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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For fiscal year ended December 31, 2002

OR

For the transition period from            to            

Commission file Number 0-22741

CARRAMERICA REALTY, L.P.

(Exact Name of Registrant as Specified in Its Charter)

Registrant’s telephone number, including area code: (202) 729-1700

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: Units of Partnership Interest

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  ¨     No  x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes  ¨  No  x

As of February 24, 2003, assuming that each unit of partnership interest has the same value as a share of common stock of CarrAmerica Realty Corporation (into which such units may be redeemed under certain circumstances) the aggregate market value of the 1,303,153 units of partnership interest held by non-affiliates of the registrant was approximately $31,314,767 million, based upon the closing price of a share of common stock of CarrAmerica Realty Corporation of $24.03 on the New York Stock Exchange composite tape on such date.

PART I

Item 1. BUSINESS

General

CarrAmerica Realty, L.P. is a Delaware limited partnership formed in March 1996 for the purpose of owning, acquiring, developing and operating office buildings across the United States. As of December 31, 2002, we owned a controlling interest in a portfolio of 55 office buildings. The 55 office buildings contain a total of approximately 4.9 million square feet of net rentable area and as of December 31, 2002 were 90.4% leased. As of December 31, 2002, we also owned minority interests (ranging from 21.2% to 49.0%) in 29 operating office buildings and one office building under construction. The 29 operating office buildings in which we owned a minority interest as of December 31, 2002 were 92.9% leased. The one office building under construction will contain approximately 129,000 square feet of net rentable area.

We are managed indirectly by CarrAmerica Realty Corporation (“CarrAmerica”). CarrAmerica indirectly serves as our sole general partner. CarrAmerica indirectly owned 90.9% of our partnership units (“Units”) as of December 31, 2002. CarrAmerica is a fully integrated, self-administered and self-managed publicly traded real estate investment trust (“REIT”). CarrAmerica is listed on the New York Stock Exchange under the symbol “CRE.”

CarrAmerica focuses on the acquisition, development, ownership and operation of office properties, located primarily in selected markets across the United States. As of December 31, 2002, it owned a greater than 50% interest in 260 operating office buildings and two office buildings and one residential property under construction. The 260 operating office buildings contain a total of approximately 20.3 million square feet of net rentable area. The two office buildings under construction will contain approximately 70,000 square feet of net rentable area. The stabilized operating buildings in which it owned a controlling interest as of December 31, 2002 were 92.3% leased. These properties had approximately 1,050 tenants. As of December 31, 2002, CarrAmerica also owned minority interests (ranging from 15% to 50%) in 36 operating office buildings and two buildings under construction. The 36 operating office buildings contain a total of approximately 4.9 million square feet of net rentable area. The two office buildings under construction will contain approximately 608,000 square feet of net rentable area. The stabilized operating buildings in which they owned a minority interest as of December 31, 2002 were 92.3% leased. For more complete information regarding CarrAmerica, see CarrAmerica’s Annual Report on Form 10-K for the year ended December 31, 2002 (the “2002 CarrAmerica 10-K”).

CarrAmerica or its predecessor, The Oliver Carr Company (“OCCO”), have developed, owned and operated office buildings in the Washington, D.C. metropolitan area for more than 40 years.

CarrAmerica organized and administers us as a means of acquiring, developing, owning and operating certain properties in its portfolio. All of our properties, along with our financial condition and results of operations, are reported as part of the consolidated financial statements of CarrAmerica. We are required to report separately in this Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission because we are a guarantor of the publicly held debt of CarrAmerica. As of December 31, 2002, approximately 26.7% of the total assets of CarrAmerica were owned by us or our subsidiaries.

We are capitalized by issuing units of partnership interest (“Units”). CarrAmerica, through its wholly owned subsidiary, CarrAmerica Realty GP Holdings, Inc. (“GP Holdings”), is our sole general partner and owned a 1.0% general partner interest (in the form of Units) as of December 31, 2002. Our limited partners are CarrAmerica Realty LP Holdings, Inc. (“LP Holdings”), a wholly-owned subsidiary of CarrAmerica, which owned an approximate 89.9% interest in us at December 31, 2002 and various other individuals and entities, which collectively owned an approximate 9.1% interest in us at December 31, 2002. As of December 31, 2002, we had 68 employees, including 62 on-site employees.

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Business Strategy

Our primary business is real estate property operations. We are an integral part of CarrAmerica, and our operations and strategic direction are defined by CarrAmerica. CarrAmerica’s primary business objectives are to achieve long-term sustainable per share earnings and cash flow growth and to maximize stockholder value by acquiring, developing, owning and operating office properties primarily in markets throughout the United States that exhibit strong, long-term growth characteristics. CarrAmerica believes that it utilizes its knowledge of its markets to evaluate market conditions in order to maintain strategic flexibility and determine whether those conditions favor acquisition, development or disposition of assets. During the last five years, CarrAmerica has actively deployed capital between acquisitions and development in order to create a portfolio with strong long-term growth prospects. CarrAmerica’s investment strategy is enhanced by providing value-added services, including development, leasing and management of the properties.

CarrAmerica focuses its acquisition and development activity in U.S. markets that possess favorable long-term growth characteristics. CarrAmerica has established a local presence in each existing market by acquiring and/or developing a critical mass of properties. This local presence is maintained through continuing investment and development activity and relationships established by local CarrAmerica employees.

As of December 31, 2002, our real estate property operations were allocated among our markets as follows:

2002 Activity

As a result of the ongoing weak economic climate, the real estate markets have been materially affected. The sustained lack of job growth has reduced demand for office space and overall vacancy rates for office properties have increased in most of our markets. In reviewing various outlooks for the economy, we believe that the vacancy rates will not improve in any material fashion until at least 2004. During 2002, our markets weakened significantly and our operations in those markets were adversely impacted. The occupancy in our portfolio of stabilized operating properties decreased to 90.4% at December 31, 2002 compared to 92.2% at December 31, 2001 and 96.8% at December 31, 2000. Market rental rates have declined in most markets from peak levels and we believe there will be additional declines in some markets in 2003.

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Acquisition Activity

During 2002, we acquired three operating properties totaling approximately 666,000 rentable square feet for approximately $160.5 million including assumed debt. Our building purchases in 2002 were acquired from unrelated third parties. Canal Center was purchased from Canal Center Properties LLC, TransPotomac V Plaza was purchased from TransPotomac V LLC and 11119 Torrey Pines Road was purchased from USAA Real Estate Company. The purchases were funded from the sale of other properties and through acquired debt. Canal Center and TransPotomac V Plaza were acquired subject to $63.5 million of 3.06% debt held by Morgan Stanley Dean Witter. We paid this debt in full in 2002. The table below details our 2002 acquisitions.

Disposition Activity

During 2002, we sold two operating properties totaling approximately 676,000 rentable square feet for approximately $130.4 million to unrelated third parties . We sold Commons @Las Colinas for $119.6 million to Wells Operating Partnership, L.P. The table below details our 2002 dispositions.

Joint Ventures and Development Activities

Joint venture arrangements provide us with opportunities to reduce investment risk by diversifying capital deployment and enhancing returns on invested capital from fee arrangements. We principally utilize these arrangements on projects characterized by large dollar-per-square foot costs and/or when we desire to limit capital deployment in certain markets. For example, we entered into a joint venture with Rosewood Property Company in September 2000 to develop two, three-story office buildings at Custer Court in Richardson, Texas. We own a 49% interest in the joint venture. Construction on the first building began in 2000 and was completed in 2002. The completed office building contains approximately 121,000 square feet of net rentable area. Due to weak market conditions, construction on the second building never began and the necessary land has not been purchased. We did not enter any new joint ventures or development activity during 2002.

Financing Activity

In January 2002, CarrAmerica issued $400.0 million of senior unsecured notes. The notes bear interest at 7.125% per annum payable semi-annually beginning on July 15, 2002. The notes mature on January 15, 2012. In November 2002, CarrAmerica issued $50.0 million of 5.261% and $175.0 million of 5.25% senior unsecured notes. The notes mature on November 30, 2007. The interest on the notes is payable semi-annually beginning May 30, 2003. We unconditionally guarantee all of the notes.

Forward-Looking Statements

Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our and our

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affiliates, or the industry’s actual results, performance, achievements or transactions to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such factors include, among others, the following:

Risk Factors

For a discussion of risks associated with an investment in CarrAmerica and us, see “Item 1 – Business, The Company – Risk Factors” in the 2002 CarrAmerica 10-K, which information is hereby incorporated by reference.

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Item 2. PROPERTIES

General

As of December 31, 2002, we owned interests (consisting of whole or partial ownership interests) in 84 operating office buildings located in 11 markets across the United States. As of December 31, 2002, we owned fee simple title or leasehold interest in 55 operating office buildings and non-controlling partial interests of 21.2% to 49.0% in 29 operating office buildings and one office building under construction. The 55 operating office buildings contain a total of approximately 4.9 million square feet of net rentable area and as of December 31, 2002 were 90.4% leased. The 29 operating office buildings in which we owned a minority interest as of December 31, 2002 contain approximately 3.2 million square feet of net rentable area and were 92.9% leased as of December 31, 2002. The one office building under construction in which we own a minority interest will contain approximately 129,000 square feet of net rentable area.

The following table sets forth information about each operating property in which we own an interest as of December 31, 2002:

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Insurance

Although we believe our properties are adequately covered by insurance, we cannot predict at this time if we will be able to obtain full coverage at a reasonable cost in the future. The costs associated with our June 30, 2002 property and casualty insurance renewals were higher than anticipated. Although we and CarrAmerica have an excellent claims history and safety record, all lines of coverage were affected by higher premiums, in part because insurance companies have experienced a loss of income on their investments, underwriting results have been poor and also as a result of the events of September 11, 2001.

Our insurance renewal on June 30, 2002 increased premiums from the prior year approximately 155%. The property insurance deductible increased from $5,000 to $10,000 per claim. Since reinsurance treaties renew twice each year (January and July), our property and casualty insurance renewal date has been changed from June 30 to May 15 to enable underwriters to concentrate on the insurance proposals well ahead of treaty renewal.

In 2002, all risk property insurers began attaching terrorism exclusions to insurance policies. As a result of the Terrorism Risk Insurance Act of 2002, terrorism insurance must now be priced separately within the property insurance coverage. Unlike earthquake exposure, insurers do not yet have a means of modeling the terrorism risk.

During 2002, CarrAmerica completed an in-depth evaluation of its terrorism exposure as well as all lender requirements. Upon the renewal date for insurance of June 30, 2002, CarrAmerica purchased terrorism coverage with limits of $200.0 million per occurrence and in the aggregate, with a deductible of $1.0 million per claim, at a cost of approximately $0.5 million per year. Our properties are covered by this policy. The policy covers only physical damage and the amount of coverage may not be enough for all damages that could result from a terrorist attack. Coverage does not include losses due to biological, chemical or radioactive contamination. The lack of coverage for such contamination could have a material adverse effect on our financial results if a building we own becomes uninhabitable as a result of biological, chemical, radioactive or other contamination. CarrAmerica does not anticipate purchasing any additional terrorism coverage before May 15, 2003, our insurance renewal date.

Occupancy, Average Rentals and Lease Expirations

As of December 31, 2002, 90.4% of our aggregate net rentable square footage in 55 consolidated operating office buildings was leased. The following table summarizes percent leased and average annualized rent per leased square foot (excluding storage space) for the past three years for the consolidated operating properties:

The following table is a schedule of our lease expirations for leases in place as of December 31, 2002 for the next ten years for the 55 consolidated operating office buildings, assuming no tenants exercise renewal options:

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Mortgage Financing

As of December 31, 2002, some of our consolidated operating properties were subject to fixed rate mortgage indebtedness. The total of these mortgages was $81.6 million. Our fixed rate mortgage debt as of December 31, 2002, bore an effective weighted average interest rate of 7.62% and a weighted average maturity of 4.7 years (assuming loans callable before maturity are called as early as possible). The following table details information regarding the existing mortgage indebtedness for the consolidated operating properties as of December 31, 2002.

For additional information regarding our properties and our operations, see “Item 1, Business.”

Item 3. LEGAL PROCEEDINGS

We are party to a variety of legal proceedings arising in the ordinary course of our business. All of these matters, taken together, are not expected to have a material adverse impact on us.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for our Units. As of December 31, 2002, there were 27 holders of Units on record. As of December 31, 2002, there were no options or warrants to purchase Units outstanding. In addition, as of December 31, 2002, there were no Units that were being, or have been publicly proposed to be, publicly offered by us.

Each Unit held by partners other than GP Holdings or LP Holdings is (subject to holding period limitations) redeemable for cash equal to the value of a share of CarrAmerica common stock or, at the option of GP Holdings, CarrAmerica common stock on a one-for-one basis. For the high and low trading prices of CarrAmerica’s common stock for the last two years, see “Item 5 – Market for Registrant’s Common Equity and Related Stockholder Matters” in the 2002 CarrAmerica 10-K, which information is hereby incorporated by reference.

We have made regular quarterly distributions of $0.50 per Class A, D and E Units throughout 2002, and $0.4625 per Class A, D and E Units throughout 2001 and 2000. The distributions are appropriately prorated to reflect ownership of Units for less than the full period to which the distribution relates. Our ability to make distributions depends on a number of factors, including net cash provided by operating activities, capital commitments and debt repayment schedules. Holders of Units are entitled to receive distributions when, as and if declared by the Board of Directors of GP Holdings, our sole general partner, out of any funds legally available for that purpose.

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Item 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial and operating information for us as of and for the years ended December 31, 2002, 2001, 2000, 1999 and 1998.

The following selected financial and operating information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

The discussion that follows is based primarily on our consolidated financial statements as of December 31, 2002 and 2001, and for the years ended December 31, 2002, 2001 and 2000 and should be read along with the consolidated financial statements and related notes. The ability to compare one period to another may be significantly affected by acquisitions completed, development properties placed in service and dispositions made during those years. The number of operating office buildings that we owned and were consolidated for the financial statements was 55, 53 and 51 as of December 31 2002, 2001 and 2000, respectively.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex or subjective judgments. Our critical accounting policies and estimates relate to evaluating the impairment of long-lived assets and other investments and the collectibility of accounts and notes receivable.

If events or changes in circumstances indicate that the carrying value of a rental property to be held and used or land held for development may be impaired, we perform a recoverability analysis based on estimated undiscounted cash flows to be generated from the property in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the property and related assets,

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such as tenant improvement and lease commissions, are written down to estimated fair value and an impairment loss is recognized. If we decide to sell rental properties or land held for development, we evaluate the recoverability of the carrying amounts of the assets. If the evaluation indicates that the carrying value is not recoverable from estimated net sales proceeds, the property is written down to estimated fair value less costs to sell and an impairment loss is recognized. Our estimates of cash flows and fair values of the properties are based on current market conditions and consider matters such as rental rates and occupancies for comparable properties, recent sales data for comparable properties and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers. For 2002 and 2001, we recognized impairment losses of $1.0 million and $0.9 million, respectively, on land holdings. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of additional impairment losses which, under applicable accounting guidance, could be substantial.

Our allowance for doubtful accounts and notes receivable is established based on analysis of the risk of loss on specific accounts. The analysis places particular emphasis on past-due accounts and considers information such as the nature and age of the receivable, the payment history of the tenant or other debtor, the financial condition of the tenant and our assessment of its ability to meet its lease obligations, the basis for any disputes and the status of related negotiations, etc. Our estimate of the required allowance, which is reviewed on a quarterly basis, is subject to revision as these factors change and is sensitive to the effects of economic and market conditions on our tenants, particularly in our largest markets. Bad debt expense was $1.2 million, $1.8 million and $0.9 million for 2002, 2001 and 2000 respectively.

Results of Operations

Operating results and assets are summarized as follows:

Operating revenues increased $7.9 million (8.8%) in 2002 as compared to 2001 and decreased $25.3 million (22.0%) in 2001 as compared to 2000. The increase in 2002 relates primarily to the three acquisitions made during 2002. Additionally, operating revenues in 2002 increased from 2001 as a result of increased recoveries from tenants of $2.2 million or 17.7%. This increase was due primarily to higher expense recoveries for real estate taxes and insurance which increased significantly in 2002 for the reasons discussed below. These increases were partially offset by higher vacancies.

The decrease in 2001 from 2000 was due primarily to the contribution of properties in August 2000 to Carr Office Park, L.L.C., in which we have a 21.2% interest. The decrease in operating revenues in 2001 was partially offset by the acquisition of two buildings in April 2001.

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On August 17, 2000, we closed on a joint venture transaction with New York State Teachers Retirement System (“NYSTRS”). At closing, we and some affiliates contributed properties to the joint venture, Carr Office Park, L.L.C., and NYSTRS contributed cash of approximately $255.1 million. The joint venture encompasses five suburban office parks (including 26 rental properties and land held for development of additional properties) in four markets. We contributed 21 properties and land held for development. We received approximately $107.0 million in cash, including payment on an intercompany obligation, and a 21.2% interest in the joint venture in exchange for the properties contributed and recognized a gain on the partial sale of $18.9 million.

Property operating expenses increased $3.3 million (10.5%) in 2002 as compared to 2001 and decreased $7.3 million (18.8%) in 2001 as compared to 2000. The increase in 2002 was due primarily to higher real estate taxes ($1.9 million) and higher insurance expense ($1.1 million). The increase in real estate taxes was due primarily to higher taxes in the San Francisco Bay market. The increase in insurance expense was due primarily to increases in insurance premiums and the cost of terrorism coverage. In addition, operating expenses increased due to the acquisition of three properties. The decrease in operating expenses in 2001 as compared to 2000 was due primarily to dispositions of interests in properties, including the properties contributed to Carr Office Park, L.L.C. in August 2000.

General and administrative expenses decreased $3.7 million (46.3%) in 2002 from 2001 and increased $1.5 million (23.1%) in 2001 from 2000. The decrease in 2002 resulted primarily from a reduction in allocated costs from CarrAmerica due to the completion of portions of its internal process improvement efforts, reduction in incentive compensation and overall cost containment efforts. The increases in general and administrative expenses in 2001 resulted primarily from costs associated with CarrAmerica’s internal process improvement efforts.

Depreciation and amortization expense increased approximately $3.0 million (12.5%) in 2002 compared to 2001 and decreased $3.6 million (13.0%) in 2001 from 2000. The increase in 2002 was due primarily to the acquisition of three properties and the write-off of tenant improvement balances for defaulting tenants. The decrease in 2001 was due primarily to dispositions of interests in properties in the first quarter of 2001 and the third quarter of 2000, partially offset by the acquisition of two properties in April 2001.

Interest expense decreased $4.6 million (24.0%) in 2002 as compared to 2001 and $8.4 million (30.4%) in 2001 compared to 2000. These decreases were primarily the result of the retirement of mortgages. Mortgages and notes payable decreased by $20.1 million between 2002 and 2001 and by $28.9 million between 2001 and 2000.

We dispose of assets (sometimes using tax-deferred exchanges) that are inconsistent with our long-term strategic or return objectives or where market conditions for sale are favorable. The proceeds from the sales are redeployed into other properties or used to fund development operations or to support other needs. During 2002, we disposed of two properties recognizing a gain of $22.4 million. These gains have been classified as discontinued operations. We sold Commons @ Las Colinas to Wells Operating Partnership, L.P. We also recognized impairment losses of $1.0 million on two land holdings. In 2001, we disposed of one property in connection with the sale of a group of properties by CarrAmerica. There was a net gain on this transaction; however, we incurred a loss of $6.5 million on our property. We also recognized an impairment loss of $0.9 million on land holdings. In 2000, we recognized a gain of $24.9 million on the Carr Office Park, L.L.C. transaction and dispositions of three other properties.

Other income decreased $1.2 million (23.1%) in 2002 as compared to 2001. This decrease was due primarily to lower interest income ($0.8 million) which was a result of lower cash balances. In addition, equity in earnings of unconsolidated entities decreased $0.5 million (14.1%). This decrease was primarily due to decreased earnings from Carr Office Park, L.L.C. In June 2001, Carr Office Park, L.L.C., a significant investee, obtained third party financing on its properties increasing its leverage and reducing our equity in earnings from the venture.

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Other income increased $2.4 million (85.7%) in 2001 from 2000. This increase was primarily due to increased equity in earnings of unconsolidated entities of $2.4 million. This increase was due primarily to our investment in Carr Office Park, L.L.C. in August 2000. Our share of Carr Office Park, L.L.C.’s earnings increased $1.6 million in 2001 from 2000.

Income from discontinued operations increased $19.1 million (248.1%) in 2002 as compared to 2001 and $3.0 million (63.8%) in 2001 as compared to 2000. The increase in 2002 from 2001 primarily resulted from the sale of two operating properties and the corresponding $22.4 million gain recognized as discussed above.

The increase in the assets in 2002 from 2001 was due primarily to the acquisition of three properties offset by the disposition of two properties. The decrease in total assets in 2001 from 2000 was due to primarily to a distribution from Carr Office Park, L.L.C. from proceeds of a third party financing of properties ($47.2 million) in 2001. This distribution reduced our investment in Carr Office Park, L.L.C. and was used primarily to repay mortgages and notes payable.

Consolidated Cash Flows

Consolidated cash flow information is summarized as follows:

Operations provided net cash of $60.9 million in 2002 as compared to $25.4 million in 2001 and $99.4 million in 2000. The changes in cash flow from operating activities were primarily the result of factors discussed above in the analysis of operating results. The level of net cash provided by operating activities is also affected by the timing of receipt of revenues and payment of expenses and amounts due to affiliates. For example, the decrease in net cash generated by operating activities in 2001 from 2000 primarily relates to the decrease in our due to affiliates.

Our investing activities provided net cash of $25.5 million in 2002, $13.5 million in 2001 and $56.5 million in 2000. The change in cash flows from investing activities in 2002 is due primarily to increased proceeds from the disposition of operating properties ($116.2 million) partially offset by increased acquisition and development of operating properties ($41.9 million) and a decrease in distributions from unconsolidated entities ($45.9 million). The change in cash flows from investing activities in 2001 is due primarily to our contribution of properties to Carr Office Park, L.L.C. in 2000 for which we received cash of $107.0 million. The acquisition of two operating properties ($51.6 million) in 2001 also contributed to the decrease in cash from investing activities compared to 2000. Partially offsetting these decreases were a receipt of the financing proceeds distribution from Carr Office Park, L.L.C. ($47.2 million), release of restricted deposits ($23.3 million) and reduced development activity ($40.1 million) in 2001.

Financing activities used net cash of $86.0 million, $43.5 million and $158.4 million in 2002, 2001 and 2000, respectively. In 2002, we repaid two mortgages including one for $63.5 million associated with TransPotomac V Plaza and Canal Center and another for $10.9 million. In 2001, we repaid three mortgages totaling $31.5 million. In 2000, we decreased our debt significantly, paying down our portion of the unsecured credit facility ($140.3 million).

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Liquidity and Capital Resources

As of December 31, 2002, we had approximately $1.7 million in available cash and cash equivalents. Our liquidity and capital resources are dependent upon CarrAmerica and its affiliates. CarrAmerica, as a REIT, is required to distribute at least 90% of its taxable income to its stockholders on an annual basis. We and CarrAmerica require capital to invest in our existing portfolio of operating assets for capital projects. These capital projects can include such things as large-scale renovations, routine capital improvements, deferred maintenance on properties we have recently acquired and tenant related matters, including tenant improvements, allowances and leasing commissions. The amounts of the leasing expenditures can vary significantly depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the life of the leases.

CarrAmerica is our principal source of liquidity. CarrAmerica’s primary external source of liquidity is its credit facility. CarrAmerica has a three-year, $500.0 million unsecured credit facility expiring in June 2004 with J.P. Morgan Chase, as agent for a group of banks. CarrAmerica can extend the life of the facility an additional year at its option. The facility carries an interest rate of 70 basis points over 30-day LIBOR, or 2.1% as of December 31, 2002. As of December 31, 2002, $88.0 million was drawn on the credit facility, $1.2 million in letters of credit were outstanding and $410.8 million was available for borrowing.

CarrAmerica’s unsecured credit facility contains financial and other covenants with which it must comply. Some of these covenants include:

Availability under the unsecured credit facility is also limited to a specified percentage of the fair value of unmortgaged properties. CarrAmerica is currently in compliance with all the financial covenants of its credit facility.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the principal amount of our long-term debt as it matures, significant non-recurring capital expenditures that need to be made periodically at our properties, development projects that we undertake and the costs associated with acquisitions of properties.

We derive substantially all of our revenue from tenants under leases at our properties. Our operating cash flow therefore depends materially on the rents that we are able to charge to our tenants, and the ability of these tenants to make their rental payments. We believe that the diversity of our tenant base helps insulate us from the negative impact of tenant defaults and bankruptcies. However, general economic downturns, or economic downturns in one or more of our markets, could materially adversely impact the ability of our tenants to make lease payments and our ability to re-lease space on favorable terms as leases expire. In either of these cases, our cash flow and therefore our ability to meet our capital needs would be adversely affected.

As a result of the ongoing weak economic climate, the real estate markets have been materially affected. The sustained lack of job growth has reduced demand for office space and overall vacancy rates for office properties have increased in most of our markets. In reviewing various outlooks for the economy, we believe that the vacancy rates will not improve in any material fashion until at least 2004. During 2002, our markets weakened significantly and our operations in those markets were adversely impacted. As a result, occupancy in our portfolio of operating properties decreased to 90.4% at December

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31, 2002, as compared to 92.2% at December 31, 2001. Market rental rates have declined in most markets from peak levels and we expect there will be additional declines in some markets in 2003.

In the future, if, as a result of general economic downturns, our or CarrAmerica’s properties do not perform as expected, or we cannot raise the expected funds from the sale of properties and/or if we are unable to obtain capital from other sources, such as CarrAmerica, we may not be able to make required principal and interest payments or make necessary routine capital improvements with respect to our existing portfolio of operating assets. While we believe that we would continue to have sufficient funds to pay our operating expenses and debt service and our regular quarterly distributions, our ability to perform development activity or to fund additional development in our joint ventures could be adversely affected. In addition, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the holder of the mortgage or lender could foreclose on the property, resulting in loss of income and asset value. An unsecured lender could also attempt to foreclose on some of our assets in order to receive payment. In most cases, very little of the principal amount that we borrow is repaid prior to the maturity of the loan. We generally expect to refinance that debt when it matures, although in some cases we may pay off the loan. If principal amounts due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow may be insufficient to repay all maturing debt. Prevailing interest rates or other factors at the time of a refinancing (such as possible reluctance of lenders to make commercial real estate loans) may result in higher interest rates and increased interest expense.

Unconsolidated Investments and Joint Ventures

We have investments in real estate joint ventures in which we hold 21.2% to 49.0% interests. These investments are accounted for using the equity method, and therefore, the assets and liabilities of the joint ventures are not included in our financial statements. Most of these joint ventures own and operate office buildings financed by non-recourse debt obligations that are secured only by the real estate and other assets of the joint ventures. We have no obligation to repay these non-recourse debt obligations and the lenders have no recourse to our other assets.

Our investments in these joint ventures are subject to risks not inherent in our majority owned properties, including:

Guarantee Obligations

We have unconditionally guaranteed unsecured notes issued by CarrAmerica to institutional and other investors. The aggregate principal amount of the unsecured notes was $1,100.0 million as of December 31, 2002. These notes are in the form of $150.0 million of 7.20% notes due in 2004, $100.0 million of 6.625% notes due in 2005, $125.0 million of 7.375% notes due in 2007, $100.0 million of 6.875% notes due in 2008, $400.0 million of 7.125% notes due in 2012, $50.0 million of 5.261% notes due in 2007 and $175.0 million of 5.250% notes due in 2007. CarrAmerica’s senior unsecured notes contain various covenants with which CarrAmerica must comply. The covenants include:

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Capital Commitments

We will require capital for development projects currently underway and in the future. As of December 31, 2002, we had 129,000 square feet of office space under construction in one project in which we own a minority interest. This project is expected to cost $24.3 million, of which our total investment is expected to be approximately $5.1 million. Through December 31, 2002, approximately $18.0 million or 74.1% of the total project costs had been expended on the project. Generally, we fund our investments in projects under construction from the proceeds of asset dispositions and loans from CarrAmerica. We expect that these sources and project-specific financing of selected assets will provide additional funds required to complete the development and to finance the costs of additional projects we may undertake. As a result of market conditions, we believe we will be limiting our development activities in the near future and expect to concentrate our growth efforts on the acquisition of properties.

We also regularly incur expenditures in connection with the re-leasing of office space, principally in the form of tenant improvements and leasing commissions. The amounts of these expenditures can vary significantly, depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the life of the leases. We expect to pay for these capital expenditures out of cash from operations or, to the extent necessary, borrowings from CarrAmerica. We believe that these expenditures are generally recouped in the form of continuing lease payments.

Insurance

Although we believe our properties are adequately covered by insurance, we cannot predict at this time if we will be able to obtain full coverage at a reasonable cost in the future. The costs associated with our June 30, 2002 property and casualty insurance renewals were higher than anticipated. Although we and CarrAmerica have an excellent claims history and safety record, all lines of coverage were affected by higher premiums, in part because insurance companies have experienced a loss of income on their investments, underwriting results have been poor and also as a result of the events of September 11, 2001.

Our insurance renewal on June 30, 2002 increased premiums from the prior year approximately 155%. The property insurance deductible increased from $5,000 to $10,000 per claim. Since reinsurance treaties renew twice each year (January and July), our property and casualty insurance renewal date has been changed from June 30 to May 15 to enable underwriters to concentrate on the insurance proposals well ahead of treaty renewal.

In 2002, all risk property insurers began attaching terrorism exclusions to insurance policies. As a result of the Terrorism Risk Insurance Act of 2002, terrorism insurance must now be priced separately within the property insurance coverage. Unlike earthquake exposure, insurers do not yet have a means of modeling the terrorism risk.

During 2002, CarrAmerica completed an in-depth evaluation of its terrorism exposure as well as all lender requirements. Upon the renewal date for insurance of June 30, 2002, CarrAmerica purchased terrorism coverage with limits of $200.0 million per occurrence and in the aggregate, with a deductible of $1.0 million per claim, at a cost of approximately $0.5 million per year. Our properties are covered by this policy. The policy covers only physical damage and the amount of coverage may not be enough for all damages that could result from a terrorist attack. Coverage does not include losses due to biological, chemical or radioactive contamination. The lack of coverage for such contamination could have a material adverse effect on our financial results if a building we own becomes uninhabitable as a result of biological, chemical, radioactive or other contamination. CarrAmerica does not anticipate purchasing any additional terrorism coverage before May 15, 2003, our insurance renewal date.

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New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 2001. SFAS No. 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization approach to an impairment-only approach. Adoption of SFAS No. 142 in January 2002 did not have a material effect on our financial statements.

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” The Statement does not change the fundamental provisions of SFAS No. 121; however, it resolves various implementation issues of SFAS No. 121 and establishes a single accounting model for long-lived assets to be disposed of by sale. It retains the requirement of Opinion No. 30 to report separately discontinued operations but extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in distribution to owners) or is classified as held for sale. Adoption of SFAS No. 144 in January 2002 did not have a material effect on our financial statements. However, in the event we sell a property on terms where we have limited or no continuing involvement with the property after such sale we are required to reclassify that property’s previously reported earnings to discontinued operations. We are also required to present assets held for sale and the related liabilities separately in our consolidated balance sheets if we meet the applicable criteria of SFAS No. 144.

In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” For 2002, the Interpretation requires certain disclosures. Beginning in 2003, the Interpretation requires recognition of liabilities at their fair value for newly issued guarantees. We do not anticipate that adoption of FASB Interpretation No. 45 will have a material effect on our financial statements.

In July 2001, the Emerging Issues Task Force (EITF) released EITF D-98: “Classification and Measurement of Redeemable Securities,” which clarifies Rule 5-02.28 of Regulation S-X. This Rule requires securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (1) at a fixed or determinable price on a fixed or determinable date; (2) at the option of the holder; or (3) upon the occurrence of an event that is not solely within the control of the issuer. This announcement is to be applied retroactively beginning in the first quarter of 2002. As discussed in the footnotes to the consolidated financial statements, each holder of Class A Units, Class D Units and Class E Units may require us to redeem their Units. In addition, Class C Units may be converted to Class A Units over time at the holder’s option. Since these Units are redeemable at the option of the holders, they are classified outside of partners’ capital on our balance sheet. Accordingly, $32.8 million and $40.2 million of partner’s capital as of December 31, 2002 and 2001, respectively, have been classified outside of partners’ capital on our balance sheet.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation and requires disclosure in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. We have adopted the disclosure provisions of SFAS No. 148. Beginning January 1, 2003, we will adopt the prospective transition method for all new stock compensation awards. We do not anticipate that adoption of SFAS No. 148 will have a material effect on our financial statements.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities.” This Interpretation clarifies the application of Accounting Research Bulletin No. 51,

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“Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. We do not anticipate that the adoption of Interpretation No. 46 will have a material impact on our financial statements.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Increases in interest rates would increase our interest expense and adversely affect our cash flow. As of December 31, 2002, we had $120.6 million of fixed rate debt. The mortgage loans mature at various times through 2017. This amount includes two notes to CarrAmerica. The first note for $30.0 million matures in 2011. The second note for $12.0 matures in 2007. The outstanding balance of these notes payable was $38.9 million and $39.5 million at December 31, 2002 and 2001, respectively.

Our future earnings, cash flow and fair values relevant to financial instruments are dependent upon prevailing market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. We manage our risk by matching projected cash inflows from operating activities, financing activities and investing activities with projected cash outflows to fund debt payments, acquisitions, capital expenditures, distributions and other cash requirements. We use derivative financial instruments only for hedging purposes and not for speculation or trading purposes.

A change in interest rates generally does not impact future earnings and cash flows for fixed rate debt instruments. As fixed rate debt matures, and additional debt is incurred to fund the repayments of maturing loans, future earnings and cash flows may be impacted by changes in interest rates. This impact would be realized in the periods subsequent to debt maturities. The following is a summary of debt maturities at December 31, 2002:

If we assume the repayments of fixed rate borrowings are made in accordance with the terms and conditions of the respective credit arrangements, a 10 percent change in the market interest rate for the respective fixed rate debt instruments would change the fair market value of our fixed rate debt by approximately $3.2 million. The estimated fair market value of the fixed rate debt instruments at December 31, 2002 and 2001 was $127.2 million and $133.2 million, respectively.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data included in this Annual Report on Form 10-K are listed in Part IV, Item 15(a)(1).

None.

PART II

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Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

We have no directors or executive officers. We are managed by GP Holdings, as the sole general partner. The directors and executive officers of GP Holdings are listed in the following table:

CarrAmerica is the sole stockholder of GP Holdings. The additional information required by this item concerning directors and executive officers of CarrAmerica and GP Holdings is incorporated by reference to the material appearing under the heading “Election of Directors (Proposal 1),” in CarrAmerica’s definitive proxy statement for the annual meeting of its stockholders to be held on May 1, 2003 (the “CarrAmerica Proxy Statement’) and under the headings “Item 1. Business—The Company—Our Directors” and “Our Executive Officers and Certain Key Employees,” in the 2002 CarrAmerica 10-K, which is incorporated by reference.

Item 11. EXECUTIVE COMPENSATION

We have no directors or executive officers. We are managed by GP Holdings, as the sole general partner. GP Holdings has not paid any compensation to its directors and officers. CarrAmerica is the sole stockholder of GP Holdings. The information required by this item with respect to CarrAmerica’s executive officers is incorporated by reference to the material appearing in the 2002 CarrAmerica Proxy Statement under the heading “Executive Compensation,” which information is incorporated by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of February 24, 2003, regarding the beneficial ownership of Units by each person we know to be the beneficial owner of more than five percent of our outstanding Units. As of February 24, 2003, no director or executive officer of GP Holdings or CarrAmerica beneficially owned any Units. Each entity named in the table has sole voting and investment power with respect to all Units shown as beneficially owned by that person, except as otherwise set forth in the notes to the table.

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CarrAmerica Realty Services, Inc. (“CARSI”), a wholly owned subsidiary of CarrAmerica, provides management and leasing services to all of our office properties. During 2002 we incurred management fees of $2.5 million for CARSI services.

Item 14. CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-14 of the rules promulgated under the Securities and Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

15(a)(1) Financial Statements

Reference is made to the Index to Financial Statements and Schedules on page 28.

15(a)(2) Financial Statement Schedules

Reference is made to the Index to Financial Statements and Schedules on page 28.

15(a)(3) Exhibits

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15(b) Reports on Form 8-K

Form 8-K filed November 20, 2002, regarding guarantee of loan between CarrAmerica Realty Corporation and Banc of America Securities LLC, J.P. Morgan Securities, Inc., Fleet Securities, Inc. and HSBC Securities (USA), Inc. in connection with a proposed public offering of $50,00,000 of 5.261% Senior Notes due 2007.

Form 8-K filed on November 25, 2002 regarding guarantee of loan between CarrAmerica Realty Corporation and Banc of America Securities LLC, J.P. Morgan Securities, Inc., Goldman, Sachs & Co., Wachovia Securities, Inc., Commerzbank Capital Markets Corp., Legg Mason Wood Walker, Incorporated, PNC Capital Markets, Inc., U.S. Bandcorp Piper Jeffray, Inc., and Wells Fargo Brokerage Services, LLC in connection with a proposed public offering of $175,000,000 of 5.25% Senior Notes due 2007.

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15(c) Exhibits

The list of exhibits filed with this report is set forth in response to Item 15(a)(3). The required exhibit index has been filed with the exhibits.

15(d) Financial Statements

The financial statements required by this item are included in the list set forth in response to Item 15(a)(1).

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the District of Columbia on March 31, 2003.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following person on behalf of the registrant and in the capacities indicated on March 31, 2003.

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CERTIFICATION

I, Thomas A. Carr, certify that: