |                | Sold in              |       |     | Sold in            |   |       | Sold prior |  |   | Sold in |       |  | Sold in |       |       | Sold prior |  
|(Dollars in thousands)                                                                                                           |                | 2002                 |       |     | 2002               |   |       | to 2002    |  |   | 2002    |       |  | 2002    |       |       | to 2002    |  
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|Property revenues                                                                                                                |                | $                    | 585   |     |                    | $ | 4,856 |            |  | $ | 9,228   |       |  | $       | 3,505 |       |            | $ | 9,208 |       |  | $ | 19,166 |       
|Interest income                                                                                                                  |                |                      |      |     |                    |   | 2     |            |  |   | (2      | )     |  |         |      |       |            |   | 4     |       |  |   | 14     |       
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|                                                                                                                                 | Total revenues |                      |       | 585 |                    |   |       | 4,858      |  |   |         | 9,226 |  |         |       | 3,505 |            |   |       | 9,212 |  |   |        | 19,180 | 
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|Interest expense                                                                                                                 |                |                      |      |     |                    |   | 73    |            |  |   | 532     |       |  |         | (25   | )     |            |   | 146   |       |  |   | 1,059  |       
|Depreciation and amortization                                                                                                    |                |                      | 26    |     |                    |   | 959   |            |  |   | 1,449   |       |  |         | 602   |       |            |   | 1,860 |       |  |   | 2,698  |       
|Property operating expenses                                                                                                      |                |                      | 463   |     |                    |   | 1,809 |            |  |   | 3,002   |       |  |         | 1,743 |       |            |   | 3,535 |       |  |   | 5,856  |       
|Ground rent                                                                                                                      |                |                      | 14    |     |                    |   | 29    |            |  |   |        |       |  |         | 43    |       |            |   | 58    |       |  |   |       |       
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|                                                                                                                                 | Total expenses |                      |       | 503 |                    |   |       | 2,870      |  |   |         | 4,983 |  |         |       | 2,363 |            |   |       | 5,599 |  |   |        | 9,613  | 
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|Income before income taxes, income from
    investment in unconsolidated joint ventures and net gain on
    sales of real estate |                |                      | 82    |     |                    |   | 1,988 |            |  |   | 4,243   |       |  |         | 1,142 |       |            |   | 3,613 |       |  |   | 9,567  |       
|Income taxes                                                                                                                     |                |                      | 25    |     |                    |   |      |            |  |   | (350    | )     |  |         | 25    |       |            |   |      |       |  |   | (353   | )     
|Income from investment in unconsolidated joint
    ventures                                                                      |                |                      |      |     |                    |   |      |            |  |   | 468     |       |  |         |      |       |            |   |      |       |  |   | 742    |       
|Net gain on sales of real estate                                                                                                 |                |                      | 5,499 |     |                    |   |      |            |  |   |        |       |  |         | 2,490 |       |            |   |      |       |  |   |       |       
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|Net income                                                                                                                       |                | $                    | 5,606 |     |                    | $ | 1,988 |            |  | $ | 4,361   |       |  | $       | 3,657 |       |            | $ | 3,613 |       |  | $ | 9,956  |       
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  
|Property revenues less property operating
    expenses before interest, depreciation and amortization                            |                | $                    | 122   |     |                    | $ | 3,047 |            |  | $ | 6,226   |       |  | $       | 1,762 |       |            | $ | 5,673 |       |  | $ | 13,310 |       
|                                                                                                                                 |                |                      |       |     |                    |   |       |            |  |   |         |       |  |         |       |       |            |  




Liquidity and Capital Resources




Liquidity

Net cash flow from operations represents the
primary source of liquidity to fund distributions, debt service,
capital improvements and non-revenue enhancing tenant
improvements. We expect that our line of credit will provide for
funding of working capital and revenue enhancing tenant
improvements, unanticipated cash needs as well as acquisitions
and development costs. Our net cash flow from operations is
dependent upon the occupancy level of our properties, the
collectibility of rent from our tenants, the level of operating
and other expenses, and other factors. Material changes in these
factors may adversely affect our net cash flow from operations.
Such changes, in turn, would adversely affect our ability to
fund distributions, debt service, capital improvements and
non-revenue enhancing tenant improvements. In addition, a
material adverse change in our net cash flow from operations may
affect the financial performance covenants under our line of
credit and unsecured notes. If we fail to meet any of our
financial performance covenants our line of credit may become
unavailable to us, or the interest charged on the line of credit
may increase. Either of these circumstances could adversely
affect our ability to fund working capital and revenue enhancing
tenant improvements, unanticipated cash needs, acquisitions and
development costs. In order to qualify as a REIT for federal
income tax purposes, Equity Office must distribute at least 90%
of its REIT taxable income (excluding capital gains). 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 to continue to make

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regular quarterly distributions to holders of
Units and preferred units. Subject to the foregoing, we have
established quarterly distribution amounts which, if annualized,
would be as follows:


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




|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In July, Equity Office redeemed its 7,994,000
    outstanding 8.98% Series A Cumulative Redeemable Preferred
    Shares and EOP Partnership cancelled a corresponding number of
    8.98% Series A Cumulative Redeemable Preferred Units. On
    the same date, Equity Office issued 8,500,000 7.75%
    Series G Cumulative Redeemable Preferred Shares and EOP
    Partnership issued a corresponding number of Series G
    Cumulative Redeemable Preferred Units. Substantially all of the
    net proceeds from the issuance and sale of the Series G
    preferred shares totaling approximately $206 million were
    used to redeem the Series A preferred shares.

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

Contractual
Obligations

As of June 30, 2002, we were subject to the
following contractual payment obligations:

|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |           |   |        |         |           |   |         |           |           |  
|----------------------------------------------------------- | ------------------- | ------------------------------------- | --------- | --------- | ---------- | - | ------- | ------- | ------- | - | ------ | ------- | ------- | ---- | ------- | ------- | --------- | - | ------- | ---------- | --------- | - | ------ | ------- | --------- | - | ------- | --------- | --------- | -
|                                                            |                     |                                      
|                                                            |                     | Payments Due by Period                |          
|                                                            |                     |                                       |          
|                                                            |                     |                                       |           | Through   |            |   |        
|Contractual Obligations:                                    |                     | Total                                 |           |           | 2002       |   |         | 2003    |         |   | 2004   |         |         | 2005 |         |         | 2006      |   |         | Thereafter |          
|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |          
|                                                            |                     |                                      
|                                                            |                     | (Dollars in thousands)                |          
|Long-term debt:                                             |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |           |   |        |         |           |   |         |          
|                                                            | Mortgage debt (1)   |                                       | $         | 2,636,533 |            |   | $       | 103,982 |         |   | $      | 202,520 |         |      | $       | 447,538 |           |   | $       | 583,372    |           |   | $      | 342,628 |           |   | $       | 956,493   |          
|                                                            | Unsecured notes (2) |                                       |           | 9,126,500 |            |   |         | 110,000 |         |   |        | 700,000 |         |      |         | 880,000 |           |   |         | 675,000    |           |   |        | 650,000 |           |   |         | 6,111,500 |          
|                                                            | Line of credit      |                                       |           |          |            |   |         |        |         |   |        |        |         |      |         |        |           |   |         |           |           |   |        |        |           |   |         |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                     |                                       | 817,656   |           |            |   | 110,874 |         |         |   | 5,345  |         |         |      | 116,022 |         |           |   | 520,249 |            |           |   | 50,074 |         |           |   | 15,092  |          
|Operating leases (ground leases)                            |                     |                                       | 1,075,113 |           |            |   | 9,422   |         |         |   | 18,853 |         |         |      | 16,353  |         |           |   | 15,996  |            |           |   | 15,793 |         |           |   | 998,696 |          
|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |          
|                                                            |                     | Total Contractual Obligations         |           | $         | 13,655,802 |   |         | $       | 334,278 |   |        | $       | 926,718 |      |         | $       | 1,459,913 |   |         | $          | 1,794,617 |   |        | $       | 1,058,495 |   |         | $         | 8,081,781 |  
|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |          
|                                                           
|Weighted Average Interest Rates
    on Maturing Debt:       |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |           |   |        |         |           |   |         |          
|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |          
|Mortgage debt                                               |                     |                                       | 7.67      | %         |            |   | 7.88    | %       |         |   | 7.40   | %       |         |      | 7.19    | %       |           |   | 7.88    | %          |           |   | 7.15   | %       |           |   | 7.96    | %        
|Unsecured notes (2)                                         |                     |                                       | 6.85      | %         |            |   | 5.37    | %       |         |   | 7.21   | %       |         |      | 4.93    | %       |           |   | 5.09    | %          |           |   | 6.55   | %       |           |   | 7.33    | %        
|Line of credit                                              |                     |                                       |          |           |            |   |        |         |         |   |       |         |         |      |        |         |           |   |        |            |           |   |       |         |           |   |        |          
|Share of mortgage debt of unconsolidated joint
    ventures |                     |                                       | 6.28      | %         |            |   | 5.74    | %       |         |   |       |         |         |      | 2.97    | %       |           |   | 6.92    | %          |           |   | 7.67   | %       |           |   | 6.92    | %        
|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |          
|                                                            |                     | Total Weighted Average Interest Rates |           |           | 6.98       | % |         |         | 6.20    | % |        |         | 7.25    | %    |         |         | 5.46      | % |         |            | 6.53      | % |        |         | 6.81      | % |         |           | 7.42      | %
|                                                            |                     |                                       |           |           |            |   |         |         |         |   |        |         |         |      |         |         |           |   |         |            |          

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---



|    |                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Balance excludes net discount of $(12.2) million,
    net of accumulated amortization of approximately
    $(5.7) million.                                                                                                                                                                                                      
|   
|(2) | Balance excludes net premium of
    $22.6 million, net of accumulated amortization of
    approximately $(6.8) million. As of June 30, 2002,
    $1.2 billion of unsecured notes were converted to a
    variable interest rate based on a spread over the 6-month LIBOR
    rate through several interest rate swap agreements.

Commitments

In accordance with the agreement governing the
investment in Wright Runstad Associates Limited Partnership
(WRALP), we agreed, for a period generally
continuing until December 31, 2007, to make available to
WRALP up to $20.0 million in additional financing or credit
support for future development. As of June 30, 2002, no
amounts have been funded pursuant to this agreement. However,
EOP Partnership has guaranteed WRALPs current line of
credit, which has an outstanding balance of approximately
$12.9 million as of June 30, 2002. WRALPs
current line of credit matures in July 2003.

We have agreed to loan amounts in connection with
certain development projects as described in
Developments subfootnote (b) later in this
section.

Debt
Financing

The table below summarizes our consolidated
mortgage debt, unsecured notes and line of credit indebtedness
at June 30, 2002 and December 31, 2001, including a
net unamortized discount on mortgage debt of approximately
$(12.2) million and $(11.8) million, respectively, and a net
unamortized premium on unsecured notes of approximately
$22.6 million and $17.5 million, respectively,
recorded in connection with property acquisitions, mergers and
the issuance of unsecured notes.

|                                          |                      |                         |   |            |                   |  |   |            |            | 
|----------------------------------------- | -------------------- | ----------------------- | - | ---------- | ----------------- |  | - | ---------- | ---------- | 
|(Dollars in thousands)                    |                      | June 30, 2002           |   |            | December 31, 2001 | 
|                                          |                      |                         |   |            |                   | 
|Balance                                   |                      |                         |   |            |                   |  |   |           
|                                          | Fixed rate           |                         | $ | 10,537,506 |                   |  | $ | 10,891,325 |           
|                                          | Variable rate (1)    |                         |   | 1,236,000  |                   |  |   | 1,097,300  |           
|                                          |                      |                         |   |            |                   | 
|                                          |                      | Total                   |   | $          | 11,773,506        |  |   | $          | 11,988,625 | 
|                                          |                      |                         |   |            |                   | 
|Percent of total debt:                    |                      |                         |   |            |                   |  |   |           
|                                          | Fixed rate           |                         |   | 89.5%      |                   |  |   | 90.8%      |           
|                                          | Variable rate (1)    |                         |   | 10.5%      |                   |  |   | 9.2%       |           
|                                          |                      |                         |   |            |                   | 
|                                          |                      | Total                   |   |            | 100.0%            |  |   |            | 100.0%     | 
|                                          |                      |                         |   |            |                   | 
|Effective interest rate at end of period: |                      |                         |   |            |                   |  |   |           
|                                          | Fixed rate           |                         |   | 7.36%      |                   |  |   | 7.37%      |           
|                                          | Variable rate (1)(2) |                         |   | 4.27%      |                   |  |   | 3.31%      |           
|                                          |                      |                         |   |            |                   | 
|                                          |                      | Effective interest rate |   |            | 7.03%             |  |   |            | 7.00%      | 
|                                          |                      |                         |   |            |                   | 




|    |                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The variable rate debt as of June 30, 2002
    and December 31, 2001 includes $1.2 billion and
    $817 million, respectively, of fixed rate unsecured notes
    that were converted to a variable rate based on various spreads
    over LIBOR through several interest rate swap agreements.
|   
|(2) | The variable rate debt bears interest at a rate
    based on various spreads over LIBOR.                                                                                                                                                                                                      

Mortgage
Debt

As of June 30, 2002, total mortgage debt
(excluding our share of unconsolidated debt of approximately
$817.7 million) consisted of approximately
$2.6 billion of fixed rate debt with a weighted average
interest rate of approximately 7.74% and $36.0 million of
variable rate debt based on LIBOR plus 55 basis points (as
of June 30, 2002 the variable rate was approximately
2.39%). See Liquidity and Capital Resources 
Contractual Obligations for annual payment obligations
under our mortgage debt.

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

Line
of Credit

We have a $1.0 billion revolving credit
facility that was obtained in May 2000. The line of credit bears
interest at LIBOR plus 60 basis points and matures on
June 19, 2003. There is also an annual facility fee of
$2.0 million payable quarterly. In addition, a competitive
bid option, whereby the lenders participating in the credit
facility bid on the interest to be charged, is available for up
to $350 million of the borrowings under the credit
facility. Equity Office has guaranteed the outstanding
obligation under the line of credit. At June 30, 2002 no
amounts were outstanding under the revolving credit facility.






Unsecured
Notes


Unsecured notes increased by $50 million
from December 31, 2001 to June 30, 2002 as a result of the
issuance of $500 million notes in February and the exchange
of the $250 million MandatOry Par Put Remarketed
SecuritiesSM and repayment of $200 million notes
upon maturity. The table below summarizes EOP Partnerships
unsecured notes outstanding as of June 30, 2002:

|                         |      |                        |  |      |           |  |  |        |   |  |          |           |  |  |  |          | 
|------------------------ | ---- | ---------------------- |  | ---- | --------- |  |  | ------ | - |  | -------- | --------- |  |  |  | -------- | 
|                         |      | Coupon/                |  |      | All-in    |  |  |        |   | 
|                         |      | Stated                 |  |      | Effective |  |  | Face   |   |  | Maturity |          
|Original Term (in years) |      | Rate                   |  |      | Rate(a)   |  |  | Amount |   |  | Date     |          
|                         |      |                        |  |      |           |  |  |        |   |  |          |          
|                         |      |                       
|                         |      | (Dollars in thousands) | 
|Fixed interest rate:     |      |                        |  |      |           |  |  |        |   |  |          |           |  |  |  |         
|                         | 7    |                        |  | 6.95 | %         |  |  | 5.37   | % |  | $        | 110,000   |  |  |  | 12/15/02 | 
|                         | 5    |                        |  | 6.38 | %         |  |  | 6.76   | % |  |          | 300,000   |  |  |  | 2/15/03  | 
|                         | 3    |                        |  | 7.38 | %         |  |  | 7.55   | % |  |          | 400,000   |  |  |  | 11/15/03 | 
|                         | 5    |                        |  | 6.80 | %         |  |  | 6.10   | % |  |          | 200,000   |  |  |  | 5/01/04  | 
|                         | 7    |                        |  | 7.24 | %         |  |  | 7.26   | % |  |          | 30,000    |  |  |  | 9/01/04  | 
|                         | 9    |                        |  | 6.90 | %         |  |  | 6.27   | % |  |          | 100,000   |  |  |  | 1/15/04  | 
|                         | 8    |                        |  | 6.88 | %         |  |  | 6.40   | % |  |          | 125,000   |  |  |  | 2/01/05  | 
|                         | 7    |                        |  | 6.63 | %         |  |  | 5.89   | % |  |          | 100,000   |  |  |  | 2/15/05  | 
|                         | 7    |                        |  | 8.00 | %         |  |  | 6.49   | % |  |          | 100,000   |  |  |  | 7/19/05  | 
|                         | 8    |                        |  | 7.36 | %         |  |  | 7.69   | % |  |          | 50,000    |  |  |  | 9/1/05   | 
|                         | 6    |                        |  | 8.38 | %         |  |  | 8.59   | % |  |          | 150,000   |  |  |  | 3/15/06  | 
|                         | 9    |                        |  | 7.44 | %         |  |  | 7.74   | % |  |          | 50,000    |  |  |  | 9/1/06   | 
|                         | 10   |                        |  | 7.13 | %         |  |  | 6.74   | % |  |          | 100,000   |  |  |  | 12/1/06  | 
|                         | 9    |                        |  | 7.00 | %         |  |  | 6.80   | % |  |          | 1,500     |  |  |  | 2/02/07  | 
|                         | 9    |                        |  | 6.88 | %         |  |  | 6.83   | % |  |          | 25,000    |  |  |  | 4/30/07  | 
|                         | 9    |                        |  | 6.76 | %         |  |  | 6.76   | % |  |          | 300,000   |  |  |  | 6/15/07  | 
|                         | 10   |                        |  | 7.41 | %         |  |  | 7.70   | % |  |          | 50,000    |  |  |  | 9/01/07  | 
|                         | 7    |                        |  | 7.75 | %         |  |  | 7.91   | % |  |          | 600,000   |  |  |  | 11/15/07 | 
|                         | 10   |                        |  | 6.75 | %         |  |  | 6.97   | % |  |          | 150,000   |  |  |  | 1/15/08  | 
|                         | 10   |                        |  | 6.75 | %         |  |  | 7.01   | % |  |          | 300,000   |  |  |  | 2/15/08  | 
|                         | 8(b) |                        |  | 7.25 | %         |  |  | 7.64   | % |  |          | 325,000   |  |  |  | 11/15/08 | 
|                         | 10   |                        |  | 6.80 | %         |  |  | 6.94   | % |  |          | 500,000   |  |  |  | 1/15/09  | 
|                         | 10   |                        |  | 7.25 | %         |  |  | 7.14   | % |  |          | 200,000   |  |  |  | 5/01/09  | 
|                         | 11   |                        |  | 7.13 | %         |  |  | 6.97   | % |  |          | 150,000   |  |  |  | 7/01/09  | 
|                         | 10   |                        |  | 8.10 | %         |  |  | 8.22   | % |  |          | 360,000   |  |  |  | 8/01/10  | 
|                         | 10   |                        |  | 7.65 | %         |  |  | 7.20   | % |  |          | 200,000   |  |  |  | 12/15/10 | 
|                         | 10   |                        |  | 7.00 | %         |  |  | 6.83   | % |  |          | 1,100,000 |  |  |  | 7/15/11  | 
|                         | 10   |                        |  | 6.75 | %         |  |  | 7.02   | % |  |          | 500,000   |  |  |  | 2/15/12  | 
|                         | 20   |                        |  | 7.88 | %         |  |  | 8.08   | % |  |          | 25,000    |  |  |  | 12/01/16 | 
|                         | 20   |                        |  | 7.35 | %         |  |  | 8.08   | % |  |          | 200,000   |  |  |  | 12/01/17 | 
|                         | 20   |                        |  | 7.25 | %         |  |  | 7.54   | % |  |          | 250,000   |  |  |  | 2/15/18  | 
|                         | 30   |                        |  | 7.50 | %         |  |  | 8.24   | % |  |          | 150,000   |  |  |  | 10/01/27 | 
|                         | 30   |                        |  | 7.25 | %         |  |  | 7.31   | % |  |          | 225,000   |  |  |  | 6/15/28  | 

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|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |         |           |  |  |         |  | 
|--------------------------------------------------------------------------- | -- | -------------------------- | --------- | ---- | --------- | - |  | ------ | ---- | - | -------- | ------- | --------- |  |  | ------- |  | 
|                                                                            |    | Coupon/                    |           |      | All-in    |   |  |        |      |  
|                                                                            |    | Stated                     |           |      | Effective |   |  | Face   |      |   | Maturity |        
|Original Term (in years)                                                    |    | Rate                       |           |      | Rate(a)   |   |  | Amount |      |   | Date     |        
|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |        
|                                                                            |    |                           
|                                                                            |    | (Dollars in thousands)     |          
|                                                                            | 30 |                            |           | 7.50 | %         |   |  | 7.55   | %    |   |          | 200,000 |           |  |  | 4/19/29 | 
|                                                                            | 30 |                            |           | 7.88 | %         |   |  | 7.94   | %    |   |          | 300,000 |           |  |  | 7/15/31 | 
|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |        
|                                                                            |    | Weighted Average/ Subtotal |           |      | 7.20      | % |  |        | 7.23 | % |          |         | 7,926,500 |  |  |         |  | 
|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |        
|Variable-interest rate (c):                                                 |    |                            |           |      |           |   |  |        |      |   |          |         |           |  |  |        
|                                                                            | 5  |                            |           | 6.50 | %         |   |  | 3.91   | %    |   |          | 300,000 |           |  |  | 1/15/04 | 
|                                                                            | 6  |                            |           | 6.50 | %         |   |  | 4.41   | %    |   |          | 150,000 |           |  |  | 6/15/04 | 
|                                                                            | 6  |                            |           | 6.50 | %         |   |  | 4.38   | %    |   |          | 100,000 |           |  |  | 6/15/04 | 
|                                                                            | 7  |                            |           | 6.63 | %         |   |  | 3.38   | %    |   |          | 300,000 |           |  |  | 2/15/05 | 
|                                                                            | 6  |                            |           | 8.38 | %         |   |  | 5.44   | %    |   |          | 150,000 |           |  |  | 3/15/06 | 
|                                                                            | 6  |                            |           | 8.38 | %         |   |  | 5.45   | %    |   |          | 200,000 |           |  |  | 3/15/06 | 
|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |        
|                                                                            |    | Weighted Average/ Subtotal |           |      | 7.08      | % |  |        | 4.33 | % |          |         | 1,200,000 |  |  |         |  | 
|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |        
|                                                                            |    | Weighted Average/ Subtotal |           |      | 7.19      | % |  |        | 6.85 | % |          |         | 9,126,500 |  |  |         |  | 
|                                                                            |    |                            |           |      |           |   |  |        |      |   |          |        
|Net premium (net of accumulated
    amortization of approximately $(6,812)) |    |                            | 22,645    |      |           |   |  |       
|                                                                            |    |                            |           |      |           |  
|Total                                                                       |    | $                          | 9,149,145 |      |           |   |  |       
|                                                                            |    |                            |           |      |           |  



---

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Includes the cost of terminated interest rate
    protection and swap agreements, offering and transaction costs
    and premiums and discounts on certain unsecured notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(b) |  | The notes are exchangeable into Equity Office
    Common Shares at an exchange rate of $34.00 per share. If the
    closing price at the time a holder exercises its exchange right
    is less than the exchange price of $34.00, the holder will
    receive, in lieu of Common Shares, cash in an amount equal to
    97% of the product of the number of Common Shares into which the
    principal amount of notes subject to such exercise would
    otherwise be exchangeable and the current market price per
    Common Share. Upon exchange of a $1,000 note for Common Shares
    of Equity Office, EOP Partnership would issue a corresponding
    number of Units to Equity Office on a one-for-one basis.
|   
|(c) |  | As of June 30, 2002, $1.2 billion of
    unsecured notes were converted to a variable interest rate based
    on a spread over the 6-month LIBOR rate through several interest
    rate swap arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

As of June 30, 2002, $2.1 billion of
unsecured debt securities and related guarantees were available
for issuance under a shelf registration statement.




Restrictions
and Covenants under Unsecured Indebtedness

Agreements or instruments relating to the
unsecured notes and the line of credit contain certain financial
restrictions and requirements described below. As of
June 30, 2002, we were in compliance with each of these
financial restrictions and requirements.

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



| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | total liabilities to total asset value may not
    exceed 0.55:1 at any time;                                                                                                                      
|
| |  | EBITDA to interest expense may not be less than
    2.00:1;                                                                                                                                        
|
| |  | cash flow to fixed charges may not be less than
    1.5:1;                                                                                                                                         
|
| |  | secured debt to total asset value may not exceed
    0.40:1;                                                                                                                                       
|
| |  | unsecured debt to unencumbered asset value may
    not exceed 0.55:1;                                                                                                                              
|
| |  | unencumbered net operating income to unsecured
    debt service may not be less than 2.0:1;                                                                                                        
|
| |  | consolidated tangible net worth may not be less
    than the sum of $7.8 billion and 70% of all net offering
    proceeds received by Equity Office or EOP Partnership after
    February 29, 2000;
|
| |  | we may not pay any distributions on Common Shares
    and Units in excess of 90% of annual FFO; and                                                                                                

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| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our investments in unimproved assets, interest in
    taxable REIT subsidiaries, developments, unconsolidated joint
    ventures, mortgages and securities, in the aggregate, may not
    exceed 25% of our total asset value.

Set forth below are the financial restrictions
and requirements to which we are subject under our unsecured
note indentures:



| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | debt to adjusted total assets may not exceed
    0.60:1;                                                         
|
| |  | secured debt to adjusted total assets may not
    exceed 0.40:1;                                                 
|
| |  | consolidated income available for debt service to
    annual debt service charge may not be less than 1.50:1; and
|
| |  | total unencumbered assets to unsecured debt may
    not be less than 1.50:1.                                     




Equity
Securities

A summary of the activity of Equity Offices
Common Shares and EOP Partnerships Units (exclusive of
Units owned by Equity Office) during the three months ended
June 30, 2002 is as follows:

|                              |                                         |               |             |           |       |  |            |            |   |  |             |            |  
|----------------------------- | --------------------------------------- | ------------- | ----------- | --------- | ----- |  | ---------- | ---------- | - |  | ----------- | ---------- | -
|                              |                                         | Common Shares |             |           | Units |  |            | Total      |  
|                              |                                         |               |             |           |       |  |            |            |  
|Outstanding at March 31, 2002 |                                         |               | 416,545,021 |           |       |  | 56,041,340 |            |   |  | 472,586,361 |           
|                              | Share options exercised                 |               |             | 553,599   |       |  |            |           |   |  |             | 553,599    |  
|                              | Units redeemed for Common Shares        |               |             | 1,919,583 |       |  |            | (1,919,583 | ) |  |             |           |  
|                              | Units redeemed for cash                 |               |             |          |       |  |            | (2,948,453 | ) |  |             | (2,948,453 | )
|                              | Restricted shares issued/cancelled, net |               |             | (8,000    | )     |  |            |           |   |  |             | (8,000     | )
|                              | Issued through dividend reinvestments   |               |             | 25,751    |       |  |            |           |   |  |             | 25,751     |  
|                              |                                         |               |             |           |       |  |            |            |  
|Outstanding at June 30, 2002  |                                         |               | 419,035,954 |           |       |  | 51,173,304 |            |   |  | 470,209,258 |           
|                              |                                         |               |             |           |       |  |            |            |  




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.




Six Months
Ended June 30, 2002

Cash and cash equivalents increased by
approximately $239.1 million to approximately
$300.2 million at June 30, 2002, compared to
$61.1 million at December 31, 2001. This increase was
the net result of the receipt of approximately
$642.2 million from operating activities, approximately
$145.0 million from investing activities, which consisted
primarily of approximately $121.6 million from property
dispositions and $150.7 million released from escrows, less
approximately $172.2 million used for capital and tenant
improvements and lease acquisition costs, and approximately
$548.1 million used for financing activities.




Additional Items






Deferred Rent
Receivable


Certain leases provide for tenant occupancy
during periods for which no rent is due or where minimum rent
payments increase during the term of the lease. We record rental
income for the full term of each lease on a straight-line basis.
Accordingly, a receivable is recorded from tenants for the
current difference between the straight-line rent and the rent
that is actually due from the tenant. This receivable amount is
included in the consolidated balance sheets as deferred
rent receivable. The deferred rent receivable increased
approximately $36.0 million to $305.8 million at
June 30, 2002, from $269.8 million at
December 31, 2001. The increase was due to a net increase
in the difference between the straight-line rent and the rent
that is actually

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due from tenants primarily from the acquisition
of the Properties acquired in the Spieker Merger on July 2,
2001 and certain development properties that were placed in
service.





Escrow
Deposits and Restricted Cash

Escrow deposits primarily consist of amounts held
by lenders to provide for future real estate tax expenditures
and tenant improvements, earnest money deposits on acquisitions
and net proceeds from tax-deferred dispositions. Restricted cash
represents amounts committed for various utility deposits and
security deposits. Certain of these amounts may be reduced upon
the fulfillment of certain obligations. The escrow deposits and
restricted cash decreased approximately $150.7 million to
$45.6 million at June 30, 2002, from
$196.3 million at December 31, 2001. The decrease was
primarily due to the disbursement of approximately
$162.0 million of proceeds from the sale of certain parking
facilities in 2001 that were deposited into a tax-deferred
escrow account.




Market Risk

Since December 31, 2001 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, 2001, except as noted below.




Interest Rate
Risk  Derivatives

As of June 30, 2002, we have several
interest rate swap agreements in place to hedge certain
unsecured notes as summarized below. In each case, we are the
variable rate payer and the counterparty is the fixed rate
payer. The variable interest rate is based on various spreads
over LIBOR. The settlement dates correspond to the interest
payment dates of the respective unsecured notes being hedged.
Each of the interest rate swap agreements terminates on the
maturity date of the respective unsecured notes being hedged.

|                    |  |                        |             |           |       |   |        |          |  |               |              |  |  |  |         | 
|------------------- |  | ---------------------- | ----------- | --------- | ----- | - | ------ | -------- |  | ------------- | ------------ |  |  |  | ------- | 
|                    |  |                        |             | Estimated |       |   | Fixed  |          |  | Maturity Date |             
|                    |  | Amount                 |             |           | Value |   |        | Interest |  |               | of Unsecured | 
|Swap Effective Date |  | Hedged                 |             |           | (1)   |   |        | Rate     |  |               | Notes/Swaps  | 
|                    |  |                        |             |           |       |   |        |          |  |               |              | 
|                    |  |                       
|                    |  | (Dollars in thousands) |            
|March 2002          |  | $                      | 300 million |           |       | $ | 4,480  |          |  |               | 6.50%        |  |  |  | 1/15/04 | 
|October 2001        |  | $                      | 150 million |           |       |   | 577    |          |  |               | 6.50%        |  |  |  | 6/15/04 | 
|October 2001        |  | $                      | 100 million |           |       |   | 438    |          |  |               | 6.50%        |  |  |  | 6/15/04 | 
|October 2001        |  | $                      | 300 million |           |       |   | 511    |          |  |               | 6.63%        |  |  |  | 2/15/05 | 
|May 2002            |  | $                      | 150 million |           |       |   | 1,764  |          |  |               | 8.38%        |  |  |  | 3/15/06 | 
|May 2002            |  | $                      | 200 million |           |       |   | 2,342  |          |  |               | 8.38%        |  |  |  | 3/15/06 | 
|                    |  |                        |             |           |       |   |        |          |  |               |              | 
|                    |  |                        |             |           |       | $ | 10,112 |          |  |               |              |  |  |  |         | 
|                    |  |                        |             |           |       |   |        |          |  |               |              | 




|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | Values are as of June 30, 2002, and may
    fluctuate based on market interest rates.

In accordance with FAS 133, Accounting for
Derivative Instruments and Hedging Activities, the above
interest rate swap agreements and the respective unsecured notes
are reflected at market value. Any market adjustment on the swap
agreements will be reflected in other assets or other
liabilities, and the corresponding market adjustment on the
unsecured notes will be reflected as either a discount or
premium on unsecured notes. Because the swap agreements are
considered a perfectly effective fair value hedge, there will be
no effect on net income from the mark to market adjustments.

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Capital Improvements, Tenant Improvements and
Leasing Commissions






Capital
Improvements


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



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

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

|                     |                        |                            |   |                 |                          |  |   |              |                 |  |               |        |        |  |   |        |        | 
|-------------------- | ---------------------- | -------------------------- | - | --------------- | ------------------------ |  | - | ------------ | --------------- |  | ------------- | ------ | ------ |  | - | ------ | ------ | 
|                     |                        |                            |   |                
|                     |                        | For the three months ended |   |                 | For the six months ended | 
|                     |                        | June 30, 2002              |   |                 | June 30, 2002            | 
|                     |                        |                            |   |                 |                          | 
|                     |                        |                            |   | Unconsolidated  |                          |  |   |              | Unconsolidated  | 
|                     |                        |                            |   | Properties (EOP |                          |  |   |              | Properties (EOP | 
|                     |                        | Consolidated               |   |                 | Partnerships            |  |   | Consolidated |                 |  | Partnerships |       
|                     |                        | Properties                 |   |                 | share)                   |  |   | Properties   |                 |  | share)        |       
|                     |                        |                            |   |                 |                          |  |   |              |                 |  |               |       
|                     |                        |                           
|                     |                        | (Dollars in thousands)     |  
|Capital Improvements |                        |                            |   |                 |                          |  |   |              |                 |  |               |        |        |  |   |       
|                     | Capital improvements   |                            | $ | 4,660           |                          |  | $ | 269          |                 |  | $             | 14,978 |        |  | $ | 643    |       
|                     | Development costs      |                            |   | 30,339          |                          |  |   | 35,580       |                 |  |               | 55,261 |        |  |   | 65,453 |       
|                     | Redevelopment costs(a) |                            |   | 10,001          |                          |  |   |             |                 |  |               | 18,490 |        |  |   |       |       
|                     |                        |                            |   |                 |                          |  |   |              |                 |  |               |       
|                     |                        | Total capital improvements |   | $               | 45,000                   |  |   | $            | 35,849          |  |               | $      | 88,729 |  |   | $      | 66,096 | 
|                     |                        |                            |   |                 |                          |  |   |              |                 |  |               |       




|    |  |                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------
|(a) |  | Redevelopment properties are Tabor Center, Polk
    and Taylor Buildings and 500-600 City Parkway.




Tenant
Improvements and Leasing Commissions

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



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

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

|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |       | 
|----------------------------------------------------- | ---------- | -------------------- | ------ | ---------------- | ------------------- | - | ----- | ----------- | ---------------- | - | ------ | ------ |  | - | ----- | ----- | 
|                                                      |            |                      |        |                 
|                                                      |            | For the three months |        |                  | For the six months  |  
|                                                      |            | ended June 30, 2002  |        |                  | ended June 30, 2002 |  
|                                                      |            |                      |        |                  |                     |  
|                                                      |            |                      |        | Cost/square foot |                     |   |       |             | Cost/square foot |  
|(Dollars in thousands except per square foot amounts) |            | Total Costs          |        |                  | Leased              |   |       | Total Costs |                  |   | Leased |       
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Consolidated Properties:                              |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|Office Properties:                                    |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|Revenue enhancing                                     |            | $                    | 13,882 |                  |                     | $ | 23.49 |             |                  | $ | 22,040 |        |  | $ | 23.06 |      
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Non-revenue enhancing:                                |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|                                                      | Renewals   |                      | $      | 18,491           |                     |   | $     | 6.79        |                  |   | $      | 30,213 |  |   | $     | 6.70  | 
|                                                      | Retenanted |                      |        | 26,345           |                     |   |       | 15.00       |                  |   |        | 49,175 |  |   |       | 14.95 | 
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Total/ Weighted Average Non-revenue enhancing         |            | $                    | 44,836 |                  |                     | $ | 10.01 |             |                  | $ | 79,388 |        |  | $ | 10.18 |      
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Industrial Properties:                                |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|Revenue enhancing                                     |            |                      |       |                  |                     |   |      |             |                  |   |       |        |  |   |      |      
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Non-revenue enhancing:                                |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|                                                      | Renewals   |                      | $      | 271              |                     |   | $     | 0.42        |                  |   | $      | 271    |  |   | $     | 0.41  | 
|                                                      | Retenanted |                      |        | 240              |                     |   |       | 3.74        |                  |   |        | 240    |  |   |       | 3.74  | 
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Total/ Weighted Average Non-revenue enhancing         |            | $                    | 511    |                  |                     | $ | 0.72  |             |                  | $ | 511    |        |  | $ | 0.71  |      
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Unconsolidated Properties
    (a):                    |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|Revenue enhancing                                     |            | $                    | 107    |                  |                     | $ | 5.97  |             |                  | $ | 631    |        |  | $ | 15.36 |      
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Non-revenue enhancing:                                |            |                      |        |                  |                     |   |       |             |                  |   |        |        |  |   |       |      
|                                                      | Renewals   |                      | $      | 436              |                     |   | $     | 3.09        |                  |   | $      | 923    |  |   | $     | 4.66  | 
|                                                      | Retenanted |                      |        | 348              |                     |   |       | 6.50        |                  |   |        | 1,031  |  |   |       | 9.54  | 
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       
|Total/ Weighted Average Non-revenue enhancing         |            | $                    | 784    |                  |                     | $ | 4.02  |             |                  | $ | 1,954  |        |  | $ | 6.38  |      
|                                                      |            |                      |        |                  |                     |   |       |             |                  |   |        |       




|    |  |                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Represents EOP Partnerships share of
    unconsolidated joint venture leasing costs. All joint ventures
    are Office Properties.

The above information includes actual capital
improvements incurred and tenant improvements and leasing
commissions for leases which commenced during the year for the
periods shown. The amounts included in the consolidated
statements of cash flows represent the cash expenditures made
during the six months ended June 30, 2002. The differences
between these amounts represent timing differences between the
lease commencement dates and the actual cash expenditures as
well as expenditures for corporate furniture, fixtures and
equipment, software, leasehold improvements and other. The
reconciliation between the amounts

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above for the consolidated properties and the
amounts disclosed in the consolidated statements of cash flows
is as follows:


|                                                                                                                             |  |                     |         |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | -
|                                                                                                                             |  | For the six months  |        
|(Dollars in thousands)                                                                                                       |  | ended June 30, 2002 |        
|                                                                                                                             |  |                     |        
|Total capital improvements, tenant improvements
    and leasing commissions                                                  |  | $                   | 190,668 |  
|Timing differences                                                                                                           |  |                     | (20,810 | )
|Expenditures for corporate furniture, fixtures
    and equipment, software, leasehold improvements and other                 |  |                     | 2,306   |  
|                                                                                                                             |  |                     |        
|Total capital improvements, tenant improvements
    and leasing commissions on the consolidated statements of cash
    flows |  | $                   | 172,164 |  
|                                                                                                                             |  |                     |        




Developments

We currently own directly and through joint
ventures several properties in various stages of development or
pre-development. These developments are funded with proceeds
from working capital and the line of credit. Specifically
identifiable direct acquisition, development and construction
costs are capitalized, including, where applicable, salaries and
related costs, real estate taxes and interest essential to the
development of a property. The properties under development and
all figures stated below are as of June 30, 2002.




Consolidated
Developments:

|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |         |   |         |  |    |   |    |  
|------------------------------------ |  | ----------------------------- |  | ------------------ | -- | --------- | - |  | --------- | ---------------------- | --------- | ---------- | ----- |  | -------- | ----- | ------- | --------- | ------- | - | --------- | ------- | ------- | ---------- | ------- | - | ------- |  | -- | - | -- | -
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       | 
|                                     |  |                               |  |                    |    |           |   |  |           | EOP Partnerships      |           |            |       |  |         
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |         
|                                     |  | Estimated                     |  |                    |    |           |   |  |           | Effective              |           |            |       |  | Total    |       |         |          
|                                     |  | Placed in                     |  |                    |    |           |   |  |           | Ownership              |           |            | Costs |  |          | Total |         |           | Project |   |           | Current |        
|                                     |  | Service                       |  |                    |    | Number of |   |  | Square    |                        |           | Percentage |       |  | Incurred |       |         | Estimated |         |   | Estimated |         |         | Percentage |        
|Wholly-Owned                         |  | Date(a)                       |  | Location           |    | Buildings |   |  | Feet      |                        |           | (a)        |       |  | (a)      |       |         | Costs(a)  |         |   | Costs(a)  |         |         | Leased     |        
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |           
|                                     |  |                               |  |                    |    |           |   |  |           | (Dollars in thousands) |           |            |      
|Tower @ Shores Center                |  | 4Q/2001                       |  | Redwood Shores, CA |    |           | 2 |  |           |                        | 334,800   |            |       |  | 100      | %     |         | $         | 107,628 |   |           | $       | 116,500 |            |         | $ | 116,500 |  |    |   | 32 | %
|Kruse Woods V                        |  | 3Q/2003                       |  | Lake Oswego, OR    |    |           | 1 |  |           |                        | 184,000   |            |       |  | 100      | %     |         |           | 5,698   |   |           |         | 33,900  |            |         |   | 33,900  |  |    |   | 0  | %
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|                                     |  |                               |  |                    |    |           | 3 |  |           |                        | 518,800   |            |       |  |          |       |         |           | 113,326 |   |           |         | 150,400 |            |         |   | 150,400 |  |    |   | 21 | %
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|                                    
|Joint Venture                        |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |         |   |         |  |    |   |    |  
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|Waters Edge Phase I                 |  | 3Q/2002                       |  | Los Angeles, CA    |    |           | 2 |  |           |                        | 240,000   |            |       |  | 87.5     | %     |         |           | 44,188  |   |           |         | 74,300  |            |         |   | 76,500  |  |    |   | 0  | %
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|Unconsolidated Developments:         |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |         |   |         | 
|                                    
|Wilson/Equity Office Developments(b) |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |         |   |         |  |    |   |    |  
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|San Rafael Corporate Center          |  | 4Q/2001                       |  | San Rafael, CA     |    |           | 2 |  |           |                        | 157,700   |            |       |  | 80       | %     |         |           | 38,759  |   |           |         | 48,100  |            |         |   | 60,100  |  |    |   | 12 | %
|Foundry Square II and IV(c)          |  | 3Q/2002 -                     |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |         |   |         |  |    |   |    |  
|                                     |  | 1Q/2003                       |  | San Francisco, CA  |    |           | 2 |  |           |                        | 734,800   |            |       |  | (c)      |       |         |           | 103,423 |   |           |         | 150,600 |            |         |   | 259,500 |  |    |   | 31 | %
|Ferry Building(d)                    |  | 3Q/2002                       |  | San Francisco, CA  |    |           | 1 |  |           |                        | 242,000   |            |       |  | (d)      |       |         |           | 42,775  |   |           |         | 60,900  |            |         |   | 99,900  |  |    |   | 0  | %
|Concar(e)                            |  | 4Q/2002                       |  | San Mateo, CA      |    |           | 2 |  |           |                        | 207,000   |            |       |  | 80       | %     |         |           | 32,432  |   |           |         | 55,200  |            |         |   | 68,500  |  |    |   | 99 | %
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|                                     |  |                               |  |                    |    |           | 7 |  |           |                        | 1,341,500 |            |       |  |          |       |         |           | 217,389 |   |           |         | 314,800 |            |         |   | 488,000 |  |    |   | 33 | %
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |         |            |        
|                                     |  | Grand Total/ Weighted Average |  |                    | 12 |           |   |  | 2,100,300 |                        |           |            |       |  |          | $     | 374,903 |           |         | $ | 539,500   |         |         | $          | 714,900 |   |         |  | 27 | %
|                                     |  |                               |  |                    |    |           |   |  |           |                        |           |            |       |  |          |       |         |           |         |   |           |         |        

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Balance Sheet Reconciliation of
Developments:

|                                                                   |               |                                                                     |       |         |         | 
|------------------------------------------------------------------ | ------------- | ------------------------------------------------------------------- | ----- | ------- | ------- | 
|Consolidated developments  costs
    incurred as reflected above: |               |                                                                     |       |        
|                                                                   | Wholly-owned  |                                                                     | $     | 113,326 |        
|                                                                   | Joint venture |                                                                     |       | 44,188  |        
|Minority interests portion of consolidated
    development         |               |                                                                     | 2,132 |        
|                                                                   |               |                                                                     |      
|                                                                   |               | Total developments in process on the consolidated
    balance sheet |       | $       | 159,646 | 
|                                                                   |               |                                                                     |      




|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The Estimated Placed in Service Date represents
    the date the certificate of occupancy was or is currently
    anticipated to be obtained. Subsequent to obtaining the
    certificate of occupancy, the property is expected to undergo a
    lease-up period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | For consolidated developments, EOP
    Partnerships Costs Incurred and the Total Estimated Costs
    are based on EOP Partnerships Effective Ownership
    Percentage. The Total Project Estimated Costs represent 100% of
    the estimated costs including any unaffiliated partys
    portion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | For unconsolidated developments, the Effective
    Ownership Percentage represents EOP Partnerships direct
    interest in the development and its indirect interest through
    its 49.9% interest in Wilson/ Equity Office (W/ EO).
    EOP Partnerships Costs Incurred and Total Estimated Costs
    are based on EOP Partnerships Effective Ownership
    Percentage. The Total Project Estimated Costs represent 100% of
    the estimated costs including those of EOP Partnership, Wilson
    Investors (WI) and any unaffiliated partys
    portions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | The Total Estimated Costs and the Total Project
    Estimated Costs are subject to change upon, or prior to, the
    completion of the development and include amounts required to
    lease the property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(b) |  | EOP Partnership and WI entered into a joint
    venture agreement to form W/EO for the purpose of developing,
    constructing, leasing and managing developments in northern
    California. W/EO is owned 49.9% by EOP Partnership and 50.1% by
    WI. William Wilson III, a trustee of Equity Office, through
    his ownership of WI, owns approximately 22% of W/EO (and
    approximately 30% of any promote to which WI is entitled under
    the joint venture agreement). EOP Partnership has agreed to loan
    up to $25 million to WI for its required contribution to
    W/EO at a 15% return per annum. As of June 30, 2002, all
    amounts lent to WI were repaid and the remaining commitment
    amount is $13 million. As a result of the recently enacted
    Sarbanes-Oxley Act of 2002, it is possible (depending on the
    scope of the regulations to be adopted by the SEC) that EOP
    Partnership could be prohibited from lending further amounts to
    WI under this arrangement or from modifying or renewing this
    arrangement.                                                                                                                                                                                                                                                                                                                              
|   
|    |  | EOP Partnership has created joint ventures with
    W/EO and, in certain cases, unaffiliated parties for the
    development of various office properties. The costs for these
    developments are expected to be funded by EOP Partnership and
    W/EO in a 60%/40% ratio and in some cases by third parties as
    described within each developments operating agreement.
    EOP Partnership has agreed to provide first mortgage financing
    to the ownership entities of each of these developments
    (subject, in the case of Concar, to final agreed documentation)
    at the greater of 6.5% or LIBOR plus 3.25%, generally maturing
    36 months after initial funding (or earlier at the option
    of EOP Partnership in the event alternative financing sources
    are available on terms reasonably acceptable to WI and any
    unaffiliated party). The aggregate amount of such financing is
    generally capped at 70% of budgeted construction costs (76% in
    the case of Concar). At June 30, 2002, EOP Partnership had
    committed to make mortgage loans totalling approximately
    $317 million, of which approximately $163 million was
    outstanding. In accordance with the W/EO operating agreement,
    EOP Partnership is entitled, but not required, to purchase the
    W/EO interest in each development subsequent to project
    stabilization.
|   
|(c) |  | Foundry Square is a project with two sites
    currently under development, each of which has a separate joint
    venture structure. EOP Partnerships Effective Ownership
    Percentages are approximately 70% and 40%, for Sites II and
    IV, respectively. Site I is currently held as land
    available for development.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(d) |  | In 2001, a joint venture between EOP Partnership,
    W/EO, and other unaffiliated parties leased the Ferry Building
    from the City and County of San Francisco, through its Port
    Commission (the Port). Under this lease, the Port is
    paid a stated base rent. In addition, once the lessee has
    received from the project a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | cumulative preferred return of 8% (prior to
    stabilization) and 11% (after stabilization), then 50% of the
    proceeds from the operation and ownership of the project are
    paid to the Port as percentage rent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | The joint venture is redeveloping the Ferry
    Building in a manner to permit the use of federal rehabilitation
    tax credits (Historic Tax Credits). Since the
    original members of the joint venture could not take full
    advantage of the Historic Tax Credits, the joint venture
    admitted a new member who could do so. This investor member will
    contribute approximately $23.5 million in equity to fund a
    portion of the Total Project Estimated Costs for the project,
    and will receive a preferred return with an effective annual
    rate of approximately 3% on its capital investment. The investor
    members interest in the joint venture is subject to
    put/call rights during the sixth and seventh years after the
    Ferry Building is placed in service. Upon the purchase of the
    investor members interest pursuant to the put/call, it is
    estimated that the joint venture will retain approximately
    $11 million of the capital contributed by the investor
    member, based on a formula to determine the purchase price for
    the investor members interest and after taking into
    account the preferred return that will have been paid to the
    investor member by such time. Through the creation of a master
    lease, EOP Partnerships Effective Ownership Percentage in
    the net cash flow of the Ferry Building project is approximately
    80%, after the distribution of preferred returns.
|   
|(e) |  | Under the terms of the ground lease, the ground
    lessor is entitled to share, in addition to ground rent, in
    proceeds from the operation and ownership of this development
    after a 10% return to the lessee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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




Impact of New Accounting Standards

In accordance with Statement of Financial
Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for
financial statements issued for fiscal years beginning after
December 15, 2001, the net income and gain/ (loss) on sales
of real estate for properties sold subsequent to
December 31, 2001 is reflected in the consolidated
statements of operations as Discontinued operations
for both periods presented.

In accordance with Statement of Financial
Accounting Standards No. 145, Rescission of FASB
Statements No. 4,44, and 62, Amendment of FASB Statement
No. 13, and Technical Corrections, effective for
financial statements issued for fiscal years beginning after
May 15, 2002, gains and losses on extinguishments of debt
are classified as income from continuing operations rather than
as extraordinary items as previously required under
Statement 4.




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.

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##### Table of Contents






Funds From Operations
(FFO)

We believe FFO, as defined by NAREIT, to be an
appropriate measure of performance for a real estate company.
While FFO is a relevant and widely used measure of operating
performance of a real estate company, it does not represent cash
flow from operations or net income as defined by GAAP, and it
should not be considered as an alternative to these indicators
in evaluating liquidity or operating performance.

The following tables reflect the calculation of
FFO for the three and six months ended June 30, 2002 and
2001, respectively:

|                                                                                                                                                          |                                                                                                                                           |                            |         |          |      |   |         |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ---- | - | ------- | -------- | -
|                                                                                                                                                          |                                                                                                                                           |                           
|                                                                                                                                                          |                                                                                                                                           | For the three months ended |        
|                                                                                                                                                          |                                                                                                                                           | June 30,                   |        
|                                                                                                                                                          |                                                                                                                                           |                            |        
|(Dollars in thousands)                                                                                                                                    |                                                                                                                                           | 2002                       |         |          | 2001 |  
|                                                                                                                                                          |                                                                                                                                           |                            |         |          |      |  
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and discontinued operations |                                                                                                                                           | $                          | 178,501 |          |      | $ | 134,817 |         
|Add (deduct):                                                                                                                                             |                                                                                                                                           |                            |         |          |      |   |         |         
|                                                                                                                                                          | Income taxes                                                                                                                              |                            |         | (1,926   | )    |   |         | (3,056   | )
|                                                                                                                                                          | Income allocated to minority interests for
    partially owned properties                                                                 |                            |         | (995     | )    |   |         | (1,353   | )
|                                                                                                                                                          | Income from investment in unconsolidated joint
    ventures (excluding gain on sale of $150 for the three months
    ended June 30, 2002) |                            |         | 22,148   |      |   |         | 17,864   |  
|                                                                                                                                                          | Depreciation and amortization (real estate
    related) (including EOP Partnerships share of
    unconsolidated joint ventures)          |                            |         | 184,290  |      |   |         | 132,342  |  
|                                                                                                                                                          | Discontinued operations (excluding depreciation,
    amortization and net gain on sale)                                                   |                            |         | 133      |      |   |         | 2,947    |  
|                                                                                                                                                          | Preferred distributions                                                                                                                   |                            |         | (15,831  | )    |   |         | (10,877  | )
|                                                                                                                                                          |                                                                                                                                           |                            |         |          |      |  
|Funds from Operations                                                                                                                                     |                                                                                                                                           | $                          | 366,320 |          |      | $ | 272,684 |         
|                                                                                                                                                          |                                                                                                                                           |                            |         |          |      |  
|Cash flow provided by (used for):                                                                                                                         |                                                                                                                                           |                            |         |          |      |   |         |         
|                                                                                                                                                          | Operating Activities                                                                                                                      |                            | $       | 363,639  |      |   | $       | 263,651  |  
|                                                                                                                                                          | Investing Activities                                                                                                                      |                            | $       | (32,250  | )    |   | $       | (112,357 | )
|                                                                                                                                                          | Financing Activities                                                                                                                      |                            | $       | (334,987 | )    |   | $       | (108,825 | )
|Ratio of earnings to combined fixed charges and
    preferred share distributions                                                                         |                                                                                                                                           |                            | 2.0     |          |      |   | 1.8     |         

|                                                                                                                                                                                                                     |                                                                                                                                         |                          |         |         |      |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- | -
|                                                                                                                                                                                                                     |                                                                                                                                         |                         
|                                                                                                                                                                                                                     |                                                                                                                                         | For the six months ended |        
|                                                                                                                                                                                                                     |                                                                                                                                         | June 30,                 |        
|                                                                                                                                                                                                                     |                                                                                                                                         |                          |        
|(Dollars in thousands)                                                                                                                                                                                               |                                                                                                                                         | 2002                     |         |         | 2001 |  
|                                                                                                                                                                                                                     |                                                                                                                                         |                          |         |         |      |  
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                                                                                                         | $                        | 375,698 |         |      | $ | 271,700 |        
|Add (deduct):                                                                                                                                                                                                        |                                                                                                                                         |                          |         |         |      |   |         |        
|                                                                                                                                                                                                                     | Income taxes                                                                                                                            |                          |         | (8,932  | )    |   |         | (4,573  | )
|                                                                                                                                                                                                                     | Income allocated to minority interests for
    partially owned properties                                                               |                          |         | (2,401  | )    |   |         | (4,606  | )
|                                                                                                                                                                                                                     | Income from investment in unconsolidated joint
    ventures (excluding gain on sale of $429 for the six months
    ended June 30, 2002) |                          |         | 79,497  |      |   |         | 33,290  |  
|                                                                                                                                                                                                                     | Depreciation and amortization (real estate
    related) (including EOP Partnerships share of
    unconsolidated joint ventures)        |                          |         | 362,989 |      |   |         | 265,752 |  
|                                                                                                                                                                                                                     | Discontinued operations (excluding depreciation,
    amortization and net gain on sale)                                                 |                          |         | 1,769   |      |   |         | 5,473   |  
|                                                                                                                                                                                                                     | Preferred distributions                                                                                                                 |                          |         | (31,661 | )    |   |         | (21,761 | )
|                                                                                                                                                                                                                     |                                                                                                                                         |                          |         |         |      |  
|Funds from Operations                                                                                                                                                                                                |                                                                                                                                         | $                        | 776,959 |         |      | $ | 545,275 |        
|                                                                                                                                                                                                                     |                                                                                                                                         |                          |         |         |      |  

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|                                                                                  |                      |                          |     |          |      |  |     |          |  
|--------------------------------------------------------------------------------- | -------------------- | ------------------------ | --- | -------- | ---- |  | --- | -------- | -
|                                                                                  |                      |                         
|                                                                                  |                      | For the six months ended |    
|                                                                                  |                      | June 30,                 |    
|                                                                                  |                      |                          |    
|(Dollars in thousands)                                                            |                      | 2002                     |     |          | 2001 | 
|                                                                                  |                      |                          |     |          |      | 
|Cash flow provided by (used for):                                                 |                      |                          |     |          |      |  |     |         
|                                                                                  | Operating Activities |                          | $   | 642,220  |      |  | $   | 456,452  |  
|                                                                                  | Investing Activities |                          | $   | 144,980  |      |  | $   | (176,029 | )
|                                                                                  | Financing Activities |                          | $   | (548,081 | )    |  | $   | (253,600 | )
|Ratio of earnings to combined fixed charges and
    preferred share distributions |                      |                          | 2.0 |          |      |  | 1.8 |         

The White Paper on FFO approved by NAREIT in
March 1995 defines FFO as net income, computed in accordance
with GAAP, excluding gains (or losses) from debt restructuring
and sales of properties (which EOP Partnership believes includes
impairments on properties held for sale), plus real estate
related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. In November
1999, NAREIT issued a National Policy Bulletin effective
January 1, 2000 clarifying the definition of FFO to include
all operating results, both recurring and non-recurring, except
those defined as extraordinary under GAAP. We believe that FFO
is helpful to investors as a measure of the performance of a
real estate company because, along with cash flow from operating
activities, investing activities and financing activities, it
provides investors with an indication of the ability of a
company to incur and service debt, to make capital expenditures
and to fund other cash needs. 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
us. 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.

41



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##### Table of Contents








|        |                                                                
|------- | ---------------------------------------------------------------
|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 in the
Market Risk section.




PART II. OTHER INFORMATION






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

Two reports on Form 8-K were filed during
the quarter ended June 30, 2002, as follows:

|               |  |                                          
|-------------- |  | -----------------------------------------
|Date of Event  |  | Items Reported/Financial Statements Filed
|               |  |                                          
|April 19, 2002 |  | Item 5, Other Events                     

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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: August 14, 2002

| |     |                       
| | --- | ----------------------
| | By: | /s/ STANLEY M. STEVENS

| |                                  
| | ---------------------------------
| |                                  
| | Stanley M. Stevens               
| | Executive Vice President,        
| | Chief Legal Counsel and Secretary

Date: August 14, 2002

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

| |                            
| | ---------------------------
| |                            
| | Richard D. Kincaid         
| | Executive Vice President,  
| | Chief Operating Officer and
| | Chief Financial Officer    

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##### Table of Contents






EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |          |  | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | 
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Page No. | 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |          | 
|10.1       |  | Severance Agreement, dated June 24, 2002,
    with Timothy H. Callahan (incorporated by reference to
    Exhibit 10.1 of Equity Office Properties Trusts
    Quarterly Report on Form 10-Q filed with the Commission on
    August 14, 2002)                                                                                                                                                                                         |  |          |  | 
|10.2        |  | Construction Loan Agreement, dated as of
    March 12, 2002, between San Rafael Corporate Center,
    LLC, a Delaware limited liability company, as Borrower and
    Riverside Finance Company, L.L.C., a Delaware limited liability
    company, as Lender (incorporated by reference to
    Exhibit 10.2 of Equity Office Properties Trusts
    Quarterly Report on Form 10-Q filed with the Commission on
    August 14, 2002)    |  |          |  | 
|10.3        |  | Construction Loan Agreement, dated as of
    December 31, 2001, between Ferry Building Investors, LLC, a
    California limited liability company, as Borrower and Riverside
    Finance Company, L.L.C., a Delaware limited liability company,
    as Lender (incorporated by reference to Exhibit 10.3 of
    Equity Office Properties Trusts Quarterly Report on
    Form 10-Q filed with the Commission on August 14, 2002)      |  |          |  | 
|10.4        |  | First Amendment to Construction Loan Agreement,
    Deed of Trust and Other Loan Documents, dated April 25,
    2002 (incorporated by reference to Exhibit 10.4 of Equity
    Office Properties Trusts Quarterly Report on
    Form 10-Q filed with the Commission on August 14, 2002)                                                                                                                                               |  |          |  | 
|10.5        |  | Construction Loan Agreement, dated as of
    April 25, 2002, between Foundry Square Associates II,
    LLC, a California limited liability company, as Borrower and
    Riverside Finance Company, L.L.C., a Delaware limited liability
    company, as Lender (incorporated by reference to
    Exhibit 10.5 of Equity Office Properties Trusts
    Quarterly Report on Form 10-Q filed with the Commission on
    August 14, 2002) |  |          |  | 
|10.6        |  | Construction Loan Agreement, dated as of
    April 30, 2002, between Foundry Square Associates IV, LLC,
    a California limited liability company, as Borrower and
    Riverside Finance Company, L.L.C., a Delaware limited liability
    company, as Lender (incorporated by reference to
    Exhibit 10.6 of Equity Office Properties Trusts
    Quarterly Report on Form 10-Q filed with the Commission on
    August 14, 2002) |  |          |  | 
|12.1        |  | Statement of Earnings to Combined Fixed Charges
    and Preferred Distributions                                                                                                                                                                                                                                                                                                                                                       |  |          |  | 



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

44