EOP OPERATING LTD PARTNERSHIP - 10-K Annual Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13625

EOP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)


Delaware		36-4156801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(Registrant’s telephone number, including area code) (312) 466-3300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered

None		None

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

Units of Limited Partnership Interest (“Units”)

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 o

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

The aggregate market value of the Units held by non-affiliates of the registrant as of June 30, 2003 (the last business day of the registrant’s most recently completed second fiscal quarter) was $855,650,789 based on the market value on that date of the common shares of Equity Office Properties Trust into which Units are exchangeable.

On February 27, 2004, 450,162,700 Units were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Equity Office Properties Trust’s proxy statement for the annual shareholders’ meeting to be held in 2004 are incorporated by reference into Part III. Equity Office Properties Trust expects to file its proxy statement within 120 days after December 31, 2003.

EOP OPERATING LIMITED PARTNERSHIP

TABLE OF CONTENTS


		Page

PART I.
	Forward-Looking Statements		3
Item 1.	Business		4
Item 2.	Properties		11
Item 3.	Legal Proceedings		17
Item 4.	Submission of Matters to a Vote of Security Holders		17
PART II.
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		18
Item 6.	Selected Financial Data		19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		49
Item 8.	Financial Statements and Supplementary Data		50
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		97
Item 9A.	Controls and Procedures		97
PART III.
Item 10.	Directors and Executive Officers of the Registrant		98
Item 11.	Executive Compensation		98
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		98
Item 13.	Certain Relationships and Related Transactions		98
Item 14.	Principal Accountant Fees and Services		98
PART IV.
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		99
Subsidiaries
Consent
Certifications
Certifications

PART I

FORWARD-LOOKING STATEMENTS

Statements contained in this Form 10-K which are not historical fact may be forward-looking statements. Such statements (none of which is intended as a guarantee of performance) are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, the risks described in our current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on July 15, 2003, as the same may be supplemented from time to time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-K is filed with the SEC. Among the factors about which we have made assumptions are the following:

• our ability to maintain occupancy and to timely lease or re-lease space at anticipated rents;

• changes in general economic conditions, including, in particular, those affecting industries in which our principal tenants and potential tenants compete and their demand for office space in markets in which we have a presence;

• the extent of any tenant bankruptcies and insolvencies;

• the extent of any early lease terminations and the amount of lease terminations fees, if any;

• the cost and availability of debt and equity financing;

• the availability of new competitive supply, which may become available by way of sublease and new construction;

• the extent of any disposition activity and our ability to complete any such dispositions in a timely manner and on acceptable terms;

• our ability to realize anticipated cost savings by creating and capturing benefits of scale;

• our ability to obtain, at a reasonable cost, adequate insurance coverage for catastrophic events, such as earthquakes and terrorist acts;

• changes in operating costs, including real estate taxes, utilities, insurance and security costs; and

• other risks and uncertainties detailed from time to time in our filings with the SEC.


Item 1.	Business.

EOP PARTNERSHIP

As used herein, “we”, “us” and “our” refer to EOP Operating Limited Partnership, a Delaware limited partnership, together with its consolidated subsidiaries, and the predecessors thereof, except where the context otherwise requires. We are a subsidiary of Equity Office Properties Trust (“Equity Office”), a Maryland real estate investment trust (“REIT”). We were organized in 1996 and began operations in 1997. We are principally engaged, through various subsidiaries, in owning, managing, leasing, acquiring and developing office properties. Equity Office’s assets are owned and substantially all of its operations are conducted through us and our subsidiaries. Equity Office is our sole general partner and owned at December 31, 2003, an approximate 89.1% interest in us. Equity Office has elected to be taxed as a REIT for federal income tax purposes, and generally will not be subject to federal income tax if 100% of its taxable income is distributed and it complies with a number of organizational and operational requirements.

At December 31, 2003, we had a portfolio of 684 office properties comprising approximately 122.3 million square feet of commercial office space in 18 states and the District of Columbia (the “Office Properties”), 75 industrial properties comprising approximately 5.8 million square feet (the “Industrial Properties” and, together with the Office Properties, the “Properties”) and approximately 0.4 million square feet of office properties under development.

Our internet site is http://www.equityoffice.com. Beginning on or about March 22, 2004, we will provide to the public on our website, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

KEY TRANSACTIONS IN 2003

During 2003, we completed the following key transactions:

• we disposed of 53 office properties, two industrial properties and four vacant land parcels in various transactions to unaffiliated parties for approximately $933.1 million. The sold office properties consisted of approximately 5,182,707 square feet and 32 residential units, and the industrial properties consisted of approximately 216,900 square feet. With these transactions, we exited the following markets: Salt Lake City, UT; Riverside, CA; Fort Worth, TX; Charlotte, NC; and San Antonio, TX;

• we sold partial interests in 13 Office Properties consisting of approximately 3,284,431 square feet for approximately $596.5 million;

• we acquired two Office Properties for approximately $183.2 million consisting of approximately 829,293 square feet;

• we placed into service four developments consisting of five buildings and approximately 1,218,215 square feet;

• we entered into $500 million of forward-starting interest rate swaps;

• we repaid $400 million of unsecured notes that matured in November 2003;

• we issued $500 million of unsecured notes due January 2013 at an effective annual interest rate of 5.98% and used a portion of the net proceeds to repay $300 million of unsecured notes that matured in February 2003;

• we obtained a new three-year $1.0 billion revolving credit facility in May 2003;

• we obtained a $1.0 billion 364-day credit facility in December 2003;

• Equity Office announced the redemption of, and subsequently redeemed in 2004, 4,562,900 outstanding 8 5/8% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest for approximately $114.6 million, which included approximately $0.6 million of accrued distributions. In connection with such redemption, we redeemed all of the Series C Preferred Units from Equity Office;

• Equity Office redeemed the 7.875% Series E Cumulative Redeemable Preferred Shares for approximately $151.9 million, which included approximately $1.9 million of accrued distributions. In connection with such redemption, we redeemed all of the Series E Preferred Units from Equity Office;

• Equity Office redeemed the 8.00% Series F Cumulative Redeemable Preferred Shares for approximately $100.0 million. In connection with such redemption, we redeemed all of the Series F Preferred Units from Equity Office; and

• Equity Office repurchased 14,236,400 Common Shares at an average price of $25.53 per share for a total of $363.5 million. In connection with the repurchases, we purchased from Equity Office and retired a corresponding number of Units for an aggregate purchase price equal to the aggregate purchase price for all Common Share repurchases.

BUSINESS STRATEGY

Our primary business objective is to achieve sustainable long-term growth in cash flow and portfolio value in order to maximize unitholder value. We intend to achieve this objective by owning and operating high-quality office buildings and providing a superior level of service to customers across the United States.

Our business strategy involves:

• increasing occupancy by leasing up vacant space on economically attractive terms, retaining tenants, reducing lease cycle time and improving customer service;

• concentrating our capital in 15 to 20 core markets with the best prospects for employment growth and where we believe we can best position ourselves to outperform our competition;

• taking advantage of favorable market opportunities to exit non-core markets and selectively disposing of properties in certain of our core markets that do not fit within our long-term strategy; and

• achieving economies of scale over time, including anticipated cost savings from the implementation of our new operating model.

New Operating Model

In 2001, we initiated a comprehensive analysis of our operating structure with the help of a management consulting firm and our employees. The goal of the analysis was to streamline operations, improve customer service, reduce lease cycle time, increase occupancy, retain tenants and reduce operating expenses. The analysis resulted in a significant reengineering effort called EOPlus. As part of this effort, many of the activities that occurred at the property level have been centralized into regional offices with a view towards allowing property managers to spend more time building customer relationships. The centralization of each region’s operations is designed to provide higher service to our customers at a lower cost. By consolidating our property management offices, we made available for leasing almost 400,000 square feet of office space in 2003. As of December 31, 2003, we have approximately 15% fewer employees at the property level than at the end of 2001. We have also created a central purchasing function to review and analyze our goods and services expenditures. The goal of the central purchasing function is to obtain preferred pricing, reduce the number of our vendors and reduce the number of invoices we process.

ACQUISITION AND DISPOSITION ACTIVITY

Over the past five years, we have invested approximately $12.9 billion, calculated on a cost basis, and have disposed of approximately $3.7 billion, calculated based on the sales price, of institutional quality office

properties, industrial properties, parking facilities and vacant land parcels throughout the United States. In the past two years we have taken advantage of the favorable market conditions for property sales and we have been a net seller of real estate.


Year	Acquisitions		Dispositions


	(Dollars in millions)
2003	$	197.2	$	1,529.6
2002	$	172.8	$	508.3
2001	$	7,237.7	$	541.2
2000	$	4,942.2	$	536.0
1999	$	393.2	$	631.9

Management considers various factors when evaluating potential property acquisitions. These factors include but are not limited to:

• the attractiveness of the property to existing and potential tenants;

• the likelihood and relative attractiveness of competitive supply;

• the anticipated demand for space in the local market;

• the creditworthiness and diversity of risk in the tenants occupying the property;

• the ability to acquire the asset at an attractive going-in yield, as well as the potential to increase operating income over time by renewing leases for higher rents;

• the physical condition of the property, including the extent of funds required for its maintenance and for physical upgrades needed in order to establish or sustain its market competitiveness;

• the ability to operate the property with a competitive cost structure; and

• the property’s location in one of our core markets.

As part of our business strategy, assuming that capital and acquisition opportunities are available to us on reasonable terms, we intend to continue to acquire additional office properties in our core markets. Properties may be acquired separately or as part of a portfolio and may be acquired for cash and/or in exchange for our debt or equity securities. These acquisitions may be individual asset transactions, joint ventures, mergers or other business combinations.

Management considers various factors when evaluating potential property dispositions. These factors include but are not limited to:

• the ability to sell the property at a price we believe would provide an attractive return to our unitholders;

• our ability to recycle capital into core markets consistent with our business strategy;

• our desire to exit markets that are not core markets;

• whether the property is strategically located;

• tenant composition and lease rollover for the property;

• general economic conditions and outlook, including job growth in the local market; and

• the general quality of the asset.

DEVELOPMENT ACTIVITY

At December 31, 2003, approximately 0.4 million square feet of projects were under development. Our policy is to prudently pursue projects where customer need is evident and market conditions warrant. In addition to our current development pipeline, we own various undeveloped land parcels on which

approximately 12 million square feet of office space could be developed, assuming our receipt of necessary permits, licenses and approvals. Our policy is to develop land only when market conditions warrant. Although we may develop some properties ourselves, a portion of this activity may also be conducted with joint venture partners. If we develop a property with a joint venture partner, we may not have the same degree of control over the property as if we owned it ourselves. In addition, if we develop a property with a joint venture partner, we will be required to share a portion of the economic benefits from such property with our joint venture partner.

In determining whether to enter into a new development, the foregoing acquisition factors are considered as well as the additional risks of development, including the following:

• our assessment of the returns from such development;

• the extent of lease-up risk in the context of the demand/supply characteristics of the local market;

• the ability to minimize construction risks; and

• the quality of local development partners, if applicable.

FINANCING POLICIES

Equity Office conducts substantially all of its investment and debt-financing activities through us. To date, we have financed our investments through a combination of equity, which may be issued by either Equity Office or us, as well as secured and unsecured debt (which would be issued by us). The terms of our lines of credit and unsecured notes contain various financial covenants which require satisfaction of certain total debt-to-asset ratios, secured debt-to-total-asset ratios, debt service coverage ratios, and unsecured debt-to-unencumbered asset ratios, as well as other limitations. In addition, we have obtained investment grade credit ratings on our unsecured debt from each of Standard & Poors, Fitch and Moodys rating agencies. A primary objective of our financing policy is to manage our financial position to allow us to raise capital at competitive rates. As of December 31, 2003, approximately 96.8% of our outstanding debt had a fixed interest rate, which limits the risk of fluctuating interest rates.

In addition, we utilize certain derivative financial instruments at times to limit interest rate risk. The derivatives we enter into, and the only derivative transactions approved by Equity Office’s Board of Trustees, are those which are used only for hedging purposes rather than speculation. If an anticipated hedged transaction does not occur, any positive or negative value of the derivative will be recognized immediately in net income.

To the extent that Equity Office’s Board of Trustees decides to obtain additional capital, Equity Office may elect to issue equity securities, cause us to issue additional Units or debt securities, retain our earnings (subject to the provisions of the Internal Revenue Code requiring distributions of taxable income to maintain REIT status), or dispose of some of our properties or utilize a combination of these methods. Under the terms of our partnership agreement, the proceeds of all equity capital raised by Equity Office must be contributed to us in exchange for additional interests in us.

DIVIDEND POLICY

In order to qualify as a REIT for federal income tax purposes, Equity Office must distribute at least 90% of its taxable income (excluding capital gains) to its shareholders. Equity Office currently distributes capital gains to its shareholders, however, these gains may be retained by Equity Office and taxed at the corporate tax rate. Our partnership agreement generally requires us to distribute substantially all of the net cash from operations each quarter and to make reasonable efforts to distribute to Equity Office enough cash for it to meet the 90% distribution requirement. Accordingly, we currently intend, although we are not legally obligated, to continue to make regular quarterly distributions to holders of Units and preferred units. The declaration of dividends on common and preferred shares is at the discretion of Equity Office’s Board of Trustees, which decision is made from time to time by Equity Office’s Board of Trustees based on then prevailing circumstances.

INDUSTRY SEGMENTS

Our primary business is the ownership and operation of office properties. Our long-term tenants are in a variety of businesses, and no single tenant is significant to our business. Information related to this segment for the years ended December 31, 2003, 2002 and 2001 is set forth in Item 8. Financial Statements and Supplementary Data — Note 20 — Segment Information.

COMPETITION

The leasing of real estate is highly competitive. We compete for tenants in our markets primarily on the basis of property location, rent charged, services provided and the design and condition of improvements. We also experience competition when attempting to acquire or divest ownership of real estate, building sites or redevelopment opportunities, including competition from domestic and foreign financial institutions, other real estate companies, life insurance companies, pension trusts, trust funds, partnerships and individual investors.

ENVIRONMENTAL EXPOSURE

As an owner of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition and results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on our Properties, properties that we have sold or on properties that may be acquired in the future.

EMPLOYEES

As of December 31, 2003, Equity Office had approximately 2,400 employees that provide real estate operations, leasing, legal, financial and accounting, acquisition, disposition and marketing expertise throughout the country.

The seven executive officers of Equity Office have an average tenure of six years with Equity Office or its affiliates or predecessors and an average of 18 years experience in the real estate industry.

EXECUTIVE AND SENIOR OFFICERS OF EQUITY OFFICE

As of March 15, 2004, the following executive and senior officers of Equity Office held the offices indicated:


Name	Age		Offices Held

Richard D. Kincaid		42	President and Chief Executive Officer
Jeffrey L. Johnson		44	Executive Vice President and Chief Investment Officer
Lawrence J. Krema		43	Executive Vice President — Human Resources and Communications
Peyton H. Owen, Jr.		46	Executive Vice President and Chief Operating Officer
Stanley M. Stevens		55	Executive Vice President, Chief Legal Counsel and Secretary
Marsha C. Williams		52	Executive Vice President and Chief Financial Officer
Robert J. Winter, Jr.		58	Executive Vice President — Development and Portfolio Management
Thomas Q. Bakke		49	Senior Vice President — National Leasing and Marketing
James R. Bannon		47	Senior Vice President — Operations
Stephen M. Briggs		45	Senior Vice President — Chief Accounting Officer
M. Patrick Callahan		42	Senior Vice President — Seattle Region
Robert E. Dezzutti		43	Senior Vice President — Los Angeles Region
Maureen Fear		47	Senior Vice President and Treasurer
Debra L. Ferruzzi		43	Senior Vice President — Corporate Strategy
Frank Frankini		49	Senior Vice President — Development and Energy Operations
Mark P. Geisreiter		42	Senior Vice President — San Francisco Region
Matthew T. Gworek		43	Senior Vice President — Investments
Donald J. Huffner, Jr.		46	Senior Vice President — Atlanta Region
Peter D. Johnston		47	Senior Vice President — Houston Region
Kim J. Koehn		48	Senior Vice President — Denver Region
Diane M. Morefield		45	Senior Vice President — Investor Relations
Scott T. Morey		39	Senior Vice President — Chief Information Officer
John W. Peterson		40	Senior Vice President — San Jose Region
Arvid A. Povilaitis		43	Senior Vice President — Chicago Region
John C. Schneider		45	Senior Vice President — Legal and Associate General Counsel for Property Operations
Mark E. Scully		45	Senior Vice President — National Leasing
Paul R. Sorensen		44	Senior Vice President — Portfolio Management
Maryann Gilligan Suydam		54	Senior Vice President — Boston Region

Set forth below is biographical information for each of the executive officers:

Richard D. Kincaid has been a trustee and President since November 2002 and Chief Executive Officer since April 2003. Mr. Kincaid also has held the following positions:

• Executive Vice President from March 1997 until November 2002;

• Chief Operating Officer from September 2001 until November 2002;

• Chief Financial Officer from March 1997 until August 2002;

• Senior Vice President from October 1996 until March 1997;

• Senior Vice President and Chief Financial Officer of Equity Office Holdings, L.L.C., a predecessor of ours, from July 1995 until October 1997;

• Senior Vice President of Equity Group Investments, Inc., an owner and financier of real estate and corporate investments, from February 1995 until July 1995;

• Senior Vice President of the Yarmouth Group, a real estate investment company in New York, New York, from August 1994 until February 1995;

• Senior Vice President — Finance of Equity Group Investments, Inc. from December 1993 until July 1994; and

• Vice President — Finance of Equity Group Investments, Inc. from August 1990 until December 1993.

Jeffrey L. Johnson has been Executive Vice President and Chief Investment Officer since May 2003. Mr. Johnson also has held the following positions:

• Managing Partner and owner of Lakeshore Holdings, LLC, a private equity firm focusing on real estate investment founded by Mr. Johnson in conjunction with Lehman Brothers Holdings Inc., a global financial services firm, from December 2002 until May 2003 (in this capacity, Mr. Johnson was responsible for all aspects of the business);

• Managing Director of Lehman Brothers Holdings Inc. from March 2000 until November 2002 (in this capacity, Mr. Johnson was a founding partner and co-head of domestic investments for Lehman Brothers’ first real estate private equity group and was instrumental in helping raise the company’s $1.6 billion fund and developing the investment strategy for the fund, built the investment team and implemented its investment process);

• Chief Investment Officer of Equity Office from March 1998 until June 1999; and

• Senior Vice President of Equity Office from March 1997 until June 1999.

Lawrence J. Krema has been Executive Vice President — Human Resources and Communications since November 2002. Mr. Krema also has held the following positions:

• Senior Vice President — Human Resources from March 2001 until November 2002; and

• Vice President of NEC Technologies, Inc., a supplier of presentation systems, computing and related technologies for the North American market, from April 1995 until October 2000 (in this capacity, Mr. Krema managed the human resources division of the company in North America and was responsible for corporate services, which included real estate, travel and office services).

Peyton H. Owen, Jr. has been Executive Vice President and Chief Operating Officer since October 2003. Mr. Owen also has held the following positions:

• Chief Operating Officer — Americas Region of Jones Lang LaSalle, a global provider of integrated real estate and investment management services, from April 1999 until October 2003 (in this capacity, Mr. Owen oversaw 5,500 people in 100 markets in the United States, Canada and Mexico; Investor Services, which included leasing and property management; Corporate Solutions, which included tenant representation, facility management and project management; and Capital Markets; and

implemented standardized processes, new technologies and compliance measurements, and consolidated the organizational structure); and

• Executive Vice President and Chief Operating Officer — Leasing and Management of LaSalle Partners, predecessor of Jones Lang LaSalle, from January 1996 until April 1999 (in this capacity, Mr. Owen oversaw the leasing and management activities for a 200-million-square-foot investment property portfolio, restructured leasing and management across 20 markets and led due diligence and integration in various corporate acquisitions.

Stanley M. Stevens has been Executive Vice President since September 1996 and Chief Legal Counsel and Secretary since October 1996. Mr. Stevens also was Executive Vice President and General Counsel of Equity Office Holdings, L.L.C. from September 1996 until October 1997.

Marsha C. Williams has been Executive Vice President and Chief Financial Officer since August 2002. Ms. Williams also has held the following positions:

• Chief Administrative Officer of Crate and Barrel, a national Chicago-based retailer of home furnishings and accessories (Crate and Barrel is the trade name of Euromarket Designs Inc., which is an indirect majority-owned subsidiary of Otto Versand Gmbh & Co., a German mail-order company), from May 1998 until August 2002 (in this capacity, Ms. Williams participated in the planning and execution of Crate and Barrel’s growth strategy and managed its finance, accounting, information technology, warehousing, distribution and logistics, loss prevention, strategic planning, direct marketing operations and purchasing departments); and

• Vice President of Amoco Corporation, a worldwide energy and chemical company, from December 1997 until April 1998 and Treasurer of Amoco Corporation from October 1993 until April 1998, as well as other capacities and positions from May 1989 until October 1993.

Robert J. Winter, Jr. has been Executive Vice President — Development and Portfolio Management since November 2002. Mr. Winter also has held the following positions:

• Senior Vice President — Development from June 2002 until November 2002;

• Senior Vice President — Development Investments from July 2001 until June 2002;

• President and Chief Executive Officer of Amli Commercial Properties Trust, a private real estate investment trust with office and industrial properties in the suburban Chicago market, from August 1998 until July 2001 (in this capacity, Mr. Winter was responsible for all aspects of the company’s business, including the development, management and ownership of its properties); and

• President and Chief Executive Officer of Amli Commercial Properties, LLC, a limited liability company and predecessor of Amli Commercial Properties Trust, from November 1996 until July 1998 (in this capacity, along with developing the business, Mr. Winter was responsible for forming Amli Commercial Properties Trust).


Item 2.	Properties.

All capitalized terms used herein and not otherwise defined shall have the meanings given in the financial statements and notes thereto set forth in Item 8. Financial Statements and Supplementary Data. For information regarding encumbrances on our properties, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt Financing — Mortgage Debt and Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K — Schedule III — Real Estate and Accumulated Depreciation as of December 31, 2003. All of our consolidated properties are held in fee simple interest, except for approximately 79 properties in which we have leasehold interests and do not own the land or a portion thereof and one property in which we are the mortgage holder.

General

We are the largest publicly-held owner and operator of office properties in the United States based upon equity market capitalization and square footage. At December 31, 2003, we had a portfolio of 684 Office Properties comprising approximately 122.3 million square feet of commercial office space in 18 states and the District of Columbia, 75 Industrial Properties comprising approximately 5.8 million square feet and approximately 0.4 million square feet of office properties under development. Approximately 42.3% of the total square feet of our office properties is located in central business districts (“CBDs”) and approximately 57.7% is located in suburban markets. At December 31, 2003, our Office Properties were approximately 86.3% occupied and our Industrial Properties were approximately 86.6% occupied on a weighted average basis. No single tenant accounts for more than 2.0% of the aggregate annualized rent or 1.9% of the aggregate occupied square feet.

For segment reporting purposes, the Office Properties are included in the “Office Properties” segment and the Industrial Properties are included in the “Corporate and Other” segment.

All property data presented below are as of December 31, 2003.

Property Statistics

Office Properties

The following table sets forth certain data relating to our Office Properties, including those we own in joint ventures with other partners. Our ten largest markets are presented from greatest to least based on property net operating income from continuing operations.


					Percentage of								Percentage of
					Office						Annualized Rent		Office
					Portfolio						for Occupied		Portfolio			Annualized Rent
	Number of		Rentable		Rentable			Percent			Square Feet		Annualized			Per Occupied
Primary Market	Buildings		Square Feet		Square Feet			Occupied			(in thousands)(a)		Rent			Square Foot(a)

San Francisco		81		10,951,996		9.0	%		72.9	%	$	344,338		10.7	%	$	43.14
Boston		51		12,567,429		10.3	%		92.4	%		446,844		13.9	%		38.46
San Jose		128		8,726,796		7.1	%		83.7	%		273,736		8.5	%		37.48
Seattle		54		9,974,085		8.2	%		86.7	%		236,287		7.4	%		27.32
New York		6		4,986,407		4.1	%		97.5	%		252,339		7.9	%		51.93
Chicago		30		11,190,188		9.2	%		86.6	%		260,501		8.1	%		26.87
Washington D.C.		25		6,041,210		4.9	%		87.8	%		179,655		5.6	%		33.87
Los Angeles		43		6,786,081		5.6	%		88.6	%		179,691		5.6	%		29.87
Atlanta		44		7,783,192		6.4	%		79.4	%		150,300		4.7	%		24.31
Orange County		31		5,872,834		4.8	%		92.9	%		134,963		4.2	%		24.74
All Others		191		37,374,707		30.6	%		86.8	%		752,185		23.4	%		23.18

Total/ Weighted Average		684		122,254,925		100.0	%		86.3	%	$	3,210,838		100.0	%	$	30.43

Industrial Properties

The following table sets forth certain data relating to our Industrial Properties.


					Percentage of								Percentage of
					Industrial						Annualized Rent		Industrial
					Portfolio						for Occupied		Portfolio			Annualized Rent
	Number of		Rentable		Rentable			Percent			Square Feet		Annualized			Per Occupied
Primary Market	Buildings		Square Feet		Square Feet			Occupied			(in thousands)(a)		Rent			Square Foot(a)

Oakland-East Bay		46		3,764,586		65.5	%		88.9	%	$	26,801		59.1	%	$	8.00
San Jose		28		1,855,673		32.3	%		81.6	%		18,099		39.9	%		11.96
Los Angeles		1		130,600		2.3	%		91.2	%		461		1.0	%		3.87

Total/ Weighted Average		75		5,750,859		100.0	%		86.6	%	$	45,361		100.0	%	$	9.11

Lease Distribution

The following table sets forth information relating to the distribution of the Office Property leases, based on occupied square feet.


			Percentage					Percentage
			of Office			Annualized Rent		of Office
			Portfolio			for Occupied		Portfolio			Annualized Rent
	Total Occupied		Occupied			Square Feet		Annualized			Per Occupied
Square Feet Under Lease	Square Feet(b)		Square Feet			(in thousands)(a)		Rent(a)			Square Foot(a)

2,500 or less		4,930,318		4.7	%	$	136,258		4.2	%	$	27.64
2,501 – 5,000		7,565,356		7.2	%		212,500		6.6	%		28.09
5,001 – 7,500		6,329,159		6.0	%		183,552		5.7	%		29.00
7,501 – 10,000		5,055,378		4.8	%		143,913		4.5	%		28.47
10,001 – 20,000		15,428,173		14.7	%		436,410		13.6	%		28.29
20,001 – 40,000		17,062,916		16.3	%		510,802		15.9	%		29.94
40,001 – 60,000		9,974,539		9.5	%		308,082		9.6	%		30.89
60,001 – 100,000		10,927,854		10.4	%		338,834		10.6	%		31.01
100,001 or greater		27,550,342		26.3	%		940,488		29.3	%		34.14

Total/ Weighted Average		104,824,035		100.0	%	$	3,210,838		100.0	%	$	30.43


(a)		Annualized rent is the monthly contractual rent as of the reporting date, or if the current rent payable is $0 then the first monthly rent payment due, under existing leases as of December 31, 2003 multiplied by 12 months (“Annualized Rent”). This amount reflects total base rent and estimated expense reimbursements from tenants as of December 31, 2003 without regard to any rent abatements and contractual increases or decreases in rent subsequent to December 31, 2003. Total rent abatements for leases in place as of December 31, 2003, for the period from January 1, 2004 to December 31, 2004, are approximately $38.2 million for Office Properties and approximately $0.1 million for Industrial Properties. We believe Annualized Rent is a useful measure because this information can be used for comparison to current market rents as published by various third party sources.

(b)		Reconciliation for total net rentable square feet for Office Properties is as follows:


			Percent of
	Square Footage		Total

Square footage occupied by tenants		104,824,035		85.7	%
Square footage used for management offices and building use		685,098		0.6	%

Total occupied square feet		105,509,133		86.3	%
Leased and unoccupied square feet		2,238,326		1.8	%
Unleased square feet		14,507,466		11.9	%

Total rentable square feet		122,254,925		100.0	%

Office Lease Expiration Schedule (a)

December 31, 2003

The following schedule is based upon the contractual termination date of the leases, without regard to any lease termination and/or renewal options. Some of our leases are subject to various forms of lease termination options exercisable by tenants. Depending on the form of the option, some of these options may or may not require the payment of a fee and a notice period as a condition to exercise. Although it is not possible to predict which tenants are likely to exercise these options, it has been our experience that markets in which the contractual rents are significantly higher than current market rents incur the greatest incidence of lease termination option exercises. As a result of these lease termination options and other factors, such as tenant insolvencies, the actual termination dates of some portion of the leases may vary from the contractual expiration date set forth in the schedule.

2004 and

month to

month(b) 2005 2006 2007 2008 2009

(Dollars in thousands except per square foot amounts)

San Francisco

Square Feet(c)
1,009,511 1,464,946 751,770 1,112,598 1,077,307 504,907

% Square Feet(d)
9.2 % 13.4 % 6.9 % 10.2 % 9.8 % 4.6 %

Annualized Rent for occupied square feet(e)
$ 39,893 $ 61,053 $ 36,794 $ 41,765 $ 45,072 $ 17,625

Annualized Rent per occupied square foot(e)
$ 39.52 $ 41.68 $ 48.94 $ 37.54 $ 41.84 $ 34.91

Boston

Square Feet(c)
1,193,587 1,146,422 880,327 1,474,248 1,382,875 1,002,949

% Square Feet(d)
9.5 % 9.1 % 7.0 % 11.7 % 11.0 % 8.0 %

Annualized Rent for occupied square feet(e)
$ 39,702 $ 41,251 $ 29,101 $ 58,157 $ 51,963 $ 40,439

Annualized Rent per occupied square foot(e)
$ 33.26 $ 35.98 $ 33.06 $ 39.45 $ 37.58 $ 40.32

San Jose

Square Feet(c)
831,826 1,694,765 987,895 674,406 371,645 256,563

% Square Feet(d)
9.5 % 19.4 % 11.3 % 7.7 % 4.3 % 2.9 %

Annualized Rent for occupied square feet(e)
$ 26,889 $ 52,910 $ 35,192 $ 25,508 $ 11,126 $ 7,303

Annualized Rent per occupied square foot(e)
$ 32.33 $ 31.22 $ 35.62 $ 37.82 $ 29.94 $ 28.46

Seattle

Square Feet(c)
1,105,585 1,099,859 1,062,424 770,384 1,221,543 777,771

% Square Feet(d)
11.1 % 11.0 % 10.7 % 7.7 % 12.2 % 7.8 %

Annualized Rent for occupied square feet(e)
$ 29,454 $ 34,443 $ 29,786 $ 22,108 $ 31,520 $ 18,142

Annualized Rent per occupied square foot(e)
$ 26.64 $ 31.32 $ 28.04 $ 28.70 $ 25.80 $ 23.33

New York

Square Feet(c)
325,549 143,751 199,790 151,962 127,331 1,183,361

% Square Feet(d)
6.5 % 2.9 % 4.0 % 3.0 % 2.6 % 23.7 %

Annualized Rent for occupied square feet(e)
$ 15,059 $ 7,733 $ 12,141 $ 7,625 $ 7,616 $ 66,069

Annualized Rent per occupied square foot(e)
$ 46.26 $ 53.80 $ 60.77 $ 50.18 $ 59.82 $ 55.83

[Additional columns below]

[Continued from above table, first column(s) repeated]

2010 2011 2012 2013 Thereafter(f) Totals

(Dollars in thousands except per square foot amounts)

San Francisco

Square Feet(c)
886,179 337,684 49,195 240,878 546,662 7,981,637

% Square Feet(d)
8.1 % 3.1 % 0.4 % 2.2 % 5.0 % 72.9 %

Annualized Rent for occupied square feet(e)
$ 42,771 $ 16,533 $ 1,303 $ 9,134 $ 32,394 $ 344,338

Annualized Rent per occupied square foot(e)
$ 48.26 $ 48.96 $ 26.49 $ 37.92 $ 59.26 $ 43.14

Boston

Square Feet(c)
1,208,855 188,018 758,869 1,325,699 1,056,279 11,618,128

% Square Feet(d)
9.6 % 1.5 % 6.0 % 10.5 % 8.4 % 92.4 %

Annualized Rent for occupied square feet(e)
$ 46,552 $ 9,579 $ 33,644 $ 53,569 $ 42,885 $ 446,844

Annualized Rent per occupied square foot(e)
$ 38.51 $ 50.95 $ 44.33 $ 40.41 $ 40.60 $ 38.46

San Jose

Square Feet(c)
772,627 695,224 497,811 116,214 403,773 7,302,749

% Square Feet(d)
8.9 % 8.0 % 5.7 % 1.3 % 4.6 % 83.7 %

Annualized Rent for occupied square feet(e)
$ 31,097 $ 40,981 $ 31,153 $ 3,608 $ 7,969 $ 273,736

Annualized Rent per occupied square foot(e)
$ 40.25 $ 58.95 $ 62.58 $ 31.04 $ 19.74 $ 37.48

Seattle

Square Feet(c)
876,223 325,447 371,868 396,924 642,192 8,650,220

% Square Feet(d)
8.8 % 3.3 % 3.7 % 4.0 % 6.4 % 86.7 %

Annualized Rent for occupied square feet(e)
$ 25,715 $ 9,782 $ 11,056 $ 9,708 $ 14,575 $ 236,287

Annualized Rent per occupied square foot(e)
$ 29.35 $ 30.06 $ 29.73 $ 24.46 $ 22.70 $ 27.32

New York

Square Feet(c)
152,239 734,960 485,978 404,601 950,089 4,859,611

% Square Feet(d)
3.1 % 14.7 % 9.7 % 8.1 % 19.1 % 97.5 %

Annualized Rent for occupied square feet(e)
$ 7,526 $ 35,688 $ 21,462 $ 20,663 $ 50,757 $ 252,339

Annualized Rent per occupied square foot(e)
$ 49.44 $ 48.56 $ 44.16 $ 51.07 $ 53.42 $ 51.93

2004 and

month to

month(b) 2005 2006 2007 2008 2009

(Dollars in thousands except per square foot amounts)

Chicago

Square Feet(c)
1,093,803 969,846 1,353,517 822,915 1,692,289 633,073

% Square Feet(d)
9.8 % 8.7 % 12.1 % 7.4 % 15.1 % 5.7 %

Annualized Rent for occupied square feet(e)
$ 28,991 $ 27,199 $ 38,568 $ 22,090 $ 48,977 $ 19,916

Annualized Rent per occupied square foot(e)
$ 26.50 $ 28.04 $ 28.49 $ 26.84 $ 28.94 $ 31.46

Washington D.C.

Square Feet(c)
533,264 696,721 603,985 568,234 886,377 315,370

% Square Feet(d)
8.8 % 11.5 % 10.0 % 9.4 % 14.7 % 5.2 %

Annualized Rent for occupied square feet(e)
$ 16,242 $ 26,561 $ 21,954 $ 15,740 $ 29,214 $ 10,067

Annualized Rent per occupied square foot(e)
$ 30.46 $ 38.12 $ 36.35 $ 27.70 $ 32.96 $ 31.92

Los Angeles

Square Feet(c)
413,414 705,164 912,461 858,479 504,390 404,406

% Square Feet(d)
6.1 % 10.4 % 13.4 % 12.7 % 7.4 % 6.0 %

Annualized Rent for occupied square feet(e)
$ 12,222 $ 21,637 $ 28,097 $ 28,345 $ 15,287 $ 10,657

Annualized Rent per occupied square foot(e)
$ 29.56 $ 30.68 $ 30.79 $ 33.02 $ 30.31 $ 26.35

Atlanta

Square Feet(c)
514,867 537,442 1,335,908 780,908 560,938 600,417

% Square Feet(d)
6.6 % 6.9 % 17.2 % 10.0 % 7.2 % 7.7 %

Annualized Rent for occupied square feet(e)
$ 10,306 $ 12,721 $ 37,585 $ 16,663 $ 10,392 $ 18,007

Annualized Rent per occupied square foot (e)
$ 20.02 $ 23.67 $ 28.13 $ 21.34 $ 18.53 $ 29.99

Orange County

Square Feet(c)
745,620 978,571 810,986 848,413 1,328,553 251,658

% Square Feet(d)
12.7 % 16.7 % 13.8 % 14.4 % 22.6 % 4.3 %

Annualized Rent for occupied square feet(e)
$ 19,007 $ 25,741 $ 20,982 $ 21,877 $ 29,782 $ 6,293

Annualized Rent per occupied square foot(e)
$ 25.49 $ 26.30 $ 25.87 $ 25.79 $ 22.42 $ 25.01

All Others

Square Feet(c)
4,420,733 4,143,014 5,085,172 4,336,768 4,494,584 3,740,854

% Square Feet(d)
11.8 % 11.1 % 13.6 % 11.6 % 12.0 % 10.0 %

Annualized Rent for occupied square feet(e)
$ 99,875 $ 103,666 $ 122,662 $ 102,560 $ 99,245 $ 81,389

Annualized Rent per occupied square foot(e)
$ 22.59 $ 25.02 $ 24.12 $ 23.65 $ 22.08 $ 21.76

Total Portfolio

Square Feet(c)
12,187,759 13,580,501 13,984,235 12,399,315 13,647,832 9,671,329

% Square Feet(d)
10.0 % 11.1 % 11.4 % 10.1 % 11.2 % 7.9 %

Annualized Rent for occupied square feet(e)
$ 337,639 $ 414,916 $ 412,863 $ 362,439 $ 380,194 $ 295,907

Annualized Rent per occupied square foot(e)
$ 27.70 $ 30.55 $ 29.52 $ 29.23 $ 27.86 $ 30.60

[Additional columns below]

[Continued from above table, first column(s) repeated]

2010 2011 2012 2013 Thereafter(f) Totals

(Dollars in thousands except per square foot amounts)

Chicago

Square Feet(c)
985,519 470,761 569,999 460,471 643,281 9,695,474

% Square Feet(d)
8.8 % 4.2 % 5.1 % 4.1 % 5.7 % 86.6 %

Annualized Rent for occupied square feet(e)
$ 25,605 $ 11,591 $ 16,391 $ 11,367 $ 9,807 $ 260,501

Annualized Rent per occupied square foot(e)
$ 25.98 $ 24.62 $ 28.76 $ 24.69 $ 15.24 $ 26.87

Washington D.C.

Square Feet(c)
251,275 458,056 298,406 232,322 460,714 5,304,724

% Square Feet(d)
4.2 % 7.6 % 4.9 % 3.8 % 7.6 % 87.8 %

Annualized Rent for occupied square feet(e)
$ 11,404 $ 14,505 $ 9,072 $ 8,042 $ 16,855 $ 179,655

Annualized Rent per occupied square foot(e)
$ 45.38 $ 31.67 $ 30.40 $ 34.62 $ 36.58 $ 33.87

Los Angeles

Square Feet(c)
416,565 196,635 528,546 398,439 676,917 6,015,416

% Square Feet(d)
6.1 % 2.9 % 7.8 % 5.9 % 10.0 % 88.6 %

Annualized Rent for occupied square feet(e)
$ 10,990 $ 5,904 $ 16,259 $ 13,416 $ 16,877 $ 179,691

Annualized Rent per occupied square foot(e)
$ 26.38 $ 30.03 $ 30.76 $ 33.67 $ 24.93 $ 29.87

Atlanta

Square Feet(c)
1,092,189 181,639 74,680 126,367 376,816 6,182,171

% Square Feet(d)
14.0 % 2.3 % 1.0 % 1.6 % 4.8 % 79.4 %

Annualized Rent for occupied square feet(e)
$ 27,443 $ 4,338 $ 1,704 $ 2,839 $ 8,301 $ 150,300

Annualized Rent per occupied square foot (e)
$ 25.13 $ 23.88 $ 22.82 $ 22.46 $ 22.03 $ 24.31

Orange County

Square Feet(c)
120,430 76,442 114,571 138,583 42,068 5,455,895

% Square Feet(d)
2.1 % 1.3 % 2.0 % 2.4 % 0.7 % 92.9 %

Annualized Rent for occupied square feet(e)
$ 2,983 $ 2,004 $ 2,820 $ 3,117 $ 357 $ 134,963

Annualized Rent per occupied square foot(e)
$ 24.77 $ 26.22 $ 24.62 $ 22.49 $ 8.48 $ 24.74

All Others

Square Feet(c)
1,589,704 967,788 890,933 774,370 1,999,188 32,443,108

% Square Feet(d)
4.3 % 2.6 % 2.4 % 2.1 % 5.3 % 86.8 %

Annualized Rent for occupied square feet(e)
$ 36,498 $ 25,592 $ 20,030 $ 21,151 $ 39,515 $ 752,185

Annualized Rent per occupied square foot(e)
$ 22.96 $ 26.44 $ 22.48 $ 27.31 $ 19.77 $ 23.18

Total Portfolio

Square Feet(c)
8,351,805 4,632,654 4,640,856 4,614,868 7,797,979 105,509,133

% Square Feet(d)
6.8 % 3.8 % 3.8 % 3.8 % 6.4 % 86.3 %

Annualized Rent for occupied square feet(e)
$ 268,585 $ 176,498 $ 164,895 $ 156,613 $ 240,290 $ 3,210,838

Annualized Rent per occupied square foot(e)
$ 32.16 $ 38.10 $ 35.53 $ 33.94 $ 30.81 $ 30.43

(a) Based on the contractual termination date of the lease without regard to any early lease termination and/or renewal options.

(b) Total square feet subject to month to month leases is approximately 955,976.

(c) Total net rentable square feet represented by expiring leases.

(d) Percentage of total net rentable square feet represented by expiring leases.

(e) Based on annualized rent. Annualized rent is the monthly contractual rent as of the reporting date, or if the current rent payable is $0 then the first monthly rent payment due, under existing leases as of December 31, 2003 multiplied by 12 months (“Annualized Rent”). This amount reflects total base rent and estimated expense reimbursements from tenants as of December 31, 2003 without regard to any rent abatements and contractual increases or decreases in rent subsequent to December 31, 2003. Total rent abatements for leases in place as of December 31, 2003, for the period from January 1, 2004 to December 31, 2004, are approximately $38.2 million. We believe Annualized Rent is a useful measure because this information can be used for comparison to current market rents as published by various third party sources.

(f) Management offices and building use square footage are included with $0 rent per square foot.


Item 3.	Legal Proceedings.

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

On May 8, 2003, Broadband Office, Inc. and the official committee of unsecured creditors of Broadband Office Inc. (collectively, the “Plaintiffs”), filed a complaint (the “Complaint”) in the United States Bankruptcy Court for the District of Delaware against one private and seven public real estate companies, various affiliated entities (collectively the “Corporate Defendants”) and certain individuals, including Equity Office, EOP Partnership, David Helfand (a former executive vice president of Equity Office), Spieker Properties, Inc. and Spieker Properties, L.P. (which we acquired in 2001) and Craig Vought (formerly co-chief executive officer of Spieker Properties, Inc. and a former Equity Office trustee). Under the terms of our indemnification agreements with Messrs. Helfand and Vought, we may be responsible to reimburse them for the effect of any judgment rendered against them personally as well as the costs of their defense. We were an equity investor in, landlord to and customer of Broadband Office, and Messrs. Helfand and Vought were members of the board of directors of Broadband Office until their resignations on May 1, 2001 and May 2, 2001, respectively. Mr. Vought also served as a member of Broadband Office’s executive committee. Broadband Office filed for bankruptcy protection on May 9, 2001. The First Amended Complaint alleges, among other things, breaches of fiduciary duty and seeks recovery of what it characterizes as preferential payments and fraudulent transfers. It further seeks to hold us liable for the outstanding debts of the corporation, jointly and severally with all of the Corporate Defendants, as an alleged “general partner” of Broadband Office. The Plaintiffs allege that the amount of these claims exceeds $300 million in the aggregate. Due to the inherent uncertainties of the judicial process and the early stage of this action, we are unable to predict the outcome of this matter with certainty. We intend to vigorously defend this matter and believe we have meritorious defenses. As a result, we have not accrued for any potential liability in connection with this litigation. As in any litigation, there can be no assurance that we will prevail. Should the court not resolve this matter in our favor it could have a material adverse effect on our financial condition, results of operations and liquidity.


Item 4.	Submission of Matters to a Vote of Security Holders.

None.

PART II


Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters.

There is no established public trading market for the Units. Equity Office’s Common Shares are traded on the New York Stock Exchange (“NYSE”) under the symbol “EOP.” On February 27, 2004, there were approximately 528 holders of record and 450,162,700 Units outstanding, 401,322,247 of which were held by Equity Office. The high and low sales prices and closing sales prices on the NYSE and distributions for the Common Shares during 2003 and 2002 are set forth in the table below. We paid an equivalent distribution on our Units to the distributions paid by Equity Office on its Common Shares during each of the periods presented.


Year	Quarter		High		Low		Close		Distributions

2003		Fourth	$	29.30	$	26.99	$	28.65	$	0.50
		Third	$	28.20	$	26.46	$	27.53	$	0.50
		Second	$	27.92	$	25.52	$	27.01	$	0.50
		First	$	26.24	$	23.31	$	25.45	$	0.50
2002		Fourth	$	26.25	$	22.96	$	24.98	$	0.50
		Third	$	29.93	$	22.78	$	25.82	$	0.50
		Second	$	31.36	$	27.96	$	30.10	$	0.50
		First	$	30.60	$	27.18	$	29.99	$	0.50


Item 6.	Selected Financial Data.

The following sets forth our selected consolidated financial and operating information on a historical basis. The selected financial data has been derived from our historical consolidated financial statements. The following information should be read together with our consolidated financial statements and notes thereto included in Item 8. Financial Statements and Supplementary Data.



	For the years ended December 31,

	2003			2002			2001(1)			2000(2)			1999


	(Dollars in thousands, except per unit data)
Operating Data:
Total revenues	$	3,195,632		$	3,359,766		$	2,966,146		$	2,164,707		$	1,877,521
Lease termination income(3)	$	68,408		$	151,969		$	41,230		$	19,829		$	15,948
Income from continuing operations	$	623,276		$	760,110		$	640,827		$	507,210		$	461,638
Net income available to unitholders	$	677,342		$	796,847		$	640,045		$	484,312		$	430,264
Funds from Operations available to unitholders — basic(4)	$	1,273,823		$	1,504,544		$	1,174,447		$	909,157		$	739,093
Funds from Operations available to unitholders plus assumed conversions(4)	$	1,289,547		$	1,520,268		$	1,190,174		$	924,907		$	754,843
Property net operating income(5)	$	2,111,793		$	2,305,323		$	2,020,847		$	1,410,705		$	1,207,259
Income from continuing operations per unit-basic	$	1.27		$	1.49		$	1.43		$	1.47		$	1.45
Income from continuing operations per unit-diluted	$	1.26		$	1.49		$	1.42		$	1.45		$	1.44
Net income available to unitholders per unit-basic	$	1.50		$	1.71		$	1.57		$	1.53		$	1.49
Net income available to unitholders per unit-diluted	$	1.50		$	1.70		$	1.55		$	1.52		$	1.48
Funds from Operations available to unitholders per unit — basic(4)	$	2.83		$	3.22		$	2.87		$	2.88		$	2.56
Funds from Operations available to unitholders plus assumed conversions per unit(4)	$	2.80		$	3.18		$	2.83		$	2.82		$	2.52
Cash distributions declared per Unit	$	2.00		$	2.00		$	1.90		$	1.74		$	1.58
Balance Sheet Data (at end of year):
Total assets	$	24,189,010		$	25,246,783		$	25,808,422		$	18,794,253		$	14,046,058
Mortgage debt net of any discounts and premiums	$	2,315,889		$	2,507,890		$	2,650,338		$	2,915,801		$	1,743,871
Unsecured notes net of any premiums and discounts	$	8,828,912		$	9,057,651		$	9,093,987		$	5,836,193		$	3,655,047
Line of Credit	$	334,000		$	205,700		$	244,300		$	51,000		$	453,000
Mandatorily Redeemable Preferred Units	$	299,500		$	299,500		$	299,500		$	300,000		$	300,000
Other Data (at end of year):
Number of Office Properties		684			734			774			381			294
Rentable square feet of Office Properties (in millions)		122.3			125.7			128.2			99.0			77.0
Occupancy of Office Properties		86.3	%		88.6	%		91.8	%		94.6	%		93.7	%
Number of Industrial Properties		75			77			79			—			—
Rentable square feet of Industrial Properties (in millions)		5.8			6.0			6.0			—			—
Occupancy of Industrial Properties		86.6	%		89.3	%		92.8	%		—			—

(1) On July 2, 2001, we completed our acquisition by merger of Spieker Properties, L.P. (“Spieker Partnership”) at a cost of approximately $7.2 billion. As a result of the Spieker Partnership merger, we

acquired an interest in 391 office properties containing approximately 28.3 million square feet and 98 industrial properties containing approximately 10.1 million square feet.

(2) On June 19, 2000, we completed our acquisition by merger of Cornerstone Properties Limited Partnership (“Cornerstone Partnership”) at a cost of approximately $4.5 billion. As a result of the Cornerstone Partnership merger, we acquired an interest in 82 properties containing approximately 18.9 million square feet.

(3) These amounts are from continuing and discontinued operations and our share of unconsolidated joint ventures.

(4) Refer to Item 7. Management’s Discussion and Analysis of Financial Condition — Funds from Operations for information regarding why we present funds from operations and for a reconciliation of this non-GAAP financial measure to net income.

(5) Calculated as property operating revenue less property operating expense from continuing operations and discontinued operations. For more information, refer to Item 8. Financial Statements and Supplementary Data — Note 20 — Segment Information.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The following discussion and analysis is based primarily on the consolidated financial statements of EOP Operating Limited Partnership for the years presented and should be read together with the notes thereto contained in this Form 10-K. Terms employed herein as defined terms, but without definition, have the meanings set forth in the notes to the financial statements (See Item 8. Financial Statements and Supplementary Data).

Executive Summary

Equity Office is the largest office REIT and publicly held owner of Office Properties in the nation based on market capitalization and square footage. We receive our revenue primarily from rental revenues generated by leases for our office space. The key factors that affect our business and financial results are the following:

• the current economic environment, including its effect on white-collar job growth in markets in which we have a presence;

• the occupancy rates of our Office Properties;

• rental rates on new Office Property leases;

• tenant improvement and leasing costs incurred to retain and obtain tenants;

• the extent of early lease terminations and any lease termination fees;

• operating expenses; and

• the extent of any dispositions and acquisitions of Office Properties.

2003 was the third consecutive year of economic slowdown marked by slow employment growth and the highest office vacancy in the United States in over 10 years. The poor economic environment and weak office markets adversely impacted our financial results. Our overall office occupancy has declined from 88.6% at December 31, 2002 to 86.3% at December 31, 2003. This was due to early lease terminations, which totaled approximately 5.4 million square feet and equated to approximately 4.4% of occupancy lost in our office portfolio. Market rental rates have continued to decline during the last two years and have significantly declined from their peak levels. Tenant improvement and leasing costs have increased dramatically due to the competitive market conditions for new leases. During 2003, we took advantage of favorable market conditions for property sales by disposing of approximately $933.1 million in non-core assets. In addition, we entered into joint ventures and sold a 75% to 80% interest in 13 Office Properties for approximately $596.5 million. We

used the proceeds from these asset sales to pay down debt, redeem preferred units, acquire strategic assets in core markets, partially fund distributions to unitholders and repurchase Units.

On a macroeconomic level, we see office markets beginning to recover and a minimal new supply of space in most of our core markets. We expect net absorption of 25 to 30 million square feet in our top 20 markets in 2004. We anticipate annual growth in the gross domestic product in the range of 4% to 4.5% and office job growth of approximately 2.5% which we believe will lead to an increase in our occupancy level. Any changes in these assumptions could impact our financial results.

As a result of the successful implementation of our new operating model, we enter 2004 with a more efficient operating platform. We intend to continue to refine our operating model in an effort to obtain additional efficiencies while improving customer service. Over the last two quarters, our occupancy has been stable at approximately 86% and we expect our average occupancy to increase approximately 1% to 2% during 2004. Although market rental rates have begun to stabilize in many of our markets, the roll down of rents on our expiring leases (assuming market rental rates do not recover from their existing levels) will continue to adversely impact our rental revenues, net income and funds from operations for the foreseeable future. We expect the cost to obtain and keep tenants, such as tenant improvements, leasing commissions, free rent and other concessions to approximate 2003 levels during 2004. As part of our capital allocation strategy of taking advantage of favorable market conditions to exit non-core markets, we expect to be net sellers of real estate again in 2004, which will further reduce our income from continuing operations and funds from operations, and may also result in gains or losses on sales of properties and potential impairment charges.

The remaining portion of our Management’s Discussion and Analysis of Financial Condition and Results of Operations will help you understand:

• the key transactions that we completed during the year;

• our critical accounting policies and estimates;

• our results of operations for the last three years;

• our liquidity and capital resources; and

• our funds from operations.

Key Transactions in 2003

During 2003, we completed the following key transactions:

• we obtained a new three-year $1.0 billion revolving credit facility in May 2003;

• we obtained a $1.0 billion 364-day credit facility in December 2003;

• Equity Office announced the redemption of, and subsequently redeemed in 2004, 4,562,900 outstanding 8 5/8% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest for approximately $114.6 million, which included approximately $0.6 million of accrued distributions. In connection with such redemption, we redeemed all of the Series C Preferred Units from Equity Office;

• Equity Office redeemed the 7.875% Series E Cumulative Redeemable Preferred Shares for approximately $151.9 million, which included approximately $1.9 million of accrued distributions. In connection with such redemption, we redeemed all of the Series E Preferred Units from Equity Office;

• Equity Office redeemed the 8.00% Series F Cumulative Redeemable Preferred Shares for approximately $100.0 million. In connection with such redemption, we redeemed all of the Series F Preferred Units from Equity Office; and

• Equity Office repurchased 14,236,400 Common Shares at an average price of $25.53 per share for a total of $363.5 million. In connection with the repurchases, we purchased from Equity Office and retired a corresponding number of Units for an aggregate purchase price equal to the aggregate purchase price for all Common Share repurchases. We also redeemed 240,240 Units directly from the holders for approximately $6.4 million.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 of this Form 10-K. We believe our most critical accounting policies include allowance for doubtful accounts, impairment of long-lived assets, depreciation and the fair value of financial instruments including derivative instruments, each of which we discuss below.


	*Allowance for Doubtful Accounts*

Rental revenue from our tenants is our principal source of revenue and is recognized in accordance with GAAP based on the contractual terms of the leases. We monitor the collectibility of accounts receivable from our tenants on an on-going basis. Based on this analysis, historical experiences and the current economic environment, we establish provisions, and maintain an allowance for doubtful accounts for estimated losses resulting from the possible inability of our tenants to make required rent payments to us. An allowance for doubtful accounts is recorded during each period and the bad debt expense is netted against rental revenue in our consolidated statements of operations. The allowance for doubtful accounts, which represents the cumulative allowances less write-offs of uncollectible rent, is netted against tenant and other receivables and deferred rent receivable on our consolidated balance sheets.

As a result of the slow down in economic activity, we have continued to experience uncollectible receivables, although at lower levels than prior periods, relating to tenants in bankruptcy or tenants experiencing financial difficulty. Although our historical bad debt expense has been based on the factors described above, if we incorrectly estimate the required allowance for doubtful accounts, our financial condition and results of operations could be adversely affected. Below is our bad debt expense from continuing operations for each of the three years in the period ended December 31, 2003.



	For the years ended December 31,

	2003			2002			2001


	(Dollars in thousands)
Bad debt expense	$	12,592		$	27,767		$	24,653

Property operating revenues	$	3,179,771		$	3,343,859		$	2,951,061

Bad debt expense as a percentage of property operating revenues		0.40	%		0.83	%		0.84	%


	*Impairment of Long-Lived Assets*

We review our long-lived assets for potential impairment in accordance with FAS 144, Accounting for the Impairment and Disposal of Long-Lived Assets. Under FAS 144, an impairment loss must be recognized when the carrying value of a long lived asset is not recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that a permanent impairment of a long-lived asset has occurred, the carrying value of the asset is reduced to its fair value and an impairment loss is recognized for the difference between the carrying value and the fair value.

Our estimate of the expected future cash flows used in testing for impairment is highly subjective and based on among other things, our estimates regarding current and future market conditions, rental rates, occupancy levels, costs of tenant improvements, leasing commissions and other tenant concessions, and assumptions regarding the residual value of our Properties at the end our anticipated holding period. These assumptions could differ materially from actual results in future periods. Since FAS 144 provides that the future cash flows used in this analysis be considered on an undiscounted basis, our historically established intent to hold properties over the long term directly decreases the likelihood of recording an impairment loss. If our strategy changes or if market conditions otherwise dictate an earlier sale date, an impairment loss could be recognized and such loss could be material.

During 2003, we recognized an impairment of approximately $7.5 million on an Office Property (See Item 8. Financial Statements and Supplementary Data Note 8 — Impairment). There were no impairments in 2002. During 2001, we recognized an impairment of approximately $2.5 million on an investment in an unconsolidated joint venture that was held for sale.


	*Depreciation*

Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”) Business Combinations was effective July 1, 2001. Depreciation expense on Properties acquired prior to July 1, 2001 was computed using the straight-line method based on an estimated useful life of 40 years. A significant portion of the acquisition cost of each property was allocated to building (usually 85% to 90% unless the property was subject to a ground lease in which case 100% of the acquisition cost was allocated to building). Depreciation expense on properties acquired subsequent to the effective date of SFAS No. 141 is based on the allocation of the acquisition cost to land, building, tenant improvements and intangibles and the determination of their useful lives are based on management’s estimates. If we do not appropriately allocate to these components or we incorrectly estimate the useful lives of these components, our computation of depreciation and amortization expense may not appropriately reflect the actual impact of these costs over future periods, which will affect net income.


	*Fair Value of Financial Instruments*

We are required to determine periodically the fair value of our mortgage debt and unsecured notes for disclosure purposes. In determining the fair value of these financial instruments, we use internally developed models that are based on current market conditions. For example, in determining the fair value of our mortgage debt and unsecured notes, we discount the spread between the future contractual interest payments and future interest payments based on a current market rate. In determining the current market rate, we add a credit spread to the quoted yields on federal government debt securities with similar maturity dates to our own debt. The credit spread estimate is based on our historical experience in obtaining either secured or unsecured financing and also is affected by current market conditions.

We are also required periodically to adjust the carrying values of interest rate swaps, as well as the underlying hedged liability, if applicable, to its fair value. In determining the fair value of interest rate swaps, we rely on third party quotations to adjust these instruments, as well as the hedged liability, if applicable, to its fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives either will be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or

recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings.

Because our valuations of our financial instruments are based on these types of estimates, the fair value of our financial instruments may change if our estimates are inaccurate. For the effect of hypothetical changes in market rates of interest on interest expense for variable rate debt, the fair value of total outstanding debt and our forward-starting interest rate swaps, see the Market Risk section.

Accounting Policy Adopted in 2003

Effective January 1, 2003, we adopted Statement of Financial Accounting Standards No. 123 (“Statement 123”) Accounting for Stock Based Compensation, which requires a fair value based accounting method for determining compensation expense associated with the issuance of share options and other equity awards. See Item 8. Financial Statements and Supplementary Data Note 2 — Summary of Significant Accounting Policies for more information.

Accounting Policies Adopted in 2002

Effective January 1, 2002, we adopted the provisions of Statement of Financial Accounting Standards No. 144 (“SFAS No. 144”) Accounting for the Impairment or Disposal of Long-Lived Assets, which is effective for financial statements issued for fiscal years beginning after December 15, 2001. SFAS No. 144 addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 extends the reporting requirements of discontinued operations to include components of an entity that have either been disposed of or are classified as held for sale. The operating results of the properties sold in 2003 and 2002 have been classified as discontinued operations in the consolidated statements of operations for each of the three years in the period ended December 31, 2003 included herein.

In accordance with Statement of Financial Accounting Standards No. 145 (“SFAS No. 145”), Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, effective for financial statements issued for fiscal years beginning after May 15, 2002, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods shall be reclassified. As a result of the adoption, an extraordinary loss of approximately $9.4 million in the year ended December 31, 2001 was reclassified to “amortization of deferred financing costs and prepayment expenses”.

Impact of New Accounting Standards

See Item 8. Financial Statements and Supplementary Data Note 3 — Impact of New Accounting Standards for the impact of new accounting standards on our financial condition and results of operations.

Results of Operations


	*Trends in Occupancy, Rental Rates, Lease Terminations, Tenant Improvements and Leasing Costs and Uncollectible Receivables*

We receive our revenue primarily from rental revenue generated by leases for office and industrial space for which we are the lessor. Our revenues also include reimbursements from our tenants for certain operating costs and revenues from parking facilities. As a result of the slowdown in economic activity and decline in white-collar employment, we have experienced a decrease both in our occupancy rates and overall market rental rates and an increase in costs to re-lease space. Below is a summary of our leasing activity for tenants taking occupancy for the periods presented for our Office Properties. Our 10 largest markets in terms of property net operating income from continuing operations in order from greatest to least are San Francisco, Boston, San Jose, Seattle, New York, Chicago, Washington D.C., Los Angeles, Atlanta and Orange County.

These markets accounted for approximately 78.4% of our property net operating income from continuing operations in the fourth quarter of 2003.



		For the years ended
		December 31,

		2003			2002

Office Property Data:
10 Largest Markets:
	Portion of total office portfolio based on square feet at end of year		69.4	%		68.1	%
	Occupancy at end of year		86.1	%		88.8	%
	Gross square footage for tenants whose lease term commenced during the year		15,218,840			13,582,766
	Weighted average annual rent per square foot for tenants whose lease term commenced during the year(a)(b)	$	27.93		$	31.54
	Gross square footage for expiring and terminated leases during the year		15,932,288			16,308,269
	Weighted average annual rent per square foot for expiring and terminated leases during the year(a)	$	31.12		$	31.19
Total Office Portfolio:
	Portion of total portfolio based on square feet at end of year		100.0	%		100.0	%
	Occupancy at end of year		86.3	%		88.6	%
	Gross square footage for tenants whose lease term commenced during the year		22,684,488			20,620,427
	Weighted average annual rent per square foot for tenants whose lease term commenced during the year(a)(b)	$	25.68		$	28.48
	Gross square footage for expiring and terminated leases during the year		23,976,592			23,711,452
	Weighted average annual rent per square foot for expiring and terminated leases during the year(a)	$	28.14		$	28.61

(a) These weighted average rental rates are based on the average annual base rent per square foot over the term of each of the leases and the current estimated tenant reimbursements, if any.

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

A significant contributor to the decline in occupancy for our Office Properties since the beginning of 2002 has been early lease terminations. From January 1, 2002 through December 31, 2003, early lease terminations affected approximately 11.2 million square feet and we received lease termination fees of approximately $219.8 million. Although lease termination fees increase current period income, future rental income will most likely be reduced because, given the decline in market rents, it is unlikely we will collect the full contracted amount which had been payable under the terminated leases from new tenants who may occupy the vacated space. We will also often incur downtime and additional costs to relet the space. Although there is no way of predicting future lease terminations, we currently anticipate that lease termination fees will be relatively stable in 2004 as compared to 2003 and the affected square feet should be less in 2004 than 2003. The amount of lease termination fees are not necessarily proportionate to the square footage of leases being terminated. Although occupancy has declined since the beginning of 2002, it has stabilized over the last two quarters at approximately 86% and given the current rate of new leasing activity, we expect our average occupancy to increase approximately 1% to 2% in 2004. We estimate that for each 1% change in the average occupancy of our Office Properties there is a corresponding $30 million to $35 million change in our net operating income.

As indicated in the table above, due to the weak economy, there has been a general decline in market rental rates for Office Properties in 2002 and 2003 as reflected by the difference between the weighted average annual rent per square foot for expiring and terminated leases compared to the weighted average annual rent per square foot for tenants whose lease term commenced during the same period. This roll down in rents adversely affected our rental revenues in 2002 and 2003 and unless the economy recovers and market rental rates increase substantially from their current levels, is expected to adversely affect our rental revenues in subsequent periods as we enter into new leases. The actual rental rates at which available space will be relet will depend on prevailing market factors at the time. We currently estimate that the average annual total rent of approximately $30.43 per square foot as of December 31, 2003 for all our Office Properties (See Item 2. Properties) is approximately $3.50 to $4.00 per square foot above market rent and expect this trend to continue in 2004. As of December 31, 2003, approximately 65.8 million square feet of occupied space (approximately 62.4% of the total occupied square feet) is scheduled to expire through 2008. The square footage of leases scheduled to expire in each of the next five years and the average annual rent per square foot for these leases is presented below.


	Square Feet of		Annualized Rent per
Year	Expiring Leases(a)		Occupied Square Foot(b)

2004		12,187,759	$	27.70
2005		13,580,501	$	30.55
2006		13,984,235	$	29.52
2007		12,399,315	$	29.23
2008		13,647,832	$	27.86

Total/Average		65,799,642	$	29.00

(a) Based on the contractual termination date of the lease without regard to any early lease termination and/or renewal options.

(b) Based on annualized rent. Annualized rent is the monthly contractual rent as of the reporting date, or if the current rent payable is $0 then the first monthly rent payment due, under existing leases as of December 31, 2003 multiplied by 12 months (“Annualized Rent”). This amount reflects total base rent and estimated expense reimbursements from tenants as of December 31, 2003 without regard to any rent abatements and contractual increases or decreases in rent subsequent to December 31, 2003. Total rent abatements for leases in place as of December 31, 2003, for the period from January 1, 2004 to December 31, 2004 are approximately $38.2 million. We believe Annualized Rent is a useful measure because this information can be used for comparison to current market rents as published by various third party sources.

During 2003, we experienced material increases in tenant improvement and leasing costs as a result of competitive market conditions for new and renewal leases. The weighted average tenant improvement and leasing cost per square foot incurred for office leases which commenced during 2003 was approximately $19.05, a substantial increase compared to the cost of $13.59 per square foot incurred in 2002. These increases in tenant improvement and leasing costs resulted in a decrease in net effective rents (contract rents reduced by tenant improvement costs, leasing commissions and any free rent periods) for lease renewals and retenanted properties. We expect tenant improvement and leasing costs to be approximately $18 to $20 per square foot in 2004.

We have also continued to experience uncollectible receivables, although at lower levels than prior periods, relating to tenants in bankruptcy or tenants experiencing financial difficulty. Bad debt expense relating to uncollectible receivables (from continuing operations) was approximately $12.6 million, $27.8 million and $24.7 million in 2003, 2002 and 2001, respectively. We anticipate that the level of uncollectible receivables in 2004 will be similar to 2003. Although we have collateral from many of our tenants, mostly in the form of security deposits and letters of credit, such collateral is generally not sufficient to cover the full cost of releasing the space and additional write-offs of tenant receivables may occur.


	*Trends in Property Operating Expenses*

Period-to-Period Comparisons

Acquisition and Disposition Activity

Below is a summary of our acquisition and disposition activity since January 1, 2002. The buildings and total square feet shown include properties we own in joint ventures with other partners that we either consolidate or account for under the equity method. The total square feet of these unconsolidated properties is included in the table. Excluding the joint venture partners’ share of the square feet of the office properties, we effectively owned 113,580,631 square feet of office space as of December 31, 2003.



		Office Properties						Industrial Properties

					Total						Total
		Buildings			Square Feet			Buildings			Square Feet

Properties owned as of:
January 1, 2002			774			128,233,987			79			6,044,831
	Acquisitions		2			260,372			—			—
	Developments placed in service		3			330,646			—			—
	Dispositions		(45	)		(3,113,189	)		(2	)		(77,072	)
	Building remeasurements		—			13,583			—			—

December 31, 2002			734			125,725,399			77			5,967,759
	Acquisitions		2			829,293			—			—
	Developments placed in service		5			1,218,215			—			—
	Dispositions(a)		(53	)		(5,182,707	)		(2	)		(216,900	)
	Property taken out of service(b)		(4	)		(450,548	)		—			—
	Building remeasurements		—			115,273			—			—

December 31, 2003			684			122,254,925			75			5,750,859


(a)		Excludes partial sales of real estate because the properties are still included in our portfolio.

(b)		Cambridge Science Center (f/k/a Riverview I) is now considered a development and 175 Wyman has been taken out of service and is being held for potential redevelopment.

The financial data presented in the consolidated statements of operations show changes in revenues and expenses from period-to-period. We do not believe our period-to-period financial data are necessarily comparable because we acquire and dispose of properties on an ongoing basis. The following tables show results attributable to the Properties that were held during both periods being compared (the “Core Portfolio”) and the changes in our aggregate total portfolio of Properties (the “Total Portfolio”).

Included in property operating revenues are rental revenue, tenant reimbursements, parking and other. Included in property operating expenses are insurance, repairs and maintenance and property operating expenses.

Comparison of the year ended December 31, 2003 to the year ended December 31, 2002

The table below represents selected operating information for the Total Portfolio and for the core portfolio consisting of 647 consolidated Office Properties, 75 Industrial Properties and 22 unconsolidated joint venture Properties acquired or placed in service on or prior to January 1, 2002. The core portfolio results below include the results of the 13 Office Properties in which we sold partial interests and entered into joint venture agreements during the fourth quarter 2003 because these properties were sold on December 30, 2003.



			Total Portfolio												Core Portfolio


									Change												Change

			2003			2002			$			%			2003			2002			$			%

(Dollars in thousands)
Property operating revenues			$	3,179,771		$	3,343,859		$	(164,088	)		(4.9	)%	$	3,138,385		$	3,323,859		$	(185,474	)		(5.6	)%
Fee income				15,861			15,907			(46	)		(0.3	)		—			—			—			—

	Total revenues			3,195,632			3,359,766			(164,134	)		(4.9	)		3,138,385			3,323,859			(185,474	)		(5.6	)

Depreciation and amortization				715,548			662,875			52,673			7.9			689,611			648,531			41,080			6.3
Real estate taxes				351,537			360,488			(8,951	)		(2.5	)		344,257			356,730			(12,473	)		(3.5	)
Property operating expenses				775,042			788,207			(13,165	)		(1.7	)		759,568			782,195			(22,627	)		(2.9	)
Ground rent				20,287			20,325			(38	)		(0.2	)		18,624			20,075			(1,451	)		(7.2	)
General and administrative(a)				62,479			65,790			(3,311	)		(5.0	)		—			—			—			—
Impairment of long-lived asset				7,500			—			7,500			—			7,500			—			7,500			—

	Total expenses			1,932,393			1,897,685			34,708			1.8			1,819,560			1,807,531			12,029			0.7

		Operating income		1,263,239			1,462,081			(198,842	)		(13.6	)		1,318,825			1,516,328			(197,503	)		(13.0	)

Interest/ dividend income				12,583			22,148			(9,565	)		(43.2	)		3,839			3,771			68			1.8
Realized gain on sale of marketable securities				9,286			—			9,286			—			—			—			—			—
Interest expense(b)				(827,335	)		(814,645	)		(12,690	)		1.6			(187,259	)		(198,110	)		10,851			(5.5	)

		Total other income/ expense		(805,466	)		(792,497	)		(12,969	)		1.6			(183,420	)		(194,339	)		10,919			(5.6	)

Income before income taxes, allocation to minority interests, income from investments in unconsolidated joint ventures and net gain on partial sales of real estate				457,773			669,584			(211,811	)		(31.6	)		1,135,405			1,321,989			(186,584	)		(14.1	)
Income taxes				(5,373	)		(9,126	)		3,753			(41.1	)		(911	)		(1,999	)		1,088			(54.4	)
Minority interests				(8,116	)		(7,200	)		(916	)		12.7			(9,307	)		(7,253	)		(2,054	)		28.3
Income from investments in unconsolidated joint ventures				79,882			106,852			(26,970	)		(25.2	)		53,131			68,630			(15,499	)		(22.6	)
Net gain on partial sales of real estate				99,110			—			99,110			—			99,110			—			99,110			—

Income from continuing operations				623,276			760,110			(136,834	)		(18.0	)		1,277,428			1,381,367			(103,939	)		(7.5	)
Discontinued operations (including net gain on sales of real estate of $61,953 and $17,926, respectively)				105,938			99,310			6,628			6.7			—			—			—			—

Net income			$	729,214		$	859,420		$	(130,206	)		(15.2	)%	$	1,277,428		$	1,381,367		$	(103,939	)		(7.5	)%

Property net operating income from continuing operations(c)			$	2,053,192		$	2,195,164		$	(141,972	)		(6.5	)%	$	2,034,560		$	2,184,934		$	(150,374	)		(6.9	)%

Deferred rental revenue			$	73,082		$	67,412		$	5,670			8.4	%	$	70,298		$	66,451		$	3,847			5.8	%

Lease termination fees			$	62,578		$	104,178		$	(41,600	)		(39.9	)%	$	62,110		$	103,469		$	(41,359	)		(40.0	)%


(a)		Corporate general and administrative expense is not allocated to the Core Portfolio because these expenses are not directly incurred in connection with any specific Property.

(b)		Interest expense (including amortization of deferred financing costs and prepayment expenses) for the core portfolio represents interest expense on property secured mortgage debt and does not include interest expense on the unsecured notes or the line of credit.

(c)		Represents segment data. See Item 8. Financial Statements and Supplementary Data Note 20 — Segment Information.

Property Operating Revenues

The decrease in property operating revenues in the Total Portfolio was primarily attributable to reduced occupancy in the core portfolio from 91.8% at January 1, 2002 to 86.5% at December 31, 2003 and a decrease in lease termination fees. A large portion of the decrease in occupancy was due to early lease terminations. In addition to the decline in occupancy, rental revenues declined as a result of decreased average rental rates on new leases as compared to average rental rates on expiring leases.

Depreciation and Amortization

Total Portfolio and core portfolio depreciation and amortization expense increased from the prior period primarily as a result of capital and tenant improvements made since the beginning of the prior period and from an increase in deferred leasing costs.

Real Estate Taxes

Real estate taxes decreased for the Total Portfolio and core portfolio primarily due to a decrease in real estate taxes in the California regions of approximately $11.5 million and the Seattle region of approximately $2.8 million, partially offset by an increase in real estate taxes in the New York region of approximately $6.3 million.

Property Operating Expenses

For the core portfolio, property operating expenses decreased primarily as a result of lower utility expense of approximately $13.8 million and lower insurance expense of approximately $11.0 million. Insurance expense decreased primarily as a result of changes in our insurance program and favorable loss experience. In addition, repairs and maintenance expense decreased by approximately $8.8 million primarily due to lower occupancy and the renegotiation of service contracts. Payroll expense decreased by approximately $4.3 million due to staff reductions. These decreases in property operating expenses were partially offset by increases in property operating general and administrative expenses which include legal, advertising, leasing and payroll costs and by severance expense of approximately $5.4 million in 2003.

General and Administrative Expenses

We incurred approximately $4.2 million of corporate level severance expense in 2003 compared to $7.2 million in 2002. The severance expense consisted of the accelerated vesting of share options and restricted shares as well as cash payments.

Beginning in fiscal 2003, we reclassified regional operating expenses and other costs directly associated with property operations from general and administrative expenses to property operating expenses. The regional offices exist to provide oversight for the management and leasing of the Properties. Accordingly, these expenses were classified as property operating expenses and all prior periods have been reclassified to provide for comparability. This reclassification did not change the prior period results or partners’ capital.

Impairment

During 2003, an Office Property was deemed to be impaired due to an analysis of its future undiscounted cash flows. As a result, we recognized a permanent impairment charge of $7.5 million, which reduced the book value of the property to its estimated fair value of $3.8 million.

Interest/ Dividend Income

Interest and dividend income decreased for the Total Portfolio by approximately $9.6 million primarily as a result of lower interest and dividends from various notes receivable and investments, which either matured or were redeemed during the period.

Realized Gain on Sale of Marketable Securities

During 2002, we entered into an early lease termination agreement with a tenant that was scheduled to occupy an entire building. As part of the consideration for the lease termination, we received five million shares of common stock. These securities were sold during the first quarter of 2003 at a gain of approximately $8.1 million. The remaining realized gain of approximately $1.2 million was due to the sale of other securities.

Interest Expense

Interest expense for the Total Portfolio increased primarily as a result of a $10.4 million decrease of capitalized interest related to several developments that were completed and placed into service. Interest expense for the core portfolio decreased primarily as a result of mortgage debt repayments.

Income Taxes

Income taxes for the Total Portfolio decreased because in 2002 we incurred approximately $5.0 million of income taxes as a result of a $40.0 million lease termination. (See “Income from Investment in Unconsolidated Joint Ventures” below).

Income from Investments in Unconsolidated Joint Ventures

Income from investments in unconsolidated joint ventures decreased for the Total Portfolio primarily due to a decrease in lease termination fees from $46.4 million to $3.7 million and a decrease in property operating revenues at the core portfolio, partially offset by a $2.3 million decrease in interest expense on variable rate mortgage debt at the core portfolio and by a development property placed in service in 2003. The decrease in property operating revenues at the core portfolio was primarily attributable to reduced occupancy and decreased average rental rates on new leases as compared to average rental rates on expiring leases.

Net Gain on Partial Sales of Real Estate

The net gain in 2003 related to the partial sale of our interests in 13 Office Properties. In accordance with SFAS No. 144, the net income from these Properties, which includes the net gain on sale, is not classified as discontinued operations because we still maintain an on-going involvement with the operation of these Properties.

Discontinued Operations

The increase in discontinued operations is a result of a higher net gain on the sale of properties in 2003 as compared to 2002, offset by the loss of net income due to the sales. Discontinued operations in 2002 includes the net income of properties sold in 2002 and in 2003 whereas the discontinued operations in 2003 only includes the net income of properties sold in 2003.

Comparison of the year ended December 31, 2002 to the year ended December 31, 2001

The table below represents selected operating information for the Total Portfolio and for the core portfolio consisting of 355 consolidated Office Properties and 23 unconsolidated joint venture Office Properties acquired or placed in service on or prior to January 1, 2001.



			Total Portfolio												Core Portfolio


									Change												Change

			2002			2001			$			%			2002			2001			$			%

(Dollars in thousands)
Property operating revenues			$	3,343,859		$	2,951,061		$	392,798			13.3	%	$	2,508,762		$	2,567,558		$	(58,796	)		(2.3	)%
Fee income				15,907			15,085			822			5.4			—			—			—			—

	Total revenues			3,359,766			2,966,146			393,620			13.3			2,508,762			2,567,558			(58,796	)		(2.3	)

Depreciation and amortization				662,875			553,328			109,547			19.8			507,556			490,125			17,431			3.6
Real estate taxes				360,488			331,182			29,306			8.8			303,730			298,532			5,198			1.7
Property operating expenses				788,207			677,440			110,767			16.4			627,711			605,120			22,591			3.7
Ground rent				20,325			16,692			3,633			21.8			11,571			12,632			(1,061	)		(8.4	)
General and administrative(a)				65,790			42,321			23,469			55.5			—			—			—			—
Impairments				—			135,220			(135,220	)		(100.0	)		—			—			—			—

	Total expenses			1,897,685			1,756,183			141,502			8.1			1,450,568			1,406,409			44,159			3.1

		Operating income		1,462,081			1,209,963			252,118			20.8			1,058,194			1,161,149			(102,955	)		(8.9	)

Interest/ dividend income				22,148			40,015			(17,867	)		(44.7	)		3,913			4,940			(1,027	)		(20.8	)
Interest expense(b)				(814,645	)		(742,586	)		(72,059	)		9.7			(196,014	)		(220,213	)		24,199			(11.0	)

		Total other income/ expense		(792,497	)		(702,571	)		(89,926	)		12.8			(192,101	)		(215,273	)		23,172			(10.8	)

Income before income taxes, allocation to minority interests and income from investments in unconsolidated joint ventures				669,584			507,392			162,192			32.0			866,093			945,876			(79,783	)		(8.4	)
Income taxes				(9,126	)		(8,745	)		(381	)		4.4			(1,027	)		(1,535	)		508			(33.1	)
Minority interests				(7,200	)		(8,685	)		1,485			(17.1	)		(7,146	)		(8,685	)		1,539			(17.7	)
Income from investments in unconsolidated joint ventures				106,852			69,203			37,649			54.4			71,792			64,504			7,288			11.3
Net gain on sales of real estate				—			81,662			(81,662	)		(100.0	)		—			8,000			(8,000	)		(100.0	)

Income from continuing operations				760,110			640,827			119,283			18.6			929,712			1,008,160			(78,448	)		(7.8	)
Discontinued operations (including net gain on sales of real estate of $17,926 in 2002)				99,310			55,746			43,564			78.1			—			—			—			—

Income before extraordinary item and cumulative effect of a change in accounting principle				859,420			696,573			162,847			23.4			929,712			1,008,160			(78,448	)		(7.8	)
Extraordinary item				—			(1,000	)		1,000			(100.0	)		—			(268	)		268			(100.0	)
Cumulative effect of a change in accounting principle				—			(1,142	)		1,142			(100.0	)		—			—			—			—

Net income			$	859,420		$	694,431		$	164,989			23.8	%	$	929,712		$	1,007,892		$	(78,180	)		(7.8	)%

Property net operating income from continuing operations(c)			$	2,195,164		$	1,942,439		$	252,725			13.0	%	$	1,577,321		$	1,663,906		$	(86,585	)		(5.2	)%

Deferred rental revenue			$	67,412		$	66,530		$	882			1.3	%	$	31,811		$	49,951		$	(18,140	)		(36.3	)%

Lease termination fees			$	104,178		$	39,438		$	64,740			164.2	%	$	46,497		$	34,732		$	11,765			33.9	%


(a)		Corporate general and administrative expense is not allocated to the core portfolio because these expenses are not directly incurred in connection with any specific Property.

(b)		Interest expense (including amortization of deferred financing costs and prepayment expenses) for the core portfolio represents interest expense on property secured mortgage debt and does not include interest expense on the unsecured notes or the line of credit.


(c)		Represents segment data. See Item 8. Financial Statements and Supplementary Data Note 20-Segment Information.

Property Operating Revenues

The increase in property operating revenues in the Total Portfolio was primarily due to the Spieker Partnership merger in July 2001, which was partially offset by a decrease in occupancy in the core portfolio as described below. In addition, lease termination fees were $104.2 million in 2002 as compared to $39.4 million in 2001. Included in the lease termination fees of $104.2 million in 2002 was approximately $46.1 million from one tenant. The primary reason for the increase in the lease termination fees and the decrease in occupancy was the slowdown in economic activity. Lease termination fees relate to specific tenants, each of which has paid a fee to terminate its lease obligations before the end of the contractual term of the lease.

The decrease in property operating revenues in the core portfolio was primarily due to a decrease in occupancy from 94.5% at January 1, 2001 to 89.2% at December 31, 2002. Occupancy decreased primarily due to tenant rollover and early lease terminations where the space was not re-leased. The decrease in property operating revenues was partially offset by lease termination fees of $46.5 million in 2002 as compared to $34.7 million in 2001.

Depreciation and Amortization

Total Portfolio depreciation and amortization expense increased primarily due to the Spieker Partnership merger and capital and tenant improvements made during each year. Core portfolio depreciation and amortization expense increased as a result of capital and tenant improvements made during each year.

Property Operating Expenses and Real Estate Taxes

Total Portfolio property operating expenses and real estate taxes increased primarily due to the Spieker Partnership merger. Core portfolio property operating expenses and real estate taxes increased primarily due to an increase of approximately $4.5 million for safety and security expense and higher insurance premiums of approximately $8.4 million primarily due to the terrorist attacks on September 11, 2001, an increase of approximately $10.6 million for repairs and maintenance and an increase in real estate taxes of approximately $5.2 million. The increase in property operating expenses and real estate taxes was partially offset by a decrease of approximately $8.2 million in utilities expense.

Ground Rent

Ground rent for the Total Portfolio increased from the prior period primarily due to the Spieker Partnership merger as several Properties acquired in the Spieker Partnership merger are subject to ground leases.

General and Administrative Expenses

General and administrative expenses increased primarily due to professional and consulting fees related to the EOPlus initiative of $15.7 million and severance expense of approximately $7.3 million in 2002. The total severance consisted of severance payments and the accelerated vesting of share options and restricted shares.

Impairments

For information on this item refer to “Item 8. Financial Statements and Supplementary Data — Note 8 — Impairment”.

Interest/Dividend Income

Interest/dividend income decreased for the Total Portfolio as a result of an $8.5 million decrease in dividends and discount amortization from our $90.6 million investment in HQ Global Workplaces, Inc. (“HQ Global”) Series A Convertible Cumulative Preferred Stock (“HQ Preferred Stock”) which was written-off in 2001 and a reduction in interest income on notes receivable of approximately $6.6 million. In addition, CT Convertible Trust I redeemed its non-convertible preferred securities that earned a 13% annual dividend for approximately $20.1 million, including accrued dividends, in September 2002.

Interest Expense

Total Portfolio interest expense increased from the prior year as a result of having more debt outstanding during 2002, mainly as a result of the Spieker Partnership merger. This increase was partially offset by interest rate swap agreements in effect during 2002 and 2001 which effectively reduced interest expense by approximately $21.3 million by converting the fixed interest rates to variable rates for a portion of the unsecured notes. The swap agreements were all terminated in 2001 and 2002. Total proceeds of approximately $90.2 million resulting from the settlement of the swaps are being amortized ratably over the remaining terms of the respective unsecured notes as a reduction to interest expense. Core portfolio interest expense decreased from the prior year as a result of the repayment and refinancing of certain mortgage notes.

Income from Investment in Unconsolidated Joint Ventures

Income from investment in unconsolidated joint ventures increased for the Total Portfolio primarily due to lease termination fees of $46.4 million in 2002 as compared to $1.0 million in 2001. Included in the lease termination fees of $46.4 million in 2002 was approximately $40 million from one tenant.

Income from investment in unconsolidated joint ventures increased for the core portfolio primarily due to lease termination fees of $6.4 million in 2002 as compared to $1.0 million in 2001 and also increased due to a $7.6 million decrease in interest expense as a result of lower interest rates on variable rate mortgage notes and the repayment of a mortgage note. The increase in income from unconsolidated joint ventures was partially offset by a decrease in property revenues as a result of a decrease in occupancy.

Net Gain on Sales of Real Estate and Discontinued Operations

Net gain on sales of real estate for the Total Portfolio decreased from the prior period as a result of a presentation change for sold properties in accordance with SFAS No. 144. Gains and losses from properties sold prior to 2002 are reflected as “net gain on sales of real estate” and gains and losses from properties sold in 2002 are reflected in “discontinued operations”. The increase in discontinued operations was primarily due to the gain on the sale of the properties sold in 2002 and properties sold in 2003 that were acquired through the Spieker Partnership merger in July 2001. The gain on sale of real estate in 2001 from the Core Portfolio represents income received from an unaffiliated party for an easement allowing highway access under an Office Property.

Extraordinary Item

The extraordinary item relates to repair costs to certain Office Properties located in Seattle, Washington that were incurred as a result of damage from an earthquake in February 2001.

Discontinued Operations

The net income for properties sold subsequent to December 31, 2001 is reflected in the consolidated statements of operations as Discontinued Operations for the periods presented. Below is a summary of the results of operations of these properties through their respective disposition dates:



				For the years ended December 31,

				2003			2002			2001

(Dollars in thousands)
Total revenues				$	83,829		$	164,425		$	123,770

Expenses:
	Depreciation and amortization				14,803			28,129			21,702
	Property operating				25,228			54,266			45,362
	Ground rent				18			164			236

		Total expenses			40,049			82,559			67,300

			Operating income		43,780			81,866			56,470

Other income/ expense:
	Interest/ dividend income				158			233			217
	Interest expense and amortization of deferred financing costs and prepayment expenses				(20	)		(346	)		(849	)

		Total other income/ expense			138			(113	)		(632	)

Income before income taxes and net gain on sales of real estate					43,918			81,753			55,838
Income taxes					67			(369	)		(92	)
Net gain on sales of real estate					61,953			17,926			—

Net income				$	105,938		$	99,310		$	55,746

Property net operating income from discontinued operations				$	58,601		$	110,159		$	78,408

Segment Reporting

For segment reporting purposes, the office properties, apartment properties and the land parcels that were sold are included in the “Office Properties” segment and the industrial properties and parking facilities that were sold are included in the “Corporate and Other” segment.

Liquidity and Capital Resources


	*Liquidity*

Our net cash provided by operating activities is primarily dependent upon the occupancy level of our properties, the rental rates on our leases, the collectibility of rent from our tenants, the level of operating and other expenses, and other factors. Our net cash provided by operating activities, including our share of net cash provided by operating activities from unconsolidated joint ventures, has been our primary source of liquidity to fund debt service, capital improvements, tenant improvements and leasing costs for operating properties as well as distributions to our unitholders. We expect that our lines of credit will adequately provide for any additional amounts which may be needed to fund working capital and unanticipated cash needs as well as acquisitions and development costs.

operations each quarter and to make reasonable efforts to distribute to Equity Office enough cash for it to meet the 90% distribution requirement. Accordingly, we currently intend, although we are not legally obligated, to continue to make regular quarterly distributions to holders of Units and preferred units. The declaration of dividends on common and preferred shares is at the discretion of Equity Office’s Board of Trustees, which decision is made from time to time by Equity Office’s Board of Trustees based on then prevailing circumstances.

A material adverse change in our net cash provided by operating activities may affect our ability to fund these items and may affect the financial performance covenants under our lines of credit and unsecured notes. If we fail to meet our financial performance covenants and to reach a satisfactory resolution with our lenders, the maturity dates for our unsecured notes could be accelerated, and our lines of credit could become unavailable to us or the interest charged on the line of credit could increase. Our interest charged on the line of credit could also increase if our debt ratings adversely change. Any of these circumstances could adversely affect our ability to fund working capital and unanticipated cash needs, acquisitions and development costs.

Lower occupancy levels, reduced rental rates, and reduced revenues as a result of asset sales have had the effect of reducing our net cash provided by operating activities. In addition, our tenant improvement and leasing costs have increased significantly due to competitive market conditions for new and renewal leases. During the year ended December 31, 2003, our net free cash flow was insufficient to pay capital improvements, tenant improvements and leasing costs and distributions to our unitholders by approximately $179 million. We funded this net free cash flow deficit primarily with a combination of borrowings under our line of credit and proceeds from property dispositions. We define net free cash flow as (a) net cash provided by operating activities determined in accordance with GAAP plus funds from operations from our joint venture activities and minority interest (which we view as an integral part of our business) plus changes in non-cash items, such as rents receivable and accounts payable, which are expected to be settled in cash but are not reflected in net cash provided by operating activities determined in accordance with GAAP due to timing differences between the accrual of the receivable or payable and the cash settlement of such items, less (b) expenditures for capital improvements, tenant improvements and leasing costs and distributions to our unitholders. Net free cash flow is a non-GAAP financial measure and is reconciled to net cash provided by operating activities, the most directly comparable GAAP measure, for the period presented below. Our calculation of net free cash flow is not necessarily comparable to similar measures that may be presented by other companies.


	For the year ended
	December 31, 2003
(Dollars in thousands)
Net cash provided by operating activities	$	1,132,303
Plus: Net joint venture and minority interest FFO excluding non-cash items (deferred rent, loan amortization and non-real estate depreciation)		112,800
Plus: Total changes in assets and liabilities in net cash provided by operating activities, net of provision for doubtful accounts and deferred rent		31,249
Plus: Other timing differences and changes in non-cash items		11,665
Less: Capital improvements, tenant improvements and leasing costs (for leases which commenced during the period) and other costs including our share of joint ventures capital improvements, tenant improvements and leasing costs		(512,036	)
Less: Distributions to unitholders		(901,259	)
Less: Payment of preferred distributions		(53,841	)

Net Free Cash Flow Deficit	$	(179,119	)

If our net cash from operating activities and tenant improvements and leasing costs continue at these levels, and if Equity Office’s Board of Trustees continues to declare distributions on its common shares at current levels, our net free cash flow deficit would continue in subsequent periods and we would fund this deficit in a similar manner. We currently anticipate that the deficit for 2004 will be similar to 2003. Beyond this, we have $1.4 billion of debt maturing through December 31, 2004. Because our anticipated distributions will not allow us to retain sufficient cash to repay all of our debt as it comes due using only cash from operating

activities, we will be required to repay most of our maturing debt with proceeds from asset sales and debt offerings. Although there can be no assurance that such funding at acceptable terms will be available to us, we believe that net cash provided by operating activities, draws under our lines of credit, proceeds from other financing sources that we expect to be available to us and proceeds from anticipated asset sales will together provide sufficient liquidity to meet our cash needs during this period.

Distributions

In 2003, Equity Office’s Board of Trustees declared dividends on preferred units as reflected below:


	Annualized
	Distribution		2003 Distributions
Security(a)	Per Unit		(Dollars in thousands)

Series B Preferred Units	$	2.625	$	15,724
Series C Preferred Units(a)	$	2.15625	$	9,839
Series E Preferred Units(a)	$	1.3015625	$	5,841
Series F Preferred Units(a)	$	1.00	$	4,000
Series G Preferred Units	$	1.9375	$	16,469


(a)		Equity Office redeemed the Series C Preferred Shares in January 2004 and redeemed the Series E and Series F Preferred Shares in June 2003. In connection with such redemptions, we redeemed all of the Series C, E and F Preferred Units from Equity Office.

Equity Office’s Board of Trustees also declared dividends on the Units for the four quarters of 2003, at the rate of $.50 per Unit per quarter.

Contractual Obligations

As of December 31, 2003, we were subject to certain material contractual payment obligations as described in the table below. We were not subject to any material capital lease obligations or unconditional purchase obligations as of December 31, 2003.



		Payments Due by Period

Contractual Obligations:		Total		2004		2005		2006		2007		2008		Thereafter


		(Dollars in thousands)
Long-term debt:
	Mortgage debt(1)	$	2,329,552	$	375,761	$	568,787	$	343,878	$	237,024	$	132,061	$	672,041
	Unsecured notes(2)		8,816,500		880,000		675,000		650,000		976,500		775,000		4,860,000
Line of Credit			334,000		—		—		334,000		—		—		—
Series B Preferred Units			299,500		—		—		—		—		299,500		—
Share of mortgage debt of unconsolidated joint ventures			797,268		117,153		466,505		52,283		2,622		16,989		141,716
Operating leases			1,260,561		16,583		16,649		16,748		16,646		16,660		1,177,275
Share of ground leases of unconsolidated joint ventures			128,566		1,216		1,216		1,258		1,294		1,294		122,288
Construction contracts on developments			12,732		12,732		—		—		—		—		—

Total Contractual Obligations		$	13,978,679	$	1,403,445	$	1,728,157	$	1,398,167	$	1,234,086	$	1,241,504	$	6,973,320

Weighted Average Interest Rates on Maturing Debt:
Long-term debt:
	Mortgage debt		7.63%		7.15%		7.87%		7.15%		7.87%		7.48%		7.84%
	Unsecured notes		6.95%		5.42%		5.67%		7.52%		7.52%		7.27%		7.17%
Line of credit			1.95%		—		—		1.95%		—		—		—
Share of mortgage debt of unconsolidated joint ventures			6.27%		2.27%		7.30%		7.67%		—		6.92%		5.43%

Total Weighted Average Interest Rates			6.90%		5.60%		6.83%		6.08%		7.59%		7.29%		7.21%

(1) Balance excludes a net unamortized discount of $13.7 million.

(2) Balance excludes a net unamortized premium of $12.4 million.

Forward-Starting Interest Rate Swaps

See “Market Risk” for information on our forward-starting interest rate swaps.

Energy Contracts

In an ongoing effort to control energy costs, from time to time we enter into contracts for the purchase of gas or electricity for properties in states which have deregulated their energy markets. Typically, these contracts provide for a term of one to three years. Although all or a portion of the commodity price under these contracts is generally fixed, the amounts actually expended under these contracts will vary in accordance with actual energy usage or the timing of energy usage during the period. As a result, the amounts to be expended under these contracts are difficult to predict. During 2003 more than half of our energy expenditures were made under various contracts of this nature and most of these expenditures were reimbursable by our tenants as ordinary operating expenses.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements with any unconsolidated investments or joint ventures that we believe have or are reasonably likely to have a material effect on our financial condition, results of operations, liquidity or capital resources.

Debt Financing

The table below summarizes our consolidated mortgage debt, unsecured notes and line of credit indebtedness at December 31, 2003 and 2002. The amounts shown include unamortized discounts on mortgage debt of approximately $13.7 million and $12.6 million, respectively, and unamortized premiums on unsecured notes of $12.4 million and $41.2 million, respectively. The discounts and premiums were originally recorded in connection with certain property acquisitions, mergers, issuances of unsecured notes and interest rate swap settlements.



			December 31,

(Dollars in thousands)			2003			2002

Balance
	Fixed rate		$	11,108,801		$	11,529,541
	Variable rate(a)			370,000			241,700

		Total	$	11,478,801		$	11,771,241

Percent of total debt
	Fixed rate			96.8	%		97.9	%
	Variable rate(a)			3.2	%		2.1	%

		Total		100.0	%		100.0	%

Effective interest rate at end of period
	Fixed rate			7.11	%		7.17	%
	Variable rate(a)			1.93	%		2.37	%

		Effective interest rate		6.94	%		7.08	%


(a)		The interest rate for these notes is based on various spreads over LIBOR.

Mortgage Debt

As of December 31, 2003, total mortgage debt (excluding our share of the mortgage debt encumbering unconsolidated properties of approximately $797.3 million) consisted of approximately $2,279.9 million of fixed rate debt with a weighted average interest rate of approximately 7.72% and $36.0 million of variable rate debt based on LIBOR plus 55 basis points (1.72% as of December 31, 2003). See “Liquidity and Capital Resources — Contractual Obligations” for annual payment obligations under our mortgage debt.

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

Line of Credit

We have a $1.0 billion revolving credit facility that was obtained in May 2003. As of March 12, 2004 and December 31, 2003, $921.7 million and $334.0 million was outstanding under this facility, respectively. The line of credit bears interest at LIBOR plus 60 basis points, has an annual facility fee of 20 basis points payable quarterly and matures in May 2006. The effective rate on the line of credit at December 31, 2003 was approximately 1.95%. In addition, a competitive bid option, whereby the lenders participating in the credit facility may bid on the interest to be charged resulting in an interest rate lower than LIBOR plus 60 basis points, is available for up to $350 million of the borrowings under the credit facility.

364-Day Line of Credit

In December 2003, we obtained a $1.0 billion 364-day credit facility. The facility has a $200 million revolving component and a $800 million term component. As of December 31, 2003, no amounts were outstanding under this facility. The line of credit bears interest at LIBOR plus 65 basis points, has an annual facility fee of 15 basis points payable quarterly and matures in December 2004. In addition, a competitive bid option, whereby the lenders participating in the credit facility may bid on the interest to be charged resulting in an interest rate lower than LIBOR plus 65 basis points, is available for up to $350 million of the borrowings under the credit facility.

Unsecured Notes

Unsecured notes decreased to approximately $8,828.9 million at December 31, 2003 compared to approximately $9,057.7 million at December 31, 2002, as a result of the repayment of $300 million 6.38% unsecured notes in February 2003, the repayment of $400 million 7.38% unsecured notes in November 2003 and amortization of discounts and premiums, partially offset by the issuance in January 2003 of $500 million 5.88% unsecured notes due January 15, 2013.

The table below summarizes the unsecured notes outstanding as of December 31, 2003:


	Coupon			Effective						Maturity
Original Term	Rate			Rate (a)			Principal Balance			Date

							(Dollars in thousands)
5 Years		6.50	%		4.59	%	$	300,000	(b)		01/15/04
9 Years		6.90	%		6.27	%		100,000	(b)		01/15/04
5 Years		6.80	%		6.10	%		200,000	(b)		05/01/04
6 Years		6.50	%		5.31	%		250,000	(b)		06/15/04
7 Years		7.24	%		7.26	%		30,000	(b)		09/01/04
8 Years		6.88	%		6.40	%		125,000			02/01/05
7 Years		6.63	%		4.99	%		400,000			02/15/05
7 Years		8.00	%		6.49	%		100,000			07/19/05
8 Years		7.36	%		7.69	%		50,000			09/01/05
6 Years		8.38	%		7.65	%		500,000			03/15/06
9 Years		7.44	%		7.74	%		50,000			09/01/06
10 Years		7.13	%		6.74	%		100,000			12/01/06
9 Years		7.00	%		6.80	%		1,500			02/02/07
9 Years		6.88	%		6.83	%		25,000			04/30/07
9 Years		6.76	%		6.76	%		300,000			06/15/07
10 Years		7.41	%		7.70	%		50,000			09/01/07
7 Years		7.75	%		7.91	%		600,000			11/15/07
10 Years		6.75	%		6.97	%		150,000			01/15/08
10 Years		6.75	%		7.01	%		300,000			02/15/08
8 Years(c)		7.25	%		7.64	%		325,000			11/15/08
10 Years		6.80	%		6.94	%		500,000			01/15/09
10 Years		7.25	%		7.14	%		200,000			05/01/09
11 Years		7.13	%		6.97	%		150,000			07/01/09
10 Years		8.10	%		8.22	%		360,000			08/01/10
10 Years		7.65	%		7.20	%		200,000			12/15/10
10 Years		7.00	%		6.83	%		1,100,000			07/15/11
10 Years		6.75	%		7.02	%		500,000			02/15/12
10 Years		5.88	%		5.98	%		500,000			01/15/13


		Coupon			Effective					Maturity
Original Term		Rate			Rate (a)			Principal Balance		Date

								(Dollars in thousands)
20 Years			7.88	%		8.08	%	$	25,000		12/01/16
20 Years			7.35	%		8.08	%		200,000		12/01/17
20 Years			7.25	%		7.54	%		250,000		02/15/18
30 Years			7.50	%		8.24	%		150,000		10/01/27
30 Years			7.25	%		7.31	%		225,000		06/15/28
30 Years			7.50	%		7.55	%		200,000		04/19/29
30 Years			7.88	%		7.94	%		300,000		07/15/31

	Weighted Average/ Subtotal		7.15	%		6.95	%		8,816,500

Net premium									12,412

Total								$	8,828,912


(a)		Includes the effect of settled interest rate protection and interest rate swap agreements, offering and transaction costs and premiums and discounts on certain unsecured notes.

(b)		Through 2004, $880 million of unsecured notes will mature and become payable, including the $400 million of unsecured notes that matured in January 2004 and were repaid with our line of credit. Our options for repaying the remaining notes include proceeds from our lines of credit, proceeds from additional debt and/or equity offerings or proceeds from property dispositions.

(c)		The notes are exchangeable into Equity Office Common Shares at an exchange rate of $34.00 per share. If the closing price of a Common Share at the time a holder exercises its exchange right is less than the exchange price of $34.00, the holder will receive, in lieu of Common Shares, cash in an amount equal to 97% of the product of the number of Common Shares into which the principal amount of notes subject to such exercise would otherwise be exchangeable and the current market price per Common Share. Upon exchange of a $1,000 note for Common Shares of Equity Office, we would issue a corresponding number of Units to Equity Office on a one-for-one basis.

As of March 12, 2004, $1.6 billion was available for issuance under a previously filed $4.0 billion shelf registration statement.

Restrictions and Covenants under Unsecured Indebtedness

Agreements or instruments relating to our lines of credit and unsecured notes contain certain financial restrictions and requirements regarding total debt-to-assets ratios, debt service coverage ratios, minimum ratio of unencumbered assets to unsecured debt and other limitations. As of December 31, 2003, we were in compliance with each of these financial restrictions and requirements. If we fail to comply with any of these restrictions and requirements, then the indebtedness could become due and payable before its stated due date.

Set forth below are the financial restrictions and requirements to which we are subject under our unsecured note indentures and our performance under each covenant as of December 31, 2003:


Covenants (a) (in each case as defined in the respective indenture)	Actual Performance

Debt to Adjusted Total Assets may not be greater than 60%		47	%
Secured Debt to Adjusted Total Assets may not be greater than 40%		12	%
Consolidated Income Available for Debt Service to Annual Debt Service charge may not be less than 1.50:1		2.45
Total Unencumbered Assets to Unsecured Debt may not be less than 150% (b)		219	%


(a)		The calculations of our actual performance under each covenant are included as Appendix A to this Form 10-K.


(b)		The unsecured notes assumed in the merger with Spieker Partnership are subject to a minimum ratio of 165%.

Equity Securities

The following table presents the changes in Equity Office’s issued and outstanding Common Shares and EOP Partnership’s Units (exclusive of Units owned by Equity Office) since December 31, 2002:


		Common Shares			Units			Total

Outstanding at December 31, 2002			411,200,998			50,206,731			461,407,729
	Share options exercised		1,661,333			—			1,661,333
	Common Shares repurchased/retired(a)		(14,236,400	)		—			(14,236,400	)
	Units redeemed for Common Shares		934,261			(934,261	)		—
	Units redeemed for cash(b)		—			(240,240	)		(240,240	)
	Restricted shares and share awards issued, net of cancellations		900,196			—			900,196

Outstanding at December 31, 2003			400,460,388			49,032,230			449,492,618


(a)		In July 2002, Equity Office announced a Common Share repurchase program allowing for the repurchase of up to $200 million of Common Shares, which was later increased to $400 million in November 2002 and to $600 million in March 2003, over the next 12 months at the discretion of management. The Common Shares may be repurchased in the open market or privately negotiated transactions. During 2003, 14,236,400 Common Shares were repurchased at an average price of $25.53 for approximately $363.5 million in the aggregate. In connection with the repurchases, we purchased from Equity Office and retired a corresponding number of Units for an aggregate purchase price equal to the aggregate purchase price for all Common Share repurchases.

(b)		During 2003, we redeemed 240,240 Units at an average price of $26.76 for a total of approximately $6.4 million.

Cash Flows

The following summary discussion of our cash flows is based on the consolidated statements of cash flows in Item 8. — Financial Statements and Supplementary Data and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Years Ended December 31, 2003 and 2002

Cash and cash equivalents increased by approximately $10.9 million to $69.4 million at December 31, 2003, compared to $58.5 million at December 31, 2002. This increase was the net result of approximately $1,132.3 million provided by operating activities, approximately $744.8 million provided by investing activities (consisting primarily of approximately $1,345.6 million provided by property dispositions partially offset by approximately $577.6 million used for capital and tenant improvements and lease acquisition costs) and approximately $1,866.2 million used for financing activities (consisting primarily of $619.9 million used for Common Share, Unit and preferred unit repurchases and approximately $901.3 million used for distributions to unitholders).

Years Ended December 31, 2002 and 2001

Cash and cash equivalents decreased by approximately $2.7 million to $58.5 million at December 31, 2002, compared to $61.1 million at December 31, 2001. This decrease was the net result of approximately $1,390.9 million provided by operating activities, approximately $85.2 million provided by investing activities (consisting primarily of $377.2 million provided by property dispositions and approximately $167.0 million

released from escrows partially offset by approximately $433.6 million used for capital and tenant improvements and lease acquisition costs) and approximately $1,478.8 million used for financing activities.

Additional Items for 2003

Developments in Process

Developments in process decreased from approximately $284.7 million at December 31, 2002 to approximately $75.2 million at December 31, 2003 due to three developments that were placed in service (Ferry Building, Foundry Square II and Water’s Edge of which total costs incurred at December 31, 2002 were approximately $269.0 million) partially offset by the effect of a previously operational property being re-characterized as held for development during 2003 (Cambridge Science Center of which total costs incurred at December 31, 2003 were approximately $31.6 million) and approximately $27.9 million of expenditures during 2003 on current developments.

Deferred Rent Receivable

Deferred rent receivable increased by approximately $47.4 million to $379.3 million at December 31, 2003, compared to $331.9 million at December 31, 2002. This increase was a result of a $72.2 million increase in receivables recorded from tenants for the current difference between the straight-line rent and the rent that is contractually due from tenants partially offset by an approximate $17.8 million decrease due to the partial sales of office properties in 2003.

Escrow Deposits and Restricted Cash

Escrow deposits primarily consist of amounts held by lenders to provide for future real estate tax expenditures and tenant improvements, earnest money deposits on acquisitions and net proceeds from tax-deferred dispositions. Restricted cash represents amounts committed for various utility deposits and security deposits. Certain of these amounts may be reduced upon the fulfillment of certain obligations. The escrow deposits and restricted cash increased approximately $46.0 million to $75.2 million at December 31, 2003 from $29.2 million at December 31, 2002. The increase was primarily due to proceeds of $50.0 million from the sale of certain properties in 2003 that were deposited into an escrow account pending a tax deferred like kind exchange pursuant to section 1031 of the Internal Revenue Code.

Deferred Leasing Costs and Other Related Intangibles

Deferred leasing costs and other related intangibles increased by approximately $79.6 million to $314.6 million at December 31, 2003, compared to $235.0 million at December 31, 2002. This increase was a result of approximately $142.3 million in new leasing costs and approximately $21.9 million of intangibles recorded in accordance with SFAS No. 141 related to the acquisition of two properties in 2003, partially offset by amortization expense of approximately $66.4 million, and $20.2 million from the partial sales of office properties sold in 2003.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets increased by approximately $71.2 million to $344.9 million at December 31, 2003, compared to $273.7 million at December 31, 2002. This increase was primarily a result of an $18.2 million increase in prepaid real estate taxes, an $11.1 million increase in the market value of our forward-starting interest rate swaps, a $25.0 million equity investment in the joint venture that owns The John Hancock Complex in Boston, Massachusetts, and a $16.8 million increase in our Supplemental Employee Retirement Plan.

Deferred Compensation

Deferred compensation decreased by approximately $9.6 million to approximately $5.9 million at December 31, 2003 compared to $15.5 million at December 31, 2002. This decrease was a result of the

continued amortization of restricted units issued prior to 2003, which were accounted for under APB 25 prior to our adoption of SFAS No. 123.

Market Risk

Qualitative Information About Market Risk

Our future earnings, cash flows and fair values relevant to financial instruments depend upon prevalent market rates for those financial instruments. Market risk is the risk of loss from adverse changes in market prices and interest rates. We manage our market risk by matching projected cash inflows from operating, investing and financing activities with projected cash outflows to fund debt service, acquisitions, capital expenditures, distributions to unitholders and other cash requirements. The majority of our outstanding debt obligations (maturing at various times through 2031) have fixed interest rates which limit the risk of fluctuating interest rates. We utilize certain derivative financial instruments at times to further reduce interest rate risk. Interest rate protection and swap agreements are used to convert some variable rate debt to a fixed rate basis, fixed rate debt to a variable rate basis, or to hedge anticipated financing transactions. Derivatives are used for hedging purposes rather than speculation. We do not enter into financial instruments for trading purposes.

Quantitative Information About Market Risk

Interest Rate Risk — Debt

The tables below disclose the effect of hypothetical changes in market rates of interest on interest expense for variable rate debt and the fair value of total outstanding debt. Interest risk amounts were determined by considering the impact of hypothetical interest rates on our debt. This analysis does not reflect the impact that a changing interest rate environment could have on the overall level of economic activity. Further, in the event of a changing interest rate environment, management would likely take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no change in our financial structure.

Effect on

Effect on Fair

Hypothetical change in

Interest

Effect on Net

Value of

As of

market rates of interest

Expense

Income

Total Debt(a)

December 31, 2003

+10% or 12 basis points

0.4 million

(0.4) million

(213) million

-10% or 12 basis points

(0.4) million

0.4 million

223 million

December 31, 2002

+10% or 14 basis points

0.3 million

(0.3) million

(190) million

-10% or 14 basis points

(0.3) million

0.3 million

197 million


(a)		As of December 31, 2003 and 2002, the fair value of our fixed-rate debt was approximately $1.3 billion and $1.0 billion higher than the book value of approximately $11.1 billion and $11.5 billion, respectively, primarily due to the general decrease in market interest rates on secured and unsecured debt.

Interest Rate Risk — Derivatives

Interest Rate Swaps

During 2002 and 2001, we entered into and terminated several interest rate swap agreements that hedged certain unsecured notes. In each case, we were the variable interest rate payer and the counterparty was the fixed rate payer. The variable interest rates were based on various spreads over LIBOR. The settlement dates corresponded to the interest payment dates of the respective unsecured notes hedged. Each of the interest rate swap agreements were to terminate on the maturity date of the respective unsecured notes hedged. The interest rate swap agreements were designated as fair value hedges. As of December 31, 2002, these interest rate swaps had been terminated.


	Forward-Starting Interest Rate Swaps

As of December 31, 2003 and 2002, we had $1.3 billion and $1.1 billion of forward-starting interest rate swaps outstanding, respectively. The outstanding swaps will hedge the future interest payments of debt anticipated to be issued in 2004. The market value of the forward-starting interest rate swaps at December 31, 2003 represented a net liability to us of approximately $10.4 million (approximately $11.1 million is recorded in other assets and $21.5 million is recorded in other liabilities) and, as of December 31, 2002, was approximately $18.6 million which is included in other liabilities. The entire net market value is also included in accumulated other comprehensive income. No hedge ineffectiveness has been recorded in earnings as these swaps were perfectly effective. As of March 5, 2004, the net market value of these forward-starting interest rate swaps represented a net liability to us of approximately $64.9 million. The market value of the forward-starting interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. If the market interest rates were 50 basis points higher, the value of the swaps would have been approximately $41.4 million and $33.3 million at December 31, 2003 and 2002, respectively. If the market interest rates were 50 basis points lower, our liability under these swaps would have been approximately $65.0 million and $60.5 million at December 31, 2003 and 2002, respectively.

Upon settlement of the swaps, we may be obligated to pay the counterparties a settlement payment, or alternatively to receive settlement proceeds from the counterparties. In accordance with FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities, if the swaps are deemed to be effective hedges upon settlement, any monies paid or received will be amortized to interest expense over the term of the respective hedged interest payments. If the swaps are deemed to be only partially effective hedges upon settlement, a portion of the monies paid or received will be immediately recognized in earnings and the remainder will be amortized to interest expense over the term of the respective hedged interest payments. If the swaps are deemed to be completely ineffective hedges upon settlement, any monies paid or received will be immediately recognized in earnings.

Capital Improvements, Tenant Improvements and Leasing Costs

Capital Improvements

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

• Capital Improvements — improvements that enhance the value of the property such as lobby renovations, roof replacement, significant renovations for Americans with Disabilities Act compliance, chiller replacement and elevator upgrades.

• Development and Redevelopment Costs — include costs associated with the development or redevelopment of a property including tenant improvements, leasing commissions, capitalized interest and operating costs incurred during completion of the property and incurred while the property is made ready for its intended use.

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



			For the years ended December 31,


			2003				2002				2001

					Unconsolidated				Unconsolidated				Unconsolidated
			Consolidated		Properties		Consolidated		Properties		Consolidated		Properties
			Properties		(our share)		Properties		(our share)		Properties		(our share)


			(Dollars in thousands)
Capital Improvements:
	Capital improvements		$	64,052	$	9,222	$	46,662	$	4,544	$	67,536	$	4,577
	Development costs			96,736		5,538		92,214		110,244		141,776		105,370
	Redevelopment costs(a)			8,391		—		32,976		—		17,308		—

		Total capital improvements	$	169,179	$	14,760	$	171,852	$	114,788	$	226,620	$	109,947

(a) Properties included in redevelopment costs for 2003 are the Tabor Center, the Polk and Taylor Buildings and Worldwide Plaza (amenities area). Redevelopments for 2002 included the 500-600 City Parkway, the Tabor Center, the Polk and Taylor Buildings and Worldwide Plaza (amenities area). Redevelopments for 2001 included US Bancorp, 100 Summer and the Tabor Center.

Tenant Improvements and Leasing Costs

Costs related to the renovation, alteration or build-out of existing office space, as well as related leasing costs, are capitalized and depreciated or amortized over the lease term. These tenant improvements may include, but are not limited to, floor coverings, ceilings, walls, HVAC, mechanical, electrical, plumbing and fire protection systems.

The amounts shown below represent the total tenant improvement and leasing costs for leases which commenced during the period, regardless of when such costs were actually paid.



		For the years ended December 31,


		2003				2002				2001

				Total Cost				Total Cost				Total Cost
				per Square				per Square				per Square
		Total Costs		Foot Leased		Total Costs		Foot Leased		Total Costs		Foot Leased


		(Dollars in thousands except per square foot amounts)
*Consolidated Properties:*

Office Properties:
Renewals		$	128,673	$	13.07	$	69,710	$	8.14	$	34,729	$	6.71
Retenanted			248,364		24.31		183,231		18.43		126,845		16.73

Total/ Weighted Average		$	377,037	$	18.79	$	252,941	$	13.67	$	161,574	$	12.67

Industrial Properties:
Renewals		$	1,153	$	3.10	$	2,540	$	2.13		—		—
Retenanted			2,213		3.78		1,153		3.66		110		8.31

Total/ Weighted Average		$	3,366	$	3.51	$	3,693	$	2.45	$	110	$	8.31

*Unconsolidated Joint Ventures(a):*

Renewals		$	17,936	$	24.09	$	2,203	$	7.80	$	1,398	$	5.42
Retenanted			8,026		23.21		4,265		14.07		5,297		13.14

Total/ Weighted Average		$	25,962	$	23.81	$	6,468	$	11.05	$	6,695	$	10.13

*Total Properties (renewals and*

	*retenanted combined):*

Office (consolidated and unconsolidated)		$	402,999	$	19.05	$	259,409	$	13.59	$	168,269	$	12.54
Industrial			3,366		3.51		3,693		2.45		110		8.31

Total/ Weighted Average		$	406,365	$	18.38	$	263,102	$	12.77	$	168,379	$	12.54

(a) Represents our share of unconsolidated joint venture tenant improvement and leasing costs. All joint venture information included above is from office properties.

During 2003, we saw evidence suggesting that contract rents may have begun to stabilize. Tenant improvements and leasing costs, however, have increased significantly due to competitive market conditions for new leases. This has had the effect of reducing net effective rents (contract rents reduced by the impact of tenant improvement costs, leasing commissions and any free rent periods) on lease renewals and retenanted space. This adverse trend may continue until market conditions improve.

The above information includes capital improvements, tenant improvements and leasing costs incurred for leases which commenced during the period shown. The amounts included in the consolidated statement of cash flows represent the cash expenditures made during the period. The differences between these amounts represent timing differences between the lease commencement dates and the dates of the cash expenditures. In addition, the figures below include expenditures for corporate furniture, fixtures and equipment, software, leasehold improvements and other. The reconciliation between the amounts above for the consolidated properties and the amounts disclosed in the consolidated statements of cash flows is as follows:



		For the years ended December 31,

		2003			2002			2001


		(Dollars in thousands)
Total capital improvements		$	169,179		$	171,852		$	226,620
Tenant improvements and leasing costs:
	Office Properties		377,037			252,941			161,574
	Industrial Properties		3,366			3,693			110
Expenditures for corporate furniture, fixtures and equipment, software, leasehold improvements and other			32,397			5,251			34,294
Timing differences			(4,399	)		(93	)		15,106

Total capital improvements, tenant improvements and leasing costs		$	577,580		$	433,644		$	437,704

Capital and tenant improvements from consolidated statement of cash flows		$	435,308		$	328,930		$	360,065
Lease commissions and other costs from consolidated statement of cash flows			142,272			104,714			77,639

Total capital improvements, tenant improvements and leasing costs from the consolidated statement of cash flows		$	577,580		$	433,644		$	437,704

Developments

We own directly several properties in various stages of development or pre-development. These developments are funded by working capital and our line of credit. Specifically identifiable direct acquisition, development and construction costs are capitalized, including, where applicable, salaries and related costs, real estate taxes and interest incurred in developing the property. The properties under development and all figures stated below are as of December 31, 2003.


					Number				Costs		Total		Current
	Estimated Placed				of		Square		Incurred To		Estimated		Percentage
Wholly-Owned	in Service Date(a)		Location		Buildings		Feet		Date		Costs (b)		Leased


	(Dollars in thousands)
Douglas Corporate Center II		3Q/2003		Roseville, CA		1		108,000	$	13,604	$	16,800		73%
Kruse Woods V		4Q/2003		Lake Oswego, OR		1		184,000		30,029		33,900		59%
Cambridge Science Center		2Q/2004		Cambridge, MA		1		131,000		31,599		52,400		19%

						3		423,000	$	75,232	$	103,100		50%

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

(b) The Total Estimated Costs represent 100% of the development’s estimated costs, including the acquisition cost of the land and building, if any. The Total Estimated Costs are subject to change upon, or prior to, the completion of the development and include amounts required to lease the property.

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

Subsequent Events

See Note 26 — Subsequent Events for transactions that occurred subsequent to December 31, 2003 through March 5, 2004.

Inflation

Substantially all of our office leases require the tenant to pay, as additional rent, a portion of real estate taxes and operating expenses. In addition, many of our office leases provide for fixed increases in base rent or indexed escalations (based on the Consumer Price Index or other measures). We believe that the majority of inflationary increases in expenses will be offset, in part, by the expense reimbursements and contractual rent increases described above.

Funds From Operations (“FFO”)

FFO is a non-GAAP financial measure. We believe FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), to be an appropriate measure of performance for a real estate company, for the reasons, and subject to the qualifications, specified in footnote (a) below. The following table reflects the reconciliation of FFO to net income, the most directly comparable GAAP measure, for the periods presented:



	For the years ended December 31,


	2003						2002						2001						2000						1999

				Per Weighted						Per Weighted						Per Weighted						Per Weighted						Per Weighted
	Dollars			Average Unit(b)			Dollars			Average Unit(b)			Dollars			Average Unit(b)			Dollars			Average Unit(b)			Dollars			Average Unit(b)


	(Dollars in thousands, except per unit amounts)
Reconciliation of net income to FFO(a):
Net income	$	729,214		$	1.62		$	859,420		$	1.84		$	694,431		$	1.70		$	530,236		$	1.68			$479,525		$	1.66
Real estate related depreciation and amortization and net gain on sales of real estate, including our share of unconsolidated joint ventures and adjusted for minority interests’ share in partially owned properties		596,481			1.32			707,697			1.51			532,260			1.30			424,845			1.34			308,829			1.07
Extraordinary item		—			—			—			—			1,000			—			—			—			—			—
Cumulative effect of a change in accounting principle		—			—			—			—			1,142			—			—			—			—			—

FFO		1,325,695			2.94			1,567,117			3.35			1,228,833			3.01			955,081			3.02			788,354			2.73
Put option settlement		—			—			—			—			2,655			0.01			(2,576	)		(0.01	)		(5,658	)		(0.02	)
Preferred distributions		(51,872	)		(0.12	)		(62,573	)		(0.13	)		(57,041	)		(0.14	)		(43,348	)		(0.14	)		(43,603	)		(0.15	)

FFO available to unitholders — basic	$	1,273,823		$	2.83		$	1,504,544		$	3.22		$	1,174,447		$	2.87		$	909,157		$	2.88			$739,093		$	2.56


	Net Income			FFO			Net Income			FFO			Net Income			FFO			Net Income			FFO			Net Income			FFO

Adjustments to arrive at FFO available to unitholders plus assumed conversions:
Net income and FFO	$	729,214		$	1,325,695		$	859,420		$	1,567,117		$	694,431		$	1,228,833		$	530,236		$	955,081			$479,525		$	788,354
Put option settlement		—			—			—			—			2,655			2,655			(2,576	)		(2,576	)		(5,658	)		(5,658	)
Preferred distributions		(51,872	)		(51,872	)		(62,573	)		(62,573	)		(57,041	)		(57,041	)		(43,348	)		(43,348	)		(43,603	)		(43,603	)

Net income and FFO available to unitholders		677,342			1,273,823			796,847			1,504,544			640,045			1,174,447			484,312			909,157			430,264			739,093
Preferred distributions on Series B preferred units, of which is assumed to be converted into Units		—			15,724			—			15,724			—			15,727			—			15,750			—			15,750

Net income and FFO available to unitholders plus assumed conversions	$	677,342		$	1,289,547		$	796,847		$	1,520,268		$	640,045		$	1,190,174		$	484,312		$	924,907			$430,264		$	754,843

Weighted average Units, dilutive potential units plus assumed conversions outstanding		452,561,353			460,950,707			469,138,720			477,528,074			411,986,897			420,379,753			318,997,407			327,400,767			291,157,204			299,560,564

Net income and FFO available to unitholders plus assumed conversions per unit	$	1.50		$	2.80		$	1.70		$	3.18		$	1.55		$	2.83		$	1.52		$	2.82			$1.48		$	2.52



	Units and unit equivalents

Weighted average Units outstanding (used for both net income and FFO basic calculation)		450,594,465	467,134,774	408,919,582	316,067,694	288,326,547
Impact of options, restricted shares and put options which are dilutive to both net income and FFO		1,966,888	2,003,946	3,067,315	2,929,713	2,830,657

Weighted average Units and dilutive potential units used for net income available to unitholders		452,561,353	469,138,720	411,986,897	318,997,407	291,157,204
Impact of conversion of Series B preferred units, which are dilutive to FFO, but not net income		8,389,354	8,389,354	8,392,856	8,403,360	8,403,360

Weighted average Units, dilutive potential units plus assumed conversions used for the calculation of FFO available to unitholders plus assumed conversions		460,950,707	477,528,074	420,379,753	327,400,767	299,560,564


(a)		FFO is a non-GAAP financial measure. The most directly comparable GAAP measure is net income, to which it is reconciled.

(b)		FFO per unit may not total the sum of the per unit components in the reconciliation due to rounding.

FFO Definition

FFO is defined as net income, computed in accordance with accounting principles generally accepted in the United States (“GAAP”), excluding gains or losses from sales of properties, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We believe that FFO is helpful to investors as one of several measures of the performance of a real estate company. We further believe that by excluding the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and between other real estate companies. Investors should review FFO, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when trying to understand a real estate company’s operating performance. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. FFO does not represent cash generated from operating activities in accordance with GAAP, nor does it represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and qualitative disclosures about market risk are incorporated herein by reference from Item 7. — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk.

Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT AUDITORS

The Partners of EOP Operating Limited Partnership

We have audited the accompanying consolidated balance sheets of EOP Operating Limited Partnership (“EOP Partnership”) as of December 31, 2003 and 2002, and the related consolidated statements of operations, partners’ capital, net comprehensive income and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and the schedule are the responsibility of EOP Partnership’s management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of EOP Partnership at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, in 2003 EOP Partnership changed its method of accounting for stock-based employee compensation. In addition, in 2002 EOP Partnership changed its method of accounting for discontinued operations.

ERNST & YOUNG LLP

Chicago, Illinois

February 5, 2004, except for Note 26

as to which the date is March 5, 2004

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS



					December 31,

					2003			2002


					(Dollars in thousands,
					except per unit amounts)
Assets:
	Investments in real estate				$	23,985,839		$	24,625,927
	Developments in process					75,232			284,737
	Land available for development					251,151			252,852
	Accumulated depreciation					(2,578,082	)		(2,077,613	)

		Investments in real estate, net of accumulated depreciation				21,734,140			23,085,903
	Cash and cash equivalents					69,398			58,471
	Tenant and other receivables (net of allowance for doubtful accounts of $6,490 and $11,695, respectively)					79,880			77,597
	Deferred rent receivable					379,329			331,932
	Escrow deposits and restricted cash					75,186			29,185
	Investments in unconsolidated joint ventures					1,127,232			1,087,815
	Deferred financing costs (net of accumulated amortization of $48,176 and $48,801, respectively)					64,337			67,151
	Deferred leasing costs and other related intangibles (net of accumulated amortization of $157,445 and $115,710, respectively)					314,568			235,002
	Prepaid expenses and other assets (net of discounts of $66,200 and $66,557, respectively)					344,940			273,727

			Total Assets		$	24,189,010		$	25,246,783

Liabilities, Minority Interests, Mandatorily Redeemable Preferred Units and Partners’ Capital:
Liabilities:
	Mortgage debt (including a net discount of $(13,663) and $(12,584), respectively)				$	2,315,889		$	2,507,890
	Unsecured notes (including a net premium of $12,412 and $41,151, respectively)					8,828,912			9,057,651
	Line of credit					334,000			205,700
	Accounts payable and accrued expenses					573,069			560,101
	Distribution payable					3,899			5,654
	Other liabilities					398,273			391,963
	Commitments and contingencies					—			—

			Total Liabilities			12,454,042			12,728,959

	Minority interests — partially owned properties					183,863			185,809

	Mandatorily Redeemable Preferred Units:
		5.25% Series B Convertible, Cumulative Redeemable Preferred Units, liquidation preference $50.00 per unit, 5,990,000 issued and outstanding				299,500			299,500

	Partners’ Capital:
		Preferred Units, 100,000,000 authorized:
			8.625% Series C Cumulative Redeemable Preferred Units, liquidation preference $25.00 per unit, 4,562,900 issued and outstanding			114,073			114,073
			7.875% Series E Cumulative Redeemable Preferred Units, liquidation preference $25.00 per unit, 0 and 6,000,000 issued and outstanding, respectively			—			150,000
			8.0% Series F Cumulative Redeemable Preferred Units, liquidation preference $25.00 per unit, 0 and 4,000,000 issued and outstanding, respectively			—			100,000
			7.75% Series G Cumulative Redeemable Preferred Units, liquidation preference $25.00 per unit, 8,500,000 issued and outstanding			212,500			212,500
		Other Partners’ Capital:
			General Partners Capital			85,086			89,650
			Limited Partners Capital			10,855,488			11,399,979
			Deferred compensation			(5,889	)		(15,472	)
			Accumulated other comprehensive loss			(9,653	)		(18,215	)

				Total Partners’ Capital		11,251,605			12,032,515

				Total Liabilities, Minority Interests, Mandatorily Redeemable Preferred Units and Partners’ Capital	$	24,189,010		$	25,246,783

See accompanying notes.

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS



						For the years ended December 31,

						2003			2002			2001


						(Dollars in thousands,
						except per unit amounts)
Revenues:
	Rental					$	2,536,774		$	2,616,884		$	2,325,332
	Tenant reimbursements						442,599			483,714			432,078
	Parking						111,455			113,151			123,207
	Other						88,943			130,110			70,444
	Fee income						15,861			15,907			15,085

				Total revenues			3,195,632			3,359,766			2,966,146

Expenses:
	Depreciation						650,235			611,038			512,126
	Amortization						65,313			51,837			41,202
	Real estate taxes						351,537			360,488			331,182
	Insurance						29,973			39,626			20,461
	Repairs and maintenance						335,529			339,556			289,347
	Property operating						409,540			409,025			367,632
	Ground rent						20,287			20,325			16,692
	Corporate general and administrative						62,479			65,790			42,321
	Impairment						7,500			—			135,220

				Total expenses			1,932,393			1,897,685			1,756,183

					Operating income		1,263,239			1,462,081			1,209,963

Other income/expense:
	Interest/dividend income						12,583			22,148			40,015
	Realized gain on sale of marketable securities						9,286			—			—
	Interest:
			Expense incurred				(820,359	)		(809,681	)		(727,560	)
			Amortization of deferred financing costs and prepayment expenses				(6,976	)		(4,964	)		(15,026	)

				Total other income/expense			(805,466	)		(792,497	)		(702,571	)

Income before income taxes, allocation to minority interests, income from investments in unconsolidated joint ventures and net gain on sales of real estate							457,773			669,584			507,392
Income taxes							(5,373	)		(9,126	)		(8,745	)
Minority interests — partially owned properties							(8,116	)		(7,200	)		(8,685	)
Income from investments in unconsolidated joint ventures							79,882			106,852			69,203
Net gain on sales of real estate							99,110			—			81,662

Income from continuing operations							623,276			760,110			640,827
Discontinued operations (including net gain on sales of real estate of $61,953, $17,926 and $0, respectively)							105,938			99,310			55,746

Income before extraordinary item and cumulative effect of change in accounting principle							729,214			859,420			696,573
Extraordinary item							—			—			(1,000	)
Cumulative effect of change in accounting principle							—			—			(1,142	)

Net income							729,214			859,420			694,431
Put option settlement							—			—			2,655
Preferred distributions							(51,872	)		(62,573	)		(57,041	)

Net income available to unitholders						$	677,342		$	796,847		$	640,045

Earnings per unit — basic:
		Income from continuing operations per unit				$	1.27		$	1.49		$	1.43

		Net income available to unitholders per unit				$	1.50		$	1.71		$	1.57

		Weighted average Units outstanding					450,594,465			467,134,774			408,919,582

Earnings per unit — diluted:
		Income from continuing operations per unit				$	1.26		$	1.49		$	1.42

		Net income available to unitholders per unit				$	1.50		$	1.70		$	1.55

		Weighted average Units outstanding and dilutive potential units					452,561,353			469,138,720			411,986,897

Distributions declared per Unit outstanding						$	2.00		$	2.00		$	1.90

See accompanying notes.

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL



		For the years ended December 31,

		2003			2002			2001


		(Dollars in thousands)
Mandatorily Redeemable Preferred Units:
Balance, beginning of period		$	299,500		$	299,500		$	300,000
	Conversion of Series B Cumulative Redeemable Preferred Units to Units		—			—			(500	)

Balance, end of period		$	299,500		$	299,500		$	299,500

Partners’ Capital:
Balance, beginning of period		$	12,047,987		$	12,452,021		$	7,380,942
	Issuance of Units for Spieker Partnership merger		—			—			3,464,625
	Issuance of share options in the Spieker Partnership merger		—			—			18,701
	Redemption of Units for cash		(6,427	)		(106,690	)		(1,245	)
	Issuance of Units through exercise of share options		37,744			40,015			72,359
	Offering costs		(257	)		(7,042	)		(65	)
	Units issued for restricted units, trustee fees and for the dividend reinvestment plan, net of restricted units retired, net of cancellations		—			11,872			15,246
	Compensation expense related to restricted units and stock options issued to employees by Equity Office		7,500			—			—
	Common Shares and Units repurchased by EOP Partnership		(363,486	)		(196,882	)		—
	Conversion of Series B Cumulative Redeemable Preferred Units to Units		—			—			500
	9.45% Series D Cumulative Redeemable Preferred Units issued in the Spieker Partnership merger		—			—			106,250
	7.875% Series E Cumulative Redeemable Preferred Units issued in the Spieker Partnership merger		—			—			150,000
	8.0% Series F Cumulative Redeemable Preferred Units issued in the Spieker Partnership merger		—			—			100,000
	Issuance of 7.75% Series G Cumulative Redeemable Preferred Units		—			212,500			—
	Preferred units redeemed		(250,000	)		(199,850	)		(106,250	)
	Reclassification of redeemable units		—			—			1,426,359
	Put option settlement		—			—			(1,467	)
	Preferred distributions, net		(51,872	)		(62,573	)		(57,041	)
	Distributions declared to partners		(901,472	)		(936,705	)		(839,463	)

Balance, end of period		$	10,519,717		$	11,206,666		$	11,729,451

Comprehensive Income:
Net income		$	729,214		$	859,420		$	694,431
Other comprehensive income (loss):
	Unrealized holding loss on forward starting interest rate swaps		2,220			(18,611	)		—
	Reversal of unrealized holding loss on settlement of forward starting interest rate swap		5,942			—			—
	Proceeds from settlement of forward starting interest rate swap		768			—			—
	Accumulated amortization of proceeds from settlement of forward starting interest rate swap		(73	)		—			—
	Unrealized holding gains (losses) from investments		848			396			(2,699	)
	Reclassification adjustment for realized gains included in net income		(1,142	)		116			—
	Recognition of permanent impairment on marketable securities		—			—			30,838

Net comprehensive income			737,777			841,321			722,570

Balance, end of period		$	11,257,494		$	12,047,987		$	12,452,021

Deferred Compensation:
Balance, beginning of period		$	(15,472	)	$	(19,822	)	$	(14,871	)
	Restricted units granted		—			(17,060	)		(17,519	)
	Restricted units retired		—			7,669			3,328
	Amortization of restricted units		9,583			13,741			9,240

Balance, end of period		$	(5,889	)	$	(15,472	)	$	(19,822	)

See accompanying notes.

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS



					For the years ended December 31,

					2003			2002			2001


					(Dollars in thousands)
Operating Activities:
	Net income				$	729,214		$	859,420		$	694,431
	Adjustments to reconcile net income to net cash provided by operating activities:
		Revenue recognized related to acquired lease obligations, net				(68	)		—			—
		Interest/dividend income accrued but not received				—			—			(9,852	)
		Amortization of discounts included in interest/dividend income				(357	)		(856	)		(2,919	)
		Amortization of deferred revenue included in other income				—			—			(3,073	)
		Depreciation and amortization (including discontinued operations)				737,102			695,892			590,214
		Amortization of premiums/discounts on unsecured notes and settled interest rate protection agreements included in interest expense				(19,904	)		(7,183	)		3,167
		Compensation expense related to restricted shares and share options issued to employees by Equity Office				17,094			14,961			9,240
		Impairments				7,500			—			135,220
		Income from investments in unconsolidated joint ventures				(79,882	)		(106,852	)		(69,203	)
		Net gain on sales of real estate (including discontinued operations)				(161,063	)		(17,926	)		(81,662	)
		Extraordinary items				—			—			1,000
		Cumulative effect of a change in accounting principle				—			—			1,142
		Provision for doubtful accounts				12,803			27,995			26,124
		Income allocated to minority interests				8,116			7,200			8,685
		Changes in assets and liabilities:
			(Increase) decrease in rents receivable			(6,893	)		30,236			(22,655	)
			(Increase) in deferred rent receivable			(72,240	)		(77,123	)		(75,555	)
			(Increase) in prepaid expenses and other assets			(8,409	)		(27,861	)		(5,051	)
			(Decrease) increase in accounts payable and accrued expenses			(17,487	)		(22,883	)		21,434
			(Decrease) increase in other liabilities			(13,223	)		15,929			20,914

				Net cash provided by operating activities		1,132,303			1,390,949			1,241,601

Investing Activities:
	Property acquisitions					(189,415	)		(53,067	)		(104,748	)
	Acquisition of Spieker Partnership					—			—			(1,076,957	)
	Property dispositions					1,345,554			377,150			361,353
	Capital and tenant improvements					(435,308	)		(328,930	)		(360,065	)
	Lease commissions and other costs					(142,272	)		(104,714	)		(77,639	)
	Decrease in escrow deposits and restricted cash					23,329			167,026			28,064
	Distributions from unconsolidated joint ventures					176,012			199,665			131,983
	Investments in unconsolidated joint ventures					(34,378	)		(198,040	)		(249,893	)
	Redemption of CT Convertible Trust I preferred stock					—			20,086			—
	Investment in securities					—			—			(683	)
	Repayments of notes receivable					1,299			5,997			382

				Net cash provided by (used for) investing activities		744,821			85,173			(1,348,203	)

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)



			For the years ended December 31,

			2003			2002			2001


			(Dollars in thousands)
Financing Activities:
	Proceeds from mortgage debt		$	—		$	14,427		$	140,000
	Principal payments on mortgage debt			(233,809	)		(156,052	)		(458,731	)
	Prepayment penalties on early extinguishment of debt			—			—			(5,000	)
	Proceeds from unsecured notes			494,810			239,127			1,386,598
	Repayment of unsecured notes			(700,000	)		(310,000	)		(100,000	)
	Proceeds from lines of credit			5,215,400			1,336,350			3,206,050
	Principal payments on lines of credit			(5,087,100	)		(1,374,950	)		(3,152,036	)
	Payments of loan costs			(8,678	)		(4,296	)		(10,481	)
	Proceeds from settlement of interest rate swap agreements			768			42,810			47,369
	Distributions to minority interests in partially owned properties			(10,062	)		(10,401	)		(5,878	)
	Payment of offering costs			(257	)		(187	)		(65	)
	Proceeds from exercise of share options			37,744			40,015			71,835
	Distributions to unitholders			(901,259	)		(935,083	)		(837,659	)
	Repurchase of Units through Equity Office’s common share repurchase program			(363,486	)		(196,882	)		—
	Redemption of Units			(6,427	)		(106,690	)		(1,245	)
	Redemption of preferred units			(250,000	)		(199,850	)		(106,250	)
	Issuance of preferred units			—			205,645			—
	Put option settlement			—			—			(1,467	)
	Payment of preferred distributions			(53,841	)		(62,755	)		(58,573	)

		Net cash (used for) provided by financing activities		(1,866,197	)		(1,478,772	)		114,467

	Net increase (decrease) in cash and cash equivalents			10,927			(2,650	)		7,865
	Cash and cash equivalents at the beginning of the year			58,471			61,121			53,256

	Cash and cash equivalents at the end of the year		$	69,398		$	58,471		$	61,121

Supplemental Information:
	Interest paid during the period, including a reduction of interest expense for capitalized interest of $10,089, $21,447 and $25,871, respectively		$	849,337		$	836,573		$	679,537

EOP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)



				For the years ended December 31,

				2003			2002			2001


				(Dollars in thousands)
Non-Cash Investing and Financing Activities:
	Investing Activities:
		Escrow deposits related to property dispositions		$	(69,330	)	$	(70,025	)	$	(184,458	)

		Mortgage loan repayment as a result of a property disposition		$	(16,279	)	$	—		$	—

		Mortgage loan assumed upon consolidation of property		$	59,166		$	—		$	—

		Escrow deposits used for property acquisition		$	—		$	70,030		$	—

		Changes in accounts due to partial sales of real estate:
			Increase in investments in unconsolidated joint ventures	$	155,710		$	—		$	—

			Decrease in investment in real estate	$	(169,390	)	$	—		$	—

			Decrease in accumulated depreciation	$	19,336		$	—		$	—

			Decrease in other assets and liabilities	$	(4,460	)	$	—		$	—

	Financing Activities:
		Mortgage loan repayment as a result of a property disposition		$	16,279		$	—		$	—

		Mortgage loan assumed upon consolidation of property		$	(59,166	)	$	—		$	—

		Issuance of unsecured notes at a discount of $10,048 in exchange for $250 million MandatOry Par Put Remarketed Securities^SM		$	—		$	(254,631	)	$	—

		Exchange of $250 million MandatOry Par Put Remarketed Securities^SM, including an unamortized premium of $4,631, for $264,679 notes due 2012 issued in February 2002		$	—		$	254,631		$	—

		Mortgage loans, unsecured notes and line of credit assumed in the Spieker Partnership merger		$	—		$	—		$	2,125,610

		Net liabilities assumed in the Spieker Partnership merger		$	—		$	—		$	125,558

		Minority interests in partially owned properties assumed in the Spieker Partnership merger		$	—		$	—		$	1,272

		Units and share options issued in the Spieker Partnership merger		$	—		$	—		$	3,483,326

		Preferred units issued in the Spieker Partnership merger		$	—		$	—		$	356,250

See accompanying notes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 —	BUSINESS AND FORMATION OF EOP PARTNERSHIP

EOP Operating Limited Partnership (“EOP Partnership”) is a Delaware limited partnership. Our general partner is Equity Office Properties Trust (“Equity Office”), a Maryland real estate investment trust (“REIT”). The use of the word “we”, “us”, or “our” refers to EOP Partnership and its subsidiaries, except where the context otherwise requires. We were organized in 1996 to continue and expand the national office property business organized by Mr. Samuel Zell, the Chairman of the Board of Trustees of Equity Office, and to complete the consolidation of our predecessors. Equity Office completed its initial public offering (the “IPO”) on July 11, 1997, having sold its common shares of beneficial interest, $0.01 par value per share (“Common Shares”). The net proceeds from the IPO were contributed to us in exchange for units of partnership interest (“Units”). Equity Office has elected to be taxed as a REIT for federal income tax purposes and generally will not be subject to federal income tax if it distributes 100% of its taxable income and complies with a number of organizational and operational requirements.

We are a fully integrated, self-administered and self-managed real estate company principally engaged, through our subsidiaries, in owning, managing, leasing, acquiring and developing office properties. At December 31, 2003, we owned or had an interest in 684 office properties comprising approximately 122.3 million rentable square feet of office space in 18 states and the District of Columbia and were located in 27 markets and 124 submarkets (the “Office Properties”). On a weighted average basis, the Office Properties were 86.3% occupied at December 31, 2003. Approximately 42.3% of the rentable square feet is located in central business districts and approximately 57.7% of the rentable square feet is located in suburban markets. At December 31, 2003, we also owned 75 industrial properties comprising approximately 5.8 million square feet of industrial space (the “Industrial Properties” and together with the Office Properties, the “Properties”) and approximately 0.4 million square feet of office properties under development. On a weighted average basis, the Industrial Properties were 86.6% occupied at December 31, 2003.


NOTE 2 —	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements represent our financial condition and results of operations and those of our subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Property holding entities and other subsidiaries of which we own 100% of the equity are consolidated. For those joint ventures of which we own less than 100% of the equity interest, we consolidate the property if we have the direct or indirect ability to make decisions about the entities’ activities based on the terms of the respective joint venture agreements which specify the sharing of participating and protective rights such as decisions regarding major leases, encumbering the entities with debt and whether to dispose of entities. We would also consolidate certain property holding entities and other subsidiaries if we own less than a 100% equity interest if we are deemed to be the primary beneficiary in a variable interest entity (as defined in FASB Interpretation 46 Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, as revised (“FIN 46”)).

Investments in Real Estate

Rental property and improvements, including interest and other costs capitalized during construction, are included in investments in real estate and are stated at cost. Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements, which improve or extend the useful life of the assets, are capitalized. Rental property and improvements, excluding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)


NOTE 2 —	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued)

land, are depreciated over their estimated useful lives using the straight-line method. The estimated useful lives by asset category are:


Asset Category	Estimated Useful Life

Building		23-40 years
Building improvements		3-40 years
Tenant improvements		Term of lease
Furniture and fixtures		3-12 years

In accordance with Statement of Financial Accounting Standards No. 141 Business Combinations (“Statement 141”), we allocate the purchase price of real estate to land, building, tenant improvements and, if determined to be material, intangibles, such as the value of above, below and at-market leases, origination costs associated with the in-place leases, and the value of tenant relationships, if any. We depreciate the amount allocated to building and other intangible assets over their estimated useful lives, which generally range from three to 40 years. The values of the above and below market leases are amortized and recorded as either an increase (in the case of below market leases) or a decrease (in the case of above market leases) to rental income over the remaining term of the associated lease. The value associated with in-place leases and tenant relationships is amortized over the expected term, which includes an estimated probability of the lease renewal, and its estimated term. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date).

In accordance with Statement 141 and its applicability to acquired in-place leases, we perform (or engage a third party to perform) the following procedures for properties we acquire:

1) estimate the value of the real estate “as if vacant” as of the acquisition date;

2) allocate that value among land, building improvements, building, and equipment and determine the associated asset life for each;

3) compute the value of the difference between the “as if vacant” value and the purchase price, which will represent the total intangible assets;

4) allocate the value of the above and below market leases to the intangible assets and determine the associated life of the above/below market leases;

5) calculate the value and associated life of the tenant relationships, if any, by taking the direct identifiable benefits of the customer relationship and discounting them to present value;

6) estimate the fair value of the in-place tenant improvements and leasing commissions and calculate the associated asset life; and

7) allocate the remaining intangible value to the in-place leases and their associated lives.

Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis) from a rental property over the anticipated holding period is less than its historical net cost basis. Upon determination that a permanent impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time we have a commitment to sell the property which is not subject to any significant contingencies. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)


NOTE 2 —	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued)

The FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long Lived Assets. Statement 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The provisions of Statement 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. We adopted the standard in 2002 and it did not have a material effect on our financial condition or results of operations.

Developments in process are carried at cost, which includes land acquisition cost, architectural fees, general contractor fees, capitalized interest, internal costs related directly to the development and other costs related directly to the construction of the property. Depreciation is not recorded until the property is placed in service, which occurs shortly after receipt of a certificate of occupancy.

Land available for development is carried at cost and is not depreciated. Land available for development includes various vacant land parcels that may have some improvements such as utility service.

Investments in Unconsolidated Joint Ventures

Investments in unconsolidated joint ventures are accounted for using the equity method of accounting because we do not have control over the activities of the investees. Our net equity investment is reflected on the consolidated balance sheets, and the consolidated statements of operations include our share of net income or loss from the unconsolidated joint ventures. Any difference between the carrying amount of these investments on our consolidated balance sheet and the historical cost of the underlying equity is depreciated as an adjustment to income from unconsolidated joint ventures generally over 40 years.

Deferred Leasing and Financing Costs

Deferred leasing and financing costs, which consist of, but are not limited to, commissions paid to third parties for new or renewal leases, and fees paid to third parties for unsecured note offerings and mortgage debt, are recorded at cost. The deferred leasing costs are amortized over the terms of the respective leases and the deferred financing costs are amortized over the terms of the respective financings on a straight-line basis, which approximates the effective yield method. We also record deferred leasing costs in accordance with Statement 141 when allocating the purchase price to acquired in-place leases (see Investment in Real Estate above).

Revenue Recognition

We record rental income for the full term of each lease on a straight-line basis. Certain leases provide for tenant occupancy during periods for which no rent is due or where minimum rent payments increase during the term of the lease. Accordingly, a receivable is recorded from tenants for the current difference between the straight-line rent and the rent that is contractually due from the tenant (“Deferred Rent Receivable”). When a property is acquired, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. The amounts included in rental income for the years ended December 31, 2003, 2002 and 2001 were approximately $73.1 million, $67.4 million and $66.5 million from continuing operations, respectively. Deferred rental revenue is not recognized for income tax purposes.

Tenant reimbursements consisting of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs are recognized as revenue in the period in which the expenses are incurred.

Lease termination income (included in other revenue) represents amounts received from tenants in connection with the early termination of their remaining lease obligation. We will also record deferred revenue in connection with a lease termination fee received if it is probable that a tenant will file for bankruptcy within

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued)

90 days, if significant contingencies in the lease termination agreement exist or if the tenant has not yet vacated the building.

We recognize income from rent, tenant reimbursements and lease termination fees and other income once all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104:

• the agreement has been fully executed and delivered;

• services have been rendered;

• the amount is fixed or determinable; and

• the collectibility is reasonably assured.

Cash Equivalents

Cash equivalents are considered to be all highly liquid investments purchased with a maturity of three months or less at the date of purchase.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is maintained for estimated losses resulting from the inability of certain tenants to meet the contractual obligations under their lease agreements. Management actively reviews tenant receivables and determines the probability of collection for receivables identified as potentially uncollectible. The amount of the allowance takes into account any security deposits or outstanding letters of credit.

Escrow Deposits and Restricted Cash

Fair Value of Financial Instruments and Other Assets

Investments in notes receivable approximate their fair value and are included in other assets.

We have debt at fixed and variable rates. The fair market value of variable rate debt approximates book value because the interest rate is based on LIBOR plus a credit premium, which represents a market rate. The fair value of the fixed-rate mortgage debt and unsecured notes as of December 31, 2003 was approximately $1.3 billion higher than the book value of approximately $11.1 billion primarily due to the general decrease in market interest rates on secured and unsecured debt. As of December 31, 2002, the fair value of our fixed-rate debt was approximately $1.0 billion higher than the book value. The fair value of the mortgage debt and the unsecured notes was determined by discounting the spread between the future contractual interest payments and the future interest payments based on a market rate. The fair value of interest rate swap agreements is determined using third party valuations. In addition, the carrying values of cash equivalents, restricted cash, escrow deposits, tenant and other rents receivable, prepaid expenses and other assets, accounts payable and accrued expenses and other liabilities approximate their fair value.

Derivatives and Hedging Activities

We may periodically enter into certain interest rate protection and swap agreements to effectively convert floating rate debt to a fixed rate basis, fixed rate debt to a floating rate basis, as well as to hedge anticipated future financing transactions. Net amounts paid or received under these agreements upon their periodic reset dates are recognized as an adjustment to interest expense when such amounts are incurred or earned.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)


NOTE 2 —	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued)

Settlement amounts paid or received in connection with settled interest rate protection agreements and interest rate swap agreements are deferred and amortized as an adjustment to interest expense over the remaining term of the related financing transaction on a straight-line basis, which approximates the effective yield method.

All derivative instruments are recorded at fair value. Derivatives that are not hedges must be adjusted to fair value through net income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be offset against the corresponding change in fair value of the hedged asset, liability, or firm commitments through net income or recognized in other comprehensive income until the hedged item is recognized in net income. The ineffective portion of a derivative’s change in fair value will be recognized in net income. We recorded a cumulative effect of a change in accounting principle resulting in a loss of approximately $1.1 million in the year ended December 31, 2001 as a result of adopting FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”).

Income Taxes

We are generally not liable for federal taxes because our partners recognize their proportionate share of our income or loss on their tax returns. The Office Properties and Industrial Properties are primarily owned by limited partnerships or limited liability companies, which are substantially pass-through entities. Some of the pass-through entities have corporate general partners or members, which are subject to federal and state income and franchise taxes. In addition, our property management business which provides management services to Properties owned by third parties and provides certain other services to many of our Properties is owned by a corporation and is subject to federal and state income and franchise taxes.

Equity Office has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, Equity Office generally will not be subject to federal income tax if it distributes 100% of its annual taxable income to its shareholders. REITs are subject to a number of organizational and operational requirements. If Equity Office fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates. Even if Equity Office qualifies for taxation as a REIT, Equity Office may be subject to state and local income taxes and to federal income tax and excise tax on its undistributed income. In addition, taxable income from Equity Office’s taxable REIT subsidiaries is subject to federal, state and local income taxes. The aggregate cost of land and depreciable property for federal income tax purposes as of December 31, 2003 and 2002 was approximately $14.4 billion and $14.8 billion, respectively.

Minority Interests — Partially Owned Properties

We consolidate certain Properties that we control, but do not wholly own. The minority interests share of the equity of these consolidated Properties is reflected in the consolidated balance sheets as “Minority interests — partially owned properties” and represents the minority interests’ share in the total equity of these Properties. The net income from these properties attributable to the minority interests is reflected as “Minority interests — Partially owned properties” in the consolidated statements of operations.

In May 2003, the Financial Accounting Standards Board (“FASB”) issued Statement No. 150 Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“Statement 150”). Statement 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. Statement 150 is effective for all financial instruments created or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003 (July 1, 2003 for calendar quarter companies). We adopted Statement 150 on July 1, 2003, which had no effect on our financial statements. Several of the Properties that we consolidate but do not wholly own are subject to finite life joint

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)


NOTE 2 —	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued)

venture agreements. Statement 150 requires the disclosure of the estimated settlement value of these noncontrolling interests. As of December 31, 2003 the estimated settlement value of these noncontrolling interests approximated the book value of approximately $169.7 million.

Use of Estimates

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

Reclassifications

Certain reclassifications have been made to the previously reported 2002 and 2001 statements in order to provide comparability with the 2003 statements reported herein. These reclassifications have not changed the 2002 or 2001 results of operations or combined partners’ capital and mandatorily redeemable preferred units.

Share Based Employee Compensation Plans

Prior to January 1, 2003, we used the accounting provisions provided by Accounting Principles Board Opinion No. 25 (“APB 25”) to account for the issuance of share options and other equity awards. Effective January 1, 2003, we adopted Statement of Financial Accounting Standards No. 123 (“Statement 123”) Accounting for Stock Based Compensation, which requires a fair value based accounting method for determining compensation expense associated with the issuance of share options and other equity awards. We adopted the accounting provisions of Statement 123 to reflect the cost of issuing share options and other equity awards. Statement of Financial Accounting Standards No. 148 (“Statement 148”) Accounting for Stock-Based Compensation — Transition and Disclosure — an Amendment of FASB Statement No. 123, issued December 2002 and effective for interim periods beginning after December 15, 2002, provided various methods of applying Statement 123. In accordance with Statement 148, we employed the prospective method for adopting Statement 123, which requires the recognition of compensation expense based on the fair value method for share options and other equity awards granted on or after January 1, 2003 and for certain modifications made subsequent to December 31, 2002 to share options and other equity awards that were outstanding as of December 31, 2002. Compensation expense is recognized ratably over the respective vesting period of the award.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued)

The following table illustrates the unaudited effect on net income available to unitholders and earnings per unit if the fair value based method had been applied to all outstanding and unvested share options for the last three years. Compensation expense related to restricted share awards is not presented in the table below because the expense amount is the same under APB No. 25 and Statement 123 and therefore, is already reflected in net income.



		For the years ended December 31,

		2003			2002			2001


		(Dollars in thousands,
		except per unit data)
Historical net income available to unitholders		$	677,342		$	796,847		$	640,045
Add back compensation expense for share options included in historical net income available to unitholders			2,907			1,265			—
Deduct compensation expense for share options determined under fair value based method			(10,916	)		(12,117	)		(11,928	)

Pro forma net income available to unitholders		$	669,333		$	785,995		$	628,117

Earnings per unit — basic:
	Historical net income available to unitholders	$	1.50		$	1.71		$	1.57
	Pro forma net income available to unitholders	$	1.49		$	1.68		$	1.54
Earnings per unit — diluted:
	Historical net income available to unitholders	$	1.50		$	1.70		$	1.55
	Pro forma net income available to unitholders	$	1.48		$	1.68		$	1.52

NOTE 3 — IMPACT OF NEW ACCOUNTING STANDARDS

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. The objective of this Interpretation is to provide guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, non-controlling interests, and results of operations of a VIE need to be included in consolidated financial statements. A company that holds variable interests in an entity will need to consolidate such entity if the company absorbs a majority of the VIE’s expected losses or receive a majority of the entity’s expected residual returns if they occur, or both.

The provisions of FIN 46 apply upon initial involvement with the respective entity for transactions created after January 31, 2003. The adoption in 2003 had no effect on us. The provisions of FIN 46 and related revised interpretations apply no later than the end of the first interim reporting period ending March 15, 2004 (March 31, 2004) for entities created before February 1, 2003.

In 1999, we invested in a 67% share of a $202.2 million mezzanine-level debt position for approximately $73.9 million as part of a debt restructuring related to the SunAmerica Center office property located in Century City, California which consists of approximately 780,000 square feet. The note accrues interest at 7.25% per annum and matures in August 2014 and is payable based on cash flow. We recognize interest income from this investment on a cash basis. We also have an option to acquire 67% of the $15.0 million face amount of two other subordinate notes from an affiliate of the property owner. We have accounted for our investment as a note receivable included in other assets.

Under the provisions of FIN 46, we are required to consolidate the financial condition and results of operations of SunAmerica Center effective January 1, 2004. Our maximum exposure to loss as a result of the investment is equivalent to the $73.9 million we invested in 1999. However, we may be required to contribute additional funds to support the operations of the property. Any additional funding will be in the form of a shortfall note, which is repayable from available cash flow. The shortfall notes may not exceed $2.5 million in the aggregate. As of December 31, 2003, SunAmerica Center’s total assets were approximately $300 million

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 3 — IMPACT OF NEW ACCOUNTING STANDARDS — (continued)

and total liabilities were approximately $235 million. Our only recourse is against the mezzanine lender entity’s sole interest in the property-owning entity. The property is encumbered by a $203 million first mortgage owed to a third party.

NOTE 4 — SPIEKER MERGER

On July 2, 2001, Spieker Properties, Inc. (“Spieker”) merged into Equity Office and Spieker Properties, L.P. (“Spieker Partnership”), Spieker’s operating partnership subsidiary, merged into EOP Partnership (collectively, the “Spieker Partnership merger”) which was accounted for using the purchase method. The transaction valued Spieker (including the outside interests in Spieker Partnership) at approximately $7.2 billion, which included transaction costs, the assumption of approximately $2.1 billion in debt and the issuance of 14.25 million of our preferred units valued at approximately $356.3 million. We paid approximately $1.1 billion in cash and Equity Office issued approximately 101.5 million Common Shares and we issued approximately 16.7 million Units to third parties, each valued at $29.29 per Common Share/Unit. We financed the $1.1 billion cash portion of the purchase price using a combination of available cash and a new $1.0 billion bridge loan facility that was entered into before the closing of the Spieker Merger. The $1.0 billion bridge loan facility had a term of 364 days and an interest rate based on LIBOR plus 80 basis points. The $1.0 billion bridge loan facility was repaid in full with the net proceeds from the issuance of $1.4 billion of unsecured notes in July 2001 and terminated upon the repayment. Through the Spieker Partnership merger, we acquired 391 Office Properties comprising approximately 28.3 million square feet, 98 Industrial Properties comprising approximately 10.1 million square feet and several development properties which added to our ownership in key markets across the western United States.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:


		(Dollars in thousands)

Investment in real estate		$	7,168,973
Other assets			47,824

	Total assets acquired		7,216,797

Mortgage debt, unsecured notes and lines of credit			(2,125,610	)
Other liabilities			(173,382	)

	Total liabilities assumed		(2,298,992	)

Minority interest in partially owned properties			(1,272	)

Common Shares, Units and stock options issued			(3,483,326	)
Preferred units issued			(356,250	)

	Total equity issued		(3,839,576	)

Total cash used for Spieker Partnership merger		$	(1,076,957	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 5 — INVESTMENTS IN REAL ESTATE

Investments in real estate, including Office Properties, Industrial Properties, properties under development and vacant land, was as follows:



		December 31,

		2003			2002


		(Dollars in thousands)
Land		$	2,737,533		$	2,878,102
Land available for development			251,151			252,852
Building			19,479,760			20,545,623
Building improvements			691,111			446,808
Tenant improvements			971,780			683,142
Furniture and fixtures			105,655			72,252
Developments in process			75,232			284,737

	Gross investments in real estate		24,312,222			25,163,516
Accumulated depreciation			(2,578,082	)		(2,077,613	)

	Net investments in real estate	$	21,734,140		$	23,085,903

During 2003, we acquired the U.S. Bank Tower and 225 West Santa Clara (a/k/a the Opus Center) office buildings for approximately $183.2 million. The office properties are located in Denver, Colorado and San Jose, California, respectively, and consist of approximately 829,293 square feet.

In May 2003, we acquired approximately 8.1% of the equity in the joint venture that owns The John Hancock Complex in Boston, Massachusetts for approximately $25.0 million. The investment in the joint venture is accounted for under the cost method of accounting because we own a noncontrolling interest in the property and is included in prepaid expenses and other assets on the consolidated balance sheet.

In September 2003, we acquired the remaining 20% equity interest in Key Center (see Note 9 — Investments in Unconsolidated Joint Ventures for more information).

In September 2003, we acquired a vacant land parcel in Folsom, California, for approximately $3.4 million.

During 2002, we acquired the Army and Navy Club Building and Liberty Plaza for a total of approximately $92.3 million from an unaffiliated party. These properties are located in Washington, D.C. and consists of approximately 260,372 square feet of office space.

During 2001, in addition to the properties acquired in the Spieker Merger, we acquired the Three Lafayette Centre office building for a total cost of approximately $68.7 million from an unaffiliated party. The property is located in Washington, D.C. and consists of approximately 259,441 square feet.

NOTE 6 — SALES OF REAL ESTATE

During 2003, we disposed of 53 office properties, two industrial properties and four vacant land parcels in separate transactions to various unaffiliated parties for approximately $933.1 million. The total gain on the sale of these properties was approximately $62.0 million which is included in discontinued operations. The sold office properties consisted of approximately 5,182,707 square feet and 32 residential units, and the industrial properties consisted of approximately 216,900 square feet. We also sold partial interests and entered into joint venture agreements on 13 office properties consisting of approximately 3,284,431 square feet. The total sales price to us from these partial sale transactions was approximately $596.5 million. The net gain on the interests sold totaled $99.1 million. The net income of the properties that were partially sold is included in net income from continuing operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 6 — SALES OF REAL ESTATE — (continued)

During 2002, we disposed of 45 office properties, four parking facilities, two industrial properties and three land parcels in separate transactions to various unaffiliated parties for approximately $508.3 million. The total gain on the sale of these properties was approximately $17.9 million. The sold office properties consisted of approximately 3,113,189 square feet, the industrial properties consisted of approximately 77,072 square feet, and the parking facilities consisted of approximately 7,464 parking spaces.

During 2001, we disposed of eight office properties, four parking facilities, a land parcel and an apartment property in separate transactions to various unaffiliated parties for approximately $327.8 million. The total gain on the sale of these properties was approximately $81.7 million. The sold office properties consisted of approximately 879,388 square feet, the parking facilities contained approximately 3,721 parking spaces and the apartment property contained approximately 161 units.

During 2001, we also disposed of 19 industrial properties that were acquired in the Spieker Partnership merger for approximately $213.4 million. There was no gain or loss on the sale of these properties. The sold industrial properties consisted of approximately 4,052,476 square feet.

The net income for properties sold in 2002 and 2003 is reflected in the consolidated statements of operations as Discontinued Operations for the periods presented. The properties that were partially sold during 2003 are not required to be reflected as discontinued operations in accordance with Statement 144. Below is a summary of the results of operations for the properties sold in 2002 and 2003, except for the properties that were partially sold, through their respective sale dates which are classified as discontinued operations:



				For the years ended December 31,

				2003			2002			2001


				(Dollars in thousands)
Total revenues				$	83,829		$	164,425		$	123,770

Expenses:
	Depreciation and amortization				14,803			28,129			21,702
	Property operating				25,228			54,266			45,362
	Ground rent				18			164			236

		Total expenses			40,049			82,559			67,300

			Operating income		43,780			81,866			56,470

Other income/expense:
	Interest/dividend income				158			233			217
	Interest expense and amortization of deferred financing costs and prepayment expenses				(20	)		(346	)		(849	)

		Total other income/expense			138			(113	)		(632	)

Income before income taxes and net gain on sales of real estate					43,918			81,753			55,838
Income taxes					67			(369	)		(92	)
Net gain on sales of real estate					61,953			17,926			—

Net income				$	105,938		$	99,310		$	55,746

Property net operating income from discontinued operations				$	58,601		$	110,159		$	78,408

Segment Reporting

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 7 — INVESTMENT IN PREFERRED STOCK

The following investment is included in Prepaid Expenses and Other Assets:

In July 1998, 50,000 preferred shares of CT Convertible Trust I, an investment management and real estate finance company, were acquired for approximately $48.5 million. The preferred shares have a liquidation preference of $1,000 each. The discount of $1.5 million is being amortized as additional dividend income over the term of 20 years. The terms of the preferred shares are as follows:

(a) For 60% of the investment, or approximately $30 million of the preferred shares:

• the coupon rate of 8.25% per annum was fixed through March 31, 2002. Thereafter, the rate increased to the greater of:

• 10% per annum, increasing by 75 basis points per annum commencing October 1, 2004 and on each October 1 thereafter, or

• a rate equal to Capital Trust, Inc.’s then annual dividend per common share divided by $7.00;

• the conversion price is $7.00 per share;

• the common share equivalent is fixed at 4,285,714 shares; and

• the preferred shares are callable through September 30, 2004.

(b) For 40% of the investment, or approximately $20 million of the preferred shares:

• the coupon rate is 13.0% per annum and is fixed until October 1, 2004 when it will increase by 75 basis points per annum; and

• the preferred shares are callable at any time.

On September 30, 2002, CT Convertible Trust I redeemed the non-convertible amount of its preferred securities at par, including accrued dividends. We received approximately $20.1 million upon the redemption. We still have an approximate $29.3 million investment in the convertible portion of the preferred securities of CT Convertible Trust I.

NOTE 8 — IMPAIRMENT

During 2003, an Office Property was deemed to be impaired due to an analysis of the undiscounted cash flows. As a result, we recognized a permanent impairment charge of $7.5 million, which reduced the book value of the property to its fair value of $3.8 million. Fair value was determined as the present value of the future cash flows. This asset and the related impairment charge are reported under the “Office Properties” segment for segment reporting purposes.

During 2001, an impairment on securities and other investments of approximately $132.7 million was recognized in connection with various investments and other assets. The total impairment consisted of the investment in HQ Global Workplaces, Inc. preferred stock, including accrued but unpaid dividends, of approximately $90.6 million, investments in several telecom, technology and advertising related companies, investments in two full-service business center joint ventures, and a portion of an investment in an internally developed software system.

During 2001, HQ Global was in default with respect to certain covenant and payment obligations under its senior and mezzanine indebtedness, but received forbearance periods from both its senior and mezzanine lenders. HQ Global was unable to restructure its indebtedness during these forbearance periods. Based on these circumstances and other factors, we determined that our investment in HQ Global was not recoverable and, therefore, recorded a permanent impairment on 100% of our investment. Subsequently, in March 2002 HQ Global filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.

During 2001, our telecom, technology and advertising related investments and full-service business center joint venture investments experienced operating losses due, in part, to the negative economic environment. These investments were considered to be impaired based on their fair value as compared to the carrying value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 8 — IMPAIRMENT — (continued)

The fair value of the investments was based on internally prepared valuations considering the then present economic conditions. The impairment represented our entire investment in the respective assets, except for the internally developed software system, for which the impairment represented approximately one-half of the investment. These investments and the related impairment are reported under the “Corporate and Other” segment for segment reporting purposes.

During 2001, we recognized a $2.5 million impairment on a parking facility that was held for sale because the sales price less costs to sell was less than the carrying amount of the property as of December 31, 2001. The asset and the related impairment are reported under the “Corporate and Other” segment for reporting purposes.

NOTE 9 — INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

The entities listed below are owned in joint ventures by us with unaffiliated parties and are accounted for under the equity method.



					Economic
					Interest(a)
					as of
					December 31,
			Total Rentable
Office Property	Location		Square Feet		2003			2002

One Post Office Square		Boston, MA		765,296		50	%		50	%
75-101 Federal Street		Boston, MA		813,195		51.61	%		51.61	%
Rowes Wharf(b)		Boston, MA		344,645		44	%		44	%
10 & 30 South Wacker		Chicago, IL		2,003,288		75	%		75	%
Bank One Center		Indianapolis, IN		1,057,877		25	%		25	%
Pasadena Towers		Los Angeles, CA		439,366		25	%		25	%
Promenade II		Atlanta, GA		774,344		50	%		50	%
SunTrust Center		Orlando, FL		640,741		25	%		25	%
Preston Commons		Dallas, TX		418,604		50	%		50	%
Sterling Plaza		Dallas, TX		302,747		50	%		50	%
Bank of America Tower		Seattle, WA		1,537,932		50.1	%		50.1	%
One Post Street		San Francisco, CA		421,121		50	%		50	%
Key Center(c)		Seattle, WA		472,929		100	%		80	%
1301 Avenue of the Americas (see Subsequent Events)		New York, NY		1,765,694		84.47	%		84.47	%
Concar		San Mateo, CA		219,318		79.96	%		79.96	%
Foundry Square IV(d)		San Francisco, CA		—		—			40	%
161 North Clark(e)		Chicago, IL		1,010,520		25	%		—
Prominence in Buckhead(e)		Atlanta, GA		424,309		25	%		—
World Trade Center East(e)		Seattle, WA		186,912		25	%		—
Treat Towers(e)		Walnut Creek, CA		367,313		25	%		—
Parkshore Plaza I(e)		Folsom, CA		114,356		25	%		—
Parkshore Plaza II(e)		Folsom, CA		155,497		25	%		—
Bridge Pointe Corporate Center I & II(e)		San Diego, CA		372,653		25	%		—

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 9 — INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES — (continued)



					Economic
					Interest(a)
					as of
					December 31,
			Total Rentable
Office Property	Location		Square Feet		2003			2002

1111 19th Street(e)		Washington, DC		252,014		20	%		—
1620 L Street(e)		Washington, DC		156,272		20	%		—
1333 H Street(e)		Washington, DC		244,585		20	%		—

		Total		15,261,528

Other
Wright Runstad Associates Limited Partnership(c)		—		—		—			30	%
Regus Equity Business Centers, LLC		—		—		—			50	%
HQ Global Workplaces		—		—		—			50	%


(a)		Represents our approximate economic ownership interest for the periods presented. Net income, cash flow from operations and capital transactions are allocated to us and our joint venture partners in accordance with the respective partnership agreements. Our share of these items is subject to change based upon, among other things, the operations of the Property and the timing and amount of capital transactions. Our legal ownership may differ.

(b)		In 2002, in connection with the restructuring of the partnership, we contributed approximately $30.9 million to the joint venture, which increased our economic ownership of Rowes Wharf to 44% from 39%.

(c)		In 2003, we acquired the remaining 20% equity interest in the Key Center office building from Wright Runstad Associates Limited Partnership (“WRALP”) and affiliates in exchange for our 30% equity interest in WRALP and a cash payment by us of approximately $7.9 million. In connection with the acquisition of Key Center, we assumed and subsequently repaid the mortgage debt secured by the Property. As a result of the acquisition, the property is now consolidated.

(d)		In 2000, we formed a joint venture with Wilson Investors-California (“WI,” of which William Wilson III, one of our trustees, is a principal), through its interest in Wilson/ Equity Office (“W/ EO”, of which 49.9% is owned by us and 50.1% is owned by WI), and an unaffiliated party to develop, construct, lease and manage Foundry Square IV, a 225,490 square foot office building located in San Francisco, California. Through the sale of the office building in July 2003, we disposed of our 40% indirect interest, which includes a 10% indirect interest through W/ EO and WI disposed of its 10% indirect interest through W/ EO to an unaffiliated party. Our share of the gain on the sale of the property was approximately $7.1 million and is included in income from investments in unconsolidated joint ventures. Our share of the gross proceeds from the sale was approximately $56.6 million, which includes the repayment of a $44.5 million construction loan. WI’s share of the proceeds was approximately $17.1 million.

(e)		In December 2003, we sold partial interests in these office properties and no longer consolidate their operations. See Note 6 — Sales of Real Estate for more information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 9 — INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES — (continued)

Combined summarized financial information for these unconsolidated joint ventures is as follows:



			December 31,

			2003			2002


			(Dollars in thousands)
Balance Sheets:
	Real estate, net of accumulated depreciation		$	3,363,990		$	2,757,699
	Other assets			220,837			207,740

		Total Assets	$	3,584,827		$	2,965,439

	Mortgage debt		$	1,308,782		$	1,312,404
	Other liabilities			127,242			112,968
	Partners’ and shareholders’ equity			2,148,803			1,540,067

		Total Liabilities and Partners’ and Shareholders’ Equity	$	3,584,827		$	2,965,439

Our share of equity			$	1,040,373		$	966,773
Net excess of cost of investments over the net book value of underlying net assets, net of accumulated depreciation of $24,456 and $20,704, respectively				86,859			121,042

Carrying value of investments in unconsolidated joint ventures			$	1,127,232		$	1,087,815

Our share of unconsolidated non-recourse mortgage debt			$	797,268	(a)	$	818,975

(a) Our share of the scheduled payments of principal on mortgage debt for each of the next five years and thereafter through maturity as of December 31, 2003 is as follows:


Year		Dollars in thousands

2004		$	117,153
2005			466,505
2006			52,283
2007			2,622
2008			16,989
Thereafter			141,716

	Total	$	797,268

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 9 — INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES — (continued)



				For the years ended December 31,

				2003		2002		2001


				(Dollars in thousands)
Statements of Operations:
	Revenues			$	472,124	$	561,482	$	509,238

	Expenses:
		Interest expense and loan cost amortization			71,618		77,020		95,389
		Depreciation and amortization			95,867		83,656		86,270
		Operating expenses			180,087		196,936		212,202

			Total expenses		347,572		357,612		393,861

	Net income before gain on sale of real estate and cumulative effect of a change in accounting principle				124,552		203,870		115,377
	Gain on sale of real estate				43,255		3,703		—
	Cumulative effect of a change in accounting principle				—		—		(2,279	)

	Net income			$	167,807	$	207,573	$	113,098

Our share of:
	Net income			$	79,882	$	106,852	$	69,203

	Interest expense and loan cost amortization			$	50,059	$	53,248	$	63,105

	Depreciation and amortization (real estate related)			$	53,208	$	48,865	$	51,021

	Gain on sale of real estate			$	7,063	$	429	$	—

NOTE 10 — MORTGAGE DEBT

We had outstanding fixed interest rate mortgage debt of approximately $2.3 billion and $2.5 billion as of December 31, 2003 and 2002, respectively and outstanding variable interest rate mortgage debt of approximately $36.0 million as of December 31, 2003 and 2002. Payments are generally due in monthly installments of principal and interest or interest only. As of December 31, 2003 and 2002, the effective interest rates on the fixed interest rate mortgage debt ranged from 5.81% to 8.63%, and the weighted average effective interest rate was approximately 7.72% and 7.70%, respectively. As of December 31, 2003 and 2002, the weighted average variable effective interest rate was approximately 1.72% and 1.98%, respectively. The historical cost, net of accumulated depreciation, of encumbered properties at December 31, 2003 and 2002 was approximately

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 10 — MORTGAGE DEBT — (continued)

$4.9 billion and $5.2 billion, respectively. During the years ended December 31, 2003 and 2002, the following transactions occurred:



		For the years ended
		December 31,

		2003			2002


		(Dollars in thousands)
Balance at beginning of year		$	2,520,474		$	2,662,099
	Repayments and scheduled principal amortization		(233,809	)		(156,052	)
	Proceeds from financings		—			14,427
	Assumed through property acquisitions (See Note 9 Investments in Unconsolidated Joint Ventures)		59,166			—
	Repaid upon sale of property		(16,279	)		—

Balance at end of year(a)		$	2,329,552		$	2,520,474

(a) Excludes net discount on mortgage debt of approximately $13,663 and $12,584 as of December 31, 2003 and 2002, respectively.

Repayment Schedule

Scheduled payments of principal for the next five years and thereafter through maturity as of December 31, 2003 are as follows:


Year	Dollars in thousands

2004	$	375,761
2005		568,787
2006		343,878
2007		237,024
2008		132,061
Thereafter		672,041

Total	$	2,329,552

NOTE 11 — LINES OF CREDIT

Our previous $1.0 billion line of credit matured in May 2003 at which time we obtained a new $1.0 billion line of credit. Our $1.0 billion line of credit bears interest at LIBOR plus 60 basis points and matures in May 2006. We also pay an annual facility fee of $2.0 million payable quarterly. In addition, a competitive bid option, whereby the lenders participating in the credit facility may bid on the interest to be charged which may result in an interest rate lower than LIBOR plus 60 basis points, is available for up to $350 million of the borrowings under the credit facility. As of December 31, 2003, $334 million was outstanding.

In December 2003 we obtained a $1.0 billion 364-day credit facility. This credit facility bears interest at LIBOR plus 65 basis points and matures in December 2004. We also pay an annual facility fee of $1.5 million payable quarterly. In addition, a competitive bid option, whereby the lenders participating in the credit facility bid on the interest to be charged which may result in an interest rate lower than LIBOR plus 65 basis points, is available for up to $350 million of the borrowings under the credit facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 11 — LINES OF CREDIT — (continued)

Agreements or instruments relating to the lines of credit contain certain financial restrictions and requirements described below. As of December 31, 2003, we were in compliance with each of these financial restrictions and requirements.

• total liabilities to total asset value may not exceed 0.55:1 at any time;

• earnings before interest, taxes, depreciation and amortization to interest expense may not be less than 2.00:1;

• cash flow to fixed charges may not be less than 1.5:1;

• secured debt to total asset value may not exceed 0.40:1;

• unsecured debt to unencumbered asset value may not exceed 0.55:1;

• unencumbered net operating income to unsecured debt service may not be less than 2.0:1;

• consolidated tangible net worth may not be less than the sum of $10.7 billion and 70% of all net offering proceeds received by us or Equity Office after December 31, 2002;

• we may not pay any distributions on Common Shares and Units in excess of 90% of annual Funds From Operations; and

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

NOTE 12 — UNSECURED NOTES

During 2003, we repaid $700 million of unsecured notes upon their maturity and issued $500 million 5.88% unsecured notes due January 15, 2013. The table below summarizes the unsecured notes outstanding as of December 31, 2003:


	Coupon		Effective		Principal			Maturity
Original Term	Rate		Rate(a)		Balance			Date


	(Dollars in thousands)
5 Years		6.50%		4.59%	$	300,000	(b)		01/15/04
9 Years		6.90%		6.27%		100,000	(b)		01/15/04
5 Years		6.80%		6.10%		200,000	(b)		05/01/04
6 Years		6.50%		5.31%		250,000	(b)		06/15/04
7 Years		7.24%		7.26%		30,000	(b)		09/01/04
8 Years		6.88%		6.40%		125,000			02/01/05
7 Years		6.63%		4.99%		400,000			02/15/05
7 Years		8.00%		6.49%		100,000			07/19/05
8 Years		7.36%		7.69%		50,000			09/01/05
6 Years		8.38%		7.65%		500,000			03/15/06
9 Years		7.44%		7.74%		50,000			09/01/06
10 Years		7.13%		6.74%		100,000			12/01/06
9 Years		7.00%		6.80%		1,500			02/02/07
9 Years		6.88%		6.83%		25,000			04/30/07
9 Years		6.76%		6.76%		300,000			06/15/07
10 Years		7.41%		7.70%		50,000			09/01/07

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 12 — UNSECURED NOTES — (continued)


			Coupon		Effective		Principal		Maturity
Original Term			Rate		Rate(a)		Balance		Date


			(Dollars in thousands)
7 Years				7.75%		7.91%		600,000		11/15/07
10 Years				6.75%		6.97%		150,000		01/15/08
10 Years				6.75%		7.01%		300,000		02/15/08
8 Years(c)				7.25%		7.64%		325,000		11/15/08
10 Years				6.80%		6.94%		500,000		01/15/09
10 Years				7.25%		7.14%		200,000		05/01/09
11 Years				7.13%		6.97%		150,000		07/01/09
10 Years				8.10%		8.22%		360,000		08/01/10
10 Years				7.65%		7.20%		200,000		12/15/10
10 Years				7.00%		6.83%		1,100,000		07/15/11
10 Years				6.75%		7.02%		500,000		02/15/12
10 Years				5.88%		5.98%		500,000		01/15/13
20 Years				7.88%		8.08%		25,000		12/01/16
20 Years				7.35%		8.08%		200,000		12/01/17
20 Years				7.25%		7.54%		250,000		02/15/18
30 Years				7.50%		8.24%		150,000		10/01/27
30 Years				7.25%		7.31%		225,000		06/15/28
30 Years				7.50%		7.55%		200,000		04/19/29
30 Years				7.88%		7.94%		300,000		07/15/31

	Weighted Average/ Subtotal			7.15%		6.95%		8,816,500

Net premium								12,412

		Total					$	8,828,912


(a)		Includes the effect of settled interest rate protection and interest rate swap agreements, offering and transaction costs and premiums and discounts on certain unsecured notes.

(b)		Through 2004, $880 million of unsecured notes will mature and become payable. The $400 million of unsecured notes that matured in January 2004 were repaid with our line of credit. We anticipate repaying the remaining notes with our lines of credit, proceeds from additional debt and/or equity offerings or proceeds from property dispositions.

(c)		The notes are exchangeable into Equity Office Common Shares at an exchange rate of $34.00 per share. If the closing price of a Common Share at the time a holder exercises their exchange right is less than the exchange price of $34.00, the holder will receive, in lieu of Common Shares, cash in an amount equal to 97% of the product of the number of Common Shares into which the principal amount of notes subject to such exercise would otherwise be exchangeable and the current market price per Common Share. Upon exchange of a $1,000 note for Common Shares of Equity Office, we would issue a corresponding number of Units to Equity Office on a one-for-one basis.

Restrictions and Covenants under Unsecured Indebtedness

Agreements or instruments relating to our unsecured notes contain certain financial restrictions and requirements described below. As of December 31, 2003, we were in compliance with each of these financial restrictions and requirements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 12 — UNSECURED NOTES — (continued)

Restrictions and Covenants

Set forth below are the financial restrictions and requirements to which we are subject under our unsecured note indentures and our performance under each covenant as of December 31, 2003:


Covenants(a) (in each case as defined in the respective indenture)	Actual Performance

Debt to Adjusted Total Assets may not be greater than 60%		47	%
Secured Debt to Adjusted Total Assets may not be greater than 40%		12	%
Consolidated Income Available for Debt Service to Annual Debt Service charge may not be less than 1.50:1		2.45
Total Unencumbered Assets to Unsecured Debt may not be less than 150%(b)		219	%


(a)		The calculations of our actual performance under each covenant are included as Appendix A to this Form 10-K.

(b)		The outstanding unsecured notes assumed in the merger with Spieker Partnership are subject to a minimum ratio of 165%.

NOTE 13 — DERIVATIVE FINANCIAL INSTRUMENTS

Forward-Starting Interest Rate Swaps

As of December 31, 2003 and 2002, we had $1.3 billion and $1.1 billion of forward-starting interest rate swaps outstanding, respectively. The outstanding swaps will hedge the future interest payments of debt anticipated to be issued in 2004. The market value of the swaps at December 31, 2003 represented a net liability to us of approximately $10.4 million (approximately $11.1 million is recorded in other assets and $21.5 million is recorded in other liabilities). The market value at December 31, 2002 was $18.6 million (all of which is included in other liabilities). The net market value is also included in accumulated other comprehensive income. No hedge ineffectiveness has been recorded in earnings as these swaps were perfectly effective. As of March 5, 2004, the market value of these forward-starting interest rate swaps represented a net liability to us of approximately $64.9 million. The market value of the forward-starting interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time.

Upon settlement of the swaps, we may be obligated to pay the counterparties a settlement payment, or alternatively to receive settlement proceeds from the counterparties. In accordance with SFAS No. 133, if the swaps are deemed to be effective hedges upon settlement, any monies paid or received will be amortized to interest expense over the term of the respective hedged interest payments. If the swaps are deemed to be only partially effective hedges upon settlement, a portion of the monies paid or received will be immediately recognized in earnings and the remainder will be amortized to interest expense over the term of the respective hedged interest payments. If the swaps are deemed to be completely ineffective hedges upon settlement, any monies paid or received will be immediately recognized in earnings.

Interest Rate Swaps

During 2002 and 2001, we entered into and settled several interest rate swap agreements that hedged certain unsecured notes. In each case, we were the variable interest rate payer and the counterparty was the fixed rate payer. The variable interest rates were based on various spreads over LIBOR. The settlement dates corresponded to the interest payment dates of the respective unsecured notes being hedged. Each of the interest rate swap agreements were to terminate on the maturity date of the respective unsecured notes being hedged. The interest rate swap agreements were designated as fair value hedges. As of December 31, 2002, all of the interest rate swaps had been terminated.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)


NOTE 14 —	MINORITY INTERESTS IN PARTIALLY OWNED PROPERTIES

Although the financial condition and results of operations of the following Properties are consolidated, there are unaffiliated parties that own an interest in these Properties. We consolidate these properties because we own at least 50% of the respective ownership entities and control major decisions. All of the Properties are Office Properties except for Fremont Bayside, which is an Industrial Property. Our legal ownership and economic interest in each Property is substantially the same. We have additional Properties that are partially owned by unaffiliated parties where our approximate economic ownership is 100%.

The amounts shown below approximate our economic ownership interest for the periods presented. Net income, cash flow from operations and capital transactions are allocated to us and our minority interest partners in accordance with the respective partnership agreements. Our share of these items is subject to change based upon, among other things, the operations of the Property and the timing and amount of capital transactions.



					Economic Interest as
					of December 31,
			Total Rentable
Property	Location		Square Feet		2003		2002

Joint Ventures with Contractual Termination Dates
The Plaza at La Jolla Village		San Diego, CA		635,419		66.7%		66.7%
222 Berkley Street		Boston, MA		519,608		91.5%		91.5%
500 Boylston Street		Boston, MA		706,864		91.5%		91.5%
Washington Mutual Tower		Seattle, WA		1,207,823		75.0%		75.0%
Wells Fargo Center		Minneapolis, MN		1,117,439		75.0%		75.0%
Foundry Square II		San Francisco, CA		505,480		87.5%		87.5%
Ferry Building(a)		San Francisco, CA		243,812		100.0%		100.0%
2951 28th Street		Santa Monica, CA		85,000		98.0%		98.0%
Fremont Bayside		Oakland, CA		103,920		90.0%		90.0%

				5,125,365

Joint Ventures without Contractual Termination Dates
Water’s Edge		Los Angeles, CA		243,433		87.5%		87.5%
Park Avenue Tower		New York, NY		568,060		94.0%		94.0%
850 Third Avenue		New York, NY		568,867		94.0%		94.0%

				1,380,360

Total				6,505,725

(a)

A joint venture between us and other unaffiliated parties leased the Ferry Building from the City and County of San Francisco, through its Port Commission (the “Port”). Under this lease, the Port is paid a stated base rent. In addition, once the lessee has received from the project a cumulative preferred return of 8% (prior to stabilization) and 11% (after stabilization), then 50% of the proceeds from the operation and ownership of the project are paid to the Port as percentage rent.

The joint venture redeveloped the Ferry Building in a manner to permit the use of federal rehabilitation tax credits (“Historic Tax Credits”). Since the original members of the joint venture could not take full advantage of the Historic Tax Credits, the joint venture admitted a new member who could do so. This investor member has contributed approximately $21.3 million in equity and has committed to contribute an additional $3.5 to fund a portion of the Total Project Estimated Costs for the project, and will be entitled to a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 14 — MINORITY INTERESTS IN PARTIALLY OWNED PROPERTIES — (continued)

preferred return with an effective annual rate of approximately 3% on its capital investment. The investor member’s interest in the joint venture is subject to put/call rights during the sixth and seventh years after the Ferry Building is placed in service. Upon the purchase of the investor member’s interest pursuant to the put/call, it is estimated that the joint venture will retain approximately $11 million of the capital contributed by the investor member, based on a formula to determine the purchase price for the investor member’s interest and after taking into account the preferred return that will have been paid to the investor member by such time. Through the creation of a master lease, our effective ownership percentage in the net cash flow of the Ferry Building project is approximately 100% after the payment to the Port of the percentage rent described above and the distribution of the preferred returns.

NOTE 15 — PARTNERS’ CAPITAL AND MANDATORILY REDEEMABLE PREFERRED UNITS

Units

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



		For the years ended
		December 31,

		2003			2002

Outstanding at January 1,			461,407,729			471,038,975
	Repurchases/retired(a)		(14,236,400	)		(7,920,854	)
	Units redeemed for cash		(240,240	)		(3,727,925	)
	Issued to Equity Office related to common shares issued for share options exercised		1,661,333			1,739,863
	Issued to Equity Office related to restricted shares and share awards issued, net of cancellations		900,196			214,291
	Issued to Equity Office related to Common Shares issued through the Dividend Reinvestment Program		—			63,379

Outstanding at December 31,			449,492,618			461,407,729


(a)		In July 2002, Equity Office announced a Common Share repurchase program allowing for the repurchase of up to $200 million of Common Shares, which was later increased to $400 million in November 2002 and to $600 million in March 2003, over the next 12 months at the discretion of management. The Common Shares may be repurchased in the open market or privately negotiated transactions. During 2003 and 2002, 14,236,400 and 7,901,900 Common Shares were repurchased at an average price of $25.53 and $24.92 for approximately $363.5 million and $196.9 million in the aggregate, respectively. In connection with the repurchases, we purchased from Equity Office and retired a corresponding number of Units for an aggregate purchase price equal to the aggregate purchase price for all Common Share repurchases.

Ownership of EOP Partnership

As of December 31, 2003 and 2002, Equity Office had a 1% general partnership interest and an approximate 88.1% limited partnership interest in us, respectively. The remaining limited partners had an approximate 10.9% interest in us, respectively and consist of various individuals and entities that contributed their properties in exchange for partnership interests. Each of our limited partners, excluding Equity Office, may, subject to certain limitations, require that we redeem its Units. Under our partnership agreement, Equity Office has the right to assume directly and satisfy the redemption right of a limited partner by issuing its Common Shares or cash in exchange for any Units tendered for redemption. If Equity Office does not assume our obligation to redeem the Units, upon redemption, the limited partner will receive cash in an amount equal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 15 — PARTNERS’ CAPITAL AND MANDATORILY REDEEMABLE PREFERRED UNITS — (continued)

to the market value of the Common Shares for which the Units would have been redeemed if Equity Office had elected to assume and satisfy our obligation by paying Common Shares. Under an assignment and assumption agreement entered into on June 29, 2001, if Equity Office elects to assume directly and satisfy the redemption right of a limited partner, we are entitled to make the election as to whether Equity Office issues Common Shares or cash in exchange for Units tendered for redemption.

Distributions

Distributions are declared and paid quarterly to holders of Units as of the record dates of each declaration. The current quarterly distribution is $0.50 per Unit. For the years ended December 31, 2003, 2002 and 2001, the per unit distributions were $2.00, $2.00 and $1.90, respectively.

Mandatorily Redeemable Preferred Units

Under the terms of the Series B Convertible, Cumulative Redeemable Preferred Units (“Series B Preferred Units”), in connection with any redemption by Equity Office of its outstanding 5.25% Series B Convertible, Cumulative Redeemable Preferred Shares, we are obligated to provide to Equity Office cash equal to the redemption price and one Series B Preferred Unit is required to be canceled with respect to each Series B Preferred Share redeemed by Equity Office. The Series B Preferred Units are mandatorily redeemable by Equity Office on February 15, 2008 at a price of $50.00 per share, plus accumulated and unpaid distributions to the redemption date.

Preferred Units

Listed below is a summary of our outstanding preferred units. We are the original issuer of our remaining outstanding series of preferred units (Series C and G) and have recorded the deferred issuance costs associated with these preferred units to partners’ capital. Upon any redemption of these preferred units, we will recognize the deferred issuance costs as an additional preferred distribution in the determination of net income available for unitholders in accordance with EITF Topic D-42. The preferred unitholders are entitled to receive, when and as authorized by the Board of Trustees of Equity Office, cumulative preferential cash distributions. We are obligated to redeem the preferred units at their liquidation preference plus all accrued distributions in connection with any redemption by Equity Office of the corresponding series of Equity Office preferred shares.


						Current
						Balance
	Annual			Liquidation		Outstanding
	Distribution			Preference		(Dollars in		Equity Office’s Voluntary
Series	Rate			Per Unit		thousands)		Redemption Date(a)

C(b)		8.625	%	$	25.00	$	114,073		on or after 12/8/2003
G(c)		7.75	%	$	25.00	$	212,500		on or after 7/29/2007

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 15 — PARTNERS’ CAPITAL AND MANDATORILY REDEEMABLE PREFERRED UNITS — (continued)

The annual per unit distributions were as follows:



	For the years ended December 31,

	2003		2002		2001

Series A(c)		—	$	1.3844167	$	2.245
Series B	$	2.625	$	2.625	$	2.625
Series C(b)	$	2.15625	$	2.15625	$	2.15625
Series D(d)		—		—	$	0.8728125
Series E(e)	$	1.3015625	$	1.96875	$	0.984375
Series F(f)	$	1.00	$	2.00	$	1.00
Series G(c)	$	1.9375	$	0.7427083		—


(a)		Equity Office may redeem the corresponding series of its preferred shares during these periods solely out of the sale proceeds of other equity shares of Equity Office, except for the portion of the redemption price equal to any accrued but unpaid dividends. Under our partnership agreement, sale proceeds from the sale of shares by Equity Office must be contributed to us in exchange for additional units. The number of shares redeemed is limited to the aggregate sales proceeds received from such other equity shares of Equity Office. Equity Office may acquire any outstanding preferred shares that have been transferred to a charitable beneficiary under Article VII of the declaration of trust of Equity Office because they were owned or acquired by a shareholder of Equity Office in violation of the ownership limits. If Equity Office redeems or acquires any or all of its outstanding preferred shares, we will redeem and cancel an equal number of preferred units and provide cash to Equity Office with respect thereto in an amount equal to the amount paid with respect to the Equity Office preferred shares redeemed or acquired by Equity Office. We are not subject to sinking fund requirements pertaining to the preferred units.

(b)		In January 2004, Equity Office redeemed the Series C Preferred Shares. See Note 26 — Subsequent Events.

(c)		In July 2002, we issued 8,500,000 7.75% Series G Cumulative Redeemable Preferred Units to Equity Office in exchange for Equity Office’s contribution of the proceeds of its issuance and sale of 8,500,000 7.75% Series G Cumulative Redeemable Preferred Shares in an offering that closed July 29, 2002. On that same date, substantially all of the net proceeds from the issuance of the Series G Preferred Units, totaling approximately $206.1 million were used to redeem the Series A Preferred Units from Equity Office and in turn, Equity Office used the proceeds to redeem its 7,994,000 outstanding 8.98% Series A Cumulative Redeemable Preferred Shares. In December 2003, the terms of the Series G Preferred Units were amended to require our consent to any redemption by Equity Office of these units.

(d)		In November 2001, Equity Office redeemed its 4,250,000 outstanding 9.45% Cumulative Redeemable Series D Preferred Shares, which were issued in connection with the Spieker Merger, at a redemption price of $25.00 per share, plus accrued and unpaid distributions for the period from October 1, 2001 to the redemption date of $0.2821875 per share, or an aggregate redemption price of approximately $107.4 million. In connection with such redemption, we redeemed all of the Series D Preferred Units from Equity Office.

(e)		On June 27, 2003, Equity Office redeemed its 6,000,000 outstanding 7.875% Series E Cumulative Redeemable Preferred Shares, which were issued in connection with the Spieker Merger, at a redemption price of $25.00 per share for an aggregate redemption price of approximately $151.9 million, which includes approximately $1.9 million of accrued and unpaid distributions. In connection with such redemption, we redeemed all of the Series E Preferred Units from Equity Office.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 15 — PARTNERS’ CAPITAL AND MANDATORILY REDEEMABLE PREFERRED UNITS — (continued)


(f)		On June 30, 2003, Equity Office redeemed its 4,000,000 outstanding 8.0% Series F Cumulative Redeemable Preferred Shares, which were issued in connection with the Spieker Merger, at a redemption price of $25.00 per share for an aggregate redemption price of $100.0 million. In connection with such redemption, we redeemed all of the Series F Preferred Units from Equity Office.

Put Option Settlement

As of December 31, 2000, 1,717,844 redeemable units were outstanding which related to Common Shares subject to a put option agreement entered into with an affiliate of the Wright Runstad & Company in connection with the acquisition of certain Properties in December 1997. In September 2001, we paid approximately $1.4 million in settlement of this put option. We previously recognized approximately $4.1 million as a total potential payment for the put option exercise between the period from August 1999 to August 2000. The difference of approximately $2.7 million between the $4.1 million previously recognized and the $1.4 million actually paid was recognized as a put option settlement.

NOTE 16 — FUTURE MINIMUM RENTS

Future minimum rental receipts due on noncancelable operating leases at the Office Properties and Industrial Properties as of December 31, 2003 were as follows:


Year	Dollars in thousands

2004	$	2,352,633
2005		2,120,951
2006		1,813,667
2007		1,520,989
2008		1,244,579
Thereafter		3,540,284

Total	$	12,593,103

We are subject to the usual business risks associated with the collection of the above scheduled rents. The future minimum rental receipts due on noncancelable operating leases from our investments in unconsolidated joint ventures are not included in the above schedule.

NOTE 17 — FUTURE MINIMUM LEASE PAYMENTS

Certain Office Properties are subject to ground leases. Certain of these leases are subject to rental increases based upon the appraised value of the Property at specified dates or certain financial calculations based on the operations of the respective Property. Any incremental changes in the rental payments as a result of these adjustments are not included in the table below because the amount of the change is not

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 17 — FUTURE MINIMUM LEASE PAYMENTS — (continued)

determinable. Future minimum lease obligations under these noncancelable leases as of December 31, 2003 were as follows:


Year	Dollars in thousands

2004	$	16,583
2005		16,649
2006		16,748
2007		16,646
2008		16,660
Thereafter		1,177,275

Total	$	1,260,561

Rental expense from continuing operations for the years ended December 31, 2003, 2002 and 2001 was approximately $24.2 million, $24.2 million and $19.7 million, respectively. These rental expense amounts include ground rent and rent for our corporate offices.

NOTE 18 — EXTRAORDINARY ITEM

The $1.0 million extraordinary loss in 2001 related to costs on certain Office Properties located in Seattle, Washington as a result of damage from an earthquake in February 2001.

NOTE 19 — EARNINGS PER UNIT

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



			For the years ended December 31,

			2003			2002			2001


			(Dollars in thousands, except per unit data)
Numerator:
	Income from continuing operations		$	623,276		$	760,110		$	640,827
	Put option settlement			—			—			2,655
	Preferred distributions			(51,872	)		(62,573	)		(57,041	)

	Income from continuing operations available to unitholders			571,404			697,537			586,441
	Discontinued operations (including net gain on sales of real estate of $61,953, $17,926 and $0, respectively)			105,938			99,310			55,746
	Extraordinary item			—			—			(1,000	)
	Cumulative effect of a change in accounting principle			—			—			(1,142	)

	Numerator for basic and diluted earnings per unit — net income available to unitholders		$	677,342		$	796,847		$	640,045

Denominator:
	Denominator for basic earnings per unit — weighted average Units outstanding			450,594,465			467,134,774			408,919,582

	Effect of dilutive potential units:
		Units issuable upon exercise of Equity Office share options, put options and restricted shares		1,966,888			2,003,946			3,067,315

	Denominator for diluted earnings per unit — weighted average Units outstanding and dilutive potential units			452,561,353			469,138,720			411,986,897

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 19 — EARNINGS PER UNIT — (continued)



		For the years ended December 31,

		2003		2002		2001


		(Dollars in thousands, except per unit data)
Earnings per unit — basic
	Income from continuing operations available to unitholders	$	1.27	$	1.49	$	1.43
	Discontinued operations		0.24		0.21		0.14

	Net income available to unitholders(a)	$	1.50	$	1.71	$	1.57

Earnings per unit — diluted
	Income from continuing operations available to unitholders	$	1.26	$	1.49	$	1.42
	Discontinued operations		0.23		0.21		0.14

	Net income available to unitholders(a)	$	1.50	$	1.70	$	1.55


(a)		Net income available to unitholders per unit may not total the sum of the per unit components due to rounding.

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



				For the years ended December 31,
		Weighted Average
Antidilutive Securities		Exercise Price		2003		2002		2001

Share options		$	29.220		13,436,967		—		—
Share options		$	29.240		—		13,032,648		—
Share options		$	30.350		—		—		4,849,148
Series B Units		$	35.700		8,389,354		8,389,354		8,389,354
Warrants (expired on December 17, 2002)		$	39.375		—		4,808,219		5,000,000

	Total				21,826,321		26,230,221		18,238,502

For additional disclosures regarding employee share options and restricted shares, see Note 2 — Summary of Significant Accounting Policies — Share Based Employee Compensation Plans and Note 23 — Share-Based Employee Compensation Plans.

NOTE 20 — SEGMENT INFORMATION

As discussed in Note 1, our primary business is the ownership and operation of Office Properties. We account for each Office Property as an individual operating segment and have aggregated the related operating accounts into a single operating segment for financial reporting purposes due to the fact that the individual operating segments have similar economic characteristics. The net property operating income from continuing operations generated at the “Corporate and Other” segment consist primarily of the Industrial Properties and stand-alone parking facilities that were sold in 2002 and 2001. The “Other revenues” generated at the “Corporate and Other” segment consist primarily of fee income from the management of office properties owned by third parties, interest and dividend income from various investments and realized gains on sale of certain marketable securities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 20 — SEGMENT INFORMATION — (continued)



				As of or for the year ended December 31, 2003

				Office			Corporate
				Properties			and Other			Consolidated


				(Dollars in thousands)
Property operating revenues(a)				$	3,131,792		$	47,979		$	3,179,771
Property operating expenses(b)					(1,116,062	)		(10,517	)		(1,126,579	)

	Property net operating income from continuing operations				2,015,730			37,462			2,053,192

Adjustments to arrive at net income:
	Other revenues				4,452			33,278			37,730
	Interest expense(c)				(176,804	)		(650,531	)		(827,335	)
	Depreciation and amortization				(691,412	)		(24,136	)		(715,548	)
	Ground rent				(20,287	)		—			(20,287	)
	General and administrative				(4,395	)		(58,084	)		(62,479	)
	Impairment				(7,500	)		—			(7,500	)

			Total		(895,946	)		(699,473	)		(1,595,419	)

Income before income taxes, allocation to minority interests, income from investments in unconsolidated joint ventures and net gain on partial sales of real estate					1,119,784			(662,011	)		457,773
Income taxes					(909	)		(4,464	)		(5,373	)
Minority interests					(8,080	)		(36	)		(8,116	)
Income from investments in unconsolidated joint ventures					76,292			3,590			79,882
Net gain on partial sales of real estate					99,110			—			99,110

Income from continuing operations					1,286,197			(662,921	)		623,276
Discontinued operations (including net gain on sales of real estate of $61,953)					102,420			3,518			105,938

Net income				$	1,388,617		$	(659,403	)	$	729,214

Property net operating income:
	Continuing operations			$	2,015,730		$	37,462		$	2,053,192
	Discontinued operations (see Note 6)				58,302			299			58,601

		Total property net operating income		$	2,074,032		$	37,761		$	2,111,793

Property operating margin from continuing and discontinued operations(d)											64.7	%

Property operating margin from continuing operations(d)											64.6	%

Capital and tenant improvements				$	401,061		$	34,247		$	435,308

Investments in unconsolidated joint ventures				$	1,128,175		$	(943	)	$	1,127,232

Total Assets				$	23,284,909		$	904,101		$	24,189,010

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 20 — SEGMENT INFORMATION — (continued)



			As of or for the year ended December 31, 2002

			Office			Corporate
			Properties			and Other			Consolidated


			(Dollars in thousands)
Property operating revenues(a)			$	3,290,424		$	53,435		$	3,343,859
Property operating expenses(b)				(1,138,460	)		(10,235	)		(1,148,695	)

Property net operating income from continuing operations				2,151,964			43,200			2,195,164

Adjustments to arrive at net income:
	Other revenues			2,542			35,513			38,055
	Interest expense(c)			(193,759	)		(620,886	)		(814,645	)
	Depreciation and amortization			(643,194	)		(19,681	)		(662,875	)
	Ground rent			(20,325	)		—			(20,325	)
	General and administrative			—			(65,790	)		(65,790	)

		Total		(854,736	)		(670,844	)		(1,525,580	)

Income before income taxes, allocation to minority interests and income from investments in unconsolidated joint ventures				1,297,228			(627,644	)		669,584
Income taxes				(2,130	)		(6,996	)		(9,126	)
Minority interests				(7,120	)		(80	)		(7,200	)
Income from investments in unconsolidated joint ventures				106,701			151			106,852

Income from continuing operations				1,394,679			(634,569	)		760,110
Discontinued operations (including net gain on sales of real estate of $17,926)				97,466			1,844			99,310

Net income			$	1,492,145		$	(632,725	)	$	859,420

Property net operating income:
	Continuing operations		$	2,151,964		$	43,200		$	2,195,164
	Discontinued operations (see Note 6)			108,757			1,402			110,159

		Total property net operating income	$	2,260,721		$	44,602		$	2,305,323

Property operating margin from continuing and discontinued operations(d)										65.7	%

Property operating margin from continuing operations(d)										65.6	%

Capital and tenant improvements			$	321,803		$	7,127		$	328,930

Investments in unconsolidated joint ventures			$	1,077,273		$	10,542		$	1,087,815

Total Assets			$	24,394,552		$	852,231		$	25,246,783

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 20 — SEGMENT INFORMATION — (continued)



			For the year ended December 31, 2001

			Office			Corporate
			Properties			and Other			Consolidated


			(Dollars in thousands)
Property operating revenues(a)			$	2,900,682		$	50,379		$	2,951,061
Property operating expenses(b)				(999,040	)		(9,582	)		(1,008,622	)

Property net operating income from continuing operations				1,901,642			40,797			1,942,439

Adjustments to arrive at net income:
	Other revenues			3,496			51,604			55,100
	Interest expense(c)			(208,398	)		(534,188	)		(742,586	)
	Depreciation and amortization			(535,565	)		(17,763	)		(553,328	)
	Ground rent			(16,692	)		—			(16,692	)
	General and administrative			(11	)		(42,310	)		(42,321	)
	Impairments			—			(135,220	)		(135,220	)

		Total		(757,170	)		(677,877	)		(1,435,047	)

Income before income taxes, allocation to minority interests, income from investments in unconsolidated joint ventures and net gain on sales of real estate				1,144,472			(637,080	)		507,392
Income taxes				(1,784	)		(6,961	)		(8,745	)
Minority interests				(8,685	)		—			(8,685	)
Income from investments in unconsolidated joint ventures				67,216			1,987			69,203
Net gain on sales of real estate				22,265			59,397			81,662

Income from continuing operations				1,223,484			(582,657	)		640,827
Discontinued operations				54,959			787			55,746

Income before extraordinary item and cumulative effect of change in accounting principle				1,278,443			(581,870	)		696,573
Extraordinary item				(1,000	)		—			(1,000	)
Cumulative effect of change in accounting principle				(1,142	)		—			(1,142	)

Net income			$	1,276,301		$	(581,870	)	$	694,431

Property net operating income:
	Continuing operations		$	1,901,642		$	40,797		$	1,942,439
	Discontinued operations (see Note 6)			77,454			954			78,408

		Total property net operating income	$	1,979,096		$	41,751		$	2,020,847

Property operating margin from continuing and discontinued operations(d)										65.7	%

Property operating margin from continuing operations(d)										65.8	%

Capital and tenant improvements			$	325,215		$	34,850		$	360,065


(a)		Included in property operating revenues are rental revenues, tenant reimbursements, parking income and other income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 20 — SEGMENT INFORMATION — (continued)


(b)		Included in property operating expenses are real estate taxes, insurance, repairs and maintenance and property operating expenses.

(c)		Interest expense for the Office Properties represents interest expense on property secured mortgage debt and does not include interest expense on the unsecured notes or the line of credit.

(d)		Property operating margin is calculated by dividing property net operating income by property operating revenues.

NOTE 21 — QUARTERLY DATA (UNAUDITED)



		For the three months ended

		12/31/03		9/30/03		6/30/03		3/31/03


		(Dollars in thousands, except per unit data)
Total revenues(a)		$	828,748	$	789,870	$	787,687	$	789,327
Income from continuing operations(a)		$	213,528	$	129,457	$	127,572	$	152,717
Discontinued operations(a)		$	23,087	$	4,866	$	56,211	$	21,775
Net income		$	236,615	$	134,323	$	183,783	$	174,492
Earnings per unit — basic:
	Net income per unit	$	0.53	$	0.30	$	0.41	$	0.38
Earnings per unit — diluted:
	Net income per unit	$	0.53	$	0.30	$	0.41	$	0.38


(a)		The amounts presented for the three months ended September 30, 2003, June 30, 2003, and March 31, 2003 are not equal to the same amounts previously reported in the Form 10-Q filed with the SEC for each period as a result of discontinued operations consisting of properties sold in 2003. Total revenues presented for the three months ended June 30, 2003 and March 31, 2003 also differ from the same amounts previously reported in the Form 10-Q filed with the SEC for each period due to the reclassification of interest/dividend income and realized gain on sale of marketable securities previously reported as revenues to other income. Below is a reconciliation to the amounts previously reported in the Form 10-Q:



	For the three months ended

	9/30/03			6/30/03			3/31/03


	(Dollars in thousands, except per unit data)
Total revenues previously reported in Form 10-Q	$	806,162		$	810,959		$	829,255
Revenues previously reported in Form 10-Q subsequently reclassified to other income		—			(3,695	)		(11,405	)
Revenues previously reported in Form 10-Q subsequently reclassified to discontinued operations		(16,292	)		(19,577	)		(28,523	)

Total revenues disclosed in Form 10-K	$	789,870		$	787,687		$	789,327

Income from continuing operations previously reported in Form 10-Q	$	138,075		$	137,617		$	166,845
Income from continuing operations previously reported in Form 10-Q subsequently reclassified to discontinued operations		(8,618	)		(10,045	)		(14,128	)

Income from continuing operations disclosed in Form 10-K	$	129,457		$	127,572		$	152,717

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 21 — QUARTERLY DATA (UNAUDITED) — (continued)



	For the three months ended

	9/30/03			6/30/03		3/31/03


	(Dollars in thousands, except per unit data)
Discontinued operations previously reported in Form 10-Q	$	(3,752	)	$	46,166	$	7,647
Discontinued operations from properties sold subsequent to the respective reporting period		8,618			10,045		14,128

Discontinued operations disclosed in Form 10-K	$	4,866		$	56,211	$	21,775



		For the three months ended

		12/31/02		9/30/02		6/30/02		3/31/02


		(Dollars in thousands, except per unit data)
Total revenues(b)		$	848,627	$	841,593	$	833,347	$	836,199
Income from continuing operations(b)		$	180,914	$	178,800	$	175,802	$	224,596
Discontinued operations(b)		$	26,664	$	25,095	$	27,681	$	19,868
Net income		$	207,578	$	203,895	$	203,483	$	244,464
Earnings per unit — basic:
	Net income per unit	$	0.45	$	0.44	$	0.43	$	0.52
Earnings per unit — diluted:
	Net income per unit	$	0.45	$	0.43	$	0.43	$	0.52


(b)		The amounts presented for the three months ended December 31, 2002, September 30, 2002, June 30, 2002, and March 31, 2002 are not equal to the same amounts previously reported in the Form 10-Q or Form 10-K filed with the SEC for each period as a result of discontinued operations consisting of properties sold in 2003. Total revenues presented for the three months ended December 31, 2002, June 30, 2002 and March 31, 2002 also differ from the same amounts previously reported in the Form 10-Q or Form 10-K filed with the SEC for each period due to the reclassification of interest/dividend income and realized gain on sale of marketable securities previously reported as revenues to other income. Below is a reconciliation to the amounts previously reported in the Form 10-Q or Form 10-K:



	For the three months ended

	12/31/02			9/30/02			6/30/02			3/31/02


	(Dollars in thousands, except per unit data)
Total revenues previously reported in Form 10-Q or Form 10-K	$	884,511		$	857,661		$	861,889		$	870,264
Revenues previously reported in Form 10-Q or Form 10-K subsequently reclassified to other income		(5,223	)		—			(7,492	)		(6,841	)
Revenues previously reported in Form 10-Q or Form 10-K subsequently reclassified to discontinued operations		(30,661	)		(16,068	)		(21,050	)		(27,224	)

Total revenues disclosed in Form 10-K	$	848,627		$	841,593		$	833,347		$	836,199

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 21 — QUARTERLY DATA (UNAUDITED) — (continued)



	For the three months ended

	12/31/02			9/30/02			6/30/02			3/31/02


	(Dollars in thousands, except per unit data)
Income from continuing operations previously reported in Form 10-Q or Form 10-K	$	195,921		$	186,638		$	186,886		$	239,209
Income from continuing operations previously reported in Form 10-Q or Form 10-K subsequently reclassified to discontinued operations		(15,007	)		(7,838	)		(11,084	)		(14,613	)

Income from continuing operations disclosed in Form 10-K	$	180,914		$	178,800		$	175,802		$	224,596

Discontinued operations previously reported in Form 10-Q or Form 10-K	$	11,657		$	17,257		$	16,597		$	5,255
Discontinued operations from properties sold subsequent to the respective reporting period		15,007			7,838			11,084			14,613

Discontinued operations disclosed in Form 10-K	$	26,664		$	25,095		$	27,681		$	19,868

NOTE 22 — RELATED PARTY TRANSACTIONS

Fees and reimbursements paid to related parties for the years ended December 31, 2003, 2002 and 2001 were as follows:



		Paid in years ended December 31,

		2003		2002		2001


		(Dollars in thousands)
Development fees, leasing commissions and management fees(a)		$	3,569	$	4,727	$	8,147
Interest and prepayment penalty on mortgage notes(b)			—		—		22,256
Office rent(c)			3,959		3,904		2,964

	Total	$	7,528	$	8,631	$	33,367

Payable to related parties at year end		$	273	$	1,748	$	339


(a)		Amounts paid in 2003 were paid to an affiliate of William Wilson III, one of Equity Office’s trustees. Amounts paid in 2002 and 2001 were paid to W/EO. In 2000, we entered into a joint venture agreement with Wilson Investors — California, LLC (“WIC”) to form W/ EO for the purpose of developing, constructing, leasing and managing developments in northern California. We own 49.9% of W/ EO and WIC owns 50.1% of W/ EO. William Wilson III, through his ownership of WIC, indirectly owns approximately 22% of W/EO and approximately 30% of any promote to which WIC is entitled under the joint venture agreement. We agreed to loan up to $25 million to WIC for its required contribution to W/ EO at a 15% interest rate per annum. In 2002, WIC repaid the outstanding loan balance of approximately $12.0 million of principal and $2.0 million of accrued interest. Upon this repayment and as a result of certain transactions with WIC the loan commitment has been terminated. Our investment in W/ EO as of December 31, 2003 and 2002 was approximately $1.3 million and $3.6 million, respectively, which represents our indirect interest in Concar at December 31, 2003 and Concar and Foundry IV (which was sold in 2003) at December 31, 2002.

		We created joint ventures with W/ EO and, in certain cases, unaffiliated parties for the development of various office properties. We agreed to provide first mortgage financing to the ownership entities of each of these developments at the greater of 6.5% or LIBOR plus 3.25%, generally maturing 36 months after initial funding or earlier at our option, in the event alternative financing sources are available on terms

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)


		NOTE 22 — RELATED PARTY TRANSACTIONS — (continued)

reasonably acceptable to WIC and any unaffiliated party. The aggregate amount of any such financing would generally be capped at 70% of budgeted construction costs (76% in the case of Concar which, at December 31, 2002 had been completed and leased and as such is now reflected as investment in real estate). At December 31, 2002, we had committed to make mortgage loans for Foundry Square IV and Concar totaling approximately $96 million, of which approximately $74 million in principal and approximately $0.4 million in accrued interest was outstanding. The total principal and interest outstanding on these mortgage loans at December 31, 2003 was approximately $40 million. The mortgage loan for Foundry Square IV was repaid in 2003.


		In December 2002, we completed a transaction with W/ EO and WIC pursuant to which we acquired W/ EO’s interests in various projects known as Foundry Square II, Foundry Square III (a land parcel that was under option), the Ferry Building, San Rafael Corporate Center I and San Rafael Corporate Center II (a land parcel). WIC acquired W/ EO’s interest in a project known as Larkspur (a land parcel under option) and WIC acquired the operating business and all assets of W/ EO other than its ownership interests in the development projects known as Foundry Square IV and Concar. W/ EO’s and our interests in Foundry Square IV and Concar remained unchanged as a result of this transaction. Joint ventures with other unaffiliated parties on the projects in which we acquired W/ EO’s interest also remain unchanged as a result of this transaction. This transaction was accounted for as a nonmonetary exchange because the assets included in the exchange were similar and because the cash consideration exchanged was minimal. No gain or loss was recognized in connection with the transaction. A WIC subsidiary will continue providing the development management services to Foundry Square II, the Ferry Building and Concar until the earlier of project stabilization or June 2004. We also engaged a subsidiary of WIC to provide leasing brokerage services for Foundry Square II and the Ferry Building. These services for Foundry Square II were terminated by us and these services for the Ferry Building were terminated in part by us in January 2004. In July, 2003, Foundry Square IV was sold. Following this sale, W/ EO’s sole asset is its ownership interest in Concar. In accordance with the W/ EO operating agreement, we may, but are not required to, purchase the W/ EO interest in Concar subsequent to project stabilization.

(b)		In connection with the Cornerstone Merger, $250 million of mortgage debt was assumed on certain properties payable to Stichting Pensioenfonds Voor de Gezondheid, Geestelijke en Maatschappelijke Belangen (“PGGM”), of which Jan H.W.R. van der Vlist, one of Equity Office’s trustees, is a director of real estate. In October 2000, we repaid $65 million of mortgage debt encumbering TransPotomac Plaza 5 upon its maturity. In December 2001, the remaining $185 million of mortgage debt encumbering several properties was prepaid. As a result of the prepayment, we paid a $5.0 million prepayment penalty to PGGM.

(c)		We lease office space from Two North Riverside Plaza Joint Venture, a partnership composed of trusts established for the benefit of the families of Samuel Zell and Robert Lurie, a deceased former business partner of Mr. Zell.

Amounts Received from Related Parties

As described in Note 7, we own, and receive distributions from, preferred shares of CT Convertible Trust I, of which Mr. Zell is Chairman of the Board.

We have entered into third-party management contracts and a licensing agreement to manage and lease space at certain Properties owned or controlled by affiliates of Mr. Zell. Income recognized by us for providing these management services during 2003, 2002, and 2001 was approximately $.8 million, $1.0 million, and $1.5 million, respectively.

In addition, we provided real estate tax consulting and risk management services to related parties for which we received approximately $.3 million, $1.6 million, and $1.7 million during 2003, 2002 and 2001, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 22 — RELATED PARTY TRANSACTIONS — (continued)

We received approximately $0.8 million from W/ EO during 2003 for lease commissions.

NOTE 23 — SHARE-BASED EMPLOYEE COMPENSATION PLANS

Equity Office has three share-based employee compensation plans: the 1997 Share Option and Share Award Plan, as amended (the “1997 Plan”), the 2003 Share Option and Share Incentive Plan, as amended (the “2003 Plan”) and the 1997 Non-Qualified Share Purchase Plan, as amended (the “Non-Qualified Share Purchase Plan”). We also have assumed individual options in connection with prior merger transactions.

The following is a description of the 1997 Plan, as amended, which is included in the financial statements because any Common Shares issued pursuant to the 1997 Plan will result in us issuing Units to Equity Office, on a one-for-one basis. The purpose of the 1997 Plan is to attract and retain highly qualified executive officers, trustees and employees. Through the 1997 Plan, eligible officers, trustees, employees and consultants are offered the opportunity to acquire Common Shares pursuant to grants of (a) options to purchase Common Shares (“Options”) and (b) Share Awards (defined below). The 1997 Plan is administered by the Compensation and Option Committee (the “Compensation Committee”), which is appointed by the Board of Trustees. The Compensation Committee determines those officers, trustees, key employees and consultants to whom, and the time or times at which, grants of Options and Share Awards will be made. The Compensation Committee interprets the 1997 Plan, adopts rules relating thereto and determines the terms and provisions of Options and Share Awards. In 2003, 2002, and 2001 the Common Shares subject to Options and Share Awards under the 1997 Plan were limited to 31,375,726, 32,030,650, and 23,733,869, respectively. The maximum aggregate number of Options and Share Awards that may be granted under the 1997 Plan may not exceed 6.8% of the outstanding Common Shares calculated on a fully diluted basis and determined annually on the first day of each calendar year. The issuance of awards or shares under the 2003 Plan does not increase the number of shares that may be issued under the 1997 Plan. No more than one-half of the maximum aggregate number of Options and Share Awards may be granted as Share Awards. To the extent that Options expire unexercised or are terminated, surrendered or canceled, the Options and Share Awards become available for future grants under the 1997 Plan, unless the 1997 Plan has terminated. The 1997 Plan has a 10-year term. The Board of Trustees may at any time prior thereto amend or terminate the 1997 Plan, but termination will not affect Options and Share Awards previously granted. Any Options or Share Awards which vest prior to any such termination will continue to be exercisable by the holder thereof.

The Compensation Committee determines the vesting schedule of each Option and the term, which shall not exceed 10 years from the grant date. As to the Options that have been granted, each vests evenly over a three year period, one-third per year on each of the first three anniversaries of the grant date. The exercise price for Options is equivalent to the fair market value of the underlying Common Shares at the grant date.

The 1997 Plan permits the issuance of Share Awards to executive officers, trustees and key employees upon such terms and conditions as are determined by the Compensation Committee in its sole discretion. A Share Award is an award of a Common Share which (a) may be fully vested upon issuance (“Share Award”) or (b) may vest over time (“Restricted Share Award”). Generally, members of the Board of Trustees have been granted Share Awards pursuant to the 1997 Plan as payment of their board fees. In each case, the number of Share Awards granted to trustees was equal to the dollar value of the fee divided by the fair market value of a Common Share on the date the fee would have been paid. Restricted Share Awards granted in 2003 and 2002 vest evenly over a five-year period, 20% per year on each of the first five anniversaries of the grant date. The Restricted Share Awards granted before 2002 vest over a five-year period as follows: 50% on the third anniversary of the grant date, 25% on the fourth anniversary of the grant date and the remaining 25% on the fifth anniversary of the grant date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 23 — SHARE-BASED EMPLOYEE COMPENSATION PLANS — (continued)

The fair value for Options granted in 2003, 2002, and 2001 was estimated at the time the Options were granted using the Black-Scholes option-pricing model with the following weighted average assumptions:


Assumptions:	2003		2002		2001

Risk-free interest rate		3.2%		4.2%		4.2%
Expected dividend yield		6.6%		7.0%		6.7%
Volatility		0.22		0.19		0.21
Weighted average expected life of the Options		7 years		5 years		5 years
Weighted average fair value of Options granted		$2.36		$2.29		$2.76

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including the expected stock price volatility.

In 2003, 2002, and 2001, we recognized compensation expense related to Restricted Shares and Options issued to employees of $17.1 million, $15.0 million, and $9.2 million, respectively.

The table below summarizes the Option activity of the 1997 Plan for the last three years:


					Weighted Average
		Common Shares			Exercise Price
		Subject to Options			Per Option

Balance at December 31, 2000			13,221,371		$	24.82
	Options granted(1)		6,785,666			27.26
	Options canceled		(438,681	)		27.53
	Options exercised		(3,282,003	)		21.89

Balance at December 31, 2001			16,286,353			26.41
	Options granted		6,540,705			28.36
	Options canceled		(592,102	)		28.98
	Options exercised		(1,739,863	)		23.00

Balance at December 31, 2002			20,495,093			27.18
	Options granted		3,550,017			24.70
	Options canceled		(1,358,070	)		27.78
	Options exercised		(1,661,333	)		22.72

Balance at December 31, 2003			21,025,707			27.10

The following table summarizes information regarding Options outstanding at December 31, 2003:



	Options Outstanding
							Options Exercisable				Options Not Exercisable
			Weighted-
			average		Weighted-				Weighted-				Weighted-
			remaining		average				average				average
Range of Exercise			contractual life		exercise				exercise				exercise
Prices	Options		in years(2)		price		Options		price		Options		price

$12.09 to $21.00		1,253,104		3.6	$	20.74		1,253,104	$	20.74		—		—
$21.07 to $23.40		1,155,499		4.9		23.25		1,155,499		23.25		—		—
$24.23 to $24.62		5,472,977		7.6		24.39		2,546,312		24.24		2,926,665		24.53
$24.88 to $28.36		6,367,408		7.9		28.20		2,798,154		28.20		3,569,254		28.19
$28.38 to $29.50		2,131,864		4.6		29.48		2,098,524		29.49		33,340		29.19
$29.76 to $33.00		4,644,855		6.6		30.35		3,491,425		30.47		1,153,430		29.99

$12.09 to $33.00		21,025,707		6.8	$	27.10		13,343,018	$	27.11		7,682,689	$	27.07

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 23 — SHARE-BASED EMPLOYEE COMPENSATION PLANS — (continued)

(1) Includes 1,890,648 non-plan options assumed in connection with the Spieker Partnership merger.

(2) Expiration dates ranged from January 2004 to December 2013.

During 2003, 2002 and 2001, there were 926,511, 541,055 and 602,666 Restricted Share Awards granted, respectively. The Restricted Shares Awards issued in 2003, 2002 and 2001 were, on average, valued at an average of $24.56, $28.01 and $20.61 each, respectively. The value of the Restricted Share Awards is recognized as compensation expense evenly over the vesting period.

Equity Office’s shareholders approved the 2003 Plan at the 2003 annual meeting of shareholders. A total of 20,000,000 Common Shares are reserved for issuance under the 2003 Plan to trustees, officers, employees and consultants of Equity Office and its subsidiaries. The 2003 Plan provides for awards of share options, restricted shares, unrestricted shares, share units, dividend equivalent rights, share appreciation rights and performance awards. No more than 10,000,000 of the Common Shares reserved under the 2003 Plan may be issued in connection with awards other than options. The maximum number of shares subject to options and share appreciation rights that can be awarded to any person is 750,000 per year, and the maximum number of shares that can be awarded to any person, other than pursuant to an option or share appreciation right, is 300,000 per year. The 2003 Plan is administered by the Compensation Committee. Subject to the terms of the 2003 Plan, the Compensation Committee may select participants to receive awards, determine the types of awards and the terms and conditions of awards, and interpret the provisions of the 2003 Plan. The exercise price of each share option awarded under the 2003 Plan may not be less than 100% of the fair market value of a Common Share on the date of grant. The term of the 2003 Plan is 10 years. Prior thereto, the Compensation Committee may terminate or amend the 2003 Plan at any time and for any reason, but termination will not affect awards previously made. There were no awards made under the 2003 Plan during 2003.

The Non-Qualified Purchase Plan was adopted to encourage eligible employees and trustees to purchase Common Shares. Under the Non-Qualified Purchase Plan, a total of 2,000,000 Common Shares are reserved for issuance. The minimum amount an eligible employee can contribute is $10 per pay period. The maximum amount an eligible employee can contribute is 20% of gross pay per pay period, up to $100,000 per calendar year. Trustees may contribute up to $100,000 per year. Contributions are held as part of the general assets of Equity Office. All contributions are fully vested. At the end of each purchase period, participant contributions are used to purchase Common Shares. The price for the Common Shares is 85% of the lesser of: (a) the closing price of the Common Shares on the last business day of the applicable purchase period and (b) the average closing price of the Common Shares for the purchase period. The number of Common Shares purchased is calculated on a per participant basis by dividing the contributions made by each participant during the Purchase Period by the purchase price. Only whole Common Shares are purchased, with any partial share of remaining cash being rolled over to the next purchase period. Shares purchased under the Non-Qualified Purchase Plan generally may not be sold, transferred or disposed of until the first anniversary of the purchase. If a participant violates this restriction, he or she is required to pay Equity Office an amount equal to the discount on the shares when purchased less, the excess, if any, of the amount the participant paid for the shares over the then current market price of the shares. At December 31, 2003, a total of 1,509,443 Common Shares remained available for issuance under the Non-Qualified Purchase Plan. Common Share purchases under this plan totaled 93,815, 90,484 and 76,645 in 2003, 2002 and 2001, respectively.

NOTE 24 — 401(K) PLAN

Our 401(k) Plan was established to cover eligible employees and employees of any designated affiliate. The 401(k) Plan permits eligible persons to defer up to 16% of their annual compensation into the 401(k) Plan, subject to certain limitations imposed by the Internal Revenue Code. Employees’ elective deferrals are immediately vested upon contribution to the 401(k) Plan. We match employee contributions to the 401(k) Plan dollar for dollar up to 4% of the employee’s annual salary. In addition, we may elect to make an annual

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 24 — 401(K) PLAN — (continued)

discretionary profit-sharing contribution. Approximately $6.7 million, $4.2 million and $3.8 million was recognized as expense in each of the years ended December 31, 2003, 2002 and 2001, respectively.

NOTE 25 — COMMITMENTS AND CONTINGENCIES

Concentration of Credit Risk

We maintain cash and cash equivalents at financial institutions. The combined account balances at each institution typically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. We believe the risk is not significant.

Environmental

As an owner of real estate, we are subject to various environmental laws of federal and local governments. Our compliance with existing laws has not had a material adverse effect on our financial condition and results of operations, and we do not believe it will have a material adverse effect in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on our current Properties or on properties that we may acquire.

Litigation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 25 — COMMITMENTS AND CONTINGENCIES — (continued)

Forward-Starting Interest Rate Swaps

See Note 13 — Derivative Financial Instruments for information on our forward-starting interest rate swaps.

Contingencies

Certain joint venture agreements contain buy/ sell options in which each party has the option to acquire the interest of the other party. Except for certain agreements in which our partners in three of our Office Properties can require us to buy their interests, such agreements do not generally require that we buy our partners’ interest. The exceptions allow our unaffiliated partners, at their election, to require that we buy their interests during specified future time periods, commencing in 2004 and at amounts that represent the fair market value of their interest at that time or at amounts based on formulas contained in the respective agreements. In addition, we have granted options to each of two tenants to purchase the Office Property it occupies.

In accordance with Statement of Accounting Standards No. 5 Accounting for Contingencies, we have not recorded a liability or the related asset that would result from the acquisition in connection with the above potential obligations because the probability of our unaffiliated partners requiring us to buy their interest is not currently determinable and we are unable to estimate the amount of the payment required for that purpose.

Approximately 260 of our properties, consisting of 33.1 million square feet, are subject to restrictions on taxable dispositions under tax protection agreements entered into with some of the contributors of the properties. The carrying value of these properties was approximately $6.7 billion at December 31, 2003. The restrictions on taxable dispositions are effective for periods expiring at different times through 2021. The terms of these tax protection agreements generally prevent us from selling specific properties in taxable transactions unless we indemnify the contributing partners for their income tax liability on the portion of the gain on sale allocated to them as a result of the property’s value at the time of its contribution to us or, in some cases, to our predecessor. We do not believe that the tax protection agreements materially affect the conduct of our business or our decisions whether to dispose of restricted properties during the restriction period because we generally hold these and our other properties for investment purposes, rather than for sale. Historically, however, where we have deemed it to be in our shareholders’ best interests to dispose of restricted properties, we have done so through transactions structured as tax-deferred transactions under section 1031 of the Internal Revenue Code. We anticipate structuring any future dispositions of restricted properties as transactions intended to qualify for tax-deferred treatment. We therefore view the likelihood of incurring any such material indemnification obligations to be remote. Were we to dispose of a restricted property in a taxable transaction, we generally would be required to pay to a partner that is a beneficiary of one of the tax protection agreements an amount based on the amount of income tax the partner would be required to pay on the incremental gain allocated to such partner as a result of the built-in gain that existed with respect to such property at the time of its contribution to us, or in some cases, to our predecessor. In some cases there is a further requirement to reimburse any additional tax liability arising from the indemnification payment itself. The exact amount that would be payable with respect to any particular taxable sale of a restricted property would depend on a number of factors, many of which can only be calculated at the time of any future sale, including the sale price of the property at the time of the sale, the partnership’s basis in the property at the time of the sale, the partner’s basis in the assets at the time of the contribution, the partner’s applicable rate of federal, state and local taxation at the time of the sale, and the timing of the sale itself.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 25 — COMMITMENTS AND CONTINGENCIES — (continued)

Insurance

Property Damage, Business Interruption, Earthquake and Terrorism: The insurance coverage provided through third-party insurance carriers is subject to coverage limitations. For each type of insurance coverage described below, should an uninsured or underinsured loss occur, we could lose all or a portion of our investment in, and anticipated cash flows from, one or more of the Properties. In addition, there can be no assurance that third-party insurance carriers will be able to maintain reinsurance sufficient to cover any losses that may be incurred.


Type of Insurance	Equity Office	Third-Party
Coverage	Loss Exposure/Deductible	Coverage Limitation

Property damage and business interruption(a)	$75 million annual aggregate exposure (which includes amounts paid for earthquake loss), plus $1 million per occurrence deductible	$1.0 billion per occurrence(c)

Earthquake(a)(b)	$75 million annual aggregate exposure (which includes amounts paid for property damage and business interruption loss), plus $1 million per occurrence deductible	$325 million in the aggregate per year(c)

Acts of terrorism(d)	$2.8 million per occurrence deductible (plus 10% of each and every loss with a maximum per occurrence exposure of $35.3 million which includes the $2.8 million deductible)	$825 million per occurrence(e)


(a)		We retain up to $75 million of such loss calculated throughout the portfolio. In the event of a loss in excess of this retention limit, the third-party insurance carriers would be obligated to cover the losses up to the stated coverage amounts in the above table.

(b)		The amount of the third-party insurance relating to earthquakes is based on maximum probable loss studies performed by independent third parties. The maximum annual aggregate payment amount for earthquake loss is $325 million, inclusive of our loss exposure of $75 million plus $1 million per occurrence deductible. There can be no assurance that the maximum probable loss studies have accurately estimated losses that may occur.

(c)		These amounts include our loss exposure/deductible amount.

(d)		The coverage includes nuclear, chemical and biological events. The coverage does not apply to non-TRIA (Terrorism Insurance Act of 2002) events (which are terrorism events that are not committed by a foreigner or a foreign country). We maintain separate insurance with a $325 million annual aggregate limit subject to a deductible of $1 million for non-TRIA events. This separate coverage for non-TRIA events excludes nuclear, biological and chemical events.

(e)		This amount is in excess of our deductible amounts.

Pollution: We have pollution and remediation insurance coverage for both sudden and gradual events. Limits for this exposure are $2 million per loss and $10 million aggregate per year subject to a deductible of $100,000.

Workers Compensation, Automobile Liability and General Liability: We have per occurrence deductible amounts for workers compensation of $500,000, auto liability of $250,000 and general liability of $1,000,000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

NOTE 26 — SUBSEQUENT EVENTS

The following transactions occurred subsequent to December 31, 2003, through March 5, 2004:

1. In January 2004, Equity Office redeemed all of its 4,562,900 outstanding 8 5/8% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest. The Series C Preferred Shares were redeemed at a redemption price of $25.00 per share for an aggregate redemption price of approximately $114.6 million, including accrued distributions. The deferred issuance costs of approximately $4.1 million will be reflected as a preferred distribution and a reduction of net income available to unitholders. In connection with such redemption, we redeemed all of the Series C Preferred Units from Equity Office.

2. We repaid $300 million of 6.50% unsecured notes and $100 million of 6.90% unsecured notes that matured in January 2004.

3. We extended the cash settlement dates of two $400 million forward-starting interest rate swaps from January 2004 to April 2004.

4. We sold Cal Center located in Sacramento, California to an unaffiliated party for approximately $18.5 million. Cal Center consisted of approximately 118,172 square feet.

5. We acquired the remaining interest in the 1301 Avenue of the Americas office building for approximately $60.7 million. Our economic interest in the joint venture after the acquisition is 100% and as a result of the acquisition the property is now consolidated.

6. In February 2004, we prepaid the mortgage notes that were secured by 580 California for approximately $56.5 million.


Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.


Item 9A.	Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Equity Office’s principal executive officer, Richard D. Kincaid, and principal financial officer, Marsha C. Williams, evaluated as of December 31, 2003 the effectiveness of the design and operation of our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As a result of this evaluation, these executive officers have concluded that, as of such date, the design and operation of our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation referred to above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant.

Information about Trustees of Equity Office is incorporated by reference from the discussion under Proposal 1 in Equity Office’s Proxy Statement for the 2004 Annual Meeting of Shareholders. We believe that, during 2003, all Section 16(a) filing requirements with respect to our equity securities were made by executive officers and trustees of Equity Office on a timely basis. The balance of the response to this item is contained in the discussion entitled “Executive and Senior Officers of Equity Office” under Item 1 of Part I of this report.

Information about our audit committee financial expert is incorporated by reference to Equity Office’s Proxy Statement for the 2004 Annual Meeting of Shareholders.

Equity Office has adopted a code of ethics that applies to its principal officer, principal financial officer and principal accounting officer, which is available on our website at: http://www.equityoffice.com. Any amendment to, or waiver from, a provision of such code of ethics will be posted on our website.

Item 11. Executive Compensation.

Information about executive compensation is incorporated by reference from the discussion under the heading “Executive Compensation” in Equity Office’s Proxy Statement for the 2004 Annual Meeting of Shareholders.


Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information about security ownership of certain beneficial owners and management, and information about Equity Office’s equity compensation plans are incorporated by reference from the discussion under the headings “Common Share and Unit Ownership by Trustees and Executive Officers” and “Equity Compensation Plan Information” in Equity Office’s Proxy Statement for the 2004 Annual Meeting of Shareholders.

Item 13. Certain Relationships and Related Transactions.

Information about certain relationships and transactions with related parties is incorporated herein by reference from the discussion under the heading “Certain Relationships and Related Transactions” in Equity Office’s Proxy Statement for the 2004 Annual Meeting of Shareholders.

Item 14. Principal Accountant Fees and Services.

Information about principal accountant fees and services is incorporated by reference from the discussion under the heading “Independent Auditors” in Equity Office’s Proxy Statement for the 2004 Annual Meeting of Shareholders.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)(1) Financial Statements:

Report of Independent Auditors

Consolidated Balance Sheets as of December 31, 2003 and 2002

Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Changes in Partners’ Capital and Net Comprehensive Income for the years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules:

Schedule III — Real Estate and Accumulated Depreciation as of December 31, 2003

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

(a)(3) Exhibits:

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

(b) Reports on Form 8-K:

The following report on Form 8-K was filed during the quarter ended December 31, 2003:


Date of Event		Items Reported/Financial Statements Filed

	November 3, 2003	Item 12. Results of Operations and Financial Condition

See Item 15(a)(3) above.

(d) Financial Statement Schedules:

Schedule III — Real Estate and Accumulated Depreciation as of December 31, 2003.

Appendix A

FINANCIAL COVENANT CALCULATIONS AS OF DECEMBER 31, 2003

UNDER CERTAIN INDENTURE AGREEMENTS

EOP OPERATING LIMITED PARTNERSHIP

UNSECURED NOTES FINANCIAL COVENANT COMPLIANCE AS OF DECEMBER 31, 2003

(Dollars in thousands)

Compliance with these financial covenants requires EOP Partnership to apply specialized terms, the definitions of which are set forth in the related unsecured note indentures, and to calculate ratios in the manner prescribed in the indentures.

This section presents such ratios as of December 31, 2003 to show that EOP Partnership was in compliance with the applicable financial covenants contained in the unsecured note indentures, copies of which have been filed as exhibits to the EOP Partnership’s periodic reports filed with the SEC. Management is not presenting these ratios and the related calculations for any other purpose or for any other period, and is not intending for these measures to otherwise provide information about EOP Partnership’s financial condition or results of operations. Investors should not rely on these measures other than for the purpose of testing EOP Partnership’s compliance with the financial covenants contained in the unsecured note indentures as of December 31, 2003.

Debt to Adjusted Total Assets

EOP Partnership may not, and may not permit a subsidiary to, incur any Debt, other than intercompany Debt, if, immediately after giving effect to the incurrence of such additional Debt, the aggregate principal amount of all outstanding Debt of EOP Partnership and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than 60% of the sum of:

(i) Total Assets as of the end of the fiscal quarter covered in EOP Partnership’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the SEC prior to the incurrence of such additional Debt and

(ii) the increase or decrease in Total Assets from the end of such quarter including, without limitation, any increase in Total Assets resulting from the incurrence of such additional Debt (such increase or decrease together with EOP Partnership’s Total Assets is referred to as the “Adjusted Total Assets”).


Mortgage debt (excluding a net discount of $(13,663))		$	2,329,552
Unsecured notes (excluding a net premium of $12,412)			8,816,500
Line of credit			334,000
EOP Partnership’s share of unconsolidated non-recourse mortgage debt			797,268

	Debt	$	12,277,320

Investments in real estate		$	23,985,839
Developments in process			75,232
Land available for development			251,151
Cash and cash equivalents			69,398
Escrow deposits and restricted cash			75,186
Investments in unconsolidated joint ventures			1,127,232

A-1


Prepaid expenses and other assets (net of discount of $66,200)			344,940
Change in cash subsequent to December 31, 2003 as a result of property dispositions			2,031

	Adjusted Total Assets	$	25,931,009

Ratio			47	%

Maximum Ratio			60	%

Secured Debt to Adjusted Total Assets

EOP Partnership may not, and may not permit any Subsidiary to, incur any Secured Debt of EOP Partnership or any Subsidiary if, immediately after giving effect to the incurrence of such additional Secured Debt, the aggregate principal amount of all outstanding Secured Debt of EOP Partnership and its Subsidiaries on a consolidated basis is greater than 40% of Adjusted Total Assets.


Mortgage debt (excluding a net discount of $(13,663))		$	2,329,552
EOP Partnership’s share of unconsolidated non-recourse mortgage debt			797,268

	Secured Debt	$	3,126,820

	Adjusted Total Assets	$	25,931,009

Ratio			12	%

Maximum Ratio			40	%

Consolidated Income Available for Debt Service to Annual Debt Service Charge

EOP Partnership may not, and may not permit any Subsidiary to, incur any Debt, other than intercompany Debt (provided that, in the case of Debt owed to Subsidiaries, such Debt is subordinate in right of payment to the debt securities), if the ratio of Consolidated Income Available for Debt Service to Annual Debt Service Charge (in each case as defined below) for the period consisting of the four consecutive fiscal quarters most recently ended prior to the date on which the additional Debt is to be incurred shall have been less than 1.5 to 1 on a pro forma basis after giving effect to the incurrence of such Debt and to the application of the proceeds therefrom, and calculated on the assumption that:

• such Debt and any other Debt incurred by EOP Partnership or a Subsidiary since the first day of such four-quarter period, which was outstanding at the end of such period, had been incurred at the beginning of such period and continued to be outstanding throughout such period, and the application of the proceeds of such Debt, including to refinance other Debt, had occurred at the beginning of such period;

• the repayment or retirement of any other Debt by EOP Partnership or a Subsidiary since the first day of such four-quarter period had been repaid or retired at the beginning of such period, except that, in determining the amount of Debt so repaid or retired, the amount of Debt under any revolving credit facility is computed based upon the average daily balance of such Debt during such period;

• in the case of Acquired Indebtedness or Debt incurred in connection with any acquisition since the first day of the four-quarter period, the related acquisition had occurred as of the first day of the period with the appropriate adjustments with respect to the acquisition being included in the pro forma calculation; and

• in the case of any increase or decrease in Total Assets, or any other acquisition or disposition by EOP Partnership or any Subsidiary of any asset or group of assets, since the first day of such four-quarter period, including by merger, stock purchase or sale, or asset purchase or sale, such increase, decrease or other acquisition or disposition or any related repayment of Debt had occurred as of the first day of

A-2

such period with the appropriate adjustments to revenues, expenses and Debt levels with respect to such increase, decrease or other acquisition or disposition being included in such pro forma calculation.


Pro forma net income		$	476,622
Pro forma interest expense			777,417
Pro forma amortization of mark to market discounts/ premiums			(4,737	)
Pro forma provision for taxes			5,204
Pro forma amortization and depreciation			707,567
Less pro forma income from investments in unconsolidated joint ventures			(71,153	)

	Consolidated Income Available for Debt Service	$	1,890,920

Pro forma interest expense		$	777,417
Pro forma amortization of mark to market discounts/ premiums			(4,737	)

	Annual Debt Service Charge	$	772,680

Ratio			2.45

Minimum Ratio			1.50

Total Unencumbered Assets to Unsecured Debt

EOP Partnership is required at all times to maintain Total Unencumbered Assets of not less than 150% of the aggregate outstanding principal amount of all outstanding Unsecured Debt of EOP Partnership and its Subsidiaries on a consolidated basis.


Total undepreciated real estate assets		$	18,795,143
Cash and cash equivalents			69,398
Escrow deposits and restricted cash			75,186
Prepaid expenses and other assets (net of discount of $66,200)			344,940
Unencumbered investments in unconsolidated joint venture properties			800,540

	Total Unencumbered Assets	$	20,085,207

Unsecured notes (excluding a net premium of $12,412)		$	8,816,500
Line of credit			334,000

	Unsecured Debt	$	9,150,500

Ratio			219	%

Minimum Ratio (a)			150	%


(a)		The unsecured notes assumed in the merger with Spieker Partnership are subject to a minimum ratio of 165%.

A-3

SIGNATURES

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

EOP OPERATING LIMITED PARTNERSHIP

By: EQUITY OFFICE PROPERTIES TRUST

its general partner

By: /s/ RICHARD D. KINCAID

Richard D. Kincaid

President and Chief Executive Officer

Date: March 15, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated as of March 15, 2004.



Signature				Title


/s/ RICHARD D. KINCAID Richard D. Kincaid				President, Chief Executive Officer and Trustee (principal executive officer)

/s/ MARSHA C. WILLIAMS Marsha C. Williams				Executive Vice President — Chief Financial Officer (principal financial officer)

/s/ STEPHEN M. BRIGGS Stephen M. Briggs				Senior Vice President — Chief Accounting Officer (principal accounting officer)

/s/ SAMUEL ZELL Samuel Zell				Chairman of Equity Office’s Board of Trustees

/s/ THOMAS E. DOBROWSKI Thomas E. Dobrowski				Trustee

/s/ WILLIAM M. GOODYEAR William M. Goodyear				Trustee

/s/ JAMES D. HARPER, JR. James D. Harper, Jr.				Trustee

David K. McKown				Trustee

/s/ JOHN S. MOODY, SR. John S. Moody, Sr.				Trustee

/s/ JERRY M. REINSDORF Jerry M. Reinsdorf				Trustee



Signature				Title

/s/ SHELI Z. ROSENBERG Sheli Z. Rosenberg				Trustee

/s/ EDWIN N. SIDMAN Edwin N. Sidman				Trustee

/s/ WARREN E. SPIEKER, JR. Warren E. Spieker, Jr.				Trustee

/s/ JAN H.W.R. VAN DER VLIST Jan H.W.R. van der Vlist				Trustee

/s/ WILLIAM WILSON III William Wilson III				Trustee

EXHIBIT INDEX


Exhibit No.		Description	Location

	3.1	Third Amended and Restated Agreement of Limited Partnership of EOP Partnership	Incorporated by reference to Exhibit 99.8 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	3.2	First Amendment to Third Amended and Restated Agreement of Limited Partnership	Incorporated by reference to Exhibit 4.1 to EOP Partnership’s 2002 Third Quarter Form 10-Q
	3.3	Second Amendment to the Third Amended and Restated Agreement of Limited Partnership	Incorporated by reference to Exhibit 10.1 to Equity Office’s 2003 Second Quarter Form l0-Q
	3.4	Third Amendment to the Third Amended and Restated Agreement of Limited Partnership	Incorporated by reference to Exhibit 10.4 to Equity Office’s 2003 Annual Report on Form 10-K
	4.1	Indenture, dated as of September 2, 1997, between EOP Partnership and State Street Bank and Trust Company	Incorporated by reference to Exhibit 4.1 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.2	First Supplemental Indenture, dated as of February 9, 1998, between EOP Partnership and State Street Bank and Trust Company	Incorporated by reference to Exhibit 4.2 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.3	$200,000,000 6.625% Note due 2005. Another $200,000,000 6.625% Note due 2005, identical in all material respects to the Note filed as Exhibit 4.4 to Equity Office’s 1997 Annual Report on Form 10-K, as amended, has not been filed.	Incorporated by reference to Exhibit 4.4 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.4	$200,000,000 6.750% Note due 2008. A $100,000,000 6.750% Note due 2008, identical in all material respects other than principal amount to the Note filed as Exhibit 4.5 to Equity Office’s 1997 Annual Report on Form 10-K, as amended, has not been filed.	Incorporated by reference to Exhibit 4.5 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.5	$200,000,000 7.250% Note due 2018. A $50,000,000 7.250% Note due 2018, identical in all material respects other than principal amount to the Note filed as Exhibit 4.6 to Equity Office’s Annual Report on Form 10-K for the year ended December 31, 1997, as amended, has not been filed.	Incorporated by reference to Exhibit 4.6 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.6	$30,000,000 7.24% Senior Note due 2004	Incorporated by reference to Exhibit 4.8 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.7	$50,000,000 7.36% Senior Note due 2005	Incorporated by reference to Exhibit 4.9 to Equity Office’s 1997 Annual Report on Form 10-K, as amended
	4.8	$50,000,000 7.44% Senior Note due 2006	Incorporated by reference to Exhibit 4.10 to Equity Office’s 1997 Annual Report on Form 10-K, as amended


Exhibit No.		Description	Location

	4.9	$50,000,000 7.41% Senior Note due 2007	Incorporated by reference to Exhibit 4.11 to Equity Office’s 1997 Annual Report on Form 10-K, as amended)
	4.10	$250,000,000 6.50% Notes due 2004	Incorporated by reference to Exhibit 4.12 to Equity Office’s 2000 Annual Report on Form 10-K, as amended
	4.11	$300,000,000 6.763% Notes due 2007	Incorporated by reference to Exhibit 4.13 to Equity Office’s 2000 Annual Report on Form 10-K, as amended
	4.12	$225,000,000 7.25% Notes due 2028	Incorporated by reference to Exhibit 4.14 to Equity Office’s 2000 Annual Report on Form 10-K, as amended
	4.13	$300,000,000 6.5% Notes due 2004	Incorporated by reference to Exhibit 4.16 to Equity Office’s 2000 Annual Report on Form 10-K, as amended
	4.14	$500,000,000 6.8% Notes due 2009	Incorporated by reference to Exhibit 4.17 to Equity Office’s 2000 Annual Report on Form 10-K, as amended
	4.15	$200,000,000 7.5% Notes due April 19, 2029	Incorporated by reference to Exhibit 4.23 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on April 19, 1999
	4.16	$400,000,000 8.375% Note due March 15, 2006	Incorporated by reference to Exhibit 4.24 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on March 24, 2000
	4.17	$100,000,000 8.375% Note due March 15, 2006	Incorporated by reference to Exhibit 4.25 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on March 24, 2000
	4.18	$360,000,000 8.10% Note due August 1, 2010 of EOP Partnership	Incorporated by reference to Exhibit 4.1 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on August 8, 2000
	4.19	Indenture, dated August 23, 2000, by and among EOP Partnership, Equity Office and State Street Bank and Trust Company	Incorporated by reference to Exhibit 4.1 to Equity Office’s Registration Statement on Form S-3 (SEC File No. 333-47754)
	4.20	$300,000,000 (or applicable lesser amount) Senior Exchangeable Note due November 15, 2008, and related Guarantee	Incorporated by reference to Exhibit 4.23 to Equity Office’s 2001 Annual Report on Form 10-K, as amended
	4.21	$25,000,000 (or applicable lesser amount) Senior Exchangeable Note due November 15, 2008, and related Guarantee	Incorporated by reference to Exhibit 4.24 to Equity Office’s 2001 Annual Report on Form 10-K, as amended
	4.22	$325,000,000 (or applicable lesser amount) Senior Exchangeable Notes due November 15, 2008, and related Guarantee	Incorporated by reference to Exhibit 4.25 to Equity Office’s 2001 Annual Report on Form 10-K, as amended


Exhibit No.		Description	Location

	4.23	Indenture, dated August 29, 2000, by and between EOP Partnership and U.S. Bank National Association (formerly known as U.S. Bank Trust National Association)	Incorporated by reference to Exhibit 4.1 to EOP Partnership’s Registration Statement on Form S-3, as amended (SEC File No. 333- 43530)
	4.24	First Supplemental Indenture, dated June 18, 2001, among EOP Partnership, Equity Office and U.S. Bank National Association (formerly known as U.S. Bank Trust National Association)	Incorporated by reference to Exhibit 4.2 to Equity Office’s Registration Statement on Form S-3, as amended (SEC File No. 333-58976)
	4.25	$400,000,000 7 3/4% Note due 2007	Incorporated by reference to Exhibit 4.5 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on November 20, 2000
	4.26	$200,000,000 7 3/4% Note due 2007	Incorporated by reference to Exhibit 4.6 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on November 20, 2000
	4.27	$500,000,000 7.000% Note due July 15, 2011, and related Guarantee	Incorporated by reference to Exhibit 4.4 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on July 18, 2001
	4.28	$500,000,000 7.000% Note due July 15, 2011, and related Guarantee	Incorporated by reference to Exhibit 4.5 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on July 18, 2001
	4.29	$100,000,000 7.000% Note due July 15, 2011, and related Guarantee	Incorporated by reference to Exhibit 4.6 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on July 18, 2001
	4.30	$300,000,000 7.875% Note due July 15, 2031, and related Guarantee	Incorporated by reference to Exhibit 4.7 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on July 18, 2001
	4.31	$400,000,000 6 3/4% Note due February 15, 2012, and related Guarantee	Incorporated by reference to Exhibit 4.1 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on February 15, 2002
	4.32	$100,000,000 6 3/4% Note due February 15, 2012, and related Guarantee	Incorporated by reference to Exhibit 4.2 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on February 15, 2002
	4.33	Indenture, dated as of December 6, 1995, among Spieker and State Street Bank and Trust, as Trustee	Incorporated by reference to Exhibit 99.17.1 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.34	Fourth Supplemental Indenture, dated as of January 24, 1996, among Spieker, Spieker Partnership and State Street	Incorporated by reference to Exhibit 99.17.7 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001


Exhibit No.		Description	Location

	4.35	$100,000,000 6.90% Note due January 15, 2004	Incorporated by reference to Exhibit 99.17.8 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.36	Fifth Supplemental Indenture, dated as of June 20, 1996, among Spieker, Spieker Partnership and State Street	Incorporated by reference to Exhibit 99.17.9 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.37	$100,000,000 Medium-Term Notes due nine months or more from July 19, 1996	Incorporated by reference to Exhibit 99.17.10 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.38	Sixth Supplemental Indenture, dated as of December 10, 1996, among Spieker, Spieker Partnership and State Street	Incorporated by reference to Exhibit 99.17.12 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.39	$100,000,000 7.125% Note due December 1, 2006	Incorporated by reference to Exhibit 99.17.13 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.40	Seventh Supplemental Indenture, dated as of December 10, 1996, among Spieker, Spieker Partnership and State Street	Incorporated by reference to Exhibit 99.17.14 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.41	$25,000,000 7.875% Note due December 1, 2016	Incorporated by reference to Exhibit 99.17.15 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.42	Eighth Supplemental Indenture, dated as of July 14, 1997, among Spieker, Spieker Partnership and State Street	Incorporated by reference to Exhibit 99.17.16 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.43	$150,000,000 7.125% Note due July 1, 2009	Incorporated by reference to Exhibit 99.17.17 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.44	Ninth Supplemental Indenture, dated as of September 29, 1997, among Spieker, Spieker Partnership, First Trust of California, National Association and State Street	Incorporated by reference to Exhibit 99.17.18 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.45	$150,000,000 7.50% Debenture due October 1, 2027	Incorporated by reference to Exhibit 99.17.19 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.46	Tenth Supplemental Indenture, dated as of December 8, 1997, among Spieker, Spieker Partnership and First Trust of California, National Association	Incorporated by reference to Exhibit 99.17.20 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.47	$200,000,000 7.35% Debenture due December 1, 2017	Incorporated by reference to Exhibit 99.17.21 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.48	Eleventh Supplemental Indenture, dated as of January 27, 1998, among Spieker, Spieker Partnership and First Trust of California, National Association	Incorporated by reference to Exhibit 99.17.22 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.49	$150,000,000 6.75% Note due January 15, 2008	Incorporated by reference to Exhibit 99.17.23 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001


Exhibit No.		Description	Location

	4.50	Twelfth Supplemental Indenture, dated as of February 2, 1998, among Spieker, Spieker Partnership and First Trust of California, National Association	Incorporated by reference to Exhibit 99.17.24 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.51	$125,000,000 6.875% Note due February 1, 2005	Incorporated by reference to Exhibit 99.17.25 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.52	Thirteenth Supplemental Indenture, dated as of February 2, 1998, among Spieker, Spieker Partnership and First Trust of California, National Association	Incorporated by reference to Exhibit 99.17.26 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.53	$1,500,000 7.0% Note due February 1, 2005	Incorporated by reference to Exhibit 99.17.27 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.54	Fourteenth Supplemental Indenture, dated as of April 29, 1998, among Spieker, Spieker Partnership and U.S. Bank National Association (formerly known as U.S. Bank Trust National Association)	Incorporated by reference to Exhibit 99.17.28 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.55	$25,000,000 6.88% Note due April 30, 2007	Incorporated by reference to Exhibit 99.17.29 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.56	Fifteenth Supplemental Indenture, dated as of May 11, 1999, among Spieker, Spieker Partnership and U.S. Bank National Association (formerly known as U.S. Bank Trust National Association)	Incorporated by reference to Exhibit 99.17.30 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.57	$200,000,000 6.8% Note due May 1, 2004	Incorporated by reference to Exhibit 99.17.31 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.58	$200,000,000 7.25% Note due May 1, 2009	Incorporated by reference to Exhibit 99.17.32 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.59	Sixteenth Supplemental Indenture, dated as of December 11, 2000, among Spieker, Spieker Partnership and U.S. Bank National Association (formerly known as U.S. Bank Trust National Association)	Incorporated by reference to Exhibit 99.17.33 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.60	$200,000,000 7.65% Note due December 15, 2010	Incorporated by reference to Exhibit 99.17.34 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001
	4.61	Seventeenth Supplemental Indenture relating to the substitution of Equity Office and EOP Partnership as successor entities for Spieker and Spieker Partnership, respectively	Incorporated by reference to Exhibit 99.17.35 to Equity Office’s Current Report on Form 8-K filed with the SEC on July 5, 2001


Exhibit No.		Description	Location

	4.62	$400,000,000 6 3/4% Note due February 15, 2012, and related Guarantee	Incorporated by reference to Exhibit 4.1 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on February 15, 2002
	4.63	$100,000,000 6 3/4% Note due February 15, 2012, and related Guarantee	Incorporated by reference to Exhibit 4.2 to EOP Partnership’s Current Report on Form 8-K filed with the SEC on February 15, 2002
	4.64	$400,000,000 5.875% Note due January 15, 2013, and related Guarantee	Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of EOP Partnership filed with the SEC on January 15, 2003
	4.65	$100,000,000 5.875% Note due January 15, 2013, and related Guarantee	Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of EOP Partnership filed with the SEC on January 15, 2003
	10.1	Amended and Restated Operating Agreement No. 1 of Wilson/ Equity Office, LLC	Incorporated by reference to Exhibit 10.13 to Equity Office’s 2000 Annual Report on Form 10-K, as amended
	10.2	Construction Loan Agreement, dated as of April 30, 2002, between Foundry Square Associates IV, LLC, a California limited liability company, as Borrower and Riverside Finance Company, L.L.C., a Delaware limited liability company, as Lender	Incorporated by reference to Exhibit 10.6 to Equity Office’s 2002 Second Quarter Form 10-Q
	10.3	Separation Agreement dated as of December 24, 2002, by and between Wilson/ Equity Office, LLC, Wilson Investors — California, LLC, EOP Investor, L.L.C., EOP — Concar Investor, L.L.C., Equity Office Properties Management Corp., EOP Partnership, Equity Office, William Wilson III, Thomas P. Sullivan, Jacqueline U. Moore, A. Robert Paratte, H. Lee Van Boven, Terry Reagan, Scott Stephens and Jon Knorpp	Incorporated by reference to Exhibit 10.8 to Equity Office’s 2002 Annual Report on Form 10-K
	10.4†	Change in Control Agreement by and between Equity Office Management L.L.C., Equity Office and Richard D. Kincaid	Incorporated by reference to Exhibit 10.7 to Equity Office’s 2003 Third Quarter Form 10-Q
	10.5†	Change in Control Agreement by and between Equity Office Properties Management Corp., Equity Office and Peter H. Adams	Incorporated by reference to Exhibit 10.3 to Equity Office’s 2001 Third Quarter Form l0-Q
	10.6†	Assumption and Amendment to Change in Control Agreement by and between Equity Office Properties Management Corp., Equity Office, EOP Partnership and Peter H. Adams	Incorporated by reference to Exhibit 10.2 to Equity Office’s 2002 Third Quarter Form 10-Q


Exhibit No.		Description	Location

	10.7†	Change in Control Agreement by and between Equity Office Properties Management Corp., Equity Office and Stanley M. Stevens	Incorporated herein by reference to Exhibit 10.8 to Equity Office’s 2001 Third Quarter Form l0-Q
	10.8†	Assumption and Amendment to Change in Control Agreement by and between Equity Office Properties Management Corp., Equity Office, EOP Partnership and Stanley M. Stevens	Incorporated by reference to Exhibit 10.4 to Equity Office’s 2002 Third Quarter Form 10-Q
	10.9†	Second Assumption and Amendment to Change in Control Agreement by and between Equity Office Management L.L.C., Equity Office, EOP Partnership and Stanley M. Stevens	Incorporated herein by reference to Exhibit 10.26 to Equity Office’s 2003 Annual Report on Form 10-K
	10.10†	Severance Agreement by and between David A. Helfand and Equity Office	Incorporated by reference to Exhibit 10.4 to Equity Office’s 2003 Second Quarter Form 10-Q
	10.11	Revolving Credit Agreement for $1,000,000,000 Revolving Credit Facility dated as of May 9, 2003 among EOP Operating Limited Partnership and the Banks listed therein	Incorporated by reference to Exhibit 4.1 to Equity Office’s 2003 First Quarter Form l0-Q
	10.12	Guaranty of Payment — No. 1 dated as of May 9, 2003	Incorporated by reference to Exhibit 4.2 to Equity Office’s 2003 First Form 10-Q
	10.13	Guaranty of Payment — No. 2 dated as of May 9, 2003	Incorporated by reference to Exhibit 4.3 to Equity Office’s 2003 First Quarter Form 10-Q
	10.14	Revolving Credit Agreement for $1,000,000,000 Revolving Credit Facility dated as of December 17, 2003 among EOP Operating Limited Partnership and the Banks listed therein	Incorporated by reference to Exhibit 10.32 to Equity Office’s 2003 Annual Report on Form 10-K
	10.15	Guaranty of Payment dated as of December 17, 2003	Incorporated by reference to Exhibit 10.33 to Equity Office’s 2003 Annual Report on Form 10-K
	21.1	List of Subsidiaries	Filed herewith
	23.1	Consent of Independent Auditors	Filed herewith
	31.1	Rule 13a-14(a)/15d-14(a) Certifications	Filed herewith
	31.2	Section 1350 Certifications	Filed herewith

† Represents a management contract or compensatory plan, contract or arrangement.

Schedule III — Real Estate and Accumulated Depreciation as of December 31, 2003



														Costs Capitalized
										Initial Cost to				Subsequent to
										EOP Partnership				Acquisition

							Encumbrances					Building and				Building and
	Description	Notes		Location	State		at 12/31/03			Land		Improvements		Land		Improvements

	Office Properties:
	Atlanta Region
1	200 Galleria			Atlanta		GA	$	—		$	10,282	$	58,266	$	—	$	3,571
2	One Ninety One Peachtree Tower			Atlanta		GA		—			46,500		263,500		—		1,461
3	Central Park		(3)	Atlanta		GA		(55,399	)		9,163		82,463		—		5,592
4	Lakeside Office Park			Atlanta		GA		—			4,792		43,132		—		2,603
5	Paces West		(3)	Atlanta		GA		—			8,336		75,025		—		6,828
6	Perimeter Center			Atlanta		GA		(195,811	)		52,374		415,161		279		30,301

	Atlanta Region Totals							(251,210	)		131,447		937,547		279		50,356

	Boston Region
7	Crosby Corporate Center			Bedford		MA		—			5,958		53,620		115		2,297
8	Crosby Corporate Center II			Bedford		MA		—			9,385		27,584		9		5,226
9	125 Summer Street			Boston		MA		(69,541	)		18,000		102,000		—		7,585
10	222 Berkley Street			Boston		MA		—			25,593		145,029		—		4,067
11	500 Boylston Street			Boston		MA		—			39,000		221,000		—		—
12	Sixty State Street			Boston		MA		(74,541	)		—		256,000		—		3,166
13	100 Summer Street			Boston		MA		—			22,271		200,439		—		62,369
14	150 Federal Street			Boston		MA		—			14,131		127,182		—		15,994
15	175 Federal Street			Boston		MA		—			4,894		44,045		—		3,571
16	2 Oliver Street- 147 Milk Street			Boston		MA		—			5,017		45,157		—		3,109
17	225 Franklin Street			Boston		MA		—			34,608		311,471		—		10,434
18	28 State Street		(3)	Boston		MA		—			9,513		85,623		—		41,649
19	Center Plaza			Boston		MA		—			18,942		170,480		—		9,555
20	Russia Wharf			Boston		MA		—			3,891		35,023		—		2,975
21	South Station			Boston		MA		—			—		31,074		—		1,284
22	New England Executive Park			Burlington		MA		—			14,733		132,594		194		14,033
23	New England Executive Park 17			Burlington		MA		—			904		8,135		9		872
24	The Tower at New England Executive Park			Burlington		MA		—			2,793		31,462		5		11,390
25	One Memorial Drive			Cambridge		MA		(56,658	)		14,862		88,216		—		2,286
26	One Canal Park			Cambridge		MA		—			2,006		18,054		—		1,912
27	245 First Street (a/k/a Riverview II)			Cambridge		MA		—			3,978		35,804		6		1,818
28	Ten Canal Park			Cambridge		MA		—			2,383		21,448		—		152
29	Riverside			Newton		MA		—			24,000		69,849		—		19,876
30	175 Wyman Street			Walthan		MA		—			14,600		5,400		3		1,425
31	Wellesley Office Park 1-4			Wellesley		MA		0			5,518		49,662		6		4,620
32	Wellesley 5-7			Wellesley		MA		—			9,335		84,018		12		4,521
33	Wellesley 8			Wellesley		MA		—			1,639		14,754		2		193

	Boston Region Totals							(200,740	)		307,955		2,415,125		361		236,377

	Chicago Region
34	101 N. Wacker			Chicago		IL		—			10,035		90,319		—		4,136
35	200 West Adams			Chicago		IL		—			11,654		104,887		—		7,067
36	30 N. LaSalle Street		(3)	Chicago		IL		—			12,489		112,401		—		7,788
37	Civic Opera House			Chicago		IL		—			12,771		114,942		—		7,663
38	One North Franklin		(3)	Chicago		IL		—			9,830		88,474		—		7,209
39	Presidents Plaza			Chicago		IL		—			13,435		120,919		—		9,354
40	BP Tower		(3)	Cleveland		OH		(84,059	)		17,403		157,260		—		9,066
41	Community Corporate Center		(3)	Columbus		OH		—			3,019		27,170		—		3,343
42	One Crosswoods Center		(3)	Columbus		OH		—			1,059		9,530		—		2,054
43	Corporate 500 Centre			Deerfield		IL		(75,836	)		20,100		113,900		—		5,670
44	1700 Higgins		(3)	Des Plaines		IL		—			1,323		11,908		64		1,224
45	Tri-State International			Lincolnshire		IL		—			10,925		98,327		290		3,917
46	1111 West 22nd Street			Oak Brook		IL		—			4,834		43,508		48		2,071

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

1
$ 10,282 $ 61,838 $ 72,120 $ (5,970 ) 1985 06/19/00 40

2
46,500 264,961 311,461 (23,596 ) 1991 06/19/00 40

3
9,163 88,055 97,218 (15,726 ) 1986 10/17/95 40

4
4,792 45,735 50,527 (7,685 ) 1972-1978 12/19/97 40

5
8,336 81,852 90,188 (14,100 ) 1988 10/31/94 40

6
52,653 445,462 498,115 (74,591 ) 1970/1989 12/19/97 40

131,727 987,903 1,119,630 (141,667 )

7
6,073 55,918 61,990 (8,562 ) 1996 12/19/97 40

8
9,393 32,810 42,204 (6,540 ) 1998 12/19/97 40

9
18,000 109,585 127,585 (10,447 ) 1989 06/19/00 40

10
25,593 149,096 174,689 (13,701 ) 1991 06/19/00 40

11
39,000 221,000 260,000 (19,568 ) 1988 06/19/00 40

12
— 259,166 259,166 (22,958 ) 1979 06/19/00 40

13
22,271 262,808 285,079 (35,327 ) 1974/1990 03/18/98 40

14
14,131 143,176 157,307 (25,153 ) 1988 12/19/97 40

15
4,894 47,616 52,510 (7,651 ) 1977 12/19/97 40

16
5,017 48,266 53,283 (8,605 ) 1988 12/19/97 40

17
34,608 321,905 356,513 (49,711 ) 1966/1996 12/19/97 40

18
9,513 127,272 136,784 (30,712 ) 1968/1997 01/23/95 40

19
18,942 180,036 198,978 (28,293 ) 1969 12/19/97 40

20
3,891 37,997 41,889 (6,877 ) 1978-1982 12/19/97 40

21
— 32,358 32,358 (5,053 ) 1988 12/19/97 40

22
14,927 146,627 161,553 (24,675 ) 1970/1985 12/19/97 40

23
912 9,007 9,920 (1,542 ) 1970/1985 12/19/97 40

24
2,798 42,852 45,650 (7,298 ) 1971/1999 03/31/98 40

25
14,862 90,502 105,364 (8,046 ) 1985 06/19/00 40

26
2,006 19,966 21,972 (3,225 ) 1987 12/19/97 40

27
3,984 37,621 41,606 (5,659 ) 1985-1986 12/19/97 40

28
2,383 21,600 23,983 (3,258 ) 1987 12/19/97 40

29
24,000 89,726 113,726 (11,421 ) 2000 12/19/97 40

30
14,603 6,825 21,428 (6,826 ) 1999 12/19/97 40

31
5,524 54,282 59,805 (8,465 ) 1963/1984 12/19/97 40

32
9,348 88,539 97,887 (13,929 ) 1963/1984 12/19/97 40

33
1,641 14,947 16,589 (2,249 ) 1963/1984 12/19/97 40

308,315 2,651,502 2,959,818 (375,751 )

34
10,035 94,455 104,491 (15,636 ) 1980/1990 12/19/97 40

35
11,654 111,954 123,608 (19,460 ) 1985/1996 12/19/97 40

36
12,489 120,189 132,678 (21,380 ) 1974/1990 06/13/97 40

37
12,771 122,604 135,376 (20,533 ) 1929/1996 12/19/97 40

38
9,830 95,684 105,514 (15,866 ) 1991 12/31/92 40

39
13,435 130,273 143,708 (20,445 ) 1980-1982 12/19/97 40

40
17,403 166,327 183,729 (28,007 ) 1985 09/04/96 40

41
3,019 30,513 33,532 (5,822 ) 1987 06/14/90 40

42
1,059 11,584 12,643 (2,161 ) 1984 11/12/93 40

43
20,100 119,570 139,670 (11,283 ) 1986/1990 06/19/00 40

44
1,387 13,132 14,519 (2,503 ) 1986 11/12/93 40

45
11,216 102,245 113,460 (16,712 ) 1986 12/19/97 40

46
4,882 45,579 50,461 (7,762 ) 1984 12/19/97 40

Costs Capitalized

Initial Cost to Subsequent to

EOP Partnership Acquisition

Encumbrances Building and Building and

Description Notes Location State at 12/31/03 Land Improvements Land Improvements

47
One Lincoln Centre Oakbrook IL — 7,350 41,650 — 2,720

48
Oakbrook Terrace Tower (3) Oakbrook Terrace IL — 11,950 107,552 486 7,497

49
Westbrook Corporate Center Westchester IL (97,864 ) 24,875 223,874 30 19,317

Chicago Region Totals (257,759 ) 173,054 1,466,621 918 100,096

Denver Region

50
410 17th Street Denver CO — 4,474 40,264 — 6,764

51
4949 S. Syracuse Denver CO — 822 7,401 22 1,086

52
Denver Corporate Center II & III (3) Denver CO — 4,059 36,534 3 5,185

53
Denver Post Tower Denver CO — — 52,937 — 6,715

54
Dominion Plaza Denver CO — 5,990 53,911 — 6,820

55
Metropoint I Denver CO — 4,375 39,375 — 4,192

56
Metropoint II Denver CO — 1,777 17,865 — 3,203

57
US Bank Tower Denver CO — 6,301 65,842 — 42

58
Tabor Center Denver CO — 12,948 116,536 — 36,642

59
Trinity Place Denver CO — 1,898 17,085 — 2,740

60
Millennium Plaza Englewood CO — 4,257 38,314 — 391

61
Terrace Building Englewood CO — 1,546 13,865 29 943

62
The Quadrant (3) Englewood CO — 4,357 39,215 — 4,045

63
The Solarium Englewood CO — 1,951 17,560 — 2,299

64
Wells Fargo Center Minneapolis MN (111,662 ) 39,045 221,255 — 612

65
LaSalle Plaza Minneapolis MN — 9,681 87,127 — 4,581

66
Northland Plaza Bloomington MN — 4,705 42,346 — 3,940

67
49 East Thomas Road (3) Phoenix AZ — 65 588 — 41

68
One Phoenix Plaza (3) Phoenix AZ — 6,192 55,727 — —

Denver Region Totals (111,662 ) 114,446 963,746 55 90,239

Houston Region

69
One American Center (3) Austin TX — — 70,812 — 10,594

70
One Congress Plaza (3) Austin TX — 6,502 58,521 — 4,055

71
San Jacinto Center (3) Austin TX — 5,075 45,671 — 6,116

72
9400 NCX (3) Dallas TX — 3,570 32,130 — 5,914

73
Colonnade I & II Dallas TX — 9,044 81,394 — 7,182

74
Colonnade III Dallas TX — 6,152 56,634 — 5,555

75
Eighty-Eighty Central Dallas TX — 3,760 33,854 — 4,470

76
Four Forest Plaza (3) Dallas TX — 4,768 42,911 — 6,843

77
Lakeside Square Dallas TX — 5,262 47,369 24 5,722

78
North Central Plaza Three (3) Dallas TX — 3,612 32,689 — 5,138

79
2500 CityWest Houston TX — 8,089 72,811 — 3,971

80
Brookhollow Central Houston TX — 7,226 65,053 — 8,992

81
Intercontinental Center (3) Houston TX — 1,602 14,420 70 2,428

82
Northborough Tower (3) Houston TX — 1,355 12,199 37 5,657

83
San Felipe Plaza (3) Houston TX (48,924 ) 13,471 117,984 20 11,534

84
909 E. Las Colinas Boulevard Irving TX — 5,129 46,164 13 2,873

85
545 E. John Carpenter Freeway Irving TX — 5,525 49,728 — 2,253

86
One Lakeway Center (3) Metairie LA — 2,804 25,235 — 4,156

87
Three Lakeway Center (3) Metairie LA — 4,695 43,661 59 4,053

88
Two Lakeway Center (3) Metairie LA — 4,644 41,792 49 4,282

89
601 Tchoupitoulas Garage New Orleans LA — 1,180 10,620 — 298

90
LL&E Tower New Orleans LA — 6,186 55,672 46 7,976

91
Texaco Center New Orleans LA — 6,686 60,177 10 5,076

Houston Region Totals (48,924 ) 116,338 1,117,502 327 125,139

Los Angeles Region

92
Stadium Towers Anaheim CA — 6,683 37,868 — 1,361

93
Brea Corporate Place Brea CA — — 35,129 — 1,207

94
Brea Corporate Plaza Brea CA — 1,902 10,776 — 748

95
Brea Financial Commons Brea CA — 2,640 14,960 — 222

96
Brea Park Centre Brea CA — 2,682 15,198 — 1,826

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

47
7,350 44,370 51,720 (4,416 ) 1986 06/19/00 40

48
12,436 115,048 127,484 (20,519 ) 1988 04/16/97 40

49
24,905 243,191 268,096 (38,742 ) 1985/1996 12/19/97 40

173,972 1,566,717 1,740,689 (251,247 )

50
4,474 47,028 51,501 (7,652 ) 1978 04/30/98 40

51
845 8,487 9,331 (1,388 ) 1982 07/15/98 40

52
4,063 41,719 45,782 (7,346 ) 1981/1993-1997 12/20/90 40

53
— 59,652 59,652 (10,363 ) 1984 04/21/98 40

54
5,990 60,731 66,721 (10,528 ) 1983 05/14/98 40

55
4,375 43,566 47,941 (6,385 ) 1987 07/15/98 40

56
1,777 21,067 22,844 (3,854 ) 1999 04/10/00 40

57
6,301 65,884 72,185 (1,283 ) 1974/2001 08/12/03 35

58
12,948 153,178 166,126 (20,120 ) 1985 04/30/98 40

59
1,898 19,826 21,724 (3,426 ) 1983 04/30/98 40

60
4,257 38,705 42,962 (5,449 ) 1982 05/19/98 40

61
1,576 14,807 16,383 (2,348 ) 1982 07/15/98 40

62
4,357 43,260 47,617 (7,894 ) 1985 12/01/92 40

63
1,951 19,859 21,810 (3,160 ) 1982 07/15/98 40

64
39,045 221,867 260,912 (19,677 ) 1988 06/19/00 40

65
9,681 91,707 101,388 (14,915 ) 1991 11/25/97 40

66
4,705 46,286 50,991 (7,080 ) 1985 07/02/98 40

67
65 629 694 (111 ) 1974/1993 12/11/96 40

68
6,192 55,727 61,919 (8,995 ) 1989 12/04/96 40

114,500 1,053,985 1,168,485 (141,971 )

69
— 81,405 81,405 (14,168 ) 1984 11/01/95 40

70
6,502 62,576 69,079 (11,605 ) 1987 11/12/93 40

71
5,075 51,787 56,861 (9,197 ) 1987 12/13/91 40

72
3,570 38,044 41,614 (7,970 ) 1981/1995 06/24/94 40

73
9,044 88,576 97,620 (13,779 ) 1983-1985 09/30/98 40

74
6,152 62,190 68,342 (9,414 ) 1998 09/30/98 40

75
3,760 38,324 42,083 (6,681 ) 1984 10/01/97 40

76
4,768 49,754 54,522 (8,870 ) 1985 06/29/89 40

77
5,286 53,091 58,378 (8,964 ) 1987 11/24/97 40

78
3,612 37,827 41,439 (6,749 ) 1986/1994 04/21/92 40

79
8,089 76,782 84,871 (12,779 ) 1983 10/01/97 40

80
7,226 74,044 81,271 (13,249 ) 1979, 1981, 1995 10/01/97 40

81
1,672 16,849 18,521 (3,241 ) 1983/1991 06/28/89 40

82
1,392 17,856 19,249 (2,850 ) 1983/1990 08/03/89 40

83
13,491 129,518 143,009 (23,881 ) 1984 09/29/87 40

84
5,142 49,037 54,180 (6,006 ) 1988 01/07/99 40

85
5,525 51,981 57,507 (6,700 ) 1985 01/07/99 40

86
2,804 29,391 32,195 (5,895 ) 1981/1996 11/12/93 40

87
4,754 47,714 52,469 (8,301 ) 1987/1996 11/12/93 40

88
4,693 46,074 50,767 (8,614 ) 1984/1996 11/12/93 40

89
1,180 10,917 12,097 (1,764 ) 1982 09/03/97 40

90
6,232 63,648 69,880 (11,634 ) 1987 09/03/97 40

91
6,696 65,253 71,949 (11,502 ) 1984 09/03/97 40

116,666 1,242,640 1,359,306 (213,814 )

92
6,683 39,229 45,912 (2,579 ) 1988 07/02/01 40

93
— 36,335 36,335 (2,359 ) 1987 07/02/01 40

94
1,902 11,524 13,426 (875 ) 1982 07/02/01 40

95
2,640 15,182 17,822 (1,009 ) 1982/1989 07/02/01 40

96
2,682 17,024 19,706 (1,305 ) 1979-1982,1990 07/02/01 40

Costs Capitalized

Initial Cost to Subsequent to

EOP Partnership Acquisition

Encumbrances Building and Building and

Description Notes Location State at 12/31/03 Land Improvements Land Improvements

97
Cerritos Towne Center Cerritos CA — — 60,368 — 2,366

98
700 North Brand Glendale CA (24,180 ) 5,970 33,828 — 2,437

99
18301 Von Karman (Apple Building) Irvine CA — 6,027 34,152 — 1,630

100
18581 Teller Irvine CA — 1,485 8,415 — 1,632

101
2600 Michelson Irvine CA — 11,291 63,984 — 1,957

102
Fairchild Corporate Center Irvine CA — 2,363 13,388 — 655

103
Inwood Park Irvine CA — 3,543 20,079 — 714

104
Tower 17 Irvine CA — 7,562 42,849 — 1,444

105
1920 Main Plaza (3) Irvine CA — 5,281 47,526 — 4,018

106
2010 Main Plaza (3) Irvine CA — 5,197 46,774 — 4,397

107
The Tower in Westwood Los Angeles CA — 10,041 56,899 — 1,058

108
10880 Wilshire Boulevard Los Angeles CA — 28,009 149,841 — 9,153

109
10960 Wilshire Boulevard Los Angeles CA — 16,841 151,574 — 8,265

110
550 S. Hope Los Angeles CA — 10,016 90,146 — 10,025

111
Two California Plaza (3) Los Angeles CA — — 156,197 — 51,634

112
Waters Edge Phase I (6) Los Angeles CA — 16,697 — — 44,000

113
1201 Dove Street Newport Beach CA — 1,998 11,320 — 419

114
The City — 3800 Chapman Orange CA — 3,019 17,107 — 239

115
500 Orange Tower Orange CA — 2,944 32,561 — 3,509

116
500-600 City Parkway Orange CA — 7,296 41,342 — 15,871

117
City Plaza Orange CA — 6,809 38,584 — 3,780

118
City Tower Orange CA — 10,440 59,160 — 1,573

119
1100 Executive Tower (3) Orange CA — 4,622 41,599 — 1,866

120
3280 E. Foothill Boulevard Pasadena CA — 3,396 19,246 — 1,437

121
790 Colorado Pasadena CA — 2,355 13,343 — 2,437

122
Century Square Pasadena CA — 6,787 38,457 — 23

123
Pasadena Financial Center Pasadena CA — 4,779 27,084 — 346

124
Centerside II San Diego CA (21,986 ) 5,777 32,737 — 1,467

125
La Jolla Centre I & II San Diego CA — 12,904 73,122 — 2,483

126
Nobel Corporate Plaza San Diego CA — 3,697 20,948 — 703

127
One Pacific Heights San Diego CA — 3,072 17,408 — 746

128
Pacific Corporate Plaza San Diego CA — 2,100 11,900 — 150

129
Park Plaza San Diego CA — 2,203 12,484 — 253

130
Westridge San Diego CA — 1,500 8,500 — —

131
Smith Barney Tower (3) San Diego CA — 2,658 23,919 — 4,614

132
The Plaza at LaJolla Village (3) San Diego CA (77,629 ) 10,916 98,243 19 4,239

133
Griffin Towers Santa Ana CA — 14,317 81,127 — 3,323

134
Lincoln Town Center Santa Ana CA — 4,403 24,950 — 1,324

135
2951 28th Street Santa Monica CA — 3,612 20,465 — 1,939

136
429 Santa Monica Santa Monica CA — 2,523 14,298 — 975

137
Arboretum Courtyard Santa Monica CA — 6,573 37,245 — 1,346

138
Santa Monica Business Park Santa Monica CA (7,947 ) — 242,155 — 6,438

139
Searise Office Tower Santa Monica CA — 4,380 24,818 — 1,341

140
Wilshire Palisades Santa Monica CA (39,392 ) 9,763 55,323 — 2,086

141
Bixby Ranch Seal Beach CA (26,015 ) 6,450 36,550 — 1,810

Los Angeles Region Totals (197,149 ) 295,519 2,265,947 19 217,488

New York Region

142
527 Madison Avenue New York NY — 9,155 51,877 — 4,303

143
850 Third Avenue (3)(5) New York NY (4,515 ) 9,606 86,453 30 5,894

144
Park Avenue Tower (5) New York NY (180,000 ) 48,976 196,566 719 11,057

145
Tower 56 New York NY (22,428 ) 6,853 38,832 — 1,689

146
Worldwide Plaza New York NY (214,856 ) 124,919 496,665 — 8,477

147
Shelton Pointe (3) Shelton CT — 1,514 13,625 — 1,430

148
177 Broad Street (3) Stamford CT — 2,562 23,056 — 1,052

149
300 Atlantic Street (3) Stamford CT — 4,632 41,691 — 3,500

150
Canterbury Green (3)(4) Stamford CT — (0.0 ) 41,987 92 1,801

151
Four Stamford Plaza (3) Stamford CT — 4,471 40,238 24 1,209

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

97
— 62,734 62,734 (3,977 ) 1989/1998 07/02/01 40

98
5,970 36,265 42,235 (3,687 ) 1981 06/19/00 40

99
6,027 35,782 41,809 (3,580 ) 1991 06/19/00 40

100
1,485 10,047 11,532 (725 ) 1983 07/02/01 40

101
11,291 65,941 77,232 (4,310 ) 1986 07/02/01 40

102
2,363 14,043 16,405 (962 ) 1979 07/02/01 40

103
3,543 20,793 24,336 (1,322 ) 1985/1996 07/02/01 40

104
7,562 44,292 51,854 (2,847 ) 1987 07/02/01 40

105
5,281 51,544 56,825 (10,158 ) 1988 09/29/94 40

106
5,197 51,171 56,368 (8,507 ) 1988 12/13/94 40

107
10,041 57,956 67,997 (3,662 ) 1989 07/02/01 40

108
28,009 158,995 187,004 (25,491 ) 1970/1992 12/19/97 40

109
16,841 159,839 176,680 (28,561 ) 1971/1992 12/19/97 40

110
10,016 100,171 110,187 (16,399 ) 1991 10/06/97 40

111
— 207,831 207,831 (46,188 ) 1992 08/23/96 40

112
16,697 44,000 60,697 (1,108 ) 2002 06/27/01 40

113
1,998 11,739 13,737 (736 ) 1975/1989 07/02/01 40

114
3,019 17,346 20,365 (1,073 ) 1984 07/02/01 40

115
2,944 36,070 39,013 (6,111 ) 1988 01/01/01 40

116
7,296 57,213 64,508 (4,282 ) 1974, 1978, 1998 07/02/01 40

117
6,809 42,364 49,173 (2,938 ) 1970 07/02/01 40

118
10,440 60,733 71,173 (3,935 ) 1988 07/02/01 40

119
4,622 43,465 48,087 (7,728 ) 1987 12/15/94 40

120
3,396 20,683 24,080 (1,327 ) 1982 07/02/01 40

121
2,355 15,780 18,134 (1,085 ) 1981 07/02/01 40

122
6,787 38,481 45,267 (2,367 ) 1984 07/02/01 40

123
4,779 27,430 32,209 (1,802 ) 1984/1996 07/02/01 40

124
5,777 34,204 39,981 (3,293 ) 1987 06/19/00 40

125
12,904 75,605 88,509 (4,818 ) 1986-1989 07/02/01 40

126
3,697 21,651 25,348 (1,383 ) 1985 07/02/01 40

127
3,072 18,154 21,226 (1,166 ) 1989 07/02/01 40

128
2,100 12,050 14,150 (737 ) 1988 07/02/01 40

129
2,203 12,737 14,940 (778 ) 1982 07/02/01 40

130
1,500 8,500 10,000 (522 ) 1980 07/02/01 40

131
2,658 28,534 31,192 (6,223 ) 1987 04/28/97 40

132
10,935 102,482 113,418 (18,103 ) 1987-1990 03/10/94 40

133
14,317 84,450 98,767 (3,854 ) 1987 07/02/01 40

134
4,403 26,274 30,677 (2,489 ) 1987 06/19/00 40

135
3,612 22,405 26,016 (1,337 ) 1971 07/02/01 40

136
2,523 15,274 17,797 (1,328 ) 1982 06/19/00 40

137
6,573 38,591 45,164 (2,382 ) 1999 07/02/01 40

138
— 248,593 248,593 (15,399 ) 1979-1981 07/02/01 40

139
4,380 26,159 30,539 (2,359 ) 1975 06/19/00 40

140
9,763 57,410 67,173 (5,170 ) 1981 06/19/00 40

141
6,450 38,360 44,810 (3,703 ) 1987 06/19/00 40

295,538 2,483,435 2,778,973 (278,040 )

142
9,155 56,179 65,334 (5,034 ) 1986 06/19/00 40

143
9,636 92,348 101,983 (16,395 ) 1960/1996 03/20/95 40

144
49,695 207,623 257,317 (28,891 ) 1986 07/15/98 40

145
6,853 40,521 47,373 (3,794 ) 1983 06/19/00 40

146
124,919 505,143 630,062 (65,221 ) 1989 10/01/98 40

147
1,514 15,055 16,569 (2,705 ) 1985/1993 11/26/91 40

148
2,562 24,108 26,670 (4,045 ) 1989 01/29/97 40

149
4,632 45,191 49,823 (7,859 ) 1987/1996 03/30/93 40

150
92 43,789 43,880 (7,684 ) 1987 12/15/92 40

151
4,495 41,447 45,942 (6,959 ) 1979/1994 08/31/94 40

Costs Capitalized

Initial Cost to Subsequent to

EOP Partnership Acquisition

Encumbrances Building and Building and

Description Notes Location State at 12/31/03 Land Improvements Land Improvements

152
One and Two Stamford Plaza (3) Stamford CT — 8,268 74,409 — 6,597

153
Three Stamford Plaza (3) Stamford CT — 3,957 35,610 — 865

New York Region Totals (421,800 ) 224,911 1,141,009 865 47,873

San Francisco Region

154
Golden Bear Center Berkeley CA (18,562 ) 4,500 25,500 — 1,362

155
Sierra Point Brisbane CA — 3,198 18,120 — 320

156
Bay Park Plaza I & II Burlingame CA — 12,906 73,133 — 1,298

157
One Bay Plaza Burlingame CA — 8,642 48,973 — 1,433

158
One & Two Corporate Center Concord CA — 6,379 36,146 — 2,215

159
5813 Shellmound Street/5855 Christie Ave Emeryville CA — 870 4,930 — 8

160
Watergate Office Towers Emeryville CA — 46,568 263,885 — (1,122 )

161
Bayside Corporate Center Foster City CA — 2,836 16,069 — 854

162
Metro Center Foster City CA — — 282,329 — 3,806

163
Parkside Towers Foster City CA — 36,000 63,965 — 10,033

164
Vintage Industrial Park Foster City CA — 5,102 28,914 — 208

165
Vintage Park Office Foster City CA — 1,608 9,111 — 92

166
Drake’s Landing Larkspur CA — 5,735 32,499 — 1,275

167
Larkspur Landing Office Park Larkspur CA — 8,316 47,126 — 2,492

168
Wood Island Office Complex Larkspur CA — 3,735 21,163 — 243

169
PeopleSoft Plaza Pleasanton CA — 7,039 39,887 — 3,372

170
Redwood Shores Redwood City CA — 4,166 23,608 — 74

171
Seaport Centre Redwood City CA — 24,000 136,000 — 1,762

172
Seaport Plaza Redwood City CA — 10,132 26,108 — 2,850

173
Towers@Shore Center Redwood City CA — 35,578 69,054 — 6,450

174
555 Twin Dolphin Plaza Redwood Shores CA — 11,790 66,810 — 3,035

175
Douglas Corporate Center Roseville CA — 2,391 13,550 — 129

176
Johnson Ranch Corp Centre I & II Roseville CA — 4,380 24,819 — 157

177
Roseville Corporate Center Roseville CA — 3,008 17,046 — —

178
3600-3620 American River Drive Sacramento CA — 2,209 12,518 — 955

179
455 University Avenue Sacramento CA — 465 2,634 — 170

180
555 University Avenue Sacramento CA — 939 5,323 — 275

181
575 & 601 University Avenue Sacramento CA — 1,159 6,569 — 472

182
655 University Avenue Sacramento CA — 672 3,806 — 305

183
701 University Avenue Sacramento CA — 934 5,294 — 206

184
740 University Avenue Sacramento CA — 212 1,199 — 47

185
Cal Center Sacramento CA — 2,393 13,560 — 662

186
Exposition Centre Sacramento CA — 1,200 7,800 — 384

187
Fidelity Plaza Sacramento CA — 1,149 6,513 — 96

188
Gateway Oaks I Sacramento CA — 2,391 13,546 — 251

189
Gateway Oaks II Sacramento CA — 1,341 7,600 — 310

190
Gateway Oaks III Sacramento CA — 936 5,305 — 140

191
Gateway Oaks IV Sacramento CA — 1,658 9,395 — 103

192
Point West Commercentre Sacramento CA — 2,321 13,154 — 791

193
Point West Corporate Center I & II Sacramento CA — 3,653 14,779 — 562

194
Point West I — Response Road Sacramento CA — 774 4,384 — 399

195
Point West III — River Park Dr. Sacramento CA — 1,141 6,467 — 812

196
The Orchard Sacramento CA — 1,226 6,948 — 291

197
Wells Fargo Center Sacramento CA — 17,819 100,975 — 2,470

198
Bayhill Office Center San Bruno CA (89,278 ) 24,010 136,055 — 4,199

199
Skyway Landing I & II San Carlos CA — 15,535 35,994 — 17,089

200
120 Montgomery San Francisco CA — 17,564 99,532 — 2,873

201
150 California San Francisco CA — 12,567 46,184 — 4,448

202
201 California San Francisco CA (39,546 ) 10,520 59,611 — 3,752

203
188 Embarcadero San Francisco CA (14,233 ) 4,108 23,280 — 1,651

204
201 Mission Street (3) San Francisco CA — 8,871 79,837 — 4,983

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

152
8,268 81,006 89,274 (14,699 ) 1986/1994 03/30/93 40

153
3,957 36,475 40,431 (6,073 ) 1980/1994 12/15/92 40

225,777 1,188,882 1,414,659 (169,359 )

154
4,500 26,862 31,362 (2,409 ) 1986 06/19/00 40

155
3,198 18,440 21,638 (1,136 ) 1979/1983 07/02/01 40

156
12,906 74,431 87,336 (6,741 ) 1985/1998 06/19/00 40

157
8,642 50,406 59,049 (4,661 ) 1979 06/19/00 40

158
6,379 38,361 44,740 (3,649 ) 1985-1987 06/19/00 40

159
870 4,938 5,808 (303 ) 1970-1971 07/02/01 40

160
46,568 262,763 309,331 (16,745 ) 1973/2001 07/02/01 40

161
2,836 16,923 19,759 (1,098 ) 1986-1987 07/02/01 40

162
— 286,134 286,134 (17,810 ) 1985-1988 07/02/01 40

163
36,000 73,998 109,998 (3,312 ) 2001 07/02/01 40

164
5,102 29,122 34,225 (1,792 ) 1985-1990 07/02/01 40

165
1,608 9,203 10,810 (761 ) 1985-1990 07/02/01 40

166
5,735 33,774 39,509 (2,262 ) 1986 07/02/01 40

167
8,316 49,618 57,935 (3,231 ) 1981-1982 07/02/01 40

168
3,735 21,406 25,141 (1,326 ) 1978 07/02/01 40

169
7,039 43,259 50,298 (3,868 ) 1984 06/19/00 40

170
4,166 23,682 27,848 (1,457 ) 1986 07/02/01 40

171
24,000 137,762 161,762 (12,103 ) 1988 06/19/00 40

172
10,132 28,958 39,090 (2,056 ) 2000 06/19/00 40

173
35,578 75,504 111,082 (4,015 ) 2002 07/02/01 40

174
11,790 69,845 81,635 (4,385 ) 1989 07/02/01 40

175
2,391 13,680 16,071 (849 ) 1990 07/02/01 40

176
4,380 24,976 29,356 (1,570 ) 1990-1998 07/02/01 40

177
3,008 17,046 20,054 (1,048 ) 1999 07/02/01 40

178
2,209 13,473 15,682 (832 ) 1977-1979/ 1997 07/02/01 40

179
465 2,803 3,268 (190 ) 1973 07/02/01 40

180
939 5,598 6,538 (382 ) 1974 07/02/01 40

181
1,159 7,040 8,199 (445 ) 1977 07/02/01 40

182
672 4,111 4,783 (252 ) 1979 07/02/01 40

183
934 5,499 6,434 (351 ) 1990 07/02/01 40

184
212 1,246 1,458 (78 ) 1973 07/02/01 40

185
2,393 14,222 16,615 (908 ) 1989 07/02/01 40

186
1,200 8,184 9,384 (790 ) 1984 06/19/00 40

187
1,149 6,609 7,759 (432 ) 1980 07/02/01 40

188
2,391 13,797 16,187 (874 ) 1990 07/02/01 40

189
1,341 7,910 9,251 (544 ) 1992 07/02/01 40

190
936 5,445 6,381 (369 ) 1996 07/02/01 40

191
1,658 9,498 11,156 (582 ) 1998 07/02/01 40

192
2,321 13,946 16,267 (950 ) 1983 07/02/01 40

193
3,653 15,340 18,994 (1,016 ) 1984 07/02/01 40

194
774 4,783 5,556 (283 ) 1976 07/02/01 40

195
1,141 7,279 8,421 (497 ) 1978 07/02/01 40

196
1,226 7,239 8,465 (465 ) 1987 07/02/01 40

197
17,819 103,445 121,264 (9,260 ) 1987 06/19/00 40

198
24,010 140,254 164,263 (12,331 ) 1982/1987 06/19/00 40

199
15,535 53,083 68,617 (3,188 ) 2000 07/02/01 40

200
17,564 102,405 119,969 (9,204 ) 1956 06/19/00 40

201
12,567 50,631 63,198 (5,628 ) 2000 12/19/97 40

202
10,520 63,363 73,883 (5,616 ) 1980 06/19/00 40

203
4,108 24,931 29,039 (2,199 ) 1985 06/19/00 40

204
8,871 84,820 93,691 (14,345 ) 1981 04/30/97 40

Costs Capitalized

Initial Cost to Subsequent to

EOP Partnership Acquisition

Encumbrances Building and Building and

Description Notes Location State at 12/31/03 Land Improvements Land Improvements

205
301 Howard Street San Francisco CA — 6,547 58,920 — 5,350

206
580 California (3) San Francisco CA (56,237 ) 7,491 67,421 8 4,196

207
60 Spear Street (3) San Francisco CA — 2,125 19,126 15 3,272

208
Maritime Plaza (3) San Francisco CA — 11,531 103,776 — 15,599

209
One Market (3) San Francisco CA (176,828 ) 34,814 313,330 — 38,285

210
Ferry Building (6) San Francisco CA — — — — 104,245

211
Foundry Square II (6) San Francisco CA — 14,391 — — 128,538

212
Peninsula Office Park San Mateo CA (79,453 ) 27,275 154,561 — —

213
San Mateo BayCenter I San Mateo CA — 5,382 30,498 — 799

214
San Mateo BayCenter II San Mateo CA (10,098 ) 6,245 35,389 — 1,233

215
San Mateo BayCenter III San Mateo CA — 3,357 19,023 — 291

216
San Rafael Corporate Center San Rafael CA — 18,002 — — 28,953

217
Norris Tech Center San Ramon CA — 5,700 32,300 — 1,899

218
One & Two ADP Plaza San Ramon CA — 7,460 42,273 — 4,083

219
Fountaingrove Center Santa Rosa CA — 2,898 16,424 — 1,722

San Francisco Region Totals (484,235 ) 539,865 3,010,049 23 432,305

San Jose Region

220
Pruneyard Office Towers Campbell CA — 16,502 154,783 — 5,174

221
Cupertino Business Center Cupertino CA — 2,910 16,490 (28 ) 1,799

222
1900 McCarthy Milpitas CA — 1,998 11,319 — 416

223
California Circle II Milpitas CA — 1,764 9,997 — 454

224
Oak Creek I & II Milpitas CA — 1,309 7,417 — —

225
Shoreline Technology Park Mountain View CA — 31,575 190,894 69 11,554

226
Meier Mountain View Mountain View CA — 13,950 79,050 — 795

227
Ravendale at Central Mountain View CA — 2,550 14,450 — 83

228
2180 Sand Hill Road Menlo Park CA — 3,408 19,314 — 1,506

229
Embarcadero Place Palo Alto CA (34,400 ) 10,500 59,500 — 733

230
Palo Alto Square Palo Alto CA — — 78,143 161 2,351

231
Xerox Campus Palo Alto CA — — 132,810 — —

232
Foothill Research Center Palo Alto CA — — 104,894 — —

233
Lockheed Palo Alto CA — — 27,712 — 70

234
10 Almaden San Jose CA — 12,583 71,303 — 524

235
1740 Technology San Jose CA (17,118 ) 8,766 49,673 — 1,125

236
2290 North First Street San Jose CA — 2,431 13,776 — 707

237
Aspect Telecommunications San Jose CA — 2,925 16,575 — —

238
Central Park Plaza San Jose CA — 11,181 63,358 23 2,012

239
Metro Plaza San Jose CA — 18,029 102,164 — 2,021

240
Ridder Park San Jose CA — 2,012 11,402 — —

241
Skyport East and West San Jose CA — 6,779 87,193 — 25,538

242
Concourse San Jose CA — 49,279 279,248 (51 ) 2,837

243
Creekside San Jose CA — 9,631 54,576 — 311

244
San Jose Gateway Office II San Jose CA — 16,286 92,288 — 1,545

245
San Jose Gateway Office III San Jose CA — 6,409 36,315 — 99

246
North First Office Center San Jose CA — 6,395 36,239 — 68

247
San Jose Gateway San Jose CA — 7,873 44,616 — 2,983

248
225 West Santa Clara Street San Jose CA — 8,600 78,891 — —

249
1871 The Alameda San Jose CA — 1,129 6,399 — 255

250
2727 Augustine Santa Clara CA — 3,000 17,000 — —

251
3001 Stender Way Santa Clara CA — 2,263 12,823 — —

252
3045 Stender Way Santa Clara CA — 1,050 5,950 — —

253
3281-3285 Scott Boulevard Santa Clara CA — 1,275 7,225 — 611

254
Applied Materials I & II Santa Clara CA — 5,100 28,900 — —

255
Meier Central North Santa Clara CA — 2,880 16,320 — 25

256
Meier Central South Santa Clara CA — 5,265 29,835 — 356

257
Patrick Henry Drive Santa Clara CA — 2,475 14,025 — 4

258
Santa Clara Office Center I Santa Clara CA — 2,010 11,391 — 230

259
Santa Clara Office Center II Santa Clara CA — 2,870 16,261 — 216

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

205
6,547 64,270 70,817 (10,512 ) 1988 04/29/98 40

206
7,500 71,617 79,117 (13,365 ) 1984 12/21/95 40

207
2,140 22,398 24,538 (3,655 ) 1967/1987 09/29/87 40

208
11,531 119,375 130,906 (20,490 ) 1967/1990 04/21/97 40

209
34,814 351,615 386,429 (66,954 ) 1976/1995 11/22/94 40

210
— 104,245 104,245 — 1898/2002 06/19/00 40

211
14,391 128,538 142,929 (2,176 ) 2002 06/19/00 40

212
2,798 157,359 184,635 (14,142 ) 1971/1998 06/19/00 40

213
5,382 31,298 36,680 (2,004 ) 1984 07/02/01 40

214
6,245 36,622 42,867 (2,230 ) 1984 07/02/01 40

215
3,357 19,315 22,672 (1,199 ) 1987 07/02/01 40

216
18,002 28,953 46,955 (785 ) 2002 07/02/01 40

217
5,700 34,199 39,899 (3,391 ) 1984/1990 06/19/00 40

218
7,460 46,355 53,815 (4,110 ) 1987-1989 06/19/00 40

219
2,898 18,146 21,045 (1,097 ) 1986/1991 07/02/01 40

539,887 3,442,353 3,982,241 (316,708 )

220
16,502 159,958 176,460 (14,452 ) 1971/1999 06/19/00 40

221
2,882 18,289 21,171 (1,017 ) 1974-1975 07/02/01 40

222
1,998 11,735 13,732 (757 ) 1984 07/02/01 40

223
1,764 10,451 12,215 (697 ) 1984 07/02/01 40

224
1,309 7,417 8,726 (456 ) 1982 07/02/01 40

225
31,644 202,449 234,093 (28,703 ) 1985/1991 12/19/97 40

226
13,950 79,845 93,795 (4,860 ) 1972/1980 07/02/01 40

227
2,550 14,533 17,083 (888 ) 1980 07/02/01 40

228
3,408 20,819 24,228 (1,303 ) 1976 07/02/01 40

229
10,500 60,233 70,733 (5,293 ) 1984 06/19/00 40

230
161 80,494 80,655 (12,763 ) 1971/1985 10/01/99 23

231
— 132,810 132,810 (8,372 ) 1991 07/02/01 40

232
— 104,894 104,894 (6,786 ) 1991 07/02/01 40

233
— 27,782 27,782 (1,753 ) 1991 07/02/01 40

234
12,583 71,826 84,409 (6,418 ) 1989 06/19/00 40

235
8,766 50,799 59,565 (3,270 ) 1986/1994 07/02/01 40

236
2,431 14,483 16,914 (943 ) 1984 07/02/01 40

237
2,925 16,575 19,500 (1,019 ) 1989 07/02/01 40

238
11,204 65,370 76,574 (4,389 ) 1984-1985 07/02/01 40

239
18,029 104,185 122,214 (6,431 ) 1986-1987 07/02/01 40

240
2,012 11,402 13,415 (701 ) 1966 07/02/01 40

241
6,779 112,732 119,511 (8,528 ) 2001 07/02/01 40

242
49,229 282,086 331,314 (17,740 ) 1980/2000 07/02/01 40

243
9,631 54,888 64,519 (3,438 ) 1986 07/02/01 40

244
16,286 93,833 110,119 (5,816 ) 1983-1984 07/02/01 40

245
6,409 36,414 42,823 (2,245 ) 1998 07/02/01 40

246
6,395 36,307 42,702 (2,237 ) 1985-1986 07/02/01 40

247
7,873 47,599 55,472 (2,972 ) 1981 07/02/01 40

248
8,600 78,891 87,491 (112 ) 2001 12/31/03 35

249
1,129 6,654 7,784 (407 ) 1972 07/02/01 40

250
3,000 17,000 20,000 (1,045 ) 1975 07/02/01 40

251
2,263 12,823 15,086 (788 ) 1978 07/02/01 40

252
1,050 5,950 7,000 (366 ) 1975 07/02/01 40

253
1,275 7,836 9,111 (445 ) 1981 07/02/01 40

254
5,100 28,900 34,000 (1,776 ) 1979 07/02/01 40

255
2,880 16,345 19,225 (1,003 ) 1972/1980 07/02/01 40

256
5,265 30,191 35,456 (2,012 ) 1972/1980 07/02/01 40

257
2,475 14,029 16,504 (862 ) 1981 07/02/01 40

258
2,010 11,621 13,632 (731 ) 1981 07/02/01 40

259
2,870 16,477 19,347 (1,036 ) 1978 07/02/01 40

Costs Capitalized

Initial Cost to Subsequent to

EOP Partnership Acquisition

Encumbrances Building and Building and

Description Notes Location State at 12/31/03 Land Improvements Land Improvements

260
Santa Clara Office Center III Santa Clara CA — 2,031 11,509 — 356

261
Santa Clara Office Center IV Santa Clara CA — 186 1,057 — —

262
Lake Marriott Business Park Santa Clara CA — 9,091 84,967 297 2,757

263
Sunnyvale Business Center Sunnyvale CA — 4,890 44,010 — 44

264
Borregas Avenue Sunnyvale CA — 1,095 6,205 — 228

265
Meier Sunnyvale Sunnyvale CA — 495 2,805 — —

San Jose Region Totals (51,518 ) 302,751 2,261,075 472 69,788

Seattle Region

266
10700 Building Bellevue WA — — 15,958 — 92

267
110 Atrium Place Bellevue WA (19,868 ) 6,333 35,888 — 2,594

268
Bellefield Office Park Bellevue WA — 12,232 69,312 (1 ) 2,140

269
Bellevue Gateway I Bellevue WA — 3,593 20,360 — 1,556

270
Bellevue Gateway II Bellevue WA — 2,016 11,423 — 494

271
Eastgate Office Park Bellevue WA — 6,468 36,650 3 2,652

272
Gateway 405 Building Bellevue WA — 1,011 5,727 — 273

273
I-90 Bellevue Bellevue WA — 3,725 21,108 — 237

274
Lincoln Executive Center Bellevue WA — 3,235 18,329 — 1,243

275
Lincoln Executive Center II & III Bellevue WA — 4,918 27,868 — 273

276
Main Street Building Bellevue WA — 1,398 7,922 — 311

277
Plaza Center Bellevue WA — 16,680 94,521 — 1,066

278
Plaza East Bellevue WA — 4,687 26,561 — 877

279
Sunset North Corporate Campus Bellevue WA — 17,031 79,249 — 12,869

280
City Center Bellevue Bellevue WA — 10,349 93,142 — 8,651

281
One Bellevue Center Bellevue WA — — 56,223 — 2,737

282
Rainier Plaza Bellevue WA — — 79,928 — 4,447

283
Key Center Bellevue WA — — 78,447 — 6,410

284
4000 Kruse Way Place Lake Oswego OR — 4,475 25,360 — 1,619

285
4004 Kruse Way Place Lake Oswego OR — 1,888 10,698 — 463

286
4800 Meadows Lake Oswego OR — — 17,448 — 432

287
4900-5000 Meadows Lake Oswego OR — — 30,528 — 1,181

288
4949 Meadows Lake Oswego OR — — 26,941 — 1,086

289
Kruse Oaks I Lake Oswego OR — — 14,648 — 4,091

290
Kruse Way Plaza I, II Lake Oswego OR — 2,866 16,239 — 1,060

291
Kruse Woods Lake Oswego OR — 10,812 80,977 — 2,664

292
Island Corporate Center Mercer Island WA (12,330 ) 2,700 15,300 — 955

293
5550 Macadam Building Portland OR — 870 4,929 — 423

294
Benjamin Franklin Plaza Portland OR — 7,505 42,529 — 2,230

295
Lincoln Center Portland OR — 18,760 106,307 — 6,372

296
One Pacific Square Portland OR — 4,451 25,221 — 1,254

297
River Forum I & II Portland OR — 4,038 22,881 — 3,140

298
RiverSide Centre (Oregon) Portland OR — 2,537 12,353 — 587

299
Congress Center Portland OR — 5,383 48,634 — 7,964

300
Southgate Office Plaza I & II Renton WA — 4,794 27,163 — 3,779

301
Washington Mutual Tower Seattle WA (78,756 ) 51,000 289,000 — 741

302
1111 Third Avenue Seattle WA — 9,900 89,571 — 3,733

303
10833-10845 NE 8th Street Seattle WA — — 2,000 — 28

304
Nordstrom Medical Tower Seattle WA — 1,700 15,450 — 565

305
Second and Seneca Seattle WA — 10,922 98,927 — 2,632

306
Second and Spring Building Seattle WA — 1,968 17,716 — 2,848

307
Wells Fargo Center Seattle WA — 21,361 193,529 — 10,384

308
Nimbus Corporate Center Tigard OR — 12,934 73,291 — 7,281

Seattle Region Totals (110,954 ) 274,539 2,086,257 2 116,433

Washington D.C. Region

309
Polk and Taylor Buildings Arlington VA — 16,943 152,483 — 23,753

310
Four and Five Valley Square Blue Bell PA — 866 7,793 (1 ) 1,735

311
One Valley Square Blue Bell PA — 717 6,457 — 1,308

312
Three Valley Square Blue Bell PA — 1,012 9,111 — 1,423

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

260
2,031 11,865 13,896 (734 ) 1980 07/02/01 40

261
186 1,057 1,243 (65 ) 1979 07/02/01 40

262
9,388 87,724 97,112 (13,782 ) 1981 12/19/97 40

263
4,890 44,054 48,944 (6,652 ) 1990 12/19/97 40

264
1,095 6,433 7,528 (381 ) 1978 07/02/01 40

265
495 2,805 3,300 (172 ) 1979 07/02/01 40

303,223 2,330,863 2,634,086 (186,617 )

266
— 16,050 16,050 (985 ) 1981 07/02/01 40

267
6,333 38,483 44,816 (3,505 ) 1981 06/19/00 40

268
12,231 71,452 83,682 (4,652 ) 1980 07/02/01 40

269
3,593 21,916 25,509 (1,581 ) 1985 07/02/01 40

270
2,016 11,917 13,933 (791 ) 1988 07/02/01 40

271
6,471 39,302 45,772 (2,505 ) 1985 07/02/01 40

272
1,011 6,000 7,011 (376 ) 1986 07/02/01 40

273
3,725 21,346 25,071 (1,305 ) 1986 07/02/01 40

274
3,235 19,572 22,807 (1,303 ) 1983-1985 07/02/01 40

275
4,918 28,141 33,059 (1,783 ) 1983-1985 07/02/01 40

276
1,398 8,233 9,631 (522 ) 1980 07/02/01 40

277
16,680 95,587 112,267 (5,970 ) 1978/1983 07/02/01 40

278
4,687 27,438 32,125 (1,770 ) 1988 07/02/01 40

279
17,031 92,118 109,149 (11,741 ) 1999 06/30/00 40

280
10,349 101,793 112,142 (12,825 ) 1987 01/28/99 40

281
— 58,960 58,960 (9,564 ) 1983 12/17/97 40

282
— 84,375 84,375 (12,941 ) 1986 12/17/97 40

283
— 84,857 84,857 (1,352 ) 2000 06/19/00 40

284
4,475 26,979 31,454 (1,913 ) 1981/1986 07/02/01 40

285
1,888 11,162 13,049 (820 ) 1996 07/02/01 40

286
— 17,880 17,880 (1,110 ) 1998 07/02/01 40

287
— 31,710 31,710 (2,129 ) 1990 07/02/01 40

288
— 28,027 28,027 (1,756 ) 1997 07/02/01 40

289
— 18,739 18,739 (1,456 ) 2001 07/02/01 40

290
2,866 17,298 20,164 (1,138 ) 1984-1986 07/02/01 40

291
10,812 83,641 94,454 (5,565 ) 1986-1988 07/02/01 40

292
2,700 16,255 18,955 (1,483 ) 1987 06/19/00 40

293
870 5,351 6,221 (394 ) 1980 07/02/01 40

294
7,505 44,759 52,264 (3,117 ) 1974/1994 07/02/01 40

295
18,760 112,678 131,438 (7,253 ) 1980/1989 07/02/01 40

296
4,451 26,475 30,926 (1,731 ) 1983 07/02/01 40

297
4,038 26,021 30,059 (1,937 ) 1985 07/02/01 40

298
2,537 12,940 15,477 (1,479 ) 1947/1979 07/02/01 40

299
5,383 56,598 61,981 (9,325 ) 1980 12/17/97 40

300
4,794 30,943 35,736 (2,050 ) 1987/1991 07/02/01 40

301
51,000 289,741 340,741 (27,040 ) 1988 06/19/00 40

302
9,900 93,304 103,204 (16,156 ) 1980 12/17/97 40

303
— 2,028 2,028 (13 ) 1962,1978,1982,1987 07/02/01 40

304
1,700 16,015 17,715 (2,580 ) 1986 12/17/97 40

305
10,922 101,559 112,482 (16,293 ) 1991 12/17/97 40

306
1,968 20,564 22,532 (3,291 ) 1906/1989 07/29/98 40

307
21,361 203,912 225,273 (32,228 ) 1983 12/17/97 40

308
12,934 80,572 93,505 (5,142 ) 1991 07/02/01 40

274,541 2,202,689 2,477,230 (222,870 )

309
16,943 176,236 193,179 (24,467 ) 1970 05/22/98 40

310
865 9,528 10,393 (1,717 ) 1988 10/07/97 40

311
717 7,765 8,482 (1,568 ) 1982 11/21/97 40

312
1,012 10,534 11,546 (2,167 ) 1984 11/21/97 40

Costs Capitalized

Initial Cost to Subsequent to

EOP Partnership Acquisition

Encumbrances Building and Building and

Description Notes Location State at 12/31/03 Land Improvements Land Improvements

313
Two Valley Square Blue Bell PA — 879 7,913 — 647

314
Four Falls Conshohocken PA — 4,939 44,458 55 3,007

315
Centerpointe I & II Fairfax VA 0 8,838 79,540 367 1,810

316
Fair Oaks Plaza Fairfax VA — 2,412 21,712 35 1,513

317
Northridge I (8) Herndon VA (12,901 ) 3,225 29,024 — 1,526

318
Oak Hill Plaza King of Prussia PA — 2,208 19,879 — 2,203

319
Walnut Hill Plaza King of Prussia PA (13,651 ) 2,045 18,410 — 1,086

320
John Marshall III McLean VA — 9,950 29,863 — 3,737

321
E.J. Randolph (8) McLean VA (14,223 ) 3,937 35,429 7 1,079

322
John Marshall I McLean VA (17,109 ) 5,216 46,814 24 461

323
E.J. Randolph II McLean VA — 5,770 24,587 — 3,853

324
1601 Market (3) Philadelphia PA — 5,781 52,027 — 16,852

325
1700 Market Philadelphia PA — 9,389 84,498 — 26,529

326
Reston Town Center Garage (3) Reston VA — 1,943 9,792 — 1,812

327
Reston Town Center (3) Reston VA (114,657 ) 18,175 154,576 83 14,925

328
1300 North 17th Street Rosslyn VA — 9,811 88,296 — 3,884

329
1616 N. Fort Myer Drive Rosslyn VA — 6,961 62,646 — 3,551

330
Army and Navy Club Building Washington D.C. — 3,773 33,954 — 177

331
Market Square Washington D.C. — 33,077 187,437 — 208

332
One Lafayette Centre Washington D.C. — 8,262 74,362 — 2,741

333
Three Lafayette Centre Washington D.C. — 6,871 61,841 — 4,893

334
Two Lafayette Centre Washington D.C. — 2,642 26,676 — 1,378

335
Liberty Place Washington D.C. — 5,625 50,625 — 876

336
One Devon Square Wayne PA — 1,025 9,227 — 1,586

337
Three Devon Square Wayne PA — 413 3,713 — 23

338
Two Devon Square Wayne PA — 659 5,935 — 492

Washington D.C. Region Totals (172,540 ) 183,362 1,439,078 570 129,070

Subtotal Office Properties (2,308,491 ) 2,664,186 19,103,956 3,892 1,615,163

Development Properties:

339
Kruse Woods V (9) Lake Oswego OR — 5,478 — — 24,551

340
Douglas Corporate Center II (9) Roseville CA — 1,700 — — 11,904

341
Cambridge Science Center (9) Cambridge MA — 1,959 17,635 — 12,005

Subtotal Development Properties — 9,137 17,635 — 48,460

Industrial Properties:

Los Angeles Region

1
Airport Commerce Center Bakersfield CA — 525 2,975 — —

Los Angeles Region Totals — 525 2,975 — —

San Francisco Region

2
Benicia Ind II & III Benicia CA — 2,250 12,750 — 59

3
BayCenter Business Park I, II & III Hayward CA — 6,240 35,360 — 655

4
Cabot Boulevard Warehouse Hayward CA — 1,905 10,795 — 43

5
Eden Landing Business Center Hayward CA — 945 5,355 — 297

6
Hayward Business Park Hayward CA — 6,750 38,250 — 324

7
Huntwood Business Center Hayward CA — 2,625 14,875 — 380

8
Keebler Warehouse Hayward CA — 630 3,570 — 762

9
The Good Guys Distribution Center Hayward CA — 3,525 19,975 — —

10
Independent Road Warehouse Oakland CA — 900 5,100 — 7

11
Port of Oakland Oakland CA — 2,025 11,475 — 256

12
Doolittle Business Center San Leandro CA — 1,320 7,480 — 78

San Francisco Region Totals — 29,115 164,985 — 2,861

San Jose Region

13
Fremont Bayside (7) Fremont CA (5,396 ) 2,025 11,475 — 89

14
Fremont Commerce Centers Fremont CA — 4,440 25,160 — 382

[Additional columns below]

[Continued from above table, first column(s) repeated]

Gross Amount Carried at

Close of Period

12/31/2003

Date of

Building and Accumulated Construction/ Date Depreciable

Land Improvements Total(1) Depreciation Renovation Acquired Lives(2)

313
879 8,560 9,439 (1,386 ) 1990 10/07/97 40

314
4,994 47,466 52,459 (8,214 ) 1988 10/07/97 40

315
9,205 81,350 90,555 (12,803 ) 1990/1998 12/19/97 40

316
2,447 23,225 25,672 (3,941 ) 1986 11/24/97 40

317
3,225 30,551 33,776 (4,927 ) 1988 12/19/97 40

318
2,208 22,081 24,290 (3,471 ) 1982 10/07/97 40

319
2,045 19,496 21,541 (3,367 ) 1985 10/07/97 40

320
9,950 33,599 43,549 (4,204 ) 2000 12/19/97 40

321
3,944 36,508 40,451 (5,690 ) 1983 12/19/97 40

322
5,240 47,275 52,515 (7,172 ) 1981 12/19/97 40

323
5,770 28,440 34,210 (1,387 ) 2002 12/19/97 40

324
5,781 68,880 74,661 (12,276 ) 1970 01/18/96 40

325
9,389 111,028 120,417 (21,773 ) 1969/1989 10/01/97 40

326
1,943 11,604 13,547 (1,573 ) 1999 10/22/96 40

327
18,258 169,502 187,759 (26,484 ) 1990 10/22/96 40

328
9,811 92,180 101,991 (14,151 ) 1980 12/19/97 40

329
6,961 66,197 73,158 (10,150 ) 1974 12/19/97 40

330
3,773 34,131 37,904 (1,372 ) 1986 05/24/02 40

331
33,077 187,645 220,722 (15,712 ) 1990 06/19/00 40

332
8,262 77,103 85,365 (12,448 ) 1980/1993 10/17/97 40

333
6,871 66,734 73,606 (3,603 ) 1986 10/17/01 40

334
2,642 28,053 30,695 (2,507 ) 1985 07/11/00 40

335
5,625 51,501 57,126 (1,635 ) 1991 09/17/02 40

336
1,025 10,813 11,838 (2,062 ) 1984 10/07/97 40

337
413 3,736 4,148 (578 ) 1985 10/07/97 40

338
659 6,427 7,086 (1,097 ) 1985 10/07/97 40

183,931 1,568,148 1,752,079 (213,902 )

2,668,078 20,719,119 23,387,197 (2,511,945 )

339
5,478 24,551 30,029 — N/A 07/02/01

340
1,700 11,904 13,604 — N/A 07/02/01

341
1,959 29,640 31,599 (2,305 ) N/A 12/19/97

9,137 66,095 75,232 (2,305 )

1
525 2,975 3,500 (183 ) 1982 07/02/01 40

525 2,975 3,500 (183 )

2
2,250 12,809 15,059 (818 ) 1996 07/02/01 40

3
6,240 36,015 42,255 (2,264 ) 1994 07/02/01 40

4
1,905 10,838 12,743 (672 ) 1988 07/02/01 40

5
945 5,652 6,597 (386 ) 1990 07/02/01 40

6
6,750 38,574 45,324 (2,407 ) 1980-1981 07/02/01 40

7
2,625 15,255 17,880 (981 ) 1979 07/02/01 40

8
630 4,332 4,962 (240 ) 1985 07/02/01 40

9
3,525 19,975 23,500 (1,228 ) 1990 07/02/01 40

10
900 5,107 6,007 (313 ) 1972 07/02/01 40

11
2,025 11,731 13,756 (743 ) 1977 07/02/01 40

12
1,320 7,558 8,878 (474 ) 1978 07/02/01 40

29,115 167,846 196,961 (10,527 )

13
2,025 11,564 13,589 (717 ) 1990 07/02/01 40

14
4,440 25,542 29,982 (1,586 ) 1988 07/02/01 40

[Additional columns below]

(1) The aggregate cost for Federal Income Tax purposes as of December 31, 2003 was approximately $14.4 billion.

(2) The life to compute depreciation on building is 35-40 years, except for Palo Alto which is subject to a ground lease that terminates in 2023. Therefore, the building is depreciated over the remaining term of the ground lease. The life to compute depreciation on building improvements is 3-40 years.

(3) The date acquired represents the date these Properties were acquired by Equity Office Predecessors. The acquisition of the Properties, or interest therein, by the Company from Equity Office Predecessors in connection with the Consolidation on July 11, 1997, was accounted for using the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. Accordingly, the assets were recorded by the Company at their fair values.

(4) This Property contains 106 residential units in addition to 226,197 square feet of office space.

(5) These loans are subject to cross default and collateralization provisions.

(6) These properties were previously under development and have been placed into service during 2003.

(7) These loans are subject to cross default and collateralization provisions.

(8) These loans are subject to cross default and collateralization provisions.

(9) These properties are in various development stages. During the development period certain operating costs, including real estate taxes together with interest incurred during the development stages will be capitalized.

(10) The encumbrances at December 31, 2003 include a net premium of approximately $13.7 million.

A summary of activity of investment in real estate and accumulated depreciation is as follows:

The changes in investment in real estate for the years ended December 31, 2003, 2002, and 2001 are as follows:


			December 31, 2003			December 31, 2002			December 31, 2001

Balance, beginning of the period			$	25,163,516		$	24,816,351		$	17,619,380
	Additions during period:
		Acquisitions		163,511			121,986			7,323,459
		Consolidation of Properties previously accounted for under the equity method		85,870			377,532			—
		Improvements		471,638			328,930			360,065
		Other(1)		—			—			(4,516	)
	Deductions during period:
		Properties disposed of		(1,545,598	)		(457,077	)		(482,037	)
		Impairment on assets held for Sale		(7,667	)		—			—
		Write-off of fully depreciated assets which are no longer in service		(19,048	)		(24,206	)		—

Balance, end of period			$	24,312,222		$	25,163,516		$	24,816,351

The changes in accumulated depreciation for the years ended December 31, 2003, 2002, 2001 and 2000, are as follows:


				December 31, 2003			December 31, 2002			December 31, 2001

Balance, beginning of the period				$	(2,077,613	)	$	(1,494,301	)	$	(978,055	)
	Additions during period:
		Depreciation			(663,935	)		(637,633	)		(532,403	)
			Consolidation of Properties previously accounted for under the equity method		—			(617	)		—
	Deductions during period:
		Properties disposed of			144,251			30,732			16,157
		Impairment on assets held for Sale			167			—			—
		Write-off of fully depreciated assets which are no longer in service			19,048			24,206			—

Balance, end of period				$	(2,578,082	)	$	(2,077,613	)	$	(1,494,301	)

(1) Approximately $3.7 million relates to the value of building equipment received in exchange for Equity Office’s equity position in a telecom company and the remainder relates to the write-off of internally developed software.


	•	our ability to maintain occupancy and to timely lease or re-lease space at anticipated rents;

	•	changes in general economic conditions, including, in particular, those affecting industries in which our principal tenants and potential tenants compete and their demand for office space in markets in which we have a presence;

	•	the extent of any tenant bankruptcies and insolvencies;

	•	the extent of any early lease terminations and the amount of lease terminations fees, if any;

	•	the cost and availability of debt and equity financing;

	•	the availability of new competitive supply, which may become available by way of sublease and new construction;

	•	the extent of any disposition activity and our ability to complete any such dispositions in a timely manner and on acceptable terms;

	•	our ability to realize anticipated cost savings by creating and capturing benefits of scale;

	•	our ability to obtain, at a reasonable cost, adequate insurance coverage for catastrophic events, such as earthquakes and terrorist acts;

	•	changes in operating costs, including real estate taxes, utilities, insurance and security costs; and

	•	other risks and uncertainties detailed from time to time in our filings with the SEC.


	•	we disposed of 53 office properties, two industrial properties and four vacant land parcels in various transactions to unaffiliated parties for approximately $933.1 million. The sold office properties consisted of approximately 5,182,707 square feet and 32 residential units, and the industrial properties consisted of approximately 216,900 square feet. With these transactions, we exited the following markets: Salt Lake City, UT; Riverside, CA; Fort Worth, TX; Charlotte, NC; and San Antonio, TX;

	•	we sold partial interests in 13 Office Properties consisting of approximately 3,284,431 square feet for approximately $596.5 million;

	•	we acquired two Office Properties for approximately $183.2 million consisting of approximately 829,293 square feet;

	•	we placed into service four developments consisting of five buildings and approximately 1,218,215 square feet;

	•	we entered into $500 million of forward-starting interest rate swaps;

	•	we repaid $400 million of unsecured notes that matured in November 2003;

	•	we issued $500 million of unsecured notes due January 2013 at an effective annual interest rate of 5.98% and used a portion of the net proceeds to repay $300 million of unsecured notes that matured in February 2003;

	•	we obtained a new three-year $1.0 billion revolving credit facility in May 2003;

	•	we obtained a $1.0 billion 364-day credit facility in December 2003;


	•	Equity Office announced the redemption of, and subsequently redeemed in 2004, 4,562,900 outstanding 8 5/8% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest for approximately $114.6 million, which included approximately $0.6 million of accrued distributions. In connection with such redemption, we redeemed all of the Series C Preferred Units from Equity Office;

	•	Equity Office redeemed the 7.875% Series E Cumulative Redeemable Preferred Shares for approximately $151.9 million, which included approximately $1.9 million of accrued distributions. In connection with such redemption, we redeemed all of the Series E Preferred Units from Equity Office;

	•	Equity Office redeemed the 8.00% Series F Cumulative Redeemable Preferred Shares for approximately $100.0 million. In connection with such redemption, we redeemed all of the Series F Preferred Units from Equity Office; and

	•	Equity Office repurchased 14,236,400 Common Shares at an average price of $25.53 per share for a total of $363.5 million. In connection with the repurchases, we purchased from Equity Office and retired a corresponding number of Units for an aggregate purchase price equal to the aggregate purchase price for all Common Share repurchases.


	•	increasing occupancy by leasing up vacant space on economically attractive terms, retaining tenants, reducing lease cycle time and improving customer service;

	•	concentrating our capital in 15 to 20 core markets with the best prospects for employment growth and where we believe we can best position ourselves to outperform our competition;

	•	taking advantage of favorable market opportunities to exit non-core markets and selectively disposing of properties in certain of our core markets that do not fit within our long-term strategy; and

	•	achieving economies of scale over time, including anticipated cost savings from the implementation of our new operating model.


	•	the attractiveness of the property to existing and potential tenants;

	•	the likelihood and relative attractiveness of competitive supply;

	•	the anticipated demand for space in the local market;

	•	the creditworthiness and diversity of risk in the tenants occupying the property;

	•	the ability to acquire the asset at an attractive going-in yield, as well as the potential to increase operating income over time by renewing leases for higher rents;

	•	the physical condition of the property, including the extent of funds required for its maintenance and for physical upgrades needed in order to establish or sustain its market competitiveness;

	•	the ability to operate the property with a competitive cost structure; and

	•	the property’s location in one of our core markets.


	•	the ability to sell the property at a price we believe would provide an attractive return to our unitholders;

	•	our ability to recycle capital into core markets consistent with our business strategy;

	•	our desire to exit markets that are not core markets;

	•	whether the property is strategically located;

	•	tenant composition and lease rollover for the property;

	•	general economic conditions and outlook, including job growth in the local market; and

	•	the general quality of the asset.


	•	our assessment of the returns from such development;

	•	the extent of lease-up risk in the context of the demand/supply characteristics of the local market;

	•	the ability to minimize construction risks; and

	•	the quality of local development partners, if applicable.


	•	Executive Vice President from March 1997 until November 2002;

	•	Chief Operating Officer from September 2001 until November 2002;

	•	Chief Financial Officer from March 1997 until August 2002;

	•	Senior Vice President from October 1996 until March 1997;

	•	Senior Vice President and Chief Financial Officer of Equity Office Holdings, L.L.C., a predecessor of ours, from July 1995 until October 1997;

	•	Senior Vice President of Equity Group Investments, Inc., an owner and financier of real estate and corporate investments, from February 1995 until July 1995;

	•	Senior Vice President of the Yarmouth Group, a real estate investment company in New York, New York, from August 1994 until February 1995;

	•	Senior Vice President — Finance of Equity Group Investments, Inc. from December 1993 until July 1994; and

	•	Vice President — Finance of Equity Group Investments, Inc. from August 1990 until December 1993.


	•	Managing Partner and owner of Lakeshore Holdings, LLC, a private equity firm focusing on real estate investment founded by Mr. Johnson in conjunction with Lehman Brothers Holdings Inc., a global financial services firm, from December 2002 until May 2003 (in this capacity, Mr. Johnson was responsible for all aspects of the business);

	•	Managing Director of Lehman Brothers Holdings Inc. from March 2000 until November 2002 (in this capacity, Mr. Johnson was a founding partner and co-head of domestic investments for Lehman Brothers’ first real estate private equity group and was instrumental in helping raise the company’s $1.6 billion fund and developing the investment strategy for the fund, built the investment team and implemented its investment process);

	•	Chief Investment Officer of Equity Office from March 1998 until June 1999; and

	•	Senior Vice President of Equity Office from March 1997 until June 1999.


	•	Senior Vice President — Human Resources from March 2001 until November 2002; and

	•	Vice President of NEC Technologies, Inc., a supplier of presentation systems, computing and related technologies for the North American market, from April 1995 until October 2000 (in this capacity, Mr. Krema managed the human resources division of the company in North America and was responsible for corporate services, which included real estate, travel and office services).


	•	Chief Operating Officer — Americas Region of Jones Lang LaSalle, a global provider of integrated real estate and investment management services, from April 1999 until October 2003 (in this capacity, Mr. Owen oversaw 5,500 people in 100 markets in the United States, Canada and Mexico; Investor Services, which included leasing and property management; Corporate Solutions, which included tenant representation, facility management and project management; and Capital Markets; and


	•	Chief Administrative Officer of Crate and Barrel, a national Chicago-based retailer of home furnishings and accessories (Crate and Barrel is the trade name of Euromarket Designs Inc., which is an indirect majority-owned subsidiary of Otto Versand Gmbh & Co., a German mail-order company), from May 1998 until August 2002 (in this capacity, Ms. Williams participated in the planning and execution of Crate and Barrel’s growth strategy and managed its finance, accounting, information technology, warehousing, distribution and logistics, loss prevention, strategic planning, direct marketing operations and purchasing departments); and

	•	Vice President of Amoco Corporation, a worldwide energy and chemical company, from December 1997 until April 1998 and Treasurer of Amoco Corporation from October 1993 until April 1998, as well as other capacities and positions from May 1989 until October 1993.


	•	Senior Vice President — Development from June 2002 until November 2002;

	•	Senior Vice President — Development Investments from July 2001 until June 2002;

	•	President and Chief Executive Officer of Amli Commercial Properties Trust, a private real estate investment trust with office and industrial properties in the suburban Chicago market, from August 1998 until July 2001 (in this capacity, Mr. Winter was responsible for all aspects of the company’s business, including the development, management and ownership of its properties); and

	•	President and Chief Executive Officer of Amli Commercial Properties, LLC, a limited liability company and predecessor of Amli Commercial Properties Trust, from November 1996 until July 1998 (in this capacity, along with developing the business, Mr. Winter was responsible for forming Amli Commercial Properties Trust).


	2004 and
	month to
	month(b)			2005			2006			2007			2008			2009


	(Dollars in thousands except per square foot amounts)
San Francisco
Square Feet(c)		1,009,511			1,464,946			751,770			1,112,598			1,077,307			504,907
% Square Feet(d)		9.2	%		13.4	%		6.9	%		10.2	%		9.8	%		4.6	%
Annualized Rent for occupied square feet(e)	$	39,893		$	61,053		$	36,794		$	41,765		$	45,072		$	17,625
Annualized Rent per occupied square foot(e)	$	39.52		$	41.68		$	48.94		$	37.54		$	41.84		$	34.91
Boston
Square Feet(c)		1,193,587			1,146,422			880,327			1,474,248			1,382,875			1,002,949
% Square Feet(d)		9.5	%		9.1	%		7.0	%		11.7	%		11.0	%		8.0	%
Annualized Rent for occupied square feet(e)	$	39,702		$	41,251		$	29,101		$	58,157		$	51,963		$	40,439
Annualized Rent per occupied square foot(e)	$	33.26		$	35.98		$	33.06		$	39.45		$	37.58		$	40.32
San Jose
Square Feet(c)		831,826			1,694,765			987,895			674,406			371,645			256,563
% Square Feet(d)		9.5	%		19.4	%		11.3	%		7.7	%		4.3	%		2.9	%
Annualized Rent for occupied square feet(e)	$	26,889		$	52,910		$	35,192		$	25,508		$	11,126		$	7,303
Annualized Rent per occupied square foot(e)	$	32.33		$	31.22		$	35.62		$	37.82		$	29.94		$	28.46
Seattle
Square Feet(c)		1,105,585			1,099,859			1,062,424			770,384			1,221,543			777,771
% Square Feet(d)		11.1	%		11.0	%		10.7	%		7.7	%		12.2	%		7.8	%
Annualized Rent for occupied square feet(e)	$	29,454		$	34,443		$	29,786		$	22,108		$	31,520		$	18,142
Annualized Rent per occupied square foot(e)	$	26.64		$	31.32		$	28.04		$	28.70		$	25.80		$	23.33
New York
Square Feet(c)		325,549			143,751			199,790			151,962			127,331			1,183,361
% Square Feet(d)		6.5	%		2.9	%		4.0	%		3.0	%		2.6	%		23.7	%
Annualized Rent for occupied square feet(e)	$	15,059		$	7,733		$	12,141		$	7,625		$	7,616		$	66,069
Annualized Rent per occupied square foot(e)	$	46.26		$	53.80		$	60.77		$	50.18		$	59.82		$	55.83


	2010			2011			2012			2013			Thereafter(f)			Totals


	(Dollars in thousands except per square foot amounts)
San Francisco
Square Feet(c)		886,179			337,684			49,195			240,878			546,662			7,981,637
% Square Feet(d)		8.1	%		3.1	%		0.4	%		2.2	%		5.0	%		72.9	%
Annualized Rent for occupied square feet(e)	$	42,771		$	16,533		$	1,303		$	9,134		$	32,394		$	344,338
Annualized Rent per occupied square foot(e)	$	48.26		$	48.96		$	26.49		$	37.92		$	59.26		$	43.14
Boston
Square Feet(c)		1,208,855			188,018			758,869			1,325,699			1,056,279			11,618,128
% Square Feet(d)		9.6	%		1.5	%		6.0	%		10.5	%		8.4	%		92.4	%
Annualized Rent for occupied square feet(e)	$	46,552		$	9,579		$	33,644		$	53,569		$	42,885		$	446,844
Annualized Rent per occupied square foot(e)	$	38.51		$	50.95		$	44.33		$	40.41		$	40.60		$	38.46
San Jose
Square Feet(c)		772,627			695,224			497,811			116,214			403,773			7,302,749
% Square Feet(d)		8.9	%		8.0	%		5.7	%		1.3	%		4.6	%		83.7	%
Annualized Rent for occupied square feet(e)	$	31,097		$	40,981		$	31,153		$	3,608		$	7,969		$	273,736
Annualized Rent per occupied square foot(e)	$	40.25		$	58.95		$	62.58		$	31.04		$	19.74		$	37.48
Seattle
Square Feet(c)		876,223			325,447			371,868			396,924			642,192			8,650,220
% Square Feet(d)		8.8	%		3.3	%		3.7	%		4.0	%		6.4	%		86.7	%
Annualized Rent for occupied square feet(e)	$	25,715		$	9,782		$	11,056		$	9,708		$	14,575		$	236,287
Annualized Rent per occupied square foot(e)	$	29.35		$	30.06		$	29.73		$	24.46		$	22.70		$	27.32
New York
Square Feet(c)		152,239			734,960			485,978			404,601			950,089			4,859,611
% Square Feet(d)		3.1	%		14.7	%		9.7	%		8.1	%		19.1	%		97.5	%
Annualized Rent for occupied square feet(e)	$	7,526		$	35,688		$	21,462		$	20,663		$	50,757		$	252,339
Annualized Rent per occupied square foot(e)	$	49.44		$	48.56		$	44.16		$	51.07		$	53.42		$	51.93


(a)	Based on the contractual termination date of the lease without regard to any early lease termination and/or renewal options.

(b)	Total square feet subject to month to month leases is approximately 955,976.

(c)	Total net rentable square feet represented by expiring leases.

(d)	Percentage of total net rentable square feet represented by expiring leases.

(e)	Based on annualized rent. Annualized rent is the monthly contractual rent as of the reporting date, or if the current rent payable is $0 then the first monthly rent payment due, under existing leases as of December 31, 2003 multiplied by 12 months (“Annualized Rent”). This amount reflects total base rent and estimated expense reimbursements from tenants as of December 31, 2003 without regard to any rent abatements and contractual increases or decreases in rent subsequent to December 31, 2003. Total rent abatements for leases in place as of December 31, 2003, for the period from January 1, 2004 to December 31, 2004, are approximately $38.2 million. We believe Annualized Rent is a useful measure because this information can be used for comparison to current market rents as published by various third party sources.


(f)	Management offices and building use square footage are included with $0 rent per square foot.


(1)	On July 2, 2001, we completed our acquisition by merger of Spieker Properties, L.P. (“Spieker Partnership”) at a cost of approximately $7.2 billion. As a result of the Spieker Partnership merger, we


	acquired an interest in 391 office properties containing approximately 28.3 million square feet and 98 industrial properties containing approximately 10.1 million square feet.

(2)	On June 19, 2000, we completed our acquisition by merger of Cornerstone Properties Limited Partnership (“Cornerstone Partnership”) at a cost of approximately $4.5 billion. As a result of the Cornerstone Partnership merger, we acquired an interest in 82 properties containing approximately 18.9 million square feet.

(3)	These amounts are from continuing and discontinued operations and our share of unconsolidated joint ventures.

(4)	Refer to Item 7. Management’s Discussion and Analysis of Financial Condition — Funds from Operations for information regarding why we present funds from operations and for a reconciliation of this non-GAAP financial measure to net income.

(5)	Calculated as property operating revenue less property operating expense from continuing operations and discontinued operations. For more information, refer to Item 8. Financial Statements and Supplementary Data — Note 20 — Segment Information.


	•	the current economic environment, including its effect on white-collar job growth in markets in which we have a presence;

	•	the occupancy rates of our Office Properties;

	•	rental rates on new Office Property leases;

	•	tenant improvement and leasing costs incurred to retain and obtain tenants;

	•	the extent of early lease terminations and any lease termination fees;

	•	operating expenses; and

	•	the extent of any dispositions and acquisitions of Office Properties.


	•	the key transactions that we completed during the year;

	•	our critical accounting policies and estimates;

	•	our results of operations for the last three years;

	•	our liquidity and capital resources; and

	•	our funds from operations.


(a)	These weighted average rental rates are based on the average annual base rent per square foot over the term of each of the leases and the current estimated tenant reimbursements, if any.

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


(1)	Balance excludes a net unamortized discount of $13.7 million.

(2)	Balance excludes a net unamortized premium of $12.4 million.


	•	Capital Improvements — improvements that enhance the value of the property such as lobby renovations, roof replacement, significant renovations for Americans with Disabilities Act compliance, chiller replacement and elevator upgrades.

	•	Development and Redevelopment Costs — include costs associated with the development or redevelopment of a property including tenant improvements, leasing commissions, capitalized interest and operating costs incurred during completion of the property and incurred while the property is made ready for its intended use.


(a)	Properties included in redevelopment costs for 2003 are the Tabor Center, the Polk and Taylor Buildings and Worldwide Plaza (amenities area). Redevelopments for 2002 included the 500-600 City Parkway, the Tabor Center, the Polk and Taylor Buildings and Worldwide Plaza (amenities area). Redevelopments for 2001 included US Bancorp, 100 Summer and the Tabor Center.


(a)	Represents our share of unconsolidated joint venture tenant improvement and leasing costs. All joint venture information included above is from office properties.


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

(b)	The Total Estimated Costs represent 100% of the development’s estimated costs, including the acquisition cost of the land and building, if any. The Total Estimated Costs are subject to change upon, or prior to, the completion of the development and include amounts required to lease the property.


	1)	estimate the value of the real estate “as if vacant” as of the acquisition date;

	2)	allocate that value among land, building improvements, building, and equipment and determine the associated asset life for each;

	3)	compute the value of the difference between the “as if vacant” value and the purchase price, which will represent the total intangible assets;

	4)	allocate the value of the above and below market leases to the intangible assets and determine the associated life of the above/below market leases;

	5)	calculate the value and associated life of the tenant relationships, if any, by taking the direct identifiable benefits of the customer relationship and discounting them to present value;

	6)	estimate the fair value of the in-place tenant improvements and leasing commissions and calculate the associated asset life; and

	7)	allocate the remaining intangible value to the in-place leases and their associated lives.


	•	the agreement has been fully executed and delivered;

	•	services have been rendered;

	•	the amount is fixed or determinable; and

	•	the collectibility is reasonably assured.


	•	the coupon rate of 8.25% per annum was fixed through March 31, 2002. Thereafter, the rate increased to the greater of: