RECKSON OPERATING PARTNERSHIP LP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 2000

OR
[ ] 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 1-13762

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

DELAWARE 11-3233647

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

225 BROADHOLLOW ROAD,
MELVILLE, NY 11747

(Address of principal (Zip Code)
executive offices)

Registrant's telephone number, including area code: (631) 694-6900
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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]

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement of Reckson Associates Realty Corp.
relating to its Annual Shareholder's Meeting to be held May 24, 2001 are
incorporated by reference into Part III.

As of March 22, 2001, 4,839,782 common units of limited partnership interest
were held by non-affiliates of the Registrant. There is no established trading
market for such units.
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TABLE OF CONTENTS

ITEM
NO. PAGE
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PART I
1. Business .................................................................... I-1
2. Properties .................................................................. I-8
3. Legal Proceedings ........................................................... I-18
4. Submission of Matters to a Vote of Security Holders ......................... I-18
PART II
5. Market for Registrant's Common Equity and Related Security Matters .......... II-1
6. Selected Financial Data ..................................................... II-2
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations .................................................................. II-3
7(a). Quantitative and Qualitative Disclosures about Market Risk .................. II-11
8. Financial Statements and Supplementary Data ................................. II-12
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure .................................................................. II-12
PART III
10. Directors and Executive Officers of the Registrant .......................... III-1
11. Executive Compensation ...................................................... III-1
12. Security Ownership of Certain Beneficial Owners and Management .............. III-1
13. Certain Relationships and Related Transactions .............................. III-1
PART IV
14. Financial Statements and Schedules, Exhibits and Reports on Form 8-K ........ IV-1

PART I

ITEM 1. BUSINESS

GENERAL

Reckson Operating Partnership, L. P. (the "Operating Partnership")
commenced operations on June 2, 1995. Reckson Associates Realty Corp. (the
"Company"), which serves as the sole general partner of the Operating
Partnership, is a fully integrated, self administered and self managed real
estate investment trust ("REIT"). The Operating Partnership and the Company
were formed for the purpose of continuing the commercial real estate business
of Reckson Associates, its affiliated partnerships and other entities
("Reckson").

For more than 40 years, Reckson has been engaged in the business of
owning, developing, acquiring, constructing, managing and leasing office and
industrial properties in the New York tri-state area (the "Tri-State Area").
Based on industry surveys, management believes that the Operating Partnership
is one of the largest owners and operators of Class A suburban and commercial
business district ("CBD") office properties and industrial properties in the
Tri-State Area. As of December 31, 2000, the Operating Partnership owned 188
properties (the "Properties") (including 10 joint venture properties) in the
Tri-State Area encompassing approximately 21.3 million rentable square feet,
all of which are managed by the Operating Partnership. The Properties consist
of 65 Class A suburban office properties (the "Suburban Office Properties")
encompassing approximately 9.1 million rentable square feet, 17 Class A CBD
Office Properties (the "CBD Office Properties") encompassing approximately 5.3
million rentable square feet (together, the "Office Properties"), 104
industrial properties (the "Industrial Properties") encompassing approximately
6.8 million rentable square feet and two 10,000 square foot retail properties.
The Operating Partnership also owns a 357,000 square foot office building
located in Orlando, Florida. In addition, as of December 31, 2000, the
Operating Partnership had approximately $6.4 million invested in certain
mortgage indebtedness encumbering approximately 101 acres of land,
approximately $17.1 million in a note receivable secured by a partnership
interest in Omni Partners, L. P., owner of the Omni, a 575,000 square foot
Class A Office Property located in Uniondale, New York and $36.5 million under
three notes which are secured by a minority partner's preferred unit interest
in the Operating Partnership (the "Note Receivable Investments"). As of
December 31, 2000, the Operating Partnership is in the process of developing a
315,000 square foot office building and also owned approximately 290 acres of
land in 13 separate parcels on which the Operating Partnership can develop
approximately 1.4 million square feet of office space and approximately 224,000
square feet of industrial space.

During 1999 and 2000, the Operating Partnership made investments in
REIT-qualified joint ventures with Reckson Strategic Venture Partners, LLC
("RSVP"), a venture capital fund created as a research and development vehicle
for the Operating Partnership to invest in alternative real estate sectors (see
Corporate Strategies and Growth Opportunities). RSVP is managed by an affiliate
of FrontLine Capital Group ("FrontLine"). The Operating Partnership has
committed up to $100 million for investments in the form of either (i)
RSVP-controlled (REIT-qualified) joint ventures or (ii) loans to FrontLine for
FrontLine's investment in RSVP. As of December 31, 2000, the Operating
Partnership has invested approximately $41.1 million in RSVP -- controlled
(REIT-qualified) joint ventures. In March 2001, the Operating Partnership
increased the RSVP Commitment to $110 million and advanced approximately $24
million under the RSVP Commitment to fund additional RSVP-controlled
(REIT-qualified) joint ventures.

The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes or have been modernized to successfully compete with
newer buildings and achieve among the highest rent, occupancy and tenant
retention rates within their markets. The majority of the Suburban Office
Properties are located in ten planned office parks. The Office Properties are
tenanted by a diverse industry group of national firms which include consumer
products, telecommunication, health care, insurance, financial services and
professional service firms such as accounting firms and securities brokerage
houses. The Industrial Properties are utilized for distribution, warehousing,
research and development and light manufacturing / assembly activities and are
located primarily in three planned industrial parks developed by Reckson.

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All of the Company's interests in the Properties, the Note Receivable
Investments and land are held directly or indirectly by, and all of its
operations are conducted through, the Operating Partnership. The Company
controls the Operating Partnership as the sole general partner and as of
December 31, 2000, owned approximately 88% of the Operating Partnership's
outstanding Class A common units of limited partnership and Class B common
units of limited partnership interest.

The Operating Partnership seeks to maintain cash reserves for normal
repairs, replacements, improvements, working capital and other contingencies.
The Operating Partnership has established an unsecured credit facility (the
"Credit Facility") with a maximum borrowing amount of $575 million scheduled to
mature on September 7, 2003. The Credit Facility requires the Operating
Partnership to comply with a number of financial and other covenants on an
ongoing basis.

There are numerous commercial properties that compete with the Operating
Partnership in attracting tenants and numerous companies that compete in
selecting land for development and properties for acquisition.

The Operating Partnership's executive offices are located at 225
Broadhollow Road, Melville, New York 11747 and its telephone number at that
location is (631) 694-6900. At December 31, 2000, the Operating Partnership had
approximately 317 employees.

RECENT DEVELOPMENTS

Acquisition Activity.

Set forth below is a brief description of the Operating Partnership's
major acquisition activity during 2000.

On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the
Americas, a 540,000 square foot, 35 story, CBD Office Property located in New
York City, for a purchase price of approximately $126.5 million. This
acquisition was financed through a $70 million secured debt financing and a
draw under the Credit Facility.

On August 15, 2000, the Operating Partnership acquired 538 Broadhollow
Road, a 180,000 square foot Suburban Office Property located in Melville, New
York for a purchase price of approximately $25.6 million. This acquisition was
financed, in part, through a borrowing under the Credit Facility.

In addition, as of December 31, 2000, the Operating Partnership has
invested approximately $6.4 million in certain mortgage indebtedness
encumbering approximately 101 acres of land. The Operating Partnership has also
loaned approximately $17.1 million to its minority partner in Omni, its 575,000
square foot flagship Long Island Suburban Office Property, and effectively
increased its economic interest in the property owning partnership.

On August 9, 1999, the Operating Partnership executed a contract for the
sale, which took place in three stages, of its interest in Reckson Morris
Operating Partnership, L. P. ("RMI"), which consisted of 28 properties,
comprising approximately 6.1 million square feet and three other big box
industrial properties to Keystone Property Trust ("KTR"). In addition, the
Operating Partnership also entered into a sale agreement with the Matrix
Development Group ("Matrix") relating to a first mortgage note and certain
industrial land holdings (the "Matrix Sale"). The combined total sales price of
$310 million ($52 million of which is attributable to the Morris Companies and
its affiliates in the form of $41.6 million of preferred units of KTR's
operating partnership and $10.4 million of debt relief) consisted of (i)
approximately $159.7 million in cash, (ii) $41.5 million in convertible
preferred and common stock of KTR, (iii) $61.6 million in preferred units of
KTR's operating partnership, (iv) approximately $37.1 million of debt relief
and (v) approximately $10.1 million in purchase money mortgage notes secured by
certain land that is being sold to Matrix.

As of December 31, 2000, the Matrix Sale and the sale of the Operating
Partnership's interest in RMI was completed. As a result, the Operating
Partnership realized a gain of approximately $16.7 million. Such gain has been
included in gain on dispositions of real estate on the Operating Partnership's
consolidated statements of income. Cash proceeds from the sales were used
primarily to repay

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borrowings under the Operating Partnership's Credit Facility. In addition, the
Operating Partnership redeemed approximately $20 million of the preferred stock
of KTR and received principal repayments of approximately $7.2 million related
to the purchase money mortgage notes, all of which was used primarily for
general operating expenditures.

Leasing Activity

During the year ended December 31, 2000, the Operating Partnership leased
approximately 800,000 square feet at the CBD Office Properties at an average
effective rent (i.e., base rent adjusted on a straight-line basis for free rent
periods, tenant improvements and leasing commissions) of $32.80 per square
foot, approximately 1.9 million square feet at the Suburban Office Properties
at an average effective rent of $22.90 per square foot and approximately 1.3
million square feet at the Industrial Properties at an average effective rent
of $7.29 per square foot. Included in this leasing data is 753,701 square feet
at the Long Island Suburban Office Properties at an average effective rent of
$24.07; 590,022 square feet at the Westchester Suburban Office Properties at an
average effective rent of $23.01; 319,174 square feet at the Westchester CBD
Office Properties at an average effective rent of $23.77; 149,301 square feet
at the Connecticut CBD Office Properties at an average effective rent of
$26.25; 548,878 square feet at the New Jersey Suburban Office Properties at an
average effective rent of $21.19 and 331,442 square feet at the New York City
CBD Office Properties at an average effective rent of $44.44. Also included in
this leasing data is 1,222,932 square feet at the Long Island Industrial
Properties at an average effective rent of $6.88; 48,568 square feet at the
Westchester Industries Properties at an average effective rent of $17.26 and
16,150 square feet at the New Jersey Industrial Properties at an average
effective rent of $8.96.

Financing Activities

On September 7, 2000, the Operating Partnership obtained its three year
$575 million unsecured revolving Credit Facility from The Chase Manhattan Bank,
as administrative agent, UBS Warburg LLC as syndication agent and Deutsche Bank
as documentation agent. The Credit Facility matures in September, 2003 and
borrowings under the Credit Facility are currently priced off of LIBOR plus 105
basis points.

The Credit Facility replaced the Operating Partnership's $500 million
unsecured credit facility (together with the Credit Facility, the "Credit
Facility") and $75 million term loan. As a result, certain deferred loan costs
incurred in connection with such unsecured credit facility and term loan were
written off. Such amount is reflected as an extraordinary loss in the Operating
Partnership's consolidated statements of income.

The Operating Partnership utilizes the Credit Facility primarily to
finance real estate investments, fund its real estate development activities
and for working capital purposes. At December 31, 2000, the Operating
Partnership had availability under the Credit Facility to borrow an additional
$358.4 million (of which, $51.3 million has been allocated for outstanding
undrawn letters of credit).

Other Financing Activities

On January 13, 2000, in connection with the acquisition of 1350 Avenue of
the Americas, the Operating Partnership obtained a secured $70 million first
mortgage commitment which matures in August 2001 and bears interest at LIBOR
plus 165 basis points

On November 2, 2000, the Operating Partnership obtained a three year
secured $250 million first mortgage commitment on the property located at 919
Third Avenue, New York N. Y. Interest rates on borrowings under the commitment
are based on LIBOR plus a spread ranging from 110 basis points to 140 basis
points based upon the outstanding balance. At closing, $200 million was funded
under the commitment at an interest rate of LIBOR plus 120 basis points. In
addition, in connection with the $200 million initial funding, the Operating
Partnership purchased a LIBOR interest rate hedge that provides for a maximum
LIBOR rate of 9.25%. The initial funding was used primarily to repay
outstanding borrowings under the Operating Partnership's Credit Facility.

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Unit Issuances

On June 20, 2000, in conjunction with the Company's exchange of 4,181,818
shares of its Class A common stock for four million shares of its Series B
preferred stock, the Operating Partnership issued 4,181,818 Class A common
units in exchange for four million shares of Series E preferred units with a
liquidation preference value of $100 million.

OPERATING STRATEGIES AND GROWTH OPPORTUNITIES

The Operating Partnership's primary business objectives are to maximize
current return to its partners through increases in distributable cash flow and
to increase partner's long-term total return through the appreciation in the
value of its Class A common units and Class B common units. The Operating
Partnership plans to achieve these objectives by continuing Reckson's operating
strategies and capitalizing on the internal and external growth opportunities
as described below.

Operating Strategies. Management believes that throughout its 40-year
operating history, Reckson has created value in its properties through a
variety of market cycles by implementing the operating strategies described
below. These operating strategies include the implementation of: (i) a
multidisciplinary leasing approach that involves architectural design and
construction personnel as well as leasing professionals, (ii) innovative
property marketing programs such as the broker frequent leasing points program
which was established by the Operating Partnership to enhance relationships
with the brokerage community and which allows brokers to accumulate points for
leasing space in the Operating Partnership's portfolio which can be redeemed
for luxurious prizes, (iii) a comprehensive tenant service program and property
amenities designed to maximize tenant satisfaction and retention, (iv) cost
control management and systems that take advantage of economies of scale that
arise from the Operating Partnership's market position and efficiencies
attributable to the state-of-the-art energy control systems at many of the
Office Properties and (v) an acquisition and development strategy that is
continuously adjusted in light of anticipated changes in market conditions and
that seeks to capitalize on management's multidisciplinary expertise and market
knowledge to modify, upgrade and reposition a property in its marketplace in
order to maximize value.

The Operating Partnership also intends to adhere to a policy of
maintaining a debt ratio (defined as the total debt of the Operating
Partnership as a percentage of the sum of the Operating Partnership's total
debt and the value of its equity) of less than 50%. As of December 31, 2000,
the Operating Partnership's debt ratio was approximately 40.6%. This
calculation is net of minority partners' proportionate share of debt and
including the Operating Partnership's share of unconsolidated joint venture
debt. This debt ratio is intended to provide the Operating Partnership with
financial flexibility to select the optimal source of capital (whether through
debt or partners contributions) with which to finance external growth.

Growth Opportunities. The Operating Partnership intends to achieve its
primary business objectives by applying its operating strategies to the
internal and external growth opportunities described below.

Internal Growth. To the extent the Long Island, Westchester, New Jersey
and Southern Connecticut suburban office and industrial markets remain strong
with supply constrained markets management believes the Operating Partnership
is well positioned to benefit from rental revenue growth through: (i)
contractual annual compounding of 3-4% Base Rent increases (defined as fixed
gross rental amounts that excludes payments on account of real estate taxes,
operating expense escalations and base electrical charges) on approximately 85%
of existing leases at the Long Island Properties, (ii) periodic contractual
increases in Base Rent on existing leases at the Westchester Properties, the
New Jersey Properties and the Southern Connecticut Properties and (iii) the
potential for increases to Base Rents as leases expire and space is re-leased
at the higher rents that exist in the current market environment as a result of
continued tightening of the office and industrial markets with limited new
supply.

In connection with the Operating Partnership's acquisition and merger
transaction with Tower Realty Trust, Inc. (see External Growth below) the
Operating Partnership entered the New York City office market. The New York
City office market is currently experiencing favorable supply and demand

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characteristics exceeding those currently in the Operating Partnership's
suburban markets and is also characterized by similar lack of available land
supply and other barriers to entry that limit competition. The Operating
Partnership's New York City office buildings offer similar potential for
increase in Base Rents as described in (iii) above.

External Growth. The Operating Partnership seeks to acquire multi-tenant
suburban and CBD Class A office and industrial properties located in the
Tri-State Area. Management believes that the Tri-State Area presents
opportunities to acquire or invest in properties at attractive yields. The
Operating Partnership believes that its (i) capital structure, in particular
its Credit Facility providing for a maximum borrowing amount of up to $575
million, (ii) ability to acquire a property for Class A common units and
thereby defer the seller's income tax on gain, (iii) operating economies of
scale, (iv) relationships with financial institutions and private real estate
owners, (v) fully integrated operations in its five existing divisions and (vi)
its dominant position and franchise in the submarkets in which it owns
Properties will enhance the Operating Partnership's ability to identify and
capitalize on acquisition opportunities. The Operating Partnership also intends
to selectively develop new Class A suburban and CBD office and industrial
properties and to continue to redevelop existing Properties as these
opportunities arise. For the near future, the Operating Partnership will
concentrate its development activities on industrial and Class A Suburban and
CBD office properties within the Tri-State Area. The Operating Partnership's
expansion into the New York City office market and the opening of its New York
City division provides it with additional opportunities to acquire interests in
properties at attractive yields. The Operating Partnership also believes that
the addition of its New York City division provides additional leasing and
operational facilities and enhances its overall franchise value by being the
only real estate operating company in the Tri-State Area with significant
presence in both Manhattan and each of the surrounding sub-markets.

During 1997, the Company formed FrontLine (formerly Reckson Service
Industries, Inc.) and RSVP. In connection with the formation of FrontLine, the
Operating Partnership established a credit facility with FrontLine (the
"FrontLine Facility") in the amount of $100 million for FrontLine to use in its
investment activities, operations and other general corporate purposes. As of
December 31, 2000, the Operating Partnership had advanced approximately $93.4
million under the FrontLine Facility. In addition, the Operating Partnership
approved the funding of investments of up to $100 million with or in RSVP (the
"RSVP Commitment"), through RSVP-controlled joint ventures (for REIT-qualified
investments) or advances made to FrontLine under terms similar to the FrontLine
Facility. As of December 31, 2000, approximately $83.2 million had been funded
through the RSVP Commitment, of which $41.1 million represents investments in
RSVP-controlled (REIT-qualified) joint ventures and $42.1 million represents
advances. In March 2001, the Operating Partnership increased the RSVP
Commitment to $110 million and advanced approximately $24 million under the
RSVP Commitment to fund additional RSVP-controlled (REIT-qualified) joint
ventures. In addition, as of December 31, 2000, the Operating Partnership,
through its Credit Facility, has allocated approximately $3.2 million in
outstanding undrawn letters of credit for the benefit of FrontLine. Both the
FrontLine Facility and the RSVP Commitment have a term of five years and
advances under each are recourse obligations of FrontLine. Interest accrues on
advances made under the credit facilities at a rate equal to the greater of (a)
the prime rate plus two percent and (b) 12% per annum, with the rate on amounts
that are outstanding for more than one year increasing annually at a rate of
four percent of the prior year's rate. Prior to maturity, interest is payable
quarterly but only to the extent of net cash flow of FrontLine and on an
interest-only basis. As of December 31, 2000, interest accrued under the
FrontLine Facility and RSVP Commitment was approximately $13.8 million.

FrontLine currently has two distinct operating units: one of which
represents its interest in HQ Global Holdings, Inc., the largest provider of
flexible officing solutions in the world, and the other which represents
interests in technology based partner companies. RSVP invests primarily in real
estate and real estate related operating companies generally outside of the
Operating Partnership's core office and industrial focus.

On August 27, 1998 the Operating Partnership announced the formation of a
joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional

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facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"),
is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating
Partnership. The Dominion Venture is primarily engaged in acquiring, developing
and/or owning government-occupied office buildings and privately operated
correctional facilities. Under the Dominion Venture's operating agreement, RSVP
may invest up to $100 million, some of which may be invested by the Operating
Partnership ( the "RSVP Capital"). The initial contribution of RSVP Capital was
approximately $39 million of which approximately $10.1 million was invested by
a subsidiary of the Operating Partnership. The Operating Partnership's
investment was funded through the RSVP Commitment. In addition, the Operating
Partnership advanced approximately $3.3 million to FrontLine through the RSVP
Commitment for an investment in RSVP which was then invested on a joint venture
basis with the Dominion Group in certain service business activities related to
the real estate activities. As of December 31, 2000, the Operating Partnership
had invested, through the RSVP Commitment, approximately $20.6 million in the
Dominion Venture which had investments in 13 government office buildings and
three correctional facilities.

As of December 31, 2000, the Operating Partnership has invested
approximately $11.1 million, through a subsidiary, in RAP Student Housing
Properties, LLC ("RAP-SHP"), a company that engages primarily in the
acquisition and development of off-campus student housing projects. The
Operating Partnership's investment was funded through the RSVP Commitment. In
addition, the Operating Partnership has advanced approximately $3.5 million to
FrontLine through the RSVP Commitment for an investment in RSVP which was then
invested in certain service business activities related to student housing. As
of December 31, 2000, RAP-SHP had investments in seven off-campus student
housing projects. Additionally, during 2000, RAP-SHP entered into an off-campus
development joint venture with Titan Investments II, a third party national
developer. The purpose of the venture is to develop or reposition off-campus
student housing projects across the United States.

As of December 31, 2000, the Operating Partnership has invested
approximately $3.4 million, through a subsidiary, in RAP MD, LLC ("RAP-MD"), a
company that engages primarily in the acquisition, ownership, management and
development of medical office properties. The Operating Partnership's
investment was funded through the RSVP Commitment. As of December 31, 2000,
RAP- MD had investments in eight medical office properties.

On September 28, 2000, the Operating Partnership formed a joint venture
(the "Tri-State JV") with Teachers Insurance and Annuity Association ("TIAA")
and contributed eight Office Properties aggregating approximately 1.5 million
square feet to the Tri-State JV in exchange for approximately $136 million and
a 51% majority ownership interest in the Tri-State JV. As a result, the
Operating Partnership realized a gain of approximately $15.2 million. Such gain
has been included in gain on dispositions of real estate on the Operating
Partnership's consolidated statements of income. Cash proceeds received were
used primarily to repay borrowings under the Credit Facility.

In July 1998, the Operating Partnership formed a joint venture,
Metropolitan Partners LLC ("Metropolitan"), with Crescent Real Estate Equities
Company, a Texas REIT ("Crescent") for the purpose of acquiring Tower Realty
Trust, Inc. ("Tower"). On May 24, 1999 the Company completed the merger with
Tower and acquired three Class A CBD Office Properties located in New York City
totaling 1.6 million square feet and one Suburban Office Property located on
Long Island totaling approximately 101,000 square feet. In addition, pursuant
to the merger, the Company also acquired certain office properties, a property
under development and land located outside of the Tri-State Area.

The Company controls Metropolitan and owns 100% of the common equity;
Crescent owns a $85 million preferred equity investment in Metropolitan.
Crescent's investment accrues distributions at a rate of 7.5% per annum for a
two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by
Metropolitan at any time during that period for $85 million, plus an amount
sufficient to provide a 9.5% internal rate of return. If Metropolitan does not
redeem the preferred interest, upon the expiration of the two-year period,
Crescent must convert its $85 million preferred interest into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's
Class A common stock at a conversion price of $24.61 per share.

I-6

Prior to the closing of the merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the merger, the Company has sold a real estate joint venture interest and
all of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Operating Partnership's
Credit Facility. As a result of incurring certain sales and closing costs in
connection with the sale of the assets located outside the Tri-State Area, the
Operating Partnership has incurred a loss of approximately $4.4 million which
has been included in gain (loss) on dispositions of real estate on the
Operating Partnership's consolidated statements of income.

Subsequent to the closing of the merger, the Operating Partnership
acquired title to 919 Third Avenue and 1350 Avenue of the Americas located in
New York City. The Operating Partnership holds all of the Properties in its New
York City division through Metropolitan.

ENVIRONMENTAL MATTERS

Under various Federal, state and local laws, ordinances and regulations,
an owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. These laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or toxic substances. The cost
of any required remediation and the owner's liability therefore as to any
property is generally not limited under such enactments and could exceed the
value of the property and/or the aggregate assets of the owner. The presence of
such substances, or the failure to properly remediate such substances, may
adversely affect the owner's ability to sell or rent such property or to borrow
using such property as collateral. Persons who arrange for the disposal or
treatment of hazardous or toxic substances may also be liable for the costs of
removal or remediation of such substances at a disposal or treatment facility,
whether or not such facility is owned or operated by such person. Certain
environmental laws govern the removal, encapsulation or disturbance of
asbestos-containing materials ("ACMs") when such materials are in poor
condition, or in the event of renovation or demolition. Such laws impose
liability for release of ACMs into the air and third parties may seek recovery
from owners or operators of real properties for personal injury associated with
ACMs. In connection with the ownership (direct or indirect), operation,
management and development of real properties, the Operating Partnership may be
considered an owner or operator of such properties or as having arranged for
the disposal or treatment of hazardous or toxic substances and, therefore,
potentially liable for removal or remediation costs, as well as certain other
related costs, including governmental fines and injuries to persons and
property.

All of the Office Properties and all of the Industrial Properties have
been subjected to a Phase I or similar environmental audit after April 1, 1994
(which involved general inspections without soil sampling, ground water
analysis or radon testing and, for the Properties constructed in 1978 or
earlier, survey inspections to ascertain the existence of ACMs were conducted)
completed by independent environmental consultant companies (except for 35
Pinelawn Road which was originally developed by Reckson and subjected to a
Phase 1 in April 1992). These environmental audits have not revealed any
environmental liability that would have a material adverse effect on the
Operating Partnership's business.

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ITEM 2. PROPERTIES

GENERAL

As of December 31, 2000, the Operating Partnership owned and operated 188
Properties (including 10 joint venture office properties but excluding the
RSVP-controlled joint ventures) in the Tri-State Area encompassing
approximately 21.3 million square feet. These properties consist of 65 Class A
Suburban Office Properties encompassing approximately 9.1 million square feet
and 17 Class A CBD Office Properties encompassing approximately 5.3 million
square feet, 104 Industrial Properties encompassing approximately 6.8 million
rentable square feet and two free-standing 10,000 square foot retail
properties. The Operating Partnership also owns a 357,000 square foot Class A
office building in Orlando, Florida. The rentable square feet of each property
has been determined for these purposes based on the aggregate leased square
footage specified in currently effective leases and, with respect to vacant
space, management's estimate. In addition, as of December 31, 2000, the
Operating Partnership is in the process of developing a 315,000 square foot
office building and owned approximately 290 acres of land in 13 separate
parcels of on which the Operating Partnership can develop approximately 1.4
million square feet of office space and approximately 224,000 square feet of
industrial space.

Reckson has historically emphasized the development and acquisition of
properties that are in strong CBD markets or are part of large scale office and
industrial parks. Approximately 37% (measured by rentable square footage) of
the Office Properties are CBD Office Properties. In addition, approximately 67%
of the Suburban Office Properties and approximately 59% of the Industrial
Properties are located in such parks (measured by rentable square footage). The
Operating Partnership believes that owning properties in planned office and
industrial parks provides certain strategic advantages, including the
following: (i) certain tenants prefer being located in a park with other high
quality companies to enhance their corporate image, (ii) parks afford tenants
certain aesthetic amenities such as a common landscaping plan, standardization
of signage and common dining and recreational facilities, (iii) tenants may
expand (or contract) their business within a park, enabling them to centralize
business functions and (iv) a park provides tenants with access to other
tenants and may facilitate business relationships between tenants.

Set forth below is a summary of certain information relating to the
Properties, categorized by Office and Industrial Properties, as of December 31,
2000.

OFFICE PROPERTIES

General

As of December 31, 2000, the Operating Partnership owned or had an
interest in 65 Class A Suburban Office Properties encompassing approximately
9.1 million square feet and 17 Class A CBD Office Properties encompassing
approximately 5.3 million square feet. As of December 31, 2000, these Office
Properties were approximately 97.2% leased (percent leased excludes properties
under development) to approximately 1,100 tenants.

The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes and achieve among the highest rent, occupancy and
tenant retention rates within their sub-markets. Forty two of the 65 Suburban
Office Properties are located in the following ten planned office parks: the
North Shore Atrium, the Huntington Melville Corporate Center, the Nassau West
Corporate Center, the Tarrytown Corporate Center, the Executive Hill Office
Park, the Reckson Executive Park, the University Square Office Complex, the
Summit at Valhalla, the Mt. Pleasant Corporate Center, and the Short Hills
Office Complex. The buildings in these office parks offer a full array of
amenities including health clubs, racquetball courts, sun decks, restaurants,
computer controlled HVAC access systems and conference centers. Management
believes that the location, quality of construction and amenities as well as
the Operating Partnership's reputation for providing a high level of tenant
service have enabled the Operating Partnership to attract and retain a national
tenant base. The office tenants include national service companies, such as
telecommunications firms, "Big Five" accounting firms, securities brokerage
houses, insurance companies and health care providers.

I-8

The Office Properties are leased to both national and local tenants.
Leases on the Office Properties are typically written for terms ranging from
five to ten years and require: (i) payment of a fixed gross rental amount that
excludes payments on account of real estate tax, operating expense escalations
and base electrical charges ("Base Rent"), (ii) payment of a base electrical
charge, (iii) payment of real estate tax escalations over a base year,
(iv) payment of compounded annual increases to Base Rent and/or payment of
operating expense escalations over a base year, (v) payment of overtime HVAC
and electric and (vi) payment of electric escalations over a base year. In
virtually all leases, the landlord is responsible for structural repairs.
Renewal provisions typically provide for renewal rates at market rates or a
percentage thereof, provided that such rates are not less than the most recent
renewal rates.

The following table sets forth certain information as of December 31, 2000
for each of the Office Properties.

OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- ------------------------------------ ------------ ------------ ------------- ---------

Office Properties:
Huntington Melville Corporate
Center, Melville, NY
Leasehold
395 North Service Rd ............... 100% (2,081) 1988 7.5
200 Broadhollow Rd ................. 100% Fee 1981 4.6
48 South Service Rd ................ 100% Fee 1986 7.3
35 Pinelawn Rd ..................... 100% Fee 1980 6.0
275 Broadhollow Rd . ............... 51% Fee 1970 5.8
58 South Service Rd (3) . .......... 100% Fee 2000 16.5
1305 Old Walt Whitman Rd ........... 51% Fee 1998(5) 18.1
----
Total--Huntington Melville
Corporate Center (4) .............. 65.8
----
North Shore Atrium, Syosset, NY
6800 Jericho Turnpike
(North Shore Atrium I) ............ 100% Fee 1977 13.0
6900 Jericho Turnpike
(North Shore Atrium II) ........... 100% Fee 1982 5.0
----
Total--North Shore Atrium .......... 18.0
----
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate Leasehold
Center II) ........................ 100% (2,082) 1984 9.1
60 Charles Lindbergh Blvd.
(Nassau West Corporate Leasehold
Center I) ......................... 100% (2,082) 1989 7.8
Leasehold
51 Charles Lindbergh Blvd. ......... 100% (2,084) 1989 6.6
Leasehold
55 Charles Lindbergh Blvd. ......... 100% (2,082) 1982 10.0
333 Earl Ovington Blvd. Leasehold
(The Omni) ........................ 60% (2,088) 1991 30.6
Leasehold
90 Merrick Ave. .................... 51% (2,084) 1985 13.2
----
Total--Nassau West Corporate
Center ............................ 77.3
----
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road .............. 100% Fee 1974 1.4
520 White Plains Road .............. 60% Fee(6) 1981 6.8
555 White Plains Road .............. 100% Fee 1972 4.2
560 White Plains Road .............. 100% Fee 1980 4.0
580 White Plains Road .............. 100% Fee 1977 6.1
660 White Plains Road .............. 100% Fee 1983 10.9
----
Total--Tarrytown Corporate
Center ............................ 33.4
----
Reckson Executive Park
Rye Brook, NY
1 International Dr. ................ 100% Fee 1983 N/A
2 International Dr. ................ 100% Fee 1983 N/A

ANNUAL
BASE
RENT
RENTABLE ANNUAL PER NUMBER
NUMBER SQUARE PERCENT BASE LEASED OF TENANT
PROPERTY OF FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------------ ----------- ------------ --------- ------------- ----------- ----------

Office Properties:
Huntington Melville Corporate
Center, Melville, NY
395 North Service Rd ............... 4 187,393 99.3% $ 4,924,316 $ 26.47 4
200 Broadhollow Rd ................. 4 67,432 100.0% $ 1,553,502 $ 23.04 13
48 South Service Rd ................ 4 125,372 100.0% $ 3,145,035 $ 25.08 8
35 Pinelawn Rd ..................... 2 105,241 92.5% $ 2,011,350 $ 20.66 25
275 Broadhollow Rd . ............... 4 124,441 99.6% $ 2,833,490 $ 22.85 13
58 South Service Rd (3) . .......... 4 277,500 -- -- -- --
1305 Old Walt Whitman Rd ........... 3 167,400 98.1% $ 4,124,735 $ 25.13 6
------- ----------- --
Total--Huntington Melville
Corporate Center (4) .............. 1,054,779 98.6% $18,592,428 $ 24.28 69
--------- ----------- --
North Shore Atrium, Syosset, NY
6800 Jericho Turnpike
(North Shore Atrium I) ............ 2 209,028 96.0% $ 4,094,898 $ 20.41 44
6900 Jericho Turnpike
(North Shore Atrium II) ........... 4 95,149 100.0% $ 2,156,644 $ 22.67 14
--------- ----------- --
Total--North Shore Atrium .......... 304,177 97.3% $ 6,251,542 $ 21.12 58
--------- ----------- --
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate
Center II) ........................ 6 211,845 96.5% $ 4,567,615 $ 22.34 23
60 Charles Lindbergh Blvd.
(Nassau West Corporate
Center I) ......................... 2 195,998 100.0% $ 4,578,271 $ 23.36 7
51 Charles Lindbergh Blvd. ......... 1 108,000 100.0% $ 2,275,649 $ 21.07 1
55 Charles Lindbergh Blvd. ......... 2 214,581 100.0% $ 2,606,170 $ 12.15 2
333 Earl Ovington Blvd.
(The Omni) ........................ 10 575,000 99.3% $16,083,501 $ 28.17 32
90 Merrick Ave. .................... 9 221,839 97.3% $ 4,997,745 $ 23.15 20
--------- ----------- --
Total--Nassau West Corporate
Center ............................ 1,527,263 98.9% $35,108,951 $ 23.24 85
--------- ----------- --
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road .............. 2 26,468 95.3% $ 426,143 $ 16.90 21
520 White Plains Road .............. 6 171,761 100.0% $ 3,727,762 $ 21.70 2
555 White Plains Road .............. 5 121,585 94.1% $ 2,692,386 $ 23.53 8
560 White Plains Road .............. 6 126,471 92.7% $ 2,220,688 $ 18.95 14
580 White Plains Road .............. 6 170,726 94.6% $ 3,525,079 $ 21.82 17
660 White Plains Road .............. 6 258,715 92.7% $ 5,090,460 $ 21.23 38
--------- ----------- --
Total--Tarrytown Corporate
Center ............................ 875,726 94.8% $17,682,518 $ 21.30 100
--------- ----------- ---
Reckson Executive Park
Rye Brook, NY
1 International Dr. ................ 3 90,000 100.0% $ 1,170,000 $ 13.00 1
2 International Dr. ................ 3 90,000 100.0% $ 1,170,000 $ 13.00 1

I-9

OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- ------------------------------------ ------------ ------------ ------------- ---------

3 International Dr. ................ 100% Fee 1983 N/A
4 International Dr. ................ 100% Fee 1986 N/A
5 International Dr. ................ 100% Fee 1986 N/A
6 International Dr. ................ 100% Fee 1986 N/A
Total--Reckson Executive Park ...... 44.4
-----
Summit at Valhalla
Valhalla, NY
100 Summit Dr. ..................... 100% Fee 1988 11.3
200 Summit Dr. ..................... 100% Fee 1990 18.0
500 Summit Dr. ..................... 100% Fee 1986 29.1
-----
Total -- Summit at Valhalla ........ 58.4
-----
Mt. Pleasant Corporate Center ......
115/117 Stevens Ave. ............... 100% Fee 1984 5.0
-----
Total -- Mt Pleasant Corporate
Center ............................ 5.0
-----
Landmark Square
Stamford, CT
One Landmark Square ................ 100% Fee 1973 N/A
Two Landmark Square ................ 100% Fee 1976 N/A
Three Landmark Square .............. 100% Fee 1978 N/A
Four Landmark Square ............... 100% Fee 1977 N/A
Five Landmark Square ............... 100% Fee 1976 N/A
Six Landmark Square ................ 100% Fee 1984 N/A
Total -- Landmark Square ........... 7.2
-----
Stamford Towers Stamford, CT .......
680 Washington Blvd. ............... 51% Fee 1989 1.3
750 Washington Blvd. ............... 51% Fee 1989 2.4
-----
Total--Stamford Towers ............. 3.7
-----
Stand-alone Long Island
Properties
400 Garden City Plaza
Garden City, NY ................... 51% Fee 1989 5.7
88 Duryea Rd.
Melville, NY ...................... 100% Fee 1986 1.5
310 East Shore Rd.
Great Neck, NY .................... 100% Fee 1981 1.5
333 East Shore Rd. Leasehold
Great Neck, NY .................... 100% (2,030) 1976 1.5
520 Broadhollow Rd.
Melville, NY ...................... 100% Fee 1978 7.0
1660 Walt Whitman Rd.
Melville, NY ...................... 100% Fee 1980 6.5
125 Baylis Rd.
Melville, NY ...................... 100% Fee 1980 8.2
150 Motor Parkway
Hauppauge, NY ..................... 100% Fee 1984 11.3
1979 Marcus Ave.
Lake Success, NY .................. 100% Fee 1987 8.6
120 Mineola Blvd.
Mineola, NY ....................... 100% Fee 1989 0.7
538 Broadhollow Road
Melville, NY ...................... 100% Fee 1986 7.5
50 Marcus Drive,
Melville, NY ...................... 100% Fee 2000(5) 12.9
-----
Total--Stand-alone Long Island ..... 72.9
-----
Stand-alone Westchester
Properties
155 White Plains Road,
Tarrytown, NY ..................... 100% Fee 1963 13.2
235 Main Street, White
Plains, NY ........................ 100% Fee 1974(5) 0.4
245 Main Street
White Plains, NY .................. 100% Fee 1983 0.4
120 White Plains Rd.
Tarrytown, NY ..................... 51% Fee 1984 9.7

ANNUAL
BASE
RENT
RENTABLE ANNUAL PER NUMBER
NUMBER SQUARE PERCENT BASE LEASED OF TENANT
PROPERTY OF FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------------ ----------- ------------ ----------- ------------- ----------- ----------

3 International Dr. ................ 3 91,174 100.0% $ 2,015,775 $ 22.10 5
4 International Dr. ................ 3 86,694 89.3% $ 2,014,051 $ 26.01 8
5 International Dr. ................ 3 90,000 100.0% $ 2,181,374 $ 24.24 1
6 International Dr. ................ 3 94,016 100.0% $ 1,656,258 $ 17.62 8
------ ----------- -
Total--Reckson Executive Park ...... 541,884 98.3% $10,207,458 $ 19.16 24
------- ----------- --
Summit at Valhalla
Valhalla, NY
100 Summit Dr. ..................... 4 249,551 95.7% $ 5,125,534 $ 21.45 9
200 Summit Dr. ..................... 4 240,834 89.7% $ 4,610,306 $ 21.34 13
500 Summit Dr. ..................... 4 208,660 100.0% $ 5,633,820 $ 27.00 1
------- ----------- --
Total -- Summit at Valhalla ........ 699,045 94.9% $15,369,660 $ 23.17 23
------- ----------- --
Mt. Pleasant Corporate Center ......
115/117 Stevens Ave. ............... 3 162,004 95.6% $ 2,895,825 $ 18.70 15
------- ----------- --
Total -- Mt Pleasant Corporate
Center ............................ 162,004 95.6% $ 2,895,825 $ 18.70 15
------- ----------- --
Landmark Square
Stamford, CT
One Landmark Square ................ 22 296,716 89.2% $ 6,311,100 $ 23.83 58
Two Landmark Square ................ 3 39,701 87.8% $ 717,196 $ 20.58 10
Three Landmark Square .............. 6 128,286 100.0% $ 1,687,016 $ 13.15 18
Four Landmark Square ............... 5 104,446 93.9% $ 1,723,990 $ 17.57 16
Five Landmark Square ............... 3 57,273 100.0% $ 302,731 $ 5.29 3
Six Landmark Square ................ 10 171,899 96.9% $ 3,920,672 $ 23.53 8
------- ----------- --
Total -- Landmark Square ........... 798,321 94.0% $14,662,705 $ 19.54 113
------- ----------- ---
Stamford Towers Stamford, CT .......
680 Washington Blvd. ............... 11 132,759 99.5% $ 3,786,544 $ 28.66 7
750 Washington Blvd. ............... 11 192,108 99.6% $ 4,675,265 $ 24.44 11
------- ----------- ---
Total--Stamford Towers ............. 324,867 99.6% $ 8,461,809 $ 21.15 18
------- ----------- ---
Stand-alone Long Island
Properties
400 Garden City Plaza
Garden City, NY ................... 5 176,073 96.6% $ 4,100,754 $ 24.12 25
88 Duryea Rd.
Melville, NY ...................... 2 25,061 96.7% $ 406,370 $ 16.77 4
310 East Shore Rd.
Great Neck, NY .................... 4 50,000 91.2% $ 1,056,684 $ 23.17 20
333 East Shore Rd.
Great Neck, NY .................... 2 17,715 99.6% $ 452,678 $ 25.65 9
520 Broadhollow Rd.
Melville, NY ...................... 1 83,176 71.1% $ 1,193,719 $ 20.19 2
1660 Walt Whitman Rd.
Melville, NY ...................... 1 73,115 99.9% $ 1,435,770 $ 19.66 5
125 Baylis Rd.
Melville, NY ...................... 2 98,329 95.3% $ 1,842,756 $ 19.66 15
150 Motor Parkway
Hauppauge, NY ..................... 4 191,447 96.1% $ 4,152,752 $ 22.56 23
1979 Marcus Ave.
Lake Success, NY .................. 4 326,612 100.0% $ 7,159,400 $ 21.92 29
120 Mineola Blvd.
Mineola, NY ....................... 6 101,000 100.0% $ 2,398,421 $ 23.75 16
538 Broadhollow Road
Melville, NY ...................... 4 180,339 95.7% $ 4,121,324 $ 23.89 12
50 Marcus Drive,
Melville, NY ...................... 2 163,762 100.0% $ 1,074,688 $ 6.56 1
------- ----------- ---
Total--Stand-alone Long Island ..... 1,486,629 96.6% $29,395,316 $ 22.26 161
--------- ----------- ---
Stand-alone Westchester
Properties
155 White Plains Road,
Tarrytown, NY ..................... 2 60,909 99.6% $ 1,168,551 $ 19.27 5
235 Main Street, White
Plains, NY ........................ 6 83,237 93.8% $ 1,513,711 $ 19.38 29
245 Main Street
White Plains, NY .................. 6 73,543 93.3% $ 1,216,955 $ 17.75 15
120 White Plains Rd.
Tarrytown, NY ..................... 6 197,785 99.6% $ 4,730,530 $ 24.03 11

I-10

OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA NUMBER
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES) OF FLOORS
- -------------------------------------- ------------ ------------ ------------- --------- -----------

80 Grasslands
Elmsford, NY ........................ 100% Fee 1989 4.9 3
360 Hamilton Avenue
White Plains, NY .................... 100% Fee 1977 1.5 12
140 Grand Street
White Plains, NY .................... 100% Fee 1991 2.2 9
-----
Total Stand-alone Westchester
Properties .......................... 32.3
-----
Executive Hill Office Park
West Orange, NJ
100 Executive Dr ..................... 100% Fee 1978 10.1 3
200 Executive Dr ..................... 100% Fee 1980 8.2 4
300 Executive Dr ..................... 100% Fee 1984 8.7 4
10 Rooney Circle ..................... 100% Fee 1971 5.2 3
-----
Total--Executive Hill Office Park 32.2
-----
University Square
Princeton, NJ
100 Campus Dr. ....................... 100% Fee 1987 N/A 1
104 Campus Dr. ....................... 100% Fee 1987 N/A 1
115 Campus Dr. ....................... 100% Fee 1987 N/A 1
Total University Square .............. 11.0
-----
Short Hills Office Complex
Short Hills, NJ
101 West John F. Kennedy
Parkway ............................. 100% Fee 1981 9.0 6
101 East John F. Kennedy
Parkway ............................. 100% Fee 1981 6.0 4
51 John F Kennedy Parkway ............ 51% Fee 1988 11.0 5
-----
Total -- Short Hills Office .......... 26.0
-----
Stand-alone New Jersey
Properties
1 Paragon Drive
Montvale, NJ ........................ 100% Fee 1980 11 2
99 Cherry Hill Road
Parsippany, NJ ...................... 100% Fee 1982 8.8 3
119 Cherry Hill Road
Parsippany, NJ ...................... 100% Fee 1982 9.3 3
One Eagle Rock
Hanover, NJ ......................... 100% Fee 1986 10.4 3
155 Passaic Ave.
Fairfield, NJ ....................... 100% Fee 1984 3.6 4
3 University Plaza
Hackensack, NJ ...................... 100% Fee 1985 10.6 6
1255 Broad Street
Clifton, NJ ......................... 100% Fee 1968 11.1 2
492 River Rd,
Nutley, NJ .......................... 100% Fee 1952 17.3 13
-----
Total Stand-alone New Jersey
Properties .......................... 82.1
-----
New York City Properties
120 W. 45th Street New York, NY 100% Fee 1989 0.4 40
100 Wall Street
New York, NY ........................ 100% Fee 1969 0.5 29
810 Seventh Avenue
New York, NY ........................ 100% Fee 1970 0.6 42
919 Third Avenue
New York, NY ........................ 100% Fee(7) 1971 1.5 47
1350 Avenue of the Americas
New York, NY ........................ 100% Fee 1966 0.6 35
-----
Total -- New York City Office
Properties .......................... 3.6
-----
Total--Office Properties (4) ......... 573.3
=====

ANNUAL
BASE
RENT
RENTABLE ANNUAL PER NUMBER
SQUARE PERCENT BASE LEASED OF TENANT
PROPERTY FEET LEASED RENT (2) SQ. FT. LEASES
- -------------------------------------- ------------ ----------- --------------- ----------- ----------

80 Grasslands
Elmsford, NY ........................ 85,104 100.0% $ 1,695,536 $ 19.92 5
360 Hamilton Avenue
White Plains, NY .................... 382,000 96.5% $ 7,465,521 $ 20.26 15
140 Grand Street
White Plains, NY .................... 130,136 93.0% $ 2,663,153 $ 22.00 17
------- ------------ --
Total Stand-alone Westchester
Properties .......................... 1,012,714 96.7% $ 20,453,957 $ 20.89 97
--------- ------------ --
Executive Hill Office Park
West Orange, NJ
100 Executive Dr ..................... 92,872 100.0% $ 1,917,717 $ 20.65 11
200 Executive Dr ..................... 102,630 99.9% $ 2,204,345 $ 20.94 16
300 Executive Dr ..................... 126,196 100.0% $ 2,213,881 $ 17.54 11
10 Rooney Circle ..................... 69,684 100.0% $ 1,406,904 $ 20.19 2
--------- ------------ --
Total--Executive Hill Office Park 391,382 100.0% $ 7,742,847 $ 19.78 40
--------- ------------ --
University Square
Princeton, NJ
100 Campus Dr. ....................... 27,350 100.0% $ 622,621 $ 22.76 3
104 Campus Dr. ....................... 70,155 100.0% $ 1,515,517 $ 21.60 2
115 Campus Dr. ....................... 33,600 100.0% $ 721,107 $ 21.46 2
--------- ------------ --
Total University Square .............. 131,105 100.0% $ 2,859,245 $ 21.81 7
--------- ------------ --
Short Hills Office Complex
Short Hills, NJ
101 West John F. Kennedy
Parkway ............................. 185,233 100.0% $ 2,963,728 $ 16.00 1
101 East John F. Kennedy
Parkway ............................. 122,841 100.0% $ 655,152 $ 5.33 1
51 John F Kennedy Parkway ............ 248,962 100.0% $ 8,790,239 $ 33.79 18
--------- ------------ --
Total -- Short Hills Office .......... 557,036 100.0% $ 12,409,119 $ 22.28 20
--------- ------------ --
Stand-alone New Jersey
Properties
1 Paragon Drive
Montvale, NJ ........................ 104,599 81.6% $ 1,763,074 $ 20.67 16
99 Cherry Hill Road
Parsippany, NJ ...................... 93,250 99.0% $ 1,746,078 $ 18.92 16
119 Cherry Hill Road
Parsippany, NJ ...................... 95,724 99.9% $ 1,908,205 $ 19.96 17
One Eagle Rock
Hanover, NJ ......................... 140,000 100.0% $ 3,223,210 $ 23.02 8
155 Passaic Ave.
Fairfield, NJ ....................... 87,986 100.0% $ 1,348,254 $ 15.32 5
3 University Plaza
Hackensack, NJ ...................... 216,403 93.2% $ 4,041,680 $ 20.04 21
1255 Broad Street
Clifton, NJ ......................... 193,574 100.0% $ 4,259,924 $ 22.01 2
492 River Rd,
Nutley, NJ .......................... 130,009 100.0% $ 1,358,105 $ 10.45 1
--------- ------------ --
Total Stand-alone New Jersey
Properties .......................... 1,061,545 96.9% $ 19,648,530 $ 19.10 86
--------- ------------ --
New York City Properties
120 W. 45th Street New York, NY 443,109 100.0% $ 15,908,898 $ 35.90 44
100 Wall Street
New York, NY ........................ 458,626 99.3% $ 14,063,841 $ 30.89 38
810 Seventh Avenue
New York, NY ........................ 692,060 95.1% $ 23,323,658 $ 35.44 36
919 Third Avenue
New York, NY ........................ 1,374,966 99.1% $ 32,217,043 $ 23.95 22
1350 Avenue of the Americas
New York, NY ........................ 540,000 92.8% $ 15,848,017 $ 31.62 77
--------- ------------ --
Total -- New York City Office
Properties .......................... 3,508,761 97.0% $101,361,457 $ 29.45 217
--------- ------------ ---
Total--Office Properties (4) ......... 14,437,238 97.2% $323,103,367 $ 23.48 1,133
========== ============ =====

- ----------
(1) Ground lease expirations assume exercise of renewal options by the lessee.

I-11

(2) Represents Base Rent of signed leases at December 31, 2000 adjusted for
scheduled contractual increases during the 12 months ending December 31,
2001. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31,
2001. Amounts included in rental revenue for financial reporting purposes
have been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.
(3) Property is currently under development.
(4) Percent leases excludes properties under development.
(5) Year renovated.
(6) The actual fee interest in is held by the County of Westchester Industrial
Development Agency. The fee interest in 520 White Plains Road may be
acquired if the outstanding principal under certain loan agreements and
annual basic installments are prepaid in full.
(7) There is a ground lease in place on a small portion of the land which
expires in 2066.

INDUSTRIAL PROPERTIES

General.

As of December 31, 2000, the Operating Partnership owned or had an
interest in 104 Industrial Properties that encompass approximately 6.8 million
rentable square feet. As of December 31, 2000, the Industrial Properties were
approximately 97.5% leased (percentage leased excludes properties under
development) to approximately 230 tenants. Many of the Industrial Properties
have been constructed with high ceiling heights (i.e., above 18 feet), upscale
office building facades, parking in excess of zoning requirements, drive-in
and/or loading dock facilities and other features which permit them to be
leased for industrial and/or office purposes.

The Industrial Properties are leased to both national and local tenants.
These tenants utilize the Industrial Properties for distribution, warehousing,
research and development and light manufacturing/assembly activities. Leases on
the Industrial Properties are typically written for terms ranging from three to
seven years and require: (i) payment of a Base Rent, (ii) payments of real
estate tax escalations over a base year, (iii) payments of compounded annual
increases to Base Rent and (iv) reimbursement of all operating expenses.
Electric costs are borne and paid directly by the tenant. Certain leases are
"triple net" (i.e., the tenant is required to pay in addition to annual Base
Rent, all operating expenses and real estate taxes). In virtually all leases,
the landlord is responsible for structural repairs. Renewal provisions
typically provide for renewal rents at market rates, provided that such rates
are not less than the most recent rental rates.

Approximately 86% of the Industrial Properties, measured by square
footage, are located on Long Island. Sixty eight percent of these properties,
as measured by square footage, are located in the following three Industrial
Parks developed by Reckson: (i) Vanderbilt Industrial Park, (ii) Airport
International Plaza and (iii) County Line Industrial Center.

In addition to the Industrial Properties on Long Island, the Operating
Partnership owns nine Industrial Properties in the other suburban markets.
These properties encompass approximately 940,000 square feet and were
approximately 93 % leased as of December 31, 2000.

The following table sets forth certain information as of December 31, 2000
for each of the Industrial Properties.

OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPRIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE CONSTRUCTED (ACRES) (FEET)
- ------------------------------- ------------ ------------- ------------- --------- -----------

Industrial Properties:
Vanderbilt Industrial Park
Hauppauge, NY
360 Vanderbilt Motor
Parkway ...................... 100% Fee 1967 4.2 16
410 Vanderbilt Motor
Parkway ...................... 100% Fee 1965 3.0 15
595 Old Willets Path .......... 100% Fee 1968 3.5 14
611 Old Willets Path .......... 100% Fee 1963 3.0 14
631/641 Old Willets Path. 100% Fee 1965 1.9 14
651/661 Old Willets Path.. 100% Fee 1966 2.0 14

PRECENTAGE
OFFICE/ ANNUAL
RESEARCH BASE
AND RENT NUMBER
DEVELOP- RENTABLE ANNUAL PER OF
MENT SQUARE PERCENT BASE LEASED TENANTS
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------- ----------- ---------- ----------- ---------- ----------- --------

Industrial Properties:
Vanderbilt Industrial Park
Hauppauge, NY
360 Vanderbilt Motor
Parkway ...................... 62% 54,000 100.0% $543,780 $ 10.07 1
410 Vanderbilt Motor
Parkway ...................... 7% 41,784 90.4% $ 98,302 $ 2.60 3
595 Old Willets Path .......... 14% 31,670 100.0% $192,605 $ 6.08 4
611 Old Willets Path .......... 11% 20,000 100.0% $127,550 $ 6.38 2
631/641 Old Willets Path. 31% 25,000 100.0% $ 95,560 $ 3.82 4
651/661 Old Willets Path.. 45% 25,000 100.0% $184,479 $ 7.38 7

I-12

OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPRIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE CONSTRUCTED (ACRES) (FEET)
- --------------------------- ------------ ------------- ------------- --------- -----------

681 Old Willets Path ...... 100% Fee 1961 1.3 14
740 Old Willets Path ...... 100% Fee 1965 3.5 14
325 Rabro Dr .............. 100% Fee 1967 2.7 14
250 Kennedy Dr ............ 100% Fee 1979 7.0 16
90 Plant Ave .............. 100% Fee 1972 4.3 16
110 Plant Ave ............. 100% Fee 1974 6.8 18
55 Engineers Rd ........... 100% Fee 1968 3.0 18
65 Engineers Rd ........... 100% Fee 1969 1.8 22
85 Engineers Rd ........... 100% Fee 1968 2.3 18
100 Engineers Rd .......... 100% Fee 1968 5.0 14
150 Engineers Rd .......... 100% Fee 1969 6.8 22
20 Oser Ave ............... 100% Fee 1979 5.0 16
30 Oser Ave ............... 100% Fee 1978 4.4 16
40 Oser Ave ............... 100% Fee 1974 3.1 16
50 Oser Ave ............... 100% Fee 1975 4.1 21
60 Oser Ave ............... 100% Fee 1975 3.3 21
63 Oser Ave ............... 100% Fee 1974 1.2 20
65 Oser Ave ............... 100% Fee 1975 1.2 18
73 Oser Ave ............... 100% Fee 1974 1.2 20
80 Oser Ave ............... 100% Fee 1974 1.1 18
85 Nicon Ct ............... 100% Fee 1978 6.1 30
90 Oser Ave ............... 100% Fee 1973 1.1 16
104 Parkway Dr. ........... 100% Fee 1985 1.8 15
110 Ricefield Ln .......... 100% Fee 1980 2.0 15
120 Ricefield Ln .......... 100% Fee 1983 2.0 15
125 Ricefield Ln .......... 100% Fee 1973 2.0 14
135 Ricefield Ln .......... 100% Fee 1981 2.1 15
85 Adams Dr ............... 100% Fee 1980 1.8 15
395 Oser Ave .............. 100% Fee 1980 6.1 14
185 Oser Ave .............. 100% Fee 1974 2.0 18
25 Davids Dr .............. 100% Fee 1975 3.2 20
45 Adams Ave .............. 100% Fee 1979 2.1 18
225 Oser Ave .............. 100% Fee 1977 1.2 14
180 Oser Ave .............. 100% Fee 1978 3.4 16
360 Oser Ave .............. 100% Fee 1981 1.3 18
400 Oser Ave .............. 100% Fee 1982 9.5 16
375 Oser Ave .............. 100% Fee 1981 1.2 18
425 Rabro Drive ........... 100% Fee 1980 4.0 16
390 Motor Parkway ......... 100% Fee 1980 10.0 14
400 Moreland Road(3) ...... 100% Fee 1967 6.3 17
600 Old Willets Path ...... 100% Fee 1965 4.5 14
-----
Total Vanderbilt
Industrial Park (4) ...... 160.4
-----
Airport International Plaza
Islip, NY
20 Orville Dr ............. 100% Fee 1978 1.0 16
25 Orville Dr ............. 100% Fee 1970 2.2 16
50 Orville Dr ............. 100% Fee 1976 1.6 15
65 Orville Dr ............. 100% Fee 1971 2.2 14
70 Orville Dr ............. 100% Fee 1975 2.3 22
80 Orville Dr ............. 100% Fee 1988 6.5 16
85 Orville Dr ............. 100% Fee 1974 1.9 14
95 Orville Dr ............. 100% Fee 1974 1.8 14
110 Orville Dr ............ 100% Fee 1979 6.4 24
180 Orville Dr ............ 100% Fee 1982 2.3 16
1101 Lakeland Ave ......... 100% Fee 1983 4.9 20
1385 Lakeland Ave ......... 100% Fee 1973 2.4 16
125 Wilbur Place .......... 100% Fee 1977 4.0 16
140 Wilbur Place .......... 100% Fee 1973 3.1 20
160 Wilbur Place .......... 100% Fee 1978 3.9 16
170 Wilbur Place .......... 100% Fee 1979 4.9 16
4040 Veterans Highway ..... 100% Fee 1972 1.0 14

PRECENTAGE
OFFICE/ ANNUAL
RESEARCH BASE
AND RENT NUMBER
DEVELOP- RENTABLE ANNUAL PER OF
MENT SQUARE PERCENT BASE LEASED TENANTS
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- --------------------------- ----------- ------------ ----------- ------------- --------- --------

681 Old Willets Path ...... 10% 15,000 100.0% $ 102,414 $ 6.83 1
740 Old Willets Path ...... 5% 30,000 100.0% $ 29,670 $ 0.99 1
325 Rabro Dr .............. 10% 35,000 100.0% $ 204,560 $ 5.84 2
250 Kennedy Dr ............ 9% 127,980 100.0% $ 455,298 $ 3.56 1
90 Plant Ave .............. 13% 75,000 100.0% $ 452,744 $ 6.04 3
110 Plant Ave ............. 8% 125,000 100.0% $ 156,250 $ 1.25 1
55 Engineers Rd ........... 8% 36,000 100.0% $ 351,878 $ 9.77 1
65 Engineers Rd ........... 10% 23,000 100.0% $ 131,198 $ 5.70 1
85 Engineers Rd ........... 5% 40,800 100.0% $ 221,601 $ 5.43 2
100 Engineers Rd .......... 11% 88,000 100.0% $ 79,271 $ 0.90 1
150 Engineers Rd .......... 11% 135,000 100.0% $ 414,528 $ 3.07 1
20 Oser Ave ............... 18% 42,000 98.7% $ 326,963 $ 7.89 2
30 Oser Ave ............... 21% 42,000 82.1% $ 212,926 $ 6.17 4
40 Oser Ave ............... 33% 59,800 80.3% $ 335,405 $ 6.99 11
50 Oser Ave ............... 15% 60,000 100.0% $ 240,000 $ 4.00 1
60 Oser Ave ............... 19% 48,000 100.0% $ 192,000 $ 4.00 1
63 Oser Ave ............... 9% 22,000 100.0% $ 68,961 $ 3.13 1
65 Oser Ave ............... 10% 20,000 100.0% $ 99,670 $ 4.98 1
73 Oser Ave ............... 15% 20,000 100.0% $ 21,271 $ 1.06 1
80 Oser Ave ............... 25% 19,500 100.0% $ 67,516 $ 3.46 1
85 Nicon Ct ............... 10% 104,000 100.0% $ 544,515 $ 5.24 1
90 Oser Ave ............... 26% 37,500 100.0% $ 130,779 $ 3.49 1
104 Parkway Dr. ........... 50% 27,600 100.0% $ 208,033 $ 7.54 1
110 Ricefield Ln .......... 25% 32,264 100.0% $ 166,220 $ 5.15 1
120 Ricefield Ln .......... 24% 33,060 100.0% $ 134,055 $ 4.05 1
125 Ricefield Ln .......... 20% 30,495 100.0% $ 206,643 $ 6.78 1
135 Ricefield Ln .......... 10% 32,340 100.0% $ 209,761 $ 6.49 1
85 Adams Dr ............... 90% 20,000 100.0% $ 278,817 $ 13.94 1
395 Oser Ave .............. 100% 50,000 99.0% $ 441,045 $ 8.91 1
185 Oser Ave .............. 40% 30,000 -- -- -- --
25 Davids Dr .............. 90% 40,000 100.0% $ 334,516 $ 8.36 1
45 Adams Ave .............. 90% 28,000 100.0% $ 226,333 $ 8.08 1
225 Oser Ave .............. 80% 10,000 99.6% $ 116,175 $ 11.67 1
180 Oser Ave .............. 35% 61,868 89.9% $ 424,419 $ 7.63 8
360 Oser Ave .............. 35% 23,000 100.0% $ 96,600 $ 4.20 1
400 Oser Ave .............. 30% 164,936 89.3% $ 1,256,877 $ 8.53 24
375 Oser Ave .............. 40% 20,000 100.0% $ 154,388 $ 7.72 1
425 Rabro Drive ........... 25% 65,641 99.7% $ 469,536 $ 7.18 1
390 Motor Parkway ......... 4% 181,155 100.0% $ 813,435 $ 4.49 1
400 Moreland Road(3) ...... 10% 56,875 -- -- -- --
600 Old Willets Path ...... 25% 69,627 100.0% $ 405,061 $ 5.82 1
------- ----------- --
Total Vanderbilt
Industrial Park (4) ...... 2,379,895 96.8% $12,023,608 $ 5.35 108
--------- ----------- ---
Airport International Plaza
Islip, NY
20 Orville Dr ............. 50% 12,852 100.0% $ 181,720 $ 14.09 1
25 Orville Dr ............. 100% 32,300 100.0% $ 490,561 $ 15.19 2
50 Orville Dr ............. 20% 28,000 99.8% $ 254,320 $ 9.10 3
65 Orville Dr ............. 13% 32,000 100.0% $ 171,588 $ 5.36 2
70 Orville Dr ............. 7% 41,508 100.0% $ 315,731 $ 7.61 2
80 Orville Dr ............. 21% 92,544 100.0% $ 668,272 $ 7.22 9
85 Orville Dr ............. 20% 25,000 100.0% $ 160,569 $ 6.42 2
95 Orville Dr ............. 10% 25,000 100.0% $ 147,583 $ 5.90 1
110 Orville Dr ............ 15% 110,000 100.0% $ 646,433 $ 5.88 1
180 Orville Dr ............ 18% 37,612 100.0% $ 191,971 $ 5.10 2
1101 Lakeland Ave ......... 8% 90,411 100.0% $ 531,315 $ 5.88 1
1385 Lakeland Ave ......... 18% 35,000 64.3% $ 162,344 $ 7.22 2
125 Wilbur Place .......... 31% 62,686 77.1% $ 248,547 $ 5.14 8
140 Wilbur Place .......... 37% 48,500 100.0% $ 210,494 $ 4.34 2
160 Wilbur Place .......... 30% 62,710 100.0% $ 481,790 $ 7.68 2
170 Wilbur Place .......... 28% 72,062 100.0% $ 407,680 $ 5.65 6
4040 Veterans Highway ..... 100% 2,800 100.0% $ 45,051 $ 16.09 1

I-13

OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPRIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE CONSTRUCTED (ACRES) (FEET)
- ----------------------------- ------------ -------------- ------------- --------- -----------

120 Wilbur Place ............ 100% Fee 1972 2.8 16
2002 Orville Drive
North ...................... 100% Fee 2000 15.8 24
2004 Orville Drive
North ...................... 100% Fee 1998 7.4 24
2005 Orville Drive
North ...................... 100% Fee 1999 8.7 24
----
Total Airport
International Plaza ........ 87.1
----
County Line Industrial Center
Melville, NY
5 Hub Dr .................... 100% Fee 1979 6.9 20
10 Hub Dr ................... 100% Fee 1975 6.6 20
30 Hub Drive ................ 100% Fee 1976 5.1 20
265 Spagnoli Rd ............. 100% Fee 1978 6.0 20
----
Total County Line
Industrial Center .......... 24.6
----
Standalone Long Island
Properties
32 Windsor Pl. Islip, NY 100% Fee 1971 2.5 18
42 Windsor Pl. Islip, NY 100% Fee 1972 2.4 18
208 Blydenburgh Rd.
Islandia, NY ............... 100% Fee 1969 2.4 14
210 Blydenburgh Rd.
Islandia, NY ............... 100% Fee 1969 1.2 14
71 Hoffman Ln.
Islandia, NY ............... 100% Fee 1970 5.8 16
135 Fell Ct. Islip, NY ...... 100% Fee 1965 3.2 16
----
Subtotal Islip/Islandia ..... 17.5
----
70 Schmitt Boulevard,
Farmingdale, NY ............ 100% Fee 1975 4.4 18
105 Price Parkway,
Farmingdale, NY ............ 100% Fee 1969 12.0 26
110 Bi County Blvd.
Farmingdale, NY ............ 100% Fee 1984 9.5 19
----
Subtotal Farmingdale ........ 25.9
----
70 Maxess Rd,
Melville, NY ............... 100% Fee 1969 9.3 15
20 Melville Park Rd,
Melville, NY ............... 100% Fee 1965 4.0 23
45 Melville Park Drive,
Melville, NY ............... 100% Fee 1998 4.2 24
65 Marcus Drive
Melville, NY ............... 100% Fee 1968 5.0 16
----
Subtotal Melville ........... 22.5
----
300 Motor Parkway,
Hauppauge, NY .............. 100% Fee 1979 4.2 14
1516 Motor Parkway,
Hauppauge, NY .............. 100% Fee 1981 7.9 24
----
Subtotal Hauppauge .......... 12.1
----
933 Motor Parkway
Smithtown, NY .............. 100% Fee 1973 5.6 20
65 S. Service Rd ,
Plainview, NY(5) ........... 100% Fee 1961 1.6 14
85 S. Service Rd.
Plainview, NY .............. 100% Fee 1961 1.6 14
19 Nicholas Dr.,
Yaphank, NY (6) ............ 100% Fee 1989 29.6 24
48 Harbor Park Dr.,
Port Washington, NY 100% Fee 1976 2.7 16
110 Marcus Dr.,
Huntington, NY ............. 100% Fee 1980 6.1 20
35 Engle St.,
Hicksville, NY ............. 100% Leasehold(7) 1966 4.0 24
100 Andrews Rd.,
Hicksville, NY ............. 100% Fee 1954 11.7 25
----

PRECENTAGE
OFFICE/ ANNUAL
RESEARCH BASE
AND RENT NUMBER
DEVELOP- RENTABLE ANNUAL PER OF
MENT SQUARE PERCENT BASE LEASED TENANTS
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ----------------------------- ----------- ------------ ----------- ------------- --------- --------

120 Wilbur Place ............ 15% 35,000 100.0% $ 196,470 $ 5.61 4
2002 Orville Drive
North ...................... 17% 206,000 100.0% $1,569,100 $ 7.62 2
2004 Orville Drive
North ...................... 20% 106,515 100.0% $ 732,042 $ 6.87 1
2005 Orville Drive
North ...................... 20% 130,010 100.0% $ 945,977 $ 7.28 1
------- ---------- -
Total Airport
International Plaza ........ 1,288,510 98.1% $8,759,558 6.93 55
--------- ---------- --
County Line Industrial Center
Melville, NY
5 Hub Dr .................... 20% 88,001 100.0% $ 536,268 $ 6.09 2
10 Hub Dr ................... 15% 95,546 100.0% $ 698,888 $ 7.94 3
30 Hub Drive ................ 18% 73,127 100.0% $ 483,286 $ 6.61 2
265 Spagnoli Rd ............. 28% 85,500 100.0% $ 673,610 $ 7.87 3
--------- ---------- --
Total County Line
Industrial Center .......... 342,174 100.0% $2,392,052 $ 6.99 10
--------- ---------- --
Standalone Long Island
Properties
32 Windsor Pl. Islip, NY 10% 43,000 100.0% $ 144,127 $ 3.35 1
42 Windsor Pl. Islip, NY 8% 65,000 100.0% $ 234,744 $ 3.61 1
208 Blydenburgh Rd.
Islandia, NY ............... 17% 24,000 100.0% $ 125,681 $ 5.24 4
210 Blydenburgh Rd.
Islandia, NY ............... 16% 20,000 100.0% $ 115,127 $ 5.76 2
71 Hoffman Ln.
Islandia, NY ............... 10% 30,400 100.0% $ 193,701 $ 6.37 1
135 Fell Ct. Islip, NY ...... 20% 30,000 100.0% $ 240,992 $ 8.03 1
--------- ---------- --
Subtotal Islip/Islandia ..... 212,400 100.0% $1,054,371 $ 4.96 10
--------- ---------- --
70 Schmitt Boulevard,
Farmingdale, NY ............ 10% 76,312 100.0% $ 559,673 $ 7.33 1
105 Price Parkway,
Farmingdale, NY ............ 8.50% 297,000 100.0% $1,430,170 $ 4.82 1
110 Bi County Blvd.
Farmingdale, NY ............ 45% 147,303 96.3% $1,250,320 $ 8.82 10
--------- ---------- --
Subtotal Farmingdale ........ 520,615 98.9% $3,240,163 $ 6.29 12
--------- ---------- --
70 Maxess Rd,
Melville, NY ............... 38% 78,000 100.0% $ 692,862 $ 8.88 1
20 Melville Park Rd,
Melville, NY ............... 66% 67,922 100.0% $ 393,337 $ 5.79 1
45 Melville Park Drive,
Melville, NY ............... 22% 40,247 100.0% $ 562,060 $ 13.97 1
65 Marcus Drive
Melville, NY ............... 50% 60,000 100.0% $ 623,162 $ 10.39 1
--------- ---------- --
Subtotal Melville ........... 246,169 100.0% $2,271,421 $ 9.23 4
--------- ---------- --
300 Motor Parkway,
Hauppauge, NY .............. 100% 55,942 96.8% $ 907,004 $ 16.75 9
1516 Motor Parkway,
Hauppauge, NY .............. 5% 140,000 100.0% $ 503,883 $ 3.60 1
--------- ---------- --
Subtotal Hauppauge .......... 195,942 99.1% $1,410,887 $ 7.27 10
--------- ---------- --
933 Motor Parkway
Smithtown, NY .............. 26% 48,000 100.0% $ 315,600 $ 6.58 2
65 S. Service Rd ,
Plainview, NY(5) ........... 10% 10,000 100.0% $ 72,008 $ 7.20 1
85 S. Service Rd.
Plainview, NY .............. 60% 20,000 100.0% $ 82,155 $ 4.11 2
19 Nicholas Dr.,
Yaphank, NY (6) ............ 5% 230,000 100.0% $1,315,250 $ 5.72 1
48 Harbor Park Dr.,
Port Washington, NY 100% 35,000 100.0% $ 735,646 $ 21.02 1
110 Marcus Dr.,
Huntington, NY ............. 39% 78,240 100.0% $ 506,119 $ 6.47 1
35 Engle St.,
Hicksville, NY ............. 8% 120,000 100.0% $ 607,559 $ 5.06 1
100 Andrews Rd.,
Hicksville, NY ............. 12% 167,500 100.0% $1,146,499 $ 6.84 2
--------- ---------- --

I-14

OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPRIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE CONSTRUCTED (ACRES) (FEET)
- --------------------------- ------------ ------------- ------------- --------- -----------

Subtotal other ............ 62.9
-----
Total Standalone Long
Island Properties ........ 140.9
-----
Standalone Westchester
Properties
100 Grasslands Rd.,
Elmsford, NY ............. 100% Fee 1964 3.6 16
2 Macy Rd.,
Harrison, NY ............. 100% Fee 1962 5.7 16
500 Saw Mill Rd.,
Elmsford, NY ............. 100% Fee 1968 7.3 22
-----
Total Standalone
Westchester Industrial
Properties ............... 16.6
-----
Standalone New Jersey
Industrial Properties
40 Cragwood Rd,
South Plainfield, NJ ..... 100% Fee 1965 13.5 16
100 Forge Way,
Rockaway, NJ ............. 100% Fee 1986 3.5 24
200 Forge Way,
Rockaway, NJ ............. 100% Fee 1989 12.7 28
300 Forge Way,
Rockaway, NJ ............. 100% Fee 1989 4.2 24
400 Forge Way,
Rockaway, NJ ............. 100% Fee 1989 12.8 28
-----
Total New Jersey
Standalone Industrial
Properties ............... 46.7
-----
Standalone Connecticut
Industrial Property
710 Bridgeport
Shelton, CT .............. 100% Fee 1971-1979 36.1 22
-----
Total Connecticut
Standalone Industrial
Property ................. 36.1
-----
Total Industrial
Properties (4) ........... 512.4
=====

PRECENTAGE
OFFICE/ ANNUAL
RESEARCH BASE
AND RENT NUMBER
DEVELOP- RENTABLE ANNUAL PER OF
MENT SQUARE PERCENT BASE LEASED TENANTS
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- --------------------------- ----------- ------------ ----------- --------------- --------- --------

Subtotal other ............ 708,740 100.0% $ 4,780,836 $ 6.75 11
------- ------------ --
Total Standalone Long
Island Properties ........ 1,883,866 99.6% $ 12,757,678 $ 6.98 47
--------- ------------ --
Standalone Westchester
Properties
100 Grasslands Rd.,
Elmsford, NY ............. 100% 45,000 87.8% $ 579,637 $ 14.67 3
2 Macy Rd.,
Harrison, NY ............. 100% 26,000 100.0% $ 394,460 $ 15.16 1
500 Saw Mill Rd.,
Elmsford, NY ............. 17% 92,000 100.0% $ 846,400 $ 9.20 1
--------- ------------ --
Total Standalone
Westchester Industrial
Properties ............... 163,000 96.7% $ 1,820,497 $ 11.55 5
--------- ------------ --
Standalone New Jersey
Industrial Properties
40 Cragwood Rd,
South Plainfield, NJ ..... 49% 135,000 57.5% $ 1,188,697 $ 15.31 3
100 Forge Way,
Rockaway, NJ ............. 12% 20,136 100.0% $ 175,842 $ 8.73 5
200 Forge Way,
Rockaway, NJ ............. 23% 72,118 100.0% $ 459,752 $ 6.38 2
300 Forge Way,
Rockaway, NJ ............. 37% 24,000 100.0% $ 230,050 $ 9.51 2
400 Forge Way,
Rockaway, NJ ............. 20% 73,000 100.0% $ 254,120 $ 3.48 2
--------- ------------ --
Total New Jersey
Standalone Industrial
Properties ............... 324,254 82.4% $ 2,308,461 $ 8.64 14
--------- ------------ --
Standalone Connecticut
Industrial Property
710 Bridgeport
Shelton, CT .............. 30% 452,414 100.0% $ 2,876,568 $ 6.36 2
--------- ------------ --
Total Connecticut
Standalone Industrial
Property ................. 452,414 100.0% $ 2,876,568 $ 6.36 2
--------- ------------ --
Total Industrial
Properties (4) ........... 6,834,113 97.5% $ 42,938,423 $ 6.50 241
========= ============ ===

- ----------
(1) Calculated as the difference from the lowest beam to floor.
(2) Represents Base Rent of signed leases at December 31, 2000 adjusted for
scheduled contractual increases during the 12 months ending December 31,
2001. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12 month period ending December 31,
2001. Amounts included in rental revenue for financial reporting purposes
have been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.
(3) Property under redevelopment.
(4) Percent leased excludes properties under redevelopment.
(5) A tenant has been granted an option exercisable after April 30, 1997 and
prior to October 31, 2002 to purchase this property for $600,000.
(6) The actual fee interest is currently held by the Town of Brookhaven
Industrial Development Agency. The Company may acquire such fee interest
by making a nominal payment to the Town of Brookhaven Industrial
Development Agency.
(7) The Company has entered into a 20 year lease agreement in which it has the
right to sublease the premises.

RETAIL PROPERTIES

As of December 31, 2000, the Operating Partnership owned two free-standing
10,000 square foot retail properties located in Great Neck and Huntington, New
York of which one property is fully leased and one property is vacant.

DEVELOPMENTS IN PROGRESS

As of December 31, 2000, the Operating Partnership had invested
approximately $154.7 million in developments in progress. This amount includes
approximately $89.0 million relating to existing buildings encompassing
approximately 1.3 million square feet. The Operating Partnership estimates that
if these

I-15

projects were to be completed, total additional development costs would be
approximately $28 million. In addition, the Operating Partnership has also
invested approximately $ 65.7 million relating to approximately 13 acres of
land which it can develop approximately 1.6 million square feet. The Operating
Partnership estimates that if these projects were to be completed, total
additional development costs would be approximately $250 million.

THE OPTION PROPERTIES

In connection with the IPO, the Operating Partnership was granted a ten
year option to acquire ten properties (the "Option Properties") which were not
contributed to the Operating Partnership and are either owned by Reckson or in
which Reckson owns a non controlling minority interest.

As of December 31, 2000, the Operating Partnership has acquired four of
the Option Properties for an aggregate purchase price of approximately $35
million and the issuance of approximately 475,000 Class A common units. In
addition, during 1998, one of the Option Properties was sold by Reckson to a
third party.

The remaining Option Properties consist of three Class A office properties
encompassing approximately 311,000 square feet and two industrial properties
encompassing approximately 69,000 square feet.

HISTORICAL NON-INCREMENTAL REVENUE-GENERATING CAPITAL EXPENDITURES, TENANT
IMPROVEMENT COSTS AND LEASING COMMISSIONS

The following table sets forth annual and per square foot recurring,
non-incremental revenue-generating capital expenditures and non-incremental
revenue-generating tenant improvement costs and leasing commissions incurred by
the Operating Partnership to retain revenues attributable to existing leased
space for the period 1996 through 2000 for the Office Properties and the
Industrial Properties. As noted, incremental revenue-generating tenant
improvement costs and leasing commissions are excluded from the table set forth
immediately below. The historical capital expenditures, tenant improvement
costs and leasing commissions set forth below are not necessarily indicative of
future recurring, non-incremental revenue-generating capital expenditures or
non-incremental revenue-generating tenant improvement costs and leasing
commissions.

1996 1997 1998 1999 2000
------------- --------------- --------------- --------------- ---------------

NON-INCREMENTAL REVENUE GENERATING
CAPITAL EXPENDITURES
Office Properties
Total ................................... $ 375,026 $ 1,108,675 $ 2,004,976 $ 2,298,899 $ 3,289,116
Per square foot ......................... $ 0.13 $ 0.22 $ 0.23 $ 0.23 $ 0.33
CBD Office Properties
Total ................................... N/A N/A N/A N/A $ 946,718
Per square foot ......................... N/A N/A N/A N/A $ 0.38
Industrial Properties
Total ................................... $ 670,751 $ 733,233 $ 1,205,266 $ 1,048,688 $ 813,431
Per square foot ......................... $ 0.18 $ 0.15 $ 0.12 $ 0.11 $ 0.11
NON-INCREMENTAL REVENUE GENERATING
TENANT IMPROVEMENT COSTS AND LEASING
COMMISSIONS
Long Island Office Properties
Annual Tenant Improvement Costs ......... $ 523,574 $ 784,044 $ 1,140,251 $ 1,009,357 $ 2,853,706
Per square foot improved ................ 4.28 7.00 3.98 4.73 6.99
Annual Leasing Commissions .............. 119,047 415,822 418,191 551,762 2,208,604
Per square foot leased .................. 0.97 4.83 1.46 2.59 4.96
Total per square foot ................... $ 5.25 $ 11.83 $ 5.44 $ 7.32 $ 11.95
Westchester Office Properties
Annual Tenant Improvement Costs ......... $ 834,764 $ 1,211,665 $ 711,160 $ 1,316,611 $ 1,860,027
Per square foot improved ................ 6.33 8.90 4.45 5.62 5.72

I-16

1996 1997 1998 1999 2000
------------ -------------- ------------ ------------ -------------

Annual Leasing Commissions .............. 264,388 366,257 286,150 457,730 $ 412,226
Per square foot leased .................. 2.00 2.69 1.79 1.96 3.00
Total per square foot ................... $ 8.33 $ 11.59 $ 6.24 $ 7.58 $ 8.72
Connecticut Office Properties
Annual Tenant Improvement Costs ......... $ 58,000 $1,022,421 $202,880 $179,043 $ 385,531
Per square foot improved ................ 12.45 13.39 5.92 4.88 4.19
Annual Leasing Commissions .............. 0 256,615 151,063 110,252 453,435
Per square foot leased .................. 0 3.36 4.41 3.00 4.92
Total per square foot ................... $ 12.45 $ 16.75 $ 10.33 $ 7.88 $ 9.11
New Jersey Office Properties
Annual Tenant Improvement Costs ......... N/A N/A $654,877 $454,054 $1,580,323
Per square foot improved ................ N/A N/A 3.78 2.29 6.71
Annual Leasing Commissions .............. N/A N/A 396,127 787,065 $1,031,950
Per square foot leased .................. N/A N/A 2.08 3.96 4.44
Total per square foot ................... N/A N/A $ 5.86 $ 6.25 $ 11.15
New York Office Properties
Annual Tenant Improvement Costs ......... N/A N/A N/A N/A $ 65,267
Per square foot improved ................ N/A N/A N/A N/A 1.79
Annual Leasing Commissions .............. N/A N/A N/A N/A 418,185
Per square foot leased .................. N/A N/A N/A N/A 11.50
Total per square foot ................... N/A N/A N/A N/A $ 13.29
Industrial Properties
Annual Tenant Improvement Costs ......... $380,334 $ 230,466 $283,842 $375,646 $ 650,216
Per square foot improved ................ 0.72 0.55 0.76 0.25 0.95
Annual Leasing Commissions .............. 436,213 81,013 200,154 835,108 436,506
Per square foot leased .................. 0.82 0.19 0.44 0.56 0.64
Total per square foot ................... $ 1.54 $ 0.74 $ 1.20 $ 0.81 $ 1.59

I-17

MORTGAGE INDEBTEDNESS

The following table sets forth certain information regarding the mortgage
debt of the Operating Partnership, as of December 31, 2000.

PRINCIPAL AMOUNT AMORTIZATION
PROPERTY OUTSTANDING INTEREST RATE MATURITY DATE SCHEDULE
- ---------------------------------------------- ------------------ ----------------- --------------- -------------
(IN THOUSANDS)

6800 Jericho Trunpike ........................ $ 14,324 8.07% 7/1/10 25 year
6900 Jericho Trunpike ........................ 7,560 8.07% 7/1/10 25 year
200 Broadhollow Road ......................... 6,494 7.75% 6/02/02 30 year
395 North Service Road ....................... 20,525 6.45% 10/26/05 (2)
50 Charles Lindbergh Blvd. ................... 15,479 7.50% 7/10/01 (3)
333 Earl Ovington Blvd (The Omni)(1) ......... 55,641 7.72% 8/14/07 25 year
310 East Shore Road .......................... 2,322 8.00% 7/01/02 (3)
80 Orville Drive ............................. 2,616 10.10% 2/01/04 (3)
580 White Plains Road ........................ 13,057 7.86% 9/1/10 25 year
Landmark Square .............................. 46,974 8.02% 10/07/06 25 year
110 Bi-County Blvd. .......................... 4,043 9.125% 11/30/12 20 year
100 Summit Lake Drive ........................ 21,541 8.50% 4/01/07 15 year
200 Summit Lake Drive ........................ 20,133 9.25% 1/01/06 25 year
120 West 45th Street ......................... 66,103 6.82%(4) 11/01/27 28 year
810 7th Avenue ............................... 85,600 7.73% 8/1/09 25 year
100 Wall Street .............................. 37,094 7.73% 8/1/09 25 year
One Orlando Center ........................... 39,465 6.82%(4) 11/01/27 28 year
1350 Avenue of the Americas .................. 70,000 LIBOR + 1.65% 8/1/01 (3)
919 3rd Avenue ............................... 200,000 LIBOR + 1.20% 10/31/03 (3)
---------
Total ........................................ $ 728,971
=========

- ----------
(1) The Company has a 60% general partnership interest in the Omni and its
proportionate share of the aggregate principal amount of the mortgage debt
is approximately $33.4 million.
(2) Principal payments of $34,000 per month.
(3) Interest only
(4) Subject to interest rate adjustment on November 1, 2004.

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS

None.

I-18

PART II

ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY MATTERS

There is no established trading market for the Registrant's common equity.
As of March 23, 2001, there were 97 holders of the Registrant's common equity.

The following table sets forth, for the periods indicated, the
distributions declared on the Class A common units and the Class B common
units.

CLASS A COMMON UNITS

QUARTER ENDED DISTRIBUTION
- ------------------------------------ -----------------

March 31, 1999 .............. $ .33750
June 30, 1999 ............... $ .37125 (1)
September 30, 1999 .......... $ .37125
December 31, 1999 ........... $ .37125

QUARTER ENDED DISTRIBUTION
- ------------------------------------- -------------
March 31, 2000 .............. $ .37125
June 30, 2000 ............... $ .38600 (2)
September 30, 2000 .......... $ .38600
December 31, 2000 ........... $ .38600

- ----------
(1) Commencing with the distribution for the quarter ending June 30, 1999, the
Operating Partnership increased the quarterly distribution to $.37125 per
unit, which is equivalent to an annual distribution of $1.485 per unit.
(2) Commencing with the distribution for the quarter ending June 30, 2000, the
Operating Partnership increased the quarterly distribution to $.386 per
unit, which is equivalent to an annual distribution of $1.544 per unit.

CLASS B COMMON UNITS

QUARTER ENDED DISTRIBUTION
- ----------------------------------- ------------------

March 31, 1999 ............. N/A
June 30, 1999 .............. $ .2364 (1)
September 30, 1999 ......... $ .5600
December 31, 1999 .......... $ .5600

QUARTER ENDED DISTRIBUTION
March 31, 2000 ............. $ .5600
June 30, 2000 .............. $ .5867 (2)
September 30, 2000 ......... $ .6000
December 31, 2000 .......... $ .6000

- ----------
(1) Represents the period May 25, 1999 through June 30, 1999
(2) Commencing with the distribution for the three month period ended July 31,
2001, the Operating Partnership increased the quarterly distribution to
$.60 per unit, which is equivalent to an annual distribution of $2.40 per
unit.

UNREGISTERED SALES OF EQUITY SECURITIES

On June 20, 2000, in conjunction with the Company's exchange of 4,181,818
shares of its Class A common stock for four million shares of its Series B
preferred stock, the Operating Partnership issued 4,181,818 Class A common
units in exchange for four million shares of Series E preferred units with a
liquidation preference value of $100 million.

II-1

ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS EXCEPT PER UNIT DATA AND PROPERTY
COUNT)

RECKSON OPERATING
PARTNERSHIP, L.P.
FOR THE YEAR ENDED DECEMBER 31,
----------------------------
2000 1999
------------- --------------

OPERATING DATA:
Total revenues ........................................... $ 509,917 $ 403,142
Total expenses ........................................... 371,561 297,476
Income before distribution to preferred unit holders,
minority interests and extraordinary loss ............... 138,356 105,666
Minority interests ....................................... 9,120 6,802
Extraordinary (loss) ..................................... 1,571 629
Preferred distributions .................................. 28,012 27,001
Net income available to common unitholders ............... 99,653 71,234
Per Unit Data: (1)
Net income per common unit:
General Partner -- Class A common unit ................... $ 1.50 $ 1.21
General Partner - Class B common unit .................... $ 2.30 $ 1.94
Limited Partners ......................................... $ 1.50 $ 1.21
Weighted average common units outstanding:
General Partner - Class A common unit .................... 43,070 40,270
General Partner -- Class B common unit ................... 10,284 6,744
Limited Partners ......................................... 7,696 7,705
BALANCE SHEET DATA: (PERIOD END)
Real estate, before accumulated depreciation ............. $2,770,607 $ 2,208,399
Total assets ............................................. 2,999,794 2,734,577
Mortgage notes payable ................................... 728,971 459,174
Unsecured credit facility ................................ 216,600 297,600
Unsecured term loan ...................................... --- 75,000
Senior unsecured notes ................................... 449,385 449,313
Market value of equity (2) ............................... 2,016,390 1,726,845
Total market capitalization including debt (2 and 3) ..... 3,397,204 2,993,756
OTHER DATA:
Funds from operations (4) ................................ $ 169,911 $ 132,444
Total square feet (at end of period) ..................... 21,291 21,385
Number of properties (at end of period) .................. 188 189

RECKSON OPERATING PARTNERSHIP, L.P.
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------
1998 1997 1996
-------------- -------------- -------------

OPERATING DATA:
Total revenues ........................................... $ 266,312 $ 153,348 $ 96,030
Total expenses ........................................... 201,003 107,639 70,935
Income before distribution to preferred unit holders,
minority interests and extraordinary loss ............... 65,309 45,709 25,095
Minority interests ....................................... 2,819 920 915
Extraordinary (loss) ..................................... 1,993 2,808 1,259
Preferred distributions .................................. 14,244 --- ---
Net income available to common unitholders ............... 46,253 41,981 22,921
Per Unit Data: (1)
Net income per common unit:
General Partner -- Class A common unit ................... $ .98 $ 1.06 $ .87
General Partner - Class B common unit .................... $ --- $ --- $ ---
Limited Partners ......................................... $ .98 $ 1.03 $ .86
Weighted average common units outstanding:
General Partner - Class A common unit .................... 39,473 32,727 19,928
General Partner -- Class B common unit ................... --- --- ---
Limited Partners ......................................... 7,728 7,016 6,503
BALANCE SHEET DATA: (PERIOD END)
Real estate, before accumulated depreciation ............. $ 1,737,133 $ 1,011,228 $ 516,768
Total assets ............................................. 1,854,520 1,113,105 543,391
Mortgage notes payable ................................... 253,463 180,023 161,513
Unsecured credit facility ................................ 465,850 210,250 108,500
Unsecured term loan ...................................... 20,000 --- ---
Senior unsecured notes ................................... 150,000 150,000 ---
Market value of equity (2) ............................... 1,332,882 1,141,592 653,606
Total market capitalization including debt (2 and 3) ..... 2,119,936 1,668,800 921,423
OTHER DATA:
Funds from operations (4) ................................ $ 98,501 $ 69,619 $ 40,938
Total square feet (at end of period) ..................... 21,000 13,645 8,800
Number of properties (at end of period) .................. 204 155 110

- ----------
(1) Based on the weighted average common units outstanding for the period then
ended.
(2) Based on the market value of the Operating Partnership's common units, the
stated value of the Operating .Partnership's preferred units and the
number of units outstanding at the end of the period.
(3) Debt amount is net of minority partners' proportionate share plus the
Operating Partnership's share of joint venture debt.
(4) See "Management's Discussion and Analysis" for a discussion of funds from
operations.

II-2

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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

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

OVERVIEW AND BACKGROUND

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

As of December 31, 2000, the Operating Partnership owned and operated 82
office properties (inclusive of ten office properties which are owned through
joint ventures) comprising approximately 14.4 million square feet, 104
industrial properties comprising approximately 6.8 million square feet and two
retail properties comprising approximately 20,000 square feet, located in the
Tri-State Area. In addition, the Operating Partnership is in the process of
developing one office property encompassing approximately 315,000 square feet.
The Operating Partnership also owns a 357,000 square foot office building
located in Orlando, Florida and approximately 290 acres of land in 13 separate
parcels of which the Operating Partnership can develop approximately 1.4
million square feet of office space and approximately 224,000 square feet of
industrial space. The Operating Partnership also has invested approximately
$6.4 million in mortgage notes encumbering approximately 101 acres of land,
approximately $17.1 million in a note receivable secured by a partnership
interest in Omni Partners, L.P., owner of the Omni, a 575,000 square foot Class
A office property located in Uniondale, New York and $36.5 million under three
notes which are secured by a minority partner's preferred interest.

On August 9, 1999, the Operating Partnership executed a contract for the
sale, which took place in three stages, of its interest in Reckson Morris
Operating Partnership, L. P. ("RMI"), which consisted of 28 properties,
comprising approximately 6.1 million square feet and three other big box
industrial properties to Keystone Property Trust ("KTR"). In addition, the
Operating Partnership also entered into a sale agreement with the Matrix
Development Group ("Matrix") relating to a first mortgage note and certain
industrial land holdings (the "Matrix Sale"). The combined total sales price of
$310 million ($52

II-3

million of which is attributable to the Morris Companies and its affiliates in
the form of $41.6 million of preferred units of KTR's operating partnership and
$10.4 million of debt relief) consisted of (i) approximately $159.7 million in
cash, (ii) $41.5 million in convertible preferred and common stock of KTR,
(iii) $61.6 million in preferred units of KTR's operating partnership, (iv)
approximately $37.1 million of debt relief and (v) approximately $10.1 million
in purchase money mortgage notes secured by certain land that is being sold to
Matrix.

As of December 31, 2000, the Matrix Sale and the sale of the Operating
Partnership's interest in RMI was completed. As a result, the Operating
Partnership realized a gain of approximately $16.7 million. Such gain has been
included in gain on dispositions of real estate on the Operating Partnership's
consolidated statements of income. Cash proceeds from the sales were used
primarily to repay borrowings under the Operating Partnership's unsecured
credit facility. In addition, the Operating Partnership redeemed approximately
$20 million of the preferred stock of KTR and received principal repayments of
approximately $7.2 million related to the purchase money mortgage notes, all of
which was used primarily for general operating expenditures.

In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas REIT
("Crescent") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower").
On May 24, 1999 the Company completed the merger with Tower and acquired three
Class A office properties located in New York City totaling 1.6 million square
feet and one office property located on Long Island totaling approximately
101,000 square feet. In addition, pursuant to the merger, the Company also
acquired certain office properties, a property under development and land
located outside of the Tri-State Area.

The Company controls Metropolitan and owns 100% of the common equity;
Crescent owns a $85 million preferred equity investment in Metropolitan.
Crescent's investment accrues distributions at a rate of 7.5% per annum for a
two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by
Metropolitan at any time during that period for $85 million, plus an amount
sufficient to provide a 9.5% internal rate of return. If Metropolitan does not
redeem the preferred interest, upon the expiration of the two-year period,
Crescent must convert its $85 million preferred interest into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's
Class A common stock at a conversion price of $24.61 per share.

Prior to the closing of the merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the merger, the Company has sold a real estate joint venture interest and
all of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Operating Partnership's
unsecured credit facility. As a result of incurring certain sales and closing
costs in connection with the sale of the assets located outside the Tri-State
Area, the Operating Partnership has incurred a loss of approximately $4.4
million which has been included in gain (loss) on dispositions of real estate
on the Operating Partnership's consolidated statements of income.

On September 28, 2000, the Operating Partnership formed a joint venture
(the "Tri-State JV") with Teachers Insurance and Annuity Association ("TIAA")
and contributed eight Class A suburban office properties aggregating
approximately 1.5 million square feet to the Tri-State JV in exchange for
approximately $136 million and a 51% majority ownership interest in the
Tri-State JV. As a result, the Operating Partnership realized a gain of
approximately $15.2 million. Such gain has been included in gain on
dispositions of real estate on the Operating Partnership's consolidated
statements of income. Cash proceeds received were used primarily to repay
borrowings under the Operating Partnership's unsecured credit facility.

The Operating Partnership has announced that it has withdrawn its offer to
purchase a tract of land located in Suffolk County, New York from the State of
New York. As a result, as of December 31, 2000, the Operating Partnership
incurred a one-time non-recurring charge of $3.2 million in connection with

II-4

the discontinuation of this development project. Such amount has been included
in gain (loss) on dispositions of real estate on the Operating Partnership's
consolidated statements of income. Further, this write off will not impact the
Operating Partnership's computation of Funds from Operations.

During 1997, the Company formed FrontLine Capital Group ("FrontLine")
(formerly Reckson Service Industries, Inc.) and Reckson Strategic Venture
Partners, LLC ("RSVP"). In connection with the formation of FrontLine, the
Operating Partnership established a credit facility with FrontLine (the
"FrontLine Facility") in the amount of $100 million for FrontLine to use in its
investment activities, operations and other general corporate purposes. As of
December 31, 2000, the Company had advanced approximately $93.4 million under
the FrontLine Facility. In addition, the Operating Partnership approved the
funding of investments of up to $100 million with or in RSVP (the "RSVP
Commitment"), through RSVP-controlled joint ventures (for REIT-qualified
investments) or advances made to FrontLine under terms similar to the FrontLine
Facility. As of December 31, 2000, approximately $83.2 million had been funded
through the RSVP Commitment, of which $41.1 million represents investments in
RSVP-controlled (REIT-qualified) joint ventures and $42.1 million represents
advances. In March 2001, the Operating Partnership increased the RSVP
Commitment to $110 million and advanced approximately $24 million under the
RSVP Commitment to fund additional RSVP-controlled (REIT-qualified) joint
ventures. In addition, as of December 31, 2000, the Company, through its
unsecured credit facility, has allocated approximately $3.2 million in
outstanding undrawn letters of credit for the benefit of FrontLine. Both the
FrontLine Facility and the RSVP Commitment have a term of five years and
advances under each are recourse obligations of FrontLine. Interest accrues on
advances made under the credit facilities at a rate equal to the greater of (a)
the prime rate plus two percent and (b) 12% per annum, with the rate on amounts
that are outstanding for more than one year increasing annually at a rate of
four percent of the prior year's rate. Prior to maturity, interest is payable
quarterly but only to the extent of net cash flow of FrontLine and on an
interest-only basis. As of December 31, 2000, interest accrued under the
FrontLine Facility and RSVP Commitment was approximately $13.8 million.

During November 1999, the Board of Directors of FrontLine and the
Operating Partnership approved an amendment to the FrontLine Facility and the
RSVP Commitment to permit FrontLine to incur secured debt and to pay interest
thereon. In consideration of the amendments, FrontLine has paid the Operating
Partnership a fee of approximately $3.6 million in the form of shares of
FrontLine common stock. Such fee is has been amortized in income over an
estimated nine month benefit period.

FrontLine currently has two distinct operating units: one of which
represents its interest in HQ Global Holdings, Inc., the largest provider of
flexible officing solutions in the world, and the other which represents
interests in technology based partner companies. RSVP invests primarily in real
estate and real estate related operating companies generally outside of the
Operating Partnership's core office and industrial focus.

The Operating Partnership and FrontLine have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their
relationship and to limit conflicts of interest. Under the Reckson Intercompany
Agreement, FrontLine granted the Operating Partnership a right of first
opportunity to make any REIT -qualified investment that becomes available to
FrontLine. In addition, if a REIT-qualified investment opportunity becomes
available to an affiliate of FrontLine, including RSVP, the Reckson
Intercompany Agreement requires such affiliate to allow the Operating
Partnership to participate in such opportunity to the extent of FrontLine's
interest.

Under the Reckson Intercompany Agreement, the Operating Partnership
granted FrontLine a right of first opportunity to provide commercial services
to the Operating Partnership and its tenants. FrontLine will provide services
to the Operating Partnership at rates and on terms as attractive as either the
best available for comparable services in the market or those offered by
FrontLine to third parties. In addition, the Operating Partnership will give
FrontLine access to its tenants with respect to commercial services that may be
provided to such tenants and, under the Reckson Intercompany Agreement, subject
to certain conditions, the Operating Partnership granted FrontLine a right of
first refusal to become the lessee of any real property acquired by the
Operating Partnership if the Operating Partnership determines that, consistent
with the Company's status as a REIT, it is required to enter into a "master"
lease agreement.

II-5

On August 27, 1998 the Operating Partnership announced the formation of a
joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"),
is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating
Partnership. The Dominion Venture is primarily engaged in acquiring, developing
and/or owning government-occupied office buildings and privately operated
correctional facilities. Under the Dominion Venture's operating agreement, RSVP
may invest up to $100 million, some of which may be invested by the Operating
Partnership ( the "RSVP Capital"). The initial contribution of RSVP Capital was
approximately $39 million of which approximately $10.1 million was invested by
a subsidiary of the Operating Partnership. The Operating Partnership's
investment was funded through the RSVP Commitment. In addition, the Operating
Partnership advanced approximately $3.3 million to FrontLine through the RSVP
Commitment for an investment in RSVP which was then invested on a joint venture
basis with the Dominion Group in certain service business activities related to
the real estate activities. As of December 31, 2000, the Operating Partnership
had invested, through the RSVP Commitment, approximately $20.6 million in the
Dominion Venture which had investments in 13 government office buildings and
three correctional facilities.

As of December 31, 2000, the Operating Partnership has invested
approximately $11.1 million, through a subsidiary, in RAP Student Housing
Properties, LLC ("RAP-SHP"), a company that engages primarily in the
acquisition and development of off-campus student housing projects. The
Operating Partnership's investment was funded through the RSVP Commitment. In
addition, the Operating Partnership has advanced approximately $3.5 million to
FrontLine through the RSVP Commitment for an investment in RSVP which was then
invested in certain service business activities related to student housing. As
of December 31, 2000, RAP-SHP had investments in seven off-campus student
housing projects. Additionally, during 2000, RAP-SHP entered into an off-campus
development joint venture with Titan Investments II, a third party national
developer. The purpose of the venture is to develop or reposition off-campus
student housing projects across the United States.

As of December 31, 2000, the Operating Partnership has invested
approximately $3.4 million, through a subsidiary, in RAP MD, LLC ("RAP-MD"), a
company that engages primarily in the acquisition, ownership, management and
development of medical office properties. The Operating Partnership's
investment was funded through the RSVP Commitment. As of December 31, 2000,
RAP-MD had investments in eight medical office properties.

The market capitalization of the Operating Partnership at December 31,
2000 was approximately $3.4 billion. The Operating Partnership's market
capitalization is calculated based on the sum of (i) the value of the Operating
Partnership's Class A common units and Class B common units (which, for this
purpose, is assumed to be the same per unit as the value of a share of the
Company's Class A common stock and Class B common stock), (ii) the liquidation
preference values of the Operating Partnership's preferred units, (iii) the
contributed value of Metropolitan's preferred interest of $85 million and (iv)
approximately $1.4 billion (including its share of joint venture debt and net
of minority partners' interest) of debt outstanding at December 31, 2000. As a
result, the Operating Partnership's total debt to total market capitalization
ratio at December 31, 2000 equaled approximately 40.6%.

RESULTS OF OPERATIONS

The Operating Partnership's total revenues increased by $106.8 million or
26.5% from 1999 to 2000 and $136.8 million or 51.4% from 1998 to 1999. Property
operating revenues, which include base rents and tenant escalations and
reimbursements ("Property Operating Revenues") increased by $82.9 million or
22.5% from 1999 to 2000 and $116.7 million or 46.2% from 1998 to 1999. The 2000
increase in Property Operating Revenues is substantially attributable to the
assets from the Tower Portfolio acquisition on May 24, 1999. This accounts for
approximately $31.9 million, or 38.5%, of the increase in Property Operating
Revenues. Additionally, approximately $21.0 million of Property Operating
Revenues was generated from two properties acquired in 2000. Property Operating
Revenues were also positively impacted by approximately $15.3 million from
increases in occupancies and rental rates in our "same store" properties,
approximately $9.6 million from newly developed properties added to the
operating portfolio and

II-6

approximately $2.3 million from 919 Third Avenue, which property operating
results were included in Property Operating Revenues. These increases offset
the impact of approximately $14.8 million of Property Operating Revenues that
were generated in 1999 from properties that were sold in the 1999 "Big Box"
industrial transaction. The remaining balance of the increase in total revenues
for 2000 is primarily attributable to an increase in gain on dispositions of
real estate of approximately $11.8 million and an increase of approximately
$8.1 million in other income related to interest earned on advances made to
FrontLine through the FrontLine Facility and to RSVP through the RSVP
Commitment.

The 1999 increase in Property Operating Revenues is substantially
attributable to the Tower Portfolio acquisition on May 24, 1999. The revenue
generated from these assets generated approximately $47.5 million of revenue in
1999. Additionally, approximately $29.1 million of revenue was generated from
the Operating Partnership's June 15, 1999 acquisition of the first mortgage
note secured by 919 Third Avenue which property operating results were included
in Properly Operating Revenues. Property Operating Revenues were also
positively effected by approximately $9.9 million from increases in occupancies
and rental rates in our "same store" properties and approximately $27.2 million
in additional revenue generated from properties acquired during 1998 and new
development activity. The remaining balance of the increase in total revenues
in 1999 is primarily attributable to the gain on dispositions of real estate of
$10.1 million and an increase of approximately $8.7 million in other income
related to interest earned on advances made to FrontLine through the FrontLine
Facility and to RSVP through the RSVP Commitment.

The Operating Partnership's base rent reflects the positive impact of the
straight-line rent adjustment of $38.8 million in 2000, $10.7 million in 1999
and $7.7 million in 1998. The 2000 straight-line rent adjustment includes $23.3
million at 919 3rd Avenue which is attributable to rental abatement periods for
the three largest tenants.

Property operating expenses, real estate taxes and ground rents ("Property
Expenses") increased by $31.5 million or 25.0% from 1999 to 2000 and by $41.7
million or 49.5% from 1998 to 1999. These increases are primarily due to the
acquisition of the properties included in the Tower Portfolio acquisition on
May 24, 1999 and the June 15, 1999 acquisition of the first mortgage note
secured by 919 Third Avenue which property operating results were included in
Property Expenses. Gross operating margins (defined as Property Operating
Revenues less Property Expenses, taken as a percentage of Property Operating
Revenues) for 2000, 1999, and 1998 were 65.2%, 65.9% and 66.6%, respectively.
The slight decrease in the gross operating margin percentages resulted from a
larger proportionate share of gross operating margin derived from office
properties, which has a lower gross margin percentage. The higher proportionate
share of the gross operating margin attributable to the office properties was a
result of the two office properties acquired in 2000, the office properties
acquired in the Tower Portfolio acquisition and the disposition of net leased
industrial properties in the "Big Box" industrial transaction. This shift in
the composition of the portfolio was offset by increases in rental rates and
operating efficiencies realized as a result of operating a larger portfolio of
properties with concentration of properties in office and industrial parks or
in its established sub-markets.

Marketing, general and administrative expenses were $25.2 million in 2000,
$22.3 million in 1999 and $16.0 million in 1998. The increase in marketing,
general and administrative expenses is due to the increased costs of opening
and maintaining the Operating Partnership's New York City division and the
increase in corporate management and administrative costs associated with the
growth of the Operating Partnership. The Operating Partnership's business
strategy has been to expand further into the Tri-State Area suburban markets
and the New York City market by applying its standards for high quality office
and industrial space and premier tenant service to its New Jersey, Westchester,
Southern Connecticut and New York City divisions. In doing this, the Operating
Partnership seeks to create a superior franchise value that it enjoys in its
home base of Long Island. Over the past three years the Operating Partnership
has supported this effort by increasing the marketing programs in the other
divisions and strengthening the resources and operating systems in these
divisions. The cost of these efforts are reflected in both marketing, general
and administrative expenses as well as the revenue growth of the Operating
Partnership. Marketing, general and administrative expense as a percentage of
total revenues were 4.9% in 2000, 5.5% in 1999 and 6.0% in 1998.

II-7

Interest expense was $96.3 million in 2000, $74.7 million in 1999 and
$47.8 million in 1998. The increase of $21.6 million from 1999 to 2000 is
attributable to (i) a full year of interest on the mortgage debt relating to
the Tower Portfolio acquisition (ii) interest on a $70 million mortgage note
for the 1350 Avenue of the Americas acquisition which occurred on January 13,
2000 and (iii) a full year of interest on the $300 million of senior unsecured
notes issued in March 1999. The increase of $26.9 million from 1998 to 1999 is
attributable to (i) an increase in mortgage debt including approximately $232
million relating to the Tower Portfolio acquisition (ii) the issuance of $300
million of senior unsecured notes in March 1999 and (iii) an increased average
balance on the Operating Partnership's unsecured credit facilities and
unsecured term loan. The weighted average balance outstanding on the Operating
Partnership's unsecured credit facilities and unsecured term loan was $416.5
million for 2000, $423.8 million for 1999 and $377.9 million for 1998.

Included in depreciation and amortization expense is amortized financing
costs of $4.1 million in 2000, $3.4 million in 1999 and $1.6 million in 1998.
The increase of approximately $700,000 from 1999 to 2000 is primarily
attributable to the secured financings of 919 Third Avenue and 1350 Avenue of
the Americas. The increase of $1.8 million from 1998 to 1999 is primarily
attributable to the increased loan costs incurred in connection with the
Operating Partnership increasing its unsecured term loan in January 1999 to $75
million, the issuance of $300 million of senior unsecured notes in March 1999
and the Operating Partnership's $130 million unsecured bridge facility obtained
in connection with the Tower Portfolio acquisition in May 1999.

Extraordinary losses, net of minority interest resulted in a $1.6 million
loss in 2000, a $629,000 loss in 1999 and a $2.0 million loss in 1998. The
extraordinary losses were all attributed to the write-offs of certain deferred
loan costs incurred in connection with the Operating Partnership's
restructuring of its unsecured credit facilities and term loans.

LIQUIDITY AND CAPITAL RESOURCES

Summary of Cash Flows

Net cash provided by operating activities totaled $170.6 million in 2000,
$155.0 million in 1999 and $121.1 million in 1998. Increases for each year were
primarily attributable to the growth in cash flow provided by the acquisition
of properties, the increased occupancy levels of the Operating Partnership's
development properties and the increase in rental rates in all of the Operating
Partnership's markets.

Net cash used in investing activities totaled $281.6 million in 2000,
$392.2 million in 1999 and $615.2 million in 1998. Cash used in investing
activities related primarily to investments in real estate properties including
development costs. The 1999 cash flows were also impacted by the acquisition of
the first mortgage note securing 919 Third Avenue and by proceeds from the
sales of real estate. In addition, during 1998, the Operating Partnership
purchased $40 million of preferred stock of Tower Realty Trust, Inc. in
connection with the Tower Portfolio acquisition.

Net cash provided by financing activities totaled $106.5 million in 2000,
$256.1 million in 1999 and $474.6 million in 1998. Cash provided by financing
activities in 2000 was primarily attributable to secured debt financings, the
redemption of preferred stock of KTR, minority partner contributions, and
advances under the Operating Partnership's unsecured credit facilities and term
loan. Cash provided by financing activities in 1999 and 1998 was primarily
attributable to proceeds from the issuances of common and preferred units,
senior unsecured notes, secured borrowings, minority partner contributions and
advances under the Operating Partnership's unsecured credit facilities and term
loan.

On June 20, 2000, the Operating Partnership issued 4,181,818 Class A
common units in exchange for four million shares of Series E preferred units
with a liquidation preference value of $100 million.

Investing Activities

On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the
Americas, a 540,000 square foot, 35 story, Class A office property, located in
New York City, for a purchase price of approximately $126.5 million. This
acquisition was financed through a $70 million secured debt financing and a
draw under the Operating Partnership's unsecured credit facility.

II-8

On August 15, 2000, the Operating Partnership acquired 538 Broadhollow
Road, a 180,000 square foot Class A office property located in Melville, New
York for a purchase price of approximately $25.6 million. This acquisition was
financed, in part, through a borrowing under the Operating Partnership's
unsecured credit facility.

In June 1998, the Operating Partnership established the FrontLine Facility
in the amount of $100 million for FrontLine's investment activities, operations
and for other general corporate purposes. As of December 31, 2000,
approximately $93.4 million had been advanced to FrontLine under this facility.
In addition, the Operating Partnership approved the commitment to fund
investments of up to $100 million with or in RSVP. As of December 31, 2000, the
Operating Partnership has funded approximately $83.2 million under this
commitment, of which $41.1 million represents investments in RSVP-controlled
(REIT -qualified) joint ventures and $42.1 million represents advances. In
March 2001, the Operating Partnership increased the RSVP Commitment to $110
million and advanced approximately $24 million under the RSVP Commitment to
fund additional RSVP-controlled (REIT-qualified) joint ventures.

Financing Activities

As of December 31, 2000, the Operating Partnership had a three year $575
million unsecured revolving credit facility (the "Credit Facility") from The
Chase Manhattan Bank, as administrative agent, UBS Warburg LLC as syndication
agent and Deutsche Bank as documentation agent. The Credit Facility matures in
September, 2003 and borrowings under the Credit Facility are currently priced
off of LIBOR plus 105 basis points.

The Credit Facility replaced the Operating Partnership's $500 million
unsecured credit facility (together with the Credit Facility, the "Credit
Facility") and $75 million term loan. As a result, certain deferred loan costs
incurred in connection with such unsecured credit facility and term loan were
written off. Such amount is reflected as an extraordinary loss in the Operating
Partnership's consolidated statements of income.

The Operating Partnership utilizes the Credit Facility primarily to
finance real estate investments, fund its real estate development activities
and for working capital purposes. At December 31, 2000, the Operating
Partnership had availability under the Credit Facility to borrow an additional
$358.4 million (of which, $51.3 million has been allocated for outstanding
undrawn letters of credit).

On November 2, 2000, the Operating Partnership obtained a three year
secured $250 million first mortgage commitment on the property located at 919
Third Avenue, New York N. Y. Interest rates on borrowings under the commitment
are based on LIBOR plus a spread ranging from 110 basis points to 140 basis
points based upon the outstanding balance. At closing, $200 million was funded
under the commitment at an interest rate of LIBOR plus 120 basis points. In
addition, in connection with the $200 million initial funding, the Operating
Partnership purchased a LIBOR interest rate hedge that provides for a maximum
LIBOR rate of 9.25%. The initial funding was used primarily to repay
outstanding borrowings under the Operating Partnership's Credit Facility.

As of December 31, 2000, in conjunction with the Company's Class B common
stock buy back program, the Operating Partnership purchased and retired
1,410,804 Class B common units for approximately $30.3 million.

Capitalization

The Operating Partnership's indebtedness at December 31, 2000 totaled
approximately $1.4 billion (including its share of joint venture debt and net
of the minority partners' interests) and was comprised of $216.6 million
outstanding under the Credit Facility, approximately $449.4 million of senior
unsecured notes and approximately $714.8 million of mortgage indebtedness.
Based on the Operating Partnership's total market capitalization of
approximately $3.4 billion at December 31, 2000, (calculated based on the value
of the Operating Partnership's Class A common units and Class B common units
(which, for this purpose, is assumed to be the same per unit as the value of a
share of the Company's Class A common stock and Class

II-9

B common stock), the liquidation preference value of the Operating
Partnership's preferred units, the contributed value of Metropolitan's
preferred interest of $85 million and the $1.4 billion of debt), the Operating
Partnership's debt represented approximately 40.6% of its total market
capitalization.

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

In order to qualify as a REIT for federal income tax purposes, the Company
is required to make distributions to its stockholders of at least 90% of REIT
taxable income. As a result, it is anticipated that the Operating Partnership
will make distributions in amounts sufficient to meet this requirement. The
Operating Partnership expects to use its cash flow from operating activities
for distributions to unit holders and for payment of recurring, non-incremental
revenue-generating expenditures. The Operating Partnership intends to invest
amounts accumulated for distribution in short-term investments.

On October 16, 2000, the Company's Board of Directors announced that it
adopted a Shareholder Rights Plan designed to protect its shareholders from
various abusive takeover tactics, including attempts to acquire control of the
Company at an inadequate price, depriving its shareholders of the full value of
their investment. The Operating Partnership has adopted a similar rights plan
(the "Rights Plan") which would be triggered in the event the Company's
Shareholder Rights Plan is triggered. A description of the Rights Plan is
included in the Notes to Financial Statements of the Operating Partnership.

INFLATION

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

The Credit Facility and certain mortgage notes payable bear interest at a
variable rate, which will be influenced by changes in short-term interest
rates, and are sensitive to inflation.

FUNDS FROM OPERATIONS

Management believes that funds from operations ("FFO") is an appropriate
measure of the performance for the Operating Partnership. FFO is defined by the
National Association of Real Estate Investment Trusts (NAREIT) as net income or
loss, excluding gains or losses from debt restructuring and sales of properties
plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with GAAP and is not indicative of cash
available to fund cash needs. FFO should not be considered as an alternative to
net income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. (See Selected Financial
Data). In November 1999, NAREIT issued a "White Paper" analysis to address
certain interpretive issues under its definition of FFO. The White Paper
provides that FFO should include both recurring and non-recurring operating
results, except those results defined as "extraordinary items" under GAAP. This
revised definition is effective for all periods beginning on or after January
1, 2000.

II-10

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

The following table presents the Operating Partnership's FFO calculation
for the years ended December 31, (in thousands):

2000 1999 1998
------------ ----------- -----------

Income before extraordinary loss ........................... $ 101,224 $ 71,863 $ 48,246
Less:
Extraordinary loss ........................................ 1,571 629 1,993
--------- --------- --------
Net Income ................................................ 99,653 71,234 46,253
Adjustment for Funds From Operations:
Add:
Real estate depreciation and amortization ................. 90,552 72,124 51,424
Minority interests' in consolidated partnerships .......... 9,120 6,802 2,819
Extraordinary loss ........................................ 1,571 629 1,993
Less:
Gain (loss) on dispositions of real estate ................ 18,669 10,052 --
Amount distributed to minority partners in consolidated
partnerships ............................................ 12,316 8,293 3,988
--------- --------- --------
Funds From Operations ...................................... $ 169,911 $ 132,444 $ 98,501
--------- --------- --------
Weighted average units outstanding ......................... 61,050 54,719 47,201
========= ========= ========

ITEM 7 (A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The primary market risk facing the Operating Partnership is interest rate
risk on its long term debt, mortgage notes and notes receivable. The Operating
Partnership will, when advantageous, hedge its interest rate risk using
financial instruments. The Operating Partnership is not subject to foreign
currency risk.

The Operating Partnership manages its exposure to interest rate risk on
its variable rate indebtedness by borrowing on a short-term basis under its
Credit Facility until such time as it is able to retire the short-term variable
rate debt with either a long-term fixed rate debt offering, long term mortgage
debt, general partner contributions or through sales or partial sales of
assets.

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

The following table sets forth the Operating Partnership's long term debt
obligations by scheduled principal cash flow payments and maturity date,
weighted average interest rates and estimated fair market value FMV at December
31, 2000 (dollars in thousands):

FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
2001 2002 2003 2004 2005
------------- ------------- ------------- -------------- -------------

Long term debt:
Fixed rate .............. $ 23,225 $ 17,011 $ 8,905 $ 112,370 $ 10,467
Weighted average
interest rate ......... 7.59% 7.80% 7.79% 7.50% 7.81%
Variable rate ........... $ 70,000 $ -- $ 416,600 $ -- $ --
Weighted average
interest rate ......... 8.43% -- 7.91% -- --

THEREAFTER TOTAL (1) F M V
-------------- -------------- ------------

Long term debt:
Fixed rate .............. $ 736,993 $ 908,971 $ 908,971
Weighted average
interest rate ......... 7.56% 7.56%
Variable rate ........... $ -- $ 486,600 $ 486,600
Weighted average
interest rate ......... -- 7.98%

- ----------
(1) Includes unamortized issuance discounts of $615,000 on the 5 and 10 year
senior unsecured notes issued on March 26, 1999 which are due at maturity.

II-11

In addition, the Operating Partnership has assessed the market risk for
its variable rate debt, which is based upon LIBOR, and believes that a one
percent increase in the LIBOR rate would have an approximate $4.9 million
annual increase in interest expense based on approximately $486.6 million
outstanding at December 31, 2000.

The following table sets forth the Operating Partnership's mortgage notes
and note receivables by scheduled maturity date, weighted average interest
rates and estimated FMV at December 31, 2000 (dollars in thousands):

FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2001 2002 2003 2004 2005 THEREAFTER TOTAL (2) F M V
---------- ------------ -------- ------------- -------- ------------ ------------- -----------

Mortgage notes and
notes receivable:
Fixed rate .............. $ 15 $ 4,209 $ --- $ 36,500 $ --- $ 16,990 $ 57,714 $ 57,714
Weighted average
interest rate ......... 9.00% 10.08% --- 10.23% --- 11.65% 10.63%

- ----------
(2) Excludes mortgage note receivable acquisition costs and interest
receivables aggregating approximately $506,000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is included in a separate section of this Form
10-K

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

II-12

PART III

ITEMS 10, 11, 12, AND 13.

The Company is the sole managing general partner of the Operating
Partnership. All of the Company's business is conducted through the Operating
Partnership. As a result, the information required by items 10, 11, 12, and 13
is identical to the information contained in Items 10, 11, 12 and 13 of the
Company's Form 10-K, which incorporates by reference information appearing in
the Company's Proxy Statement furnished to shareholders in connection with the
Company's 2001 Annual Meeting. Such information is incorporated by reference in
this Form 10-K.

III-1

PART IV

ITEM 14. FINANCIAL STATEMENTS AND SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K

(a)(1 and 2) Financial Statements and Schedules

The following consolidated financial information is included as a separate
section of this annual report on Form 10-K:

PAGE
------

RECKSON OPERATING PARTNERSHIP, L.P.
Report of Independent Auditors ................................................... IV-5
Consolidated Balance Sheets as of December 31, 2000 and December 31, 1999 ........ IV-6
Consolidated Statements of Income for the years ended December 31, 2000, 1999, and
1998 ........................................................................... IV-7
Consolidated Statement of Partners' Capital for the years ended December 31, 2000,
1999, and 1998 ................................................................. IV-8
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999,
and 1998. ...................................................................... IV-9
Notes to Financial Statements .................................................... IV-10
Schedule III -- Real Estate and Accumulated Depreciation ......................... IV-25

All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the financial statements and notes
thereto.

IV-1

(3) Exhibits

EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- --------- ----------- -------------------------------------------------------------------------------------------------

3.1 a Amended and Restated Agreement of Limited Partnership of the Registrant
3.2 f Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series A Preferred Units of Limited Partnership Interest
3.3 f Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series B Preferred Units of Limited Partnership Interest
3.4 f Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series C Preferred Units of Limited Partnership Interest
3.5 f Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series D Preferred Units of Limited Partnership Interest
3.6 m Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series B Common Units of Limited Partnership Interest
3.7 m Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series E Preferred Partnership Units of Limited Partnership
3.8 Supplement to the Amended and Restated Agreement of Limited Partnership of the Registrant
Establishing Series F Junior Participating Preferred Partnership Units Issuable Under the Rights
Plan
4.1 h Form of 7.40% Notes due 2004 of the Registrant
4.2 h Form of 7.75% Notes due 2009 of the Registrant
4.3 h Indenture, dated March 26, 1999, among the Registrant, Reckson Associates Realty Corp. (the
"Company"), and The Bank of New York, as trustee
4.4 Rights Agreement, dated as of October 13, 2000, between the Registrant and American Stock
Transfer and Trust Company
10.1 d Third Amended and Restated Agreement of Limited Partnership of Omni Partners, L.P.
10.2 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Donald Rechler
10.3 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Scott Rechler
10.4 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Mitchell Rechler
10.5 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Gregg Rechler
10.6 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Roger Rechler
10.7 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Michael Maturo
10.8 n Amendment and Restatement of Employment and Non-Competition Agreement, dated as of
August 15, 2000 between the Company and Jason Barnett
10.9 a Purchase Option Agreements relating to the Reckson Option Properties
10.10 a Purchase Option Agreements relating to the Other Option Properties
10.11 c Amended 1995 Stock Option Plan
10.12 c 1996 Employee Stock Option Plan
10.13 b Ground Leases for certain of the properties
10.14 g Third Amended and Restated Agreement of Limited Partnership of Reckson FS Limited
Partnership
10.15 a Indemnity Agreement relating to 100 Oser Avenue
10.16 d Amended and Restated 1997 Stock Option Plan
10.17 d 1998 Stock Option Plan
10.18 d Note Purchase Agreement for the Senior Unsecured Notes
10.19 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Donald Rechler
10.20 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Scott Rechler
10.21 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Mitchell Rechler
10.22 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Gregg Rechler
10.23 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Roger Rechler
10.24 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Michael Maturo
10.25 n Amended and Restated Severance Agreement, dated August 15, 2000 between the Company
and Jason Barnett
10.26 e Amended and Restated Operating Agreement of Metropolitan Partners LLC, dated December
8, 1998
10.27 g Intercompany Agreement by and between the Registrant and Reckson Service Industries, Inc.,
dated May 13, 1998
10.28 m Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service
Industries, Inc., as borrower and the Registrant, as Lender relating to Reckson Strategic Venture
Partners, LLC ("RSVP Credit Agreement")
10.29 m Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service
Industries, Inc., as borrower and the Registrant, as Lender relating to the operations of Reckson
Service Industries, Inc. ("RSI Credit Agreement")
10.30 m Letter Agreement, dated November 30, 1999, amending the RSVP Credit Agreement and the
RSI Credit Agreement
10.31 j Consolidated, Amended and Restated Fee and Leasehold Mortgage Note relating to 919 Third
Avenue
10.32 l Agreement of Purchase and Sale, between NBBRE 919 Third Avenue Associates, L.P., as Seller,
and the Registrant, as Purchaser
10.33 j Side Letter to Agreement of Purchase and Sale between NBRE 919 Third Avenue Associates,
L.P., as Seller and the Registrant as Purchaser
10.34 k Contribution and Exchange Agreement by and between Reckson Morris Industrial Trust,
Reckson Morris Industrial Interim GP, LLC, the Registrant, Robert Morris, Joseph D. Morris,
Ronald Schram, Mark M. Bava, The Drew Morris Trust, The Justin Morris Trust, The Keith
Morris Trust, Joseph D. Morris Family Limited Partnership and Robert Morris Family Limited
Partnership, and American Real Estate Investment L.P. and American Real Estate Corporation
10.35 n $575 million Credit Facility dated as of September 7, 2000 among the Registrant, The Chase
Manhattan Bank, NBS Warburg Dillion Read, Deutsche Bank and Chase Securities, Inc.
10.36 n Guaranty Agreement dated as of September 7, 2000 among the Company, the Chase Manhattan
Bank and UBS Warburg LLC
10.37 n Operating Agreement dated as of September 28, 2000 between Reckson Tri-State Member LLC
(together with its permitted successors and assigns) and TIAA Tri-State LLC
10.38 p Secured Loan Agreement among Metropolitan 919 3rd Avenue LLC (as borrower), Merrill
Lynch Mortgage Capital Inc., Bayerische Landesbank, Cayman Islands Branch, Commerzbank
AG New York and Grand Cayman Branches, Wells Fargo Bank, National Association and the
other lenders signatory thereto
10.39 p Loan Agreement between 1350 LLC, as Borrower, and Secore Financial Corporation, as Lender

IV-2

EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- ---------- ----------- --------------------------------------------------------------------------------------------

10.40 p Agreement of Spreader, Consolidation and Modification of Mortgage Security Agreement
among Metropolitan 810 7th Ave., LLC, 100 Wall Company LLC and Monumental Life
Insurance Company
10.41 p Consolidated, Amended and Restated Secured Promissory Note relating to Metropolitan 810 7th
Ave., LLC and 100 Wall Company LLC
12.1 Statement of Ratios of Earnings to Fixed Charges
21.1 Statement of Subsidiaries
23.0 Consent of Independent Auditors
24.1 Power of Attorney (included in Part IV of the Form 10-K)

(a) Previously filed as an exhibit to Registration Statement Form S-11 (No.
333-1280) and incorporated herein by reference.
(b) Previously filed as an exhibit to Registration Statement Form S-11 (No.
33-84324) and incorporated herein by reference.
(c) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on November 25, 1996 and incorporated herein by reference.
(d) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 26, 1998 and incorporated herein by reference.
(e) Previously filed as an exhibit to the Registrant's Form 8-K report filed
with the SEC on December 22, 1998 and incorporated herein by reference.
(f) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on March 1, 1999 and incorporated herein by reference.
(g) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 16, 1999 and incorporated herein by reference.
(h) Previously filed as an exhibit to the Registrant's Form 8-K filed with SEC
on March 26, 1999 and incorporated herein by reference.
(i) Previously filed as an exhibit to the Registrant's Form 8-K filed with SEC
on June 7, 1999 and incorporated herein by reference.
(j) Previously filed as an exhibit to the Registrant's Form 8-K filed with SEC
on June 25, 1999 and incorporated herein by reference.
(k) Previously filed as an exhibit to the Registrant's Form 8-K filed with SEC
on August 25, 1999 and incorporated herein by reference.
(l) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
January 14, 2000 and incorporated herein by reference.
(m) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 17, 2000 and incorporated herein by reference.
(n) Previously filed as an exhibit to the Registrant's Form 8-K filed with the
SEC on October 17, 2000 and incorporated herein by reference.
(o) Previously filed as an exhibit to the Registrant's Form 10-Q filed with the
SEC on August 11, 2000 and incorporated herein by reference.
(p) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 21, 2001 and incorporated herein by reference.

(b) Reports on Form 8-K

On October 17, 2000, the Registrant filed a report on Form 8-K relating to:

(i) the authorization by the Company's Board of Directors of a dividend
distribution of one preferred share purchase right for each outstanding
shares of Class A common stock of the Company under a shareholder rights
plans;

(ii) the purchase by a subsidiary of Teachers Insurance and Annuity Association
of America from a subsidiary of the Registrant of a 49% interest in RT
Tri-State LLC for approximately $136 million;

(iii) the Registrant entering into an unsecured revolving credit facility of up
to $575 million with The Chase Manhattan Bank, UBS Warburg LLC, Deutsche
Bank and Chase Securities Inc;

(iv) the Company's entering into employment and noncompetition agreements and
severance agreements with each of its executive officers; and

(v) the adoption by the Company's Board of Directors of a new bylaw provision.

On November 2, 2000, the Company submitted a report on Form 8-K under Item 9
thereof in order to submit its third quarter presentation in satisfaction of
the requirements of Regulation FD.

On November 3, 2000, the Company submitted a report on Form 8-K under Item 9
thereof in order to submit supplemental operating and financial data for the
third quarter presentation in satisfaction of the requirements of Regulation
FD.

IV-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, on March 22, 2001.

RECKSON OPERATING PARTNERSHIP, L.P.

By: RECKSON ASSOCIATES REALTY CORP.,
its general partner

By: /s/ Donald J. Rechler
---------------------------
Donald J. Rechler,
Chairman of the Board and Co-Chief
Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Reckson Associates Realty Corp. ("Reckson Associates"), the
corporate general partner of the registrant, hereby severally constitutes and
appoints Scott H. Rechler, Michael Maturo and Mitchell D. Rechler, and each of
them, his attorney-in-fact and agent, with full power of substitution and
resubstitution for him in any and all capacities, to sign any or all amendments
to this annual report on Form 10-K for the fiscal year ended December 31, 2000,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary in connection with such matters and
hereby ratifying and confirming all that such attorney-in-fact or his
substitutes may do or cause to be done by virtue hereof.

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 on March 22, 2001.

SIGNATURE TITLE SIGNATURE TITLE
- -------------------------- --------------------------- ------------------------ --------------------------

/s/ Donald J. Rechler Chairman of the Board, /s/ Scott H. Rechler President, Co-Chief
- ---------------- Co-Chief Executive ---------------- Executive Officer and
Donald J. Rechler Officer and Director Scott H. Rechler Director of Reckson
(Principal Executive Associates
Officer) of Reckson
Associates

/s/ Roger M. Rechler Vice-Chairman of the /s/ Michael Maturo Executive Vice President,
- ---------------- Board, Executive Vice ---------------- Treasurer and Chief
Roger M. Rechler President and Director of Michael Maturo Financial Officer
Reckson Associates (Principal Financial
Officer and Principal
Accounting Officer) of
Reckson Associates

/s/ Mitchell D. Rechler Executive Vice President, /s/ Harvey R. Blau Director of Reckson
- ---------------- Co-Chief Operating ---------------- Associates
Mitchell D. Rechler Officer and Director of Harvey R. Blau
Reckson Associates

/s/ Leonard Feinstein Director of Reckson /s/ Herve A. Kevenides Director of Reckson
- ---------------- Associates ---------------- Associates
Leonard Feinstein Herve A. Kevenides

/s/ John V. N. Klein Director of Reckson /s/ Lewis S. Ranieri Director of Reckson
- ---------------- Associates ---------------- Associates
John V. N. Klein Lewis S. Ranieri

/s/ Conrad D. Stephensen Director of Reckson
- ---------------- Associates
Conrad D. Stephensen

IV-4

REPORT OF INDEPENDENT AUDITORS

To the Partners
Reckson Operating Partnership, L.P.

We have audited the accompanying consolidated balance sheets of Reckson
Operating Partnership, L. P. (the "Operating Partnership") as of December 31,
2000 and 1999, and the related consolidated statements of income, partners'
capital, and cash flows for each of the three years in the period ended
December 31 2000. We have also audited the financial statement schedule listed
in the index at item 14 (a). These financial statements and financial statement
schedule are the responsibility of the Operating Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement 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 Reckson
Operating Partnership, L. P. at December 31, 2000 and 1999, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

ERNST & YOUNG LLP

New York, New York
February 13, 2001

IV-5

RECKSON OPERATING PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT UNIT DATA)

DECEMBER 31,
---------------------------------
2000 1999
--------------- ---------------

ASSETS
Commercial real estate properties, at cost (Notes 2, 3, 5, 6,and 8)
Land ................................................................. $ 396,482 $ 276,204
Buildings and improvements ........................................... 2,219,448 1,802,611
Developments in progress: .............................................
Land ................................................................. 60,918 60,894
Development costs .................................................... 93,759 68,690
Furniture, fixtures and equipment ..................................... 7,138 6,473
----------- -----------
2,777,745 2,214,872
Less accumulated depreciation ...................................... (288,479) (218,385)
----------- -----------
2,489,266 1,996,487
Investments in real estate joint ventures (Note 8) .................... 43,534 31,531
Investment in mortgage notes and notes receivable (Note 6) ............ 58,220 352,466
Cash and cash equivalents (Note 9) .................................... 16,624 21,122
Tenant receivables .................................................... 11,511 5,117
Investments in and advances to affiliates (Note 8) .................... 180,593 179,762
Deferred rents receivable ............................................. 67,930 32,132
Prepaid expenses and other assets ..................................... 68,759 66,855
Contract and land deposits and pre-acquisition costs .................. 1,676 9,585
Deferred lease and loan costs, less accumulated amortization of $32,773
and $24,484, respectively ............................................ 61,681 39,520
----------- -----------
Total Assets ......................................................... $ 2,999,794 $ 2,734,577
----------- -----------
LIABILITIES
Mortgage notes payable (Note 2) ....................................... $ 728,971 $ 459,174
Unsecured credit facility (Note 3) .................................... 216,600 297,600
Unsecured term loan (Note 3) .......................................... -- 75,000
Senior unsecured notes (Note 4) ....................................... 449,385 449,313
Accrued expenses and other liabilities (Note 5) ....................... 93,520 81,265
Distributions payable ................................................. 28,801 27,166
----------- -----------
Total Liabilities .................................................... 1,517,277 1,389,518
----------- -----------
Commitments and other comments (Notes 9, 10, and 13) .................. -- --
Minority interests' in consolidated partnerships ...................... 226,350 93,086
----------- -----------
PARTNERS' CAPITAL (Note 7)
Preferred Capital, 11,234,518 and 15,234,518 units outstanding,
respectively ......................................................... 313,126 413,126
General Partner's Capital:
Class A common units, 45,352,286 and 40,375,506 outstanding,
respectively ....................................................... 575,570 477,172
Class B common units, 10,283,513 and 10,283,763 outstanding,
respectively ....................................................... 270,118 270,689
Limited Partners' Capital, 7,694,642 and 7,701,142 units outstanding,
respectively ......................................................... 97,353 90,986
----------- -----------
Total Partners' Capital .............................................. 1,256,167 1,251,973
----------- -----------
Total Liabilities and Partners' Capital ............................ $ 2,999,794 $ 2,734,577
=========== ===========

(see accompanying notes to financial statements)

IV- 6

RECKSON OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT DATA)

FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
2000 1999 1998
-------------- -------------- --------------

REVENUES (Note 10):
Base rents ....................................................... $ 397,327 $ 324,146 $ 224,703
Tenant escalations and reimbursements ............................ 54,750 44,989 27,744
Equity in earnings of service companies and real estate joint
ventures ........................................................ 4,383 2,148 1,836
Interest income on mortgage notes and notes receivable ........... 8,212 7,944 7,739
Gain (loss) on disposition of real estate (Note 6) ............... 18,669 10,052 --
Investment and other income ...................................... 26,576 13,863 4,290
----------- ----------- -----------
Total Revenues .................................................. 509,917 403,142 266,312
----------- ----------- -----------
EXPENSES:
Property operating expenses ...................................... 157,456 125,994 84,280
Marketing, general and administrative ............................ 25,221 22,269 15,971
Interest ......................................................... 96,337 74,709 47,795
Depreciation and amortization .................................... 92,547 74,504 52,957
----------- ----------- -----------
Total Expenses .................................................. 371,561 297,476 201,003
----------- ----------- -----------
Income before distributions to preferred unit holders,
minority interests and extraordinary loss ....................... 138,356 105,666 65,309
Preferred unit distributions ..................................... (28,012) (27,001) (14,244)
Minority partners' interest in consolidated partnerships ......... (9,120) (6,802) (2,819)
----------- ----------- -----------
Income before extraordinary loss ................................. 101,224 71,863 48,246
Extraordinary loss on extinguishment of debts (Note 3) ........... (1,571) (629) (1,993)
----------- ----------- -----------
Net income available to common unit holders ...................... $ 99,653 $ 71,234 $ 46,253
=========== =========== ===========
Net income available to:
General Partner - Class A common units ........................ $ 64,552 $ 48,791 $ 38,667
General Partner - Class B common units ........................ 23,607 13,110 --
Limited Partners' ............................................. 11,494 9,333 7,586
----------- ----------- -----------
Total ........................................................... $ 99,653 $ 71,234 $ 46,253
=========== =========== ===========
Net income per weighted average units:
General Partner - per Class A common unit before
extraordinary loss ........................................... $ 1.52 $ 1.22 $ 1.02
Extraordinary loss per Class A general partnership unit ( .02) ( .01) ( .04)
----------- ----------- -----------
Net income per weighted average Class A general
partnership common unit ...................................... $ 1.50 $ 1.21 $ .98
=========== =========== ===========
General Partner - per Class B common unit before
extraordinary loss ........................................... $ 2.34 $ 1.96 $ --
Extraordinary loss per Class B general partnership unit ( .04) ( .02) --
----------- ----------- -----------
Net income per weighted average Class B general
partnership unit ............................................. $ 2.30 $ 1.94 $ --
=========== =========== ===========
Limited Partners' - per common unit before
extraordinary loss ........................................... $ 1.52 $ 1.22 $ 1.02
Extraordinary loss per limited partnership unit ............... ( .02) ( .01) ( .04)
----------- ----------- -----------
Net income per weighted average limited partnership
unit ......................................................... $ 1.50 $ 1.21 $ .98
=========== =========== ===========
Weighted average common units outstanding:
General Partner - Class A common units ........................ 43,070,000 40,270,000 39,473,000
General Partner - Class B common units ........................ 10,284,000 6,744,000 --
Limited Partners .............................................. 7,696,000 7,705,000 7,728,000

(see accompanying notes to financial statements)

IV- 7

RECKSON OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(IN THOUSANDS)

GENERAL PARTNER'S CAPITAL
-------------------------------------------
PREFERRED CLASS B CLASS A LIMITED TOTAL
CAPITAL COMMON UNITS COMMON UNITS PARTNERS' CAPITAL PARTNERS' CAPITAL
------------- -------------- -------------- ------------------- ------------------

BALANCE JANUARY 1, 1998 .............. $ -- $ -- $ 446,702 $ 85,750 $ 532,452
Net Income ........................... -- -- 38,667 7,586 46,253
Contributions ........................ 263,126 -- 54,089 11,484 328,699
Distributions ........................ -- -- (55,193) (10,695) (65,888)
Contribution of a 1% interest in
Reckson FS Limited Partnership ...... -- -- 1,076 -- 1,076
---------- --------- --------- --------- ----------
BALANCE DECEMBER 31, 1998 ............ 263,126 -- 485,341 94,125 842,592
Net Income ........................... -- 13,110 48,791 9,333 71,234
Contributions ........................ 150,000 302,653 1,601 -- 454,254
Distributions ........................ -- (14,787) (58,561) (10,987) (84,335)
Retirement of units .................. -- (30,287) -- (1,485) (31,772)
---------- --------- --------- --------- ----------
BALANCE DECEMBER 31, 1999 ............ 413,126 270,689 477,172 90,986 1,251,973
Net Income ........................... -- 23,607 64,552 11,494 99,653
Contributions ........................ -- -- 6,701 -- 6,701
Distributions ........................ -- (24,132) (66,096) (11,765) (101,993)
Retirement / redemption of units ..... (100,000) (46) 93,241 6,638 (167)
---------- --------- --------- --------- ----------
BALANCE DECEMBER 31, 2000 ............ $ 313,126 $ 270,118 $ 575,570 $ 97,353 $1,256,167
========== ========= ========= ========= ==========

(see accompanying notes to financial statements)

IV- 8

RECKSON OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------
2000 1999 1998
------------- ------------- -------------

Income before distributions to preferred unit holders .................... $ 127,665 $ 98,235 $ 60,497
Adjustments to reconcile income before distributions to preferred unit
holders to net cash provided by operating activities:
Depreciation and amortization ........................................... 92,547 74,504 52,957
Extraordinary loss on extinguishment of debts ........................... 1,571 629 1,993
Minority partners' interests in consolidated partnerships ............... 9,120 6,802 2,819
Gain (loss) on dispositions of real estate, securities and mortgage
repayment ............................................................. (18,669) (9,657) (52)
Distribution from investments in real estate joint ventures ............. 368 442 470
Equity in earnings of service companies and real estate joint
ventures. ............................................................. (4,383) (2,148) (1,836)
Changes in operating assets and liabilities:
Prepaid expenses and other assets ....................................... (9,568) (24,292) (4,597)
Tenant and affiliate receivables ........................................ (6,394) 42 (184)
Deferred rents receivable ............................................... (35,798) (2,158) (7,553)
Accrued expenses and other liabilities .................................. 14,152 12,618 16,605
---------- ---------- ----------
Net cash provided by operating activities ............................... 170,611 155,017 121,119
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of commercial real estate properties .......................... (190,548) (284,741) (449,241)
Investment in mortgage notes and notes receivable ....................... -- (295,048) 4,072
Increase (decrease) in contract deposits and preacquisition costs ....... (2,023) (12,650) 8,839
Additions to developments in progress ................................... (13,392) (9,615) (97,570)
Additions to commercial real estate properties .......................... (89,818) (28,135) (21,181)
Payment of leasing costs ................................................ (24,082) (16,467) (8,802)
Investments in securities ............................................... -- -- (42,299)
Additions to furniture, fixtures and equipment .......................... (742) (461) (2,071)
Investments in real estate joint ventures ............................... (10,780) (15,033) (7,773)
Distribution from service companies ..................................... -- -- 15
Proceeds from dispositions of real estate, securities and mortgage
note receivable repayments ............................................ 49,810 269,916 809
---------- ---------- ----------
Net cash used in investing activities ................................... (281,575) (392,234) (615,202)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from secured borrowings ........................................ 297,163 125,548 11,458
Principal payments on secured borrowings ................................ (27,367) (4,714) (4,735)
Proceeds from redemption of KTR preferred stock ......................... 19,903
Proceeds from issuance of senior unsecured notes, net of issuance
costs ................................................................. -- 299,262 --
Payment of loan costs and prepayment penalties .......................... (11,649) (8,264) (4,738)
Investments in and advances to affiliates ............................... (14,568) (126,249) (24,409)
Proceeds from unsecured credit facilities and term loans ................ 689,600 397,500 413,100
Principal payments on unsecured credit facilities and term loans ........ (845,600) (510,750) (137,500)
Contributions ........................................................... 4,010 149,512 272,734
Distributions ........................................................... (128,369) (104,246) (57,683)
Retirement of units ..................................................... -- (30,287) --
Contributions by minority partners in consolidated partnerships ......... 135,975 75,500 10,000
Distributions to minority partners in consolidated partnerships ......... (12,632) (6,701) (3,592)
---------- ---------- ----------
Net cash provided by financing activities ................................ 106,466 256,111 474,635
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents ..................... (4,498) 18,894 (19,448)
Cash and cash equivalents at beginning of period ......................... 21,122 2,228 21,676
---------- ---------- ----------
Cash and cash equivalents at end of period ............................... $ 16,624 $ 21,122 $ 2,228
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest, including interest
capitalized ........................................................... $ 106,106 $ 77,014 $ 52,622
---------- ---------- ----------

(see accompanying notes to financial statements)

IV- 9

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2000

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Reckson Operating Partnership, L.P. (the "Operating Partnership") is
engaged in the ownership, management, operation, leasing and development of
commercial real estate properties, principally office and industrial buildings
and also owns certain undeveloped land (collectively, the "Properties") located
in the New York tri-state area (the "Tri-State Area").

ORGANIZATION AND FORMATION OF THE OPERATING PARTNERSHIP

The Operating Partnership commenced operations on June 2, 1995. The sole
general partner in the Operating Partnership, Reckson Associates Realty Corp.
(the "Company") is a self administered and self managed real estate investment
trust ("REIT"). During June, 1995, the Company contributed approximately $162
million in cash to the Operating Partnership in exchange for an approximate 73%
general partnership interest.

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

During July 1998, the Company formed Metropolitan Partners, LLC
("Metropolitan") for the purpose of acquiring Tower Realty Trust, Inc.
("Tower"). On May 24, 1999 the Company completed the merger with Tower and
acquired three Class A office properties located in New York City totaling 1.6
million square feet and one office property located on Long Island totaling
approximately 101,000 square feet. In addition, pursuant to the merger, the
Company also acquired certain office properties, a property under development
and land located outside of the Tri-State Area. All of the assets acquired in
the merger, located outside the Tri-State Area, other than a 357,000 square
foot office property located in Orlando, Florida, have been sold (see note 6).

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the
consolidated financial position of the Operating Partnership and its
subsidiaries at December 31, 2000 and 1999 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000. The Operating Partnership's investments in Metropolitan, Omni
Partners, L.P. ("Omni"), the Tri-State JV (see note 6) and certain industrial
joint venture properties formerly owned by Reckson Morris Operating
Partnership, L.P. ("RMI") are reflected in the accompanying financial
statements on a consolidated basis with a reduction for minority partners'
interest. The Operating Partnership's investment in RMI was reflected in the
accompanying financial statements on a consolidated basis with a reduction for
minority partner's interest through September 26, 1999. On September 27, 1999,
the Operating Partnership sold its interest in RMI to Keystone Property Trust
("KTR"). The operating results of the service businesses currently conducted by
Reckson Management Group, Inc. ("RMG") and Reckson Construction Group, Inc.
("RCG") are reflected in the accompanying financial statements on the equity
method of accounting. The Operating Partnership also invests in real estate
joint ventures where it may own less than a controlling interest, such
investments are also reflected in the accompanying financial statements on the
equity method of accounting. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.

IV-10

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

The minority interests at December 31, 2000 represent a convertible
preferred interest in Metropolitan, a 49% interest in the Tri-State JV and a
40% interest in Omni.

The merger with Tower was accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16. Accordingly, the fair value of the
consideration given by the Operating Partnership, in accordance with the
accounting principles generally accepted in the United States ("GAAP"), was
used as the valuation basis for the merger. The assets acquired and liabilities
assumed by the Operating Partnership were recorded at the fair value as of the
closing date of the merger.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual results could differ
from those estimates.

Real Estate

Depreciation is computed utilizing the straight-line method over the
estimated useful lives of ten to thirty years for buildings and improvements
and five to ten years for furniture, fixtures and equipment. Tenant
improvements, which are included in buildings and improvements, are amortized
on a straight-line basis over the term of the related leases.

Cash Equivalents

The Operating Partnership considers highly liquid investments with a
maturity of three months or less when purchased, to be cash equivalents.

Tenant's lease security deposits aggregating approximately $6.1 million
and $5.1 million at December 31, 2000 and 1999, respectively have been included
in cash and cash equivalents on the accompanying balance sheets.

Deferred Costs

Tenant leasing commissions and related costs incurred in connection with
leasing tenant space are capitalized and amortized over the life of the related
lease. In addition, loan costs incurred are capitalized and amortized over the
term of the related loan.

Income Taxes

No provision has been made for income taxes in the accompanying
consolidated financial statements since such taxes, if any, are the
responsibility of the individual partners.

Revenue Recognition

Minimum rental income is recognized on a straight-line basis over the term
of a lease. The excess of rents recognized over amounts contractually due are
included in deferred rents receivable on the accompanying balance sheets.
Contractually due but unpaid rents are included in tenant receivables on the
accompanying balance sheets. Certain lease agreements provide for reimbursement
of real estate taxes, insurance, common area maintenance costs and indexed
rental increases, which are recorded on an accrual basis.

The Operating Partnership records interest income on investments in
mortgage notes and notes receivable on an accrual basis of accounting. The
Operating Partnership does not accrue interest on impaired loans where, in the
judgment of management, collection of interest according to the contractual

IV-11

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

terms is considered doubtful. Among the factors the Operating Partnership
considers in making an evaluation of the collectibility of interest are: the
status of the loan, the value of the underlying collateral, the financial
condition of the borrower and anticipated future events.

Gain (loss) on dispositions of real estate are recorded when title is
conveyed to the buyer, subject to the buyer's financial commitment being
sufficient to provide economic substance to the sale.

Net Income Per Common Partnership Unit

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

Distributions to Preferred Unit Holders

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

Segment Reporting

In 1997, the FASB issued Statement No. 131 "Disclosures about segments of
an Enterprise and Related Information" ("Statement 131") which is effective for
fiscal years beginning after December 15, 1997. Statement 131 establishes
standards for reporting information about operating segments in annual
financial statements and in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. The adoption of this standard had no impact on the
Operating Partnership's financial position or results of operations but did
affect the disclosure of segment information (see Note 11).

Recent Pronouncements

In June 1999, the FASB issued Statement No. 137, amending Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which
extended the required date of adoption to the years beginning after June 15,
2000. The Operating Partnership will adopt the new Statement effective January
1, 2001. Because of the Operating Partnership's minimal use of derivatives,
management does not anticipate that the adoption of the new Statement will have
a significant effect on earnings or the financial position of the Operating
Partnership.

Reclassifications

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

2. MORTGAGE NOTES PAYABLE

At December 31, 2000, there were 19 mortgage notes payable with an
aggregate outstanding principal amount of approximately $729 million.
Properties with an aggregate carrying value at December 31, 2000 of
approximately $1,362 million are pledged as collateral against the mortgage
notes payable. In addition, approximately $47 million of the $729 million are
recourse to the Operating Partnership. The mortgage notes bear interest at
rates ranging from 6.45% to 10.10%, and mature between 2001 and 2027. The
weighted average interest rates on the outstanding mortgage notes payable at
December 31, 2000, 1999 and 1998 were approximately 7.8%, 7.6% and 7.8%,
respectively. Certain of the mortgage notes payable are guaranteed by certain
minority partners in the Operating Partnership.

IV-12

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. MORTGAGE NOTES PAYABLE - (CONTINUED)

Scheduled principal repayments during the next five years and thereafter
are as follows (in thousands):

YEAR ENDED DECEMBER 31,
- --------------------------------

2001 ......................... $ 93,225
2002 ......................... 17,011
2003 ......................... 208,905
2004 ......................... 12,370
2005 ......................... 10,467
Thereafter ................... 386,993
---------
$ 728,971
=========

On January 13, 2000, in connection with the acquisition of 1350 Avenue of
the Americas, the Operating Partnership obtained a secured $70 million first
mortgage commitment which matures in August 2001 and bears interest at LIBOR
plus 165 basis points.

On November 2, 2000, in connection with the acquisition of 919 Third
Avenue, the Operating Partnership obtained a three year secured $250 million
first mortgage commitment. Interest rates on borrowings under the commitment
are based on LIBOR plus a spread ranging from 110 basis points to 140 basis
points based upon the outstanding balance. At closing, $200 million was funded
under the commitment at an interest rate of LIBOR plus 120 basis points. In
addition, in connection with the $200 million initial funding, the Operating
Partnership purchased a LIBOR interest rate hedge that provides for a maximum
LIBOR rate of 9.25%. The initial funding was used primarily to repay
outstanding borrowings under the Operating Partnership's unsecured credit
facility.

3. UNSECURED CREDIT FACILITY

As of December 31, 2000, the Operating Partnership had a three year $575
million unsecured revolving credit facility (the "Credit Facility") from The
Chase Manhattan Bank, as administrative agent, UBS Warburg LLC as syndication
agent and Deutsche Bank as documentation agent. The Credit Facility matures in
September, 2003 and borrowings under the Credit Facility are currently priced
off of LIBOR plus 105 basis points.

The Credit Facility replaced the Operating Partnership's $500 million
unsecured credit facility (together with the Credit Facility, the "Credit
Facility") and $75 million term loan. As a result, certain deferred loan costs
incurred in connection with such unsecured credit facility and term loan were
written off. Such amount is reflected as an extraordinary loss in the
accompanying consolidated statements of income.

The Operating Partnership utilizes the Credit Facility primarily to
finance real estate investments, fund its real estate development activities
and for working capital purposes. At December 31, 2000, the Operating
Partnership had availability under the Credit Facility to borrow an additional
$358.4 million (of which, $51.3 million has been allocated for outstanding
undrawn letters of credit).

The Operating Partnership capitalized interest incurred on borrowings to
fund certain development costs in the amount of $11.5 million, $9.8 million and
$7.3 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

IV-13

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )

4. SENIOR UNSECURED NOTES

As of December 31, 2000, the Operating Partnership had outstanding
approximately $449.4 million (net of issuance discounts) of senior unsecured
notes (the "Senior Unsecured Notes"). The following table sets forth the
Operating Partnership's Senior Unsecured Notes and other related disclosures
(dollars in thousands):

FACE COUPON
ISSUANCE AMOUNT RATE TERM MATURITY
- ------------------------------- ------------ ---------- ---------- ----------------

August 27, 1997 ......... $ 150,000 7.20% 10 years August 28, 2007
March 26, 1999 .......... $ 100,000 7.40% 5 years March 15, 2004
March 26, 1999 .......... $ 200,000 7.75% 10 years March 15, 2009

Interest on the Senior Unsecured Notes is payable semiannually with
principal and unpaid interest due on the scheduled maturity dates. In addition,
the Senior Unsecured Notes issued on March 26, 1999 were issued at an aggregate
discount of $738,000. Such discount is being amortized over the term of the
Senior Unsecured Notes to which they relate.

5. LAND LEASES AND AIR RIGHTS

The Operating Partnership leases, pursuant to noncancellable operating
leases, the land on which fourteen of its buildings were constructed. The
leases, which contain renewal options, expire between 2009 and 2236. The leases
either contain provisions for scheduled increases in the minimum rent at
specified intervals or for adjustments to rent based upon the fair market value
of the underlying land or other indexes at specified intervals. Minimum ground
rent is recognized on a straight-line basis over the terms of the leases. The
excess of amounts recognized over amounts contractually due is approximately
$2.7 million and $2.6 million at December 31, 2000 and 1999, respectively.
These amounts are included in accrued expenses and other liabilities on the
accompanying balance sheets.

In addition, the Operating Partnership, through the acquisition of certain
properties, is subject to three air rights lease agreements. These lease
agreements have terms expiring between 2048 and 2236, including renewal
options.

Future minimum lease commitments relating to the land leases and air
rights lease agreements during the next five years and thereafter are as
follows (in thousands):

YEAR ENDED DECEMBER 31, LAND LEASES AIR RIGHTS
- ---------------------------- ------------- -----------

2001 ..................... $ 2,114 $ 940
2002 ..................... 2,059 941
2003 ..................... 2,058 944
2004 ..................... 2,182 954
2005 ..................... 2,185 954
Thereafter ............... 51,084 137,791
-------- ---------
$ 61,682 $ 142,524
======== =========

6. COMMERCIAL REAL ESTATE INVESTMENTS

The Tower Merger

In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC ("Metropolitan"), with Crescent Real Estate Equities Company, a Texas REIT
("Crescent") for the purpose of acquiring Tower Realty Trust, Inc. ("Tower").
On May 24, 1999 the Company completed the merger with Tower

IV-14

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)

and acquired three Class A office properties located in New York City totaling
1.6 million square feet and one office property located on Long Island totaling
approximately 101,000 square feet. In addition, pursuant to the merger, the
Company also acquired certain office properties, a property under development
and land located outside of the Tri-State Area.

The Company controls Metropolitan and owns 100% of the common equity;
Crescent owns a $85 million preferred equity investment in Metropolitan.
Crescent's investment accrues distributions at a rate of 7.5% per annum for a
two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by
Metropolitan at any time during that period for $85 million, plus an amount
sufficient to provide a 9.5% internal rate of return. If Metropolitan does not
redeem the preferred interest, upon the expiration of the two-year period,
Crescent must convert its $85 million preferred interest into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's
Class A common stock at a conversion price of $24.61 per share.

Prior to the closing of the merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the merger, the Company has sold a real estate joint venture interest and
all of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Credit Facility. As a result
of incurring certain sales and closing costs in connection with the sale of the
assets located outside the Tri-State Area, the Operating Partnership has
incurred a loss of approximately $4.4 million which has been included in gain
(loss) on dispositions of real estate on the accompanying consolidated
statements of income.

"Big Box" Industrial Investment Activity

On August 9, 1999, the Operating Partnership executed a contract for the
sale, which took place in three stages, of its interest in RMI, which consisted
of 28 properties, comprising approximately 6.1 million square feet and three
other big box industrial properties to KTR. In addition, the Operating
Partnership also entered into a sale agreement with the Matrix Development
Group ("Matrix") relating to a first mortgage note and certain industrial land
holdings (the "Matrix Sale"). The combined total sales price of $310 million
($52 million of which is attributable to the Morris Companies and its
affiliates in the form of $41.6 million of preferred units of KTR's operating
partnership and $10.4 million of debt relief) consisted of (i) approximately
$159.7 million in cash, (ii) $41.5 million in convertible preferred and common
stock of KTR, (iii) $61.6 million in preferred units of KTR's operating
partnership, (iv) approximately $37.1 million of debt relief and (v)
approximately $10.1 million in purchase money mortgage notes secured by certain
land that is being sold to Matrix.

As of December 31, 2000, the Matrix Sale and the sale of the Operating
Partnership's interest in RMI was completed. As a result, the Operating
Partnership realized a gain of approximately $16.7 million. Such gain has been
included in gain on dispositions of real estate on the accompanying
consolidated statements of income. Cash proceeds from the sales were used
primarily to repay borrowings under the Credit Facility. In addition, the
Operating Partnership redeemed approximately $20 million of the preferred stock
of KTR and received principal repayments of approximately $7.2 million related
to the purchase money mortgage notes, all of which was used primarily for
general operating expenditures.

Other Real Estate Investment Activities

On April 13, 1999, the Operating Partnership received approximately $25.8
million from the redemption of a mortgage note receivable which secured three
office properties located in Garden City,

IV-15

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)

Long Island, encompassing approximately 400,000 square feet. As a result, the
Operating Partnership recognized a gain of approximately $4.3 million. Such
gain has been included in gain on dispositions of real estate on the
accompanying consolidated statements of income.

On June 15, 1999, the Operating Partnership acquired the first mortgage
note secured by a 47 story, 1.4 million square foot Class A office property
located at 919 Third Avenue in New York City for approximately $277.5 million.
The first mortgage note entitled the Operating Partnership to all the net cash
flow of the property and to substantial rights regarding the operations of the
property, with the Operating Partnership anticipating to ultimately obtain
title to the property. This acquisition was financed with proceeds from the
issuance of six million Series E preferred units of general partnership
interest (see note 7) and through an advance under the Credit Facility. Current
financial accounting guidelines provides that where a lender has virtually the
same risks and potential rewards as those of a real estate owner it should
recognize the full economics associated with the operations of the property. As
such, the Operating Partnership has recognized real estate operations of 919
Third Avenue in the accompanying consolidated statements of income from the
date of acquisition. On July 28, 2000, the Operating Partnership consented to
the filing of a consensual, pre-packaged bankruptcy plan with the current fee
owner and on November 2, 2000 the Operating Partnership obtained title to the
property.

On January 13, 2000, the Operating Partnership acquired 1350 Avenue of the
Americas, a 540,000 square foot, 35 story, Class A office property, located in
New York City, for a purchase price of approximately $126.5 million. This
acquisition was financed through a $70 million secured debt financing and a
draw under the Credit Facility.

On August 15, 2000, the Operating Partnership acquired 538 Broadhollow
Road, a 180,000 square foot Class A office property located in Melville, New
York for a purchase price of approximately $25.6 million. This acquisition was
financed, in part, through a borrowing under the Credit Facility.

On September 28, 2000, the Operating Partnership formed a joint venture
(the "Tri-State JV") with Teachers Insurance and Annuity Association ("TIAA")
and contributed eight Class A suburban office properties aggregating
approximately 1.5 million square feet to the Tri-State JV in exchange for
approximately $136 million and a 51% majority ownership interest in the
Tri-State JV. As a result, the Operating Partnership realized a gain of
approximately $15.2 million. Such gain has been included in gain on
dispositions of real estate on the accompanying consolidated statements of
income. Cash proceeds received were used primarily to repay borrowings under
the Credit Facility.

In addition, as of December 31, 2000, the Operating Partnership has
invested approximately $6.4 million in mortgage notes encumbering approximately
101 acres of land, approximately $17.1 million in a note receivable secured by
a partnership interest in Omni Partner's, L.P., owner of the Omni, a 575,000
square foot Class A office property located in Uniondale, New York and $36.5
million under three notes which bear interest at rates ranging from 10.5% to
11% per annum and are secured by a minority partner's preferred unit interest.

The Operating Partnership has announced that it has withdrawn its offer to
purchase a tract of land located in Suffolk County, New York from the State of
New York. As a result, as of December 31, 2000, the Company incurred a one-time
non-recurring charge of $3.2 million in connection with the discontinuation of
this development project. Such amount has been included in gain (loss) on
dispositions of real estate on the accompanying consolidated statements of
income.

7. PARTNERS' CAPITAL

On May 24, 1999, in conjunction with the Tower acquisition, the Operating
Partnership issued 11,694,567 Class B common units of general partnership
interest to the Company which were valued for GAAP purposes at $26 per unit for
total consideration of approximately $304.1 million. The Class B

IV-16

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. PARTNERS' CAPITAL - (CONTINUED)

common units are entitled to receive an initial annual distribution of $2.24
per unit which distribution is subject to adjustment annually. On July 1, 2000,
the annual distribution on the Class B common units was increased to $2.40 per
unit.

The Class B common units are exchangeable at any time, at the option of
the holder, into an equal number of Class A common units subject to customary
antidilution adjustments. The Class B common units will be exchanged for an
equal number of Class A common units upon the exchange, if any, by the Company
of Class A common stock for Class B common stock at any time following November
23, 2003.

On June 2, 1999, in connection with the Company's issuance of Series B
convertible preferred stock, the Operating Partnership issued six million
Series E preferred units of general partnership interest to the Company in
exchange for approximately $150 million. The Series E preferred units have a
liquidation preference of $25 per unit, and an initial distribution rate of
7.85% per annum with such rate increasing to 8.35% per annum on April 30, 2000
and to 8.85% per annum from and after April 30, 2001. The Series E preferred
units are convertible into Class A common units at a price of $26.05 per unit
and are redeemable by the Operating Partnership on or after March 2, 2002.
Proceeds from the issuance of the Series E preferred units were used as partial
consideration in the acquisition of the first mortgage note secured by 919
Third Avenue located in New York City. On June 20, 2000, the Operating
Partnership issued 4,181,818 Class A common units in exchange for four million
Series E preferred units with a liquidation preference value of $100 million.

The Board of Directors of the Company has authorized a purchase buy back
program for the Company's Class B common stock. As a result, as of December 31,
2000, in conjunction with the Company's Class B common stock buy back program,
the Operating Partnership purchased and retired 1,410,804 Class B common units
for approximately $30.3 million.

On October 16, 2000, the Company's Board of Directors announced that it
adopted a Shareholder Rights Plan designed to protect its shareholders from
various abusive takeover tactics, including attempts to acquire control of the
Company at an inadequate price, depriving its shareholders of the full value of
their investment. The Operating Partnership has adopted a similar rights plan
(the "Rights Plan") which would be triggered in the event the Company's
Shareholders Rights Plan is triggered. The Rights Plan was not adopted in
response to any known effort to acquire control of the Operating Partnership or
the Company.

Under the Rights Plan, each Class A common unitholder will receive a
dividend of one Right for each Class A common unit owned. The Rights will be
exercisable only if a person or group acquires, or announces their intent to
acquire, 15% or more of the Company's Class A common stock, or announces a
tender offer the consummation of which would result in beneficial ownership by
a person or group of 15% or more of the Company's Class A common stock. Each
Right will entitle the holder to purchase one one-thousandth of a unit of a new
series of junior participating preferred units of the Operating Partnership at
an initial exercise price of $84.44.

If any person acquires beneficial ownership of 15% or more of the
outstanding shares of Class A common stock of the Company, then all Rights
holders (except the acquiring person if such person is a holder of Rights) will
be entitled to purchase the Operating Partnership's Class A common units at a
discounted price. If the Company is acquired in a merger after such an
acquisition, all Rights holders (except the acquiring person if such person is
a holder of Rights) will also be entitled to purchase stock in the buyer at a
discount in accordance with the Rights Plan.

The distribution of Rights was made to Class A common unitholders of
record at the close of business on October 27, 2000 and Class A common units
that are newly-issued after that date (including Class A common units issued
upon conversion of the outstanding Class B common units) will also carry

IV-17

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. PARTNERS' CAPITAL - (CONTINUED)

Rights until the Rights become detached from the Class A common units. The
Rights will expire at the close of business on October 13, 2010, unless earlier
redeemed by the Operating Partnership. The Rights distribution is not taxable
to unitholders.

8. RELATED PARTY TRANSACTIONS

The Operating Partnership, through its subsidiaries and affiliates,
provides management, leasing and other tenant related services to the
Properties. Certain executive officers of the Company have continuing ownership
interests in the unconsolidated service companies.

The Operating Partnership in connection with its formation was granted a
ten year option period to acquire ten properties which are either owned by the
Reckson Group, the predecessor to the Company, or in which the Reckson Group
owns a non-controlling minority interest. As of December 31, 2000, one of these
properties was sold by the Reckson Group to a third party and four of these
properties were acquired by the Operating Partnership for a aggregate purchase
price of approximately $35 million, which included the issuance of
approximately 475,000 Units valued at approximately $8.8 million.

During July 1999, the Operating Partnership sold its interest in a 852,000
square foot development property to RCG in exchange for a $12.3 million note.
The note accrues interest annually at the rate of 12%, has a five year maturity
and is prepayable in whole or in part. During October 1999, RCG made a payment
to the Operating Partnership, in the form of 97 shares of its preferred stock,
valued at approximately $4.0 million, towards accrued interest and principal
due under the note.

The Operating Partnership and FrontLine have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their
relationship and to limit conflicts of interest. Under the Reckson Intercompany
Agreement, FrontLine granted the Operating Partnership a right of first
opportunity to make any REIT -qualified investment that becomes available to
FrontLine. In addition, if a REIT-qualified investment opportunity becomes
available to an affiliate of FrontLine, including RSVP, the Reckson
Intercompany Agreement requires such affiliate to allow the Operating
Partnership to participate in such opportunity to the extent of FrontLine's
interest.

Under the Reckson Intercompany Agreement, the Operating Partnership
granted FrontLine a right of first opportunity to provide commercial services
to the Operating Partnership and its tenants. FrontLine will provide services
to the Operating Partnership at rates and on terms as attractive as either the
best available for comparable services in the market or those offered by
FrontLine to third parties. In addition, the Operating Partnership will give
FrontLine access to its tenants with respect to commercial services that may be
provided to such tenants and, under the Reckson Intercompany Agreement, subject
to certain conditions, the Operating Partnership granted FrontLine a right of
first refusal to become the lessee of any real property acquired by the
Operating Partnership if the Operating Partnership determines that, consistent
with the Company's status as a REIT, it is required to enter into a "master"
lease agreement.

RSVP-Controlled REIT-Qualified Joint Venture Investments

On August 27, 1998 the Operating Partnership announced the formation of a
joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Dominion Venture"),
is owned by Dominion Venture Group LLC, and by a subsidiary of the Operating
Partnership. The Dominion Venture is primarily engaged in acquiring, developing
and/or owning government-occupied office buildings and privately operated
correctional facilities. Under the Dominion Venture's operating agreement, RSVP
may invest up to $100 million, some of which may be invested by the Operating
Partnership (the "RSVP

IV-18

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. RELATED PARTY TRANSACTIONS - (CONTINUED)

Capital"). The initial contribution of RSVP Capital was approximately $39
million of which approximately $10.1 million was invested by a subsidiary of
the Operating Partnership. The Operating Partnership's investment was funded
through the RSVP Commitment. In addition, the Operating Partnership advanced
approximately $3.3 million to FrontLine through the RSVP Commitment for an
investment in RSVP which was then invested on a joint venture basis with the
Dominion Group in certain service business activities related to the real
estate activities. As of December 31, 2000, the Operating Partnership had
invested, through the RSVP Commitment, approximately $20.6 million in the
Dominion Venture which had investments in 13 government office buildings and
three correctional facilities.

As of December 31, 2000, the Operating Partnership has invested
approximately $11.1 million, through a subsidiary, in RAP Student Housing
Properties, LLC ("RAP-SHP"), a company that engages primarily in the
acquisition and development of off-campus student housing projects. The
Operating Partnership's investment was funded through the RSVP Commitment. In
addition, the Operating Partnership has advanced approximately $3.5 million to
FrontLine through the RSVP Commitment for an investment in RSVP which was then
invested in certain service business activities related to student housing. As
of December 31, 2000, RAP-SHP had investments in seven off-campus student
housing projects. Additionally, during 2000, RAP-SHP entered into an off-campus
development joint venture with Titan Investments II, a third party national
developer. The purpose of the venture is to develop or reposition off-campus
student housing projects across the United States.

As of December 31, 2000, the Operating Partnership has invested
approximately $3.4 million, through a subsidiary, in RAP MD, LLC ("RAP-MD"), a
company that engages primarily in the acquisition, ownership, management and
development of medical office properties. The Operating Partnership's
investment was funded through the RSVP Commitment. As of December 31, 2000,
RAP-MD had investments in eight medical office properties.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with FASB Statement No. 107, "Disclosures About Fair Value
of Financial Instruments", management has made the following disclosures of
estimated fair value at December 31, 2000 as required by FASB Statement No.
107.

Cash equivalents and variable rate debt are carried at amounts which
reasonably approximate their fair values.

The fair value of the Operating Partnership's long term debt, mortgage
notes and notes receivable is estimated based on discounting future cash flows
at interest rates that management believes reflects the risks associated with
long term debt, mortgage notes and notes receivable of similar risk and
duration. In addition, management believes that the estimated aggregate fair
value of these assets and liabilities approximates their carrying values.

Considerable judgment is necessary to interpret market data and develop
estimated fair value. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

10. RENTAL INCOME

The office and industrial Properties are being leased to tenants under
operating leases. The minimum rental amount due under certain leases are
generally either subject to scheduled fixed increases or indexed escalations.
In addition, the leases generally also require that the tenants reimburse the
Operating Partnership for increases in certain operating costs and real estate
taxes above base year costs.

IV-19

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
10. RENTAL INCOME - (CONTINUED)

Expected future minimum rents to be received over the next five years and
thereafter from leases in effect at December 31, 2000 are as follows (in
thousands):

2001 ......................... $ 378,057
2002 ......................... 380,665
2003 ......................... 355,064
2004 ......................... 324,183
2005 ......................... 278,782
Thereafter ................... 1,465,457
-----------
$ 3,182,208
===========

11. SEGMENT DISCLOSURE

The Operating Partnership's portfolio consists of Class A office
properties located within the New York City metropolitan area and Class A
suburban office and industrial properties located and operated within the
Tri-State Area (the "Core Portfolio"). The Operating Partnership's portfolio
also includes one office property located in Orlando, Florida, certain
industrial joint venture properties formerly owned by RMI and for the period
commencing January 6, 1998 and ending September 26, 1999, industrial properties
which were owned by RMI and subsequently sold to KTR. The Operating Partnership
has managing directors who report directly to the Chief Operating Officer and
Chief Financial Officer who have been identified as the Chief Operating
Decision Makers because of their final authority over resource allocation,
decisions and performance assessment.

In addition, the Operating Partnership does not consider (i) interest
incurred on its Credit Facility, term loan and Senior Unsecured Notes, (ii) the
operating performance of the office property located in Orlando, Florida and
(iii) commencing January 1, 2000, the operating performance of the industrial
joint venture properties formerly owned by RMI as part of its Core Portfolio's
property operating performance.

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

IV-20

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
11. SEGMENT DISCLOSURE - (CONTINUED)

The following tables set forth the components of the Operating
Partnership's revenues and expenses and other related disclosures, as required
by Statement 131, for the years ended December 31 (in thousands):

2000
-------------------------------------------
CORE CONSOLIDATED
PORTFOLIO OTHER TOTALS
-------------- ------------- --------------

REVENUES:
Base rents, tenant escalations
and reimbursements .............. $ 442,326 $ 9,751 $ 452,077
Equity in earnings of real
estate joint ventures and
service companies ............... -- 4,383 4,383
Other income ..................... 1,212 52,245 53,457
----------- --------- -----------
Total Revenues ................... 443,538 66,379 509,917
----------- --------- -----------
EXPENSES:
Property expenses ................. 154,930 2,526 157,456
Marketing, general and
administrative ................... 20,606 4,615 25,221
Interest .......................... 40,465 55,872 96,337
Depreciation and amortization ..... 84,401 8,146 92,547
----------- --------- -----------
Total Expenses .................... 300,402 71,159 371,561
----------- --------- -----------
Income (loss) before preferred
distributions, minority
interests and extraordinary
loss ............................. $ 143,136 $ (4,780) $ 138,356
=========== ========= ===========
Total assets ...................... $ 2,428,500 $ 571,294 $ 2,999,794
=========== ========= ===========

1999
------------------------------------------------------
CORE CONSOLIDATED
PORTFOLIO RMI OTHER TOTALS
-------------- ---------- -------------- -------------

REVENUES:
Base rents, tenant escalations
and reimbursements .............. $ 340,293 $15,394 $ 13,448 $ 369,135
Equity in earnings of real
estate joint ventures and
service companies ............... -- -- 2,148 2,148
Other income ..................... 448 9 31,402 31,859
----------- ------- ---------- -----------
Total Revenues ................... 340,741 15,403 46,998 403,142
----------- ------- ---------- -----------
EXPENSES:
Property expenses ................. 119,270 2,406 4,318 125,994
Marketing, general and
administrative ................... 16,981 548 4,740 22,269
Interest .......................... 25,167 445 49,097 74,709
Depreciation and amortization ..... 64,097 3,663 6,744 74,504
----------- ------- ---------- -----------
Total Expenses .................... 225,515 7,062 64,899 297,476
----------- ------- ---------- -----------
Income (loss) before preferred
distributions, minority
interests and extraordinary
loss ............................. $ 115,226 $ 8,341 $ (17,901) $ 105,666
=========== ======= ========== ===========
Total assets ...................... $ 2,142,696 $ 0 $ 591,881 $ 2,734,577
=========== ======= ========== ===========

12. NON-CASH INVESTING AND FINANCING ACTIVITIES

Additional supplemental disclosures of non-cash investing and financing
activities are as follows:

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

During June 1999, in connection with the sale of an office property, the
Operating Partnership obtained a $1.2 million purchase money mortgage as
partial consideration for the sale.

During July 1999, the Operating Partnership sold its interest in a 852,000
square foot development property to RCG in exchange for a $12.3 million note.
During October 1999, the Operating Partnership accepted 97 shares of preferred
stock of RCG as payment of $4.0 million of principal and interest due under the
note.

During September 1999, in connection with the Matrix Sale and the first
stage closing of RMI, the Operating Partnership received as partial
consideration for the sale $41.5 million of common and preferred stock of KTR
and approximately $10.1 million in purchase money mortgages from Matrix. In
addition, the Operating Partnership was also relieved of approximately $26.7
million of secured indebtedness.

During November 1999, the Operating Partnership received approximately
$3.6 million of common stock of FrontLine as consideration for amending the
FrontLine Facility and the RSVP Commitment. In May 2000, the Operating
Partnership contributed the common stock it received from FrontLine to RMG in
exchange for 50 shares of non voting preferred stock, 97 shares of 8% preferred
stock and a $1.4 million note.

IV-21

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12. NON-CASH INVESTING AND FINANCING ACTIVITIES - (CONTINUED)

On June 20, 2000, in conjunction with the Company's exchange of 4,181,818
shares of its Class A common stock for four million shares of its Series B
preferred stock, the Operating Partnership issued 4,181,818 Class A common
units in exchange for four million shares of Series E preferred units with a
liquidation preference value of $100 million.

13. COMMITMENTS AND OTHER COMMENTS

The Operating Partnership had outstanding undrawn letters of credit
against its Credit Facility of approximately $51.3 million and $52.3 million at
December 31, 2000 and 1999, respectively.

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following summary represents the Operating Partnership's results of
operations for each fiscal quarter during 2000 and 1999 (in thousands, except
unit data):

2000
----------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- ---------------- --------------- ---------------

Total revenues ............................ $ 117,658 $ 125,448 $ 140,294 $ 126,517
=========== =========== =========== ===========
Income before distributions to preferred
unit holders, minority interests and
extraordinary loss ....................... $ 28,772 $ 35,709 $ 44,208 $ 29,667
Preferred unit distributions .............. (7,985) (7,857) (6,085) (6,085)
Minority partners' interest in consolidated
partnerships ............................. (1,975) (1,925) (1,874) (3,346)
Extraordinary loss ........................ -- -- (1,571) --
----------- ----------- ----------- -----------
Net income available to common unit
holders .................................. $ 18,812 $ 25,927 $ 34,678 $ 20,236
=========== =========== =========== ===========
Net income available to:
General Partner -- Class A common units $ 11,946 $ 16,563 $ 22,753 $ 13,290
General Partner -- Class B common units 4,589 6,281 8,050 4,687
Limited Partners' ........................ 2,277 3,083 3,875 2,259
----------- ----------- ----------- -----------
Total ..................................... $ 18,812 $ 25,927 $ 34,678 $ 20,236
=========== =========== =========== ===========
Net income per common unit:
General Partner -- Class A common units $ .30 $ .40 $ .50 $ .29
General Partner -- Class B common units $ .45 $ .61 $ .78 $ .46
Limited Partners' ........................ $ .30 $ .40 $ .50 $ .29
Weighted average common units
outstanding:
General Partner -- Class A common units 40,382,000 41,343,000 45,178,000 45,326,000
General Partner -- Class B common units 10,284,000 10,284,000 10,284,000 10,284,000
Limited Partners' ........................ 7,700,000 7,695,000 7,695,000 7,695,000

IV-22

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
14. QUARTERLY FINANCIAL DATA (UNAUDITED) - (CONTINUED)

1999
----------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- ---------------- --------------- ---------------

Total revenues ............................ $ 76,107 $ 90,846 $ 125,731 $ 110,458
=========== =========== =========== ===========
Income before distributions to preferred
unit holders, minority interests and
extraordinary loss ....................... $ 20,091 $ 20,728 $ 35,709 $ 29,138
Preferred unit distributions .............. (5,041) (5,989) (7,985) (7,986)
Minority partners' interest in consolidated
partnerships ............................. (1,168) (1,615) (2,150) (1,869)
Extraordinary loss ........................ -- -- (629) --
----------- ----------- ----------- -----------
Net income available to common unit
holders .................................. $ 13,882 $ 13,124 $ 24,945 $ 19,283
=========== =========== =========== ===========
Net income available to:
General Partner -- Class A common units $ 11,641 $ 9,550 $ 15,409 $ 12,191
General Partner -- Class B common units -- 1,747 6,596 4,767
Limited Partners' ........................ 2,241 1,827 2,940 2,325
----------- ----------- ----------- -----------
Total ..................................... $ 13,882 $ 13,124 $ 24,945 $ 19,283
=========== =========== =========== ===========
Net income per common unit:
General Partner -- Class A common units $ .29 $ .24 $ .38 $ .30
General Partner -- Class B common units $ -- $ .36 $ .58 $ .46
Limited Partners' ........................ $ .29 $ .24 $ .38 $ .30
Weighted average common units
outstanding:
General Partner -- Class A common units 40,049,000 40,285,000 40,367,000 40,375,000
General Partner -- Class B common units --- 4,883,000 11,457,000 10,469,000
Limited Partners' ........................ 7,710,000 7,705,000 7,702,000 7,701,000

15. PRO FORMA RESULTS (UNAUDITED)
The following unaudited pro forma operating results of the Operating
Partnership for the year ended December 31, 2000 have been prepared as if the
property acquisitions and dispositions made during 2000 had occurred on January
1, 2000. Unaudited pro forma financial information is presented for
informational purposes only and may not be indicative of what the actual
results of operations of the Operating Partnership would have been had the
events occurred as of January 1, 2000, nor does it purport to represent the
results of operations for future periods (in thousands except per unit data):

Total Revenues ...................................................... $ 508,381
=========
Income before distributions to preferred unit holders, minority
interests and extraordinary loss ................................... $ 135,532
=========
Net income available to General Partner -- Class A common units . $ 54,117
=========
Net Income per weighted average Class A common unit ................. $ 1.26
=========
Net Income available to General Partner -- Class B common units . $ 19,782
=========
Net Income per weighted average Class B common unit ................. $ 1.92
=========
Net Income available to Limited Partners ............................ $ 9,640
=========
Net income per weighted average limited partnership unit ............ $ 1.26
=========

IV-23

RECKSON OPERATING PARTNERSHIP, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )

16. OTHER INVESTMENTS AND ADVANCES

During 1997, the Company formed FrontLine (formerly Reckson Service
Industries, Inc.) and RSVP. In connection with the formation of FrontLine, the
Operating Partnership established a credit facility with FrontLine (the
"FrontLine Facility") in the amount of $100 million for FrontLine to use in its
investment activities, operations and other general corporate purposes. As of
December 31, 2000, the Operating Partnership had advanced approximately $93.4
million under the FrontLine Facility. In addition, the Operating Partnership
approved the funding of investments of up to $100 million with or in RSVP (the
"RSVP Commitment"), through RSVP-controlled joint ventures (for REIT-qualified
investments) or advances made to FrontLine under terms similar to the FrontLine
Facility. As of December 31, 2000, approximately $83.2 million had been funded
through the RSVP Commitment, of which $41.1 million represents investments in
RSVP-controlled (REIT-qualified) joint ventures and $42.1 million represents
advances.

In March 2001, the Operating Partnership increased the RSVP Commitment to
$110 million and advanced approximately $24 million under the RSVP Commitment
to fund additional RSVP-controlled (REIT-qualified) joint ventures (unaudited).

In addition, as of December 31, 2000, the Operating Partnership, through
its Credit Facility, has allocated approximately $3.2 million in outstanding
undrawn letters of credit for the benefit of FrontLine. Both the FrontLine
Facility and the RSVP Commitment have a term of five years and advances under
each are recourse obligations of FrontLine. Interest accrues on advances made
under the credit facilities at a rate equal to the greater of (a) the prime
rate plus two percent and (b) 12% per annum, with the rate on amounts that are
outstanding for more than one year increasing annually at a rate of four
percent of the prior year's rate. Prior to maturity, interest is payable
quarterly but only to the extent of net cash flow of FrontLine and on an
interest-only basis. As of December 31, 2000, interest accrued under the
FrontLine Facility and RSVP Commitment was approximately $13.8 million.

During November 1999, the Board of Directors of FrontLine and the
Operating Partnership approved an amendment to the FrontLine Facility and the
RSVP Commitment to permit FrontLine to incur secured debt and to pay interest
thereon and to issue preferred stock and to pay dividends thereon. In
consideration of the amendments, FrontLine paid the Operating Partnership a fee
of approximately $3.6 million in the form of shares of FrontLine common stock.
Such fee has been recognized in income over an estimated nine month benefit
period.

FrontLine currently has two distinct operating units: one of which
represents its interest in HQ Global Holdings, Inc., the largest provider of
flexible officing solutions in the world, and the other which represents
interests in technology based partner companies. RSVP invests primarily in real
estate and real estate related operating companies generally outside of the
Operating Partnership's core office and industrial focus.

IV-24

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D
- ------------------------------------------ ---------------- ------------------------------ ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------------ ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------------------ ---------------- -------------- --------------- ------ ---------------

Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an industrial park) -- $ 1,940 $ 9,955 -- 10,608
85 Nicon Court
Hauppauge, New York ..................... -- 797 2,818 -- 64
104 Parkway Drive So.,
Hauppauge, New York ..................... -- 54 804 -- 200
125 Ricefield Lane
Hauppauge, New York ..................... -- 13 852 -- 330
110 Ricefield Lane
Hauppauge, New York ..................... -- 33 1,043 1 57
120 Ricefield Lane
Hauppauge, New York ..................... -- 16 1,051 -- 192
135 Ricefield Lane
Hauppauge, New York ..................... -- 24 906 -- 473
1997 Portfolio Acquisition,
Hauppauge, New York
(10 additional buildings in
Vanderbilt Industrial Park) ............. -- 930 (B) 20,619 1 3,069
425 Rabro Drive
Hauppauge, New York ..................... -- 665 3,489 -- 71
600 Old Willets Path
Hauppauge, New York ..................... -- 295 3,521 -- 727
Airport International Plaza,
Islip, New York
(17 buildings in an industrial park)..... 2,616 (C) 1,263 13,608 -- 11,055
120 Wilbur Place
Islip, New York ......................... -- 202 1,154 8 117
2004 Orville Drive North
Islip, New York ......................... -- 633 4,226 -- 1,413
2005 Orville Drive North
Islip, New York ......................... -- 984 5,410 -- 984
County Line Industrial Center,
Melville, New York
(3 buildings in an industrial park) ..... -- 628 3,686 -- 2,823
30 Hub Drive
Melville, New York ...................... -- 469 1,571 -- 312
32 Windsor Place,
Islip, New York ......................... -- 32 321 -- 46

COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
- ------------------------------------------ -------------------------------- -------------- -------------- -----------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
--------------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
- ------------------------------------------ ------- --------------- -------- -------------- -------------- -----------

Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an industrial park) 1,940 20,563 22,503 14,499 1961-1979 1961-1979
85 Nicon Court
Hauppauge, New York ..................... 797 2,882 3,679 480 1984 1995
104 Parkway Drive So.,
Hauppauge, New York ..................... 54 1,004 1,058 161 1985 1996
125 Ricefield Lane
Hauppauge, New York ..................... 13 1,182 1,195 296 1973 1996
110 Ricefield Lane
Hauppauge, New York ..................... 34 1,100 1,134 191 1980 1996
120 Ricefield Lane
Hauppauge, New York ..................... 16 1,243 1,259 168 1983 1996
135 Ricefield Lane
Hauppauge, New York ..................... 24 1,379 1,403 367 1981 1996
1997 Portfolio Acquisition,
Hauppauge, New York
(10 additional buildings in
Vanderbilt Industrial Park) ............. 931 23,688 24,619 3,445 1974-1982 1997
425 Rabro Drive
Hauppauge, New York ..................... 665 3,560 4,225 433 1980 1997
600 Old Willets Path
Hauppauge, New York ..................... 295 4,248 4,543 358 1999 1999
Airport International Plaza,
Islip, New York
(17 buildings in an industrial park)..... 1,263 24,663 25,926 15,729 1970-1988 1970-1988
120 Wilbur Place
Islip, New York ......................... 210 1,271 1,481 116 1972 1998
2004 Orville Drive North
Islip, New York ......................... 633 5,639 6,272 921 1998 1998
2005 Orville Drive North
Islip, New York ......................... 984 6,394 7,378 387 1999 1999
County Line Industrial Center,
Melville, New York
(3 buildings in an industrial park) ..... 628 6,509 7,137 4,636 1975-1979 1975-1979
30 Hub Drive
Melville, New York ...................... 469 1,883 2,352 358 1976 1996
32 Windsor Place,
Islip, New York ......................... 32 367 399 357 1971 1971

COLUMN A COLUMN I
- ------------------------------------------ --------------
LIFE ON WHICH
DEPRECIATION
DESCRIPTION IS COMPUTED
- ------------------------------------------ --------------

Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an industrial park) 10 - 30 Years
85 Nicon Court
Hauppauge, New York ..................... 10 - 30 Years
104 Parkway Drive So.,
Hauppauge, New York ..................... 10 - 30 Years
125 Ricefield Lane
Hauppauge, New York ..................... 10 - 30 Years
110 Ricefield Lane
Hauppauge, New York ..................... 10 - 30 Years
120 Ricefield Lane
Hauppauge, New York ..................... 10 - 30 Years
135 Ricefield Lane
Hauppauge, New York ..................... 10 - 30 Years
1997 Portfolio Acquisition,
Hauppauge, New York
(10 additional buildings in
Vanderbilt Industrial Park) ............. 10 - 30 Years
425 Rabro Drive
Hauppauge, New York ..................... 10 - 30 Years
600 Old Willets Path
Hauppauge, New York ..................... 10 - 30 Years
Airport International Plaza,
Islip, New York
(17 buildings in an industrial park)..... 10 - 30 Years
120 Wilbur Place
Islip, New York ......................... 10 - 30 Years
2004 Orville Drive North
Islip, New York ......................... 10 - 30 Years
2005 Orville Drive North
Islip, New York ......................... 10 - 30 Years
County Line Industrial Center,
Melville, New York
(3 buildings in an industrial park) ..... 10 - 30 Years
30 Hub Drive
Melville, New York ...................... 10 - 30 Years
32 Windsor Place,
Islip, New York ......................... 10 - 30 Years

Continued

IV-25

RECKSON OPERATING PARTNERSHIP, L.P
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000 (CONTINUED)
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D
- ----------------------------------- ------------- ------------------------ ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------ ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ----------------------------------- ------------- -------- --------------- ------ ---------------

42 Windsor Place
Islip, New York .................. -- 48 327 -- 548
505 Walt Whitman Rd.,
Huntington, New York ............. -- 140 42 -- 59
1170 Northern Blvd.,
N. Great Neck, New York .......... -- 30 99 -- 34
50 Charles Lindbergh Blvd.,
Mitchel Field, New York .......... 15,479 A 12,089 -- 5,361
200 Broadhollow Road
Melville, New York ............... 6,494 338 3,354 -- 3,430
48 South Service Road
Melville, New York ............... -- 1,652 10,245 -- 5,108
395 North Service Road
Melville, New York ............... 20,525 A 15,551 -- 7,298
6800 Jericho Turnpike
Syosset, New York ................ 14,324 582 6,566 -- 9,357
6900 Jericho Turnpike
Syosset, New York ................ 7,560 385 4,228 -- 3,572
300 Motor Parkway
Hauppauge, New York .............. -- 276 1,136 -- 1,665
88 Duryea Road
Melville, New York ............... -- 200 1,565 -- 748
210 Blydenburgh Road
Islandia, New York ............... -- 11 158 -- 156
208 Blydenburgh Road
Islandia, New York ............... -- 12 192 -- 147
71 Hoffman Lane
Islandia, New York ............... -- 19 260 -- 172
933 Motor Parkway
Hauppauge, New York .............. -- 106 375 -- 396
65 and 85 South Service Road
Plainview, New York .............. -- 40 218 -- 17
333 Earl Ovington Blvd., (Omni)
Mitchel Field, New York .......... 55,641 A 67,221 -- 19,025
135 Fell Court
Islip, New York .................. -- 462 1,265 -- 261
40 Cragwood Road
South Plainfield, New Jersey ..... -- 725 7,131 -- 5,873
110 Marcus Drive
Huntington, New York ............. -- 390 1,499 -- 107

COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
- ----------------------------------- ---------------------------------- -------------- -------------- ---------- --------------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------
LIFE ON WHICH
BUILDINGS AND ACCUMULATED DATE OF DATE DEPRECIATION
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------------------- -------- --------------- --------- -------------- -------------- ---------- --------------

42 Windsor Place
Islip, New York .................. 48 875 923 768 1972 1972 10 - 30 Years
505 Walt Whitman Rd.,
Huntington, New York ............. 140 101 241 85 1950 1968 10 - 30 Years
1170 Northern Blvd.,
N. Great Neck, New York .......... 30 133 163 130 1947 1962 10 - 30 Years
50 Charles Lindbergh Blvd.,
Mitchel Field, New York .......... -- 17,450 17,450 9,985 1984 1984 10 - 30 Years
200 Broadhollow Road
Melville, New York ............... 338 6,784 7,122 4,087 1981 1981 10 - 30 Years
48 South Service Road
Melville, New York ............... 1,652 15,353 17,005 7,957 1986 1986 10 - 30 Years
395 North Service Road
Melville, New York ............... -- 22,849 22,849 11,974 1988 1988 10 - 30 Years
6800 Jericho Turnpike
Syosset, New York ................ 582 15,923 16,505 9,443 1977 1978 10 - 30 Years
6900 Jericho Turnpike
Syosset, New York ................ 385 7,800 8,185 4,161 1982 1982 10 - 30 Years
300 Motor Parkway
Hauppauge, New York .............. 276 2,801 3,077 1,510 1979 1979 10 - 30 Years
88 Duryea Road
Melville, New York ............... 200 2,313 2,513 1,359 1980 1980 10 - 30 Years
210 Blydenburgh Road
Islandia, New York ............... 11 314 325 302 1969 1969 10 - 30 Years
208 Blydenburgh Road
Islandia, New York ............... 12 339 351 337 1969 1969 10 - 30 Years
71 Hoffman Lane
Islandia, New York ............... 19 432 451 431 1970 1970 10 - 30 Years
933 Motor Parkway
Hauppauge, New York .............. 106 771 877 627 1973 1973 10 - 30 Years
65 and 85 South Service Road
Plainview, New York .............. 40 235 275 226 1961 1961 10 - 30 Years
333 Earl Ovington Blvd., (Omni)
Mitchel Field, New York .......... -- 86,246 86,246 23,633 1990 1995 10 - 30 Years
135 Fell Court
Islip, New York .................. 462 1,526 1,988 381 1965 1992 10 - 30 Years
40 Cragwood Road
South Plainfield, New Jersey ..... 725 13,004 13,729 7,381 1970 1983 10 - 30 Years
110 Marcus Drive
Huntington, New York ............. 390 1,606 1,996 1,230 1980 1980 10 - 30 Years

Continued

IV-26

RECKSON OPERATING PARTNERSHIP, L.P
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000 (CONTINUED)
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------- ------------- ------------------------ ---------------------- ----------------------------------
COST CAPITALIZED,
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
------------------------ ---------------------- ----------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS TOTAL
- -------------------------------- ------------- -------- --------------- ------ --------------- -------- --------------- ---------

333 East Shore Road
Great Neck, New York .......... -- A 564 -- 271 -- 835 835
310 East Shore Road
Great Neck, New York .......... 2,322 485 2,009 -- 1,610 485 3,619 4,104
70 Schmitt Blvd.
Farmingdale, New York ......... -- 727 3,408 -- 33 727 3,441 4,168
19 Nicholas Drive
Yaphank, New York ............. -- 160 7,399 -- 6,042 160 13,441 13,601
1516 Motor Parkway
Hauppauge, New York ........... -- 603 6,722 -- 271 603 6,993 7,596
125 Baylis Road
Melville, New York ............ -- 1,601 8,626 -- 2,026 1,601 10,652 12,253
35 Pinelawn Road
Melville, New York ............ -- 999 7,073 -- 2,165 999 9,238 10,237
520 Broadhollow Road
Melville, New York ............ -- 457 5,572 -- 1,669 457 7,241 7,698
1660 Walt Whitman Road
Melville, New York ............ -- 370 5,072 -- 463 370 5,535 5,905
70 Maxess Road
Melville, New York ............ -- 367 1,859 95 2,957 462 4,816 5,278
20 Melville Park Rd.,
Melville, New York ............ -- 391 2,650 -- 101 391 2,751 3,142
105 Price Parkway
Farmingdale, New York ......... -- 2,030 6,327 -- 469 2,030 6,796 8,826
48 Harbor Park Drive
Port Washington, New York ..... -- 1,304 2,247 -- 93 1,304 2,340 3,644
60 Charles Lindbergh
Mitchel Field, New York ....... -- A 20,800 -- 1,904 -- 22,704 22,704
155 White Plains Road,
Tarrytown, New York ........... -- 1,613 2,542 -- 921 1,613 3,463 5,076
235 Main Street
White Plains, New York ........ -- 933 5,375 -- 1,233 933 6,608 7,541
245 Main Street
White Plains, New York ........ -- 1,235 7,284 1 806 1,236 8,090 9,326
505 White Plains Road
Tarrytown, New York ........... -- 210 1,332 -- 271 210 1,603 1,813
555 White Plains Road
Tarrytown, New York ........... -- 712 4,133 51 4,517 763 8,650 9,413
560 White Plains Road
Tarrytown, New York ........... -- 1,521 8,756 -- 2,011 1,521 10,767 12,288

COLUMN A COLUMN F COLUMN G COLUMN H COLUMN I
- -------------------------------- -------------- -------------- ---------- --------------
LIFE ON WHICH
ACCUMULATED DATE OF DATE DEPRECIATION
DESCRIPTION DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
- -------------------------------- -------------- -------------- ---------- --------------

333 East Shore Road
Great Neck, New York .......... 582 1976 1976 10 - 30 Years
310 East Shore Road
Great Neck, New York .......... 1,773 1981 1981 10 - 30 Years
70 Schmitt Blvd.
Farmingdale, New York ......... 613 1965 1995 10 - 30 Years
19 Nicholas Drive
Yaphank, New York ............. 1,623 1989 1995 10 - 30 Years
1516 Motor Parkway
Hauppauge, New York ........... 1,245 1981 1995 10 - 30 Years
125 Baylis Road
Melville, New York ............ 1,814 1980 1995 10 - 30 Years
35 Pinelawn Road
Melville, New York ............ 1,939 1980 1995 10 - 30 Years
520 Broadhollow Road
Melville, New York ............ 1,837 1978 1995 10 - 30 Years
1660 Walt Whitman Road
Melville, New York ............ 992 1980 1995 10 - 30 Years
70 Maxess Road
Melville, New York ............ 800 1967 1995 10 - 30 Years
20 Melville Park Rd.,
Melville, New York ............ 420 1965 1996 10 - 30 Years
105 Price Parkway
Farmingdale, New York ......... 1,140 1969 1996 10 - 30 Years
48 Harbor Park Drive
Port Washington, New York ..... 391 1976 1996 10 - 30 Years
60 Charles Lindbergh
Mitchel Field, New York ....... 3,945 1989 1996 10 - 30 Years
155 White Plains Road,
Tarrytown, New York ........... 523 1963 1996 10 - 30 Years
235 Main Street
White Plains, New York ........ 1,159 1974 1996 10 - 30 Years
245 Main Street
White Plains, New York ........ 1,515 1983 1996 10 - 30 Years
505 White Plains Road
Tarrytown, New York ........... 347 1974 1996 10 - 30 Years
555 White Plains Road
Tarrytown, New York ........... 2,302 1972 1996 10 - 30 Years
560 White Plains Road
Tarrytown, New York ........... 2,602 1980 1996 10 - 30 Years

Continued

IV-27

RECKSON OPERATING PARTNERSHIP, L.P
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000 (CONTINUED)
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------- ------------- ------------------------ ---------------------- ----------------------------------
COST CAPITALIZED,
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
------------------------ ---------------------- ----------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS TOTAL
- ------------------------------- ------------- -------- --------------- ------ --------------- -------- --------------- ---------

580 White Plains Road
Tarrytown, New York .......... 13,057 2,414 14,595 -- 3,056 2,414 17,651 20,065
660 White Plains Road
Tarrytown, New York .......... -- 3,929 22,640 45 4,801 3,974 27,441 31,415
Landmark Square
Stamford, Connecticut ........ 46,974 11,603 64,466 832 27,610 12,435 92,076 104,511
110 Bi -County Blvd.
Farmingdale, New York ........ 4,043 2,342 6,665 -- 187 2,342 6,852 9,194
One Eagle Rock,
East Hanover, New Jersey ..... -- 803 7,563 -- 3,025 803 10,588 11,391
710 Bridgeport Avenue
Shelton, Connecticut ......... -- 5,405 21,620 7 719 5,412 22,339 27,751
101 JFK Expressway
Short Hills, New Jersey ...... -- 7,745 43,889 -- 1,154 7,745 45,043 52,788
10 Rooney Circle
West Orange, New Jersey ...... -- 1,302 4,615 1 425 1,303 5,040 6,343
Executive Hill Office Park
West Orange, New Jersey ...... -- 7,629 31,288 4 1,299 7,633 32,587 40,220
3 University Plaza
Hackensack, New Jersey ....... -- 7,894 11,846 -- 2,425 7,894 14,271 22,165
One Paragon Drive
Montvale, New Jersey ......... -- 2,773 9,901 -- 687 2,773 10,588 13,361
150 Motor Parkway
Hauppauge, New York .......... -- 1,114 20,430 -- 2,688 1,114 23,118 24,232
Reckson Executive Park
Ryebrook, New York ........... -- 18,343 55,028 -- 2,168 18,343 57,196 75,539
University Square
Princeton, New Jersey ........ -- 3,288 8,888 -- 419 3,288 9,307 12,595
100 Andrews Road
Hicksville, New York ......... -- 2,337 1,711 151 5,742 2,488 7,453 9,941
2 Macy Road
Harrison, New York ........... -- 642 2,131 -- 66 642 2,197 2,839
80 Grasslands
Elmsford, New York ........... -- 1,208 6,728 -- 436 1,208 7,164 8,372
65 Marcus Drive
Melville, New York ........... -- 295 1,966 56 883 351 2,849 3,200
Triad V -- 1979 Marcus Rd.,
Lake Success, New York ....... -- 3,528 31,786 -- 7,921 3,528 39,707 43,235
100 Forge Way
Rockaway, New Jersey ......... -- 315 902 -- 90 315 992 1,307

COLUMN A COLUMN F COLUMN G COLUMN H COLUMN I
- ------------------------------- -------------- -------------- ---------- --------------
LIFE ON WHICH
ACCUMULATED DATE OF DATE DEPRECIATION
DESCRIPTION DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
- ------------------------------- -------------- -------------- ---------- --------------

580 White Plains Road
Tarrytown, New York .......... 3,515 1997 1996 10 - 30 Years
660 White Plains Road
Tarrytown, New York .......... 5,523 1983 1996 10 - 30 Years
Landmark Square
Stamford, Connecticut ........ 12,076 1973-1984 1996 10 - 30 Years
110 Bi -County Blvd.
Farmingdale, New York ........ 972 1984 1997 10 - 30 Years
One Eagle Rock,
East Hanover, New Jersey ..... 1,683 1986 1997 10 - 30 Years
710 Bridgeport Avenue
Shelton, Connecticut ......... 2,893 1971-1979 1997 10 - 30 Years
101 JFK Expressway
Short Hills, New Jersey ...... 5,478 1981 1997 10 - 30 Years
10 Rooney Circle
West Orange, New Jersey ...... 699 1971 1997 10 - 30 Years
Executive Hill Office Park
West Orange, New Jersey ...... 3,968 1978-1984 1997 10 - 30 Years
3 University Plaza
Hackensack, New Jersey ....... 1,785 1985 1997 10 - 30 Years
One Paragon Drive
Montvale, New Jersey ......... 1,320 1980 1997 10 - 30 Years
150 Motor Parkway
Hauppauge, New York .......... 2,986 1984 1997 10 - 30 Years
Reckson Executive Park
Ryebrook, New York ........... 6,192 1983-1986 1997 10 - 30 Years
University Square
Princeton, New Jersey ........ 940 1987 1997 10 - 30 Years
100 Andrews Road
Hicksville, New York ......... 1,194 1954 1996 10 - 30 Years
2 Macy Road
Harrison, New York ........... 234 1962 1997 10 - 30 Years
80 Grasslands
Elmsford, New York ........... 778 1989/1964 1997 10 - 30 Years
65 Marcus Drive
Melville, New York ........... 454 1968 1996 10 - 30 Years
Triad V -- 1979 Marcus Rd.,
Lake Success, New York ....... 4,514 1987 1998 10 - 30 Years
100 Forge Way
Rockaway, New Jersey ......... 107 1986 1998 10 - 30 Years

Continued

IV-28

RECKSON OPERATING PARTNERSHIP, L.P
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000 (CONTINUED)
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D
- ----------------------------------- ------------- --------------------------------- ------------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
--------------------------------- ------------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ----------------------------------- ------------- ----------------- --------------- -------- ---------------

200 Forge Way
Rockaway, New Jersey ............. -- 1,128 3,228 -- 178
300 Forge Way
Rockaway, New Jersey ............. -- 376 1,075 -- 254
400 Forge Way
Rockaway, New Jersey ............. -- 1,142 3,267 -- 179
51 - 55 Charles Lindbergh Blvd.
Mitchel Field, New York .......... -- A 27,975 -- 4,258
155 Passaic Avenue
Fairfield, New Jersey ............ -- 3 (A) 3,538 -- 2,126
100 Summit Drive
Valhalla, New York ............... 21,541 3,007 41,351 -- 4,140
115/117 Stevens Avenue
Valhalla, New York ............... -- 1,094 22,490 -- 733
200 Summit Lake Drive
Valhalla, New York ............... 20,133 4,343 37,305 -- 1,961
140 Grand Street
White Plains, New York ........... -- 1,932 18,744 -- 309
500 Summit Lake Drive
Valhalla, New York ............... -- 7,052 37,309 -- 7,794
99 Cherry Hill Road
Parsippany, New Jersey ........... -- 2,360 7,508 -- 373
119 Cherry Hill Road
Parsippany, New Jersey ........... -- 2,512 7,622 -- 879
45 Melville Park Road
Melville, New York ............... -- 355 1,487 -- 1,822
500 Saw Mill River Road
Elmsford, New York ............... -- 1,542 3,796 -- 185
120 W.45th Street
New York, New York ............... 66,103 28,757 (A) 162,809 (10) 1,237
1255 Broad Street
Clifton, New Jersey .............. -- 1,329 15,869 -- 3,976
810 7th Avenue
New York, New York ............... 85,600 26,984 (A) 152,767 112 9,155
120 Mineola Blvd.
Mineola, New York ................ -- 1,869 10,603 5 256
100 Wall Street
New York, New York ............... 37,094 11,749 66,517 90 4,568
One Orlando
Orlando, Florida ................. 39,465 9,386 51,136 29 1,639

COLUMN A KCOLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
- ----------------------------------- ---------------------------------- -------------- -------------- ---------- --------------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------
LIFE ON WHICH
BUILDINGS AND ACCUMULATED DATE OF DATE DEPRECIATION
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------------------- -------- --------------- --------- -------------- -------------- ---------- --------------

200 Forge Way
Rockaway, New Jersey ............. 1,128 3,406 4,534 342 1989 1998 10 - 30 Years
300 Forge Way
Rockaway, New Jersey ............. 376 1,329 1,705 176 1989 1998 10 - 30 Years
400 Forge Way
Rockaway, New Jersey ............. 1,142 3,446 4,588 346 1989 1998 10 - 30 Years
51 - 55 Charles Lindbergh Blvd.
Mitchel Field, New York .......... -- 32,233 32,233 4,495 1981 1998 10 - 30 Years
155 Passaic Avenue
Fairfield, New Jersey ............ 3 5,664 5,667 623 1984 1998 10 - 30 Years
100 Summit Drive
Valhalla, New York ............... 3,007 45,491 48,498 4,441 1988 1998 10 - 30 Years
115/117 Stevens Avenue
Valhalla, New York ............... 1,094 23,223 24,317 2,128 1984 1998 10 - 30 Years
200 Summit Lake Drive
Valhalla, New York ............... 4,343 39,266 43,609 3,493 1990 1998 10 - 30 Years
140 Grand Street
White Plains, New York ........... 1,932 19,053 20,985 1,746 1991 1998 10 - 30 Years
500 Summit Lake Drive
Valhalla, New York ............... 7,052 45,103 52,155 3,569 1986 1998 10 - 30 Years
99 Cherry Hill Road
Parsippany, New Jersey ........... 2,360 7,881 10,241 676 1982 1998 10 - 30 Years
119 Cherry Hill Road
Parsippany, New Jersey ........... 2,512 8,501 11,013 706 1982 1998 10 - 30 Years
45 Melville Park Road
Melville, New York ............... 355 3,309 3,664 407 1998 1998 10 - 30 Years
500 Saw Mill River Road
Elmsford, New York ............... 1,542 3,981 5,523 399 1968 1998 10 - 30 Years
120 W.45th Street
New York, New York ............... 28,747 164,046 192,793 9,065 1998 1999 10 - 30 Years
1255 Broad Street
Clifton, New Jersey .............. 1,329 19,845 21,174 1,057 1999 1999 10 - 30 Years
810 7th Avenue
New York, New York ............... 27,096 161,922 189,018 8,785 1970 1999 10 - 30 Years
120 Mineola Blvd.
Mineola, New York ................ 1,874 10,859 12,733 608 1977 1999 10 - 30 Years
100 Wall Street
New York, New York ............... 11,839 71,085 82,924 3,845 1969 1999 10 - 30 Years
One Orlando
Orlando, Florida ................. 9,415 52,775 62,190 2,770 1987 1999 10 - 30 Years

Continued

IV-29

RECKSON OPERATING PARTNERSHIP, L.P
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000 (CONTINUED)
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D
- -------------------------------- ------------- ---------------------------------- -------------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
---------------------------------- -------------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- -------------------------------- ------------- ------------------ --------------- --------- ---------------

1350 Avenue of the Americas
New York, New York ............ 70,000 19,222 109,168 -- 6,142
919 3rd. Avenue
New York, New York ............ 200,000 101,644 (A) 205,736 -- 316
538 Broadhollow Road
Melville, New York ............ -- 3,900 21,413 -- 867
360 Hamilton Avenue
White Plains, New York (D) .... -- 2,838 34,606 -- 19,048
492 River Road
Nutley, New Jersey ............ -- 2,615 5,102 -- 1,525
275 Broadhollow Road
Melville, New York ............ -- 3,850 12,958 -- 1
400 Garden City Plaza
Garden City, New York ......... -- 9,081 17,004 -- 69
90 Merrick Avenue
East Meadow, New York ......... -- (A) 23,804 -- 19
120 White Plains Road
Tarrytown, New York ........... -- 3,852 24,861 -- 16
100 White Plains Road
Tarrytown, New York ........... -- 79 472 -- 7
51 JFK Parkway
Short Hills, New Jersey ....... -- 10,053 62,504 1 115
680 Washington Blvd
Stamford, Connecticut ......... -- 4,561 23,698 -- 6
750 Washington Blvd
Stamford, Connecticut ......... -- 7,527 31,940 -- 23
1305 Walt Whitman Road
Melville, New York ............ -- 3,934 24,040 -- 4
Land held for development ...... -- 60,823 -- -- --
Developments in progress ....... -- -- 77,076 -- --
Other property ................. -- -- -- -- 9,777
------- ------- ------- -- ------
Total .......................... $728,971 $ 455,920 $2,037,742 $1,480 $275,465
======== =========== ========== ====== ========

COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
- -------------------------------- ------------------------------------------- -------------- -------------- ----------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
-------------------------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
- -------------------------------- ----------- ----------------- ------------- -------------- -------------- ----------

1350 Avenue of the Americas
New York, New York ............ 19,222 115,310 134,532 3,500 1966 2000
919 3rd. Avenue
New York, New York ............ 101,644 206,052 307,696 1,085 1970 2000
538 Broadhollow Road
Melville, New York ............ 3,900 22,280 26,180 239 2000 2000
360 Hamilton Avenue
White Plains, New York (D) .... 2,838 53,654 56,492 1,494 2000 2000
492 River Road
Nutley, New Jersey ............ 2,615 6,627 9,242 38 2000 2000
275 Broadhollow Road
Melville, New York ............ 3,850 12,959 16,809 896 1970 1997
400 Garden City Plaza
Garden City, New York ......... 9,081 17,073 26,154 811 1989 1997
90 Merrick Avenue
East Meadow, New York ......... -- 23,823 23,823 3,393 1985 1997
120 White Plains Road
Tarrytown, New York ........... 3,852 24,877 28,729 1,401 1984 1997
100 White Plains Road
Tarrytown, New York ........... 79 479 558 5 1984 1997
51 JFK Parkway
Short Hills, New Jersey ....... 10,054 62,619 72,673 3,201 1988 1998
680 Washington Blvd
Stamford, Connecticut ......... 4,561 23,704 28,265 1,143 1989 1998
750 Washington Blvd
Stamford, Connecticut ......... 7,527 31,963 39,490 1,482 1989 1998
1305 Walt Whitman Road
Melville, New York ............ 3,934 24,044 27,978 959 1999 1999
Land held for development ...... 60,823 -- 60,823 -- N/A Various
Developments in progress ....... -- 77,076 77,076 --
Other property ................. -- 9,777 (B) 9,777 1,209
------- ------- ------- -----
Total .......................... $457,400 $2,313,207 $2,770,607 $284,315
======== ========== ========== ========

COLUMN A COLUMN I
- -------------------------------- --------------
LIFE ON WHICH
DEPRECIATION
DESCRIPTION IS COMPUTED
- -------------------------------- --------------

1350 Avenue of the Americas
New York, New York ............ 10 - 30 Years
919 3rd. Avenue
New York, New York ............ 10 - 30 Years
538 Broadhollow Road
Melville, New York ............ 10 - 30 Years
360 Hamilton Avenue
White Plains, New York (D) .... 10 - 30 Years
492 River Road
Nutley, New Jersey ............ 10 - 30 Years
275 Broadhollow Road
Melville, New York ............ 10 - 30 Years
400 Garden City Plaza
Garden City, New York ......... 10 - 30 Years
90 Merrick Avenue
East Meadow, New York ......... 10 - 30 Years
120 White Plains Road
Tarrytown, New York ........... 10 - 30 Years
100 White Plains Road
Tarrytown, New York ........... 10 - 30 Years
51 JFK Parkway
Short Hills, New Jersey ....... 10 - 30 Years
680 Washington Blvd
Stamford, Connecticut ......... 10 - 30 Years
750 Washington Blvd
Stamford, Connecticut ......... 10 - 30 Years
1305 Walt Whitman Road
Melville, New York ............ 10 - 30 Years
Land held for development ...... N/A
Developments in progress .......
Other property .................
Total ..........................

- ------
A These land parcels, or a portion of the land parcels, on which the building
and improvements were constructed are subject to a ground lease.
B The land parcel on which the building and improvements were constructed for
one property is subject to a ground lease.
C The Encumbrance of $2,616 is related to one property.
D As of December 31, 2000, this property was partially under development. As a
result, certain costs have been classified as development costs on the
Company's accompanying balance sheet.
The aggregate cost of Federal Income Tax purposes was approximately
$ 2,169 million at December 31, 2000.

IV-30

RECKSON OPERATING PARTNERSHIP, L.P.
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
(IN THOUSANDS)

The changes in real estate for each of the periods in the three years
ended December 31, 2000 are as follows:

2000 1999 1998
------------- ------------- -------------

Real estate balance at beginning of period ................ $2,208,399 $1,737,133 $1,011,228
Improvements / revaluations ............................... 166,260 57,571 134,582
Disposal, including write-off of fully depreciated building
improvements ............................................. (52,092) (317,864) --
Acquisitions .............................................. 448,040 731,559 591,323
---------- ---------- ----------
Balance at end of period .................................. $2,770,607 $2,208,399 $1,737,133
========== ========== ==========

The changes in accumulated depreciation, exclusive of amounts relating to
equipment, autos, furniture and fixtures, for each of the periods in the three
years ended December 31, 2000 are as follows:

2000 1999 1998
----------- ----------- -----------

Balance at beginning of period ............................ $215,112 $156,231 $108,652
Depreciation for period ................................... 71,478 65,471 47,579
Disposal, including write-off of fully depreciated building
improvements ............................................. (2,275) (6,590) --
-------- -------- --------
Balance at end of period .................................. $284,315 $215,112 $156,231
======== ======== ========

IV-31