UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999

                         Commission file number: 1-13762



                       RECKSON OPERATING PARTNERSHIP, L.P.
             (Exact name of registrant as specified in its charter)


Delaware                                                             11-3233647
--------                                                             ----------
(State other jurisdiction of                                     (IRS. Employer
incorporation of organization)                           Identification Number)

225 Broadhollow Road, Melville, NY                                        11747
----------------------------------                                        -----
(Address of principal executive office)                              (zip code)

                                 (516) 694-6900
               (Registrant's telephone number including area code)


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days.

                                    Yes X No

<PAGE>
                      RECKSON OPERATING PARTNERSHIP, L. P.
                                QUARTERLY REPORT
                    FOR THE THREE MONTHS ENDED JUNE 30, 1999

                               TABLE OF CONTENTS


INDEX                                                            PAGE
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PART I.  FINANCIAL INFORMATION
--------------------------------------------------------------------------------

Item 1.  Financial Statements

         Consolidated  Balance  Sheets as of June 30,
         1999 (unaudited) and December 31, 1998                    2

         Consolidated  Statements  of Income  for the
         three and six months ended June 30, 1999 and
         1998 (unaudited)                                          3

         Consolidated  Statements  of Cash  Flows for
         the six  months  ended  June  30,  1999  and
         1998 (unaudited)                                          4

         Notes   to   the   Consolidated    Financial
         Statements (unaudited)                                    5

Item 2.  Management's   Discussion  and  Analysis  of
         Financial    Condition    and   Results   of
         Operations

Item 3.  Quantitative  and  Qualitative   Disclosures
         about Market Risk

--------------------------------------------------------------------------------
PART II. OTHER INFORMATION
--------------------------------------------------------------------------------
Item 1.  Legal Proceedings
Item 2.  Changes in Securities and use of proceeds
Item 3.  Defaults Upon Senior Securities
Item 4.  Submission of Matters to a Vote of Securities
         Holders
Item 5.  Other Information
Item 6.  Exhibits and Reports on form 8-K
--------------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
                         Reckson Operating Partnership, L.P.
                             Consolidated Balance Sheets
                  (Dollars in thousands, except for share amounts)
<CAPTION>
                                                        June 30,        December 31,
                                                         1999              1998
                                                      -----------       -----------
                                   (unaudited)
<S>                                                   <C>               <C>
Assets
Commercial real estate properties, at cost
   Land                                               $   289,191       $   212,540
   Buildings and improvements                           1,835,625         1,372,549
Developments in progress:                                                       ---
   Land                                                    75,354            69,143
   Development costs                                       71,613            82,901
Real estate held for sale                                 221,703               ---
Furniture, fixtures and equipment                           6,486             6,090
                                                      -----------       -----------
                                                        2,499,972         1,743,223
Less accumulated depreciation                            (189,482)         (159,049)
                                                      -----------       -----------
                                                        2,310,490         1,584,174
Investments in real estate joint ventures                  21,803            15,104
Investment in mortgage notes and notes
   receivable                                             341,666            99,268
Cash and cash equivalents                                  41,289             2,228
Tenant receivables                                          2,978             5,159
Investments in and advances to affiliates                  94,698            53,154
Deferred rent receivable                                   24,955            22,526
Prepaid expenses and other assets                          20,053            46,372
Contract and land deposits and
   pre-acquisition costs                                    2,118             2,253
Deferred lease and loan costs                              33,324            24,282
                                                      -----------       -----------
   Total Assets                                       $ 2,893,374       $ 1,854,520
                                                      ===========       ===========
Liabilities
Mortgage notes payable                                $   387,014       $   253,463
Unsecured credit facilities                               479,100           465,850
Unsecured term loan                                        75,000            20,000
Senior unsecured notes                                    449,279           150,000
Accrued expenses and other liabilities                     64,472            48,384
Distributions payable                                      24,915            19,663
Affiliate payables                                          1,157             2,395
                                                      -----------       -----------
   Total Liabilities                                    1,480,937           959,755
                                                      -----------       -----------
Commitments and other comments                                ---               ---

Minority interests in consolidated partnerships           127,506            52,173
                                                      -----------       -----------

PARTNERS' CAPITAL

Preferred Capital, 15,234,518  and 9,234,518
   units outstanding, respectively                        413,126           263,126
General Partner's Capital:
   Common units, 40,364,588 and 40,035,419
        units outstanding, respectively                   479,826           485,341
   Class B Common Units, 11,694,567 and 0 units
        outstanding, respectively                         300,539               ---
Limited Partners' Capital, 7,701,542 and
   7,764,630 units outstanding, respectively               91,440            94,125
                                                      -----------       -----------
   Total Partners' Capital                              1,284,931           842,592
                                                      -----------       -----------
        Total Liabilities and Partners' Capital       $ 2,893,374       $ 1,854,520
                                                      ===========       ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
                                         Reckson Operating Partnership, L.P.
                                          Consolidated Statements of Income
                          (Unaudited and in thousands, except per share and share amounts)
<CAPTION>

                                                     Three Months Ended June 30,       Six Months Ended June 30,
                                                    ------------------------------  -------------------------------
                                                          1999           1998           1999              1998
                                                    --------------  --------------  --------------  ---------------
<S>                                                  <C>             <C>             <C>             <C>
Revenues:
Base rents                                           $     77,192    $     55,536    $    139,285    $     102,571
Tenant escalations and reimbursements                       8,586           7,061          17,129           13,113
Equity in earnings of real estate joint ventures              438             173             649              273
Equity in earnings of service companies                        74             651             240              392
Interest income on mortgage notes and notes
   receivable                                               1,910           1,773           4,718            3,453
Other                                                       2,646           1,073           4,932            1,527
                                                     ------------    ------------    ------------    -------------
   Total Revenues                                          90,846          66,267         166,953          121,329
                                                     ------------    ------------    ------------    -------------
Expenses:
Property operating expenses                                15,038          12,073          27,436           21,693
Real estate taxes                                          12,011           9,032          22,112           17,036
Ground rents                                                  490             432             898              845
Marketing, general and administrative                       4,550           3,639           8,624            6,943
Interest                                                   18,902          10,970          32,846           21,497
Depreciation and amortization                              19,127          12,457          34,218           23,264
                                                     ------------    ------------    ------------    -------------
   Total Expenses                                          70,118          48,603         126,134           91,278
                                                     ------------    ------------    ------------    -------------
Income before distributions to preferred unit
   holders and minority interests'                         20,728          17,664          40,819           30,051
Preferred unit distributions                               (5,989)         (4,168)        (11,031)          (4,168)
Minority partners' interest in consolidated
   partnerships income                                     (1,615)           (712)         (2,783)          (1,273)
                                                     ------------    ------------    ------------    -------------
Net income available to common unit holders          $     13,124    $     12,784    $     27,005    $      24,610
                                                     ============    ============    ============    =============
Net Income:
   General Partner - common units                    $      9,550    $     10,022    $     21,190    $      19,857
   General Partner - Class B Common Units                   1,747             ---           1,747              ---
   Limited Partners'                                        1,827           2,762           4,068            4,753
                                                     ------------    ------------    ------------    -------------
Total                                                $     13,124    $     12,784    $     27,005    $      24,610
                                                     ============    ============    ============    =============

Net income per common unit:
   General Partner - common units                    $       0.24    $       0.25    $       0.53    $        0.51
   General Partner - Class B Common Units            $       0.36    $        ---    $       0.71    $         ---
   Limited Partners'                                 $       0.24    $       0.36    $       0.53    $        0.62

Weighted average common units outstanding:
   General Partner - common units                      40,285,000      39,637,000      40,167,000       38,914,000
   General Partner - Class B Common Units               4,883,000             ---       2,455,000              ---
   Limited Partners'                                    7,705,000       7,694,000       7,708,000        7,701,000
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
                       Reckson Operating Partnership, L.P
                      Consolidated Statement of Cash Flows
                          (Unaudited and in thousands)
<CAPTION>

                                                                        Six Months Ended June 30,
                                                                        -------------------------
                                                                           1999           1998
                                                                        ----------    -----------
<S>                                                                     <C>           <C>
Cash Flows From Operating Activities:
Net Income available to common unitholders                              $   27,005    $    24,610
Adjustments   to  reconcile  net  income  to  net  cash  provided
by operating activities:
     Depreciation and amortization                                          34,218         23,264
     Minority partners' interests in consolidated partnerships               2,783          1,273
     Loss reserve on real estate held for sale .                             4,450            ---
     Gain of sale of interest in Reckson Executive Centers, LLC                ---             (9)
     Gain on sale of securities and mortgage redemption                     (4,492)           (43)
     Distribution from a real estate joint venture                             173            217
     Equity in earnings of service companies                                  (240)          (392)
     Equity in earnings of real estate joint ventures                         (649)          (273)
Changes in operating assets and liabilities:
     Prepaid expenses and other assets                                     (15,254)       (10,728)
     Tenant receivables                                                      2,181            913
     Deferred rents receivable                                              (2,429)        (3,614)
     Real estate tax escrow                                                   (618)           115
     Accrued expenses and other liabilities                                 22,232          8,573
                                                                        ----------    -----------
     Net cash provided by operating activities                              69,360         43,906
                                                                        ----------    -----------
Cash Flows from Investing Activities:
     Purchases of commercial real estate properties                       (194,871)      (383,366)
     Increase in real estate held for sale .                               (57,095)           ---
     Increase in deposits and pre- acquisition costs                        (1,889)         4,187
     Investment in mortgage notes and notes receivable                    (262,643)        20,097
     Additions to commercial real estate properties                        (16,389)        (9,754)
     Additions to developments in progress                                  (8,073)       (43,330)
     Payment of leasing costs                                               (7,377)        (3,768)
     Additions to furniture, fixtures and equipment                           (447)          (776)
     Investments in real estate joint ventures                              (6,223)        (2,970)
     Proceeds from sales of property, securities and mortgage
         redemption                                                         25,929            809
                                                                        ----------    -----------
     Net cash used in investing activities                                (529,078)      (418,871)
                                                                        ----------    -----------
Cash Flows from Financing Activities:
     Principal payments on secured borrowings                               (1,495)        (3,118)
     Proceeds from issuance of senior unsecured notes net of
         issuance costs                                                    299,262            ---
     Payment of loan costs                                                  (5,368)           (69)
     Investments in and advances to affiliates                             (41,304)       (26,205)
     Proceeds from unsecured credit facilities                             299,000        180,996
     Principal payments on unsecured credit facilities                    (230,750)       (94,000)
     Contributions of minority partners' in consolidated partnerships       75,000            ---
     Contributions                                                         149,300        314,315
     Distributions                                                         (42,416)       (14,498)
     Distributions to minority partners' in consolidated partnerships       (2,450)        (1,311)
                                                                        ----------    -----------
     Net cash provided by  financing activities                            498,779        356,110
                                                                        ----------    -----------
     Net increase (decrease) in cash and cash equivalents                   39,061        (18,855)
     Cash and cash equivalents at beginning of period                        2,228         21,676
                                                                        ----------    -----------
     Cash and cash equivalents at end of period                         $   41,289    $     2,821
                                                                        ==========    ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>

                      RECKSON OPERATING PARTNERSHIP, L. P.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1999
                                  (unaudited)

1.   Organization and Formation of the Operating Partnership

     Reckson  Operating  Partnership,   L.  P.  (The  "Operating   Partnership")
commenced  operations on June 2, 1995 and is the successor to the  operations of
the  Reckson  Group.  The sole  general  partner in the  Operating  Partnership,
Reckson  Associates Realty Corp. (the "Company") is a self administered and self
managed Real Estate Investment Trust ("REIT").

     The Operating  Partnership  executed various option and purchase agreements
whereby it issued 2,758,960 units in the Operating  Partnership ("Units") to the
continuing  investors  and assumed  approximately  $163 million (net of the Omni
mortgages)  of  indebtedness  in  exchange  for  interests  in certain  property
partnerships,  fee simple and leasehold  interests in properties and development
land,  certain  business assets of the executive center entities and 100% of the
non-voting preferred stock of the management and construction companies.

     As of June 30, 1999, the Operating Partnership owned and operated 92 office
properties  comprising  approximately  14.9 million  square feet, 130 industrial
properties  comprising  approximately  11.1  million  square feet and two retail
properties comprising  approximately 20,000 square feet, located in the New York
Tri-State area (the "Tri-State  Area"). In addition,  the Operating  Partnership
owned or had contracted to acquire  approximately 1,013 acres of land (including
approximately  306 acres  under  option)  in 20  separate  parcels  of which the
Operating  Partnership  can develop  approximately  9.8  million  square feet of
industrial  and  office  space.  The  Operating  Partnership  also has  invested
approximately  $306.1 million in mortgage notes encumbering three Class A office
properties encompassing approximately 1.6 million square feet, a 306 acre parcel
of land located in New Jersey and in a note receivable  secured by a partnership
interest in Omni Partner's, L.P., owner of the Omni, a 575,000 square foot Class
A office property located in Uniondale, New York.

     During 1997, the Company formed Reckson Service  Industries,  Inc.  ("RSI")
and Reckson  Strategic  Venture  Partners,  LLC ("RSVP").  On June 11, 1998, the
Operating  Partnership  distributed  its 95%  common  stock  interest  in RSI of
approximately  $3 million to its owners,  including the Company which,  in turn,
distributed the common stock of RSI to its  stockholders.  Additionally,  during
June 1998,  the Operating  Partnership  established  a credit  facility with RSI
(the"RSI  Facility")  in the amount of $100  million  for RSI's  service  sector
operations  and other  general  corporate  purposes.  As of June 30,  1999,  the
Operating  Partnership  had advanced $46.4 million under the RSI facility all of
which is  outstanding.  In  addition,  the  Operating  Partnership  approved the
funding  of  investments  of up to  $100  million  with or in  RSVP  (the  "RSVP
Commitment"),  through RSVP-controlled joint venture REIT-qualified  investments
or advances made to RSI under terms similar to the RSI Facility.  As of June 30,
1999, approximately $36.9 million had been invested through the RSVP Commitment,
of which $16.3 million  represents RSVP controlled joint venture  REIT-qualified
investments  and  $20.6  million  represents  advances  to RSI  under  the  RSVP
Commitment.  RSI serves as the managing member of RSVP. RSI invests in operating
companies that generally  provide  commercial  services to the RSI customer base
which includes the tenants of RSI's  executive  suite business and to properties
owned by the Operating Partnership and its tenants and third parties nationwide.
RSVP was formed to provide the Company with a research and  development  vehicle
to invest in alternative  real estate  sectors.  RSVP invests  primarily in real
estate and real estate  related  operating  companies  generally  outside of the
Company's core office and industrial  focus.  RSVP's strategy is to identify and
acquire  interests in established  entrepreneurial  enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique  circumstances  for  attractive  investments  as well as a
platform for future growth.

     On January 6, 1998, the Operating  Partnership made its initial  investment
in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse
facilities.  In connection with the transaction the Morris Companies contributed
100% of their  interests  in certain  industrial  properties  to Reckson  Morris
Operating Partnership, L. P. ("RMI") in exchange for operating partnership units
in RMI.  The  Operating  Partnership  has agreed to invest up to $150 million in
RMI. As of June 30, 1999, the Operating  Partnership has invested  approximately
$95.5 million for an approximate 72% controlling  interest. In addition, at June
30, 1999, the Operating  Partnership had advanced  approximately  $34 million to
RMI to acquire an 846,000 square foot industrial property (see note 9).

     During  July  1998,  the  Company   formed   Metropolitan   Partners,   LLC
("Metropolitan")   for  the  purpose  of  acquiring  Tower  Realty  Trust,  Inc.
("Tower"). On May 24, 1999 the Company completed the merger with Tower (see Note
6) and  acquired  three  Class A office  properties  located  in New  York  City
totaling 1.6 million square feet and one office property  located on Long Island
totaling approximately 101,000 square feet. In addition, pursuant to the merger,
the  Company  also  acquired  certain  office   properties,   a  property  under
development  and land located  outside of the  Tri-State  Area which have either
been sold,  are under  contract  to sell or are being held for sale.  The assets
currently being held for sale have been included in real estate held for sale on
the accompanying consolidated balance sheet.

Basis of Presentation

     The accompanying consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries at June 30,
1999 and December 31, 1998 and the results of its  operations  for the three and
six months ended June 30, 1999 and 1998,  respectively,  and, its cash flows for
the six  months  ended  June 30,  1999 and  1998,  respectively.  The  Operating
Partnership's  investments  in  Metropolitan,  RMI  and  Omni  Partners,  L.  P.
("Omni"),   are  reflected  in  the  accompanying   financial  statements  on  a
consolidated  basis  with a  reduction  for  minority  partners'  interest.  The
operating  results of the  service  businesses  currently  conducted  by Reckson
Management Group, Inc., and Reckson  Construction  Group, Inc., are reflected in
the accompanying  financial  statements on the equity method of accounting.  The
Operating  Partnership  also invests in real estate joint  ventures where it may
own less than a controlling interest, such investments are also reflected in the
accompanying  financial  statements  on the  equity  method of  accounting.  All
significant  intercompany  balances and transactions have been eliminated in the
consolidated financial statements

     The  merger  with  Tower (see note 6) was  accounted  for as a purchase  in
accordance with Accounting  Principles  Board Opinion No. 16.  Accordingly,  the
fair  value  of  the  consideration  given  by  the  Operating  Partnership,  in
accordance with GAAP, was used as the valuation basis for the merger. The assets
acquired and liabilities  assumed by the Operating  Partnership were recorded at
the fair  value as of the  closing  date of the  merger  and the  excess  of the
purchase  price  over  the  historical  basis  of the net  assets  acquired  was
allocated  primarily to commercial  real estate  properties and real estate held
for sale.

     The  minority  interests  at June 30, 1999  represent  an  approximate  28%
interest in RMI, a  convertible  preferred  interest in  Metropolitan  and a 40%
interest in Omni.

     The accompanying  interim unaudited financial statements have been prepared
by the Operating Partnership's  management pursuant to the rules and regulations
of the Securities  and Exchange  Commission  ("SEC").  Certain  information  and
footnote  disclosure  normally included in the financial  statements prepared in
accordance with generally accepted accounting  principles ("GAAP") may have been
condensed or omitted pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information presented not
misleading.  The unaudited financial  statements as of June 30, 1999 and for the
six month  periods  ended  June 30,  1999 and 1998  include,  in the  opinion of
management,  all  adjustments,   consisting  of  normal  recurring  adjustments,
necessary to present  fairly the financial  information  set forth  herein.  The
results of operations for the interim periods are not necessarily  indicative of
the results  that may be expected for the year ending  December 31, 1999.  These
financial   statements   should  be  read  in  conjunction  with  the  Operating
Partnership's  audited financial statements and notes thereto for the year ended
December  31, 1998  included in the  Operating  Partnership's  Form S-3 filed on
March 11, 1999 with the SEC.

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative  Instruments and Hedging  Activities",  which is
required to be adopted in years  beginning  after June 15, 1999.  The  Statement
permits  early  adoption as of the  beginning  of any fiscal  quarter  after its
issuance. The Operating Partnership expects to adopt the new Statement effective
January 1, 2001. The Operating Partnership does not anticipate that the adoption
of this Statement will have any effect on its results of operations or financial
position.

     Certain prior year amounts have been reclassified to conform to the current
year presentation.

2.   Mortgage Notes Payable

     As of June 30, 1999,  the  Operating  Partnership  had  approximately  $387
million of fixed rate  mortgage  notes  which  mature at various  times  between
August 1999 and November  2027.  The notes are secured by 25 properties  and two
parcels of land and have a weighted average interest rate of approximately 7.5%.
In addition,  as of June 30, 1999, the Operating  Partnership had a construction
loan payable  secured by a  development  property held for sale in the amount of
approximately $5.4 million which was satisfied during July 1999.

3.   Senior Unsecured Notes

     As  of  June  30,  1999,   the  Operating   Partnership   had   outstanding
approximately  $449.3  million (net of issuance  discounts) of senior  unsecured
notes  (the  "Senior  Unsecured  Notes").  The  following  table  sets forth the
Operating  Partnership's  Senior  Unsecured Notes and other related  disclosures
(dollars in thousands):

   Issuance          Face Amount     Coupon Rate     Term         Maturity
   --------          -----------     -----------     ----         --------
August 27, 1997       $ 150,000         7.20%      10 years    August 28, 2007
March 26, 1999        $ 100,000         7.40%       5 years    March 15, 2004
March 26, 1999        $ 200,000         7.75%      10 years    March 15, 2009

     Interest  on the  Senior  Unsecured  Notes  is  payable  semiannually  with
principal and unpaid interest due on the scheduled  maturity dates. In addition,
the five year and 10 year Senior  Unsecured  Notes issued on March 26, 1999 were
issued at a discount of $172,000 and $566,000, respectively.

     Net proceeds of approximately  $297.4 million received from the issuance of
the  March 26,  1999  Senior  Unsecured  Notes  were  used to repay  outstanding
borrowings under the Credit Facility.

4.   Unsecured Credit Facilities and Unsecured Term Loan

     As of June 30,  1999,  the  Operating  Partnership  had a three  year  $500
million unsecured  revolving credit facility (the "Credit  Facility") from Chase
Manhattan  Bank,  Union Bank of  Switzerland  and PNC Bank as co-managers of the
credit  facility  bank  group.  Interest  rates on  borrowings  under the Credit
Facility  are  priced off of LIBOR plus a sliding  scale  ranging  from 65 basis
points to 90 basis points based on the Operating Partnership's  investment grade
rating  on  its  senior  unsecured  debt.  On  March  16,  1999,  the  Operating
Partnership  received its second investment grade rating on its senior unsecured
debt. As a result,  the pricing under the Credit  Facility was adjusted to LIBOR
plus 90 basis points.

     The Operating Partnership utilizes the Credit Facility primarily to finance
the  acquisitions  of  properties  and other real estate  investments,  fund its
development  activities and for working capital purposes.  At June 30, 1999, the
Operating  Partnership had  availability  under the Credit Facility to borrow an
additional  $123 million (net of $28 million of outstanding  undrawn  letters of
credit).

     As of June 30, 1999, the Operating  Partnership  had a one year $75 million
unsecured term loan (the "Term Loan") from Chase Manhattan Bank.  Interest rates
on borrowings  under the Term Loan are priced off of LIBOR plus 150 basis points
for the first nine months and 175 basis points for the  remaining  three months.
At June 30, 1999, the Operating  Partnership had $75 million  outstanding  under
the Term Loan.

     On May 24, 1999, in conjunction with the acquisition of Tower (see Note 6),
the Operating Partnership obtained a $130 million unsecured bridge facility (The
"Bridge  Facility") from UBS AG.  Interest rates on borrowings  under the Bridge
Facility were priced off of LIBOR plus  approximately  214 basis points. On July
23, 1999, the Bridge  Facility was repaid through a long term fixed rate secured
borrowing.

5.   Partners' Capital

     On May 26,  1999 the  Operating  Partnership  declared  a  distribution  of
$.37125 per common  partnership unit payable on July 16, 1999 to its unitholders
of record as of July 8, 1999. The  distribution  declared,  which related to the
three months ended June 30, 1999, is based upon an annual distribution of $1.485
per unit.

     On May 26, 1999 the Operating  Partnership  declared a distribution  on the
general  partner's Series A preferred units of $.4766 per unit payable on August
2, 1999. The distribution declared, which relates to the three months ended July
31, 1999 is based on an annual distribution of $1.906 per unit.

     On May 24, 1999, in conjunction with the Tower  acquisition,  the Operating
Partnership  issued  11,694,567  Class B  Common  Units of  general  partnership
interest to the Company  which were valued for GAAP purposes at $26 per unit for
total  consideration of approximately  $304.1 million.  The Class B Common Units
are entitled to receive an initial annual  distribution  of $2.24 per unit which
distribution  is subject to  adjustment  annually.  The Class B Common Units are
exchangeable  at any time, at the option of the holder,  into an equal number of
common  units  subject to  customary  antidilution  adjustments.  The  Operating
Partnership, at its option, may redeem any or all of the Class B Common Units in
exchange  for an equal  number of common  units at any time  following  the four
year, six-month anniversary of the issuance of the Class B Common Units.

     On June 2, 1999,  the  Operating  Partnership  issued six million  Series B
preferred units of general partnership  interests to the Company in exchange for
approximately  $150  million.  The Series B preferred  units have a  liquidation
preference of $25 per unit, and an initial  distribution rate of 7.85% per annum
with such rate  increasing to 8.35% per annum on April 30, 2000 and to 8.85% per
annum  from and  after  April  30,  2001.  The  Series  B  preferred  units  are
convertible to common units at a conversion  rate of .9597 common units for each
preferred unit and are redeemable by the Operating Partnership on or after March
2, 2002. Proceeds from the issuance of the Series B preferred units were used as
partial  consideration  in the acquisition of the first mortgage note secured by
919 Third Avenue located in New York City.

     On July 9, 1999 the Operating Partnership declared a distribution of $.4231
per Class B common  partnership  unit  payable on August 2, 1999 to the  general
partner.  The  distribution  declared,  which related to the period from May 24,
1999 through July 31, 1999,  is based upon an annual  distribution  of $2.24 per
unit.

     Net income per common  partnership unit and Class B Common partnership unit
is  determined  by  allocating  net income  after  preferred  distributions  and
minority partners' interest in consolidated  partnerships  income to the general
and limited  partners' based on their weighted  average  distribution per common
partnership units outstanding during the respective periods presented.

     Holders of preferred units of limited and general partnership  interest are
entitled  to  distributions  based on the  stated  rates of return  (subject  to
adjustment) for those units.

6.   Commercial Real Estate Investments

     During the three  months ended March 31, 1999,  the  Operating  Partnership
purchased  approximately  68.1 acres of vacant land in  Northern  New Jersey for
approximately  $2.6 million which allows for  approximately  1.1 million  square
feet of future development opportunities.  In addition, RMI purchased 74.6 acres
of vacant land for  approximately  $3.7 million  which allows for  approximately
1,000,000 square feet of future development  opportunities and an 846,000 square
foot industrial  property located in Cranbury,  New Jersey for approximately $34
million which was advanced by the Company.

     On April 13, 1999, the Operating  Partnership received  approximately $25.8
million from the  redemption of a mortgage note  receivable  which secured three
office   properties   located  in  Garden  City,   Long   Island,   encompassing
approximately  400,000  square  feet.  As a result,  the  Operating  Partnership
recognized a gain of approximately $4.5 million.  Such gain has been included in
other income on the accompanying consolidated statement of income.

     On June 7, 1999 the Operating  Partnership sold a 24,000 square foot office
property  located in  Ossining,  New York for  approximately  $1.5  million.  As
partial  consideration for the sale, the Operating  Partnership  obtained a $1.2
million, three year purchase money mortgage.

     On June 15, 1999,  the Operating  Partnership  acquired the first  mortgage
note  secured by a 42 story,  1.4 million  square  foot Class A office  property
located at 919 third Avenue in New York City for  approximately  $277.5 million.
The first  mortgage note entitles the Operating  Partnership to all the net cash
flow of the property and to substantial  rights  regarding the operations of the
property, with the Operating Partnership anticipating ultimately obtaining title
to the property.  This  acquisition was financed with proceeds from the issuance
of six million  Series B preferred  units of general  partnership  interest (see
note  5)  and  through  draws  under  the  Credit  Facility.  Current  financial
accounting  guidelines  provide that where a lender has virtually the same risks
and  potential  rewards as those of a real estate owner it should  recognize the
full  economics  associated  with the  operations of the property.  As such, the
Operating Partnership has recognized the real estate operations of the 919 Third
Avenue in the accompanying  consolidated statement of income for the period from
the date of acquisitions through June 30, 1999.

     In July 1998,  the Company formed a joint  venture,  Metropolitan  Partners
LLC, a Delaware limited liability company  ("Metropolitan"),  with Crescent Real
Estate Equities Company, a Texas real estate investment trust ("Crescent").

     On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower")  executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger")   into   Metropolitan,   with   Metropolitan   surviving  the  Merger.
Concurrently with the Merger, Tower Realty Operating  Partnership,  L.P. ("Tower
OP") was merged with and into a subsidiary of  Metropolitan.  The  consideration
issued  in the  mergers  was  comprised  of (i) 25% cash  (approximately  $107.2
million) and (ii) 75% of shares of Class B Exchangeable  Common Stock, par value
$.01 per share,  of the Company  (the "Class B Common  Stock")  (valued for GAAP
purposes at approximately $304.1 million).

     Under the terms of the transaction,  Metropolitan effectively paid for each
share of Tower  common  stock and each unit of limited  partnership  interest of
Tower OP the sum of (i)  $5.75 in cash,  and (ii)  0.6273  of a share of Class B
Common  Stock.  The shares of Class B Common  Stock are  entitled  to receive an
initial  annual  dividend  of $2.24 per  share,  which  dividend  is  subject to
adjustment annually.  The shares of Class B Common Stock are exchangeable at any
time,  at the  option of the  holder,  into an equal  number of shares of common
stock,   par  value  $.01  per  share,  of  the  Company  subject  to  customary
antidilution  adjustments.  The Company, at its option, may redeem any or all of
the  Class B Common  Stock in  exchange  for an equal  number  of  shares of the
Company's  common  stock  at  any  time  following  the  four  year,   six-month
anniversary of the issuance of the Class B Common Stock.

     The  Company  controls  Metropolitan  and owns 100% of the  common  equity;
Crescent  owns  a $85  million  preferred  equity  investment  in  Metropolitan.
Crescent's  investment  accrues  distributions at a rate of 7.5% per annum for a
two-year  period and may be  redeemed  by  Metropolitan  at any time during that
period for $85 million,  plus an amount  sufficient  to provide a 9.5%  internal
rate of return. If Metropolitan does not redeem the preferred interest, upon the
expiration  of the  two-year  period,  Crescent  must  convert  its $85  million
preferred interest into either (i) a common membership  interest in Metropolitan
or (ii) shares of the Company's common stock at a conversion price of $24.61 per
share.

     The  Tower  portfolio  acquired  in the  Merger  consists  of three  office
properties comprising  approximately 1.6 million square feet located in New York
City, one office property  located on Long Island and certain office  properties
and other real estate assets located outside the Tri-State Area.

     Prior to the closing of the Merger,  the Company  arranged  for the sale of
four of  Tower's  Class B New York  City  properties,  comprising  approximately
701,000 square feet for approximately  $84.5 million.  Subsequent to the closing
of the Merger,  the Company has sold a real estate joint venture  interest,  one
office property and one  development  property all located outside the Tri State
Area for  approximately  $58 million.  In  addition,  the  remaining  properties
located  outside of the Tri-State  Area are under  contract to sell or are being
held for sale.  The Company  currently  anticipates  that it will incur  certain
sales and  closing  costs in  connection  with the sale of several of the assets
located outside the Tri State Area. As a result, the Company has recorded a loss
reserve of approximately $4.4 million which has been included in other income on
the Company's consolidated statement of income.

7.   Segment Disclosure

     The Operating Partnership's portfolio consists of Class A office properties
located within the New York City  metropolitan  area and Class A suburban office
and industrial  properties located in the Tri-State Area (the "Core Portfolio").
In addition the Operating  Partnership's  portfolio  also includes 22 industrial
properties owned by RMI. The Company and RMI have managing  directors who report
directly to the Chief  Operating  Officer and Chief  Financial  Officer who have
been  identified as the Chief  Operating  Decision Makers because of their final
authority over resource allocation decisions and performance assessment.

     In addition,  as the Operating  Partnership  expects to meet its short term
liquidity  requirements  in part  through the credit  facilities  and Term Loan,
interest incurred on borrowings under the credit facilities and Term Loan is not
considered as part of property operating performance.  Further, the Company does
not consider the property operating  performance of real estate held for sale as
a reportable segment.

     The accounting  policies of the  reportable  segments are the same as those
described in the summary of significant accounting policies.

     The   following   table  sets  forth  the   components   of  the  Operating
Partnership's  revenues and expenses and other related disclosures for the three
months ended June 30, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                                               Three months ended June 30, 1999
                                                         ------------------------------------------
                                                           Core                              Consolidated
                                                         Portfolio       RMI      Other          Totals
                                                         ---------   ----------  ---------    ------------
<S>                                                      <C>         <C>         <C>          <C>
Revenues:
     Base rents, tenant escalations and reimbursements   $   76,943   $   5,287   $   3,548    $   85,778
     Equity in earnings of real estate joint ventures
         and service companies .......................         --          --           512           512
     Other income ....................................          144        --         4,412         4,556
                                                         ----------   ---------   ---------    ----------
Total Revenues .......................................       77,087       5,287       8,472        90,846
                                                         ----------   ---------   ---------    ----------
Expenses:
     Property expenses ...............................       25,554         816       1,169        27,539
     Marketing, general and administrative ...........        3,858         167         525         4,550
     Interest ........................................        5,191         940      12,771        18,902
     Depreciation and amortization ...................       16,212       1,287       1,628        19,127
                                                         ----------   ---------   ---------    ----------
Total Expenses .......................................       50,815       3,210      16,093        70,118
                                                         ----------   ---------   ---------    ----------
Income before preferred dividends and distributions
     and minority interests' .........................   $   26,272   $   2,077   $  (7,621)   $   20,728
                                                         ==========   =========   =========    ==========
Total Assets                                             $2,082,784   $ 194,898   $ 615,692    $2,893,374
                                                         ==========   =========   =========    ==========
</TABLE>
<TABLE>
<CAPTION>
                                                               Three months ended June 30, 1998
                                                         ------------------------------------------
                                                           Core                               Consolidated
                                                         Portfolio        RMI      Other          Totals
                                                         ---------    ----------  ---------    ------------
<S>                                                      <C>          <C>         <C>          <C>
Revenues:
     Base rents, tenant escalations and reimbursements   $   59,186   $   3,411   $    --      $   62,597
     Equity in earnings of real estate joint ventures
         and service companies .......................         --          --           824           824
     Other income ....................................          189        --         2,657         2,846
                                                         ----------   ---------   ---------    ----------
Total Revenues .......................................       59,375       3,411       3,481        66,267
                                                         ----------   ---------   ---------    ----------
Expenses:
     Property expenses ...............................       20,963         574        --          21,537
     Marketing, general and administrative ...........        2,508         106       1,025         3,639
     Interest ........................................        4,211         281       6,478        10,970
     Depreciation and amortization ...................       10,899         778         780        12,457
                                                         ----------   ---------   ---------    ----------
Total Expenses .......................................       38,581       1,739       8,283        48,603
                                                         ----------   ---------   ---------    ----------
Income before preferred dividends and distributions
     and minority interests' .........................   $   20,794   $   1,672   $  (4,802)   $   17,664
                                                         ==========   =========   =========    ==========
Total Assets                                             $1,425,924   $ 113,937   $  84,481    $1,624,342
                                                         ==========   =========   =========    ==========
</TABLE>
<TABLE>
<CAPTION>
                                                                 Six months ended June 30, 1999
                                                         ------------------------------------------
                                                           Core                               Consolidated
                                                         Portfolio       RMI      Other          Totals
                                                         ---------    ----------  ---------    ------------
<S>                                                      <C>          <C>         <C>          <C>
Revenues:
     Base rents, tenant escalations and reimbursements   $  142,966   $   9,900   $   3,548    $  156,414
     Equity in earnings of real estate joint ventures
         and service companies .......................          ---         ---         889           889
     Other income ....................................          213           2       9,435         9,650
                                                         ----------   ---------   ---------    ----------
Total Revenues .......................................      143,179       9,902      13,872       166,953
                                                         ----------   ---------   ---------    ----------
Expenses:
     Property expenses ...............................       47,710       1,567       1,169        50,446
     Marketing, general and administrative ...........        7,800         298         526         8,624
     Interest ........................................        9,751       1,217      21,878        32,846
     Depreciation and amortization ...................       28,993       2,367       2,858        34,218
                                                         ----------   ---------   ---------    ----------
Total Expenses .......................................       94,254       5,449      26,431       126,134
                                                         ----------   ---------   ---------    ----------
Income before preferred dividends and distributions
     and minority interests' .........................   $   48,925   $   4,453   $ (12,559)   $   40,819
                                                         ==========   =========   =========    ==========
Total Assets                                             $2,082,784   $ 194,898   $ 615,692    $2,893,374
                                                         ==========   =========   =========    ==========
</TABLE>
<TABLE>
<CAPTION>
                                                                 Six months ended June 30, 1998
                                                         ------------------------------------------
                                                           Core                               Consolidated
                                                         Portfolio        RMI      Other          Totals
                                                         ---------    ----------  ---------    ------------
<S>                                                      <C>          <C>         <C>          <C>
Revenues:
     Base rents, tenant escalations and reimbursements   $  109,048   $   6,636   $     ---    $  115,684
     Equity in earnings of real estate joint ventures
         and service companies .......................          ---         ---         665           665
     Other income ....................................          222         ---       4,758         4,980
                                                         ----------   ---------   ---------    ----------
Total Revenues .......................................      109,270       6,636       5,423       121,329
                                                         ----------   ---------   ---------    ----------
Expenses:
     Property expenses ...............................       38,458       1,116         ---        39,574
     Marketing, general and administrative ...........        5,238         206       1,499         6,943
     Interest ........................................        7,683         536      13,278        21,497
     Depreciation and amortization ...................       20,245       1,535       1,484        23,264
                                                         ----------   ---------   ---------    ----------
Total Expenses .......................................       71,624       3,393      16,261        91,278
                                                         ----------   ---------   ---------    ----------
Income before preferred dividends and distributions
     and minority interests' .........................   $   37,646   $   3,243   $ (10,838)   $   30,051
                                                         ==========   =========   =========    ==========
Total Assets                                             $1,425,924   $ 113,937   $  84,481    $1,624,342
                                                         ==========   =========   =========    ==========
</TABLE>

8.   Non-Cash Investing and Financing Activities (in thousands)

                            Six Months Ended June 30,
                                                -----------------------
                                                    1999         1998
                                                ----------  -----------
     Cash paid during the period for interest    $ 24,662    $  17,869
                                                 ========    =========
     Interest capitalized during the period      $  4,440    $   3,263
                                                 ========    =========

     On May 24, 1999, in conjunction with the Tower  acquisition,  the Operating
Partnership  issued  11,694,567  Class B Common Units which were valued for GAAP
purposes  at  approximately  $304.1  million and  assumed  approximately  $133.4
million of indebtedness for a total non cash investment of approximately  $437.5
million.

9.   Subsequent Event

     On August 9, 1999,  the Operating  Partnership  executed a contract for the
sale of RMI and three  other big box  industrial  properties  to  American  Real
Estate Investment  Corporation ("REA"). In addition,  the Operating  Partnership
also entered into a sale  agreement  with Matrix  Development  Group  ("Matrix")
relating to a first  mortgage note and certain  industrial  land  holdings.  The
combined total sale price is $310 million (approximately $42 million of which is
payable  to the  Morris  Companies  and its  affiliates)  and will  consist of a
combination of cash,  convertible  preferred and common stock of REA,  preferred
units of REA's  operating  partnership,  relief  of debt  and a  purchase  money
mortgage note secured by certain land that is being sold to Matrix.  The closing
will take place in three stages  which are  anticipated  to be completed  during
August 1999, December 1999, and April 2000.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The following  discussion should be read in conjunction with the historical
financial  statements of Reckson  Operating  Partnership,  L. P. (the "Operating
Partnership") and related notes.

     The Operating  Partnership considers certain statements set forth herein to
be  forward-looking  statements  within  the  meaning  of  Section  27A  of  the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act  of  1934,  as  amended,   with  respect  to  the  Operating   Partnership's
expectations for future periods. Certain forward-looking statements,  including,
without   limitation,   statements   relating  to  the  timing  and  success  of
acquisitions,  the  financing of the  Operating  Partnership's  operations,  the
ability to lease  vacant  space and the  ability to renew or relet  space  under
expiring leases, involve certain risks and uncertainties. Although the Operating
Partnership  believes that the  expectations  reflected in such  forward-looking
statements  are based on reasonable  assumptions,  the actual results may differ
materially  from  those  set  forth in the  forward-looking  statements  and the
Operating  Partnership  can  give no  assurance  that  its  expectation  will be
achieved.  Certain  factors  that  might  cause  the  results  of the  Operating
Partnership to differ  materially from those  indicated by such  forward-looking
statements include,  among other factors,  general economic conditions,  general
real estate  industry  risks,  tenant  default and  bankruptcies,  loss of major
tenants,   the  impact  of  competition  and  acquisition,   redevelopment   and
development risks, the ability to finance business  opportunities and local real
estate  risks such as an  oversupply  of space or a reduction in demand for real
estate in the Operating  Partnership's real estate markets.  Consequently,  such
forward-looking  statements  should be  regarded  solely as  reflections  of the
Operating  Partnership's  current operating and development plans and estimates.
These  plans  and  estimates  are  subject  to  revisions  from  time to time as
additional  information  becomes  available,  and actual results may differ from
those indicated in the referenced statements.

Overview and Background

     The Operating  Partnership,  which commenced  operations on June 2 1995, is
engaged in the  ownership,  management,  operation,  leasing and  development of
commercial real estate properties,  principally office and industrial buildings,
and also owns certain  undeveloped  land located in the New York  Tri-State area
(the "Tri-State Area").  Reckson  Associates Realty Corp. (the "Company"),  is a
self  administered and self managed Real Estate  Investment Trust ("REIT"),  and
serves as the sole general partner in the Operating Partnership.

     As of June 30, 1999, the Operating Partnership owned and operated 92 office
properties  comprising  approximately  14.9 million  square feet, 130 industrial
properties  comprising  approximately  11.1  million  square feet and two retail
properties comprising approximately 20,000 square feet, located in the Tri-State
Area. In addition,  the Operating Partnership owned or had contracted to acquire
approximately  1,013  acres of land  (including  approximately  306 acres  under
option) in 20 separate  parcels of which the Operating  Partnership  can develop
approximately  9.8  million  square feet of  industrial  and office  space.  The
Operating Partnership also has invested approximately $306.1 million in mortgage
notes encumbering three Class A office properties encompassing approximately 1.6
million  square  feet,  a 306 acre parcel of land located in New Jersey and in a
note receivable secured by a partnership interest in Omni Partner's, L.P., owner
of the Omni, a 575,000 square foot Class A office property located in Uniondale,
New York.

     During 1997, the Company formed Reckson Service  Industries,  Inc.  ("RSI")
and Reckson  Strategic  Venture  Partners,  LLC ("RSVP").  On June 11, 1998, the
Operating  Partnership  distributed  its 95%  common  stock  interest  in RSI of
approximately  $3 million to its owners,  including the Company which,  in turn,
distributed  the common stock of RSI received from the Operating  Partnership to
its  stockholders.  Additionally,  during June 1998,  the Operating  Partnership
established a credit facility with RSI (the"RSI Facility") in the amount of $100
million  for  RSI's  service  sector  operations  and  other  general  corporate
purposes.  As of June 30, 1999,  the Operating  Partnership  had advanced  $46.4
million  under the RSI Facility.  In addition,  the  Operating  Partnership  has
approved the funding of  investments  of up to $100 million with or in RSVP (the
"RSVP  Commitment"),   through   RSVP-controlled  joint  venture  REIT-qualified
investments or advances made to RSI under terms similar to the RSI Facility.  As
of June 30, 1999, approximately $36.9 million had been invested through the RSVP
Commitment,  of which $16.3  million  represents  RSVP-controlled  joint venture
REIT-qualified  investments and $20.6 million  represents  advances to RSI under
the RSVP  Commitment.  RSI serves as the managing member of RSVP. RSI invests in
operating  companies that generally  provide  commercial  services to properties
owned by the Operating Partnership and its tenants and third parties nationwide.
RSVP was formed to provide the Company with a research and  development  vehicle
to invest in alternative  real estate  sectors.  RSVP invests  primarily in real
estate and real estate  related  operating  companies  generally  outside of the
Company's core office and industrial  focus.  RSVP's strategy is to identify and
acquire  interests in established  entrepreneurial  enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique  circumstances  for  attractive  investments  as well as a
platform for future growth.

     On January 6, 1998, the Operating  Partnership made its initial  investment
in the Morris Companies, a New Jersey developer and owner of "Big Box" warehouse
facilities.  In connection with the transaction the Morris Companies contributed
100% of their  interests  in certain  industrial  properties  to Reckson  Morris
Operating Partnership, L. P. ("RMI") in exchange for operating partnership units
in RMI.  The  Operating  Partnership  has agreed to invest up to $150 million in
RMI. As of June 30, 1999, the Operating  Partnership has invested  approximately
$95.5 million for an approximate 72% controlling  interest. In addition, at June
30, 1999, the Operating  Partnership had advanced  approximately  $34 million to
RMI to acquire an 846,000 square foot industrial property.

     On August 9, 1999,  the Operating  Partnership  executed a contract for the
sale of RMI and three  other big box  industrial  properties  to  American  Real
Estate Investment  Corporation ("REA"). In addition,  the Operating  Partnership
also entered into a sale  agreement  with Matrix  Development  Group  ("Matrix")
relating to a first  mortgage note and certain  industrial  land  holdings.  The
combined total sale price is $310 million (approximately $42 million of which is
payable  to the  Morris  Companies  and its  affiliates)  and will  consist of a
combination of cash,  convertible  preferred and common stock of REA,  preferred
units of REA's  operating  partnership,  relief  of debt  and a  purchase  money
mortgage note secured by certain land that is being sold to Matrix.  The closing
will take place in three stages  which are  anticipated  to be completed  during
August 1999, December 1999, and April 2000.

     In July 1998,  the Company formed a joint  venture,  Metropolitan  Partners
LLC, a Delaware limited liability company  ("Metropolitan"),  with Crescent Real
Estate Equities Company, a Texas real estate investment trust ("Crescent").

     On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower")  executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger")   into   Metropolitan,   with   Metropolitan   surviving  the  Merger.
Concurrently with the Merger, Tower Realty Operating  Partnership,  L.P. ("Tower
OP") was merged with and into a subsidiary of  Metropolitan.  The  consideration
issued  in the  mergers  was  comprised  of (i) 25% cash  (approximately  $107.2
million) and (ii) 75% of shares of Class B Exchangeable  Common Stock, par value
$.01 per share,  of the Company  (the "Class B Common  Stock")  (valued for GAAP
purposes at approximately $304.1 million).

     Under the terms of the transaction,  Metropolitan effectively paid for each
share of Tower  common  stock and each unit of limited  partnership  interest of
Tower OP the sum of (i)  $5.75 in cash,  and (ii)  0.6273  of a share of Class B
Common  Stock.  The shares of Class B Common  Stock are  entitled  to receive an
initial  annual  dividend  of $2.24 per  share,  which  dividend  is  subject to
adjustment annually.  The shares of Class B Common Stock are exchangeable at any
time,  at the  option of the  holder,  into an equal  number of shares of common
stock,   par  value  $.01  per  share,  of  the  Company  subject  to  customary
antidilution  adjustments.  The Company, at its option, may redeem any or all of
the  Class B Common  Stock in  exchange  for an equal  number  of  shares of the
Company's  common  stock  at  any  time  following  the  four  year,   six-month
anniversary of the issuance of the Class B Common Stock.

     The  Company  controls  Metropolitan  and owns 100% of the  common  equity;
Crescent  owns  a $85  million  preferred  equity  investment  in  Metropolitan.
Crescent's  investment  accrues  distributions at a rate of 7.5% per annum for a
two-year  period and may be  redeemed  by  Metropolitan  at any time during that
period for $85 million,  plus an amount  sufficient  to provide a 9.5%  internal
rate of return. If Metropolitan does not redeem the preferred interest, upon the
expiration  of the  two-year  period,  Crescent  must  convert  its $85  million
preferred interest into either (i) a common membership  interest in Metropolitan
or (ii) shares of the Company's common stock at a conversion price of $24.61 per
share.

     The  Tower  portfolio  acquired  in the  Merger  consists  of three  office
properties comprising  approximately 1.6 million square feet located in New York
City, one office property  located on Long Island and certain office  properties
and other real estate assets located outside the Tri-State Area.

     Prior to the closing of the Merger,  the Company  arranged  for the sale of
four of  Tower's  Class B New York  City  properties,  comprising  approximately
701,000 square feet for approximately  $84.5 million.  Subsequent to the closing
of the Merger,  the Company has sold a real estate joint venture  interest,  one
office property and one  development  property all located outside the Tri State
Area for  approximately  $58 million.  In  addition,  the  remaining  properties
located  outside of the Tri-State  Area are under  contract to sell or are being
held for sale.  The Company  currently  anticipates  that it will incur  certain
sales and  closing  costs in  connection  with the sale of several of the assets
located outside the Tri State Area. As a result, the Company has recorded a loss
reserve of approximately $4.4 million which has been included in other income on
the Company's consolidated statement of income.

     The market capitalization of the Operating Partnership at June 30, 1999 was
approximately $3.2 billion. The Operating Partnership's market capitalization is
calculated  based on the value of the Operating  Partnership's  common units and
Class B Common Units  (which,  for this  purpose,  is assumed to be the same per
unit as the market  value of a share of the  Company's  common stock and Class B
Common Stock), the stated values of the Operating  Partnership's preferred units
and the $1.4  billion  (including  its  share of joint  venture  debt and net of
minority partners'  interest) of debt outstanding at June 30, 1999. As a result,
the Operating  Partnership's total debt to total market  capitalization ratio at
June 30, 1999 equaled approximately 42.7%.

Result of Operations

     The Operating  Partnership's  total revenues  increased by $24.6 million or
37.1% for the three  months  ended June 30, 1999 as compared to the 1998 period.
The growth in total  revenues is  substantially  attributable  to the  Operating
Partnership's  acquisition of 42 properties comprising approximately 8.0 million
square feet and the  development of three  properties  comprising  approximately
412,000 square feet. Property operating  revenues,  which include base rents and
tenant escalations and reimbursements  ("Property Operating Revenues") increased
by $23.2  million or 37% for the three months ended June 30, 1999 as compared to
the 1998 period.  The 1999 increase in Property  Operating Revenues is comprised
of  approximately  $2.4  million  attributable  to increases in rental rates and
changes in  occupancies  and  approximately  $20.8 million  attributable  to the
acquisitions  and  development  of  properties.  The  remaining  balance  of the
increase in total revenues in 1999 is primarily  attributable to interest income
on  the  Operating  Partnership's   investments  in  mortgage  notes  and  notes
receivable. The Operating Partnership's base rent was increased by the impact of
the  straight-line  rent  adjustment  by $3.2 million for the three months ended
June 30, 1999 as compared to $2.1 million for the 1998 period.

     Property operating expenses,  real estate taxes and ground rents ("Property
Expenses")  increased by $6 million or 27.9% for the three months ended June 30,
1999 as compared to the 1998 period.  These  increases  are primarily due to the
acquisition  of  properties.   Gross  operating  margins  (defined  as  Property
Operating  Revenues  less Property  Expenses,  taken as a percentage of Property
Operating Revenues) for the three months ended June 30, 1999 and 1998 were 67.9%
and  65.6%  respectively.  The  increase  in gross  operating  margins  reflects
increases  realized in rental rates and the Operating  Partnership's  ability to
realize  certain  operating  efficiencies  as a  result  of  operating  a larger
portfolio  of  properties  with  concentrations  of  properties  in  office  and
industrial parks or in its established sub-markets.

     Marketing,  general and  administrative  expenses increased by $911,000 for
the three  months  ended  June 30,  1999 as  compared  to the 1998  period.  The
increase is due to the increased  costs of managing the  acquisition  properties
and the increase in corporate  management and  administrative  costs  associated
with the growth of the  Operating  Partnership  including the opening of its New
York  City  division.  Marketing,  general  and  administrative  expenses  as  a
percentage of total revenues were 5.01% for the three months ended June 30, 1999
as compared to 5.49% for the 1998 period.

     Interest expense  increased by $7.9 million for the three months ended June
30, 1999 as compared to the 1998  period.  The  increase is  attributable  to an
increased cost  attributable  to an increased  average  balance on the Operating
Partnership's  credit  facilities  and  Term  Loan,  interest  on the  Operating
Partnership's  senior  unsecured notes issued on March 26, 1999, and an increase
in  secured  borrowings  primarily  attributable  to the  assumption  of debt in
conjunction with the Tower acquisition. The weighted average balance outstanding
on the  Company's  credit  facilities  and Term Loan was $352.1  million for the
three  months  ended June 30, 1999 as  compared  to $306.9  million for the 1998
period.

     The Operating  Partnership's  total revenues  increased by $45.6 million or
37.6% for the six months ended June 30 1999 as compared to the 1998 period.  The
growth  in  total  revenues  is  substantially  attributable  to  the  Operating
Partnership's acquisition of 70 properties comprising approximately 12.4 million
square feet. Property Operating Revenues increased by $40.7 million or 35.2% for
the six months  ended June 30, 1999.  As compared to the 1998  period.  The 1999
increase  in  Property   Operating   Revenues  is   comprised  of  $5.5  million
attributable  to increases in rental rates and changes in occupancies  and $35.2
million  attributable  to  acquisitions  and  development  of  properties.   The
remaining  balance  of the  increase  in  total  revenues  in 1999 is  primarily
attributable  to interest income on the Operating  Partnership's  investments in
mortgage notes and notes receivable.  The Operating  Partnership's base rent was
increased by the impact of the straight-line rent adjustment by $4.6 million for
the six  months  ended June 30 1999 as  compared  to $3.6  million  for the 1998
period.

     Property Expenses  increased by $10.9 million for the six months ended June
30, 1999 as compared to the 1998 period.  These  increases  are primarily due to
the acquisition of properties.  Gross operating margins for the six months ended
June 30, 1999 and 1998 were 67.8% and 65.8%, respectively. The increase in gross
operating margins reflects  increases realized in rental rates and the Operating
Partnership's  ability to realize certain operating  efficiencies as a result of
operating a larger  portfolio of properties with  concentration of properties in
office and industrial parks or in its established sub-markets.

     Marketing, general and administrative increased by $1.7 million for the six
months ended June 30, 1999 as comparable to the 1998 period. The increase is due
to increased  costs of managing the  acquisition  properties and the increase in
corporate  management and administrative costs associated with the growth of the
Operating  Partnership  including  the  opening  of its New York City  division.
Marketing, general and administrative expenses as a percentage of total revenues
were 5.17% for the six months  ended June 30,  1999 as compared to 5.72% for the
1999 period.

     Interest  expense  increased by $11.3 million for the six months ended June
30, 1999 as compared to the 1998  period.  The  increase is  attributable  to an
increased cost  attributable  to an increased  average  balance on the Operating
Partnership's  credit  facilities  and  Term  Loan,  interest  on the  Operating
Partnership's senior unsecured notes issued on March 26, 1999 and an increase in
secured  borrowings  primarily   attributable  to  the  assumption  of  debt  in
conjunction with the Tower acquisition. The weighted average balance outstanding
on the Operating  Partnership's  credit  facilities was $429 million for the six
months ended June 30, 1999 as compared to $311.5 million for the 1998 period.

Liquidity and Capital Resources

     During April 1998, the Company  contributed  approximately  $221 million to
the Operating  Partnership in exchange for 9,200,000  Series A preferred  units.
The Series A preferred  units have a  liquidation  preference of $25 per unit, a
distribution rate of 7.625 % and are convertible to the Operating  Partnership's
common units at a conversion rate of .8769 common units for each preferred unit.
Additionally,  with the  acquisition of six office  properties and the remaining
50%  interest  in a 365,000  square  foot  vacant  office  building  located  in
Westchester County, the Operating Partnership issued series B, C and D preferred
operating units in the amount of  approximately  $42.5 million.  The series B, C
and D  preferred  units  have a  current  distribution  rate  of  6.25%  and are
convertible to common units at conversion prices of approximately $32.51, $29.39
and $29.12, respectively for each preferred unit.

     On March 26, 1999,  the Operating  Partnership  issued $100 million of 7.4%
senior  unsecured  notes due March 15,  2004 and $200  million  of 7.75%  senior
unsecured notes due March 15, 2009. Net proceeds of approximately $297.4 million
were used to repay  outstanding  borrowings  under the  Operating  Partnership's
unsecured credit facility.

     As of June 30,  1999,  the  Operating  Partnership  had a three  year  $500
million unsecured  revolving credit facility (the "Credit  Facility") from Chase
Manhattan  Bank,  Union Bank of  Switzerland  and PNC Bank as co-managers of the
credit  facility  bank  group.  Interest  rates on  borrowings  under the Credit
Facility  are  priced off of LIBOR plus a sliding  scale  ranging  from 65 basis
points to 90 basis points based on the Operating Partnership's  investment grade
rating  on  its  senior  unsecured  debt.  On  March  16,  1999,  the  Operating
Partnership  received its second investment grade rating on its senior unsecured
debt. As a result,  the pricing under the Credit  Facility was adjusted to LIBOR
plus 90 basis points.

     The Operating Partnership utilizes the Credit Facility primarily to finance
the  acquisitions  of  properties  and other real estate  investments,  fund its
development  activities and for working capital purposes.  At June 30, 1999, the
Operating  Partnership had  availability  under the Credit Facility to borrow an
additional  $123 million (net of $28 million of outstanding  undrawn  letters of
credit).

     As of June 30, 1999, the Operating  Partnership  had a one year $75 million
unsecured term loan (the "Term Loan") from Chase Manhattan Bank.  Interest rates
on borrowings  under the Term Loan are priced off of LIBOR plus 150 basis points
for the first nine months and 175 basis points for the  remaining  three months.
At June 30, 1999, the Operating  Partnership had $75 million  outstanding  under
the Term Loan.

     On May 24,  1999,  in  conjunction  with  the  acquisition  of  Tower,  the
Operating  Partnership  obtained a $130 million  unsecured  bridge facility (The
"Bridge  Facility") from UBS AG.  Interest rates on borrowings  under the Bridge
Facility were priced off of LIBOR plus  approximately  214 basis points. On July
23, 1999, the Bridge  Facility was repaid through a long term fixed rate secured
borrowing.

     On May 24, 1999, in conjunction with the Tower  acquisition,  the Operating
Partnership  issued  11,694,567  Class B  Common  Units of  general  partnership
interest to the Company  which were valued for GAAP purposes at $26 per unit for
total  consideration of approximately  $304.1 million.  The Class B Common Units
are entitled to receive an initial annual  distribution of $2.24 per unit, which
distribution  is subject to  adjustment  annually.  The Class B Common Units are
exchangeable  at any time, at the option of the holder,  into an equal number of
common  units  subject to  customary  antidilution  adjustments.  The  Operating
Partnership, at its option, may redeem any or all of the Class B Common Units in
exchange  for an equal  number of common  units at any time  following  the four
year, six-month anniversary of the issuance of the Class B Common Units.

     On June 2, 1999,  the  Operating  Partnership  issued six million  Series B
preferred units of general partnership  interests to the Company in exchange for
approximately  $150  million.  The Series B preferred  units have a  liquidation
preference of $25 per unit, and an initial  distribution rate of 7.85% per annum
with such rate  increasing to 8.35% per annum on April 30, 2000 and to 8.85% per
annum  from and  after  April  30,  2001.  The  Series  B  preferred  units  are
convertible to common units at a conversion  rate of .9597 common units for each
preferred unit and are redeemable by the Operating Partnership on or after March
2, 2002. Proceeds from the issuance of the Series B preferred units were used as
partial  consideration  in the acquisition of the first mortgage note secured by
919 Third Avenue located in New York City.

     The  Operating  Partnership's  indebtedness  at June 30, 1999  totaled $1.4
billion  (including  its  share of joint  venture  debt and net of the  minority
partners'  interests) and was comprised of $473.3 million  outstanding under the
credit facilities (of which $125 million has been subsequently refinanced with a
long term fixed rate secured borrowing),  $75 million outstanding under the Term
Loan, $449.3 million of senior unsecured notes and approximately  $366.3 million
of mortgage  indebtedness.  Based on the  Operating  Partnership's  total market
capitalization of approximately  $3.2 billion at June 30, 1999 (calculated based
on the  value of the  Operating  Partnership's  common  units and Class B Common
Units (which, for this purpose, is assumed to be the same per unit as the market
value of a share of the Company's  common stock and Class B Common  Stock),  the
stated value of the  Operating  Partnership's  preferred  units),  the Operating
Partnership's  debt  represented   approximately   42.7%  of  its  total  market
capitalization.

     Historically,  rental revenue has been the principal source of funds to pay
operating   expenses,   debt   service  and  capital   expenditures,   excluding
non-recurring capital expenditures of the Operating  Partnership.  The Operating
Partnership  expects to meet its short  term  liquidity  requirements  generally
through its net cash  provided  by  operating  activities  along with the Credit
Facility previously discussed. The Operating Partnership expects to meet certain
of its financing requirements through long-term secured and unsecured borrowings
and the issuance of debt  securities  and  additional  equity  securities of the
Operating  Partnership.   The  Operating  Partnership  will  refinance  existing
mortgage  indebtedness or indebtedness  under the Credit Facility at maturity or
retire  such  debt  through  the  issuance  of  additional  debt  securities  or
additional equity  securities.  The Operating  Partnership  anticipates that the
current  balance of cash and cash  equivalents  and cash  flows  from  operating
activities,  together with cash  available  from  borrowings and debt and equity
offerings,  will be adequate to meet the capital and liquidity  requirements  of
the Operating Partnership in both the short and long-term.

SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES, TENANT IMPROVEMENT AND LEASING
COMMISSIONS

     The   following   table   summarizes   the   expenditures    incurred   for
non-incremental   capital   expenditures,   tenant   improvements   and  leasing
commissions for the Operating Partnerhips's office and industrial properties for
the six month  period  ended June 30,  1999 and the  historical  average of such
non-incremental   capital   expenditures,   tenant   improvements   and  leasing
commissions for the years 1995 through 1998.

<TABLE>
Non-Incremental Revenue Generating Tenant Improvements and Leasing Commissions
<CAPTION>
                                                                                                     Six
                                                                                                     Months
                                                                                                     Ended
                                                                                       1995 -1998    June 30,
                                         1995         1996         1997         1998    Average      1999
                                  ------------------------------------------------------------------------------
<S>                               <C>          <C>          <C>          <C>          <C>          <C>
Long Island Office Properties
    Tenant Improvements            $452,057     $523,574      $784,044    $1,140,251    $724,982     $141,292
    Per Square Foot Improved           4.44         4.28          7.00          3.98        4.92         2.33
    Leasing Commissions            $144,925     $119,047      $415,822      $418,191    $274,496      $90,216
    Per Square Foot Leased             1.42         0.97          4.83          1.46        2.17         1.18
                                  ---------    ---------    ----------   -----------   ---------    ---------
     Total Per Square Foot            $5.86        $5.25        $11.83         $5.44       $7.09        $3.51
                                  =========    =========    ==========   ===========   =========    =========

  Westchester Office Properties
    Tenant Improvements           N/A           $834,764    $1,211,665      $711,160    $961,413     $376,574
    Per Square Foot Improved      N/A               6.33          8.90          4.45        6.67         4.12
    Leasing Commissions           N/A           $264,388      $366,257      $286,150    $326,204     $165,254
    Per Square Foot Leased        N/A               2.00          2.69          1.79        2.24         1.81
                                  ---------    ---------    ----------   -----------   ---------    ---------
     Total Per Square Foot        N/A              $8.33        $11.59         $6.24       $8.91        $5.93
                                  =========    =========    ==========   ===========   =========    =========

  Connecticut Office Properties<F1>
    Tenant Improvements           N/A            $58,000    $1,022,421      $202,880    $570,356      $45,445
    Per Square Foot Improved      N/A              12.45         13.39          5.92        9.66         6.47
    Leasing Commissions           N/A              $0.00      $256,615      $151,063    $181,190      $14,550
    Per Square Foot Leased        N/A               0.00          3.36          4.41        3.89         2.07
                                  ---------    ---------    ----------   -----------   ---------    ---------
     Total Per Square Foot        N/A             $12.45        $16.75        $10.33      $13.55        $8.54
                                  =========    =========    ==========   ===========   =========    =========
  New Jersey Office Properties
    Tenant Improvements           N/A          N/A           N/A            $654,877    $654,877     $119,323
    Per Square Foot Improved      N/A          N/A           N/A                3.78        3.78         2.20
    Leasing Commissions           N/A          N/A           N/A            $396,127    $396,127     $193,570
    Per Square Foot Leased        N/A          N/A           N/A                2.08        2.08         3.18
                                  ---------    ---------    ----------   -----------   ---------    ---------
     Total Per Square Foot        N/A          N/A           N/A               $5.86       $5.86        $5.38
                                  =========    =========    ==========   ===========   =========    =========
  Industrial Properties
    Tenant Improvements            $210,496     $380,334      $230,466      $283,842    $276,285     $150,222
    Per Square Foot Improved           0.90         0.72          0.55          0.76        0.73         0.15
    Leasing Commissions            $107,351     $436,213       $81,013      $200,154    $206,183     $681,474
    Per Square Foot Leased             0.46         0.82          0.19          0.44        0.48         0.67
                                  ---------    ---------    ----------   -----------   ---------    ---------
     Total Per Square Foot            $1.36        $1.54         $0.75         $1.20       $1.21        $0.82
                                  =========    =========    ==========   ===========   =========    =========
<FN>
<F1>
1995 - 1998 average weighted to reflect October 1996 acquisition date
</FN>
</TABLE>

LEASE EXPIRATIONS

     The following  table sets forth  scheduled  lease  expirations for executed
leases as of June 30, 1999:

<TABLE>
Long Island Office Properties (excluding Omni):
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                     19      79,657       2.7%       $21.31       $21.54
2000                     45     268,683       9.1%       $21.71       $23.29
2001                     40     187,022       6.3%       $22.15       $24.02
2002                     33     255,550       8.6%       $22.30       $23.71
2003                     52     342,577      11.6%       $21.81       $23.10
2004                     38     246,753       8.4%       $22.69       $25.17
2005 and thereafter      89   1,576,056      53.3%          ---          ---
                     ------  ----------   --------
Total                   316   2,956,298     100.0%
                     ======  ==========   ========
<FN>
<F1>    Per square foot rental rate represents annualized straight line
rent as of the lease expiration date.
<F2>    Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
Omni:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                    ---          ---      ---           ---          ---
2000                      4      60,316      10.2%       $31.71       $36.63
2001                      4      32,680       5.6%       $27.36       $33.63
2002                      4     129,351      22.0%       $24.78       $27.14
2003                      5      72,530      12.3%       $29.56       $29.71
2004                      4     112,414      19.1%       $25.98       $33.12
2005 and thereafter       8     181,502      30.8%          ---          ---
                     ------  ----------   --------
Total                    29     588,793     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
Industrial Properties:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                     22     296,298       5.2%       $5.12        $5.68
2000                     30   1,105,940      19.3%       $4.84        $5.19
2001                     28     676,925      11.8%       $5.70        $7.16
2002                     26     207,544       3.6%       $6.42        $7.09
2003                     30     724,434      12.7%       $5.26        $6.06
2004                     24     509,372       8.9%       $6.59        $7.15
2005 and thereafter      42   2,207,616      38.5%         ---          ---
                     ------  ----------   --------
Total                   202   5,728,129     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
Research and Development Properties:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                      4      26,891       2.1%        $8.68        $9.44
2000                      7     111,040       8.7%        $8.20        $8.58
2001                      8     150,120      11.8%       $10.75       $11.31
2002                      3      67,967       5.3%       $10.54       $12.51
2003                      4     271,042      21.3%        $5.38        $5.25
2004                      6     105,303       8.3%       $11.93       $13.20
2005 and thereafter      11     540,277      42.5%          ---          ---
                     ------  ----------   --------
Total                    43   1,272,640     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
Westchester Office Properties:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                     21      77,887       2.8%       $19.74       $20.18
2000                     53     502,045      18.1%       $22.63       $22.86
2001                     46     334,819      12.1%       $21.83       $21.89
2002                     46     441,072      15.9%       $20.16       $20.40
2003                     35     245,108       8.8%       $21.80       $22.94
2004                     19     106,700       3.9%       $20.10       $20.34
2005 and thereafter      34   1,063,628      38.4%          ---          ---
                     ------  ----------   --------
Total                   254   2,771,259     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
Stamford Office Properties:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                     10      24,916       2.4%       $23.61       $23.78
2000                     26     114,054      11.0%       $22.16       $22.54
2001                     23     102,583       9.9%       $24.10       $25.18
2002                     15      89,774       8.7%       $27.32       $28.51
2003                     16      99,052       9.6%       $31.71       $32.46
2004                     15     201,091      19.4%       $20.77       $21.29
2005 and thereafter      25     403,160      39.0%          ---          ---
                     ------  ----------   --------
Total                   130   1,034,630     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
New Jersey Office Properties:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                      5      41,540       2.5%       $20.06       $20.28
2000                     34     329,989      19.7%       $22.66       $22.83
2001                     21     260,195      15.5%       $18.09       $18.10
2002                     20     166,699      10.0%       $19.96       $20.06
2003                     18     327,593      19.6%       $18.09       $18.14
2004                     25     200,994      12.0%       $21.98       $21.94
2005 and thereafter      17     346,494      20.7%          ---          ---
                     ------  ----------   --------
Total                   140   1,673,504     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
New York Office Properties:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                      8      34,158       1.3%       $34.19       $35.37
2000                     19     946,214      34.9%       $32.61       $32.72
2001                     19     136,453       5.0%       $36.25       $36.38
2002                     16     194,873       7.2%       $32.20       $33.92
2003                      7      93,752       3.4%       $31.34       $31.75
2004                      8     107,589       4.0%       $34.48       $34.59
2005 and thereafter      68   1,197,158      44.2%          ---          ---
                     ------  ----------   --------
Total                   145   2,710,197     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square foot rental rate represents annualized base rent
as of the lease expiration date plus non-recoverable operating
expense pass-throughs.
</FN>
</TABLE>
<TABLE>
Reckson / Morris Industrial:
<CAPTION>
                                            Percent
                                Total       of Total       Per
                               Rentable     Rentable      Square        Per
      Year of        Number     Square       Square        Foot        Square
       Lease           of        Feet         Feet         S/L          Foot
     Expiration      Leases    Expiring     Expiring    Rent <F1>    Rent <F2>
--------------------------------------------------------------------------------
<S>                  <C>     <C>          <C>          <C>          <C>
1999                      7     387,686      12.7%        $3.95        $3.98
2000                      6     173,768       5.7%        $5.14        $5.31
2001                      1     243,751       8.0%        $7.50        $7.69
2002                      1     610,949      20.0%        $3.75        $3.96
2003                      3     113,916       3.8%        $4.53        $4.72
2004                      5     308,057      10.1%        $4.52        $4.87
2005 and thereafter       8   1,211,594      39.7%          ---          ---
                     ------  ----------   --------
Total                    31   3,049,721     100.0%
                     ======  ==========   ========
<FN>
<F1>
Per square foot rental rate represents  annualized  straight line rent as of the
lease expiration date.
<F2>
Per square  foot  rental rate  represents  annualized  base rent as of the lease
expiration date plus  non-recoverable  operating  expense  pass-throughs.  </FN>
</TABLE>

Inflation

     The  office  leases  generally  provide  for fixed base rent  increases  or
indexed  escalations.  In  addition,  the office  leases  provide  for  separate
escalations  of real estate  taxes and electric  costs over a base  amount.  The
industrial leases also generally  provide for fixed base rent increases,  direct
pass  through  of  certain  operating  expenses  and  separate  real  estate tax
escalations  over  a  base  amount.  The  Operating  Partnership  believes  that
inflationary  increases in expenses will generally be offset by contractual rent
increases and expense escalations described above.

     The credit facilities and Term Loan bear interest at a variable rate, which
will be influenced by changes in short-term interest rates, and are sensitive to
inflation.

Impact of Year 2000

     Some of the Operating  Partnership's  older computer  programs were written
using two digits  rather than four to define the  applicable  year. As a result,
those  computer  programs have  time-sensitive  software that  recognizes a date
using "00" as the year 1900 rather than the year 2000. This could cause a system
failure or miscalculation  causing disruptions of operations,  including,  among
other  things,  a  temporary  inability  to process  transactions,  or engage in
similar normal business activities.

     The Operating  Partnership has completed an assessment to modify or replace
portions of its software so that its computer  systems  will  function  properly
with  respect to dates in the year 2000 and  thereafter.  Currently,  the entire
property  management  system  is year  2000  compliant  and has been  thoroughly
tested. Since the Operating Partnership's  accounting software is maintained and
supported by an unaffiliated third party, the total year 2000 project cost as it
relates to the accounting software is estimated to be minimal.

     The year 2000 project has been completed, which is prior to any anticipated
impact on its operating  systems.  Additionally,  the Operating  Partnership has
received assurances from its contractors that all of the Operating Partnership's
building  management and mechanical systems are currently year 2000 compliant or
will be made  compliant  prior to any  impact  on those  systems.  However,  the
Operating  Partnership  cannot  guarantee that all contractors  will comply with
their  assurances and therefore,  the Operating  Partnership  may not be able to
determine year 2000 compliance of those contractors. At that time, the Operating
Partnership will determine the extent to which the Operating Partnership will be
able to replace non compliant  contractors.  The Operating  Partnership believes
that with  modifications  to existing  software and conversions to new software,
the year 2000  issue  will not pose  significant  operational  problems  for its
computer systems.  However,  if such modifications and conversions are not made,
or are not completed timely, the year 2000 issue could have a material impact on
the operations of the Operating Partnership.

     To date, the Operating  Partnership has expended  approximately one million
dollars  in  connection  with  upgrading  building  management,  mechanical  and
computer systems. The costs and completion of the project on which the Operating
Partnership  believes it has completed the year 2000  modifications are based on
management's best estimates,  which were derived utilizing numerous  assumptions
of future events,  including the continued availability of certain resources and
other factors.  However,  there can be no guarantee that these estimates will be
achieved and actual  results  could differ  materially  from those  anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the  availability  and costs of personnel  trained in this area, the
ability  to  locate  and  correct  all  relevant  computer  codes,  and  similar
uncertainties.

     In a "worst case scenario", the Operating Partnership believes that failure
of the building  management  and  mechanical  systems to operate  properly would
result in inconveniences to the building tenants which might include no elevator
service,  lighting  or entry and egress.  In this case,  the  management  of the
Operating  Partnership  would manually override such systems in order for normal
operations to resume. Additionally, in a "worst case scenario" of the failure of
the upgrades to the  accounting  software,  the Operating  Partnership  would be
required  to  process  transactions,  such  as the  issuance  of  disbursements,
manually  until  an  alternative  system  was  implemented.   If  the  Operating
Partnership was not successful in implementing  their year 2000 compliance plan,
the  Operating  Partnership  may  suffer  a  material  adverse  impact  on their
consolidated results of operations and financial condition.

Funds From Operations

     Management  believes that funds from  operations  ("FFO") is an appropriate
measure of performance of an operating partnership which is a general partner of
an equity  REIT.  FFO is  defined by the  National  Association  of Real  Estate
Investment Trusts (NAREIT) as net income or loss, excluding gains or losses from
debt restructurings and sales of properties, plus depreciation and amortization,
and after adjustments for  unconsolidated  partnerships and joint ventures.  FFO
does not represent cash generated from operating  activities in accordance  with
generally accepted accounting principles and is not indicative of cash available
to fund cash needs. FFO should not be considered as an alternative to net income
as an indicator of the Operating  Partnership's  operating  performance or as an
alternative to cash flow as a measure of liquidity. In March 1995, NAREIT issued
a "White  Paper"  analysis  to address  certain  interpretive  issues  under its
definition  of FFO.  The White  Paper  provides  that  amortization  of deferred
financing costs and  depreciation of non-rental real estate assets are no longer
to be added back to net income to arrive at FFO.

     Since all companies and analysts do not calculate FFO in a similar fashion,
the  Operating  Partnership's  calculation  of FFO  presented  herein may not be
comparable to similarly titled measures as reported by other companies.

     The following  table presents the Operating  Partnership's  FFO calculation
(in thousands):

<TABLE>
<CAPTION>
                                                           Three Months Ended June 30,     Six Months Ended June 30,
                                                           ---------------------------     -------------------------
                                                              1999             1998           1999           1998
                                                           ---------        ---------      ---------      ---------
<S>                                                        <C>              <C>            <C>            <C>
Net Income                                                 $  13,124        $  12,784      $  27,005      $  24,610
Adjustment for Funds From Operations:
Add:
    Real Estate Depreciation and Amortization                 18,406           12,181         33,094         22,787
    Minority interests in consolidated partnerships            1,615              712          2,783          1,273
Less:
Amount distributed to minority partners in consolidated
    partnerships                                               1,980            1,001          3,448          1,799
                                                           ---------        ---------      ---------      ---------
Funds From Operations                                      $  31,165        $  24,676      $  59,434      $  46,871
                                                           =========        =========      =========      =========
</TABLE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The primary  market risk facing the Operating  Partnership is interest rate
risk on its long term debt,  mortgage notes and notes receivable.  The Operating
Partnership does not hedge interest rate risk using financial  instrument nor is
the Operating Partnership subject to foreign currency risk.

     The Operating Partnership manages its exposure to interest rate risk on its
variable rate  indebtedness by borrowing on a short-term  basis under its Credit
Facility  or Term Loan until  such time as it is able to retire  the  short-term
variable  rate debt with a long-term  fixed rate debt offering on terms that are
advantageous   to  the  Operating   Partnership  or  through   general   partner
contributions.

     The following table sets forth the Operating  Partnership's  long term debt
obligations,  principal  cash  flows by  scheduled  maturity,  weighted  average
interest rates and estimated fair market value ("FMV") at June 30, 1999 (dollars
in thousands):

<TABLE>
<CAPTION>
                                          For the Year Ended December 31,
                            ---------------------------------------------------------
                                1999        2000       2001        2002        2003    Thereafter    Total<F1>     F.M.V
                            ----------   ---------   ---------   --------   ---------  ----------   ----------  -----------
<S>                         <C>          <C>         <C>         <C>        <C>        <C>          <C>         <C>
Long term debt:
   Fixed rate               $    8,904   $  32,487   $  19,825   $ 15,002   $  19,742  $  735,681   $  831,641  $   831,641
   Average interest rate         8.85%       7.38%       7.43%      7.80%       7.65%       7.49%        7.51%

   Variable rate            $  205,000   $   5,373   $ 349,100   $    ---   $     ---  $      ---   $  559,473  $   559,473
   Average interest rate         6.93%       7.75%       5.93%        ---         ---         ---        6.39%
<FN>
<F1>
Includes  unamortized issuance discounts of $721,000 on the 5 and 10 year senior
unsecured notes issued on March 26, 1999 which are due at maturity.
</FN>
</TABLE>


     In addition, the Operating Partnership has assessed the market risk for its
variable rate debt,  which is based upon LIBOR,  and believes that a one percent
increase in the LIBOR rate would have an approximate 5.6 million annual increase
in interest  expense based on approximately  $559.4 million  outstanding at June
30, 1999.

     The following table sets forth the Operating  Partnership's  mortgage notes
and note receivables by scheduled maturity date, weighted average interest rates
and estimated FMV at June 30, 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                          For the Year Ended December 31,
                            ---------------------------------------------------------
                                1999        2000       2001        2002        2003    Thereafter      Total       F.M.V
                            ----------   ---------   ---------   --------   ---------  ----------   ----------  -----------
<S>                         <C>          <C>         <C>         <C>        <C>        <C>          <C>         <C>
Mortgage notes and notes
   receivable:
      Fixed rate            $    5,038   $ 277,548   $     ---   $  6,785   $     ---  $   50,990   $  340,361  $   340,361
      Average interest rate        10%       9.41%         ---     10.65%         ---      10.69%        9.63%
</TABLE>

     The fair value of the  Operating  Partnership's  long term  debt,  mortgage
notes and notes  receivable is estimated based on discounting  future cash flows
at interest rates that management  believes  reflects the risks  associated with
long term  debt,  mortgage  notes  and  notes  receivable  of  similar  risk and
duration.

<PAGE>
PART II - OTHER INFORMATION

Item 1.  Legal Proceedings - None
Item 2.  Changes in Securities and use of proceeds

          On May 24,  1999,  in  conjunction  with the  Tower  acquisition,  the
          Operating  Partnership  issued  11,694,567  Class B  Common  Units  of
          general partnership interest to the Company which were valued for GAAP
          purposes  at $26 per share for total  consideration  of  approximately
          $304.1  million.  The Class B Common  Units are entitled to receive an
          initial  annual  distribution  of $2.24 per share  and is  subject  to
          adjustment annually.  The Class B Common Units are exchangeable at any
          time,  at the  option of the  holder,  into an equal  number of common
          units  subject to customary  antidilution  adjustments.  The Operating
          Partnership,  at its  option,  may  redeem  any or all of the  Class B
          Common  Units in exchange  for an equal  number of common units at any
          time following the four year, six-month anniversary of the issuance of
          the Class B Common Units.

          On June 2, 1999, the Operating Partnership issued six million Series B
          preferred  units of general  partnership  interests  to the Company in
          exchange for approximately $150 million.  The Series B preferred units
          have  a  liquidation  preference  of $25  per  unit,  and  an  initial
          distribution  rate of 7.85% per annum  with  such rate  increasing  to
          8.35%  per annum on April  30,  2000 and to 8.85%  per annum  from and
          after April 30, 2001. The Series B preferred  units are convertible to
          common  units at a  conversion  rate of .9597  common  units  for each
          preferred unit and are  redeemable by the Operating  Partnership on or
          after  March 2,  2002.  Proceeds  from the  issuance  of the  Series B
          preferred units were used as partial  consideration in the acquisition
          of the first  mortgage note secured by 919 Third Avenue located in New
          York City.

          On March 16 , 1999, the Operating Partnership's Registration Statement
          on Form  S-3  (File  No.  333-67129)  was  declared  effective  by the
          Securities and Exchange  Commission.  On March 23, 1999, the Operating
          Partnership offered $100 million of its 7.40% Notes due March 15, 2004
          and  $200  million  of  its  7.75%  Notes  due  March  15  2009  in an
          underwritten  public  offering in which Goldman,  Sachs & Co. acted as
          the  managing  underwriter.  The  public  offering  price of the Notes
          aggregated  approximately $299.3 million and the underwriting discount
          aggregated  $1.9 million.  Net proceeds to the  Operating  Partnership
          aggregated  approximately  $297.4  million  and  were  used  to  repay
          borrowings under the Operating Partnership's Credit Facility.

Item 3.  Defaults Upon Senior Securities - None
Item 4.  Submission of Matters to a Vote of Securities Holders - None
Item 5.  Other information - None
Item 6.  Exhibits and Reports on Form 8-K
         a)  Exhibit 27 Financial Data Schedule
         b)  During the three  months ended June 30, 1999 the  registrant  filed
             the following reports:

          On May 11, 1999, the Operating  Partnership  filed Form 8-K announcing
          that the  Operating  Partnership  had  entered  into an  agreement  to
          acquire the first mortgage note secured by 919 Third Avenue located in
          New York City.

          On June 7, 1999, the Operating  Partnership  filed Form 8-K announcing
          that on May 24, 1999 (i) the stockholders of Tower Realty Trust,  Inc.
          approved the merger of the two companies,  (ii) Metropolitan Operating
          Partnership,  L.  P.  entered  into a $130  million  unsecured  credit
          agreement,  (iii) that on May 26, 1999,  the Company  announced  Scott
          Rechler had been named Co-Chief  Executive Officer and President along
          with  other  appointments,  (iv) that the  Operating  Partnership  had
          increased  its  distribution  on its  common  units  to an  annualized
          distribution rate of $1.485 per unit and (v) that on June 2, 1999, the
          Company  issued six million  shares of Preferred  Stock for  aggregate
          proceeds of $150 million.

          On June 25, 1999, the Operating  Partnership filed Form 8-K announcing
          that it had  closed  on the  acquisition  of the first  mortgage  note
          secured by 919 Third Avenue located in New York City.




SIGNATURES

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

                        RECKSON OPERATING PARTNERSHIP, L.P.

                        BY: RECKSON ASSOCIATES REALTY CORP., its general partner


August 11, 1999          /s/   Scott H. Rechler
Date                     Scott H. Rechler, Co-Chief Executive Officer
                         and President

August 11, 1999          /s/   Michael Maturo
Date                     Michael Maturo, Executive Vice President,
                         Treasurer and Chief Financial Officer