WHAT KEEPS SENIOR OPERATING OFFICERS of the nation's largest office REIT awake at night? In a word — occupancy. “If you look at our industry, there is some analogy to filling hotel rooms and airline seats,” explains Christopher Mundy, executive vice president of strategic planning and operations for Chicago-based Equity Office Properties Trust (NYSE: EOP), which once again ranked No. 1 on this year's Top Office Owners survey. “Every space that is vacant is really underutilized inventory.”

With the current national office vacancy rate for all classes of space hovering between 14% and 16%, landlords these days are as intent on signing and retaining tenants as Shaquille O'Neal is on winning NBA championships. Higher occupancy numbers translate into higher net operating income and a rising stock price — and the pressure to produce these results is intense.

Equity Office reports that at the end of first-quarter 2002, the occupancy rate of its portfolio registered 90.7%, down from 93.7% in third-quarter 2001. The portfolio includes 767 properties comprising approximately 128 million sq. ft. in 21 states and the District of Columbia. Those ownership totals reflect the completion of the Spieker merger in July 2001, which expanded Equity Office's portfolio by nearly 30%, or 28 million sq. ft. The company's market cap stands at $12.6 billion.

“We want to put ourselves in a position to win all the jump balls with our customers and our brokers, our extended sales force,” says Mundy. In non-sports terms, that means implementing best practices such as simplifying lease documents for prospective tenants, paying broker commissions promptly and leveraging the company's scale to improve operational efficiency.

In Boston, for example, the REIT consolidated 13 management offices and opened a 24-hour customer-service call center. “Project New World,” as the new pilot program is referred to, saves the company money and improves efficiency.

Most of the 391 office properties acquired in the $7.2 billion Spieker deal are located in the slumping markets of Northern California. “If you look at the markets Spieker was in [San Francisco, Seattle and Portland to name a few], they are strong, intellectual capital markets in very supply-constrained places,” says Mundy. “We believe that in the long run, the investment will pay off. In the short term, things have become tougher there.”

Indeed, Class-A office rental rates in San Francisco have plummeted from $80 per sq. ft. in fourth-quarter 2000 to $35 per sq. ft. in first-quarter 2002, according to Cushman & Wakefield. The company's exposure in Northern California and elsewhere has not escaped the attention of Moody's Investors Service. “EOP's rapid rise of acquisitions, weakening fundamentals due to slowing rental rate growth and rising vacancies in major markets where it operates, and increased exposure to development, are credit concerns,” wrote Moody's in May. “Integration risks are partially offset by the firm's sound track record in merging and integrating firms.”

Among its recent milestones, Equity Office became the first REIT ever to be included in the S&P 500 index in October 2001. The company also made the list of Fortune magazine's “Most Admired Companies” in February 2001.

The company's focus these days is less on acquisitions and more on core internal operations, including finding a replacement for Timothy Callahan, who resigned his position as CEO in April. A broad search both inside and outside the company is under way, Mundy says, and a new leader is likely to be named by September. In the meantime, chairman Sam Zell is assuming the role of president and CEO. The company's stock price closed at $30.25 on June 17, below its 52-week high of $33.08.

Top 25 Office Owners

The Top 25 Office Owners survey is based on totals provided by participating companies. Owners were asked to record the amount of office space their company owned as of Dec. 31, 2001, and were ranked accordingly. Results are given in square feet.

1 Equity Office Properties Trust
Two N. Riverside Plaza, Suite 2100 Chicago, IL 60606
Phone: (312) 466-3300
Fax: (312) 454-0332
E-mail: terry.holt@equityoffice.com
Web site: www.equityoffice.com
Officers: Sam Zell, Chairman/President/CEO; Richard Kincaid, COO; David Helfand, CIO
Total Office Portfolio: 128.2 million sq. ft.

2 Hines
2800 Post Oak Blvd., Houston, TX 77056-6118
Phone: (713) 621-8000
Fax: (713) 966-2053
Web site: www.hines.com
Officers: Jeffrey C. Hines, President; Gerald D. Hines, Chairman; Hastings Johnson, Exec. VP/CFO
Total Office Portfolio: 44.6 million sq. ft.

3 Mack-Cali Realty Corp.
11 Commerce Dr., Cranford, NJ 07016
Phone: (908) 272-8000
Fax: (908) 272-6755
E-mail: investorrelations@mack-cali.com
Web site: www.mack-cali.com
Officers: Mitchell E. Hersh, CEO; Timothy M. Jones, President; Barry Lefkowitz, Exec. VP/CFO
Total Office Portfolio: 28 million sq. ft.

4 Clarion Partners
335 Madison Ave., 7th Floor New York, NY 10017
Phone: (212) 883-2500
Fax: (212) 883-2700
Web site: www.clarionp.com
Officers: Stephen Furnary, Managing Director/Chairman; Frank Sullivan, Managing Director; Charles Gressman, Managing Director
Total Office Portfolio: 27.2 million sq. ft.

5 CarrAmerica Realty Corp.
1850 K St. N.W., Suite 500 Washington, DC 20006
Phone: (202) 729-1700
Fax: (202) 729-1150
E-mail: maureen.wheeler@carramerica.com
Web site: www.carramerica.com
Officers: Thomas A. Carr, CEO; Philip L. Hawkins, President/COO; Stephen E. Riffee, CFO
Total Office Portfolio: 25 million sq. ft.

5 Duke Realty Corp.
600 E. 96th St., Suite 100 Indianapolis, IN 46240
Phone: (317) 808-6000
Fax: (317) 808-6786
E-mail: webmaster@dukerealty.com
Web site: www.dukerealty.com
Officers: Thomas Hefner, Chairman/CEO; Gary Burk, Co-COO; Denny Oklak, Co-COO
Total Office Portfolio: 25 million sq. ft.

5 Lincoln Property Co.
500 N. Akard, Suite 3300, Dallas, TX 75201
Phone: (214) 740-3300
Fax: (214) 740-3441
Web site: www.lincolnproperty.com
Officers: Mack Pogue, Chairman; Tim Byrne, President/CEO, Residential Division; Bill Duvall, President/CEO, Commercial Division
Total Office Portfolio: 25 million sq. ft.

8 Shorenstein Co. LLP
555 California St., San Francisco, CA 94104
Phone: (415) 772-7000
Fax: (415) 398-6682
E-mail: sbaker@shorenstein.com
Web site: www.shorenstein.com
Officers: Douglas W. Shorenstein, Chairman/CEO; Glenn A. Shannon, President; Richard A. Chicotel, Managing Director/CFO
Total Office Portfolio: 19 million sq. ft.

9 Liberty Property Trust
65 Valley Stream Pkwy., Malvern, PA 19355
Phone: (610) 648-1700
Fax: (610) 644-4129
E-mail: jleonard@libertyproperty.com
Web site: www.libertyproperty.com
Officers: Willard G. Rouse III, Chairman/CEO; William P. Hankowsky, President/CIO; Robert E. Fenza, Exec. VP/COO
Total Office Portfolio: 15.9 million sq. ft.

10 RREEF
875 N. Michigan Ave., 41st Floor Chicago, IL 60611
Phone: (312) 266-9300
Fax: (312) 266-9346
E-mail: ctalmadge@rreef.com
Web site: www.rreef.com
Officers: Donald A. King Jr., Managing Principal; Charles B. Leitner, Principal in Charge, Acquisitions; Robert J. Cook, Principal in Charge, Portfolio Managment
Total Office Portfolio: 15.44 million sq. ft.

11 CB Richard Ellis Investors LLC
865 S. Figueroa St., Suite 3500 Los Angeles, CA 90017
Phone: (213) 683-4200
Fax: (213) 683-4301
E-mail: investorservices@cbreinvestors.com
Web site: www.cbreinvestors.com
Officers: Robert H. Zerbst, President; William M. Harris, COO; Laurie E. Romanak, Chief Financial & Administrative Officer
Total Office Portfolio: 15.43 million sq. ft.

12 Brandywine Realty Trust
401 Plymouth Rd., Suite 500 Plymouth Meeting, PA 19462
Phone: (610) 325-5600
Fax: (610) 325-5622
Web site: www.brandywinerealty.com
Officers: Gerard H. Sweeney, President/CEO; Anthony S. Rimikis, Sr. VP, Construction & Development; H. Jeffrey DeVuono, Senior VP, Operations
Total Office Portfolio: 14.8 million sq. ft.

13 Prentiss Properties
3890 W. Northwest Hwy., Suite 400 Dallas, TX 75220
Phone: (214) 654-0886
Fax: (214) 352-6286
E-mail: ir@pplinc.com
Web site: www.prentissproperties.com
Officers: Mike Prentiss, Chairman; Tom August, President/CEO; Mike Ernest, Exec. VP/CFO
Total Office Portfolio: 14.4 million sq. ft.

14 Brookfield Properties Limited
BCE Place, Bay Wellington Tower, 181 Bay St., Suite 4300 Toronto, Ontario, Canada M5J 2T3
Phone: (416) 369-2300
Fax: (416) 369-2301
Web site: www.brookfieldproperties.com
Officers: David Arthur, President/CEO; Philip Mostowich, Sr. VP, Eastern Office; Thomas Farley, Sr. VP, Western Office
Total Office Portfolio: 13.8 million sq. ft.

15 Reckson Associates Realty Corp.
225 Broadhollow Rd., Melville, NY 11747
Phone: (631) 694-6900
Fax: (631) 622-6790
E-mail: investorrelations@reckson.com
Web site: www.reckson.com
Officers: Donald Rechler, Co-CEO; Scott Rechler, Co-CEO; Michael Maturo, CFO
Total Office Portfolio: 13.78 million sq. ft.

16 Charles E. Smith Commercial Realty, a division of Vornado Realty Trust
2345 Crystal Dr., Arlington, VA 22202
Phone: (703) 920-8500
Fax: (703) 769-1396
E-mail: jmacnow@vno.com
Web site: www.charlesesmith.com
Officers: Paul Larner, COO/CFO; Ken McVearry, Exec. VP; Brent Bitz, Exec. VP
Total Office Portfolio: 13 million sq. ft.

17 Hartz Mountain Industries Inc.
400 Plaza Dr., Secaucus, NJ 7096
Phone: (201) 348-1200
Fax: (201) 348-4358
Web site: www.hartzmountain.com
Officers: Emanuel Stern, President/COO; Constantino T. Milano, Exec. VP, Financing & Leasing; Irwin Horowitz, Exec. VP/General Counsel
Total Office Portfolio: 12.8 million sq. ft.

18 Opus Group
10350 Bren Rd. W., Minnetonka, MN 55343
Phone: (952) 656-4444
Fax: (952) 656-4750
E-mail: carol.quam@opuscorp.com
Web site: www.opuscorp.com
Officers: Gerald Rauenhorst, Founding Chairman; Keith Bednarowski, Chairman; Mark Rauenhorst, President/CEO
Total Office Portfolio: 12.4 million sq. ft.

19 Legacy Partners Commercial Inc.
4000 E. Third Ave., Suite 600 Foster City, CA 94301
Phone: (650) 571-2200
Fax: (650) 571-2211
E-mail: dsmith@legacypartners.com
Web site: www.legacypartners.com
Officers: Barry DiRaimondo, President; Paul Meyer, CFO; Mack Laney, COO
Total Office Portfolio: 11.5 million sq. ft.

20 The Gale Co.
200 Campus Dr., Suite 200 Florham Park, NJ 07932
Phone: (973) 301-9500
Fax: (973) 301-9501
Web site: www.thegalecompany.com
Officers: Stan Gale, Chairman/CEO; Mark Yeager, President; Kathy Wielkopolski, CFO/COO
Total Office Portfolio: 11.1 million sq. ft.

21 The Alter Group
5500 W. Howard St., Skokie, IL 60072
Phone: (800) 637-4842
Fax: (847) 676-4325
E-mail: tag@altergroup.com
Web site: www.altergroup.com
Officers: Michael J. Alter, President; Richard Ciatto, Exec. VP, Sales; Randolph Thomas, Exec. VP, Development
Total Office Portfolio: 10.9 million sq. ft.

22 CMD Realty Investors
227 W. Monroe, Suite 3900, Chicago, IL 60606
Phone: (312) 726-3121
Fax: (312) 726-9473
E-mail: hzwieg@cmdrealty.com
Web site: www.cmdrealty.com
Officers: Steven Ellenbogen, President/CEO; Richard Schaller, COO; Hugh Zwieg, CFO
Total Office Portfolio: 10.5 million sq. ft.

23 The Rouse Co.
10275 Little Patuxent Pkwy. Columbia, MD 21044
Phone: (410) 992-6326
Fax: (410) 964-3412
E-mail: ntyrrell@therousecompany.com
Web site: www.therousecompany.com
Officers: Anthony Deering, Chairman/CEO; Douglas McGregor, Vice Chairman/COO; Jeffrey Donahue, Exec. VP/CFO
Total Office Portfolio: 9.04 million sq. ft.

24 Newmark & Co. Real Estate Inc.
125 Park Ave., New York, NY 10017
Phone: (212) 372-2000
Fax: (212) 372-2426
E-mail: jrader@newmarkre.com
Web site: www.newmarkre.com
Officers: Jeffrey Gural, Chairman; Barry Gosin, Vice Chairman/CEO; James Kuhn, President
Total Office Portfolio: 9 million sq. ft.

25 Forest City Enterprises Inc.
1100 Terminal Tower, Cleveland, OH 44113
Phone: (216) 621-6060
Fax: (216) 263-6208
E-mail: tom_kmiecik@FCEINC.com
Web site: www.FCEINC.com
Officers: Albert Ramer, Co-Chairman; Samuel H. Miller, Co-Chairman/Treasurer; Charles A. Ramer, President/CEO
Total Office Portfolio: 8.8 million sq. ft.