UNITED STATES







---

FORM 10-Q

(MARK ONE)

[X]


| |                                                 
| | ------------------------------------------------
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2000

OR

[   ]

| |                                                  
| | -------------------------------------------------
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number: 1-13625



---

EOP OPERATING LIMITED PARTNERSHIP



|                                                                |  |                                      
|--------------------------------------------------------------- |  | -------------------------------------
|                                                               
|                                                               
|                                                               
|                                                               
|Delaware                                                        |  | 36-4156801                           
|(State or Other Jurisdiction of
	Incorporation or Organization) |  | (I.R.S. Employer
	Identification No.)

|                                                                                                 |  |                
|------------------------------------------------------------------------------------------------ |  | ---------------
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Two North Riverside Plaza, Suite 2100
	Chicago, Illinois(Address of principal executive offices) |  | 60606(Zip Code)

(312) 466-3300





---

Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for
the past 90 days. Yes  [X]  No 
[   ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

On November 9, 2000, 348,183,163 of the registrants
Units were outstanding.



---






---



PART I.  FINANCIAL INFORMATION

ITEM 1.  Financial Statements

EOP OPERATING LIMITED PARTNERSHIP



CONSOLIDATED BALANCE SHEETS


|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |            |           |         |            | 
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | --------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | --------- | ------- | ---------- | ---------- | --------- | ------- | ---------- | 
|                                             |                                                                                                              | September 30,                                 |                                                                                                                                                               | December 31,                           
|(Dollars in thousands, except per unit data) |                                                                                                              | 2000                                          |                                                                                                                                                               | 1999                                   
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                        
|                                             |                                                                                                              | (Unaudited)                                   |                                                                                                                                                               |                                        
|                                            
|                                            
|                                            
|                                            
|Assets:                                      |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                            
|                                            
|                                            
|                                            
|                                             | Investment in real estate                                                                                    |                                               | $                                                                                                                                                             | 17,346,156                              |           |         | $          | 12,847,389 |          
|                                            
|                                            
|                                            
|                                            
|                                             | Developments in process                                                                                      |                                               |                                                                                                                                                               | 141,578                                 |           |         |            | 229,225    |          
|                                            
|                                            
|                                            
|                                            
|                                             | Land available for development                                                                               |                                               |                                                                                                                                                               | 94,194                                  |           |         |            | 125,926    |          
|                                            
|                                            
|                                            
|                                            
|                                             | Accumulated depreciation                                                                                     |                                               |                                                                                                                                                               | (878,187                                | )         |         |            | (630,387   | )        
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             | Investment in real estate, net of accumulated depreciation                                                   |                                               |                                                                                                                                                               | 16,703,741                              |           |         |            | 12,572,153 |          
|                                            
|                                            
|                                            
|                                            
|                                             | Cash and cash equivalents                                                                                    |                                               |                                                                                                                                                               | 59,080                                  |           |         |            | 2,338      |          
|                                            
|                                            
|                                            
|                                            
|                                             | Tenant and other receivables (net of allowance for doubtful
	accounts of $3,740 and $1,244, respectively)    |                                               |                                                                                                                                                               | 57,574                                  |           |         |            | 54,497     |          
|                                            
|                                            
|                                            
|                                            
|                                             | Deferred rent receivable                                                                                     |                                               |                                                                                                                                                               | 188,064                                 |           |         |            | 138,697    |          
|                                            
|                                            
|                                            
|                                            
|                                             | Escrow deposits and restricted cash                                                                          |                                               |                                                                                                                                                               | 75,197                                  |           |         |            | 19,754     |          
|                                            
|                                            
|                                            
|                                            
|                                             | Investment in unconsolidated joint ventures                                                                  |                                               |                                                                                                                                                               | 1,104,095                               |           |         |            | 865,863    |          
|                                            
|                                            
|                                            
|                                            
|                                             | Deferred financing costs (net of accumulated amortization of
	$22,907 and $14,863, respectively)             |                                               |                                                                                                                                                               | 75,407                                  |           |         |            | 55,196     |          
|                                            
|                                            
|                                            
|                                            
|                                             | Deferred leasing costs (net of accumulated amortization of
	$37,096 and $22,461, respectively)               |                                               |                                                                                                                                                               | 136,353                                 |           |         |            | 97,743     |          
|                                            
|                                            
|                                            
|                                            
|                                             | Prepaid expenses and other assets (net of discount on note
	receivable of $64,152 and $62,393, respectively) |                                               |                                                                                                                                                               | 328,637                                 |           |         |            | 239,817    |          
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             |                                                                                                              |                                               |                                                                                                                                                               | Total Assets                            |           | $       | 18,728,148 |            |           | $       | 14,046,058 | 
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|Liabilities and Partners Capital:           |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                            
|                                            
|                                            
|                                            
|                                             | Mortgage debt (including a net (discount)/premium of $(20,183)
	and $10,574, respectively)                   |                                               | $                                                                                                                                                             | 2,965,099                               |           |         | $          | 1,743,871  |          
|                                            
|                                            
|                                            
|                                            
|                                             | Unsecured notes (including a net (discount)/premium of $(1,187)
	and $47,
	respectively)                     |                                               |                                                                                                                                                               | 4,838,813                               |           |         |            | 3,655,047  |          
|                                            
|                                            
|                                            
|                                            
|                                             | Lines of credit                                                                                              |                                               |                                                                                                                                                               | 880,000                                 |           |         |            | 453,000    |          
|                                            
|                                            
|                                            
|                                            
|                                             | Accounts payable and accrued expenses                                                                        |                                               |                                                                                                                                                               | 406,130                                 |           |         |            | 318,003    |          
|                                            
|                                            
|                                            
|                                            
|                                             | Distribution payable                                                                                         |                                               |                                                                                                                                                               | 159,706                                 |           |         |            | 5,446      |          
|                                            
|                                            
|                                            
|                                            
|                                             | Other liabilities                                                                                            |                                               |                                                                                                                                                               | 178,155                                 |           |         |            | 161,164    |          
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             |                                                                                                              |                                               |                                                                                                                                                               | Total Liabilities                       |           |         | 9,427,903  |            |           |         | 6,336,531  | 
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             | Commitments and contingencies                                                                                |                                               |                                                                                                                                                               |                                         |           |         |            |            |          
|                                            
|                                            
|                                            
|                                            
|                                             | Minority Interests  partially owned properties                                                              |                                               |                                                                                                                                                               | 205,003                                 |           |         |            | 39,027     |          
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             | Partners Capital:                                                                                           |                                               |                                                                                                                                                               |                                         |           |         |            |            |          
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              | Preferred Units:                              |                                                                                                                                                               |                                         |           |         |            |            |           |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              |                                               | 8.98% Series A Cumulative Redeemable Preferred Units,
	liquidation preference $25.00 per unit, 7,994,000 and
	8,000,000 issued and outstanding, respectively  |                                         |           | 199,850 |            |            |           | 200,000 |           
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              |                                               | 5.25% Series B Convertible, Cumulative Redeemable Preferred
	Units, liquidation preference $50.00 per unit, 6,000,000
	issued and outstanding                 |                                         |           | 300,000 |            |            |           | 300,000 |           
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              |                                               | 8.625% Series C Cumulative Redeemable Preferred Units,
	liquidation preference $25.00 per unit, 4,562,900 and
	4,600,000 issued and outstanding, respectively |                                         |           | 114,073 |            |            |           | 115,000 |           
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              | General Partners Capital                     |                                                                                                                                                               |                                         | 70,531    |         |            |            | 58,381    |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              | Limited Partners Capital                     |                                                                                                                                                               |                                         | 8,444,984 |         |            |            | 6,986,181 |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                                              | Accumulated other comprehensive (loss) income |                                                                                                                                                               |                                         | (34,196   | )       |            |            | 10,938    |        
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             |                                                                                                              |                                               |                                                                                                                                                               | Total Partners Capital                 |           |         | 9,095,242  |            |           |         | 7,670,500  | 
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           
|                                             |                                                                                                              |                                               |                                                                                                                                                               | Total Liabilities and Partners Capital |           | $       | 18,728,148 |            |           | $       | 14,046,058 | 
|                                             |                                                                                                              |                                               |                                                                                                                                                               |                                         |           |         |            |           

See accompanying notes.

2



---



EOP OPERATING LIMITED PARTNERSHIP



CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |         |         |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ---------------------------------------- | -------------- | ------- | ------- | ------- | ----------- | ------- | ------- | ------- | 
|                                                                                                                                                                      |                            |                                         
|                                                                                                                                                                      |                            | For the three months ended              
|                                                                                                                                                                      |                            | September 30,                           
|                                                                                                                                                                      |                            |                                         
|(Dollars in thousands, except per unit data)                                                                                                                          |                            | 2000                                     |                | 1999   
|                                                                                                                                                                      |                            |                                          |                |        
|Revenues:                                                                                                                                                             |                            |                                          |                |         |         |         |             |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Rental                     |                                          | $              | 493,580 |         |         | $           | 374,428 |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Tenant reimbursements      |                                          |                | 94,308  |         |         |             | 73,326  |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Parking                    |                                          |                | 29,857  |         |         |             | 28,942  |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Other                      |                                          |                | 11,442  |         |         |             | 9,865   |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Fee income                 |                                          |                | 2,699   |         |         |             | 1,580   |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Interest/ dividends        |                                          |                | 9,415   |         |         |             | 3,216   |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|                                                                                                                                                                      |                            |                                          | Total revenues |         |         | 641,301 |             |         |         | 491,357 | 
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Expenses:                                                                                                                                                             |                            |                                          |                |         |         |         |             |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Interest:                  |                                          |                |         |         |         |             |         |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      |                            | Expense incurred                         |                |         | 156,433 |         |             |         | 103,035 |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      |                            | Amortization of deferred financing costs |                |         | 2,280   |         |             |         | 1,540   |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Depreciation               |                                          |                | 111,527 |         |         |             | 84,160  |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Amortization               |                                          |                | 5,931   |         |         |             | 3,705   |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Real estate taxes          |                                          |                | 76,551  |         |         |             | 63,288  |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Insurance                  |                                          |                | 2,992   |         |         |             | 2,461   |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Repairs and maintenance    |                                          |                | 65,392  |         |         |             | 51,775  |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Property operating         |                                          |                | 73,104  |         |         |             | 54,548  |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Ground rent                |                                          |                | 2,926   |         |         |             | 1,728   |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | General and administrative |                                          |                | 24,714  |         |         |             | 18,964  |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|                                                                                                                                                                      |                            |                                          | Total expenses |         |         | 521,850 |             |         |         | 385,204 | 
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net (loss) on sales
	of real estate and extraordinary items |                            |                                          | 119,451        |         |         |         | 106,153     |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Minority Interests  partially owned properties                                                                                                                       |                            |                                          | (1,658         | )       |         |         | (500        | )      
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Income from investment in unconsolidated joint ventures                                                                                                               |                            |                                          | 16,862         |         |         |         | 3,031       |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Net (loss) on sales of real estate                                                                                                                                    |                            |                                          | (4,271         | )       |         |         |            |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Income before extraordinary items                                                                                                                                     |                            |                                          | 130,384        |         |         |         | 108,684     |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Extraordinary items                                                                                                                                                   |                            |                                          |               |         |         |         | (230        | )      
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Net income                                                                                                                                                            |                            |                                          | 130,384        |         |         |         | 108,454     |        
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Put option settlement                                                                                                                                                 |                            |                                          | (515           | )       |         |         | (4,627      | )      
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Preferred distributions                                                                                                                                               |                            |                                          | (10,884        | )       |         |         | (10,907     | )      
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Net income available for Units                                                                                                                                        |                            | $                                        | 118,985        |         |         | $       | 92,920      |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Net income available per weighted average Unit
	outstanding  Basic                                                                                                   |                            | $                                        | 0.34           |         |         | $       | 0.32        |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Weighted average Units outstanding  Basic                                                                                                                            |                            |                                          | 346,087,554    |         |         |         | 288,620,341 |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Net income available per weighted average Unit and unit
	equivalent outstanding  Diluted                                                                             |                            | $                                        | 0.34           |         |         | $       | 0.32        |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        
|Weighted average Units and unit equivalents
	outstanding  Diluted                                                                                                    |                            |                                          | 349,494,261    |         |         |         | 291,592,245 |        
|                                                                                                                                                                      |                            |                                          |                |         |         |         |             |        

See accompanying notes.

3



---



EOP OPERATING LIMITED PARTNERSHIP



CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |           |         |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ---------------------------------------- | -------------- | --------- | ------- | --------- | ----------- | --------- | ------- | --------- | 
|                                                                                                                                                                    |                            |                                         
|                                                                                                                                                                    |                            | For the nine months ended               
|                                                                                                                                                                    |                            | September 30,                           
|                                                                                                                                                                    |                            |                                         
|(Dollars in thousands, except per unit data)                                                                                                                        |                            | 2000                                     |                | 1999     
|                                                                                                                                                                    |                            |                                          |                |          
|Revenues:                                                                                                                                                           |                            |                                          |                |           |         |           |             |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Rental                     |                                          | $              | 1,231,061 |         |           | $           | 1,115,738 |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Tenant reimbursements      |                                          |                | 226,273   |         |           |             | 210,953   |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Parking                    |                                          |                | 82,986    |         |           |             | 85,064    |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Other                      |                                          |                | 35,531    |         |           |             | 22,225    |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Fee income                 |                                          |                | 7,441     |         |           |             | 5,487     |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Interest/ dividends        |                                          |                | 23,736    |         |           |             | 8,303     |        
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|                                                                                                                                                                    |                            |                                          | Total revenues |           |         | 1,607,028 |             |           |         | 1,447,770 | 
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Expenses:                                                                                                                                                           |                            |                                          |                |           |         |           |             |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Interest:                  |                                          |                |           |         |           |             |           |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    |                            | Expense incurred                         |                |           | 368,268 |           |             |           | 310,435 |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    |                            | Amortization of deferred financing costs |                |           | 4,758   |           |             |           | 3,712   |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Depreciation               |                                          |                | 279,813   |         |           |             | 250,698   |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Amortization               |                                          |                | 15,470    |         |           |             | 9,723     |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Real estate taxes          |                                          |                | 194,391   |         |           |             | 187,326   |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Insurance                  |                                          |                | 8,443     |         |           |             | 7,142     |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Repairs and maintenance    |                                          |                | 166,396   |         |           |             | 153,622   |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Property operating         |                                          |                | 169,607   |         |           |             | 151,089   |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Ground rent                |                                          |                | 7,388     |         |           |             | 5,122     |        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | General and administrative |                                          |                | 66,454    |         |           |             | 57,928    |        
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|                                                                                                                                                                    |                            |                                          | Total expenses |           |         | 1,280,988 |             |           |         | 1,136,797 | 
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net gain on sales
	of real estate and extraordinary items |                            |                                          | 326,040        |           |         |           | 310,973     |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Minority Interests  partially owned properties                                                                                                                     |                            |                                          | (4,142         | )         |         |           | (1,398      | )        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Income from investment in unconsolidated joint ventures                                                                                                             |                            |                                          | 41,625         |           |         |           | 8,081       |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Net gain on sales of real estate                                                                                                                                    |                            |                                          | 36,589         |           |         |           | 8,085       |          
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Income before extraordinary items                                                                                                                                   |                            |                                          | 400,112        |           |         |           | 325,741     |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Extraordinary items                                                                                                                                                 |                            |                                          | (875           | )         |         |           | (10,548     | )        
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Net income                                                                                                                                                          |                            |                                          | 399,237        |           |         |           | 315,193     |          
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Put option settlement                                                                                                                                               |                            |                                          | (2,576         | )         |         |           | (4,627      | )        
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Preferred distributions, net                                                                                                                                        |                            |                                          | (32,464        | )         |         |           | (32,695     | )        
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Net income available for Units                                                                                                                                      |                            | $                                        | 364,197        |           |         | $         | 277,871     |          
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Net income available per weighted average Unit
	outstanding  Basic                                                                                                 |                            | $                                        | 1.19           |           |         | $         | 0.96        |          
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Weighted average Units outstanding  Basic                                                                                                                          |                            |                                          | 305,567,221    |           |         |           | 288,591,469 |          
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Net income available per weighted average Unit and unit
	equivalent outstanding  Diluted                                                                           |                            | $                                        | 1.18           |           |         | $         | 0.95        |          
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          
|Weighted average Units and unit equivalents
	outstanding  Diluted                                                                                                  |                            |                                          | 308,416,166    |           |         |           | 291,321,396 |          
|                                                                                                                                                                    |                            |                                          |                |           |         |           |             |          

See accompanying notes.

4



---



EOP OPERATING LIMITED PARTNERSHIP



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(Unaudited)


|                            |                                                                                                                                                  |                      |         |                     |   |      |         |      |  |   |         |         |   |   |         |   | 
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------- | ------- | ------------------- | - | ---- | ------- | ---- |  | - | ------- | ------- | - | - | ------- | - | 
|                            |                                                                                                                                                  |                      |         |                    
|                            |                                                                                                                                                  | For the three months |         | For the nine months
|                            |                                                                                                                                                  | ended                |         | ended              
|                            |                                                                                                                                                  | September 30,        |         | September 30,      
|                            |                                                                                                                                                  |                      |         |                    
|(Dollars in thousands)      |                                                                                                                                                  | 2000                 |         | 1999                |   | 2000 |         | 1999
|                            |                                                                                                                                                  |                      |         |                     |   |      |         |     
|Net income                  |                                                                                                                                                  | $                    | 130,384 |                     |   | $    | 108,454 |      |  | $ | 399,237 |         |   | $ | 315,193 |  
|                           
|                           
|                           
|                           
|Other comprehensive income: |                                                                                                                                                  |                      |         |                     |   |      |         |      |  |   |         |         |   |   |         |  
|                           
|                           
|                           
|                           
|                            | Unrealized holding losses arising during the period                                                                                              |                      |         | (25,650             | ) |      |         |     |  |   |         | (44,227 | ) |   |         |  | 
|                           
|                           
|                           
|                           
|                            | Less: reclassification adjustment for the transfer of
	250,000 shares of common stock of Cornerstone Properties
	Inc. to merger acquisition cost |                      |         |                    |   |      |         |     |  |   |         | (907    | ) |   |         |  | 
|                            |                                                                                                                                                  |                      |         |                     |   |      |         |      |  |   |         |         |   |   |         |  
|Comprehensive income        |                                                                                                                                                  | $                    | 104,734 |                     |   | $    | 108,454 |      |  | $ | 354,103 |         |   | $ | 315,193 |  
|                            |                                                                                                                                                  |                      |         |                     |   |      |         |      |  |   |         |         |   |   |         |  

See accompanying notes.

5



---



EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


|                       |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |          |         |         |          |  
|---------------------- | ---------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | ------- | ------- | ---------- | -------- | ------- | ------- | -------- | -
|                       |                                                                                    |                                                                                                          
|                       |                                                                                    | For the nine months ended                                                                                
|                       |                                                                                    | September 30,                                                                                            
|                       |                                                                                    |                                                                                                          
|(Dollars in thousands) |                                                                                    | 2000                                                                                                      |                                                              | 1999                                     
|                       |                                                                                    |                                                                                                           |                                                              |                                          
|Operating Activities:  |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |         
|                      
|                      
|                      
|                      
|                       | Net income                                                                         |                                                                                                           | $                                                            | 399,237                                   |         |         | $          | 315,193  |        
|                      
|                      
|                      
|                      
|                       | Adjustments to reconcile net income to net cash provided by
	operating activities: |                                                                                                           |                                                              |                                           |         |         |            |          |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Depreciation and amortization                                                                             |                                                              |                                           | 300,041 |         |            |          | 264,133 |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Amortization of premiums/discounts on unsecured notes and
	terminated interest rate protection agreements |                                                              |                                           | 3,018   |         |            |          | 2,757   |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Amortization of deferred revenue included in other income                                                 |                                                              |                                           | (4,134  | )       |            |          |        |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Compensation related to restricted shares issued to employees by
	the Trust                               |                                                              |                                           | 5,831   |         |            |          | 3,727   |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Income from unconsolidated joint ventures                                                                 |                                                              |                                           | (41,625 | )       |            |          | (8,081  | )      
|                      
|                      
|                      
|                      
|                       |                                                                                    | Net gain on sales of real estate                                                                          |                                                              |                                           | (36,589 | )       |            |          | (8,085  | )      
|                      
|                      
|                      
|                      
|                       |                                                                                    | Extraordinary items                                                                                       |                                                              |                                           | 875     |         |            |          | 10,548  |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Provision for doubtful accounts                                                                           |                                                              |                                           | 555     |         |            |          | 679     |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Allocation to minority interests                                                                          |                                                              |                                           | 4,142   |         |            |          | 1,398   |        
|                      
|                      
|                      
|                      
|                       |                                                                                    | Changes in assets and liabilities:                                                                        |                                                              |                                           |         |         |            |          |         |        
|                      
|                      
|                      
|                      
|                       |                                                                                    |                                                                                                           | Decrease (increase) in rents receivable                      |                                           |         | 4,527   |            |          |         | (3,769  | )       
|                      
|                      
|                      
|                      
|                       |                                                                                    |                                                                                                           | (Increase) in deferred rent receivables                      |                                           |         | (49,367 | )          |          |         | (48,340 | )       
|                      
|                      
|                      
|                      
|                       |                                                                                    |                                                                                                           | Decrease in prepaid expenses and other assets                |                                           |         | 7,700   |            |          |         | 1,212   |         
|                      
|                      
|                      
|                      
|                       |                                                                                    |                                                                                                           | Increase (decrease) in accounts payable and accrued expenses |                                           |         | 27,789  |            |          |         | (16,806 | )       
|                      
|                      
|                      
|                      
|                       |                                                                                    |                                                                                                           | (Decrease) in due to affiliates                              |                                           |         |        |            |          |         | (297    | )       
|                      
|                      
|                      
|                      
|                       |                                                                                    |                                                                                                           | (Decrease) increase in other liabilities                     |                                           |         | (38,097 | )          |          |         | 4,204   |         
|                       |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |         
|                       |                                                                                    |                                                                                                           |                                                              | Net cash provided by operating activities |         |         | 583,903    |          |         |         | 518,473  |  
|                       |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |         
|Investing Activities:  |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |         
|                      
|                      
|                      
|                      
|                       | Property acquisitions                                                              |                                                                                                           |                                                              | (87,477                                   | )       |         |            | (119,676 | )      
|                      
|                      
|                      
|                      
|                       | Acquisition of Cornerstone Properties                                              |                                                                                                           |                                                              | (1,159,968                                | )       |         |            |         |        
|                      
|                      
|                      
|                      
|                       | Property dispositions                                                              |                                                                                                           |                                                              | 332,307                                   |         |         |            |         |        
|                      
|                      
|                      
|                      
|                       | Payments for capital and tenant improvements                                       |                                                                                                           |                                                              | (183,549                                  | )       |         |            | (155,857 | )      
|                      
|                      
|                      
|                      
|                       | Payments of disposition costs for sales of real estate                             |                                                                                                           |                                                              |                                          |         |         |            | (1,349   | )      
|                      
|                      
|                      
|                      
|                       | Distributions from unconsolidated joint ventures                                   |                                                                                                           |                                                              | 150,765                                   |         |         |            | 11,471   |        
|                      
|                      
|                      
|                      
|                       | Investments in unconsolidated joint ventures                                       |                                                                                                           |                                                              | (174,637                                  | )       |         |            | (29,381  | )      
|                      
|                      
|                      
|                      
|                       | Payments of lease acquisition costs                                                |                                                                                                           |                                                              | (53,573                                   | )       |         |            | (30,852  | )      
|                      
|                      
|                      
|                      
|                       | Contributions from minority interest partner in partially owned
	properties        |                                                                                                           |                                                              |                                          |         |         |            | 11,000   |        
|                      
|                      
|                      
|                      
|                       | Investment in securities                                                           |                                                                                                           |                                                              | (89,311                                   | )       |         |            | (2,000   | )      
|                      
|                      
|                      
|                      
|                       | Investment in notes receivable                                                     |                                                                                                           |                                                              | (7,131                                    | )       |         |            | (73,860  | )      
|                      
|                      
|                      
|                      
|                       | Decrease in escrow deposits and restricted cash                                    |                                                                                                           |                                                              | 83,021                                    |         |         |            | 22,749   |        
|                       |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |         
|                       |                                                                                    |                                                                                                           |                                                              | Net cash (used for) investing activities  |         |         | (1,189,553 | )        |         |         | (367,755 | )
|                       |                                                                                    |                                                                                                           |                                                              |                                           |         |         |            |         

6



---



EOP OPERATING LIMITED PARTNERSHIP


CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Continued)

|                                             |                                                                                                       |                                                      |   |            |         |  |   |            |          |  
|-------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ---------- | ------- |  | - | ---------- | -------- | -
|                                             |                                                                                                       |                                                     
|                                             |                                                                                                       | For the nine months ended                           
|                                             |                                                                                                       | September 30,                                       
|                                             |                                                                                                       |                                                     
|(Dollars in thousands)                       |                                                                                                       | 2000                                                 |   | 1999      
|                                             |                                                                                                       |                                                      |   |           
|Financing Activities:                        |                                                                                                       |                                                      |   |            |         |  |   |           
|                                            
|                                            
|                                            
|                                            
|                                             | Repurchase of Units                                                                                   |                                                      |   | (119,633   | )       |  |   |           |         
|                                            
|                                            
|                                            
|                                            
|                                             | Proceeds from exercise of share options                                                               |                                                      |   | 63,853     |         |  |   | 2,051      |         
|                                            
|                                            
|                                            
|                                            
|                                             | Redemption of Units for cash                                                                          |                                                      |   | (3,780     | )       |  |   |           |         
|                                            
|                                            
|                                            
|                                            
|                                             | Distributions to unitholders                                                                          |                                                      |   | (265,999   | )       |  |   | (215,161   | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Put option settlement                                                                                 |                                                      |   |           |         |  |   | (11,338    | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Payment of preferred distributions                                                                    |                                                      |   | (32,651    | )       |  |   | (32,914    | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Repurchase of preferred units, including transaction costs                                            |                                                      |   | (890       | )       |  |   |           |         
|                                            
|                                            
|                                            
|                                            
|                                             | Payment of offering costs                                                                             |                                                      |   | (14        | )       |  |   | (575       | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Distributions to minority interest in partially owned properties                                      |                                                      |   | (6,769     | )       |  |   | (1,236     | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Proceeds from mortgage debt                                                                           |                                                      |   | 190,000    |         |  |   | 3,374      |         
|                                            
|                                            
|                                            
|                                            
|                                             | Proceeds from unsecured notes                                                                         |                                                      |   | 1,183,553  |         |  |   | 1,195,587  |         
|                                            
|                                            
|                                            
|                                            
|                                             | Proceeds from lines of credit                                                                         |                                                      |   | 4,345,150  |         |  |   | 1,291,600  |         
|                                            
|                                            
|                                            
|                                            
|                                             | Principal payments on mortgage debt                                                                   |                                                      |   | (328,455   | )       |  |   | (513,773   | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Principal payments on lines of credit                                                                 |                                                      |   | (4,333,691 | )       |  |   | (1,890,700 | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Payments of loan costs                                                                                |                                                      |   | (28,282    | )       |  |   | (11,398    | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Prepayment penalties on early extinguishment of debt                                                  |                                                      |   |           |         |  |   | (13,566    | )       
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             |                                                                                                       | Net cash provided by (used for) financing activities |   |            | 662,392 |  |   |            | (198,049 | )
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Net increase (decrease) in cash and cash equivalents                                                  |                                                      |   | 56,742     |         |  |   | (47,331    | )       
|                                            
|                                            
|                                            
|                                            
|                                             | Cash and cash equivalents at the beginning of the period                                              |                                                      |   | 2,338      |         |  |   | 67,080     |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Cash and cash equivalents at the end of the period                                                    |                                                      | $ | 59,080     |         |  | $ | 19,749     |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|Supplemental Information:                    |                                                                                                       |                                                      |   |            |         |  |   |           
|                                            
|                                            
|                                            
|                                            
|                                             | Interest paid during the period, including capitalized interest
	of $12,466 and $12,642, respectively |                                                      | $ | 387,972    |         |  | $ | 219,374    |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|Non-Cash Investing and Financing Activities: |                                                                                                       |                                                      |   |            |         |  |   |           
|                                            
|                                            
|                                            
|                                            
|                                             | Mortgage loans and line of credit assumed through Cornerstone
	Merger                                 |                                                      | $ | 1,720,449  |         |  | $ |           |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Net liabilities assumed through Cornerstone Merger                                                    |                                                      | $ | 34,507     |         |  | $ |           |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Minority interest in partially owned properties assumed through
	Cornerstone Merger                   |                                                      | $ | 165,154    |         |  | $ |           |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Units and options issued through Cornerstone Merger                                                   |                                                      | $ | 1,577,260  |         |  | $ |           |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Escrow deposits used for property acquisitions                                                        |                                                      | $ | 37,105     |         |  | $ | 192,427    |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Escrow deposits provided by property dispositions                                                     |                                                      | $ | (167,922   | )       |  | $ | (95,956    | )       
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Mortgage loan assumed through property acquisition                                                    |                                                      | $ | 65,661     |         |  | $ |           |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           
|                                             | Mortgage loan assumed by purchaser through property disposition                                       |                                                      | $ | (11,369    | )       |  | $ |           |         
|                                             |                                                                                                       |                                                      |   |            |         |  |   |           

See accompanying notes.

7



---



EOP OPERATING LIMITED PARTNERSHIP



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


Definition of Terms.Capitalized terms used but not
defined herein are as defined in the Companys Annual
Report on Form 10-K for the year ended December 31,
1999, as amended (the Form 10-K).

The consolidated financial statements of the Company have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC). The following notes
highlight significant changes to the notes to the
December 31, 1999 audited consolidated and combined
financial statements of the Company and should be read in
conjunction with the financial statements and notes thereto
included in the Form 10-K. The following notes also present
interim disclosures as required by the SEC.

NOTE 1  BUSINESS AND FORMATION OF THE
COMPANY

As used herein, the Company means EOP Operating
Limited Partnership, a Delaware Limited Partnership. The Company
is a subsidiary of Equity Office Properties Trust (the
Trust) which was formed on October 9, 1996 to
continue and expand the national office property business
organized by Mr. Samuel Zell, Chairman of the Board of
Trustees of the Trust, and to complete the Consolidation. The
Trust completed its IPO on July 11, 1997. The Company is a
fully integrated, self-administered and self-managed real estate
company primarily engaged in acquiring, owning, managing,
leasing and renovating office properties. The Trusts
assets, which include investments in joint ventures, are owned
by, and substantially all of its operations are conducted
through the Company. The Trust is the general partner of the
Company. The Trust elected to be taxed as a 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. As of September 30, 2000, the Company owned
or had an interest in 380 office properties (the
Office Properties) containing approximately
99.1 million rentable square feet of office space and owned
nine stand-alone parking facilities (the Parking
Facilities and, together with the Office Properties, the
Properties) containing approximately 14,244 parking
spaces. The weighted average occupancy of the Office Properties
at September 30, 2000 was approximately 95.1%. The Office
Properties are located in 105 submarkets in 37 markets
in 24 states and the District of Columbia. The Office
Properties, by rentable square feet, are located approximately
51.5% in CBDs and 48.5% in suburban markets.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES



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

The consolidated financial statements represent the financial
condition and results of the Company and its subsidiaries.

The Cornerstone Merger (as defined in Note 3) was accounted
for using the purchase method of accounting in accordance with
Accounting Principles Board Opinion No. 16. The fair value
of the consideration given by the Company in the Cornerstone
Merger was used as the valuation basis for the Cornerstone
Merger. The assets acquired and the liabilities assumed from
Cornerstone Partnership were recorded at their relative fair
values as of June 19, 2000 (the Cornerstone Closing
Date). The results of operations of the Cornerstone
properties for the period from the Cornerstone Closing Date
through September 30, 2000 are included in the
Companys consolidated statements of operations.



| |                                   
| | ----------------------------------
| | Derivatives and Hedging Activities

In June 1998, the FASB issued Statement No. 133
Accounting for Derivative Instruments and Hedging
Activities. The statement requires recording all
derivative instruments as assets or liabilities, measured at
fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value
of derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective

8



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

portion of a derivatives change in fair value will be
immediately recognized in earnings. The standards
effective date was deferred by FASB No. 137 to all fiscal
years beginning after June 15, 2000. The Company will adopt
the standard on January 1, 2001 and does not anticipate
that the adoption will have a material impact on the
Companys financial condition and results of operations.



| |                 
| | ----------------
| | Use of Estimates

The preparation of the consolidated financial statements of the
Company in conformity with accounting principles generally
accepted in the United States 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 of the Company as of and
for the three and nine months ended September 30, 2000 and
1999 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.



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

Certain reclassifications have been made to the previously
reported 1999 statements in order to provide comparability with
the 2000 statements reported herein. These reclassifications
have not changed the 1999 results or shareholders equity.

NOTE 3  CORNERSTONE MERGER

On June 19, 2000, the Trust, the Company, Cornerstone
Properties Inc. (Cornerstone) and Cornerstone
Properties Limited Partnership (Cornerstone
Partnership) consummated the merger of Cornerstone with
and into the Trust and the merger of Cornerstone Partnership
with and into the Company (the Cornerstone Merger)
at a total cost of approximately $4.5 billion. The purchase
price consisted of:



| |       |                                                                                                                                                                                                                                                                                   
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the Trusts issuance of approximately 51.3 million
	Common Shares valued at $24.68 per share and the issuance
	of share options for a total of approximately
	$1,271.3 million, of which the Company issued a
	corresponding number of Units to the Trust on a one-for-one
	basis;
|
| | (ii)  | the Companys issuance of approximately 12.4 million
	Units to third parties valued at $24.68 per Unit for a
	total of approximately $306.0 million;                                                                                                                              
|
| | (iii) | the cash redemption of approximately 58.6 million shares of
	Cornerstone common stock valued at $18.00 per share for a
	total of approximately $1,053.9 million;                                                                                                                  
|
| | (iv)  | the cash redemption of approximately 3.0 million shares of
	Cornerstone preferred stock valued at $18.00 per share,
	plus accrued but unpaid dividends, for a total of approximately
	$57.6  million;                                                                             
|
| | (v)   | the assumption of approximately $1,304.9 million of secured
	debt and $415.5  million of unsecured debt;                                                                                                                                                                          
|
| | (vi)  | the payment of merger costs of approximately
	$72.1 million; and                                                                                                                                                                                                                  
|
| | (vii) | the assumption of net liabilities of approximately
	$9.6 million.                                                                                                                                                                                                                 

The cash portion of the Cornerstone Merger of approximately
$1.2 billion was partially funded from the $1.0 Billion
Credit Facility and a new $1.0 billion revolving credit
facility obtained at the time of the

9



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Cornerstone Merger (the Line of Credit).
Concurrently with the Cornerstone Merger, the Company borrowed
$1.0 billion from the $1.0 Billion Credit Facility and
amended the facility into a term loan (the Term
Loan). The Term Loan bears interest at LIBOR plus
80 basis points and matures on May 29, 2001. The net
cash proceeds that the Company receives from the disposition of
a Property (excluding proceeds from a tax-deferred property
disposition), the issuance of unsecured notes or the issuance of
Units must be used to repay any amounts outstanding under the
Term Loan up to the then current unpaid balance of the
Term Loan.

The remaining cash consideration in the Cornerstone Merger was
funded from the Line of Credit, which bears interest at LIBOR
plus 60 basis points and matures on June 19, 2003. There is
also a facility fee of $2.0 million per annum on the Line
of Credit payable quarterly. In addition, the Company assumed
interest rate protection agreements in the notional amount of
$250 million thereby effectively converting a portion of
the Line of Credit to a fixed-blended interest rate of 4.6%. The
interest rate protection agreements terminate in December 2000
and January 2001.

The Trust has guaranteed the outstanding obligations under the
Line of Credit and the Term Loan.

As a result of the Cornerstone Merger, the Company acquired an
interest in 82 Office Properties containing approximately
18.9 million square feet of office space. In addition, in
connection with the Cornerstone Merger, the Board of Trustees of
the Trust was increased by three members. The new members
are William Wilson III, formerly chairman of the board of
Cornerstone, John S. Moody, formerly president and chief
executive officer of Cornerstone, and Jan H.W.R.
van der Vlist, director of real estate for Stichting
Pensioenfonds voor de Gezondheid, Gaestelijke en
Meatschappelljke Belangen.

NOTE 4  ACQUISITIONS

On July 11, 2000, the Company acquired Two Lafayette
Center, a 130,704 square foot office building in
Washington, D.C., for approximately $29.3 million in
cash from an unaffiliated party.

On August 2, 2000, a joint venture between the Company and
an unaffiliated party acquired a 45% general partner equity
interest and a debt interest in a limited partnership that owns
1301 Avenue of the Americas, a 1.77 million square
foot office building located in Midtown Manhattan in
New York. The Companys share of the investment was
approximately $163.2 million. The investment has been
accounted for under the equity method of accounting. In
addition, the Company and its joint venture partner purchased
options to acquire the remaining 55% equity interest over a
period of three and one-half to eight years at a value as
described in the option agreements.

On August 21, 2000, the Company acquired the remaining
interest in the North Loop Transportation Center and the Theater
District Garage, two parking facilities located in Chicago,
Illinois from an unaffiliated party, for approximately
$15.1 million. The purchase price consisted of
$12.5 million in cash and 91,406 Units valued at $28.81 per
Unit.

On September 8, 2000, the Company acquired the World Trade
Center a 186,912 square foot office building located in Seattle,
Washington, from Wright Runstad Associates Limited Partnership
(WRALP), a related party of the Company, for
approximately $38.6 million. Upon acquisition of the
property, the Company repaid a $31.3 million mortgage note
secured by the property at close. The remaining acquisition cost
was funded through the issuance of 227,011 Units valued at
$27.89 per Unit for a total of approximately
$6.3 million and cash.

On September 27, 2000, the Company and Wilson/ Equity
Office, LLC acquired a 12.9 acre vacant land parcel in San
Rafael, California, for approximately $30.3 million, of
which the Company funded approximately $28.3 million, from
an unaffiliated party. Wilson/ Equity Office, LLC is a joint
venture between the Company and Wilson Investors, LLC, an entity
that is partially owned by William Wilson III, a trustee of
the Company. The joint venture was formed to acquire, develop,
lease and operate office properties. The Company

10



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

has a 49.9% non-managing member interest in the joint venture
and Wilson Investors, LLC has a 50.1% managing member interest
in the joint venture.

NOTE 5  DISPOSITIONS

On August 17, 2000, the Company disposed of Agoura Hills
Business Park and Westlake Spectrum Center I and II,
which were acquired in connection with the Cornerstone Merger,
to unaffiliated parties for approximately $17.4 million,
and $18.1 million, respectively. Agoura Hills Business Park
is located in Agoura Hills, California and consists of
115,208 square feet. Westlake Spectrum Center I and II
is located in Westlake Village, California and consists of
118,990 square feet. There was no gain or loss on the sale
of these properties.

On September 29, 2000, the Company disposed of Westwood
Business Centre to an unaffiliated party for approximately
$24.0 million in cash. The 164,985 square foot office
property is located in Westwood, Massachusetts. The sale
resulted in a loss of approximately $3.6 million.

The Company incurred an additional $0.7 million of costs
pertaining to the sale of 11 parking facilities on
May 17, 2000. These additional costs reduced the original
gain on sale of the 11 parking facilities.

NOTE 6  INVESTMENT IN UNCONSOLIDATED JOINT
VENTURES

The Company has several investments in unconsolidated joint
ventures consisting of Office Properties, Parking Facilities, a
management company and a company that provides fully-furnished
office space to tenants. Combined summarized financial
information for the unconsolidated joint ventures is as follows:

|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | --------------------------------------------------------- | --------- | ------------ | --------- | - | ------- | --------- | --------- | 
|                                                                                                                                                           |                                    | September 30,                                             |           | December 31,
|(Dollars in thousands)                                                                                                                                     |                                    | 2000                                                      |           | 1999        
|                                                                                                                                                           |                                    |                                                           |           |             
|Balance Sheets:                                                                                                                                            |                                    |                                                           |           |              |           |   |         |          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                           | Real estate, net                   |                                                           | $         | 2,831,348    |           |   | $       | 1,719,417 |          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                           | Other assets                       |                                                           |           | 194,032      |           |   |         | 106,211   |          
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          
|                                                                                                                                                           |                                    | Total Assets                                              |           | $            | 3,025,380 |   |         | $         | 1,825,628 | 
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          
|                                                                                                                                                           | Mortgage debt                      |                                                           | $         | 1,331,743    |           |   | $       | 559,344   |          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                           | Other liabilities                  |                                                           |           | 102,148      |           |   |         | 58,793    |          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                           | Partners and shareholders equity |                                                           |           | 1,591,489    |           |   |         | 1,207,491 |          
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          
|                                                                                                                                                           |                                    | Total Liabilities and Partners and Shareholders
	Equity |           | $            | 3,025,380 |   |         | $         | 1,825,628 | 
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          
|Companys share of equity                                                                                                                                  |                                    | $                                                         | 954,503   |              |           | $ | 696,502 |          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|                                                                                                                                                          
|Net excess of cost of investments over the net book value of
	underlying net assets, net of accumulated depreciation of
	$15,425 and $11,679, respectively |                                    |                                                           | 149,592   |              |           |   | 169,361 |          
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          
|Carrying value of investments in unconsolidated joint ventures                                                                                             |                                    | $                                                         | 1,104,095 |              |           | $ | 865,863 |          
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          
|Companys share of unconsolidated mortgage debt                                                                                                            |                                    | $                                                         | 832,614   |              |           | $ | 264,751 |          
|                                                                                                                                                           |                                    |                                                           |           |              |           |   |         |          

11



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |        |        |        | 
|----------------------------------------------------------------------- | --------------------------------------------- | ----------------------------- | -------------- | ------------------- | ------ | ------ | ----- | ------ | ------ | ------ | ------ | ------- | ------- | ------- | ------ | ------ | ------ | ------ | 
|                                                                        |                                               |                               |                |                    
|                                                                        |                                               | For the three months          |                | For the nine months
|                                                                        |                                               | ended                         |                | ended              
|                                                                        |                                               | September 30,                 |                | September 30,      
|                                                                        |                                               |                               |                |                    
|(Dollars in thousands)                                                  |                                               | 2000                          |                | 1999                |        | 2000   |       | 1999  
|                                                                        |                                               |                               |                |                     |        |        |       |       
|Statements of Operations:                                               |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Revenues                                      |                               | $              | 116,810             |        |        | $     | 28,522 |        |        | $      | 266,611 |         |         | $      | 80,498 |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|                                                                        | Expenses:                                     |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |        |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                               | Interest expense              |                |                     | 24,900 |        |       |        | 4,455  |        |        |         | 46,263  |         |        |        | 13,358 |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                               | Depreciation and amortization |                |                     | 17,245 |        |       |        | 4,834  |        |        |         | 42,665  |         |        |        | 13,473 |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                               | Operating expenses            |                |                     | 42,864 |        |       |        | 10,352 |        |        |         | 100,037 |         |        |        | 30,776 |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|                                                                        |                                               |                               | Total expenses |                     |        | 85,009 |       |        |        | 19,641 |        |         |         | 188,965 |        |        |        | 57,607 | 
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|                                                                        | Net income before gain on sale of real estate |                               |                | 31,801              |        |        |       | 8,881  |        |        |        | 77,646  |         |         |        | 22,891 |       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Gain on sale of real estate                   |                               |                | 8,291               |        |        |       |       |        |        |        | 8,291   |         |         |        |       |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|                                                                        | Net income                                    |                               | $              | 40,092              |        |        | $     | 8,881  |        |        | $      | 85,937  |         |         | $      | 22,891 |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|Companys share of net income                                           |                                               | $                             | 16,862         |                     |        | $      | 3,031 |        |        | $      | 41,625 |         |         | $       | 8,081  |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|Companys share of interest expense                                     |                                               | $                             | 13,839         |                     |        | $      | 2,198 |        |        | $      | 23,786 |         |         | $       | 6,595  |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       
|Companys share of depreciation and amortization (real
	estate related) |                                               | $                             | 10,488         |                     |        | $      | 3,669 |        |        | $      | 26,331 |         |         | $       | 10,800 |       
|                                                                        |                                               |                               |                |                     |        |        |       |        |        |        |        |         |         |         |        |       

In August 2000, the joint venture owner of One Post Office
Square refinanced the mortgage note secured by the property
which matured on July 1, 2000. The principal amount of the
new mortgage note is $110 million due July 2005 and bears
interest at LIBOR plus 45 basis points. The Company
purchased a 9.05% LIBOR based interest rate cap, thereby capping
the effective interest rate on the Companys share of the
mortgage note at 9.5% for three years.

NOTE 7  UNSECURED DEBT

On August 7, 2000, the Company issued $360 million of
unsecured notes due 2010 (the $360 Million
Notes) in a public offering (the $360 Million
Notes Offering). The net proceeds after discount and
offering expenses were approximately $356.2 million and
were used to repay amounts outstanding on the Term Loan. The
$360 Million Notes bear interest at a stated rate of
8.10% per annum and have an effective annual rate of
8.22% per annum.

On August 23, 2000, the Company issued $300 million of
senior exchangeable notes due November 8, 2008, and
subsequently issued an additional $25 million of notes with
identical terms pursuant to the exercise of an overallotment
option (the $325 Million Notes) in a private
placement to institutional investors (the
$325 Million Notes Offering). The net proceeds
after offering expenses were approximately $314.6 million
and were used to repay amounts outstanding on the Term Loan.

The $325 Million Notes bear interest payable semiannually at the
greater of:



| |     |                    
| | --- | -------------------
| | (a) | 7.25% per annum; or
|
| | (b) | the product of:    



| |     |                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------
| | (1) | two times the cash distribution paid by the Trust on each of its
	Common Shares for the most recent quarter; and
|
| | (2) | the number of Common Shares of the Trust into which the notes
	are exchangeable.                                

The $325 Million Notes are exchangeable into Common Shares
of the Trust at any time on or after November 22, 2000, at
an exchange rate of $34.00 per share, which is equal to an
exchange rate of

12



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

29.4118 Common Shares per $1,000 principal amount of
notes. If the closing price on the NYSE 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 of the
Trust, cash in an amount equal to 97% of the product of:



| |     |                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | the number of Common Shares of the Trust into which the
	principal amount of notes subject to such exercise would
	otherwise be exchangeable; and
|
| | (b) | such closing price per Common Share of the Trust.                                                                                                

The Company may redeem some or all of the notes at any time on
or after November 15, 2004.

The payment of principal and interest on the $325 Million
Notes is guaranteed by the Trust.

NOTE 8  PARTNERS CAPITAL

Units

The following table presents the changes in the Companys
issued and outstanding Units since July 1, 2000:

|                                                                                      |  |  |             |  
|------------------------------------------------------------------------------------- |  |  | ----------- | -
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Outstanding at June 30, 2000                                                          |  |  | 346,302,409 |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Units issued to the Trust related to Common Shares issued for
	share option exercises |  |  | 1,628,923   |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Units retired                                                                         |  |  | (107,956    | )
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Units issued through Property acquisitions                                            |  |  | 318,417     |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Restricted Units issued/cancelled, net                                                |  |  | (6,500      | )
|                                                                                      |  |  |             |  
|Outstanding at September 30, 2000                                                     |  |  | 348,135,293 |  
|                                                                                      |  |  |             |  



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

The following table provides information regarding the
distributions paid or declared with respect to Units and each
series of preferred units during the three months ended
September 30, 2000:

|                         |  |              |           |           |  |             |                    |  |  |  |                    | 
|------------------------ |  | ------------ | --------- | --------- |  | ----------- | ------------------ |  |  |  | ------------------ | 
|                         |  | Distribution |           |           |  |            
|                         |  | Amount       |           |           |  |            
|                         |  | per Unit     |           | Date Paid |  | Record Date
|                         |  |              |           |           |  |            
|Units                    |  | $            | 0.45      |           |  |             | October 13, 2000   |  |  |  | September 29, 2000 | 
|                        
|                        
|                        
|                        
|Series A Preferred Units |  | $            | 0.56125   |           |  |             | September 15, 2000 |  |  |  | September 1, 2000  | 
|                        
|                        
|                        
|                        
|Series B Preferred Units |  | $            | 0.65625   |           |  |             | August 15, 2000    |  |  |  | August 1, 2000     | 
|                        
|                        
|                        
|                        
|Series C Preferred Units |  | $            | 0.5390625 |           |  |             | September 15, 2000 |  |  |  | September 1, 2000  | 

13



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

NOTE 9  EARNINGS PER UNIT

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

|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |             |  
|---------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | ------------------------- | - | ---- | - | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                           |                                                                                                                                               |                            |   |                          
|                                                                                                           |                                                                                                                                               | For the three months ended |   | For the nine months ended
|                                                                                                           |                                                                                                                                               | September 30,              |   | September 30,            
|                                                                                                           |                                                                                                                                               |                            |   |                          
|(Dollars in thousands, except per unit data)                                                               |                                                                                                                                               | 2000                       |   | 1999                      |   | 2000 |   | 1999       
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |            
|Numerator:                                                                                                 |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Net income available for Units before net (loss) gain on sales
	of real estate and extraordinary items                                        |                            | $ | 123,256                   |   |      | $ | 93,150      |   |  | $ | 329,956     |   |  | $ | 280,334     |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Net (loss) gain on sales of real estate (excluding allocation to
	minority interests of $1,473 for the nine months ended
	September 30, 2000) |                            |   | (4,271                    | ) |      |   |            |   |  |   | 35,116      |   |  |   | 8,085       |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Extraordinary items                                                                                                                           |                            |   |                          |   |      |   | (230        | ) |  |   | (875        | ) |  |   | (10,548     | )
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                           | Numerator for basic and diluted earnings per unit 
	net income available for Units and unit equivalents                                      |                            | $ | 118,985                   |   |      | $ | 92,920      |   |  | $ | 364,197     |   |  | $ | 277,871     |  
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|Denominator:                                                                                               |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Denominator for basic earnings per Unit  weighted
	average Units outstanding                                                                 |                            |   | 346,087,554               |   |      |   | 288,620,341 |   |  |   | 305,567,221 |   |  |   | 288,591,469 |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Effect of dilutive securities:                                                                                                                |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |             |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Units issuable upon exercise of share options, put options and
	restricted stock                                                              |                            |   | 3,406,707                 |   |      |   | 2,971,904   |   |  |   | 2,848,945   |   |  |   | 2,729,927   |  
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                           | Denominator for diluted earnings per Unit and unit
	equivalent  adjusted weighted average Units
	outstanding and unit equivalents            |                            |   | 349,494,261               |   |      |   | 291,592,245 |   |  |   | 308,416,166 |   |  |   | 291,321,396 |  
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|Basic earnings available for Units per weighted average
	Unit:                                             |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Net income before net (loss) gain on sales of real estate and
	extraordinary items                                                            |                            | $ | 0.35                      |   |      | $ | 0.32        |   |  | $ | 1.08        |   |  | $ | 0.97        |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Net (loss) gain on sales of real estate                                                                                                       |                            |   | (0.01                     | ) |      |   |            |   |  |   | 0.11        |   |  |   | 0.03        |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Extraordinary items                                                                                                                           |                            |   |                          |   |      |   |            |   |  |   |            |   |  |   | (0.04       | )
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                           | Net income                                                                                                                                    |                            | $ | 0.34                      |   |      | $ | 0.32        |   |  | $ | 1.19        |   |  | $ | 0.96        |  
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|Diluted earnings available for Units and unit equivalents per
	weighted average Units and unit equivalent: |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Net income before net (loss) gain on sales of real estate and
	extraordinary items                                                            |                            | $ | 0.35                      |   |      | $ | 0.32        |   |  | $ | 1.07        |   |  | $ | 0.96        |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Net (loss) gain on sales of real estate                                                                                                       |                            |   | (0.01                     | ) |      |   |            |   |  |   | 0.11        |   |  |   | 0.03        |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Extraordinary items                                                                                                                           |                            |   |                          |   |      |   |            |   |  |   |            |   |  |   | (0.04       | )
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            
|                                                                                                           | Net income                                                                                                                                    |                            | $ | 0.34                      |   |      | $ | 0.32        |   |  | $ | 1.18        |   |  | $ | 0.95        |  
|                                                                                                           |                                                                                                                                               |                            |   |                           |   |      |   |             |   |  |   |             |   |  |   |            

14



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

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

|                         |       |          |        |                            |  |                           |           |            |  |      |           |            |  |  |           |            |  |  |           |            | 
|------------------------ | ----- | -------- | ------ | -------------------------- |  | ------------------------- | --------- | ---------- |  | ---- | --------- | ---------- |  |  | --------- | ---------- |  |  | --------- | ---------- | 
|                         |       |          |        |                            |  |                          
|                         |       | Weighted |        | For the three months ended |  | For the nine months ended
|                         |       | Average  |        | September 30,              |  | September 30,            
|                         |       | Exercise |        |                            |  |                          
|Antidilutive Securities  |       | Price    |        | 2000                       |  | 1999                      |           | 2000       |  | 1999
|                         |       |          |        |                            |  |                           |           |            |  |     
|Share options            |       | $        | 32.870 |                            |  |                           | 678,200   |            |  |      |          |            |  |  |          |            |  |  |          |           
|                        
|                        
|                        
|                        
|Share options            |       | $        | 30.040 |                            |  |                           |          |            |  |      | 3,462,383 |            |  |  |          |            |  |  |          |           
|                        
|                        
|                        
|                        
|Share options            |       | $        | 30.010 |                            |  |                           |          |            |  |      |          |            |  |  | 3,391,371 |            |  |  |          |           
|                        
|                        
|                        
|                        
|Share options            |       | $        | 30.060 |                            |  |                           |          |            |  |      |          |            |  |  |          |            |  |  | 3,445,883 |           
|                        
|                        
|                        
|                        
|Series B Preferred Units |       | $        | 35.700 |                            |  |                           | 6,000,000 |            |  |      | 6,000,000 |            |  |  | 6,000,000 |            |  |  | 6,000,000 |           
|                        
|                        
|                        
|                        
|Warrants                 |       | $        | 39.375 |                            |  |                           | 5,000,000 |            |  |      | 5,000,000 |            |  |  | 5,000,000 |            |  |  | 5,000,000 |           
|                         |       |          |        |                            |  |                           |           |            |  |      |           |            |  |  |           |            |  |  |           |           
|                         | Total |          |        |                            |  |                           |           | 11,678,200 |  |      |           | 14,462,383 |  |  |           | 14,391,371 |  |  |           | 14,445,883 | 
|                         |       |          |        |                            |  |                           |           |            |  |      |           |            |  |  |           |            |  |  |           |           

Upon exercise of the above antidilutive securities the Company
would issue a corresponding number of Units to the Trust on a
one-for-one basis.

NOTE 10  SEGMENT INFORMATION

As discussed in Note 1, the Companys primary business
is the ownership and operation of Office Properties. The
Companys long-term tenants are in a variety of businesses
and no single tenant, by itself, is material to the
Companys business. Information related to this segment for
the three and nine months ended September 30, 2000 and 1999
is set forth below:

|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |          |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ----------------------------------------- | -------- | ------------------ | ---------- | ------------ | -------- | ---------- | -------- | --------- | -------- | ------------ | ---------- | - | -------- | ------- | -------- | - | ------- | ------- | ------- | - | -------- | -------- | -------- | -
|                                                                                                                                                                      |                               |                                          
|                                                                                                                                                                      |                               | For the three months ended               
|                                                                                                                                                                      |                               |                                          
|                                                                                                                                                                      |                               |                                           |          |                   
|                                                                                                                                                                      |                               | September 30, 2000                        |          | September 30, 1999
|                                                                                                                                                                      |                               |                                           |          |                   
|                                                                                                                                                                      |                               |                                           |          | Corporate          |            |              |          |            |          | Corporate |          |             
|                                                                                                                                                                      |                               | Office                                    |          | and                |            |              |          | Office     |          | and       |          |             
|(Dollars in thousands)                                                                                                                                                |                               | Properties                                |          | Other              |            | Consolidated |          | Properties |          | Other     |          | Consolidated
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |             
|Property Operating Revenues                                                                                                                                           |                               | $                                         | 624,760  |                    |            | $            | 4,427    |            |          | $         | 629,187  |              |            | $ | 476,282  |         |          | $ | 10,279  |         |         | $ | 486,561  |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Property Operating Expenses                                                                                                                                           |                               |                                           | (216,814 | )                  |            |              | (1,225   | )          |          |           | (218,039 | )            |            |   | (170,026 | )       |          |   | (2,046  | )       |         |   | (172,072 | )       
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|                                                                                                                                                                      | Net operating income          |                                           |          | 407,946            |            |              |          | 3,202      |          |           |          | 411,148      |            |   |          | 306,256 |          |   |         | 8,233   |         |   |          | 314,489  |         
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|Adjustments to arrive at net income:                                                                                                                                  |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Other revenues                |                                           |          | 1,062              |            |              |          | 11,052     |          |           |          | 12,114       |            |   |          | 364     |          |   |         | 4,432   |         |   |          | 4,796    |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Interest expense(1)           |                                           |          | (54,490            | )          |              |          | (101,943   | )        |           |          | (156,433     | )          |   |          | (30,663 | )        |   |         | (72,372 | )       |   |          | (103,035 | )       
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Depreciation and amortization |                                           |          | (114,668           | )          |              |          | (5,070     | )        |           |          | (119,738     | )          |   |          | (85,905 | )        |   |         | (3,500  | )       |   |          | (89,405  | )       
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Ground rent                   |                                           |          | (2,926             | )          |              |          |           |          |           |          | (2,926       | )          |   |          | (1,715  | )        |   |         | (13     | )       |   |          | (1,728   | )       
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | General and administrative    |                                           |          | (31                | )          |              |          | (24,683    | )        |           |          | (24,714      | )          |   |          | 37      |          |   |         | (19,001 | )       |   |          | (18,964  | )       
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|                                                                                                                                                                      |                               | Total adjustments to arrive at net income |          |                    | (171,053   | )            |          |            | (120,644 | )         |          |              | (291,697   | ) |          |         | (117,882 | ) |         |         | (90,454 | ) |          |          | (208,336 | )
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net (loss) on sales
	of real estate and extraordinary items |                               |                                           | 236,893  |                    |            |              | (117,442 | )          |          |           | 119,451  |              |            |   | 188,374  |         |          |   | (82,221 | )       |         |   | 106,153  |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Minority interests                                                                                                                                                    |                               |                                           | (1,559   | )                  |            |              | (99      | )          |          |           | (1,658   | )            |            |   | (381     | )       |          |   | (119    | )       |         |   | (500     | )       
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Income from investment in unconsolidated joint ventures                                                                                                               |                               |                                           | 15,699   |                    |            |              | 1,163    |            |          |           | 16,862   |              |            |   | 2,307    |         |          |   | 724     |         |         |   | 3,031    |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Net (loss) on sales of real estate                                                                                                                                    |                               |                                           | (3,702   | )                  |            |              | (569     | )          |          |           | (4,271   | )            |            |   |         |         |          |   |        |         |         |   |         |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Extraordinary items                                                                                                                                                   |                               |                                           |         |                    |            |              |         |            |          |           |         |              |            |   |         |         |          |   | (230    | )       |         |   | (230     | )       
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|                                                                                                                                                                      |                               | Net income                                |          | $                  | 247,331    |              |          | $          | (116,947 | )         |          | $            | 130,384    |   |          | $       | 190,300  |   |         | $       | (81,846 | ) |          | $        | 108,454  |  
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|                                                                                                                                                                      |                               | Capital and tenant improvements           |          | $                  | 61,592     |              |          | $          | 8,955    |           |          | $            | 70,547     |   |          | $       | 49,775   |   |         | $       | 12,295  |   |          | $        | 62,070   |  
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         
|                                                                                                                                                                      |                               | Total Assets                              |          | $                  | 18,132,120 |              |          | $          | 596,028  |           |          | $            | 18,728,148 |   |          |         |          |   |         |         |         |   |          |          |          |  
|                                                                                                                                                                      |                               |                                           |          |                    |            |              |          |            |          |           |          |              |            |   |          |         |          |   |         |         |         |   |          |         

15



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |          |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ----------------------------------------- | --------- | ------------------ | -------- | ------------ | -------- | ---------- | -------- | --------- | --------- | ------------ | -------- | - | --------- | -------- | -------- | - | -------- | -------- | -------- | - | --------- | -------- | -------- | -
|                                                                                                                                                                    |                                 |                                          
|                                                                                                                                                                    |                                 | For the nine months ended                
|                                                                                                                                                                    |                                 |                                          
|                                                                                                                                                                    |                                 |                                           |           |                   
|                                                                                                                                                                    |                                 | September 30, 2000                        |           | September 30, 1999
|                                                                                                                                                                    |                                 |                                           |           |                   
|                                                                                                                                                                    |                                 |                                           |           | Corporate          |          |              |          |            |          | Corporate |           |             
|                                                                                                                                                                    |                                 | Office                                    |           | and                |          |              |          | Office     |          | and       |           |             
|(Dollars in thousands)                                                                                                                                              |                                 | Properties                                |           | Other              |          | Consolidated |          | Properties |          | Other     |           | Consolidated
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |             
|Property Operating Revenues                                                                                                                                         |                                 | $                                         | 1,553,779 |                    |          | $            | 22,072   |            |          | $         | 1,575,851 |              |          | $ | 1,405,954 |          |          | $ | 28,026   |          |          | $ | 1,433,980 |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Property Operating Expenses                                                                                                                                         |                                 |                                           | (532,331  | )                  |          |              | (6,506   | )          |          |           | (538,837  | )            |          |   | (493,114  | )        |          |   | (6,065   | )        |          |   | (499,179  | )       
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|                                                                                                                                                                    | Net operating income            |                                           |           | 1,021,448          |          |              |          | 15,566     |          |           |           | 1,037,014    |          |   |           | 912,840  |          |   |          | 21,961   |          |   |           | 934,801  |         
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|Adjustments to arrive at net income:                                                                                                                                |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Other revenues                  |                                           |           | 1,906              |          |              |          | 29,271     |          |           |           | 31,177       |          |   |           | 1,456    |          |   |          | 12,334   |          |   |           | 13,790   |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Interest expense(1)             |                                           |           | (112,825           | )        |              |          | (255,443   | )        |           |           | (368,268     | )        |   |           | (99,515  | )        |   |          | (210,920 | )        |   |           | (310,435 | )       
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Depreciation and amortization   |                                           |           | (287,408           | )        |              |          | (12,633    | )        |           |           | (300,041     | )        |   |           | (254,371 | )        |   |          | (9,762   | )        |   |           | (264,133 | )       
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Ground rent                     |                                           |           | (7,369             | )        |              |          | (19        | )        |           |           | (7,388       | )        |   |           | (5,084   | )        |   |          | (38      | )        |   |           | (5,122   | )       
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | General and administrative      |                                           |           | (398               | )        |              |          | (66,056    | )        |           |           | (66,454      | )        |   |           | (413     | )        |   |          | (57,515  | )        |   |           | (57,928  | )       
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|                                                                                                                                                                    |                                 | Total adjustments to arrive at net income |           |                    | (406,094 | )            |          |            | (304,880 | )         |           |              | (710,974 | ) |           |          | (357,927 | ) |          |          | (265,901 | ) |           |          | (623,828 | )
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net gain on sales
	of real estate and extraordinary items |                                 |                                           | 615,354   |                    |          |              | (289,314 | )          |          |           | 326,040   |              |          |   | 554,913   |          |          |   | (243,940 | )        |          |   | 310,973   |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Minority interests                                                                                                                                                  |                                 |                                           | (2,685    | )                  |          |              | (1,457   | )          |          |           | (4,142    | )            |          |   | (1,086    | )        |          |   | (312     | )        |          |   | (1,398    | )       
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Income from investment in unconsolidated joint ventures                                                                                                             |                                 |                                           | 38,779    |                    |          |              | 2,846    |            |          |           | 41,625    |              |          |   | 6,724     |          |          |   | 1,357    |          |          |   | 8,081     |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Net gain on sales of real estate                                                                                                                                    |                                 |                                           | 36,589    |                    |          |              |         |            |          |           | 36,589    |              |          |   | 8,085     |          |          |   |         |          |          |   | 8,085     |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Extraordinary items                                                                                                                                                 |                                 |                                           | (611      | )                  |          |              | (264     | )          |          |           | (875      | )            |          |   | (10,318   | )        |          |   | (230     | )        |          |   | (10,548   | )       
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|                                                                                                                                                                    | Net income                      |                                           | $         | 687,426            |          |              | $        | (288,189   | )        |           | $         | 399,237      |          |   | $         | 558,318  |          |   | $        | (243,125 | )        |   | $         | 315,193  |         
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|                                                                                                                                                                    | Capital and tenant improvements |                                           | $         | 165,459            |          |              | $        | 18,090     |          |           | $         | 183,549      |          |   | $         | 137,853  |          |   | $        | 18,004   |          |   | $         | 155,857  |         
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         
|                                                                                                                                                                    | Total Assets                    |                                           | $         | 18,132,120         |          |              | $        | 596,028    |          |           | $         | 18,728,148   |          |   |           |          |          |   |          |          |          |   |           |          |         
|                                                                                                                                                                    |                                 |                                           |           |                    |          |              |          |            |          |           |           |              |          |   |           |          |          |   |          |          |          |   |           |         



---



|    |                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest expense for the Office Properties does not include an
	allocation of interest expense on the Companys unsecured
	debt.

NOTE 11  PRO FORMA STATEMENTS OF OPERATIONS
(UNAUDITED)

The pro forma data presented below are included to illustrate
the effect on the Companys operations as a result of the
Cornerstone Merger as if it had happened on January 1,
1999. The pro forma condensed combined statements of operations
have been prepared by management of the Company and do not
purport to be indicative of the results which actually would
have been obtained had the Cornerstone Merger been completed on
January 1, 1999, or which may be obtained in the future.

|                                                                       |  |                           |             |      |  |   |             | 
|---------------------------------------------------------------------- |  | ------------------------- | ----------- | ---- |  | - | ----------- | 
|                                                                       |  |                          
|                                                                       |  | For the nine months ended
|                                                                       |  | September 30,            
|                                                                       |  |                          
|(Dollars in thousands, except per unit data)                           |  | 2000                      |             | 1999
|                                                                       |  |                           |             |     
|Total revenues                                                         |  | $                         | 1,887,482   |      |  | $ | 1,913,095   | 
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Net income available for Units                                         |  | $                         | 429,189     |      |  | $ | 331,659     | 
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Net income available per weighted average unit
	outstanding  Basic    |  | $                         | 1.25        |      |  | $ | 0.94        | 
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Weighted average Units outstanding  Basic                             |  |                           | 345,006,505 |      |  |   | 352,158,315 | 
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Net income available per weighted average Unit outstanding
	  Diluted |  | $                         | 1.24        |      |  | $ | 0.94        | 
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Weighted average Units and unit equivalents outstanding
	  Diluted    |  |                           | 348,373,935 |      |  |   | 355,217,124 | 

16



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

NOTE 12  COMMITMENTS AND CONTINGENCIES



| |                             
| | ----------------------------
| | Concentration of Credit Risk

The Company 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 the Company
believes that the risk is not significant.



| |              
| | -------------
| | Environmental

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



| |           
| | ----------
| | Litigation

The Company has become a party to various legal actions
resulting from the operational activities transferred to it in
connection with the Consolidation and the Cornerstone Merger.
These actions are incidental to the transferred businesses and
management does not believe that these actions will have a
material adverse effect on the Company.

Neither the Company nor any of the Properties is presently
subject to any litigation nor, to the Companys knowledge,
is any litigation threatened against the Company or any of the
Properties, other than actions which the Company does not
believe to be material to the Company, or 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, business, results of operations or financial
condition of the Company.



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

In July 1998, the Company entered into an agreement to purchase
the World Trade Center project in Seattle, Washington. The
property consists of approximately 186,912 square feet of
office space and is 100% preleased to a single tenant. The
Company acquired the Property on September 8, 2000 for
approximately $38.6 million (see Note 4).

In accordance with the agreement governing the Companys
investment in WRALP, the Company agreed to make available to
WRALP up to $20.0 million in additional financing or credit
support for future development. As of September 30, 2000,
no amounts had been funded pursuant to this agreement. However,
the Company has guaranteed WRALPs $20.0 million line
of credit, which had an outstanding balance of approximately
$18.3 million as of September 30, 2000.

Included in Investments in Real Estate is Warner Park Center, an
Office Property consisting of 57,366 square feet, which was
held for sale as of September 30, 2000. The carrying amount
of Warner Park Center approximates the sales price of
approximately $9.2 million. This transaction is contingent
upon certain terms and conditions as set forth in the purchase
agreement. There can be no assurance that this transaction will
be consummated as described.



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

The WR Holders exercised its option to extend the date to
August 13, 2001, at which time the WR Holders can
require the Trust to purchase all or a portion of the remaining
1,717,844 Common Shares

17



---



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

issued to them at a price equal to $31.50 per Common Share.
Prior to such date, if the WR Holders sell all or a portion
of their Common Shares to a third party for a price less than
$29.10625, then the Trust is obligated to pay to the
WR Holders for each Common Share sold at such lower price
an amount equal to the difference between $29.10625 and such
lower price, not to exceed $3.00 per Common Share. Any
amounts paid by the Trust as a result of such sales will result
in the Company making an equal payment to the Trust and will be
recorded as a reduction in partners capital. For put
options exercised on August 13, 2001, any amounts paid up
to $29.10625 per Common Share would be reflected as a
reduction in partners capital and the portion of any
amounts paid in excess of $29.10625 per Common Share (not
to exceed $2.39375 per Common Share up to an aggregate of
approximately $4.1 million) will be reflected as a put
option settlement. The $4.1 million portion of the total
potential payment has been reflected by the Company as a put
option settlement on a straight-line basis over the period
between August 13, 1999 and August 13, 2000.

In connection with the acquisition of Worldwide Plaza on
October 1, 1998, the Company issued a transferable put
option on the 6,861,166 Units issued in that transaction,
which is exercisable only on the third anniversary of closing,
with an estimated fair value of approximately
$27.4 million. This option entitles its holder to
additional Common Shares, the number of which shall be
determined using a formula based on the extent, if any, that the
Common Shares are then trading at less than $29.05 per
share.

NOTE 13  SUBSEQUENT EVENTS

On October 27, 2000, the Company repaid the
$65 million mortgage note encumbering TransPotomac Plaza
upon its maturity with proceeds from the Line of Credit.

18



---





|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|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 results of operations should be read in
conjunction with the Consolidated Financial Statements of the
Company and the Notes thereto contained in this Form 10-Q.
Terms employed herein as defined terms, but without definition,
shall have the meaning set forth in the financial statements.
Statements contained in this Managements
Discussion and Analysis of Financial Condition and Results of
Operations, including, without limitation, the
Developments and Market
Risks disclosures, which are not historical facts may
be forward-looking statements. Such statements are subject to
certain risks and uncertainties which could cause actual results
to differ materially from those projected or anticipated.
Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of
September 30, 2000. Among the factors about which the
Company has made assumptions are the following:



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys ability to successively integrate
	Cornerstones operations into those of the Company;                                                         
|
| |  | Future economic conditions which may impact upon the demand for
	office space and the ability of tenants to pay rent, either at
	current or increased levels;
|
| |  | Prevailing interest rates;                                                                                                                                   
|
| |  | The extent of inflation on operating expenses;                                                                                                               
|
| |  | The Companys ability to reduce various expenses as a
	percentage of revenues;                                                                               
|
| |  | The Companys continuing ability to pay amounts due to its
	noteholders and preferred unitholders prior to any distribution
	to holders of its Units;        
|
| |  | The cost to complete and lease-up pending developments;                                                                                                      
|
| |  | The Companys continued access to adequate credit
	facilities or other debt financing on acceptable terms; and                                               
|
| |  | The demand from the Companys customers for office-related
	services.                                                                                        

During the nine months ended September 30, 2000, the
Company completed the following key transactions:



| |   |                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Acquired Cornerstone Partnership (see Cornerstone
	Merger below for additional information);                                                                                                                                                                                                                              
|
| |  | Converted its existing $1.0 billion revolving credit
	facility into a Term Loan and obtained a new $1.0 billion
	revolving Line of Credit in connection with the Cornerstone
	Merger;                                                                                                                                       
|
| |  | Acquired through a joint venture a 45% general partner
	equity interest and a debt interest in a limited partnership
	that owns 1301 Avenue of the Americas, a 1.77 million
	square foot office building located in Midtown Manhattan in
	New York. The Companys share of the investment was
	approximately $163.2 million;
|
| |  | Sold 11 parking facilities for approximately
	$180.0 million;                                                                                                                                                                                                                                                               
|
| |  | Sold six office properties and a development parcel for
	approximately $124.7  million;                                                                                                                                                                                                                                     
|
| |  | Sold a 49.9% interest in Bank of America Tower for
	approximately $209.6  million;                                                                                                                                                                                                                                          
|
| |  | Issued a total of $1,185 million of unsecured notes in
	three separate offerings;                                                                                                                                                                                                                                           
|
| |  | Obtained a $190 million mortgage note on Park Avenue Tower
	and 850 Third Avenue;                                                                                                                                                                                                                                           

19



---





| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Invested approximately $75.0 million in convertible
	preferred stock of HQ  Global Workplaces, Inc., a
	provider of temporary office suites;  and
|
| |  | Invested approximately $8.0 million in preferred stock of
	Captivate, a provider of video screens in elevator cabs.                              

Results of Operations



| |        
| | -------
| | General

The following discussion is based primarily on the Consolidated
Financial Statements of the Company as of September 30,
2000 and December 31, 1999 and for the three and nine
months ended September 30, 2000 and 1999.

The Company receives income primarily from rental revenue from
the Office Properties, including reimbursements from tenants for
certain operating costs, and from parking revenue from Office
Properties and Parking Facilities.

Below is a summary of the Companys acquisition and
disposition activity since January 1, 1999. The buildings
and total square feet shown include Properties the Company owns
in joint ventures with other partners and reflects the total
square footage of the Properties. Excluding the joint venture
partners share of the square feet of these Properties, the
Company effectively owned approximately 93.0 million square
feet of office space as of September 30, 2000.

|                                       |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |        |  
|-------------------------------------- | ------------------------------ | ----------------- | --- | ------------------ | - | ------- | ---------- | ---------- | - |  | -- | --- | - |  | ------ | ------ | -
|                                       |                                |                   |     |                   
|                                       |                                | Office Properties |     | Parking Facilities
|                                       |                                |                   |     |                   
|                                       |                                |                   |     | Total Square       |   |        
|                                       |                                | Buildings         |     | Feet               |   | Garages |            | Spaces    
|                                       |                                |                   |     |                    |   |         |            |           
|Properties owned as of:                |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |       
|                                      
|                                      
|                                      
|                                      
|January 1, 1999                        |                                |                   | 284 |                    |   |         | 75,100,727 |            |   |  | 19 |     |   |  | 18,059 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Acquisitions                   |                   |     | 10                 |   |         |            | 1,947,639  |   |  |    | 1   |   |  |        | 2,575  |  
|                                      
|                                      
|                                      
|                                      
|                                       | Developments placed in service |                   |     | 4                  |   |         |            | 610,810    |   |  |    | 1   |   |  |        | 589    |  
|                                      
|                                      
|                                      
|                                      
|                                       | Dispositions                   |                   |     | (4                 | ) |         |            | (668,796   | ) |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Remeasurements                 |                   |     |                   |   |         |            | 25,230     |   |  |    |    |   |  |        | 42     |  
|                                      
|                                      
|                                      
|                                      
|                                       | Reclassifications(1)           |                   |     |                   |   |         |            |           |   |  |    | (1  | ) |  |        | (759   | )
|                                       |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |       
|December 31, 1999                      |                                |                   | 294 |                    |   |         | 77,015,610 |            |   |  | 20 |     |   |  | 20,506 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Developments placed in service |                   |     | 1                  |   |         |            | 180,000    |   |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Dispositions                   |                   |     | (1                 | ) |         |            | (247,891   | ) |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Remeasurements                 |                   |     |                   |   |         |            | 20,100     |   |  |    |    |   |  |        |       |  
|                                       |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |       
|March 31, 2000                         |                                |                   | 294 |                    |   |         | 76,967,819 |            |   |  | 20 |     |   |  | 20,506 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Acquisitions                   |                   |     | 82                 |   |         |            | 18,896,980 |   |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Dispositions                   |                   |     | (1                 | ) |         |            | (87,040    | ) |  |    | (11 | ) |  |        | (6,992 | )
|                                      
|                                      
|                                      
|                                      
|                                       | Developments placed in service |                   |     | 6                  |   |         |            | 1,504,303  |   |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Remeasurements                 |                   |     |                   |   |         |            |           |   |  |    |    |   |  |        | 730    |  
|                                       |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |       
|June 30, 2000                          |                                |                   | 381 |                    |   |         | 97,282,062 |            |   |  | 9  |     |   |  | 14,244 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Acquisitions                   |                   |     | 3                  |   |         |            | 2,083,310  |   |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Dispositions                   |                   |     | (4                 | ) |         |            | (399,183   | ) |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Developments placed in service |                   |     |                   |   |         |            |           |   |  |    |    |   |  |        |       |  
|                                      
|                                      
|                                      
|                                      
|                                       | Remeasurements                 |                   |     |                   |   |         |            | 129,011    |   |  |    |    |   |  |        |       |  
|                                       |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |       
|September 30, 2000 (Total Portfolio) |                                |                   | 380 |                    |   |         | 99,095,200 |            |   |  | 9  |     |   |  | 14,244 |       
|                                       |                                |                   |     |                    |   |         |            |            |   |  |    |     |   |  |        |       



---



|    |                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 601 Tchoupitoulas garage previously was considered a
	stand-alone garage and included in the number of parking
	facilities owned by the Company. Effective with the second
	quarter of 1999, this garage is no longer considered a
	stand-alone parking facility.

20



---



As a result of the acquisition and disposition of properties,
the financial data presented shows changes in revenues and
expenses from period to period. Therefore, the Company does not
believe its period to period financial data necessarily are
comparable. The following analysis shows changes resulting from
Properties that were held during the entire period for the
periods being compared (the Core Portfolio) and
changes in the Total Portfolio.

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



| |                                                                               
| | ------------------------------------------------------------------------------
| | Comparison of the three months ended September 30,
	2000 to September 30, 1999

The table below represents selected operating information for
the Total Portfolio and for the Core Portfolio consisting of
269 Office Properties and nine Parking Facilities acquired
or placed in service on or prior to July 1, 1999.

|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |     | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | --------------- | ------- | -------------- |  | ---------- | ------- | ------- |  | --------- | ------- | ------- |  | ---------- | ------ | ------ |  | - | ------- | ------- |  | - | ------- | ------- |  | - | ------ | ------ |  |  | ------ | --- | 
|                                                                                                                                                                      |                |                 |         |               
|                                                                                                                                                                      |                | Total Portfolio |         | Core Portfolio
|                                                                                                                                                                      |                |                 |         |               
|                                                                                                                                                                      |                |                 |         | Increase/      |  | %          |         |         |  | Increase/ |         | %      
|(Dollars in thousands)                                                                                                                                                |                | 2000            |         | 1999           |  | (Decrease) |         | Change  |  | 2000      |         | 1999    |  | (Decrease) |        | Change
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |       
|Property revenues                                                                                                                                                     |                | $               | 629,187 |                |  | $          | 486,561 |         |  | $         | 142,626 |         |  |            | 29.3   | %      |  | $ | 451,210 |         |  | $ | 424,110 |         |  | $ | 27,100 |        |  |  | 6.4    | %  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Fee income                                                                                                                                                            |                |                 | 2,699   |                |  |            | 1,580   |         |  |           | 1,119   |         |  |            | 70.8   |        |  |   |        |         |  |   |        |         |  |   |       |        |  |  |       |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Interest/dividend income                                                                                                                                              |                |                 | 9,415   |                |  |            | 3,216   |         |  |           | 6,199   |         |  |            | 192.8  |        |  |   | 195     |         |  |   | 396     |         |  |   | (201   | )      |  |  | (50.8  | )  
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|                                                                                                                                                                      | Total revenues |                 |         | 641,301        |  |            |         | 491,357 |  |           |         | 149,944 |  |            |        | 30.5   |  |   |         | 451,405 |  |   |         | 424,506 |  |   |        | 26,899 |  |  |        | 6.3 | 
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|Interest expense                                                                                                                                                      |                |                 | 156,433 |                |  |            | 103,035 |         |  |           | 53,398  |         |  |            | 51.8   |        |  |   | 33,016  |         |  |   | 31,953  |         |  |   | 1,063  |        |  |  | 3.3    |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Depreciation and amortization                                                                                                                                         |                |                 | 119,738 |                |  |            | 89,405  |         |  |           | 30,333  |         |  |            | 33.9   |        |  |   | 85,674  |         |  |   | 77,317  |         |  |   | 8,357  |        |  |  | 10.8   |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Property operating expenses                                                                                                                                           |                |                 | 218,039 |                |  |            | 172,072 |         |  |           | 45,967  |         |  |            | 26.7   |        |  |   | 158,994 |         |  |   | 151,202 |         |  |   | 7,792  |        |  |  | 5.2    |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Ground rent                                                                                                                                                           |                |                 | 2,926   |                |  |            | 1,728   |         |  |           | 1,198   |         |  |            | 69.3   |        |  |   | 2,525   |         |  |   | 1,715   |         |  |   | 810    |        |  |  | 47.2   |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|General and administrative                                                                                                                                            |                |                 | 24,714  |                |  |            | 18,964  |         |  |           | 5,750   |         |  |            | 30.3   |        |  |   | 10      |         |  |   | (37     | )       |  |   | 47     |        |  |  | (127.0 | )  
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|                                                                                                                                                                      | Total expenses |                 |         | 521,850        |  |            |         | 385,204 |  |           |         | 136,646 |  |            |        | 35.5   |  |   |         | 280,219 |  |   |         | 262,150 |  |   |        | 18,069 |  |  |        | 6.9 | 
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net (loss) on sales
	of real estate and extraordinary items |                |                 | 119,451 |                |  |            | 106,153 |         |  |           | 13,298  |         |  |            | 12.5   |        |  |   | 171,186 |         |  |   | 162,356 |         |  |   | 8,830  |        |  |  | 5.4    |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Minority interests                                                                                                                                                    |                |                 | (1,658  | )              |  |            | (500    | )       |  |           | (1,158  | )       |  |            | 231.6  |        |  |   | (323    | )       |  |   | (381    | )       |  |   | 58     |        |  |  | (15.2  | )  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Income from investment in unconsolidated joint ventures                                                                                                               |                |                 | 16,862  |                |  |            | 3,031   |         |  |           | 13,831  |         |  |            | 456.3  |        |  |   | 4,865   |         |  |   | 2,200   |         |  |   | 2,665  |        |  |  | 121.1  |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Net (loss) on sales of real estate                                                                                                                                    |                |                 | (4,271  | )              |  |            |        |         |  |           | (4,271  | )       |  |            |       |        |  |   |        |         |  |   |        |         |  |   |       |        |  |  |       |    
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Extraordinary items                                                                                                                                                   |                |                 |        |                |  |            | (230    | )       |  |           | 230     |         |  |            | (100.0 | )      |  |   |        |         |  |   |        |         |  |   |       |        |  |  |       |    
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|Net income                                                                                                                                                            |                | $               | 130,384 |                |  | $          | 108,454 |         |  | $         | 21,930  |         |  |            | 20.2   | %      |  | $ | 175,728 |         |  | $ | 164,175 |         |  | $ | 11,553 |        |  |  | 7.0    | %  
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|Property revenues less property operating expenses before
	depreciation and amortization, general and administrative,
	ground rent and interest expense               |                | $               | 411,148 |                |  | $          | 314,489 |         |  | $         | 96,659  |         |  |            | 30.7   | %      |  | $ | 292,216 |         |  | $ | 272,908 |         |  | $ | 19,308 |        |  |  | 7.1    | %  
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|Straight-line rent adjustment                                                                                                                                         |                | $               | 22,187  |                |  | $          | 17,122  |         |  | $         | 5,065   |         |  |            | 29.6   | %      |  | $ | 13,583  |         |  | $ | 12,912  |         |  | $ | 671    |        |  |  | 5.2    | %  
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    
|Lease termination fees                                                                                                                                                |                | $               | 2,975   |                |  | $          | 5,245   |         |  | $         | (2,270  | )       |  |            | (43.3  | )%     |  | $ | 2,189   |         |  | $ | 5,071   |         |  | $ | (2,882 | )      |  |  | (56.8  | )% 
|                                                                                                                                                                      |                |                 |         |                |  |            |         |         |  |           |         |         |  |            |        |        |  |   |         |         |  |   |         |         |  |   |        |        |  |  |        |    



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

The increase in property revenues in the Core Portfolio resulted
from an increase in rental rates and an increase in occupancy.
The weighted average occupancy of the Core Portfolio increased
from 94.5% at July 1, 1999 to 95.1% at September 30,
2000. This increase represents approximately 0.8 million
square feet in the

21



---







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

Total Portfolio interest/ dividend income increased primarily as
a result of the Companys $75 million investment in
May 2000 in Series A Convertible Cumulative Preferred
Stock (the Series A Preferred Stock) of
HQ Global Workplaces, Inc. (HQ) that has
an initial dividend rate of 13.5% per annum, which
increases by 50 basis points each year through maturity in
2007. The Company also earned interest income from property
disposition proceeds held in escrow accounts. The amounts in
escrow will be utilized for property acquisitions or returned to
the Company.



| |                 
| | ----------------
| | 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 and an increase in the weighted
average interest rate. In addition, the following statistics for
each period for the Total Portfolio are as follows:



| |   |                                                                    
| | - | -------------------------------------------------------------------
| |  | Total debt to total assets increased to 46.4% from 42.4%;          
|
| |  | Interest coverage ratio decreased to 2.6 times from 2.9
	times; and
|
| |  | Weighted average interest rate increased to 7.5% from 7.1%.        

Core Portfolio interest expense increased from the prior period
due to the financing of Park Avenue Tower and 850 Third Avenue
partially offset by the paydown of mortgage debt on certain
Properties. Interest expense on the unsecured notes and lines of
credit is not reflected in the Core Portfolio.



| |                              
| | -----------------------------
| | Depreciation and Amortization

Total Portfolio depreciation and amortization expense increased
from the prior period as a result of Properties acquired 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

Core Portfolio property operating expenses increased mainly as a
result of increases in real estate taxes and other operating
expenses. Real estate taxes increased approximately
$3.0 million due to higher property tax assessments, other
operating expenses increased approximately $4.8 million
primarily due to higher repairs and maintenance costs and
general property operating expenses.



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

General and administrative expenses increased due to an increase
in the number of employees at the corporate office as a result
of the establishment of new revenue-producing business groups
such as Access and the hiring of additional personnel in other
corporate groups, primarily the information technology group. In
addition, general and administrative expenses increased as a
result of hiring additional personnel due to the Cornerstone
Merger which was anticipated by the Company. Although general
and administrative expenses are expected to increase along with
any increase in the size of the Companys portfolio, it is
also anticipated that the Company will realize economies of
scale with future growth, should it occur.



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

Income from investment in unconsolidated joint ventures
increased for the Total Portfolio due to the acquisition through
a joint venture of an interest in 1301 Avenue of the
Americas office property in

22



---







| |                                                                              
| | -----------------------------------------------------------------------------
| | Comparison of the nine months ended September 30,
	2000 to September 30, 1999

The table below represents selected operating information for
the Total Portfolio and for the Core Portfolio consisting of
266 Office Properties and seven Parking Facilities acquired
or placed in service on or prior to January 1, 1999.

|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | --------------- | --------- | -------------- |  | ---------- | --------- | --------- |  | --------- | ------- | ------- |  | ---------- | ----- | ------ |  | - | --------- | --------- |  | - | --------- | --------- |  | - | ------ | ------ |  |  | ----- | --- | 
|                                                                                                                                                                    |                |                 |           |               
|                                                                                                                                                                    |                | Total Portfolio |           | Core Portfolio
|                                                                                                                                                                    |                |                 |           |               
|                                                                                                                                                                    |                |                 |           | Increase/      |  | %          |           |           |  | Increase/ |         | %      
|(Dollars in thousands)                                                                                                                                              |                | 2000            |           | 1999           |  | (Decrease) |           | Change    |  | 2000      |         | 1999    |  | (Decrease) |       | Change
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |       
|Property revenues                                                                                                                                                   |                | $               | 1,575,851 |                |  | $          | 1,433,980 |           |  | $         | 141,871 |         |  |            | 9.9   | %      |  | $ | 1,305,357 |           |  | $ | 1,222,068 |           |  | $ | 83,289 |        |  |  | 6.8   | %  
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Fee income                                                                                                                                                          |                |                 | 7,441     |                |  |            | 5,487     |           |  |           | 1,954   |         |  |            | 35.6  |        |  |   |          |           |  |   |          |           |  |   |       |        |  |  |      |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Interest/dividend income                                                                                                                                            |                |                 | 23,736    |                |  |            | 8,303     |           |  |           | 15,433  |         |  |            | 185.9 |        |  |   | 1,407     |           |  |   | 1,364     |           |  |   | 43     |        |  |  | 3.2   |    
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|                                                                                                                                                                    | Total revenues |                 |           | 1,607,028      |  |            |           | 1,447,770 |  |           |         | 159,258 |  |            |       | 11.0   |  |   |           | 1,306,764 |  |   |           | 1,223,432 |  |   |        | 83,332 |  |  |       | 6.8 | 
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|Interest expense                                                                                                                                                    |                |                 | 368,268   |                |  |            | 310,435   |           |  |           | 57,833  |         |  |            | 18.6  |        |  |   | 93,305    |           |  |   | 100,348   |           |  |   | (7,043 | )      |  |  | (7.0  | )  
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Depreciation and amortization                                                                                                                                       |                |                 | 300,041   |                |  |            | 264,133   |           |  |           | 35,908  |         |  |            | 13.6  |        |  |   | 243,444   |           |  |   | 224,180   |           |  |   | 19,264 |        |  |  | 8.6   |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Property operating expenses                                                                                                                                         |                |                 | 538,837   |                |  |            | 499,179   |           |  |           | 39,658  |         |  |            | 7.9   |        |  |   | 451,851   |           |  |   | 426,318   |           |  |   | 25,533 |        |  |  | 6.0   |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Ground rent                                                                                                                                                         |                |                 | 7,388     |                |  |            | 5,122     |           |  |           | 2,266   |         |  |            | 44.2  |        |  |   | 6,852     |           |  |   | 5,085     |           |  |   | 1,767  |        |  |  | 34.7  |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|General and administrative                                                                                                                                          |                |                 | 66,454    |                |  |            | 57,928    |           |  |           | 8,526   |         |  |            | 14.7  |        |  |   | 244       |           |  |   | 368       |           |  |   | (124   | )      |  |  | (33.7 | )  
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|                                                                                                                                                                    | Total expenses |                 |           | 1,280,988      |  |            |           | 1,136,797 |  |           |         | 144,191 |  |            |       | 12.7   |  |   |           | 795,696   |  |   |           | 756,299   |  |   |        | 39,397 |  |  |       | 5.2 | 
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net gain on sales
	of real estate and extraordinary items |                |                 | 326,040   |                |  |            | 310,973   |           |  |           | 15,067  |         |  |            | 4.8   |        |  |   | 511,068   |           |  |   | 467,133   |           |  |   | 43,935 |        |  |  | 9.4   |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Minority interests                                                                                                                                                  |                |                 | (4,142    | )              |  |            | (1,398    | )         |  |           | (2,744  | )       |  |            | 196.3 |        |  |   | (1,178    | )         |  |   | (1,077    | )         |  |   | (101   | )      |  |  | 9.4   |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Income from investment in unconsolidated joint ventures                                                                                                             |                |                 | 41,625    |                |  |            | 8,081     |           |  |           | 33,544  |         |  |            | 415.1 |        |  |   | 11,075    |           |  |   | 7,312     |           |  |   | 3,763  |        |  |  | 51.5  |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Net gain on sales of real estate                                                                                                                                    |                |                 | 36,589    |                |  |            | 8,085     |           |  |           | 28,504  |         |  |            | 352.6 |        |  |   |          |           |  |   |          |           |  |   |       |        |  |  |      |    
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Extraordinary items                                                                                                                                                 |                |                 | (875      | )              |  |            | (10,548   | )         |  |           | 9,673   |         |  |            | (91.7 | )      |  |   | (611      | )         |  |   | (9,527    | )         |  |   | 8,916  |        |  |  | (93.6 | )  
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|Net income                                                                                                                                                          |                | $               | 399,237   |                |  | $          | 315,193   |           |  | $         | 84,044  |         |  |            | 26.7  | %      |  | $ | 520,354   |           |  | $ | 463,841   |           |  | $ | 56,513 |        |  |  | 12.2  | %  
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|Property revenues less property operating expenses before
	depreciation and amortization, general and administrative,
	ground rent and interest expense             |                | $               | 1,037,014 |                |  | $          | 934,801   |           |  | $         | 102,213 |         |  |            | 10.9  | %      |  | $ | 853,506   |           |  | $ | 795,750   |           |  | $ | 57,756 |        |  |  | 7.3   | %  
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|Straight-line rent adjustment                                                                                                                                       |                | $               | 50,419    |                |  | $          | 48,895    |           |  | $         | 1,524   |         |  |            | 3.1   | %      |  | $ | 39,064    |           |  | $ | 42,279    |           |  | $ | (3,215 | )      |  |  | (7.6  | )% 
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    
|Lease termination fees                                                                                                                                              |                | $               | 15,249    |                |  | $          | 10,501    |           |  | $         | 4,748   |         |  |            | 45.2  | %      |  | $ | 13,850    |           |  | $ | 7,413     |           |  | $ | 6,437  |        |  |  | 86.8  | %  
|                                                                                                                                                                    |                |                 |           |                |  |            |           |           |  |           |         |         |  |            |       |        |  |   |           |           |  |   |           |           |  |   |        |        |  |  |       |    



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

The increase in property revenues in the Core Portfolio resulted
from an increase in rental rates partially offset by a slight
decrease in occupancy. The weighted average occupancy of the
Core Portfolio decreased from 95.3% at January 1, 1999 to
95.0% at September 30, 2000. This decrease represents
approximately 0.3 million square feet in the Core Portfolio
between January 1, 1999 and September 30, 2000.
Included in Property Revenues are lease termination fees. These
fees relate to specific tenants who have paid a fee to terminate
their lease obligations before the end of the contractual term
of their lease. Although the Company has received these fees in
the past, a prediction of the timing or amounts of future fees
cannot be made.

23



---





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

Total Portfolio interest/dividend income increased as a result
of the Companys $73.9 million investment in a
Tranche B note as part of the Sun America Center debt
restructuring in September 1999. The Companys share of the
face amount of the Tranche B note is approximately
$136.0 million and the note matures on August 31,
2014. The note accrues interest at a stated rate of
7.25% per annum. The Company also earned dividend revenue
from its $75 million investment in May 2000 in
Series A Preferred Stock of HQ that has an initial dividend
rate of 13.5% per annum, which increases by 50 basis points
each year through maturity in 2007. The Company also earned
interest income from property disposition proceeds held in
escrow accounts. The amounts in escrow will be utilized for
property acquisitions or returned to the Company.



| |                 
| | ----------------
| | 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 and an increase in the weighted
average interest rate. In addition, the statistics for each
period for the Total Portfolio are as follows:



| |   |                                                                    
| | - | -------------------------------------------------------------------
| |  | Total debt to total assets increased to 46.4% from 42.4%;          
|
| |  | Interest coverage ratio decreased to 2.8 times from 2.9
	times; and
|
| |  | Weighted average interest rate increased to 7.5% from 7.1%.        

Core Portfolio interest expense decreased from the prior period
due to the paydown of mortgage debt on certain Properties.
Interest expense on the unsecured notes and lines of credit is
not reflected in the Core Portfolio.



| |                              
| | -----------------------------
| | Depreciation and Amortization

Total Portfolio depreciation and amortization expense increased
from the prior period as a result of Properties acquired 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

Core Portfolio property operating expenses increased mainly as a
result of an increase in real estate taxes and other operating
expenses. Real estate taxes increased approximately
$10.0 million due to higher property tax assessments,
repairs and maintenance expense increased approximately
$8.1 million and other operating expenses increased
approximately $7.4 million, including a one-time charge
related to a change in the employee benefit program.



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

General and administrative expenses increased due to an increase
in the number of employees at the corporate office as a result
of the establishment of new revenue-producing business groups
such as Access and the hiring of additional personnel in other
corporate groups, primarily the information technology group. In
addition, general and administrative expenses increased as a
result of hiring additional personnel due to the Cornerstone
Merger which was anticipated by the Company. Although general
and administrative expenses are expected to increase along with
any increase in the size of the Companys portfolio, it is
also anticipated that the Company will realize economies of
scale with future growth, should it occur.



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

Income from investment in unconsolidated joint ventures
increased for the Total Portfolio due to the acquisition through
a joint venture of an interest in 1301 Avenue of the Americas
office property in August 2000 and the partial sale of twelve
Office Properties in December 1999 and one Office Property in
June 2000. The Company retained an equity interest in these
Office Properties and accounts for its remaining interest

24



---





Property Dispositions

The Company has disposed or partially disposed of the following
office properties and parking facilities since January 1,
1999:

|     |  |                                |  |                                
|---- |  | ------------------------------ |  | -------------------------------
|     |  |                                |  |                                
|Year |  | Property                      
|     |  |                               
|2000 |  | Bank of America Tower(1)       |  | Forbes and Allies Garage(2)    
|     |  | Sarasota City Center           |  | Juniper/ Locust Garage(2)      
|     |  | Media Center                   |  | Milwaukee Center Garage(2)     
|     |  | 1111 Sansom Street Garage(2)   |  | Riverfront Center(2)           
|     |  | 15th & Sansom Street Garage(2) |  | Park Plaza                     
|     |  | 1602-34 Chancellor Garage(2)   |  | Agoura Hills Business Park     
|     |  | 1616 Sansom Street Garage(2)   |  | Westlake Spectrum Center I & II
|     |  | Boston Harbor Garage(2)        |  | Westwood Business Centre       
|     |  | Capital Commons Garage(2)      |  |                                
|    
|1999 |  | Atrium Towers                  |  | SunTrust Center(1)             
|     |  | 5100 Brookline                 |  | Promenade II(1)                
|     |  | 215 Fremont Street             |  | Pasadena Towers(1)             
|     |  | One Columbus Building          |  | Preston Commons(1)             
|     |  | 10 & 30 South Wacker(1)        |  | Sterling Plaza(1)              
|     |  | Bank One Center(1)             |  |                                



---



|    |                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These Office Properties were partially sold. The Company
        accounts for its remaining interest in these Office Properties
        under the equity method of accounting.
|   
|(2) | These 11 parking facilities were disposed of on
        May 17, 2000.                                                                                                         

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

|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------------- | ------ | ------------------- |  | ---- | ------ | ------ |  | - | ------ | ------ |  | - | ------- | ------- | 
|                                                                                                                                                         |                |                      |        |                    
|                                                                                                                                                         |                | For the three months |        | For the nine months
|                                                                                                                                                         |                | ended                |        | ended              
|                                                                                                                                                         |                | September 30,        |        | September 30,      
|                                                                                                                                                         |                |                      |        |                    
|(Dollars in thousands)                                                                                                                                   |                | 2000                 |        | 1999                |  | 2000 |        | 1999  
|                                                                                                                                                         |                |                      |        |                     |  |      |        |       
|Property revenues                                                                                                                                        |                | $                    | 2,019  |                     |  | $    | 61,808 |        |  | $ | 33,212 |        |  | $ | 187,441 |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Interest income                                                                                                                                          |                |                      | 65     |                     |  |      | 38     |        |  |   | 82     |        |  |   | 128     |        
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        
|                                                                                                                                                         | Total revenues |                      |        | 2,084               |  |      |        | 61,846 |  |   |        | 33,294 |  |   |         | 187,569 | 
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        
|Interest expense                                                                                                                                         |                |                      | 187    |                     |  |      | 2,907  |        |  |   | 408    |        |  |   | 9,101   |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Depreciation and amortization                                                                                                                            |                |                      | 107    |                     |  |      | 10,292 |        |  |   | 5,828  |        |  |   | 31,569  |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Property operating expenses                                                                                                                              |                |                      | 1,447  |                     |  |      | 20,740 |        |  |   | 10,200 |        |  |   | 63,447  |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Ground rent                                                                                                                                              |                |                      |       |                     |  |      | 13     |        |  |   |       |        |  |   | 38      |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|General and administrative                                                                                                                               |                |                      | 1      |                     |  |      |       |        |  |   | 154    |        |  |   | 169     |        
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        
|                                                                                                                                                         | Total expenses |                      |        | 1,742               |  |      |        | 33,952 |  |   |        | 16,590 |  |   |         | 104,324 | 
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        
|Income before allocation to minority interests, net (loss) gain
        on sales of real estate and extraordinary items                                  |                |                      | 342    |                     |  |      | 27,894 |        |  |   | 16,704 |        |  |   | 83,245  |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Minority interest  partially owned properties                                                                                                           |                |                      |       |                     |  |      | (119   | )      |  |   | (1,457 | )      |  |   | (322    | )      
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Net (loss) gain on sales of real estate and extraordinary items                                                                                          |                |                      | (4,271 | )                   |  |      |       |        |  |   | 36,325 |        |  |   | 7,294   |        
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        
|Net income                                                                                                                                               |                | $                    | (3,929 | )                   |  | $    | 27,775 |        |  | $ | 51,572 |        |  | $ | 90,217  |        
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        
|Property revenues less property operating expenses before
        depreciation and amortization, general and administrative and
        interest expense |                | $                    | 572    |                     |  | $    | 41,068 |        |  | $ | 23,012 |        |  | $ | 123,994 |        
|                                                                                                                                                         |                |                      |        |                     |  |      |        |        |  |   |        |        |  |   |         |        

25



---



Liquidity and Capital Resources



| |          
| | ---------
| | Liquidity

Net cash provided from operations represents the primary source
of liquidity to fund distributions, debt service, recurring
capital costs and non-revenue enhancing tenant improvements. The
Companys partnership agreement generally requires the
Company to distribute substantially all of the net cash from
operations each quarter and to make reasonable efforts to
distribute to the Trust enough cash for it to meet the 95%
distribution requirement. Subject to the foregoing, the Company
has established annual distribution rates as follows:



| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | $1.80 per annum per Unit;                                               
|
| |  | 8.98% per annum ($2.245 per unit) for each
	Series A Preferred Unit;    
|
| |  | 5.25% per annum ($2.625 per unit) for each
	Series B Preferred Unit; and
|
| |  | 8.625% per annum ($2.15625 per unit) for each
	Series C Preferred Unit. 

The Company intends to continue to fund distributions, debt
service, recurring capital costs and non-revenue enhancing
tenant improvements from cash from operations and borrowings
under its credit facility. The Company also expects that its
credit facility will provide for temporary working capital, the
funding of capital improvements and revenue enhancing tenant
improvements, unanticipated cash needs and funding of
acquisitions and development costs.

Since the Companys anticipated distributions will not
allow the Company, using only cash from operations, to retire
all of its debt as it comes due, the Company will be required to
repay maturing debt with funds from debt and/or equity
financing. There can be no assurance that such financing will be
available on acceptable terms or at all.



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

The table below summarizes the mortgage debt, unsecured notes
and the lines of credit at September 30, 2000 and
December 31, 1999, including a net unamortized (discount)/
premium on mortgage debt of $(20,183) and $10,574, respectively,
and a net unamortized (discount)/ premium on unsecured notes of
$(1,187) and $47, respectively, recorded in connection with
property acquisitions, mergers and the issuance of unsecured
notes.

|                                          |               |                         |   |              |           |   |   |           |           |  
|----------------------------------------- | ------------- | ----------------------- | - | ------------ | --------- | - | - | --------- | --------- | -
|                                          |               | September 30,           |   | December 31,
|(Dollars in thousands)                    |               | 2000                    |   | 1999        
|                                          |               |                         |   |             
|Debt Summary:                             |               |                         |   |              |           |   |   |          
|                                         
|                                         
|                                         
|                                         
|Balance                                   |               |                         |   |              |           |   |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Fixed rate    |                         | $ | 7,669,636    |           |   | $ | 5,272,608 |          
|                                         
|                                         
|                                         
|                                         
|                                          | Variable rate |                         |   | 1,014,276    |           |   |   | 579,310   |          
|                                          |               |                         |   |              |           |   |   |          
|                                          |               | Total                   |   | $            | 8,683,912 |   |   | $         | 5,851,918 |  
|                                          |               |                         |   |              |           |   |   |          
|Percent of total debt:                    |               |                         |   |              |           |   |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Fixed rate    |                         |   | 88.3         | %         |   |   | 90.1      | %        
|                                         
|                                         
|                                         
|                                         
|                                          | Variable rate |                         |   | 11.7         | %         |   |   | 9.9       | %        
|                                          |               |                         |   |              |           |   |   |          
|                                          |               | Total                   |   |              | 100.0     | % |   |           | 100.0     | %
|                                          |               |                         |   |              |           |   |   |          
|Effective interest rate at end of period: |               |                         |   |              |           |   |   |          
|                                         
|                                         
|                                         
|                                         
|                                          | Fixed rate    |                         |   | 7.5          | %         |   |   | 7.1       | %        
|                                         
|                                         
|                                         
|                                         
|                                          | Variable rate |                         |   | 7.8          | %         |   |   | 7.4       | %        
|                                          |               |                         |   |              |           |   |   |          
|                                          |               | Effective interest rate |   |              | 7.5       | % |   |           | 7.2       | %
|                                          |               |                         |   |              |           |   |   |          

A majority of the variable rate debt shown above bears interest
at an interest rate based on various spreads over LIBOR.

26



---



Mortgage Financing

As of September 30, 2000, the Companys total mortgage
debt (excluding the Companys share of unconsolidated debt
of approximately $832.6 million) consisted of approximately
$2.9 billion of fixed-rate debt with a weighted average
interest rate of approximately 7.8% and $134.3 million of
variable rate debt based on various spreads over LIBOR or the
prime rate. The Companys mortgage debt at
September 30, 2000 will mature as follows:

|                                                                 |          |   |           |           | 
|---------------------------------------------------------------- | -------- | - | --------- | --------- | 
|Dollars in thousands                                             |          |  
|                                                                 |          |  
|2000                                                             |          | $ | 74,573    |          
|                                                                
|                                                                
|                                                                
|                                                                
|2001                                                             |          |   | 215,489   |          
|                                                                
|                                                                
|                                                                
|                                                                
|2002                                                             |          |   | 177,091   |          
|                                                                
|                                                                
|                                                                
|                                                                
|2003                                                             |          |   | 199,645   |          
|                                                                
|                                                                
|                                                                
|                                                                
|2004                                                             |          |   | 325,108   |          
|                                                                
|                                                                
|                                                                
|                                                                
|Thereafter                                                       |          |   | 1,993,376 |          
|                                                                 |          |   |           |          
|                                                                 | Subtotal |   |           | 2,985,282 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Net discount (net of accumulated amortization of $2.1 
	million) |          |   | (20,183   | )        
|                                                                 |          |   |           |          
|                                                                 | Total    |   | $         | 2,965,099 | 
|                                                                 |          |   |           |          

The instruments encumbering the Properties generally restrict
transfer of the respective Properties subject to the terms of
the mortgage, prohibit additional liens and require payment of
real estate taxes on the Properties, maintenance of the
Properties in good condition, maintenance of insurance on the
Properties and obtaining lender consent to material tenant
leases.

Credit Facilities

The cash portion of the Cornerstone Merger of approximately
$1.2 billion was partially funded from the Term Loan and
the Line of Credit. The Term Loan bears interest at LIBOR plus
80 basis points and matures on May 29, 2001. The net
cash proceeds that the Company receives from the disposition of
a Property (excluding proceeds from a tax-deferred property
disposition), the issuance of unsecured notes or the issuance of
Common Shares or Units must be used to repay any amounts
outstanding under the Term Loan up to the then current unpaid
balance of the Term Loan.

The remaining cash consideration of the Cornerstone Merger was
funded from the Line of Credit which bears interest at LIBOR
plus 60 basis points and matures on June 19, 2003.
There is also a facility fee of $2.0 million per annum on
the Line of Credit payable quarterly. In addition, the Company
assumed interest rate protection agreements in the notional
amount of $250 million thereby effectively converting a
portion of the Line of Credit to a fixed-blended interest rate
of 4.6%. The interest rate protection agreements terminate in
December 2000 and January 2001.

As of November 6, 2000, the outstanding balance on the Term
Loan and Line of Credit was approximately $325.0 million
and $687.6 million, respectively.

The Trust has guaranteed the outstanding obligations under the
Line of Credit and the Term Loan.

27



---



Unsecured Notes

The table below summarizes the Companys unsecured notes as
of September 30, 2000:

|                          |                                                            |             |         |           |   |           |     |     |   |  |     |     |  
|------------------------- | ---------------------------------------------------------- | ----------- | ------- | --------- | - | --------- | --- | --- | - |  | --- | --- | -
|                          |                                                            |             |         | Stated    |   | Effective
|Tranche                   |                                                            | Amount      |         | Rate      |   | Rate(1)  
|                          |                                                            |             |         |           |   |          
|                          |                                                            | (Dollars in |         |           |   |          
|                          |                                                            | thousands)  |         |           |   |          
|                         
|                         
|                         
|                         
|3 Year Notes due 2002     |                                                            | $           | 200,000 |           |   |           | 6.4 | %   |   |  | 6.6 | %  
|                         
|                         
|                         
|                         
|4 Year MOPPRS due 2002(2) |                                                            |             | 250,000 |           |   |           | 6.4 | %   |   |  | 6.3 | %  
|                         
|                         
|                         
|                         
|5 Year Notes due 2003     |                                                            |             | 300,000 |           |   |           | 6.4 | %   |   |  | 6.8 | %  
|                         
|                         
|                         
|                         
|5 Year Notes due 2004     |                                                            |             | 300,000 |           |   |           | 6.5 | %   |   |  | 6.7 | %  
|                         
|                         
|                         
|                         
|6 Year Notes due 2004     |                                                            |             | 250,000 |           |   |           | 6.5 | %   |   |  | 6.7 | %  
|                         
|                         
|                         
|                         
|7 Year Notes due 2004     |                                                            |             | 30,000  |           |   |           | 7.2 | %   |   |  | 7.3 | %  
|                         
|                         
|                         
|                         
|7 Year Notes due 2005     |                                                            |             | 400,000 |           |   |           | 6.6 | %   |   |  | 7.0 | %  
|                         
|                         
|                         
|                         
|8 Year Notes due 2005     |                                                            |             | 50,000  |           |   |           | 7.4 | %   |   |  | 7.7 | %  
|                         
|                         
|                         
|                         
|6 Year Notes due 2006     |                                                            |             | 500,000 |           |   |           | 8.4 | %   |   |  | 8.6 | %  
|                         
|                         
|                         
|                         
|9 Year Notes due 2006     |                                                            |             | 50,000  |           |   |           | 7.4 | %   |   |  | 7.7 | %  
|                         
|                         
|                         
|                         
|9 Year Notes due 2007     |                                                            |             | 300,000 |           |   |           | 6.8 | %   |   |  | 6.8 | %  
|                         
|                         
|                         
|                         
|10 Year Notes due 2007    |                                                            |             | 50,000  |           |   |           | 7.4 | %   |   |  | 7.7 | %  
|                         
|                         
|                         
|                         
|10 Year Notes due 2008    |                                                            |             | 300,000 |           |   |           | 6.8 | %   |   |  | 7.0 | %  
|                         
|                         
|                         
|                         
|8 Year Notes due 2008(3)  |                                                            |             | 325,000 |           |   |           | 7.3 | %   |   |  | 7.6 | %  
|                         
|                         
|                         
|                         
|10 Year Notes due 2009    |                                                            |             | 500,000 |           |   |           | 6.8 | %   |   |  | 6.9 | %  
|                         
|                         
|                         
|                         
|10 Year Notes due 2010(4) |                                                            |             | 360,000 |           |   |           | 8.1 | %   |   |  | 8.2 | %  
|                         
|                         
|                         
|                         
|20 Year Notes due 2018    |                                                            |             | 250,000 |           |   |           | 7.3 | %   |   |  | 7.6 | %  
|                         
|                         
|                         
|                         
|30 Year Notes due 2028    |                                                            |             | 225,000 |           |   |           | 7.3 | %   |   |  | 7.3 | %  
|                         
|                         
|                         
|                         
|30 Year Notes due 2029    |                                                            |             | 200,000 |           |   |           | 7.5 | %   |   |  | 7.6 | %  
|                          |                                                            |             |         |           |   |           |     |     |   |  |     |    
|                          | Subtotal                                                   |             | $       | 4,840,000 |   |           |     | 7.1 | % |  |     | 7.3 | %
|                          |                                                            |             |         |           |   |           |     |     |   |  |     |    
|                          | Net discount (net of $.1 million accumulated amortization) |             |         | (1,187    | ) |           |     |     |   |  |     |     |  
|                          |                                                            |             |         |           |   |           |     |     |   |  |     |    
|                          | Total                                                      |             | $       | 4,838,813 |   |           |     |     |   |  |     |     |  
|                          |                                                            |             |         |           |   |           |     |     |   |  |     |    



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the cost of terminated interest rate protection
	agreements, offering and transaction costs and premiums and
	discounts on certain unsecured notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(2) | The MOPPRS are subject to mandatory redemption in 2002 but do
	not mature until 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | On August 23, 2000, the Company issued the $325 Million
	Notes due November 2008. The net proceeds after offering
	expenses were approximately $314.6 million and were used to
	repay amounts outstanding on the Term Loan. The $325 
	Million Notes are exchangeable into Common Shares of the Trust
	at an exchange rate of $34.00 per share which is equal to
	an exchange rate of 29.4118 Common Shares per $1,000
	principal amount of notes. If the closing price of a Common
	Share on the NYSE 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: a) the number of Common Shares into
	which the principal amount of notes subject to such exercise
	would otherwise be exchangeable and b) such closing price
	per Common Share. Upon exchange of a $1,000 note for Common
	Shares of the Trust the Company would issue a corresponding
	number of Units to the Trust on a one-for-one basis.
|   
|(4) | On August 7, 2000, the Company issued the $360 Million
	Notes due August 1, 2010. The net proceeds after discount
	and offering expenses were approximately $356.2 million and
	were used to repay amounts outstanding on the Term  Loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

The Company previously filed a shelf registration statement,
which was declared effective by the SEC on July 22, 1998,
relating to the issuance from time to time of up to
$2.0 billion of unsecured debt securities and warrants
exercisable for debt securities in amounts, at initial prices
and on terms to be determined at the time

28



---





The Company filed an additional shelf registration statement,
which was declared effective by the SEC on August 31, 2000,
relating to the issuance from time to time of up to
$2.0 billion of unsecured debt securities in amounts, at
initial prices and on terms to be determined at the time of the
offering. As of September 30, 2000, the Company had not
issued any debt securities under this registration statement.



| |                           
| | --------------------------
| | Restrictions and Covenants

Agreements or instruments relating to the unsecured notes and
lines of credit generally contain certain restrictions and
requirements regarding total debt-to-assets ratios, secured
debt-to-total assets ratios, debt service coverage ratios,
minimum ratio of unencumbered assets to unsecured debt and other
limitations.

Equity Securities

A summary of the activity of the Trusts Common Shares and
the Companys Units during the three months ended
September 30, 2000, is as follows:

|                              |                                                  |               |             |           |   |       |            |            |   |  |             |           |  
|----------------------------- | ------------------------------------------------ | ------------- | ----------- | --------- | - | ----- | ---------- | ---------- | - |  | ----------- | --------- | -
|                              |                                                  | Common Shares |             | Units     |   | Total
|                              |                                                  |               |             |           |   |      
|Balance at June 30, 2000      |                                                  |               | 301,132,281 |           |   |       | 45,170,128 |            |   |  | 346,302,409 |          
|                             
|                             
|                             
|                             
|                              | Units issued for property acquisitions           |               |             |          |   |       |            | 318,417    |   |  |             | 318,417   |  
|                             
|                             
|                             
|                             
|                              | Common Shares retired                            |               |             | (107,956  | ) |       |            |           |   |  |             | (107,956  | )
|                             
|                             
|                             
|                             
|                              | Units redeemed for Common Shares                 |               |             | 2,261,527 |   |       |            | (2,261,527 | ) |  |             |          |  
|                             
|                             
|                             
|                             
|                              | Restricted Shares issued/cancelled, net          |               |             | (6,500    | ) |       |            |           |   |  |             | (6,500    | )
|                             
|                             
|                             
|                             
|                              | Common Shares issued through exercise of options |               |             | 1,628,923 |   |       |            |           |   |  |             | 1,628,923 |  
|                              |                                                  |               |             |           |   |       |            |            |   |  |             |          
|Balance at September 30, 2000 |                                                  |               | 304,908,275 |           |   |       | 43,227,018 |            |   |  | 348,135,293 |          
|                              |                                                  |               |             |           |   |       |            |            |   |  |             |          

Investments in Securities

The Company owns equity interests in several companies that
provide communication services or amenities to tenants. The
equity interests are in the form of common or preferred stock
and vested and unvested warrants to acquire common stock. Below
is a summary of these investments as of September 30, 2000:

|                         |                     |                  |    |        |  |             |                |                |  |             |       |             |         |  |           |           |            |  |           |         |           |   |        |        |         | 
|------------------------ | ------------------- | ---------------- | -- | ------ |  | ----------- | -------------- | -------------- |  | ----------- | ----- | ----------- | ------- |  | --------- | --------- | ---------- |  | --------- | ------- | --------- | - | ------ | ------ | ------- | 
|                         |                     | Square Feet      |    |        |  | Capital     |                | Shares         |  | Warrants    |       | Book       
|Company                  |                     | (In millions)(d) |    | Symbol |  | Investment  |                | Received(e)    |  | Received(e) |       | Value(f)   
|                         |                     |                  |    |        |  |             |                |                |  |             |       |            
|                         |                     |                  |    |        |  | (Dollars in |                |                |  |             |       | (Dollars in
|                         |                     |                  |    |        |  | thousands)  |                |                |  |             |       | thousands) 
|                        
|                        
|                        
|                        
|Allied Riser Corporation |                     |                  | 94 |        |  |             | ARCC           |                |  | $           | 3,452 |             |         |  | 861,720   |           |            |  | 1,731,875 |         |           | $ | 17,258 |       
|                        
|                        
|                        
|                        
|Broadband Office         |                     |                  | 58 |        |  |             | Privately Held |                |  |             | 3,500 |             |         |  | 2,623,365 |           |            |  |          |         |           |   | 4,936  |       
|                        
|                        
|                        
|                        
|Captivate                |                     |                  | 72 |        |  |             | Privately Held |                |  |             | 9,705 |             |         |  | 2,253,835 |           |            |  | 2,373,798 |         |           |   | 19,870 |       
|                        
|                        
|                        
|                        
|Cypress                  |                     |                  | 17 |        |  |             | CYCO           |                |  |             | 7,858 |             |         |  | 828,947   |           |            |  | 894,164   |         |           |   | 2,205  |       
|HQ Global                |                     |                  |    |        |  |             |                |                |  |             |       |             |         |  |           |           |            |  |           |         |           |   |        |       
|                        
|                        
|                        
|                        
|                         | Workplaces, Inc.(a) |                  |    |       |  |             |                | Privately Held |  |             |       | 75,061      |         |  |           | 1,839,497 |            |  |           | 555,911 |           |   |        | 75,609 |        
|                        
|                        
|                        
|                        
|OnSite(b)                |                     |                  | 22 |        |  |             | Privately Held |                |  |             |      |             |         |  |          |           |            |  |          |         |           |   |       |       
|Constellation Real       |                     |                  |    |        |  |             |                |                |  |             |       |             |         |  |           |           |            |  |           |         |           |   |        |       
|                        
|                        
|                        
|                        
|                         | Technologies(c)     |                  |    |       |  |             |                | Privately Held |  |             |       | 2,730       |         |  |           | 2,729,727 |            |  |           |        |           |   |        | 2,730  |        
|                         |                     |                  |    |        |  |             |                |                |  |             |       |             |         |  |           |           |            |  |           |         |           |   |        |       
|                         |                     | Total            |    |        |  |             |                |                |  |             |       | $           | 102,306 |  |           |           | 11,137,091 |  |           |         | 5,555,748 |   |        | $      | 122,608 | 
|                         |                     |                  |    |        |  |             |                |                |  |             |       |             |         |  |           |           |            |  |           |         |           |   |        |       



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In May 2000, the Company invested approximately $75 million
	in Series A Preferred Stock of HQ. The Series A
	Preferred Stock has an initial dividend rate of 13.5% per
	annum which increases by 50 basis points each year. The
	Series A Preferred Stock is redeemable in 2004, matures in
	2007, and may be converted to HQ common stock upon a
	qualifying merger or initial public offering of HQ. In connection

29



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | with the investment, the Company and HQ entered into a joint
	venture agreement to own and develop full service business
	centers in the Office Properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(b) |  | The Company entered into an agreement with OnSite
	Access, Inc. (OnSite), a facilities-based
	provider of broadband data, video and voice communications
	services, delivered over fiber optic networks designed,
	constructed and owned by OnSite in large- and medium-sized
	office buildings. OnSite will provide its services to tenants in
	certain Office Properties. In return for access to the Office
	Properties, OnSite is obligated to grant the Company warrants to
	acquire common shares of OnSite for $2.36 per share.                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(c) |  | Constellation Real Technologies is a real estate technology
	limited liability company created by 11 of the nations
	largest owners, managers and developers of real estate.
	Constellation Real Technologies was created to sponsor real
	estate-related Internet, e-commerce and telecommunications
	enterprises, acquire interests in existing best of
	breed companies, and act as an opportunistic consolidator
	across property sectors in the real estate technology area. The
	11 members have committed to contribute a total of
	$135 million, with the Company committing to
	$15 million. In September 2000, Constellation Real
	Technologies made an investment of $25  million, of which
	the Companys contribution was $2.7 million, in
	FacilityPro.com, a business-to-business electronic marketplace
	for commercial facility and property management professionals
	and their suppliers in September 2000.
|   
|(d) |  | Square Feet (in millions) represents the portion of the
	Companys Office Properties that is anticipated to be wired
	by each company in accordance with their respective agreements.
	These square footage amounts are subject to change upon the
	signing of additional license agreements. As of
	September 30, 2000, 62% of the Companys Office
	Properties was wired and operational by at least one of the
	Companys strategic telecommunications providers. The
	majority of the Office Properties is currently scheduled to be
	wired and operational by early 2001.                                                                                                                                                                                                                                                                                                                                                   
|   
|(e) |  | Shares received and warrants received may include securities
	allocable to joint venture partners. The Company may earn
	additional common/ preferred shares or warrants based upon
	achieving certain thresholds in accordance with the respective
	investment agreements or upon the signing of additional license
	agreements for properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(f) |  | The Companys investments in publicly traded companies are
	adjusted to reflect their market values as of September 30,
	2000. The Companys investments in privately held entities
	were recorded at estimated fair value when the investment was
	made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Access Income

The Company generates revenue from various sources by providing
certain services to its tenants and from investing in companies
that also provide tenant services. Below is a table summarizing
this income:

|                                         |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 
|---------------------------------------- |  | -------------------- | ----- | ------------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ----- | 
|                                         |  |                      |       |                    
|                                         |  | For the three months |       | For the nine months
|                                         |  | ended                |       | ended              
|                                         |  | September 30,        |       | September 30,      
|                                         |  |                      |       |                    
|(Dollars in thousands)                   |  | 2000                 |       | 1999                |  | 2000 |       | 1999
|                                         |  |                      |       |                     |  |      |       |     
|Revenues:                                |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 
|                                        
|                                        
|                                        
|                                        
|Other Income                             |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 
|                                        
|                                        
|                                        
|                                        
|Access services(a)                       |  | $                    | 2,954 |                     |  | $    | 1,708 |      |  | $ | 7,540  |   |  | $ | 4,978 | 
|                                        
|                                        
|                                        
|                                        
|Amortization of deferred revenue(b)      |  |                      | 1,969 |                     |  |      |      |      |  |   | 4,134  |   |  |   |      | 
|                                        
|                                        
|                                        
|                                        
|Interest/ Dividend Income                |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 
|                                        
|                                        
|                                        
|                                        
|HQ Global Workplaces, Inc                |  |                      | 3,079 |                     |  |      |      |      |  |   | 3,951  |   |  |   |      | 
|                                        
|                                        
|                                        
|                                        
|Income from Unconsolidated Joint Venture |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 
|                                        
|                                        
|                                        
|                                        
|Regus Equity Business Centers(c)         |  |                      | (128  | )                   |  |      |      |      |  |   | (1,180 | ) |  |   |      | 
|                                         |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 
|Total Access Income                      |  | $                    | 7,874 |                     |  | $    | 1,708 |      |  | $ | 14,445 |   |  | $ | 4,978 | 
|                                         |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |       | 



---



|    |  |                                                                                                                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Amounts reflected for Access services include income from the
	following access services: Telecom, Adcom, ATMs, Book Fairs and
	Vending.

30



---





|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | The Company received common stock and/or warrants to purchase
	common stock for allowing companies that provide
	telecommunication services access to the Office Properties. The
	securities received from these companies were recorded as
	deferred revenue at fair value at the time such securities were
	earned and are included in other liabilities on the balance
	sheet. The deferred revenue will be amortized into other income
	over the terms of the respective license agreements.
|   
|(c) |  | The Company indirectly owns a 47.5% membership interest in this
	joint venture. The joint venture provides fully furnished
	offices with short-term, flexible rental agreements to
	prospective tenants seeking this type of office space.                                                                                                                                                                                                                                                      

Cornerstone Merger

On June 19, 2000, the Trust, the Company, Cornerstone and
Cornerstone Partnership consummated the merger of Cornerstone
with and into the Trust and the merger of Cornerstone
Partnership with and into the Company at a total cost of
approximately $4.5 billion. The purchase price consisted of:



| |       |                                                                                                                                                                                                                                                                                    
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the Trusts issuance of approximately 51.3 million
	Common Shares valued at $24.68 per share, and the issuance
	of share options for a total of approximately
	$1,271.3 million, of which the Company issued a
	corresponding number of Units to the Trust on a one-for-one
	basis;
|
| | (ii)  | the Companys issuance of approximately 12.4 million
	Units to third parties valued at $24.68 per Unit for a
	total of approximately $306.0 million;                                                                                                                               
|
| | (iii) | the cash redemption of approximately 58.6 million shares of
	Cornerstone common stock valued at $18.00 per share for a
	total of approximately $1,053.9 million;                                                                                                                   
|
| | (iv)  | the cash redemption of approximately 3.0 million shares of
	Cornerstone preferred stock valued at $18.00 per share,
	plus accrued but unpaid dividends, for a total of approximately
	$57.6  million;                                                                              
|
| | (v)   | the assumption of approximately $1,304.9 million of secured
	debt and $415.5  million of unsecured debt;                                                                                                                                                                           
|
| | (vi)  | the payment of merger costs of approximately
	$72.1 million; and                                                                                                                                                                                                                   
|
| | (vii) | the assumption of net liabilities of approximately
	$9.6 million.                                                                                                                                                                                                                  

The cash portion of the Cornerstone Merger of approximately
$1.2 billion was partially funded from the Term Loan and
the Line of Credit. See Credit Facilities above for
further disclosure.

Market Risk

Since December 31, 1999, there have been no material
changes in the information regarding market risk that was
provided in the Companys Form 10-K for the year ended
December 31, 1999.

Capital Improvements

When acquiring a property, the Company considers capital
improvements and revenue enhancing tenant improvements in
determining the amount of equity and debt financing required to
purchase the property and fund the improvements. Therefore,
capital improvements made in the year of acquisition and the
following two years, are treated separately from typical
recurring capital expenditures, non-revenue enhancing tenant
improvements and leasing commissions required once these
properties have reached stabilized occupancy, and deferred
maintenance and renovations planned at the time of acquisition
have been completed. Capital improvements (including tenant
improvements and leasing commissions for shell space) for the
nine months ended September 30, 2000 were approximately
$19.6 million or $0.23 per weighted-average square
foot. These amounts exclude capital and tenant improvements of
approximately $84.5 million for developments.

The Company considers capital expenditures to be recurring
expenditures relating to the ongoing maintenance of the Office
Properties. The table below summarizes capital expenditures for
the nine months

31



---





|                                                    |  |   |      | 
|--------------------------------------------------- |  | - | ---- | 
|                                                   
|                                                   
|                                                   
|                                                   
|Number of Office Properties                         |  |   | 380  | 
|                                                   
|                                                   
|                                                   
|                                                   
|Weighted-average rentable square feet (in millions) |  |   | 85.2 | 
|                                                   
|                                                   
|                                                   
|                                                   
|Capital expenditures per square foot                |  | $ | 0.16 | 

Tenant Improvements and Leasing Commission Costs

The Company distinguishes its tenant improvements and leasing
commissions between those that are revenue enhancing (i.e.,
required for space which is vacant at the time of acquisition or
that has been vacant for nine months or more) and non-revenue
enhancing (i.e., required to maintain the revenue being
generated from currently leased space). The table below
summarizes the revenue enhancing and non-revenue enhancing
tenant improvements and leasing commissions for the nine months
ended September 30, 2000. The tenant improvement and
leasing commission costs set forth below are presented on an
aggregate basis and do not reflect significant regional
variations and, in any event, are not necessarily indicative of
future tenant improvements and leasing commission costs:

|                                                                    |                                                     |                                                     |                                            |        |        |        | 
|------------------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------------------------------------------ | ------ | ------ | ------ | 
|                                                                    |                                                     | For the nine months                                
|                                                                    |                                                     | ended                                              
|                                                                    |                                                     | September 30,                                      
|(Dollars in thousands)                                              |                                                     | 2000(1)                                            
|                                                                    |                                                     |                                                    
|Number of Office Properties                                         |                                                     |                                                     | 380                                        |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Weighted-average rentable square feet (in millions)                 |                                                     |                                                     | 85.2                                       |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Revenue enhancing tenant improvements and leasing commissions:      |                                                     |                                                     |                                            |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Amounts (in thousands)                              |                                                     | $                                          | 39,071 |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Per square foot improved                            |                                                     | $                                          | 29.48  |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Per total weighted-average square foot (annualized) |                                                     | $                                          | 0.61   |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Non-revenue enhancing tenant improvements and leasing
	commissions: |                                                     |                                                     |                                            |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Renewal space:                                      |                                                     |                                            |        |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                     | Amounts (in thousands)                              |                                            | $      | 28,060 |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                     | Per square foot improved                            |                                            | $      | 6.62   |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                     | Per total weighted-average square foot (annualized) |                                            | $      | 0.44   |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Retenanted space:                                   |                                                     |                                            |        |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                     | Amounts (in thousands)                              |                                            | $      | 66,616 |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                     | Per square foot improved                            |                                            | $      | 13.43  |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                     | Per total weighted-average square foot (annualized) |                                            | $      | 1.04   |       
|                                                                    |                                                     |                                                     |                                            |       
|                                                                    |                                                     |                                                     | Total non-revenue enhancing (in thousands) |        | $      | 94,676 | 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Per square foot improved                                            |                                                     | $                                                   | 10.30                                      |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Per total weighted-average square foot (annualized)                 |                                                     | $                                                   | 1.48                                       |       



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The per square foot calculations as of September 30, 2000
	are calculated taking the total dollars anticipated to be
	incurred on tenant improvements for tenants taking occupancy
	during the nine months ended September 30, 2000, divided by
	the total square footage being improved or total weighted
	average building square footage. The actual amounts incurred as
	of September 30, 2000 for revenue enhancing, non-revenue
	enhancing renewal and retenanted space are summarized below:

|                                 |  |   |      | 
|-------------------------------- |  | - | ---- | 
|(Dollars in millions)            |  |  
|                                 |  |  
|Revenue enhancing                |  | $ | 23.7 | 
|                                
|                                
|                                
|                                
|Non-revenue enhancing renewal    |  | $ | 11.6 | 
|                                
|                                
|                                
|                                
|Non-revenue enhancing retenanted |  | $ | 65.0 | 

Developments

The Company currently owns several Properties in various stages
of development or pre-development. The Company funds these
developments with proceeds from working capital and its credit
facility. Specifically identifiable direct acquisition,
development and construction costs are capitalized including,
where applicable,

32



---





|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |        |  |  |         |         | 
|---------------------------- | --------------------------------------------- | -------- |  | ------------------- |  | ------- | -- | --------------- |  | ---------------------- | --------- | --------- | - | - | --------- | --------- |  | - | ------- | ------ |  |  | ------- | ------- | 
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           | Total    
|                             |                                               |          |  | Estimated Placed in |  | Percent |    | Square          |  | Costs                  |           | Estimated
|Property                     |                                               | Location |  | Service Date(a)     |  | Leased  |    | Feet            |  | Incurred               |           | Costs(a) 
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |          
|                             |                                               |          |  |                     |  |         |    |                 |  |                       
|                             |                                               |          |  |                     |  |         |    |                 |  | (Dollars in thousands)
|                            
|                            
|                            
|                            
|Wholly-Owned                 |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |        |  |  |         |        
|                            
|                            
|                            
|                            
|                             | Seaport Plaza                                 |          |  | Redwood City, CA    |  |         |    | 4Q/2000         |  |                        |           | 100       | % |   |           | 160,000   |  |   | $       | 35,302 |  |  | $       | 41,300  | 
|                            
|                            
|                            
|                            
|                             | Parkside Towers                               |          |  | Foster City, CA     |  |         |    | 4Q/2001         |  |                        |           | 96        | % |   |           | 398,000   |  |   |         | 53,739 |  |  |         | 131,400 | 
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |        |  |  |         |        
|                             |                                               |          |  |                     |  |         |    |                 |  |                        | 97        | %         |   |   | 558,000   |           |  |   | 89,041  |        |  |  | 172,700 |        
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |        |  |  |         |        
|                            
|                            
|                            
|                            
|Other Developments           |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |       
|                            
|                            
|                            
|                            
|                             | San Rafael Corporate Center(b)(c)             |          |  | San Rafael, CA      |  |         |    | 3Q/01 and 3Q/03 |  |                        |           | 0         | % |   |           | 380,000   |  |   |         | 28,337 |  |  |         | 141,500 | 
|                            
|                            
|                            
|                            
|                             | Foundry Square (f/k/a First and Howard)(b)(d) |          |  | San Francisco, CA   |  |         |    | 1Q/02  1Q/03   |  |                        |           | 0         | % |   |           | 1,260,000 |  |   |         | 12,562 |  |  |         | 439,500 | 
|                            
|                            
|                            
|                            
|                             | Concar(b)(e)                                  |          |  | San Mateo, CA       |  |         |    | 2Q/2002         |  |                        |           | 100       | % |   |           | 203,000   |  |   |         | 4,859  |  |  |         | 66,300  | 
|                            
|                            
|                            
|                            
|                             | Ferry Building(b)(f)                          |          |  | San Francisco, CA   |  |         |    | 3Q/2002         |  |                        |           | 0         | % |   |           | 250,000   |  |   |         | 6,020  |  |  |         | 81,200  | 
|                            
|                            
|                            
|                            
|                             | Larkspur Landing                              |          |  | Larkspur, CA        |  |         |    | 3Q/2003         |  |                        |           | 0         | % |   |           | 168,000   |  |   |         | 759    |  |  |         | 45,000  | 
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |        |  |  |         |        
|                             |                                               |          |  |                     |  |         |    |                 |  |                        | 9         | %         |   |   | 2,261,000 |           |  |   | 52,537  |        |  |  | 773,500 |        
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |        |  |  |         |        
|Grand Total/Weighted Average |                                               |          |  |                     |  |         | 26 | %               |  |                        | 2,819,000 |           |   | $ | 141,578   |           |  | $ | 946,200 |       
|                             |                                               |          |  |                     |  |         |    |                 |  |                        |           |           |   |   |           |           |  |   |         |       



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The Estimated Placed in Service Date represents the date the
        certificate of occupancy has been or is currently anticipated to
        be obtained. Subsequent to obtaining the certificate of
        occupancy, the Property is expected to undergo a lease-up
        period. The Total Estimated Costs represent current estimates of
        total development costs, including amounts required to tenant
        the Property. These costs are estimates and are subject to
        change upon or prior to completion of the development. There is
        currently substantial demand for construction services in the
        San Francisco Bay area, and binding contracts are not yet in
        place for a material portion of the anticipated construction.
        Accordingly, there is the possibility of unanticipated increases
        in costs or a delay in completion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(b) |  | Each of these developments is being undertaken in conjunction
        with Wilson/ Equity Office, L.L.C., a Delaware limited liability
        company (Wilson/ Equity Office) in which a
        non-controlled subsidiary of the Company (the EOP
        Investor) owns approximately a 49.9% interest. (The
        Company owns a 95% economic interest in the EOP Investor).
        Mr. William Wilson III, a trustee of the Company,
        indirectly owns, together with members of his immediate family,
        approximately a 22% interest (and approximately a 30% interest
        in the promotional interest as described below) in Wilson/
        Equity Office through his approximately 44% interest in its
        managing member, the owner of the remaining 50.1% interest in
        Wilson/ Equity Office (the Wilson Investor). Wilson/
        Equity Office owns 40% of the aggregate equity interest owned by
        it and the EOP Investor in each of these developments. The
        Wilson Investor is entitled to certain promotional returns after
        the Company and Wilson/ Equity Office have received 20%
        cumulative internal rates of return on their investment. The EOP
        Investor is entitled to purchase the interest of the Wilson
        Investor subsequent to project stabilization pursuant to a right
        of first offer mechanism.

The EOP Investor and the Wilson Investor have committed to
contribute $11.2 and $8.8 million respectively in capital
to Wilson/ Equity Office, and the EOP Investor has advanced the
proceeds of a $1.0 million working capital line to Wilson/
Equity Office. The Board of Trustees of the Trust has also
authorized the Company to negotiate and enter into an agreement
with Wilson/ Equity Office providing for:



| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in the EOP Investors committed capital level
        to Wilson/ Equity Office from approximately $11.2 million
        to approximately $38.2  million;
|
| |  | an increase in the Wilson Investors committed capital
        level to Wilson/Equity Office from $8.8 million to
        $35.8 million;                            

33



---





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the extension of a loan to the Wilson Investor of up to
	$25.0 million as required to make further capital
	contributions to Wilson/ Equity Office, secured by substantially
	all of the interest of the Wilson Investor in Wilson/ Equity
	Office, and accruing interest at 15% per annum;                                                                                                                                                                                                   
|
| |  | the extension of first mortgage financing to the ownership
	entities of each of these developments at LIBOR plus 2.4642%,
	generally maturing thirty-six months after initial funding (or
	earlier at the option of the Company in the event alternative
	financing sources are available on terms reasonably acceptable
	to the Wilson Investor and any unrelated third-party investors).
	The aggregate amount of any such financing would be capped at
	70% of budgeted construction costs.



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) |  | Wilson/ Equity Office and the Company have currently agreed to
	proceed with the initial phase only, consisting of approximately
	148,600 square feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(d) |  | Wilson/ Equity Office and the Company have commenced
	construction on only the first of the four contemplated
	buildings, consisting of approximately 502,200 rentable square
	feet (482,900 rentable square feet of office and 19,300 rentable
	square feet of retail). Unrelated third parties are entitled to
	an approximately 14.0% ownership interest in this building.
	Unrelated third parties are also entitled to up to a 50%
	ownership interest in the second and third of the contemplated
	four buildings and a 20% interest in the fourth of the
	contemplated four buildings. Upon exercise of the option to
	acquire the land included in this development, affiliates of the
	Wilson Investor will be entitled to receive 41,959 Class A
	Operating Units in the Company and a capital account credit in
	the aggregate amount of approximately $8.9 million in
	Wilson/Equity Office. The fourth of the contemplated four
	buildings is not yet fully entitled. The square footage number
	shown includes 51,200 square feet of retail space.
|   
|(e) |  | Under the terms of the ground lease, the ground lessor is
	entitled to share, in addition to base rent, in proceeds from
	the operation and ownership of this development after a ten
	percent return to lessee, calculated at 40% of proceeds prior to
	a 14% cumulative return (18% after 2018) and 35% thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(f) |  | Under the terms of the ground lease, the ground lessor is
	entitled to share, in addition to base rent, in 50% of proceeds
	from the operation and ownership of this development after a
	preferred 11% cumulative return to the ground lessee (8% prior
	to project stabilization).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

In addition to the Properties described above, the Company owns
various land parcels available for development. However, no
significant development activity is taking place on these sites
at this time.

Inflation

Substantially all of the 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 the office leases
provide for fixed increases in base rent or indexed escalations
(based on the Consumer Price Index or other measures). The
Company believes that inflationary increases in expenses will be
offset, in part, by the expense reimbursements and contractual
rent increases described above.

Funds From Operations

Management of the Company believes Funds from Operations, as
defined by the National Association of Real Estate Investment
Trusts, Inc. (NAREIT), to be an appropriate
measure of performance for an equity REIT. While Funds from
Operations is a relevant and widely used measure of operating
performance of equity REITs, it does not represent cash flow
from operations or net income as defined by generally accepted
accounting principles (GAAP), and it should not be
considered as an alternative to these indicators in evaluating
liquidity or operating performance of the Company.

34



---



The following table reflects the calculation of the
Companys Funds from Operations for the three and nine
months ended September 30, 2000 and 1999 on an historical
basis:

|                                                                                                                                                                      |                                                                                                                       |                    |         |          |   |   |         |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------ | ------- | -------- | - | - | ------- | -------- | -
|                                                                                                                                                                      |                                                                                                                       |                   
|                                                                                                                                                                      |                                                                                                                       | Three Months Ended
|                                                                                                                                                                      |                                                                                                                       | September 30,     
|                                                                                                                                                                      |                                                                                                                       |                   
|(Dollars in thousands)                                                                                                                                                |                                                                                                                       | 2000               |         | 1999    
|                                                                                                                                                                      |                                                                                                                       |                    |         |         
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net (loss) on sales
	of real estate and extraordinary items |                                                                                                                       | $                  | 119,451 |          |   | $ | 106,153 |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Add back (deduct):                                                                                                                                                    |                                                                                                                       |                    |         |          |   |   |         |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | (Income) allocated to minority interests for partially owned
	properties                                              |                    |         | (1,658   | ) |   |         | (500     | )
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Income from investments in unconsolidated joint ventures                                                              |                    |         | 16,862   |   |   |         | 3,031    |  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Depreciation and amortization (real estate related) (including
	the companys share of unconsolidated joint ventures) |                    |         | 126,968  |   |   |         | 91,171   |  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Put option settlement                                                                                                 |                    |         | (515     | ) |   |         | (4,627   | )
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Preferred distributions                                                                                               |                    |         | (10,884  | ) |   |         | (10,907  | )
|                                                                                                                                                                      |                                                                                                                       |                    |         |          |   |   |         |         
|Funds from Operations(1)                                                                                                                                              |                                                                                                                       |                    | 250,224 |          |   |   | 184,321 |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Less deferred rental revenue                                                                                          |                    |         | (22,187  | ) |   |         | (17,122  | )
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Plus deferred rental expense                                                                                          |                    |         | 671      |   |   |         | 466      |  
|                                                                                                                                                                      |                                                                                                                       |                    |         |          |   |   |         |         
|Adjusted Funds from Operations                                                                                                                                        |                                                                                                                       | $                  | 228,708 |          |   | $ | 167,665 |         
|                                                                                                                                                                      |                                                                                                                       |                    |         |          |   |   |         |         
|Cash Flow Provided By (Used For):                                                                                                                                     |                                                                                                                       |                    |         |          |   |   |         |         
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Operating Activities                                                                                                  |                    | $       | 205,445  |   |   | $       | 177,750  |  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Investing Activities                                                                                                  |                    | $       | (196,463 | ) |   | $       | (126,977 | )
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Financing Activities                                                                                                  |                    | $       | (32,256  | ) |   | $       | (66,941  | )

|                                                                                                                                                                    |                                                                                                                                |                   |         |            |   |   |         |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ----------------- | ------- | ---------- | - | - | ------- | -------- | -
|                                                                                                                                                                    |                                                                                                                                |                  
|                                                                                                                                                                    |                                                                                                                                | Nine Months Ended
|                                                                                                                                                                    |                                                                                                                                | September 30,    
|                                                                                                                                                                    |                                                                                                                                |                  
|(Dollars in thousands)                                                                                                                                              |                                                                                                                                | 2000              |         | 1999      
|                                                                                                                                                                    |                                                                                                                                |                   |         |           
|Income before allocation to minority interests, income from
	investment in unconsolidated joint ventures, net gain on sales
	of real estate and extraordinary items |                                                                                                                                | $                 | 326,040 |            |   | $ | 310,973 |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Add back (deduct):                                                                                                                                                  |                                                                                                                                |                   |         |            |   |   |         |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | (Income) allocated to minority interests for partially owned
	properties (excluding allocation of gain on sale of real estate) |                   |         | (2,669     | ) |   |         | (1,398   | )
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Income from investments in unconsolidated joint ventures                                                                       |                   |         | 41,625     |   |   |         | 8,081    |  
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Depreciation and amortization (real estate related) (including
	the companys share of unconsolidated joint ventures)          |                   |         | 319,052    |   |   |         | 270,402  |  
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Put option settlement                                                                                                          |                   |         | (2,576     | ) |   |         | (4,627   | )
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Preferred distributions                                                                                                        |                   |         | (32,464    | ) |   |         | (32,695  | )
|                                                                                                                                                                    |                                                                                                                                |                   |         |            |   |   |         |         
|Funds from Operations(1)                                                                                                                                            |                                                                                                                                |                   | 649,008 |            |   |   | 550,736 |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Less deferred rental revenue                                                                                                   |                   |         | (50,419    | ) |   |         | (48,895  | )
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Plus deferred rental expense                                                                                                   |                   |         | 1,787      |   |   |         | 1,582    |  
|                                                                                                                                                                    |                                                                                                                                |                   |         |            |   |   |         |         
|Adjusted Funds from Operations                                                                                                                                      |                                                                                                                                | $                 | 600,376 |            |   | $ | 503,423 |         
|                                                                                                                                                                    |                                                                                                                                |                   |         |            |   |   |         |         
|Cash Flow Provided By (Used For):                                                                                                                                   |                                                                                                                                |                   |         |            |   |   |         |         
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Operating Activities                                                                                                           |                   | $       | 583,903    |   |   | $       | 518,473  |  
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Investing Activities                                                                                                           |                   | $       | (1,189,553 | ) |   | $       | (367,755 | )
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                    | Financing Activities                                                                                                           |                   | $       | 662,392    |   |   | $       | (198,049 | )



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The White Paper on Funds from Operations approved by the Board
	of Governors of NAREIT in March 1995 defines Funds from
	Operations as net income (loss) (computed in accordance with
	GAAP), excluding gains (or losses) from debt restructuring and
	sales of properties, plus real estate related depreciation and
	amortization and after adjustments for unconsolidated
	partnerships and joint ventures.

35



---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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. In accordance with this NAREIT Bulletin, the
	Company will no longer adjust for the amortization of discounts
	and premiums on mortgages when calculating FFO. Accordingly, the
	Company restated the prior period data for comparative purposes.
	The Company believes that Funds from Operations is helpful to
	investors as a measure of the performance of an equity REIT
	because, along with cash flow from operating activities,
	financing activities and investing activities, it provides
	investors with an indication of the ability of the Company to
	incur and service debt, to make capital expenditures and to fund
	other cash needs. The Company computes Funds from Operations in
	accordance with standards established by NAREIT which may not be
	comparable to Funds from Operations reported by other REITs that
	do not define the term in accordance with the current NAREIT
	definition or that interpret the current NAREIT definition
	differently than the Company. Funds from Operations 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 the Companys financial performance or to cash flow from
	operating activities (determined in accordance with GAAP) as a
	measure of the Companys liquidity, nor is it indicative of
	funds available to fund the Companys cash needs, including
	its ability to make cash distributions.



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

Information about quantitative and qualitative disclosures about
market risk is incorporated herein by reference from the
Market Risk discussion under Item 2.
Managements Discussion and Analysis of Financial Condition
and Results of Operations.

PART II. OTHER INFORMATION

ITEM 2.  Changes in Securities and Use of
Proceeds.

(a)  Not applicable.

(b)  Not applicable.



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) | On August 21, 2000, the Company acquired the remaining
	interest in the North Loop Transportation Center and the Theater
	District Garage, two parking facilities located in Chicago,
	Illinois, from an unaffiliated party for approximately $15.1
	million. The purchase price consisted of $12.5 million in cash
	and 91,406 Units valued at $30.6324 per Unit. The Units were
	issued in a private placement in reliance on an exemption from
	registration under the Securities Act of 1933, as amended,
	provided under Section 4(2) and Rule 506 of
	Regulation D.

On September 8, 2000, the
Company purchased the World Trade Center project in Seattle,
Washington for approximately $38.6 million. Upon
acquisition of the property, the Company repaid a $31.3 million
mortgage secured by the property. The remaining acquisition cost
was funded through the issuance in a private placement of
227,011 Units valued at $27.89 per Unit for a total of
approximately $6.3 million and cash. The Units were issued
in reliance upon an exemption from registration under the
Securities Act of 1933, as amended, provided under
Section 4(2) and Rule  506 of Regulation D.

On August 23, 2000 and September 15, 2000, the Company
issued and sold a total of $325,000,000 aggregate principal
amount of Senior Exchangeable Notes due November 15, 2008
(the Notes), guaranteed as to the payment of
principal and interest by the Trust (the Guarantees
and, together with the Notes, the Securities), under
an Indenture, dated as of August 23, 2000, among the
Company, the Trust and State Street Bank and Trust Company, as
trustee, to Salomon Smith Barney Inc. (the Initial
Purchaser), in a private placement. The Securities were
sold to the Initial Purchaser at a price equal to 97% of the
principal amount of the Notes. The net proceeds from the sale of
the Securities were used to repay a portion of the outstanding
balance under the Term Loan. In connection with the issuance and
sale of the

36



---





On or after November 22, 2000, unless earlier redeemed or
repurchased, the Securities are exchangeable into common shares
of beneficial interest, $.01 par value per share of the
Trust (the Common Shares), at an initial exchange
price of $34.00 per Common Share, which may be adjusted in
specified events. However, if the closing price per Common Share
on the New York Stock Exchange at the time a holder
exercises its exchange right is less than the exchange price, an
exercising holder will receive, instead of Common Shares, cash
in an amount equal to 97% of the product of: (a) the number
of Common Shares into which the principal amount of the
exercised Notes would otherwise be exchangeable; and
(b) the closing price per Common Share.

(d)  Not applicable.



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

(a)  Exhibits.

|        |      |              |  |                                                                                                                                                                                                                                                                                                         
|------- | ---- | ------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |             
|No.     |      | Exhibit Name
|        |      |             
|        | 3.1  |              |  | First Amendment to Second Amended and Restated Agreement of
	Limited Partnership of the Company                                                                                                                                                                                                         
|        | 3.2  |              |  | Second Amendment to Second Amended and Restated Agreement of
	Limited Partnership of the Company                                                                                                                                                                                                        
|        | 4.1  |              |  | Form of $360,000,000 8.10% Note due August 1, 2010 of
	the Company (incorporated herein by reference to
	Exhibit 4.1 of the Companys Current Report on
	Form 8-K, filed with the SEC on August 8, 2000)                                                                                                
|        | 4.2  |              |  | Indenture, dated August 23, 2000, by and among the Company,
	the Trust and State Street Bank and Trust Company, as Trustee
	(incorporated herein by reference to Exhibit 4.1 of the
	Companys Registration Statement on Form S-3 (SEC File
	No. 333-47754), filed with the SEC on October 11, 2000)    
|        | 4.3  |              |  | Registration Rights Agreement, dated as of August 23, 2000,
	among the Trust, the Company and Salomon Smith Barney Inc.
	(incorporated herein by reference to Exhibit 4.2 of the
	Companys Registration Statement on Form S-3 (SEC File
	No.  333-47754), filed with the SEC on October 11,
	2000)     
|        | 4.4  |              |  | Form of Senior Exchangeable Note due November 15, 2008
	(incorporated herein by reference to Exhibit 4.3 of the
	Companys Registration Statement on Form S-3 (SEC File
	No.  333-47754), filed with the SEC on October 11,
	2000)                                                                      
|        | 4.5  |              |  | Indenture, dated August 29, 2000, by and between the
	Company and U.S. Bank Trust National Association, as
	Trustee (incorporated herein by reference to Exhibit 4.1 of
	the Companys Registration Statement on Form S-3, as
	amended (SEC File No. 333-43530), filed with the SEC on
	August 30, 2000)
|        | 27.1 |              |  | Financial Data Schedule                                                                                                                                                                                                                                                                                 

(b)  Reports on Form 8-K.

On August 8, 2000, the Company filed a Current Report on
Form 8-K, dated August 2, 2000, in connection with its
registration statements on Form S-3 (SEC File Nos.
333-58689 and 333-42928), which included certain exhibits
related to the completion of a public offering of
$360 million aggregate principal amount of 8.10% Notes
due August 1, 2010.

On August 30, 2000, the Company filed a Current Report on
Form 8-K, dated August 23, 2000, in connection with
the completion on August 23, 2000 of the private placement
of $300 million aggregate principal amount of Securities.

37



---



On September 19, 2000, the Company filed a Current Report
on Form 8-K, dated September 15, 2000, in connection
with the completion on September 15, 2000 of the private
placement of an additional $25 million aggregate principal
amount of Securities, which were issued pursuant to the partial
exercise by the Initial Purchaser of the over-allotment option
granted to it on August 23, 2000.

38



---



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



| |                                   
| | ----------------------------------
| | EOP OPERATING LIMITED PARTNERSHIP 
|
| | By: EQUITY OFFICE PROPERTIES TRUST
| | its general partner               

Date: November 9, 2000

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

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

Date: November 9, 2000

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

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

39



---



INDEX TO EXHIBITS

|        |      |              |  |                                                                                                                                                                                                                                                                                                          |  |  |  | 
|------- | ---- | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |      |              |  | Page                                                                                                                                                                                                                                                                                                    
|No.     |      | Exhibit Name |  | Number                                                                                                                                                                                                                                                                                                  
|        |      |              |  |                                                                                                                                                                                                                                                                                                         
|        | 3.1  |              |  | First Amendment to Second Amended and Restated Agreement of
	Limited Partnership of the Company                                                                                                                                                                                                          |  |  |  | 
|        | 3.2  |              |  | Second Amendment to Second Amended and Restated Agreement of
	Limited Partnership of the Company                                                                                                                                                                                                         |  |  |  | 
|        | 4.1  |              |  | Form of $360,000,000 8.10% Note due August 1, 2010 of
	the Company (incorporated herein by reference to
	Exhibit 4.1 of the Companys Current Report on
	Form 8-K, filed with the SEC on August 8, 2000)                                                                                                 |  |  |  | 
|        | 4.2  |              |  | Indenture, dated August 23, 2000, by and among the Company,
	the Trust and State Street Bank and Trust Company, as Trustee
	(incorporated herein by reference to Exhibit 4.1 of the
	Companys Registration Statement on Form S-3 (SEC File
	No. 333-47754), filed with the SEC on October 11, 2000)     |  |  |  | 
|        | 4.3  |              |  | Registration Rights Agreement, dated as of August 23, 2000,
	among the Trust, the Company and Salomon Smith Barney Inc.
	(incorporated herein by reference to Exhibit 4.2 of the
	Companys Registration Statement on Form S-3 (SEC File
	No.  333-47754), filed with the SEC on October 11,
	2000)      |  |  |  | 
|        | 4.4  |              |  | Form of Senior Exchangeable Note due November 15, 2008
	(incorporated herein by reference to Exhibit 4.3 of the
	Companys Registration Statement on Form S-3 (SEC File
	No.  333-47754), filed with the SEC on October 11,
	2000)                                                                       |  |  |  | 
|        | 4.5  |              |  | Indenture, dated August 29, 2000, by and between the
	Company and U.S. Bank Trust National Association, as
	Trustee (incorporated herein by reference to Exhibit 4.1 of
	the Companys Registration Statement on Form S-3, as
	amended (SEC File No. 333-43530), filed with the SEC on
	August 30, 2000) |  |  |  | 
|        | 27.1 |              |  | Financial Data Schedule                                                                                                                                                                                                                                                                                  |  |  |  |