1. Prudential Equity Group, LLC Security Analysis Equity Office Properties September 2004 James W. Sullivan Managing Director Senior Real Estate Analyst

2. Prudential Equity Group, LLC R E S E A R C H 2 REIT METRICS Funds Flow Operations (FFO) = net income plus real estate depreciation. Funds Available For Distribution (FAD) = FFO less non-revenue generating capex. Retained Free Cash Flow (FCF) = FAD less dividends on common and dilutive convertible preferred. Security Analysis

3. Prudential Equity Group, LLC R E S E A R C H 3 The largest publicly held REIT Owns 689 buildings with 124 mil. sq. ft. in 18 states and Washington, D.C., 27 MSAs, and 123 sub markets Is primarily an acquirer (value added and otherwise) and selective developer Has BBB+ credit rating and excellent access to capital Since becoming a public company in 1997, the company has delivered CAGR as follows: 1997 2005E FFO per-share4.8%$1.80 $2.61 Dividends 6.6% $1.20 $2.00 Annualized Total Return * EOP: 9.8% vs. RMS: 10.7% * EOP: July 11, 1997 IPO share price compared to August 31, 2004 share price plus aggregate dividend payments over period; RMS: July 1, 1997 value compared to August 31, 2004 value. Equity Office Properties (EOP, $28.56, Underweight--as of August 31, 2004) Source: Company data and Prudential Equity Group, LLC. Security Analysis

4. Prudential Equity Group, LLC R E S E A R C H 4 Equity Office Properties Internal Growth FCF External growth Ancillary and other income sources Net Operating Margins Financing activities Growth Model Security Analysis

5. Prudential Equity Group, LLC R E S E A R C H 5 Equity Office Properties Internal Growth Occupancy rate and rental trend—weak job growth, negative pricing, mediocre operating skills Poor market exposure Margins—negative trends Failed “other income” initiatives Impact per-share FFO at 1.5x rate Security Analysis

6. Prudential Equity Group, LLC R E S E A R C H 6 Equity Office Properties Unusually Weak Cyclical Trend Source: Property & Portfolio Research (PPR) estimates. Security Analysis

7. Prudential Equity Group, LLC R E S E A R C H 7 Equity Office Properties Cash Flow Stress Source: Company reports, Prudential Equity Group, LLC estimates. Security Analysis

8. Prudential Equity Group, LLC R E S E A R C H 8 Equity Office Properties Market Exposure % of Property NOI % of Office From Continuing Top 5 Markets Portfolio Sq. Ft. Operations Boston 10.2% 13.4% San Francisco 8.9% 11.6% San Jose 7.1% 10.3% New York 4.1% 8.6% Los Angeles 6.2% 7.0% Note: Data is as of June 30, 2004 and includes consolidated and unconsolidated office properties. Source: Company report. Security Analysis

9. Prudential Equity Group, LLC R E S E A R C H 9 Security Analysis Equity Office Properties Secular Issues Off-shoring Labor force growth Demographics Female participation Source: Company data and Prudential Equity Group, LLC.

10. Prudential Equity Group, LLC R E S E A R C H 10 Free Cash Flow 2004E: ($143.9 mils.) 2005E: ($142.7 mils.) Borrowed to pay dividend Weaken credit ratios Cut dividend or increase borrowing cost Equity Office Properties Source: Company report and Prudential Equity Group, LLC estimates. Security Analysis

11. Prudential Equity Group, LLC R E S E A R C H 11 Source:Prudential Equity Group, LLC. Equity Office Properties Security Analysis External Growth Excessive Liquidity Unusually low cap rates Limited value creation opportunity Not a scale business

12. Prudential Equity Group, LLC R E S E A R C H 12 Security Analysis Equity Office Properties Let’s Compare The Metrics PeerREIT 10-Year EOP GroupIndustry Average Yield 7.2% 6.1% 5.2% 6.8% Div/FFO 76.9% 72.9% 69.9% 74.8% ’04E/’05E Growth (3.5%) 0.5% 5.6% 6.6% LTM Div Growth 0.0% 1.5% 2.7% 3.0% P/FFO 2005E 10.7x 11.1x 12.7x 11.3x Note: All calculations are as of August 25, 2004. Source: Company data, First Call, and Prudential Equity Group, LLC.

13. Prudential Equity Group, LLC R E S E A R C H 13 Security Analysis Equity Office Properties Our Conclusion—Multiple Should Compress 1.The REIT industry is overpriced. 2.EOP’s dividend should be cut 25%. 3.Resulting yield should be above industry average. Source: Prudential Equity Group, LLC.

14. Prudential Equity Group, LLC R E S E A R C H 14 Security Analysis Equity Office Properties Our Call EOP RelIndustry Current Multiple10.7x 0.85 12.7x 2-Yr. Growth(3.5%) NA 5.6% Yield 7.2% 1.40 5.2% Div. Growth 0.0% 2.7% Target Multiple 7.5x 10.3x Yield at target 10.0% 6.4% Div’d Return 7.2% 5.2% Total Ret. Potential (21.0%) (14.0%) Note: All calculations are as of August 25, 2004. Source: Prudential Equity Group, LLC. estimates.

15. Prudential Equity Group, LLC R E S E A R C H 15 Security Analysis Equity Office Properties Valuation: The valuation method we use to determine our $20 price target is 7.5x our estimated 2005 FFO per-share of $2.61. The 7.5x multiple represents a 5.0% discount to our warranted office sector average share price to FFO multiple of 8.0x. Over the last five years, Equity Office’s shares have traded in a range from a 8.0% discount to the average sector multiple to a 20% premium with an average 6.0% premium. We apply the 5.0% discount based on the portfolio’s overweight in the weakest office markets in the country and the company’s lease expiration exposure to those markets. Furthermore, during the downturn the company has reported, and provided guidance for, leasing costs higher than any of the Office REIT peers. This combination should drive FAD payout ratios above peer averages and continue to pressure the dividend. Including the current yield, our target price implies a total return potential of negative 18.4%. Risks: Large vacancy rates at this point in the real estate cycle across most of the nation’s office markets provide tenants with a multitude of office space options including both direct vacant space and space available for sublease. As a result, landlords have little power to attract tenants other than through lowering rents or spending large amounts of capital to rebuild space. Historically, office space demand growth has lagged office job growth by six to twelve months. Although recent job growth statistics are encouraging, the level of demand necessary to raise rents and slow leasing costs to landlords may not arrive until 2006.Although the recent office job growth statistics suggest occupancy growth toward the end of 2004 and in 2005, lower rental rates on new leases and high leasing capital expenditures should continue to pressure office REIT results through 2005. Source: Prudential Equity Group, LLC.

16. Prudential Equity Group, LLC R E S E A R C H 16 Security Analysis Equity Office Properties Source: FactSet and Prudential Equity Group, LLC.

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