##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q

|           |  |                                                                                                                                                           |  | 
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|(Mark One) |  |                                                                                                                                                           |  | 
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended March 31, 2002 or      |  | 
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period
    from                to |  | 

COMMISSION FILE NUMBER: 1-13625



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EOP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its
charter)


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

(312) 466-3300

(Registrants telephone number, including
area code)




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

APPLICABLE ONLY TO CORPORATE
ISSUERS:

On April 30, 2002, 472,768,222 Units were
outstanding.



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##### 





PART I.


FINANCIAL INFORMATION



ITEM 1. Financial
Statements.


EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |            |            |            | 
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------------ | ---------- | ---------- | --------- | ---------- | ---------- | ---------- | 
|                                                                                      |                                                                                                              | March 31,                                                                                                                                           |                                                                 | December 31,
|(Dollars in thousands, except per unit amounts)                                       |                                                                                                              | 2002                                                                                                                                                |                                                                 | 2001        
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |             
|                                                                                      |                                                                                                              | (Unaudited)                                                                                                                                         |                                                                 |             
|Assets:                                                                               |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      | Investment in real estate                                                                                    |                                                                                                                                                     | $                                                               | 24,424,402   |            |            | $         | 24,399,658 |           
|                                                                                      | Developments in process                                                                                      |                                                                                                                                                     |                                                                 | 173,452      |            |            |           | 164,997    |           
|                                                                                      | Land available for development                                                                               |                                                                                                                                                     |                                                                 | 261,618      |            |            |           | 251,696    |           
|                                                                                      | Accumulated depreciation                                                                                     |                                                                                                                                                     |                                                                 | (1,639,679   | )          |            |           | (1,494,301 | )         
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      |                                                                                                              | Investment in real estate, net of accumulated
    depreciation                                                                                      |                                                                 |              | 23,219,793 |            |           |            | 23,322,050 |           
|                                                                                      | Cash and cash equivalents                                                                                    |                                                                                                                                                     |                                                                 | 303,838      |            |            |           | 61,121     |           
|                                                                                      | Tenant and other receivables (net of allowance
    for doubtful accounts of $9,863 and $7,794, respectively) |                                                                                                                                                     |                                                                 | 204,148      |            |            |           | 120,425    |           
|                                                                                      | Deferred rent receivable                                                                                     |                                                                                                                                                     |                                                                 | 287,799      |            |            |           | 269,796    |           
|                                                                                      | Escrow deposits and restricted cash                                                                          |                                                                                                                                                     |                                                                 | 47,247       |            |            |           | 196,289    |           
|                                                                                      | Investment in unconsolidated joint ventures                                                                  |                                                                                                                                                     |                                                                 | 1,220,855    |            |            |           | 1,321,127  |           
|                                                                                      | Deferred financing costs (net of accumulated
    amortization of $37,584 and $36,198, respectively)          |                                                                                                                                                     |                                                                 | 78,175       |            |            |           | 77,880     |           
|                                                                                      | Deferred leasing costs (net of accumulated
    amortization of $89,223 and $78,600, respectively)            |                                                                                                                                                     |                                                                 | 188,502      |            |            |           | 187,336    |           
|                                                                                      | Prepaid expenses and other assets (net of
    discounts of $67,316 and $67,413, respectively)                |                                                                                                                                                     |                                                                 | 266,294      |            |            |           | 252,398    |           
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      |                                                                                                              |                                                                                                                                                     | Total Assets                                                    |              | $          | 25,816,651 |           |            | $          | 25,808,422 | 
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|Liabilities, Minority Interests and
    Partners Capital:                            |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|Mortgage debt (including a net discount of
    $(11,997) and $(11,761), respectively) |                                                                                                              | $                                                                                                                                                   | 2,634,953                                                       |              |            | $          | 2,650,338 |           
|                                                                                      | Unsecured notes (including a net premium of
    $1,922 and $17,487, respectively)                            |                                                                                                                                                     |                                                                 | 9,128,422    |            |            |           | 9,093,987  |           
|                                                                                      | Line of credit                                                                                               |                                                                                                                                                     |                                                                 |             |            |            |           | 244,300    |           
|                                                                                      | Accounts payable and accrued expenses                                                                        |                                                                                                                                                     |                                                                 | 511,116      |            |            |           | 570,744    |           
|                                                                                      | Distribution payable                                                                                         |                                                                                                                                                     |                                                                 | 243,570      |            |            |           | 6,060      |           
|                                                                                      | Other liabilities                                                                                            |                                                                                                                                                     |                                                                 | 366,728      |            |            |           | 330,277    |           
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      |                                                                                                              |                                                                                                                                                     | Total Liabilities.                                              |              |            | 12,884,789 |           |            |            | 12,895,706 | 
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      | Commitments and contingencies                                                                                |                                                                                                                                                     |                                                                 |             |            |            |           |           |           
|                                                                                      | Minority interest  partially owned
    properties                                                           |                                                                                                                                                     |                                                                 | 180,364      |            |            |           | 181,017    |           
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      | Preferred Units, 100,000,000 authorized:                                                                     |                                                                                                                                                     |                                                                 |              |            |            |           |            |           
|                                                                                      |                                                                                                              | 8.98% Series A Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    7,994,000 issued and outstanding              |                                                                 |              | 199,850    |            |           |            | 199,850    |           
|                                                                                      |                                                                                                              | 5.25% Series B Convertible, Cumulative
    Redeemable Preferred Units, liquidation preference $50.00 per
    unit, 5,990,000 issued and outstanding |                                                                 |              | 299,500    |            |           |            | 299,500    |           
|                                                                                      |                                                                                                              | 8.625% Series C Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    4,562,900 issued and outstanding             |                                                                 |              | 114,073    |            |           |            | 114,073    |           
|                                                                                      |                                                                                                              | 7.875% Series E Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    6,000,000 issued and outstanding             |                                                                 |              | 150,000    |            |           |            | 150,000    |           
|                                                                                      |                                                                                                              | 8.0% Series F Cumulative Redeemable
    Preferred Units, liquidation preference $25.00 per unit,
    4,000,000 issued and outstanding..             |                                                                 |              | 100,000    |            |           |            | 100,000    |           
|                                                                                      | General Partners Capital                                                                                     |                                                                                                                                                     |                                                                 | 93,237       |            |            |           | 93,010     |           
|                                                                                      | Limited Partners Capital                                                                                     |                                                                                                                                                     |                                                                 | 11,828,121   |            |            |           | 11,795,204 |           
|                                                                                      | Deferred compensation                                                                                        |                                                                                                                                                     |                                                                 | (33,544      | )          |            |           | (19,822    | )         
|                                                                                      | Accumulated other comprehensive income (loss)                                                                |                                                                                                                                                     |                                                                 | 261          |            |            |           | (116       | )         
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      |                                                                                                              |                                                                                                                                                     | Total Partners Capital.                                        |              |            | 12,751,498 |           |            |            | 12,731,699 | 
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           
|                                                                                      |                                                                                                              |                                                                                                                                                     | Total Liabilities, Minority Interests and
    Partners Capital |              | $          | 25,816,651 |           |            | $          | 25,808,422 | 
|                                                                                      |                                                                                                              |                                                                                                                                                     |                                                                 |              |            |            |           |           

See accompanying notes.

2



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##### 





EOP OPERATING LIMITED PARTNERSHIP


CONSOLIDATED STATEMENTS OF
OPERATIONS

(Unaudited)


|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |         |         |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ---------------------------------------- | -------------- | ------- | ------- | ------- | ----------- | ------- | ------- | ------- | 
|                                                                                                                                                                                                                     |                                                |                                         
|                                                                                                                                                                                                                     |                                                | For the three months ended              
|                                                                                                                                                                                                                     |                                                | March 31,                               
|                                                                                                                                                                                                                     |                                                |                                         
|(Dollars in thousands, except per unit amounts)                                                                                                                                                                      |                                                | 2002                                     |                | 2001   
|                                                                                                                                                                                                                     |                                                |                                          |                |        
|Revenues:                                                                                                                                                                                                            |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                                                                                     | Rental                                         |                                          | $              | 696,765 |         |         | $           | 506,427 |        
|                                                                                                                                                                                                                     | Tenant reimbursements                          |                                          |                | 123,826 |         |         |             | 97,089  |        
|                                                                                                                                                                                                                     | Parking                                        |                                          |                | 29,323  |         |         |             | 30,226  |        
|                                                                                                                                                                                                                     | Other                                          |                                          |                | 24,924  |         |         |             | 16,123  |        
|                                                                                                                                                                                                                     | Fee income                                     |                                          |                | 4,078   |         |         |             | 2,172   |        
|                                                                                                                                                                                                                     | Interest/dividends                             |                                          |                | 6,843   |         |         |             | 10,833  |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                                                                                     |                                                |                                          | Total revenues |         |         | 885,759 |             |         |         | 662,870 | 
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Expenses:                                                                                                                                                                                                            |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                                                                                     | Interest:                                      |                                          |                |         |         |         |             |         |        
|                                                                                                                                                                                                                     |                                                | Expense incurred                         |                |         | 204,846 |         |             |         | 157,867 |        
|                                                                                                                                                                                                                     |                                                | Amortization of deferred financing costs |                |         | 1,282   |         |             |         | 1,326   |        
|                                                                                                                                                                                                                     | Depreciation                                   |                                          |                | 158,106 |         |         |             | 113,980 |        
|                                                                                                                                                                                                                     | Amortization                                   |                                          |                | 12,018  |         |         |             | 9,030   |        
|                                                                                                                                                                                                                     | Real estate taxes                              |                                          |                | 98,068  |         |         |             | 76,359  |        
|                                                                                                                                                                                                                     | Insurance                                      |                                          |                | 8,543   |         |         |             | 3,277   |        
|                                                                                                                                                                                                                     | Repairs and maintenance                        |                                          |                | 82,969  |         |         |             | 65,145  |        
|                                                                                                                                                                                                                     | Property operating                             |                                          |                | 83,591  |         |         |             | 68,453  |        
|                                                                                                                                                                                                                     | Ground rent                                    |                                          |                | 5,570   |         |         |             | 3,081   |        
|                                                                                                                                                                                                                     | General and administrative                     |                                          |                | 32,954  |         |         |             | 24,122  |        
|                                                                                                                                                                                                                     | Impairment on securities and other investments |                                          |                |        |         |         |             | 3,000   |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|                                                                                                                                                                                                                     |                                                |                                          | Total expenses |         |         | 687,947 |             |         |         | 525,640 | 
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                |                                          | 197,812        |         |         |         | 137,230     |        
|Income taxes                                                                                                                                                                                                         |                                                |                                          | (7,006         | )       |         |         | (1,517      | )      
|Minority interests  partially owned
    properties                                                                                                                                                                  |                                                |                                          | (1,406         | )       |         |         | (3,253      | )      
|Income from investment in unconsolidated joint
    ventures                                                                                                                                                          |                                                |                                          | 57,628         |         |         |         | 15,426      |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Income from continuing operations                                                                                                                                                                                    |                                                |                                          | 247,028        |         |         |         | 147,886     |        
|Discontinued operations (including net loss on
    disposal of $(3,009) and $0, respectively)                                                                                                                        |                                                |                                          | (2,564         | )       |         |         | 1,278       |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Income before cumulative effect of a change in
    accounting principle                                                                                                                                              |                                                |                                          | 244,464        |         |         |         | 149,164     |        
|Cumulative effect of change in accounting
    principle                                                                                                                                                              |                                                |                                          |               |         |         |         | (1,142      | )      
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Net income                                                                                                                                                                                                           |                                                |                                          | 244,464        |         |         |         | 148,022     |        
|Preferred distributions                                                                                                                                                                                              |                                                |                                          | (15,830        | )       |         |         | (10,884     | )      
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Net income available for Units                                                                                                                                                                                       |                                                | $                                        | 228,634        |         |         | $       | 137,138     |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Net income available per weighted average Unit
    outstanding  basic                                                                                                                                               |                                                | $                                        | 0.48           |         |         | $       | 0.39        |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Weighted average Units outstanding 
    basic                                                                                                                                                                       |                                                |                                          | 470,206,844    |         |         |         | 348,476,502 |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Net income available per weighted average Unit
    and unit equivalent outstanding  diluted                                                                                                                         |                                                | $                                        | 0.48           |         |         | $       | 0.39        |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Weighted average Units and unit equivalents
    outstanding  diluted                                                                                                                                                |                                                |                                          | 472,713,024    |         |         |         | 351,400,853 |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        
|Distributions declared per Unit outstanding                                                                                                                                                                          |                                                | $                                        | 0.50           |         |         | $       | 0.45        |        
|                                                                                                                                                                                                                     |                                                |                                          |                |         |         |         |             |        

See accompanying notes.

3



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##### 





EOP OPERATING LIMITED PARTNERSHIP


CONSOLIDATED STATEMENTS OF NET COMPREHENSIVE
INCOME

(Unaudited)


|                            |                                                                                   |                      |         |      |  |   |         |        |  
|--------------------------- | --------------------------------------------------------------------------------- | -------------------- | ------- | ---- |  | - | ------- | ------ | -
|                            |                                                                                   |                     
|                            |                                                                                   | For the three months
|                            |                                                                                   | ended March 31,     
|                            |                                                                                   |                     
|(Dollars in thousands)      |                                                                                   | 2002                 |         | 2001
|                            |                                                                                   |                      |         |     
|Net income                  |                                                                                   | $                    | 244,464 |      |  | $ | 148,022 |       
|Other comprehensive income: |                                                                                   |                      |         |      |  |   |         |       
|                            | Unrealized holding gains/(losses) from
    investments arising during the period  |                      |         | 261  |  |   |         | (1,416 | )
|                            | Reclassification adjustment for realized gains/
    losses included in net income |                      |         | 116  |  |   |         |       |  
|                            | Recognition of permanent impairment on marketable
    securities                  |                      |         |     |  |   |         | 24,084 |  
|                            |                                                                                   |                      |         |      |  |   |         |       
|Net comprehensive income    |                                                                                   | $                    | 244,841 |      |  | $ | 170,690 |       
|                            |                                                                                   |                      |         |      |  |   |         |       

See accompanying notes.

4



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##### 





EOP OPERATING LIMITED PARTNERSHIP


CONSOLIDATED STATEMENTS OF CASH
FLOWS

(Unaudited)


|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |            |          |         |         | 
|------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | -------- | ------- | ------- | ---------- | -------- | ------- | ------- | 
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                              
|                                                                                                       |                                                                                                                                                                                 | For the three months ended                                                                                                                   
|                                                                                                       |                                                                                                                                                                                 | March 31,                                                                                                                                    
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                              
|(Dollars in thousands)                                                                                 |                                                                                                                                                                                 | 2002                                                                                                                                          |                                                              | 2001                                     
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                          
|Operating Activities:                                                                                  |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Net income                                                                                                                                                                      |                                                                                                                                               | $                                                            | 244,464                                   |          |         | $       | 148,022    |         
|                                                                                                       | Adjustments to reconcile net income to net cash
    provided by operating activities:                                                                                           |                                                                                                                                               |                                                              |                                           |          |         |         |            |         
|                                                                                                       |                                                                                                                                                                                 | Amortization of discounts included in
    interest/dividend income                                                                            |                                                              |                                           | (97      | )       |         |            | (534     | )      
|                                                                                                       |                                                                                                                                                                                 | Amortization of deferred revenue included in
    other income                                                                                 |                                                              |                                           |         |         |         |            | (2,833   | )      
|                                                                                                       |                                                                                                                                                                                 | Depreciation and amortization (including
    discontinued operations)                                                                         |                                                              |                                           | 171,736  |         |         |            | 124,974  |        
|                                                                                                       |                                                                                                                                                                                 | Amortization of premiums/discounts on unsecured
    notes and terminated interest rate protection agreements
    included in interest expense |                                                              |                                           | (400     | )       |         |            | 1,171    |        
|                                                                                                       |                                                                                                                                                                                 | Impairment on securities and other investments                                                                                                |                                                              |                                           |         |         |         |            | 3,000    |        
|                                                                                                       |                                                                                                                                                                                 | Compensation related to restricted shares issued
    to employees by Equity Office.                                                           |                                                              |                                           | 4,419    |         |         |            | 2,159    |        
|                                                                                                       |                                                                                                                                                                                 | Income from unconsolidated joint ventures                                                                                                     |                                                              |                                           | (57,628  | )       |         |            | (15,426  | )      
|                                                                                                       |                                                                                                                                                                                 | Net loss on sales of real estate (included in
    discontinued operations)                                                                    |                                                              |                                           | 3,009    |         |         |            |         |        
|                                                                                                       |                                                                                                                                                                                 | Cumulative effect of a change in accounting
    principle                                                                                     |                                                              |                                           |         |         |         |            | 1,142    |        
|                                                                                                       |                                                                                                                                                                                 | Provision for doubtful accounts                                                                                                               |                                                              |                                           | 6,863    |         |         |            | 3,884    |        
|                                                                                                       |                                                                                                                                                                                 | Income allocation to minority interests                                                                                                       |                                                              |                                           | 1,406    |         |         |            | 3,253    |        
|                                                                                                       |                                                                                                                                                                                 | Changes in assets and liabilities:                                                                                                            |                                                              |                                           |          |         |         |            |          |        
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               | (Increase) decrease in rents receivable                      |                                           |          | (27,033 | )       |            |          | 16,381  |        
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               | (Increase) in deferred rent receivables                      |                                           |          | (21,968 | )       |            |          | (18,228 | )      
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               | (Increase) decrease in prepaid expenses and other
    assets |                                           |          | (7,755  | )       |            |          | 1,698   |        
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               | (Decrease) in accounts payable and accrued
    expenses      |                                           |          | (62,458 | )       |            |          | (79,703 | )      
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               | Increase in other liabilities                                |                                           |          | 24,023  |         |            |          | 3,841   |        
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              | Net cash provided by operating activities |          |         | 278,581 |            |          |         | 192,801 | 
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|Investing Activities:                                                                                  |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Property dispositions                                                                                                                                                           |                                                                                                                                               |                                                              | 107,743                                   |          |         |         | 8,600      |         
|                                                                                                       | Payments for capital and tenant improvements                                                                                                                                    |                                                                                                                                               |                                                              | (58,215                                   | )        |         |         | (53,910    | )       
|                                                                                                       | Decrease (increase) in escrow deposits and
    restricted cash                                                                                                                  |                                                                                                                                               |                                                              | 149,042                                   |          |         |         | (5,299     | )       
|                                                                                                       | Distributions from unconsolidated joint ventures                                                                                                                                |                                                                                                                                               |                                                              | 32,312                                    |          |         |         | 24,724     |         
|                                                                                                       | Investments in unconsolidated joint ventures                                                                                                                                    |                                                                                                                                               |                                                              | (38,559                                   | )        |         |         | (21,248    | )       
|                                                                                                       | Payments of lease acquisition costs                                                                                                                                             |                                                                                                                                               |                                                              | (16,750                                   | )        |         |         | (16,539    | )       
|                                                                                                       | Repayments of notes receivable                                                                                                                                                  |                                                                                                                                               |                                                              | 1,657                                     |          |         |         |           |         
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       |                                                                                                                                                                                 | Net cash provided by (used for) investing
    activities                                                                                      |                                                              |                                           | 177,230  |         |         |            | (63,672  | )      
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|Financing Activities:                                                                                  |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Principal payments on mortgage debt                                                                                                                                             |                                                                                                                                               |                                                              | (15,149                                   | )        |         |         | (130,315   | )       
|                                                                                                       | Proceeds from unsecured notes                                                                                                                                                   |                                                                                                                                               |                                                              | 239,127                                   |          |         |         |           |         
|                                                                                                       | Repayment of unsecured notes                                                                                                                                                    |                                                                                                                                               |                                                              | (200,000                                  | )        |         |         |           |         
|                                                                                                       | Proceeds from lines of credit                                                                                                                                                   |                                                                                                                                               |                                                              | 805,050                                   |          |         |         | 1,646,700  |         
|                                                                                                       | Principal payments on lines of credit                                                                                                                                           |                                                                                                                                               |                                                              | (1,049,350                                | )        |         |         | (1,660,200 | )       
|                                                                                                       | Payments of loan costs                                                                                                                                                          |                                                                                                                                               |                                                              | (3,540                                    | )        |         |         |           |         
|                                                                                                       | Termination of interest rate swap agreement                                                                                                                                     |                                                                                                                                               |                                                              | 3,193                                     |          |         |         |           |         
|                                                                                                       | Distributions to minority interests in partially
    owned properties                                                                                                           |                                                                                                                                               |                                                              | (2,059                                    | )        |         |         | (2,161     | )       
|                                                                                                       | Proceeds from exercise of share options                                                                                                                                         |                                                                                                                                               |                                                              | 23,638                                    |          |         |         | 12,572     |         
|                                                                                                       | Distributions to unitholders                                                                                                                                                    |                                                                                                                                               |                                                              | (174                                      | )        |         |         | (487       | )       
|                                                                                                       | Payment of preferred distributions                                                                                                                                              |                                                                                                                                               |                                                              | (13,830                                   | )        |         |         | (10,884    | )       
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       |                                                                                                                                                                                 | Net cash (used for) financing activities                                                                                                      |                                                              |                                           | (213,094 | )       |         |            | (144,775 | )      
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Net increase (decrease) in cash and cash
    equivalents                                                                                                                        |                                                                                                                                               |                                                              | 242,717                                   |          |         |         | (15,646    | )       
|                                                                                                       | Cash and cash equivalents at the beginning of the
    period                                                                                                                    |                                                                                                                                               |                                                              | 61,121                                    |          |         |         | 53,256     |         
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Cash and cash equivalents at the end of the period                                                                                                                              |                                                                                                                                               | $                                                            | 303,838                                   |          |         | $       | 37,610     |         
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|Supplemental Information:                                                                              |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|Interest paid during the period, including
    capitalized interest of $5,338 and $5,027, respectively |                                                                                                                                                                                 | $                                                                                                                                             | 244,607                                                      |                                           |          | $       | 183,540 |           
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|Non-Cash Investing and Financing
    Activities:                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Issuance of unsecured notes at a discount of
    $10,048 in exchange for $250 million MandatOry Par Put
    Remarketed SecuritiesSM                                             |                                                                                                                                               | $                                                            | (254,631                                  | )        |         | $       |           |         
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           
|                                                                                                       | Exchange of $250 million MandatOry Par Put
    Remarketed SecuritiesSM, including an unamortized
    premium of $4,631, for $264,679 notes due 2012 issued in
    February 2002 |                                                                                                                                               | $                                                            | 254,631                                   |          |         | $       |           |         
|                                                                                                       |                                                                                                                                                                                 |                                                                                                                                               |                                                              |                                           |          |         |         |           

See accompanying notes.

5



---



##### 





EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)


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

NOTE 1  BUSINESS AND FORMATION OF
EOP PARTNERSHIP

As used herein, EOP Partnership means
EOP Operating Limited Partnership, a Delaware limited
partnership, together with its subsidiaries, and the
predecessors thereof (EOP Partnership Predecessors).
EOP Partnership is a subsidiary of Equity Office Properties
Trust (Equity Office), a Maryland real estate
investment trust. EOP Partnership was organized in 1996 to
continue and expand the national office property business
organized by Mr. Samuel Zell, President, Chief Executive
Officer and Chairman of the Board of Trustees of Equity Office,
and to complete the consolidation of the EOP Partnership
Predecessors (the Consolidation). Equity Office
completed its initial public offering (the IPO) on
July 11, 1997, having sold its common shares of beneficial
interest, $0.01 par value per share (Common Shares).
The net proceeds from the IPO were contributed to EOP
Partnership in exchange for units of partnership interest
(Units). EOP Partnership is a fully integrated,
self-administered and self-managed real estate company
principally engaged in acquiring, owning, managing, developing
and leasing office properties. Equity Office has elected to be
taxed as a real estate investment trust (REIT) for
federal income tax purposes and generally will not be subject to
federal income tax if it distributes 100% of its taxable income
and complies with a number of organizational and operational
requirements. At March 31, 2002, EOP Partnership owned or
had an interest in 767 office properties (the Office
Properties) comprising approximately 127.5 million
rentable square feet of office space and 79 industrial
properties (the Industrial Properties) comprising
approximately 6.0 million rentable square feet of
industrial space (together with the Office Properties, the
Properties). The Office Properties were, on a
weighted average basis, 90.7% occupied at March 31, 2002,
and are located in 147 submarkets in 35 markets in 22 states and
the District of Columbia. The Office Properties, by rentable
square feet, are located approximately 40.4% in central business
districts (CBDs) and approximately 59.6% in suburban
markets.

NOTE 2  SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

Basis
of Presentation

The consolidated financial statements represent
the financial condition and results of EOP Partnership and its
subsidiaries. All intercompany transactions and balances have
been eliminated in consolidation.

Use
of Estimates

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

Unaudited
Interim Statements

The consolidated financial statements as of and
for the three months ended March 31, 2002 and 2001 and
related footnote disclosures are unaudited. In the opinion of
management, such financial statements reflect all adjustments
necessary for a fair presentation of the results of the interim
periods. All such adjustments are of a normal, recurring nature.

6



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


Reclassifications

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

NOTE 3  DISPOSITIONS

During the three months ended March 31,
2002, EOP Partnership sold seven office properties in separate
transactions to various unaffiliated parties for approximately
$109.2 million. The total loss on the sale of the wholly
owned properties was approximately $3.0 million. The seven
office properties sold were:

|                           |  |          |                  |          |  |              |   |  |  |  |         | 
|-------------------------- |  | -------- | ---------------- | -------- |  | ------------ | - |  |  |  | ------- | 
|                           |  |          |                  | Building |  | Total Square
|Property                   |  | Location |                  | Count    |  | Footage     
|                           |  |          |                  |          |  |             
|Park Place Shopping Center |  |          | Atlanta, GA      |          |  |              | 1 |  |  |  | 64,037  | 
|Dominion Tower             |  |          | Norfolk, VA      |          |  |              | 1 |  |  |  | 403,276 | 
|One Park Square            |  |          | Albuquerque, NM  |          |  |              | 4 |  |  |  | 262,035 | 
|Santa Monica Gateway       |  |          | Santa Monica, CA |          |  |              | 1 |  |  |  | 75,242  | 
|                           |  |          |                  |          |  |              |   |  |  |  |         | 
|                           |  |          | Total            |          |  |              | 7 |  |  |  | 804,590 | 
|                           |  |          |                  |          |  |              |   |  |  |  |         | 

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, net income and gain/(loss) on sales of
real estate for properties sold subsequent to December 31,
2001 are reflected in the consolidated statements of operations
as Discontinued operations for both periods
presented. Below is a summary of the results of operations of
these properties through their respective disposition dates:

|                                               |                |               |        |       |  |   |       |       | 
|---------------------------------------------- | -------------- | ------------- | ------ | ----- |  | - | ----- | ----- | 
|                                               |                |              
|                                               |                | For the three
|                                               |                | months ended 
|                                               |                | March 31,    
|                                               |                |              
|(Dollars in thousands)                         |                | 2002          |        | 2001 
|                                               |                |               |        |      
|Property revenues                              |                | $             | 1,605  |       |  | $ | 3,344 |      
|Interest income                                |                |               |       |       |  |   | 2     |      
|                                               |                |               |        |       |  |   |       |      
|                                               | Total revenues |               |        | 1,605 |  |   |       | 3,346 | 
|                                               |                |               |        |       |  |   |       |      
|Interest expense                               |                |               | (25    | )     |  |   | 73    |      
|Depreciation and amortization                  |                |               | 330    |       |  |   | 638   |      
|Property operating expenses                    |                |               | 855    |       |  |   | 1,357 |      
|                                               |                |               |        |       |  |   |       |      
|                                               | Total expenses |               |        | 1,160 |  |   |       | 2,068 | 
|                                               |                |               |        |       |  |   |       |      
|Income before net loss on sales of real estate |                |               | 445    |       |  |   | 1,278 |      
|Net loss on sales of real estate               |                |               | (3,009 | )     |  |   |      |      
|                                               |                |               |        |       |  |   |       |      
|Net income                                     |                | $             | (2,564 | )     |  | $ | 1,278 |      
|                                               |                |               |        |       |  |   |       |      



|         |                                                
|-------- | -----------------------------------------------
|NOTE 4  | INVESTMENT IN UNCONSOLIDATED JOINT
    VENTURES

EOP Partnership has several investments in
unconsolidated joint ventures consisting of Office Properties
and property management and development companies and two
companies that provide fully furnished office

7



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


space to tenants. Combined summarized financial
information of the unconsolidated joint ventures is as follows:

|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------------------------------ | --------- | ----------------- | --------- | - | --------- | --------- | --------- | 
|(Dollars in thousands)                                                                                                                                           |                                    | March 31, 2002                                               |           | December 31, 2001
|                                                                                                                                                                 |                                    |                                                              |           |                  
|Balance Sheets:                                                                                                                                                  |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 | Real estate, net                   |                                                              | $         | 2,979,457         |           |   | $         | 3,135,250 |          
|                                                                                                                                                                 | Other assets                       |                                                              |           | 248,035           |           |   |           | 276,322   |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 |                                    | Total Assets                                                 |           | $                 | 3,227,492 |   |           | $         | 3,411,572 | 
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 | Mortgage debt                      |                                                              | $         | 1,311,104         |           |   | $         | 1,370,025 |          
|                                                                                                                                                                 | Other liabilities                  |                                                              |           | 153,101           |           |   |           | 169,987   |          
|                                                                                                                                                                 | Partners and shareholders equity |                                                              |           | 1,763,287         |           |   |           | 1,871,560 |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|                                                                                                                                                                 |                                    | Total Liabilities and Partners and
    Shareholders Equity |           | $                 | 3,227,492 |   |           | $         | 3,411,572 | 
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|EOP Partnerships share of equity                                                                                                                                |                                    | $                                                            | 1,095,873 |                   |           | $ | 1,194,441 |          
|Net excess of cost of investments over the net
    book value of underlying net assets, net of accumulated
    depreciation of $20,503 and $19,984, respectively |                                    |                                                              | 124,982   |                   |           |   | 126,686   |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|Carrying value of investments in unconsolidated
    joint ventures                                                                                               |                                    | $                                                            | 1,220,855 |                   |           | $ | 1,321,127 |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          
|EOP Partnerships share of unconsolidated
    non-recourse mortgage debt                                                                                         |                                    | $                                                            | 819,055   |                   |           | $ | 848,944   |          
|                                                                                                                                                                 |                                    |                                                              |           |                   |           |   |           |          

|                            |                                                                                                             |                               |                |         |        |        |   |         |        |         | 
|--------------------------- | ----------------------------------------------------------------------------------------------------------- | ----------------------------- | -------------- | ------- | ------ | ------ | - | ------- | ------ | ------- | 
|                            |                                                                                                             |                              
|                            |                                                                                                             | For the three months ended   
|                            |                                                                                                             | March 31,                    
|                            |                                                                                                             |                              
|(Dollars in thousands)      |                                                                                                             | 2002                          |                | 2001   
|                            |                                                                                                             |                               |                |        
|Statements of Operations:   |                                                                                                             |                               |                |         |        |        |   |        
|                            | Revenues                                                                                                    |                               | $              | 209,842 |        |        | $ | 130,819 |       
|                            |                                                                                                             |                               |                |         |        |        |   |        
|                            | Expenses:                                                                                                   |                               |                |         |        |        |   |         |       
|                            |                                                                                                             | Interest expense              |                |         | 19,517 |        |   |         | 25,310 |        
|                            |                                                                                                             | Depreciation and amortization |                |         | 21,118 |        |   |         | 20,980 |        
|                            |                                                                                                             | Operating expenses            |                |         | 56,518 |        |   |         | 55,643 |        
|                            |                                                                                                             |                               |                |         |        |        |   |        
|                            |                                                                                                             |                               | Total expenses |         |        | 97,153 |   |         |        | 101,933 | 
|                            |                                                                                                             |                               |                |         |        |        |   |        
|                            | Net income before gain on sale of real estate and
    cumulative effect of a change in accounting principle |                               |                | 112,689 |        |        |   | 28,886  |       
|                            | Gain on sale of real estate                                                                                 |                               |                | 3,553   |        |        |   |         |       
|                            | Cumulative effect of a change in accounting
    principle                                                   |                               |                |        |        |        |   | (2,279  | )     
|                            |                                                                                                             |                               |                |         |        |        |   |        
|                            | Net income                                                                                                  |                               | $              | 116,242 |        |        | $ | 26,607  |       
|                            |                                                                                                             |                               |                |         |        |        |   |        
|EOP Partnerships share of: |                                                                                                             |                               |                |         |        |        |   |        
|                            | Net income                                                                                                  |                               | $              | 57,628  |        |        | $ | 15,426  |       
|                            |                                                                                                             |                               |                |         |        |        |   |        
|                            | Interest expense and loan cost amortization                                                                 |                               | $              | 13,254  |        |        | $ | 16,415  |       
|                            |                                                                                                             |                               |                |         |        |        |   |        
|                            | Depreciation and amortization (real estate
    related)                                                     |                               | $              | 12,810  |        |        | $ | 12,677  |       
|                            |                                                                                                             |                               |                |         |        |        |   |        

Investment in
Foundry Square I

In 2000, EOP Partnership formed a joint venture
with Wilson Investors (WI), through its interest in
Wilson/ Equity Office (W/EO), and an unaffiliated
party to develop, construct, lease and manage Foundry
Square I, a 327,000 square foot office building project
located in San Francisco, California which was

8



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


scheduled to be completed in third quarter 2003.
W/EO is owned 49.9% by EOP Partnership and 50.1% by WI. William
Wilson III, a trustee of Equity Office, through his
ownership of WI, owns approximately 22% of W/EO (and
approximately 30% of any promote to which WI is entitled under
the joint venture agreement). The building was 94% pre-leased to
a single tenant. In March 2002, the tenant terminated its lease
for $85 million.

In March 2002, EOP Partnership entered into
contracts with the joint venture partners to acquire the land,
improvements and partnership interests in Foundry Square I.
WIs share of the lease termination income and
consideration for its joint venture interest is approximately
$26 million. EOP Partnerships share of the lease
termination fee is approximately $40 million and was
recorded as income from investment in unconsolidated joint
ventures in the first quarter 2002.

In addition, WI repaid the current approximate
$12 million outstanding balance under a $25 million
loan commitment EOP Partnership previously made to WI and the
accrued interest of approximately $2 million. The remaining
amount that WI can draw under the $25 million loan
commitment is approximately $13 million.

EOP Partnership had previously accounted for the
investment in Foundry Square I under the equity method and
is now consolidating the investment, which is reflected as land
available for development. EOP Partnership is currently
analyzing the investment opportunities in Foundry Square I,
which may include future development or the sale of Foundry
Square I.

Investment
in Griffin Towers

In March 2002, EOP Partnership acquired the
remaining interest in the joint venture in exchange for the
assumption by EOP Partnership of the joint venture
partners share of the joint venture debt of approximately
$50.8 million. EOP Partnership had previously accounted for
the investment in Griffin Towers under the equity method and is
now consolidating the investment.

Investment
in Civic Parking

In January 2002, EOP Partnership disposed of
its 50% interest in four parking facilities in St. Louis,
Missouri to an unaffiliated party for approximately
$47.5 million and repaid EOP Partnerships share of
the mortgage debt of approximately $28.7 million. During
2001, an impairment on assets held for sale of approximately
$2.5 million was recognized in connection with the sale.
The parking facilities contained approximately 7,464 parking
spaces.

NOTE 5  UNSECURED
NOTES

In February 2002, EOP Partnership issued
$500 million of unsecured notes due February 2012.
These notes are guaranteed by Equity Office. The coupon interest
rate of the notes is 6.75% per annum with interest payable
semiannually. The effective interest rate, which includes
amortization of the discount and other offering costs, is
approximately 7.0%. Total cash proceeds, net of selling
commissions and other expenses, were approximately
$235.9 million. Approximately $260.0 million of the
aggregate principal amount of the notes was exchanged for
$250 million of the aggregate principal amount of EOP
Partnerships outstanding 6.376% MandatOry Par Put
Remarketed SecuritiesSM due February 15, 2012,
which were subject to mandatory redemption and a remarketing
agreement. The remaining net proceeds were used to repay the
line of credit and for general business purposes, including
working capital.

In February 2002, EOP Partnership terminated
the interest rate swap agreement that hedged $267 million
of $1.1 billion 7.0% unsecured notes due July 15,
2011. The total proceeds as a result of the termination that
were recorded as additional premium on the $1.1 billion
unsecured notes were approximately $3.2 million.

9



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


In March 2002 EOP Partnership entered into
two interest rate swap agreements. These fair value hedges
converted $300 million of 6.5% unsecured notes until the
maturity of the notes in January 2004 from a fixed interest
rate to a variable interest rate based on a spread over the
6-month LIBOR rate. The settlement dates correspond to the
interest payment dates of the unsecured notes being hedged. In
accordance with FAS 133, the interest rate swap agreements
and the respective unsecured notes are reflected at market
value. Any market adjustment on the swap agreements will be
reflected in Other assets or Other
liabilities, and the corresponding market adjustment on
the unsecured notes will be reflected as either a discount or
premium on unsecured notes. Because the swap agreements are
considered a perfectly effective fair value hedge, there will be
no effect on net income from the mark-to-market adjustment.

NOTE 6  PARTNERS
CAPITAL

Units

The following table presents the changes in the
issued and outstanding Units since January 1, 2002:

|                               |                                                                                           |  |             |           | 
|------------------------------ | ----------------------------------------------------------------------------------------- |  | ----------- | --------- | 
|Outstanding at January 1, 2002 |                                                                                           |  | 471,038,975 |          
|                               | Issued to Equity Office related to Common Shares
    issued for share option exercises    |  |             | 1,034,769 | 
|                               | Restricted units issued/cancelled, net                                                    |  |             | 491,630   | 
|                               | Units issued to Equity Office for Common Shares
    issued through dividend reinvestments |  |             | 20,987    | 
|                               |                                                                                           |  |             |          
|Outstanding at March 31, 2002  |                                                                                           |  | 472,586,361 |          
|                               |                                                                                           |  |             |          

Distributions

|                         |  |              |          |           |  |             |                   |  |  |  |                  | 
|------------------------ |  | ------------ | -------- | --------- |  | ----------- | ----------------- |  |  |  | ---------------- | 
|                         |  | Quarterly    |          |           |  |            
|                         |  | Distribution |          |           |  |            
|                         |  | Amount       |          |           |  | Unitholder 
|                         |  | Per Unit     |          | Date Paid |  | Record Date
|                         |  |              |          |           |  |            
|Units                    |  |              | $.50     |           |  |             | April 15, 2002    |  |  |  | March 29, 2002   | 
|Series A Preferred Units |  |              | .56125   |           |  |             | March 15, 2002    |  |  |  | March 1, 2002    | 
|Series B Preferred Units |  |              | .65625   |           |  |             | February 15, 2002 |  |  |  | February 1, 2002 | 
|Series C Preferred Units |  |              | .5390625 |           |  |             | March 15, 2002    |  |  |  | March 1, 2002    | 
|Series E Preferred Units |  |              | .4921875 |           |  |             | January 31, 2002  |  |  |  | January 15, 2002 | 
|Series F Preferred Units |  |              | .50      |           |  |             | April 1, 2002     |  |  |  | March 15, 2002   | 

10



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)




|         |                  
|-------- | -----------------
|NOTE 7  | EARNINGS PER UNIT

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

|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |             |           | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | - | ----------- | --------- |  | - | ----------- | --------- | 
|                                                                                              |                                                                                                                                 |                                                                                                 
|                                                                                              |                                                                                                                                 | For the three months ended                                                                      
|                                                                                              |                                                                                                                                 | March 31,                                                                                       
|                                                                                              |                                                                                                                                 |                                                                                                 
|(Dollars in thousands, except per unit data)                                                  |                                                                                                                                 | 2002                                                                                             |   | 2001       
|                                                                                              |                                                                                                                                 |                                                                                                  |   |            
|Numerator:                                                                                    |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Net income available for Units before
    discontinued operations and cumulative effect of a change in
    accounting principle |                                                                                                  | $ | 231,198     |           |  | $ | 137,002     |          
|                                                                                              | Discontinued operations (including loss on
    disposal of $(3,009) and $0, respectively)                                       |                                                                                                  |   | (2,564      | )         |  |   | 1,278       |          
|                                                                                              | Cumulative effect of a change in accounting
    principle                                                                       |                                                                                                  |   |            |           |  |   | (1,142      | )        
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Numerator for basic and diluted earnings per
    Unit  net income available for Units and unit
    equivalent                  |                                                                                                  | $ | 228,634     |           |  | $ | 137,138     |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|Denominator:                                                                                  |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Denominator for net income available per weighted
    average Unit outstanding  basic                                          |                                                                                                  |   | 470,206,844 |           |  |   | 348,476,502 |          
|                                                                                              | Effect of dilutive securities:                                                                                                  |                                                                                                  |   |             |           |  |   |             |          
|                                                                                              |                                                                                                                                 | Units issued upon exercise of Equity Office share
    options, put options and restricted shares |   |             | 2,506,180 |  |   |             | 2,924,351 | 
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Denominator for net income available per weighted
    average Unit and unit equivalent outstanding  diluted                    |                                                                                                  |   | 472,713,024 |           |  |   | 351,400,853 |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|Net income available per weighted average Unit
    outstanding  basic:                       |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Net income before discontinued operations and
    cumulative effect of a change in accounting principle                         |                                                                                                  | $ | 0.49        |           |  | $ | 0.39        |          
|                                                                                              | Discontinued operations                                                                                                         |                                                                                                  |   | (0.01       | )         |  |   |            |          
|                                                                                              | Cumulative effect of a change in accounting
    principle                                                                       |                                                                                                  |   |            |           |  |   |            |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Net income available per weighted average Unit
    outstanding  basic                                                          |                                                                                                  | $ | 0.48        |           |  | $ | 0.39        |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|Net income available per weighted average Unit
    and unit equivalent outstanding  diluted: |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Net income before discontinued operations and
    cumulative effect of a change in accounting principle                         |                                                                                                  | $ | 0.49        |           |  | $ | 0.39        |          
|                                                                                              | Discontinued operations                                                                                                         |                                                                                                  |   | (0.01       | )         |  |   |            |          
|                                                                                              | Cumulative effect of a change in accounting
    principle                                                                       |                                                                                                  |   |            |           |  |   |            |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            
|                                                                                              | Net income available per weighted average Unit
    and unit equivalent outstanding  diluted                                    |                                                                                                  | $ | 0.48        |           |  | $ | 0.39        |          
|                                                                                              |                                                                                                                                 |                                                                                                  |   |             |           |  |   |            

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

|                         |       |                  |        |                            |  |      |           |            |  |  |           |            | 
|------------------------ | ----- | ---------------- | ------ | -------------------------- |  | ---- | --------- | ---------- |  |  | --------- | ---------- | 
|                         |       |                  |        |                           
|                         |       |                  |        | For the three months ended
|                         |       |                  |        | March 31,                 
|                         |       | Weighted Average |        |                           
|Antidilutive Securities  |       | Exercise Price   |        | 2002                       |  | 2001
|                         |       |                  |        |                            |  |     
|Share options            |       | $                | 30.120 |                            |  |      | 7,394,109 |            |  |  |          |           
|Share options            |       | $                | 30.340 |                            |  |      |          |            |  |  | 3,077,389 |           
|Series B Preferred Units |       | $                | 35.700 |                            |  |      | 5,990,000 |            |  |  | 6,000,000 |           
|Warrants                 |       | $                | 39.375 |                            |  |      | 5,000,000 |            |  |  | 5,000,000 |           
|                         |       |                  |        |                            |  |      |           |            |  |  |           |           
|                         | Total |                  |        |                            |  |      |           | 18,384,109 |  |  |           | 14,077,389 | 
|                         |       |                  |        |                            |  |      |           |            |  |  |           |           

11



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


NOTE 8  SEGMENT
INFORMATION

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

|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | --------- | ---------- | - | ------------ | -------- | --------- | - | - | --------- | ---------- | -
|                                                                                                                                                          |                                           |                                          
|                                                                                                                                                          |                                           | For the three months ended March 31, 2002
|                                                                                                                                                          |                                           |                                          
|                                                                                                                                                          |                                           | Office                                    |           | Corporate  |   |             
|(Dollars in thousands)                                                                                                                                    |                                           | Properties                                |           | and Other  |   | Consolidated
|                                                                                                                                                          |                                           |                                           |           |            |   |             
|Property operating revenues                                                                                                                               |                                           | $                                         | 860,122   |            |   | $            | 14,716   |           |   | $ | 874,838   |           
|Property operating expenses                                                                                                                               |                                           |                                           | (270,180  | )          |   |              | (2,991   | )         |   |   | (273,171  | )         
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|                                                                                                                                                          | Net operating income                      |                                           |           | 589,942    |   |              |          | 11,725    |   |   |           | 601,667    |  
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|Adjustments to arrive at net income:                                                                                                                      |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|                                                                                                                                                          | Other revenues                            |                                           |           | 521        |   |              |          | 10,400    |   |   |           | 10,921     |  
|                                                                                                                                                          | Interest expense (1)                      |                                           |           | (45,241    | ) |              |          | (159,605  | ) |   |           | (204,846   | )
|                                                                                                                                                          | Depreciation and amortization             |                                           |           | (164,820   | ) |              |          | (6,586    | ) |   |           | (171,406   | )
|                                                                                                                                                          | Ground rent                               |                                           |           | (5,570     | ) |              |          |          |   |   |           | (5,570     | )
|                                                                                                                                                          | General and administrative                |                                           |           |           |   |              |          | (32,954   | ) |   |           | (32,954    | )
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|                                                                                                                                                          | Total adjustments to arrive at net income |                                           |           | (215,110   | ) |              |          | (188,745  | ) |   |           | (403,855   | )
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures and discontinued operations |                                           |                                           | 374,832   |            |   |              | (177,020 | )         |   |   | 197,812   |           
|Income taxes                                                                                                                                              |                                           |                                           | (48       | )          |   |              | (6,958   | )         |   |   | (7,006    | )         
|Minority interests                                                                                                                                        |                                           |                                           | (1,386    | )          |   |              | (20      | )         |   |   | (1,406    | )         
|Income from investment in unconsolidated joint
    ventures                                                                                               |                                           |                                           | 58,672    |            |   |              | (1,044   | )         |   |   | 57,628    |           
|Discontinued operations (including net loss on
    disposal of $(3,009))                                                                                  |                                           |                                           | (2,564    | )          |   |              |         |           |   |   | (2,564    | )         
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|Net income                                                                                                                                                |                                           | $                                         | 429,506   |            |   | $            | (185,042 | )         |   | $ | 244,464   |           
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|Investment in unconsolidated joint ventures                                                                                                               |                                           | $                                         | 1,179,608 |            |   | $            | 41,247   |           |   | $ | 1,220,855 |           
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|Capital and tenant improvements                                                                                                                           |                                           | $                                         | 56,965    |            |   | $            | 1,250    |           |   | $ | 58,215    |           
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           
|                                                                                                                                                          | Total Assets                              |                                           | $         | 24,530,828 |   |              | $        | 1,285,823 |   |   | $         | 25,816,651 |  
|                                                                                                                                                          |                                           |                                           |           |            |   |              |          |           |   |   |           |           

12



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | -------- | --------- | - | ------------ | -------- | -------- | - | - | -------- | -------- | -
|                                                                                                                                                                                                                     |                                                |                                          
|                                                                                                                                                                                                                     |                                                | For the three months ended March 31, 2001
|                                                                                                                                                                                                                     |                                                |                                          
|                                                                                                                                                                                                                     |                                                | Office                                    |          | Corporate |   |             
|(Dollars in thousands)                                                                                                                                                                                               |                                                | Properties                                |          | and Other |   | Consolidated
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |             
|Property operating revenues                                                                                                                                                                                          |                                                | $                                         | 642,118  |           |   | $            | 7,747    |          |   | $ | 649,865  |         
|Property operating expenses                                                                                                                                                                                          |                                                |                                           | (212,058 | )         |   |              | (1,176   | )        |   |   | (213,234 | )       
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|                                                                                                                                                                                                                     | Net operating income                           |                                           |          | 430,060   |   |              |          | 6,571    |   |   |          | 436,631  |  
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|Adjustments to arrive at net income:                                                                                                                                                                                 |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|                                                                                                                                                                                                                     | Other revenues                                 |                                           |          | 1,131     |   |              |          | 11,874   |   |   |          | 13,005   |  
|                                                                                                                                                                                                                     | Interest expense (1)                           |                                           |          | (52,527   | ) |              |          | (105,340 | ) |   |          | (157,867 | )
|                                                                                                                                                                                                                     | Depreciation and amortization                  |                                           |          | (117,893  | ) |              |          | (6,443   | ) |   |          | (124,336 | )
|                                                                                                                                                                                                                     | Ground rent                                    |                                           |          | (3,081    | ) |              |          |         |   |   |          | (3,081   | )
|                                                                                                                                                                                                                     | General and administrative                     |                                           |          | (37       | ) |              |          | (24,085  | ) |   |          | (24,122  | )
|                                                                                                                                                                                                                     | Impairment on securities and other investments |                                           |          |          |   |              |          | (3,000   | ) |   |          | (3,000   | )
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|                                                                                                                                                                                                                     | Total adjustments to arrive at net income      |                                           |          | (172,407  | ) |              |          | (126,994 | ) |   |          | (299,401 | )
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                |                                           | 257,653  |           |   |              | (120,423 | )        |   |   | 137,230  |         
|Income taxes                                                                                                                                                                                                         |                                                |                                           | (10      | )         |   |              | (1,507   | )        |   |   | (1,517   | )       
|Minority interests                                                                                                                                                                                                   |                                                |                                           | (3,253   | )         |   |              |         |          |   |   | (3,253   | )       
|Income from investment in unconsolidated joint
    ventures                                                                                                                                                          |                                                |                                           | 15,208   |           |   |              | 218      |          |   |   | 15,426   |         
|Discontinued operations                                                                                                                                                                                              |                                                |                                           | 1,278    |           |   |              |         |          |   |   | 1,278    |         
|Cumulative effect of a change in accounting
    principle                                                                                                                                                            |                                                |                                           | (1,142   | )         |   |              |         |          |   |   | (1,142   | )       
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|Net income                                                                                                                                                                                                           |                                                | $                                         | 269,734  |           |   | $            | (121,712 | )        |   | $ | 148,022  |         
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         
|Capital and tenant improvements                                                                                                                                                                                      |                                                | $                                         | 47,746   |           |   | $            | 6,164    |          |   | $ | 53,910   |         
|                                                                                                                                                                                                                     |                                                |                                           |          |           |   |              |          |          |   |   |          |         




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

NOTE 9  COMMITMENTS AND
CONTINGENCIES

Concentration of Credit
Risk

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

Environmental

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

Litigation

EOP Partnership is not presently subject to
material litigation nor, to EOP Partnerships knowledge, is
any litigation threatened against EOP Partnership, other than
routine actions for negligence and other claims

13



---



##### 



EOP OPERATING LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


and administrative proceedings arising in the
ordinary course of business, some of which are expected to be
covered by liability insurance and all of which collectively are
not expected to have a material adverse effect on the liquidity,
results of operations, or business or financial condition of EOP
Partnership.

Contingencies

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

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

Insurance

EOP Partnership has deductible amounts on
insurance policies related to property damage, business
interruption, workers compensation, auto liability and general
liability losses that may be incurred at the Properties. The
following summarizes EOP Partnership deductibles by type of
insurance coverage:

|                                          |  |                  |                                     | 
|----------------------------------------- |  | ---------------- | ----------------------------------- | 
|                                          |  | Per Occurrence  
|Insurance Coverage                        |  | Deductible Limit
|                                          |  |                 
|Property damage and business interruption |  |                  | $50,000 for property damage         | 
|                                          |  |                  | 5% of building value for earthquake | 
|Workers compensation                      |  |                  | $250,000                            | 
|Automobile liability                      |  |                  | $250,000                            | 
|General liability                         |  |                  | $500,000                            | 

EOP Partnership places commercial insurance
coverage in excess of the per occurrence deductible amounts
above, including acts of terrorism. EOP Partnerships
current coverage for terrorist insurance is up to
$200 million per occurrence and in the aggregate and
excludes nuclear, chemical or biological acts of terrorism.
There can be no assurance, however, that insurance coverage for
acts of terrorism will be available in the future.

EOP Partnership carries earthquake insurance on
all the Properties, including those in California and
Washington, subject to coverage limitations, which EOP
Partnership believes are commercially reasonable. No assurance
can be given that material losses in excess of insurance
proceeds will not occur in the future.

Commitments

In accordance with the agreement governing the
investment in Wright Runstad Associates Limited Partnership
(WRALP), EOP Partnership agreed, for a period
generally continuing until December 31, 2007, to make
available to WRALP up to $20.0 million in additional
financing or credit support for future development. As of
March 31, 2002, no amounts have been funded pursuant to
this agreement. However, EOP Partnership has guaranteed
WRALPs line of credit, which has an outstanding balance of
approximately $13.5 million as of March 31, 2002.
WRALPs current line of credit matures in July 2003.

EOP Partnership has agreed to loan up to
$25 million to Wilson Investors (WI) for its
required contribution to Wilson/Equity Office (W/EO)
at a 15% return per annum. The balance of this loan as of
March 31, 2002 was approximately $12 million of
principal and $2 million of accrued interest all of which
was repaid in April 2002. The remaining amount that WI can draw
under the $25 million loan commitment is approximately
$13 million.

14



---



##### 





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

Overview

The following discussion and analysis of the
consolidated financial condition and consolidated results of
operations should be read together with the consolidated
financial statements of EOP Partnership and notes thereto
contained in this Form 10-Q. Terms employed herein as
defined terms, but without definition, shall have the meaning
set forth in the notes to the financial statements. Statements
contained in this Managements Discussion and
Analysis of Financial Condition and Results of Operations,
including, without limitation, the Market Risk and
Developments disclosures, and elsewhere in this
Form 10-Q which are not historical fact may be
forward-looking statements. Such statements (none of which is
intended as a guarantee of performance) are subject to certain
risks and uncertainties, which could cause actual results to
differ materially from those projected or anticipated. A number
of important factors could cause actual results to differ
materially from those indicated by the forward-looking
statements, including, but not limited to, the risks described
in our Current Report on Form 8-K filed with the Securities
and Exchange Commission on February 12, 2002. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date this Form 10-Q
is filed with the SEC. Among the factors about which EOP
Partnership has made assumptions are the following:



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

During the three months ended March 31,
2002, we completed the following key transactions:



| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Issued $500 million of unsecured notes due
    February 2012 at an all-in cost of 7.0% and exchanged
    approximately $260.0 million of these notes for the
    previously outstanding $250.0 million MandatOry Par Put
    Remarketed SecuritiesSM which were subject to
    mandatory redemption;
|
| |  | Sold seven office properties and a 50% interest
    in four parking facilities for approximately
    $156.7 million; and                                                                                                                                                                            
|
| |  | Received a lease termination fee of approximately
    $40 million from a tenant scheduled to occupy Foundry
    Square I.                                                                                                                                                                           

15



---



##### 



Critical Accounting Policies and
Estimates

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

Results of Operations

General

The following discussion is based primarily on
the consolidated financial statements as of March 31, 2002
and for the three months ended March 31, 2002 and 2001.

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

|                            |                                                            |               |  |                |   |                 |  |           |   |  |  |           |  
|--------------------------- | ---------------------------------------------------------- | ------------- |  | -------------- | - | --------------- |  | --------- | - |  |  | --------- | -
|                            |                                                            | Top 5 Markets |  | Top 10 Markets |   | Total Portfolio
|                            |                                                            |               |  |                |   |                
|For the three months ended: |                                                            |               |  |                |   |                 |  |           |   |  |  |          
|March 31, 2002:             |                                                            |               |  |                |   |                 |  |           |   |  |  |          
|                            | Portion of total portfolio based on square feet            |               |  | 42.3           | % |                 |  | 67.2      | % |  |  | 100.0     | %
|                            | Weighted average occupancy                                 |               |  | 90.7           | % |                 |  | 91.2      | % |  |  | 90.7      | %
|                            | Gross square footage leased                                |               |  | 1,662,543      |   |                 |  | 2,780,836 |   |  |  | 4,497,483 |  
|                            | Weighted average annual rent per square foot
    leased(a) |               |  | $42.92         |   |                 |  | $38.21    |   |  |  | $32.13    |  
|December 31, 2001:          |                                                            |               |  |                |   |                 |  |           |   |  |  |          
|                            | Portion of total portfolio based on square feet            |               |  | 42.0           | % |                 |  | 66.9      | % |  |  | 100.0     | %
|                            | Weighted average occupancy                                 |               |  | 92.5           | % |                 |  | 92.7      | % |  |  | 91.8      | %
|                            | Gross square footage leased                                |               |  | 1,383,026      |   |                 |  | 2,580,920 |   |  |  | 4,549,803 |  
|                            | Weighted average annual rent per square foot
    leased(a) |               |  | $38.68         |   |                 |  | $36.51    |   |  |  | $30.76    |  
|March 31, 2001:             |                                                            |               |  |                |   |                 |  |           |   |  |  |          
|                            | Portion of total portfolio based on square feet            |               |  | 41.6           | % |                 |  | 66.6      | % |  |  | 100.0     | %
|                            | Weighted average occupancy                                 |               |  | 96.6           | % |                 |  | 95.8      | % |  |  | 94.2      | %
|                            | Gross square footage leased                                |               |  | 1,677,053      |   |                 |  | 2,408,954 |   |  |  | 3,622,509 |  
|                            | Weighted average annual rent per square foot
    leased(a) |               |  | $58.57         |   |                 |  | $49.75    |   |  |  | $40.18    |  




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

As of March 31, 2002, approximately
71,809,638 occupied square feet (approximately 56.3% of the
total portfolio) is expiring through 2006. The average annual
rent per square foot for these leases is presented in the table
below. Upon expiration, we may be unable to release this space
at rents at or above the current rent or be able to release all
of this space within a reasonable time period.

|      |  |                    |            |                     |  |   |       | 
|----- |  | ------------------ | ---------- | ------------------- |  | - | ----- | 
|      |  | Square Feet        |            | Average Annual Rent
|Year  |  | of Expiring Leases |            | per Square Foot    
|      |  |                    |            |                    
|2002  |  |                    | 11,891,376 |                     |  | $ | 26.77 | 
|2003  |  |                    | 15,975,198 |                     |  |   | 28.48 | 
|2004  |  |                    | 14,385,546 |                     |  |   | 27.06 | 
|2005  |  |                    | 15,424,289 |                     |  |   | 29.73 | 
|2006  |  |                    | 14,133,229 |                     |  |   | 29.19 | 
|      |  |                    |            |                     |  |   |       | 
|Total |  |                    | 71,809,638 |                     |  | $ | 28.32 | 
|      |  |                    |            |                     |  |   |       | 

16



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##### 



We believe that it is too soon to draw any
conclusions about where occupancy levels or market rents
ultimately will stabilize. Further decreases in occupancy rates
and/or declines in rents could adversely affect our revenues and
results of operations in subsequent periods.

In addition to the downward trend in occupancy,
we have experienced an increase in the amount of uncollectible
receivables relating to tenants in bankruptcy and tenants that
are having financial difficulties. Although we have substantial
collateral from many of our tenants, additional write-offs may
occur in subsequent periods. Future rental income may also be
affected by early lease terminations. In either of these
circumstances, we may not be able to collect the full amount
that was due under the leases and would incur additional cost in
re-leasing the space.

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

Below is a summary of our acquisition and
disposition activity since January 1, 2001. The buildings
and total square feet shown include properties we own in joint
ventures with other partners and reflects the total square feet
of the properties. Excluding the joint venture partners
share of the square feet of these properties, we effectively
owned 121.3 million square feet of office space as of
March 31, 2002.

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






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

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

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

17



---



##### 



Comparison of the three months
ended March 31, 2002 to March 31, 2001

The table below represents selected operating
information for the Total Portfolio and for the Core Portfolio
consisting of 383 Office Properties acquired or placed in
service on or prior to January 1, 2001.

|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |    |      |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------- | ------- | -------------- | ------- | ---------- | ------- | ------ | ------- | --------- | ------- | ------ | ------- | ---------- | ------ | ------ | ---- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------ | - | ------ | - | ------ | -- | ---- | -
|                                                                                                                                                                                                                     |                                                |                 |         |               
|                                                                                                                                                                                                                     |                                                | Total Portfolio |         | Core Portfolio
|                                                                                                                                                                                                                     |                                                |                 |         |               
|                                                                                                                                                                                                                     |                                                |                 |         | Increase/      |         | %          |         |        |         | Increase/ |         | %     
|(Dollars in thousands)                                                                                                                                                                                               |                                                | 2002            |         | 2001           |         | (Decrease) |         | Change |         | 2002      |         | 2001   |         | (Decrease) |        | Change
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |       
|Property revenues                                                                                                                                                                                                    |                                                | $               | 874,838 |                |         | $          | 649,865 |        |         | $         | 224,973 |        |         |            | 34.6   | %      |      | $ | 639,186 |   |         | $ | 639,903 |   |         | $ | (717   | ) |        |   | (0.1   | )%
|Fee income                                                                                                                                                                                                           |                                                |                 | 4,078   |                |         |            | 2,172   |        |         |           | 1,906   |        |         |            | 87.8   |        |      |   |        |   |         |   |        |   |         |   |       |   |        |   |       |   
|Interest/dividend income                                                                                                                                                                                             |                                                |                 | 6,843   |                |         |            | 10,833  |        |         |           | (3,990  | )      |         |            | (36.8  | )      |      |   | 943     |   |         |   | 1,391   |   |         |   | (448   | ) |        |   | (32.2  | ) 
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|                                                                                                                                                                                                                     |                                                | Total revenues  |         |                | 885,759 |            |         |        | 662,870 |           |         |        | 222,889 |            |        |        | 33.6 |   |         |   | 640,129 |   |         |   | 641,294 |   |        |   | (1,165 | ) |        |    | (0.2 | )
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Interest expense                                                                                                                                                                                                     |                                                |                 | 204,846 |                |         |            | 157,867 |        |         |           | 46,979  |        |         |            | 29.8   |        |      |   | 49,098  |   |         |   | 54,251  |   |         |   | (5,153 | ) |        |   | (9.5   | ) 
|Depreciation and amortization                                                                                                                                                                                        |                                                |                 | 171,406 |                |         |            | 124,336 |        |         |           | 47,070  |        |         |            | 37.9   |        |      |   | 128,848 |   |         |   | 119,127 |   |         |   | 9,721  |   |        |   | 8.2    |   
|Property operating expenses                                                                                                                                                                                          |                                                |                 | 273,171 |                |         |            | 213,234 |        |         |           | 59,937  |        |         |            | 28.1   |        |      |   | 210,034 |   |         |   | 210,322 |   |         |   | (288   | ) |        |   | (0.1   | ) 
|Ground rent                                                                                                                                                                                                          |                                                |                 | 5,570   |                |         |            | 3,081   |        |         |           | 2,489   |        |         |            | 80.8   |        |      |   | 3,122   |   |         |   | 3,081   |   |         |   | 41     |   |        |   | 1.3    |   
|General and administrative                                                                                                                                                                                           |                                                |                 | 32,954  |                |         |            | 24,122  |        |         |           | 8,832   |        |         |            | 36.6   |        |      |   |        |   |         |   | 37      |   |         |   | (37    | ) |        |   | (100.0 | ) 
|                                                                                                                                                                                                                     | Impairment on securities and other investments |                 |         |               |         |            |         | 3,000  |         |           |         | (3,000 | )       |            |        | (100.0 | )    |   |         |  |         |   |         |  |         |   |        |  |        |   |        |   |     
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|                                                                                                                                                                                                                     |                                                | Total expenses  |         |                | 687,947 |            |         |        | 525,640 |           |         |        | 162,307 |            |        |        | 30.9 |   |         |   | 391,102 |   |         |   | 386,818 |   |        |   | 4,284  |   |        |    | 1.1  |  
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                |                 | 197,812 |                |         |            | 137,230 |        |         |           | 60,582  |        |         |            | 44.1   |        |      |   | 249,027 |   |         |   | 254,476 |   |         |   | (5,449 | ) |        |   | (2.1   | ) 
|Income taxes                                                                                                                                                                                                         |                                                |                 | (7,006  | )              |         |            | (1,517  | )      |         |           | (5,489  | )      |         |            | 361.8  |        |      |   | (45     | ) |         |   | (5      | ) |         |   | (40    | ) |        |   | 800.0  |   
|Minority interests                                                                                                                                                                                                   |                                                |                 | (1,406  | )              |         |            | (3,253  | )      |         |           | 1,847   |        |         |            | (56.8  | )      |      |   | (1,378  | ) |         |   | (3,253  | ) |         |   | 1,875  |   |        |   | (57.6  | ) 
|Income from investment in unconsolidated joint
    ventures                                                                                                                                                          |                                                |                 | 57,628  |                |         |            | 15,426  |        |         |           | 42,202  |        |         |            | 273.6  |        |      |   | 17,842  |   |         |   | 15,208  |   |         |   | 2,634  |   |        |   | 17.3   |   
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Income from continuing operations                                                                                                                                                                                    |                                                |                 | 247,028 |                |         |            | 147,886 |        |         |           | 99,142  |        |         |            | 67.0   |        |      |   | 265,446 |   |         |   | 266,426 |   |         |   | (980   | ) |        |   | (0.4   | ) 
|Discontinued operations                                                                                                                                                                                              |                                                |                 | (2,564  | )              |         |            | 1,278   |        |         |           | (3,842  | )      |         |            | (300.6 | )      |      |   |        |   |         |   |        |   |         |   |       |   |        |   |       |   
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Income before cumulative effect of a change in
    accounting principle                                                                                                                                              |                                                |                 | 244,464 |                |         |            | 149,164 |        |         |           | 95,300  |        |         |            | 63.9   |        |      |   | 265,446 |   |         |   | 266,426 |   |         |   | (980   | ) |        |   | (0.4   | ) 
|Cumulative effect of a change in accounting
    principle                                                                                                                                                            |                                                |                 |        |                |         |            | (1,142  | )      |         |           | 1,142   |        |         |            | (100.0 | )      |      |   |        |   |         |   | (1,142  | ) |         |   | 1,142  |   |        |   | (100.0 | ) 
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Net income                                                                                                                                                                                                           |                                                | $               | 244,464 |                |         | $          | 148,022 |        |         | $         | 96,442  |        |         |            | 65.2   | %      |      | $ | 265,446 |   |         | $ | 265,284 |   |         | $ | 162    |   |        |   | 0.1    | % 
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Property revenues less property operating
    expenses before interest, depreciation and amortization, ground
    rent and general and administrative expense(a)                                                     |                                                | $               | 602,417 |                |         | $          | 438,618 |        |         | $         | 163,799 |        |         |            | 37.3   | %      |      | $ | 429,152 |   |         | $ | 429,581 |   |         | $ | (429   | ) |        |   | (0.1   | )%
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Deferred rental revenue (a)                                                                                                                                                                                          |                                                | $               | 20,428  |                |         | $          | 14,985  |        |         | $         | 5,443   |        |         |            | 36.3   | %      |      | $ | 9,147   |   |         | $ | 14,846  |   |         | $ | (5,699 | ) |        |   | (38.4  | )%
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   
|Lease termination fees(a)                                                                                                                                                                                            |                                                | $               | 18,248  |                |         | $          | 6,750   |        |         | $         | 11,498  |        |         |            | 170.3  | %      |      | $ | 16,955  |   |         | $ | 6,750   |   |         | $ | 10,205 |   |        |   | 151.2  | % 
|                                                                                                                                                                                                                     |                                                |                 |         |                |         |            |         |        |         |           |         |        |         |            |        |        |      |   |         |   |         |   |         |   |         |   |        |   |        |   |        |   




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

Property
Revenues

The increase in property revenues in the Total
Portfolio is primarily due to the properties acquired in the
Spieker Merger in 2001. As a result of the current slowdown in
economic activity, we have experienced an increase in the amount
of uncollectible receivables relating to tenants in bankruptcy
and tenants that are having financial difficulties. The amount
of bad debts written off in the Total Portfolio for the three
months ended March 31, 2002 was approximately
$6.9 million as compared to $3.9 million for the prior
period. Although we have substantial collateral from many of our
tenants, additional write-offs may occur in

18



---



##### 



subsequent periods. Included in property revenues
are lease termination fees. These fees relate to specific
tenants, each of whom has paid a fee to terminate its lease
obligations before the end of the contractual term of the lease.
Although we have historically received such termination fees,
there is no way of predicting the timing or amounts of future
lease termination fees. The decrease in property revenues in the
Core Portfolio resulted primarily from a decrease in occupancy
and an increase in bad debt expense, partially offset by a
slight increase in rental rates and an increase in lease
termination fees. The weighted average occupancy of the Core
Portfolio decreased from 94.7% at January 1, 2001 to 91.2%
at March 31, 2002, mainly due to tenant rollover and early
lease terminations at various properties where the space was not
re-leased due to the current slowdown in economic activity.


Interest Expense

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



| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total debt to total assets decreased to 45.6%
    from 46.2%;                                                                                                                                              
|
| |  | Interest coverage ratio (calculated as EBITDA
    divided by interest expense, including our share of interest
    expense of unconsolidated joint ventures) increased to 3.0 times
    from 2.7 times; and
|
| |  | Weighted average interest rate decreased to 7.2%
    from 7.5%.                                                                                                                                            

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

Depreciation and
Amortization

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

Property Operating
Expenses

Total Portfolio property operating expenses
increased mainly as a result of the Spieker Merger in 2001. Core
Portfolio property operating expenses remained stable as a
result of a decrease in utilities of $3.4 million offset by
increases in repairs and maintenance of approximately
$1.1 million primarily due to higher safety and security
expense, increases in insurance expenses of approximately
$1.1 million due to higher premiums and an increase in real
estate taxes of approximately $2.3 million. Substantially
all of the office leases require the tenant to pay, as
additional rent, a portion of any increases in operating
expenses over a base amount. We believe a substantial portion of
any future increase in operating expenses will be offset by
expense reimbursements from tenants, which are included in
property revenues.

General and Administrative
Expenses

General and administrative expenses increased due
to an increase in the number of employees at the corporate and
regional offices as a result of the Spieker Merger, consulting
fees and severance expense of approximately $3.2 million for a
former executive vice president consisting of the acceleration
of vesting of share options and restricted shares and the
severance payment made to this individual. In April 2002,
we entered into a severance arrangement with another executive
vice president. Approximately $3.4 million of expense
relating to this severance arrangement will be recorded during
the second quarter of 2002. We also intend to enter into a
severance arrangement with Timothy H. Callahan in connection
with his resignation as President and Chief Executive Officer of
Equity Office in April 2002. We can give no assurance as to
the exact amount because the severance arrangement has not been
negotiated and finalized. The expense related to the severance
arrangement to be entered into with Mr. Callahan is
expected to be recorded in the second quarter.

19



---



##### 



Although general and administrative expenses are
subject to increase along with any increase in the size of the
portfolio, it is also anticipated that economies of scale may be
realized with future growth, should it occur.

Income
Taxes

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

Income
from Investment in Unconsolidated Joint Ventures

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

Discontinued
Operations

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, the net income and gain/(loss) on sales
of real estate for properties sold subsequent to
December 31, 2001 are reflected in the consolidated
statements of operations as Discontinued Operations for both
periods presented. The decrease in discontinued operations is
primarily due to the loss on the sale of the properties sold in
2002.

Property Dispositions

EOP Partnership has disposed or partially
disposed of the following office properties consisting of
approximately 1.7 million square feet, industrial
properties consisting of approximately 4.1 million square
feet and eight parking facilities since January 1, 2001:

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






|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | The industrial properties were all acquired in
    the Spieker Merger.
|   
|(2) | Sold our remaining interest in these four garages.                    
|   
|(3) | Consists of four office properties.                                   
|   
|(4) | Consists of two office properties.                                    

20



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|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(5) | Biltmore Apartments is a residential property
    which is part of the 177 Broad Street Office Property.

In accordance with SFAS 144 Accounting for
the Impairment or Disposal of Long Lived Assets, effective
for financial statements issued for fiscal years beginning after
December 15, 2001, net income and gain/(loss) on sales of
real estate for properties sold subsequent to December 31,
2001 are reflected in the consolidated statements of operations
as Discontinued operations for both periods
presented. Below is a summary of the results of operations of
these properties along with those properties sold prior to 2002
through their respective disposition dates:

|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |       | 
|-------------------------------------------------------------------------------------------------------------------------------- | -------------- | -------------------- | ------ | ------- |  | ---------- | ----- | ----- |  | - | ----- | ----- | 
|                                                                                                                                 |                |                     
|                                                                                                                                 |                | For the three months
|                                                                                                                                 |                | ended March 31,     
|                                                                                                                                 |                |                     
|                                                                                                                                 |                |                      |        |        
|                                                                                                                                 |                | 2002                 |        | 2001   
|                                                                                                                                 |                |                      |        |        
|                                                                                                                                 |                | Sold in              |        | Sold in |  | Sold prior
|(Dollars in thousands)                                                                                                           |                | 2002                 |        | 2002    |  | to 2002   
|                                                                                                                                 |                |                      |        |         |  |           
|Property revenues                                                                                                                |                | $                    | 1,605  |         |  | $          | 3,344 |       |  | $ | 9,937 |      
|Interest income                                                                                                                  |                |                      |       |         |  |            | 2     |       |  |   | 16    |      
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      
|                                                                                                                                 | Total revenues |                      |        | 1,605   |  |            |       | 3,346 |  |   |       | 9,953 | 
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      
|Interest expense                                                                                                                 |                |                      | (25    | )       |  |            | 73    |       |  |   | 454   |      
|Depreciation and amortization                                                                                                    |                |                      | 330    |         |  |            | 638   |       |  |   | 1,338 |      
|Property operating expenses                                                                                                      |                |                      | 855    |         |  |            | 1,357 |       |  |   | 2,893 |      
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      
|                                                                                                                                 | Total expenses |                      |        | 1,160   |  |            |       | 2,068 |  |   |       | 4,685 | 
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      
|Income before income taxes, income from
    investment in unconsolidated joint ventures and net loss on
    sales of real estate |                |                      | 445    |         |  |            | 1,278 |       |  |   | 5,268 |      
|Income taxes                                                                                                                     |                |                      |       |         |  |            |      |       |  |   | (4    | )    
|Income from investment in unconsolidated joint
    ventures                                                                      |                |                      |       |         |  |            |      |       |  |   | 275   |      
|Net loss on sales of real estate                                                                                                 |                |                      | (3,009 | )       |  |            |      |       |  |   |      |      
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      
|Net income                                                                                                                       |                | $                    | (2,564 | )       |  | $          | 1,278 |       |  | $ | 5,539 |      
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      
|Property revenues less property operating
    expenses before interest, depreciation and amortization                            |                | $                    | 750    |         |  | $          | 1,987 |       |  | $ | 7,044 |      
|                                                                                                                                 |                |                      |        |         |  |            |       |       |  |   |       |      

Liquidity and Capital Resources

Liquidity

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

21



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##### 



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


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

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

Contractual
Obligations

As of March 31, 2002, we were subject to the
following contractual payment obligations:

|                                                            |                 |                               |           |           |            |      |         |         |         |      |        |         |         |            |         |         |           |  |         |         |           |  |        |         |           |  |           |           |           | 
|----------------------------------------------------------- | --------------- | ----------------------------- | --------- | --------- | ---------- | ---- | ------- | ------- | ------- | ---- | ------ | ------- | ------- | ---------- | ------- | ------- | --------- |  | ------- | ------- | --------- |  | ------ | ------- | --------- |  | --------- | --------- | --------- | 
|                                                            |                 |                              
|                                                            |                 | Payments Due by Period       
|                                                            |                 |                              
|                                                            |                 |                               |           | Through   |            |     
|Contractual Obligations:                                    |                 | Total                         |           | 2002      |            | 2003 |         | 2004    |         | 2005 |        | 2006    |         | Thereafter
|                                                            |                 |                               |           |           |            |      |         |         |         |      |        |         |         |           
|                                                            |                 |                              
|                                                            |                 | (Dollars in thousands)       
|Long-term debt:                                             |                 |                               |           |           |            |      |         |         |         |      |        |         |         |            |         |         |           |  |         |         |           |  |        |         |           |  |           |          
|                                                            | Mortgage debt   |                               | $         | 2,646,950 |            |      | $       | 114,399 |         |      | $      | 202,520 |         |            | $       | 447,538 |           |  | $       | 583,372 |           |  | $      | 342,628 |           |  | $         | 956,493   |          
|                                                            | Unsecured notes |                               |           | 9,126,500 |            |      |         | 110,000 |         |      |        | 700,000 |         |            |         | 880,000 |           |  |         | 675,000 |           |  |        | 650,000 |           |  |           | 6,111,500 |          
|                                                            | Line of credit  |                               |           |          |            |      |         |        |         |      |        |        |         |            |         |        |           |  |         |        |           |  |        |        |           |  |           |          |          
|Share of mortgage debt of unconsolidated joint
    ventures |                 |                               | 819,055   |           |            |      | 112,273 |         |         |      | 5,345  |         |         |            | 116,022 |         |           |  | 520,249 |         |           |  | 50,074 |         |           |  | 15,092    |          
|Operating leases (ground leases)                            |                 |                               | 1,087,269 |           |            |      | 14,216  |         |         |      | 18,971 |         |         |            | 16,472  |         |           |  | 16,114  |         |           |  | 15,844 |         |           |  | 1,005,652 |          
|                                                            |                 |                               |           |           |            |      |         |         |         |      |        |         |         |            |         |         |           |  |         |         |           |  |        |         |           |  |           |          
|                                                            |                 | Total Contractual Obligations |           | $         | 13,679,774 |      |         | $       | 350,888 |      |        | $       | 926,836 |            |         | $       | 1,460,032 |  |         | $       | 1,794,735 |  |        | $       | 1,058,546 |  |           | $         | 8,088,737 | 
|                                                            |                 |                               |           |           |            |      |         |         |         |      |        |         |         |            |         |         |           |  |         |         |           |  |        |         |           |  |           |          

Commitments

In accordance with the agreement governing the
investment in Wright Runstad Associates Limited Partnership
(WRALP), we agreed, for a period generally
continuing until December 31, 2007, to make available to
WRALP up to $20.0 million in additional financing or credit
support for future development. As of March 31, 2002, no
amounts have been funded pursuant to this agreement. However,
EOP Partnership has guaranteed WRALPs current line of
credit, which has an outstanding balance of approximately
$13.5 million as of March 31, 2002.

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

Debt Financing

The table below summarizes our mortgage debt,
unsecured notes and line of credit indebtedness at
March 31, 2002 and December 31, 2001, including a net
unamortized discount on mortgage debt of $(11,997)

22



---



##### 



and $(11,761), respectively, and a net
unamortized premium on unsecured notes of $1,922 and $17,487,
respectively, recorded in connection with property acquisitions,
mergers and the issuance of unsecured notes.


|                                          |                      |                         |       |                   |      |            |   |            |      |            | 
|----------------------------------------- | -------------------- | ----------------------- | ----- | ----------------- | ---- | ---------- | - | ---------- | ---- | ---------- | 
|(Dollars in thousands)                    |                      | March 31, 2002          |       | December 31, 2001
|                                          |                      |                         |       |                  
|Balance                                   |                      |                         |       |                   |      |            |   |           
|                                          | Fixed rate           |                         | $     | 10,877,375        |      |            | $ | 10,891,325 |     
|                                          | Variable rate (1)    |                         |       | 886,000           |      |            |   | 1,097,300  |     
|                                          |                      |                         |       |                   |      |            |   |           
|                                          |                      |                         | Total |                   | $    | 11,763,375 |   |            | $    | 11,988,625 | 
|                                          |                      |                         |       |                   |      |            |   |           
|Percent of total debt:                    |                      |                         |       |                   |      |            |   |           
|                                          | Fixed rate           |                         |       | 92.5%             |      |            |   | 90.8%      |     
|                                          | Variable rate (1)    |                         |       | 7.5%              |      |            |   | 9.2%       |     
|                                          |                      |                         |       |                   |      |            |   |           
|                                          |                      |                         | Total |                   |      | 100.0%     |   |            |      | 100.0%     | 
|                                          |                      |                         |       |                   |      |            |   |           
|Effective interest rate at end of period: |                      |                         |       |                   |      |            |   |           
|                                          | Fixed rate           |                         |       | 7.4%              |      |            |   | 7.4%       |     
|                                          | Variable rate (1)(2) |                         |       | 4.2%              |      |            |   | 3.3%       |     
|                                          |                      |                         |       |                   |      |            |   |           
|                                          |                      | Effective interest rate |       |                   | 7.2% |            |   |            | 7.0% |           
|                                          |                      |                         |       |                   |      |            |   |           




|    |                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The variable rate debt as of March 31, 2002
    and December 31, 2001 includes $850 million and
    $817 million, respectively, of fixed rate unsecured notes
    that were converted to a variable rate based on various spreads
    over LIBOR through several interest rate swap agreements.
|   
|(2) | The variable rate debt bears interest at a rate
    based on various spreads over LIBOR.                                                                                                                                                                                                       

Mortgage
Debt

As of March 31, 2002, total mortgage debt
(excluding our share of unconsolidated debt of approximately
$819.1 million) consisted of approximately
$2.6 billion of fixed rate debt with a weighted average
interest rate of approximately 7.7% and $36.0 million of
variable rate debt based on LIBOR plus 55 basis points (as of
March 31, 2002 the variable rate was approximately 2.4%).
Our mortgage debt at March 31, 2002 will mature as follows:

|                                                                                 |          |                        |           |           | 
|-------------------------------------------------------------------------------- | -------- | ---------------------- | --------- | --------- | 
|Year                                                                             |          | (Dollars in thousands)
|                                                                                 |          |                       
|2002                                                                             |          | $                      | 114,399   |          
|2003                                                                             |          |                        | 202,520   |          
|2004                                                                             |          |                        | 447,538   |          
|2005                                                                             |          |                        | 583,372   |          
|2006                                                                             |          |                        | 342,628   |          
|Thereafter                                                                       |          |                        | 956,493   |          
|                                                                                 |          |                        |           |          
|                                                                                 | Subtotal |                        |           | 2,646,950 | 
|Net discount (net of accumulated amortization
    of
    approximately $(5,573)) |          |                        | (11,997   | )        
|                                                                                 |          |                        |           |          
|Total                                                                            |          | $                      | 2,634,953 |          
|                                                                                 |          |                        |           |          

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

Line
of Credit

We have a $1.0 billion revolving credit
facility that was obtained in May 2000. The line of credit
bears interest at LIBOR plus 60 basis points and matures on
June 19, 2003. There is also an annual facility fee of
$2.0 million payable quarterly. In addition, a competitive
bid option, whereby the lenders participating in the credit
facility bid on the interest to be charged, is available for up
to $350 million of the borrowings under the credit
facility. Equity Office has guaranteed the outstanding
obligation under the line of credit. At March 31, 2002, no
amounts were outstanding under the revolving credit facility.

23



---



##### 



Unsecured
Notes

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

|                                                                          |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |          |  | 
|------------------------------------------------------------------------- | ---- | -------------------------- | --------- | --------- | ---- | ------ |  | -------- | ---- | - | - | --------- | --------- |  |  | -------- |  | 
|                                                                          |      | Coupon/                    |           | All-in    |      |        |  |         
|                                                                          |      | Stated                     |           | Effective |      | Face   |  | Maturity
|Original Term (in years)                                                  |      | Rate                       |           | Rate(a)   |      | Amount |  | Date    
|                                                                          |      |                            |           |           |      |        |  |         
|                                                                          |      |                           
|                                                                          |      | (Dollars in thousands)    
|Fixed interest rate:                                                      |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|                                                                          | 7    |                            |           | 6.95      | %    |        |  | 5.37     | %    |   | $ | 110,000   |           |  |  | 12/15/02 | 
|                                                                          | 5    |                            |           | 6.38      | %    |        |  | 6.76     | %    |   |   | 300,000   |           |  |  | 2/15/03  | 
|                                                                          | 3    |                            |           | 7.38      | %    |        |  | 7.55     | %    |   |   | 400,000   |           |  |  | 11/15/03 | 
|                                                                          | 5    |                            |           | 6.80      | %    |        |  | 6.10     | %    |   |   | 200,000   |           |  |  | 5/01/04  | 
|                                                                          | 7    |                            |           | 7.24      | %    |        |  | 7.26     | %    |   |   | 30,000    |           |  |  | 9/01/04  | 
|                                                                          | 9    |                            |           | 6.90      | %    |        |  | 6.27     | %    |   |   | 100,000   |           |  |  | 12/15/04 | 
|                                                                          | 8    |                            |           | 6.88      | %    |        |  | 6.40     | %    |   |   | 125,000   |           |  |  | 2/01/05  | 
|                                                                          | 7    |                            |           | 6.63      | %    |        |  | 5.89     | %    |   |   | 100,000   |           |  |  | 2/15/05  | 
|                                                                          | 7    |                            |           | 8.00      | %    |        |  | 6.49     | %    |   |   | 100,000   |           |  |  | 7/19/05  | 
|                                                                          | 8    |                            |           | 7.36      | %    |        |  | 7.69     | %    |   |   | 50,000    |           |  |  | 9/1/05   | 
|                                                                          | 6    |                            |           | 8.38      | %    |        |  | 8.59     | %    |   |   | 500,000   |           |  |  | 3/15/06  | 
|                                                                          | 9    |                            |           | 7.44      | %    |        |  | 7.74     | %    |   |   | 50,000    |           |  |  | 9/1/06   | 
|                                                                          | 10   |                            |           | 7.13      | %    |        |  | 6.74     | %    |   |   | 100,000   |           |  |  | 12/1/06  | 
|                                                                          | 9    |                            |           | 7.00      | %    |        |  | 6.80     | %    |   |   | 1,500     |           |  |  | 2/02/07  | 
|                                                                          | 9    |                            |           | 6.88      | %    |        |  | 6.83     | %    |   |   | 25,000    |           |  |  | 4/30/07  | 
|                                                                          | 9    |                            |           | 6.76      | %    |        |  | 6.76     | %    |   |   | 300,000   |           |  |  | 6/15/07  | 
|                                                                          | 10   |                            |           | 7.41      | %    |        |  | 7.70     | %    |   |   | 50,000    |           |  |  | 9/01/07  | 
|                                                                          | 7    |                            |           | 7.75      | %    |        |  | 7.91     | %    |   |   | 600,000   |           |  |  | 11/15/07 | 
|                                                                          | 10   |                            |           | 6.75      | %    |        |  | 6.97     | %    |   |   | 150,000   |           |  |  | 1/15/08  | 
|                                                                          | 10   |                            |           | 6.75      | %    |        |  | 7.01     | %    |   |   | 300,000   |           |  |  | 2/15/08  | 
|                                                                          | 8(b) |                            |           | 7.25      | %    |        |  | 7.64     | %    |   |   | 325,000   |           |  |  | 11/15/08 | 
|                                                                          | 10   |                            |           | 6.80      | %    |        |  | 6.94     | %    |   |   | 500,000   |           |  |  | 1/15/09  | 
|                                                                          | 10   |                            |           | 7.25      | %    |        |  | 7.14     | %    |   |   | 200,000   |           |  |  | 5/01/09  | 
|                                                                          | 11   |                            |           | 7.13      | %    |        |  | 6.97     | %    |   |   | 150,000   |           |  |  | 7/01/09  | 
|                                                                          | 10   |                            |           | 8.10      | %    |        |  | 8.22     | %    |   |   | 360,000   |           |  |  | 8/01/10  | 
|                                                                          | 10   |                            |           | 7.65      | %    |        |  | 7.20     | %    |   |   | 200,000   |           |  |  | 12/15/10 | 
|                                                                          | 10   |                            |           | 7.00      | %    |        |  | 6.83     | %    |   |   | 1,100,000 |           |  |  | 7/15/11  | 
|                                                                          | 10   |                            |           | 6.75      | %    |        |  | 7.02     | %    |   |   | 500,000   |           |  |  | 2/15/12  | 
|                                                                          | 20   |                            |           | 7.88      | %    |        |  | 8.08     | %    |   |   | 25,000    |           |  |  | 12/01/16 | 
|                                                                          | 20   |                            |           | 7.35      | %    |        |  | 8.08     | %    |   |   | 200,000   |           |  |  | 12/01/17 | 
|                                                                          | 20   |                            |           | 7.25      | %    |        |  | 7.54     | %    |   |   | 250,000   |           |  |  | 2/15/18  | 
|                                                                          | 30   |                            |           | 7.50      | %    |        |  | 8.24     | %    |   |   | 150,000   |           |  |  | 10/01/27 | 
|                                                                          | 30   |                            |           | 7.25      | %    |        |  | 7.31     | %    |   |   | 225,000   |           |  |  | 6/15/28  | 
|                                                                          | 30   |                            |           | 7.50      | %    |        |  | 7.55     | %    |   |   | 200,000   |           |  |  | 4/19/29  | 
|                                                                          | 30   |                            |           | 7.88      | %    |        |  | 7.94     | %    |   |   | 300,000   |           |  |  | 7/15/31  | 
|                                                                          |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|                                                                          |      | Weighted Average/ Subtotal |           |           | 7.25 | %      |  |          | 7.29 | % |   |           | 8,276,500 |  |  |          |  | 
|                                                                          |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|Variable-interest rate(c):                                                |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|                                                                          | 5    |                            |           | 6.50      | %    |        |  | 4.29     | %    |   |   | 300,000   |           |  |  | 1/15/04  | 
|                                                                          | 6    |                            |           | 6.50      | %    |        |  | 4.76     | %    |   |   | 150,000   |           |  |  | 6/15/04  | 
|                                                                          | 6    |                            |           | 6.50      | %    |        |  | 4.78     | %    |   |   | 100,000   |           |  |  | 6/15/04  | 
|                                                                          | 7    |                            |           | 6.63      | %    |        |  | 3.76     | %    |   |   | 300,000   |           |  |  | 2/15/05  | 
|                                                                          |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|                                                                          |      | Weighted Average/ Subtotal |           |           | 6.55 | %      |  |          | 4.24 | % |   |           | 850,000   |  |  |          |  | 
|                                                                          |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|                                                                          |      | Weighted Average/ Subtotal |           |           | 7.19 | %      |  |          | 7.00 | % |   |           | 9,126,500 |  |  |          |  | 
|                                                                          |      |                            |           |           |      |        |  |          |      |   |   |           |           |  |  |         
|Net premium (net of accumulated
    amortization of approximately $4,052) |      |                            | 1,922     |           |      |        |  |         
|                                                                          |      |                            |           |           |      |        |  |         
|Total                                                                     |      | $                          | 9,128,422 |           |      |        |  |         
|                                                                          |      |                            |           |           |      |        |  |         




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

24



---



##### 





|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | The notes are exchangeable into Common Shares at
    an exchange rate of $34.00 per share. If the closing price at
    the time a holder exercises its exchange right is less than the
    exchange price of $34.00, the holder will receive, in lieu of
    Common Shares, cash in an amount equal to 97% of the product of
    the number of Common Shares into which the principal amount of
    notes subject to such exercise would otherwise be exchangeable
    and the current market price per Common Share. Upon exchange of
    a $1,000 note for Common Shares of Equity Office, EOP
    Partnership would issue a corresponding number of Units to
    Equity Office on a one-for-one basis.
|   
|(c) |  | As of March 31, 2002, $850 million of
    unsecured notes were converted to a variable interest rate based
    on a spread over the 6-month LIBOR rate through several interest
    rate swap arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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

Restrictions
and Covenants under Unsecured Indebtedness

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

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



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

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



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

25



---



##### 



Equity Securities

A summary of the activity of Equity Offices
Common Shares and EOP Partnerships Units (exclusive of
Units owned by Equity Office) during the three months ended
March 31, 2002 is as follows:

|                                  |                                            |               |             |           |  |       |            |          |   |  |             |           | 
|--------------------------------- | ------------------------------------------ | ------------- | ----------- | --------- |  | ----- | ---------- | -------- | - |  | ----------- | --------- | 
|                                  |                                            | Common Shares |             | Units     |  | Total
|                                  |                                            |               |             |           |  |      
|Outstanding at December 31, 2001. |                                            |               | 414,548,673 |           |  |       | 56,490,302 |          |   |  | 471,038,975 |          
|                                  | Share options exercised                    |               |             | 1,034,769 |  |       |            |         |   |  |             | 1,034,769 | 
|                                  | Common Shares issued in exchange for Units |               |             | 448,962   |  |       |            | (448,962 | ) |  |             |          | 
|                                  | Restricted shares issued/cancelled, net    |               |             | 491,630   |  |       |            |         |   |  |             | 491,630   | 
|                                  | Issued through dividend reinvestments      |               |             | 20,987    |  |       |            |         |   |  |             | 20,987    | 
|                                  |                                            |               |             |           |  |       |            |          |   |  |             |          
|Outstanding at March 31, 2002.    |                                            |               | 416,545,021 |           |  |       | 56,041,340 |          |   |  | 472,586,361 |          
|                                  |                                            |               |             |           |  |       |            |          |   |  |             |          

Cash Flows

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

Three Months Ended
March 31, 2002 and 2001

Cash and cash equivalents increased by
approximately $242.7 million to approximately
$303.8 million at March 31, 2002, compared to
$61.1 million at December 31, 2001. This increase was
the net result of the receipt of approximately
$278.6 million from operating activities, approximately
$177.2 million from investing activities, which consisted
primarily of approximately $107.7 million from property
dispositions and $149.0 million released from escrows, less
approximately $75.0 million used for capital and tenant
improvements and lease acquisition costs, and approximately
$(213.1) million used for financing activities.

Market Risk

Since December 31, 2001 there were no
material changes in the information regarding market risk that
was provided in the Form 10-K for the year ended
December 31, 2001, except as noted below.

Interest Rate Risk 
Derivatives

During the three months ended March 31,
2002, we entered into two interest rate swap agreements to hedge
certain unsecured notes as summarized below. In each case, we
are the variable rate payer and the counterparty is the fixed
rate payer. The variable interest rate is based on various
spreads over LIBOR. The settlement dates correspond to the
interest payment dates of the respective unsecured notes being
hedged. Each of the interest rate swap agreements terminate on
the maturity date of the respective unsecured notes being hedged.

|           |  |                        |             |           |  |          |      |               |  |  |       |  |  |  |         | 
|---------- |  | ---------------------- | ----------- | --------- |  | -------- | ---- | ------------- |  |  | ----- |  |  |  | ------- | 
|           |  |                        |             | Estimated |  | Fixed    |      | Maturity Date
|           |  | Amount                 |             | Value     |  | Interest |      | of Unsecured 
|Date       |  | Hedged                 |             | (1)       |  | Rate     |      | Notes/Swaps  
|           |  |                        |             |           |  |          |      |              
|           |  |                       
|           |  | (Dollars in thousands)
|March 2002 |  | $                      | 150 million |           |  | $        | (204 | )             |  |  | 6.50% |  |  |  | 1/15/04 | 
|March 2002 |  | $                      | 150 million |           |  | $        | (273 | )             |  |  | 6.50% |  |  |  | 1/15/04 | 




|    |                                                                                       
|--- | --------------------------------------------------------------------------------------
|(1) | Values are as of March 31, 2002, and may
    fluctuate based on market interest rates.

In accordance with FAS 133, Accounting for
Derivative Instruments and Hedging Activities, the above
interest rate swap agreements and the respective unsecured notes
are reflected at market value. Any market adjustment on the swap
agreements will be reflected in other assets or other
liabilities, and the corresponding market adjustment on the
unsecured notes will be reflected as either a discount or
premium on unsecured

26



---



##### 



notes. Because the swap agreements are considered
a perfectly effective fair value hedge, there will be no effect
on net income from the mark to market adjustments.


In February 2002, we terminated the interest
rate swap agreement that hedged $267 million of
$1.1 billion 7.0% unsecured notes due 2011. The total
proceeds as a result of the termination that were recorded as
additional premium on the $1.1 billion unsecured notes were
approximately $3.2 million.

Capital Improvements, Tenant Improvements and
Leasing Commissions

Capital
Improvements

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



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

Tenant Improvements and Leasing
Commissions

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



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

Cost of
Improvements

The table below details the costs incurred for
each type of improvement. These costs exclude similar costs
incurred at unconsolidated joint ventures.

|                      |                                     |                                   |   |        |        | 
|--------------------- | ----------------------------------- | --------------------------------- | - | ------ | ------ | 
|                      |                                     | For the three months ended       
|                      |                                     | March 31, 2002                   
|                      |                                     |                                  
|                      |                                     | (Dollars in thousands, except per
|                      |                                     | square foot amounts)             
|                      |                                     |                                  
|Capital Improvements: |                                     |                                   |   |       
|                      | Capital improvements                |                                   | $ | 11,151 |       
|                      | Development and redevelopment costs |                                   |   | 32,578 |       
|                      |                                     |                                   |   |       
|                      |                                     | Total capital improvements        |   | $      | 43,729 | 
|                      |                                     |                                   |   |       

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

27



---



##### 



Tenant Improvements and Leasing
Commissions:

|                            |                                    |   |        |        | 
|--------------------------- | ---------------------------------- | - | ------ | ------ | 
|Revenue enhancing           |                                    | $ | 8,158  |       
|                            |                                    |   |        |       
|Per square foot leased      |                                    | $ | 22.38  |       
|                            |                                    |   |        |       
|Non-revenue enhancing:      |                                    |   |        |       
|                            | Non-revenue enhancing  renewals   |   | $      | 11,722 | 
|                            | Per square foot leased             |   | $      | 6.51   | 
|                            | Non-revenue enhancing  retenanted |   | $      | 22,830 | 
|                            | Per square foot leased             |   | $      | 14.88  | 
|                            |                                    |   |        |       
|Total non-revenue enhancing |                                    | $ | 34,552 |       
|                            |                                    |   |        |       
|Per square foot leased      |                                    | $ | 10.36  |       
|                            |                                    |   |        |       

The above information includes actual capital
improvements incurred and tenant improvements and leasing
commissions for leases which commenced during the year for the
three months ended March 31, 2002. The amounts included in
the consolidated statements of cash flows represent the cash
expenditures made during the three months ended March 31,
2002. The differences between these amounts represent timing
differences between the lease commencement dates and the actual
cash expenditures as well as expenditures for corporate
furniture, fixtures and equipment, software, leasehold
improvements and other. The reconciliation between the amounts
above and the amounts disclosed in the consolidated statements
of cash flows is as follows:

|                                                                                                                             |  |                      |         |  
|---------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | -
|                                                                                                                             |  | For the three months
|(Dollars in thousands)                                                                                                       |  | ended March 31, 2002
|                                                                                                                             |  |                     
|Total capital improvements, tenant improvements
    and leasing commissions                                                  |  | $                    | 86,439  |  
|Timing differences                                                                                                           |  |                      | (12,551 | )
|Expenditures for corporate furniture, fixtures
    and equipment, software, leasehold improvements and other                 |  |                      | 1,077   |  
|                                                                                                                             |  |                      |         |  
|Total capital improvements, tenant improvements
    and leasing commissions on the consolidated statements of cash
    flows |  | $                    | 74,965  |  
|                                                                                                                             |  |                      |         |  

The table below details our share of the costs
incurred for each type of improvement for Properties owned in
unconsolidated joint ventures:

|                                                       |                                    |                      |        |        | 
|------------------------------------------------------ | ---------------------------------- | -------------------- | ------ | ------ | 
|                                                       |                                    | For the three months
|(Dollars in thousands, except per square foot amounts) |                                    | ended March 31, 2002
|                                                       |                                    |                     
|Capital Improvements:                                  |                                    |                      |        |       
|Capital improvements                                   |                                    | $                    | 374    |       
|Development and redevelopment costs                    |                                    |                      | 29,873 |       
|                                                       |                                    |                      |        |       
|                                                       | Total capital improvements         |                      | $      | 30,247 | 
|                                                       |                                    |                      |        |       
|Tenant Improvements and Leasing
    Commissions:       |                                    |                      |        |       
|Revenue enhancing                                      |                                    | $                    | 524    |       
|                                                       |                                    |                      |        |       
|Per square foot leased                                 |                                    | $                    | 22.65  |       
|                                                       |                                    |                      |        |       
|Non-revenue enhancing:                                 |                                    |                      |        |       
|                                                       | Non-revenue enhancing  renewals   |                      | $      | 487    | 
|                                                       | Per square foot leased             |                      | $      | 8.58   | 
|                                                       | Non-revenue enhancing  retenanted |                      | $      | 683    | 
|                                                       | Per square foot leased             |                      | $      | 12.52  | 
|                                                       |                                    |                      |        |       
|Total non-revenue enhancing                            |                                    | $                    | 1,170  |       
|                                                       |                                    |                      |        |       
|Per square foot leased                                 |                                    | $                    | 10.51  |       
|                                                       |                                    |                      |        |       

28



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##### 



Developments

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

Consolidated
Developments:

|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|------------------------------------ |  | ----------------------------- |  | ------------------ | -- | --------- | - | ------ | --------- | ---------------------- | --------- | -------- |  | --------- | ---- | --------- | ------- | ---------- | ------- | - | ------- | - | ------- | - | ------- | - | ------- |  | -- | - | --- | -
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |          
|                                     |  |                               |  |                    |    |           |   |        |           | EOP Partnerships      |           |          |  |          
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |          
|                                     |  | Estimated                     |  |                    |    |           |   |        |           | Effective              |           |          |  | Total     |      |          
|                                     |  | Placed in                     |  |                    |    |           |   |        |           | Ownership              |           | Costs    |  | Total     |      | Project   |         | Current   
|                                     |  | Service                       |  |                    |    | Number of |   | Square |           | Percentage             |           | Incurred |  | Estimated |      | Estimated |         | Percentage
|Wholly-Owned                         |  | Date(a)                       |  | Location           |    | Buildings |   | Feet   |           | (a)                    |           | (a)      |  | Costs(a)  |      | Costs(a)  |         | Leased    
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |           
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |         
|                                     |  |                               |  |                    |    |           |   |        |           | (Dollars in thousands) |           |         
|Tower at Shores Center               |  | 4Q/2001                       |  | Redwood Shores, CA |    |           | 2 |        |           |                        | 334,800   |          |  |           | 100  | %         |         | $          | 105,113 |   |         | $ | 116,500 |   |         | $ | 116,500 |  |    |   | 32  | %
|EJ Randolph II                       |  | 2Q/2002                       |  | McLean, VA         |    |           | 1 |        |           |                        | 122,000   |          |  |           | 100  | %         |         |            | 27,997  |   |         |   | 35,700  |   |         |   | 35,700  |  |    |   | 100 | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  |                               |  |                    |    |           | 3 |        |           |                        | 456,800   |          |  |           |      |           |         |            | 133,110 |   |         |   | 152,200 |   |         |   | 152,200 |  |    |   | 50  | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                    
|Joint Venture                        |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|Waters Edge Phase I (b)             |  | 3Q/2002                       |  | Los Angeles, CA    |    |           | 2 |        |           |                        | 240,000   |          |  |           | 87.5 | %         |         |            | 38,210  |   |         |   | 74,300  |   |         |   | 76,500  |  |    |   | 0   | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  |                               |  |                    |    |           | 2 |        |           |                        | 240,000   |          |  |           |      |           |         |            | 38,210  |   |         |   | 74,300  |   |         |   | 76,500  |  |    |   | 0   | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|Unconsolidated Developments:         |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         | 
|                                    
|Wilson/Equity Office Developments(c) |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|San Rafael Corporate Center          |  | 4Q/2001                       |  | San Rafael, CA     |    |           | 2 |        |           |                        | 157,700   |          |  |           | 80   | %         |         |            | 38,386  |   |         |   | 48,100  |   |         |   | 60,100  |  |    |   | 12  | %
|Foundry Square II and IV (d)         |  | 3Q/2002 -                     |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  | 1Q/2003                       |  | San Francisco, CA  |    |           | 2 |        |           |                        | 734,800   |          |  |           | (d)  |           |         |            | 86,359  |   |         |   | 150,600 |   |         |   | 259,500 |  |    |   | 31  | %
|Ferry Building(e)                    |  | 3Q/2002                       |  | San Francisco, CA  |    |           | 1 |        |           |                        | 242,000   |          |  |           | (e)  |           |         |            | 32,247  |   |         |   | 60,900  |   |         |   | 99,900  |  |    |   | 0   | %
|Concar(f)                            |  | 4Q/2002                       |  | San Mateo, CA      |    |           | 2 |        |           |                        | 207,000   |          |  |           | 80   | %         |         |            | 25,627  |   |         |   | 55,200  |   |         |   | 68,500  |  |    |   | 99  | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  |                               |  |                    |    |           | 7 |        |           |                        | 1,341,500 |          |  |           |      |           |         |            | 182,619 |   |         |   | 314,800 |   |         |   | 488,000 |  |    |   | 33  | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |   |     |  
|                                     |  | Grand Total/ Weighted Average |  |                    | 12 |           |   |        | 2,038,300 |                        |           |          |  |           |      | $         | 353,939 |            |         | $ | 541,300 |   |         | $ | 716,700 |   |         |  | 33 | %
|                                     |  |                               |  |                    |    |           |   |        |           |                        |           |          |  |           |      |           |         |            |         |   |         |   |         |   |         |   |         |  |    |  

Balance Sheet Reconciliation of
Developments:

|                                                                   |               |                                                                     |       |         |         | 
|------------------------------------------------------------------ | ------------- | ------------------------------------------------------------------- | ----- | ------- | ------- | 
|Consolidated developments  costs
    incurred as reflected above: |               |                                                                     |       |        
|                                                                   | Wholly-owned  |                                                                     | $     | 133,110 |        
|                                                                   | Joint venture |                                                                     |       | 38,210  |        
|Minority interests portion of consolidated
    development         |               |                                                                     | 2,132 |        
|                                                                   |               |                                                                     |       |        
|                                                                   |               | Total developments in process on the consolidated
    balance sheet |       | $       | 173,452 | 
|                                                                   |               |                                                                     |       |        




|    |  |                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The Estimated Placed in Service Date represents
    the date the certificate of occupancy was or is currently
    anticipated to be obtained. Subsequent to obtaining the
    certificate of occupancy, the property is expected to undergo a
    lease-up period.

29



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##### 





|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | For consolidated developments, EOP
    Partnerships Costs Incurred and the Total Estimated Costs
    are based on EOP Partnerships Effective Ownership
    Percentage. The Total Project Estimated Costs represent 100% of
    the estimated costs including any unaffiliated third
    partys portion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | For unconsolidated developments, the Effective
    Ownership Percentage represents EOP Partnerships direct
    interest in the development and its 49.9% interest in Wilson/
    Equity Office (W/ EO). EOP Partnerships Costs
    Incurred and Total Estimated Costs, are based on EOP
    Partnerships Effective Ownership Percentage. The Total
    Project Estimated Costs represent 100% of the estimated costs
    including those of EOP Partnership, Wilson Investors
    (WI) and any unaffiliated partys portions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | The Total Estimated Costs and the Total Project
    Estimated Costs are subject to change upon, or prior to, the
    completion of the development and include amounts required to
    lease the property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(b) |  | EOP Partnership and a third party entered into a
    joint venture agreement for the purpose of developing,
    constructing, leasing and managing Waters Edge Phase I and
    a potential Phase II development. The total cost for the
    development of Phase I and land acquisition of Phase II is
    approximately $91 million, which includes
    $14.5 million allocated to the cost of the Phase II land
    parcel. EOP Partnership plans to fund approximately
    $74.3 million of the Phase I total development costs, which
    consists of 87.5% of the equity component, and the balance in
    the form of preferred equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(c) |  | EOP Partnership and WI entered into a joint
    venture agreement to form W/ EO for the purpose of developing,
    constructing, leasing and managing developments in northern
    California. W/ EO is owned 49.9% by EOP Partnership and 50.1% by
    WI. William Wilson III, a trustee of Equity Office, through his
    ownership of WI, owns approximately 22% of W/ EO (and
    approximately 30% of any promote to which WI is entitled under
    the joint venture agreement). EOP Partnership has agreed to loan
    up to $25 million to WI for its required contribution to W/ EO
    at a 15% return per annum. The balance of this loan as of
    March 31, 2002 is approximately $12 million of
    principal and $2 million of accrued interest all of which
    was repaid in April 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | EOP Partnership has created joint ventures with
    W/EO and, in certain cases, unaffiliated third parties for the
    development of various office properties. The costs for these
    developments are expected to be funded by EOP Partnership and
    W/EO in a 60% / 40% ratio and in some cases by third
    parties as described within each developments respective
    operating agreement. The Board of Trustees of Equity Office has
    also authorized us to negotiate and enter into an agreement with
    W/EO providing for the extension of first mortgage financing to
    the ownership entities of each of these developments at the
    greater of 6.5% or LIBOR plus 3.25%, generally maturing
    36 months after initial funding (or earlier at the option
    of EOP Partnership in the event alternative financing sources
    are available on terms reasonably acceptable to WI and any
    unaffiliated investors). The aggregate amount of any such
    financing would generally be capped at 70% of budgeted
    construction costs. In accordance with the W/EO operating
    agreement, EOP Partnership is entitled, but not required, to
    purchase the W/EO interest in each development subsequent to
    project stabilization.
|   
|(d) |  | Foundry Square is a project with two sites
    currently under development, each of which has a separate joint
    venture structure. EOP Partnerships Effective Ownership
    Percentages are approximately 65% and 40%, for Sites II and IV,
    respectively. Site I, which is owned 100% by EOP Partnership as
    of March 31, 2002, and Site III are currently held as land
    available for development.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(e) |  | In the second quarter 2001, a joint venture
    between EOP Partnership, W/ EO, and other unaffiliated parties
    leased the Ferry Building from the City and County of San
    Francisco, through its Port Commission (the Port).
    Under this lease, the Port is paid a stated base rent. In
    addition, once the lessee has received from the project a
    cumulative preferred return of 8% (prior to stabilization) and
    11% (after stabilization), then 50% of the proceeds from the
    operation and ownership of the project are paid to the Port as
    percentage rent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | The joint venture is redeveloping the Ferry
    Building in a manner to permit the use of federal rehabilitation
    tax credits (Historic Tax Credits). Since the
    original members of the joint venture could not take full
    advantage of the Historic Tax Credits, in the fourth quarter
    2001, the joint venture admitted a new member who could do so.
    This investor member will contribute approximately
    $23.5 million in equity to fund a portion of the Total
    Project Estimated Costs for the project, and will receive a
    preferred                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | return with an effective annual rate of
    approximately 3% on its capital investment. The investor
    members interest in the joint venture is subject to
    put/call rights during the sixth and seventh years after the
    Ferry Building is placed in service. Upon the purchase of the
    investor members interest pursuant to the put/call, it is
    estimated that the joint venture will retain approximately
    $11 million of the capital contributed by the investor
    member, based on a formula to determine the purchase price for
    the investor members interest and after taking into
    account the preferred return that will have been paid to the
    investor member by such time. Through the creation of a master
    lease, EOP Partnerships Effective Ownership Percentage in
    the net cash flow of the Ferry Building project is approximately
    80%, after the distribution of preferred returns.
|   
|(f) |  | Under the terms of the ground lease, the ground
    lessor is entitled to share, in addition to ground rent, in
    proceeds from the operation and ownership of this development
    after a 10% return to the lessee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

In addition to the developments described above,
we own or have under option various land parcels available for
development. These sites represent possible future development
of up to approximately 11.8 million square feet of office
space. The development of these sites will be impacted by the
timing and likelihood of success of the entitlement process,
both of which are uncertain. These sites include, among others :
Russia Wharf, Boston, MA; Reston Town Center, Reston, VA;
Prominence in Buckhead, Atlanta, GA; Perimeter Center, Atlanta,
GA; Tabor Center, Denver, CO; Bridge Pointe, San Diego, CA; La
Jolla Centre, San Diego, CA; Orange Center, Orange, CA; Waters
Edge, Los Angeles, CA; Skyport Plaza, San Jose, CA; Foundry
Square, San Francisco, CA; Larkspur Landing, Larkspur, CA; San
Rafael Corporate Center, San Rafael, CA; Station Oaks, Walnut
Creek, CA; Parkshore Plaza, Folsom, CA; Douglas Corporate
Center, Roseville, CA; Kruse Woods V, Lake Oswego, OR;
Southport, Renton, WA; City Center Bellevue; Bellevue, WA; and
8th Street, Bellevue, WA.

Impact of New Accounting Standards

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

Inflation

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

Funds From Operations
(FFO)

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

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##### 



The following table reflects the calculation of
FFO for the three months ended March 31, 2002 and 2001,
respectively:

|                                                                                                                                                                                                                     |                                                                                         |                                                                |         |          |         |   |         |          |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                                                                                                                                                                                                     |                                                                                         |                                                               
|                                                                                                                                                                                                                     |                                                                                         | For the three months                                          
|                                                                                                                                                                                                                     |                                                                                         | ended March 31,                                               
|                                                                                                                                                                                                                     |                                                                                         |                                                               
|(Dollars in thousands)                                                                                                                                                                                               |                                                                                         | 2002                                                           |         | 2001    
|                                                                                                                                                                                                                     |                                                                                         |                                                                |         |         
|Income before income taxes, allocation to
    minority interests, income from investment in unconsolidated
    joint ventures, discontinued operations and cumulative effect of
    a change in accounting principle |                                                                                         | $                                                              | 197,812 |          |         | $ | 137,230 |         
|Add (deduct):                                                                                                                                                                                                        |                                                                                         |                                                                |         |          |         |   |         |         
|                                                                                                                                                                                                                     | Income taxes                                                                            |                                                                |         | (7,006   | )       |   |         | (1,517   | )      
|                                                                                                                                                                                                                     | Income allocated to minority interests for
    partially owned properties               |                                                                |         | (1,406   | )       |   |         | (3,253   | )      
|                                                                                                                                                                                                                     | Income from investment in unconsolidated joint
    ventures (excluding gain             |                                                                |         | 57,349   |         |   |         |          |        
|                                                                                                                                                                                                                     |                                                                                         | on sale of $279 for the three months ended
    March 31, 2002) |         |          |         |   |         |          | 15,426  | 
|                                                                                                                                                                                                                     | Depreciation and amortization (real estate
    related) (including EOP                  |                                                                |         |          |         |   |         |          |        
|                                                                                                                                                                                                                     |                                                                                         | Partnerships share of unconsolidated joint
    ventures)      |         |          | 178,945 |   |         |          | 133,673 | 
|                                                                                                                                                                                                                     | Discontinued operations (excluding depreciation,
    amortization and net loss on sale) |                                                                |         | 775      |         |   |         | 1,916    |        
|                                                                                                                                                                                                                     | Preferred distributions                                                                 |                                                                |         | (15,830  | )       |   |         | (10,884  | )      
|                                                                                                                                                                                                                     |                                                                                         |                                                                |         |          |         |   |         |         
|Funds from Operations                                                                                                                                                                                                |                                                                                         | $                                                              | 410,639 |          |         | $ | 272,591 |         
|                                                                                                                                                                                                                     |                                                                                         |                                                                |         |          |         |   |         |         
|Cash flow provided by (used for):                                                                                                                                                                                    |                                                                                         |                                                                |         |          |         |   |         |         
|                                                                                                                                                                                                                     | Operating Activities                                                                    |                                                                | $       | 278,581  |         |   | $       | 192,801  |        
|                                                                                                                                                                                                                     | Investing Activities                                                                    |                                                                | $       | 177,230  |         |   | $       | (63,672  | )      
|                                                                                                                                                                                                                     | Financing Activities                                                                    |                                                                | $       | (213,094 | )       |   | $       | (144,775 | )      
|Ratio of earnings to combined fixed charges and
    preferred share distributions                                                                                                                                    |                                                                                         |                                                                | 1.9     |          |         |   | 1.8     |         

The White Paper on FFO approved by NAREIT in
March 1995 defines FFO as net income, computed in
accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of properties (which EOP Partnership
believes includes impairments on properties held for sale), plus
real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures.
In November 1999, NAREIT issued a National Policy Bulletin
effective January 1, 2000 clarifying the definition of FFO
to include all operating results, both recurring and
non-recurring, except those defined as extraordinary under GAAP.
We believe that FFO is helpful to investors as a measure of the
performance of a real estate company because, along with cash
flow from operating activities, investing activities and
financing activities, it provides investors with an indication
of the ability of a company to incur and service debt, to make
capital expenditures and to fund other cash needs. We compute
FFO in accordance with standards established by NAREIT, which
may not be comparable to FFO reported by other real estate
companies that do not define the term in accordance with the
current NAREIT definition or that interpret the current NAREIT
definition differently than us. FFO does not represent cash
generated from operating activities in accordance with GAAP, nor
does it represent cash available to pay distributions and should
not be considered as an alternative to net income, determined in
accordance with GAAP, as an indication of our financial
performance or to cash flow from operating activities determined
in accordance with GAAP, as a measure of our liquidity, nor is
it indicative of funds available to fund our cash needs,
including our ability to make cash distributions.

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##### 





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

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

PART II. OTHER INFORMATION



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

(a) Exhibits

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

(b) Reports on Form 8-K

Two reports on Form 8-K were filed during
the quarter ended March 31, 2002, as follows:

|                  |  |                                          
|----------------- |  | -----------------------------------------
|Date of Event     |  | Items Reported/Financial Statements Filed
|                  |  |                                          
|February 12, 2002 |  | Item 5, Other Events                     
|                  |  | Item 7, Financial Statements and Exhibits
|February 12, 2002 |  | Item 5, Other Events                     
|                  |  | Item 7, Financial Statements and Exhibits

33



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##### 





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: May 15, 2002

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

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

Date: May 15, 2002

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

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

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##### 





EXHIBIT INDEX


|            |  |                                                                                                                                                                                                                                                                |  |          |  | 
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- |  | 
|Exhibit No. |  | Description                                                                                                                                                                                                                                                    |  | Page No.
|            |  |                                                                                                                                                                                                                                                                |  |         
|4.1         |  | $400,000,000 6 3/4% Note due
    February 15, 2012, and related                                                                                                                                                                                                |  |          |  | 
|            |  | Guarantee (incorporated herein by reference to
    Exhibit 4.1 to EOP Partnerships Current Report on
    Form 8-K filed with the SEC on February 15, 2002)                                                                                                    |  |          |  | 
|4.2         |  | $100,000,000 6 3/4% Note due
    February 15, 2012, and related Guarantee (incorporated
    herein by reference to Exhibit 4.2 to EOP
    Partnerships Current Report on Form 8-K filed with
    the SEC on February 15, 2002)                                |  |          |  | 
|10.1        |  | Form of Share Appreciation Rights Agreement by
    and between Equity Office and Jan H. W. R. van der Vlist
    (incorporated herein by reference to Exhibit 10.1 to Equity
    Offices Quarterly Report on Form 10-Q filed with the
    SEC on May 15, 2002) |  |          |  | 
|12.1        |  | Statement of Earnings to Combined Fixed Charges
    and Preferred Distributions                                                                                                                                                                                |  |          |  | 

35