
<PAGE>
      As filed with the Securities and Exchange Commission on June 5, 1998
                                                    Registration No. 333-[     ]
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------


                                    FORM S-3
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                             BRANDYWINE REALTY TRUST
                            AND BRANDYWINE OPERATING
                                PARTNERSHIP, L.P.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                                                   <C>  

              Brandywine Realty Trust - Maryland                               Brandywine Realty Trust - 23-2413352
      Brandywine Operating Partnership, L.P. - Delaware                Brandywine Operating Partnership, L.P. - 23-2862640
(State or other jurisdiction of incorporation or organization)                (I.R.S. Employer Identification No.)
</TABLE>

                               16 Campus Boulevard
                       Newtown Square, Pennsylvania 19073
                                 (610) 325-5600
    (Address, including zip code, and telephone number, including area code,
                  of Registrant's principal executive offices)

                                Gerard H. Sweeney
                      President and Chief Executive Officer
                               16 Campus Boulevard
                       Newtown Square, Pennsylvania 19073
                                 (610) 325-5600
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                    Copy to:
                          Michael H. Friedman, Esquire
                               Pepper Hamilton LLP
                              3000 Two Logan Square
                      Philadelphia, Pennsylvania 19103-2799
                                 (215) 981-4563
                                 ---------------

         Approximate date of commencement of proposed sale to the public: As
soon as possible after the effective date of this Registration Statement and
from time to time as determined by market conditions.

         If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

         If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [X]

         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

         If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

         If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]


                                        

<PAGE>
<TABLE>
<CAPTION>
                                                  Calculation of  Registration Fee
====================================================================================================================================
                                                                                           Proposed Maximum
  Title of Each Class of Securities          Amount to be          Proposed Maximum           Aggregate                Amount of
        to be Registered (1)                Registered (2)          Price Per Unit        Offering Price (2)        Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                            <C>                <C>                     <C>      <C> 
Preferred Shares of Beneficial
Interest, par value $.01 per share (3)
Common Shares of Beneficial
Interest, par value $.01 per share (4)     $663,129,026 (6)              (7)(8)              $663,129,026 (7)           $200,948 (9)
Depositary Shares, representing
Preferred Shares (5).................
Preferred Share Warrants.............
Common Share Warrants................
Depositary Share Warrants............
------------------------------------------------------------------------------------------------------------------------------------
Debt Securities                              $750,000,000              N.A. (10)               $750,000,000            $221,250 (10)
------------------------------------------------------------------------------------------------------------------------------------
Guarantees                                       (11)                     (11)                     (11)                     (11)
====================================================================================================================================
</TABLE>
(1)  The Debt Securities will be issued by Brandywine Operating Partnership,
     L.P. All other securities registered hereby will be issued by Brandywine
     Realty Trust. This Registration Statement also covers delayed delivery
     contracts which may be issued by Brandywine Realty Trust under which the
     counterpart may be required to purchase Preferred Shares, Common Shares or
     Depositary Shares. Such contracts may be issued together with the specific
     securities to which they relate. In addition, securities registered
     hereunder may be sold separately, together or as units with other
     securities registered hereunder.

(2)  In U.S. Dollars or the equivalent thereof denominated in one or more
     foreign currencies or units of two or more foreign currencies or composite
     currencies (such as European Currency Units).

(3)  Such indeterminate number of Preferred Shares as may from time to time be
     issued at indeterminate prices.

(4)  Such indeterminate number of Common Shares as may from time to time be
     issued at indeterminate prices or issuable upon conversion of Preferred
     Shares or Depositary Shares registered hereunder.

(5)  To be represented by Depositary Receipts representing an interest in all or
     a specified portion of a Preferred Share.

(6)  Pursuant to Rule 429 under the Securities Act of 1933, as amended, all such
     securities, none of which have been sold, are being carried forward from
     the earlier Registration Statement of Brandywine Realty Trust on Form S-3
     (No. 333-39155).

(7)  Estimated solely for purposes of calculating the registration fee. No
     separate consideration will be received for Common Shares that are issued
     upon conversion of Preferred Shares or Depositary Shares registered
     hereunder. The aggregate maximum offering price of Common Shares, Preferred
     Shares, Depository Shares and Warrants issued pursuant to this Registration
     Statement will not exceed $663,129,026. Pursuant to Rule 429 under the
     Securities Act of 1933, as amended, all such securities, none of which have
     been sold, are being carried forward from the earlier Registration
     Statement of Brandywine Realty Trust on Form S-3 (No. 333-39155).

(8)  Omitted pursuant to General Instruction II.D. of Form S-3 under the
     Securities Act of 1933, as amended.

(9)  The registration fee has been calculated in accordance with Rule 457(o)
     under the Securities Act of 1933, as amended. Such fee has been paid
     previously in connection with the earlier Registration Statement of
     Brandywine Realty Trust on Form S-3 (No. 333-39155) and is being carried
     forward.

(10) The proposed maximum offering price per unit has been omitted pursuant to
     Securities Release No. 6964. The registration fee has been calculated in
     accordance with Rule 457(o) under the Securities Act of 1933, as amended,
     and reflects the offering price rather than the principal amount of any
     Debt Securities issued at a discount.

(11) Debt Securities rated below investment grade at the time of issuance by
     Brandywine Operating Partnership, L.P. will be accompanied by Guarantees to
     be issued by Brandywine Realty Trust. None of the proceeds will be received
     by Brandywine Realty Trust for the Guarantees. Pursuant to Rule 457(n)
     under the Securities Act of 1933, as amended, no separate filing fee for
     the Guarantees is required.
<PAGE>

================================================================================
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

The prospectus contained in this Registration Statement relates to and
constitutes a Post-Effective Amendment to the Registration Statement on Form S-3
(No. 333-39155) of Brandywine Realty Trust, and it is intended to be the
combined prospectus referred to in Rule 429 under the Securities Act of 1933, as
amended.

================================================================================

                                       -2-


<PAGE>



The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.


                    Preliminary Prospectus dated June 5, 1998
                              Subject to Completion


================================================================================


                             BRANDYWINE REALTY TRUST

                                  $663,129,026

         Preferred Shares, Common Shares, Depositary Shares and Warrants


                                   ----------


                     BRANDYWINE OPERATING PARTNERSHIP, L.P.

                                  $750,000,000

                                 Debt Securities


================================================================================

                  We will provide specific terms of these securities in
supplements to this prospectus.

                  You should read this prospectus and any supplement carefully 
before you invest.


                                   ----------


            See "Risk Factors" beginning on page 6 of this prospectus
       for certain factors relevant to an investment in these securities.


                                   ----------


    Neither the Securities and Exchange Commission nor any state securities
 commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
                               criminal offense.




                    The date of this prospectus is [ ], 1998.



<PAGE>





                                TABLE OF CONTENTS

                                                                      Page
                                                                      ----

ABOUT THIS PROSPECTUS....................................................3

WHERE YOU CAN FIND MORE INFORMATION......................................3

SUMMARY..................................................................4

RISK FACTORS.............................................................6

RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE 
     DISTRIBUTIONS......................................................14

USE OF PROCEEDS.........................................................14

DESCRIPTION OF DEBT SECURITIES..........................................15

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST............................25

DESCRIPTION OF DEPOSITARY SHARES........................................29

DESCRIPTION OF WARRANTS.................................................33

CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE COMPANY'S
     DECLARATION OF TRUST AND BYLAWS....................................33

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES.............................37

FEDERAL INCOME TAX CONSIDERATIONS.......................................39

PLAN OF DISTRIBUTION....................................................52

EXPERTS.................................................................53

LEGAL MATTERS...........................................................54

TAX MATTERS.............................................................54





                                       -2-


<PAGE>



                              ABOUT THIS PROSPECTUS

     This prospectus (this "Prospectus") is part of a registration statement
that we filed with the Securities and Exchange Commission (the "SEC") utilizing
a "shelf" registration process. Under this shelf process, we may sell any
combination of the securities in one or more offerings. This Prospectus provides
you with a general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this Prospectus. Before you
invest, you should read both this Prospectus and any prospectus supplement
together with the additional information described under the heading WHERE YOU
CAN FIND MORE INFORMATION.



                       WHERE YOU CAN FIND MORE INFORMATION

     Brandywine Realty Trust (collectively with its subsidiaries, the "Company")
files, and Brandywine Operating Partnership, L.P. (the "Operating Partnership")
will file, annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also photocopy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms.

     The registration statement on Form S-3 of which this Prospectus is a part
contains important additional information not included in this Prospectus.
Statements in the registration statement summarizing other documents are
qualified by reference to such documents which have been filed as exhibits to
the registration statement or other filings made with the SEC. The registration
statement is available at the SEC's web site and public reference rooms.

     The SEC allows us to "incorporate by reference" the information which we
file with them, which means we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this Prospectus and information which we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), until we sell all of the securities.

     o    The Company's Annual Report on Form 10-K for the year ended December
          31, 1997;

     o    The Company's Quarterly Report on Form 10-Q for the quarter ended
          March 31, 1998;

     o    The combined statements of revenues and certain expenses of the Green
          Hills Properties for the year ended December 31, 1996; the combined
          statements of revenues and certain expenses of Berwyn Park Properties
          for the year ended December 31, 1996; and the reports thereon of the
          Company's independent public accountants included in the Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1997;

     o    The Company's Current Reports on Form 8-K/A No. 1 dated February 13,
          1997; Form 8-K/A No. 2 dated February 24, 1997; Form 8-K/A No. 1 dated
          April 29, 1997; Form 8-K dated June 9, 1997; Form 8-K dated June 26,
          1997; Form 8-K dated September 10, 1997; Form 8-K dated October 30,
          1997; Form 8-K dated December 17, 1997; Form 8-K dated January 9,
          1998; Form 8-K dated January 27, 1998; Form 8-K dated January 30,
          1998; Form 8-K dated February 13, 1998; Form 8-K dated February 23,
          1996; Form 8-K dated February 25, 1998; Form 8-K dated March 17, 1998;
          Form 8-K dated April 13, 1998; Form 8-K/A dated April 16, 1998; Form
          8-K dated April 17, 1998; Form 8-K dated May 14, 1998; and Form 8-K
          dated June 3, 1998;

     o    The description of the Common Shares contained in the Company's
          Registration Statement on Form 8-A dated October 14, 1997 and any
          other reports or amendments filed for the purpose of updating such
          description; and


                                       -3-


<PAGE>



     o    The description of the Operating Partnership's general partnership
          units contained in its Registration Statement on Form 10 filed with
          the Commission pursuant to the Exchange Act, and any other reports or
          amendments filed for the purpose of updating such description.

     You may request a copy of these filings (not including the exhibits to such
filings unless such exhibits are specifically incorporated by reference therein)
at no cost, by writing or telephoning us at the following address:

                             Brandywine Realty Trust
                               16 Campus Boulevard
                                 Newtown Square
                               Pennsylvania 19073
                     Attention: Brad A. Molotsky, Secretary
                                 (610) 325-5600

     You should rely only on the information provided or incorporated by
reference in this Prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.


                                     SUMMARY

     The following summary is qualified in its entirety by the more detailed
descriptions and the financial information and statements, and the notes in such
documents, appearing elsewhere and incorporated by reference in this Prospectus.

The Company and the Operating Partnership

     The Company is a self-administered, self-managed and fully integrated real
estate investment trust ("REIT") active in acquiring, developing, redeveloping,
leasing and managing primarily suburban office properties. As of June 1, 1998,
the Company's portfolio included 151 office properties and 28 industrial
facilities (collectively, the "Properties") that contained an aggregate of
approximately 12.2 million net rentable square feet. Certain of the Properties
serve as flex facilities, accommodating office use, warehouse space and research
and development activities.

     As of June 1, 1998, the Company was in the process of developing two
suburban office buildings that are expected to contain an aggregate of
approximately 69,000 and 38,000 net rentable square feet, respectively, upon
completion. The Company expects completion to occur during the fourth quarter of
1998. As of June 1, 1998, the Company also owned or held options to purchase
approximately 302.5 acres of land for future development.

     In addition, as of June 1, 1998, the Company owned economic interests,
ranging from 35% to 65%, in eight office development joint ventures (the
"Development Entities"). Two of the Development Entities own two suburban office
buildings that contain an aggregate of approximately 233,000 net rentable square
feet. A Third Development Entity is in the process of constructing a suburban
office building that is expected to contain approximately 85,000 net rentable
square feet upon completion. The Company expects this building to be completed
during 1998. As of June 1, 1998, the Development Entities also owned or held
options to purchase approximately 46.8 acres of land for future development.

     The Company owns its assets and conducts its operations through the
Operating Partnership and subsidiaries of the Operating Partnership. The Company
is the sole general partner of the Operating Partnership and, as of June 1,
1998, held an approximately 97.4% interest in the Operating Partnership.




                                       -4-


<PAGE>



     The Company provides real estate management services through a management
company (the "Management Company"). As of June 1, 1998, the Management Company
managed approximately 12.2 million net rentable square feet (including 177 of
the Properties). Through its ownership of preferred stock and common stock of
the Management Company, the Operating Partnership is entitled to receive 95% of
amounts paid as dividends by the Management Company.

     The Company was organized as a Maryland real estate investment trust in
1986. The Company's principal executive offices are located at 16 Campus
Boulevard, Newtown Square, Pennsylvania 19073 and its telephone number is (610)
325-5600.

Securities Offered

     Pursuant to this Prospectus, the Company may offer any combination of the
following securities (the "Equity Securities") with an aggregate public offering
price of up to $663,129,026:

     o    common shares of beneficial interest, $0.01 par value per share
          ("Common Shares");

     o    one or more series of preferred shares of beneficial interest, $0.01
          par value per share ("Preferred Shares");

     o    one or more series of Preferred Shares represented by depositary
          shares ("Depositary Shares"); and

     o    warrants to purchase Preferred Shares, Common Shares or Depository
          Shares ("Warrants").

     In addition, the Operating Partnership may offer one or more series of
unsecured non-convertible debt securities (the "Debt Securities") with an
aggregate public offering price of up to $750,000,000. If any Debt Securities
are rated below investment grade at the time of issuance, they will be fully and
unconditionally guaranteed by the Company (the "Guarantees"). We refer to the
Equity Securities and Debt Securities collectively as the "Securities."




                                       -5-


<PAGE>

                                  RISK FACTORS

     This Prospectus contains forward-looking statements. These statements are
identified by words such as "expect," "anticipate," "should" and words of
similar import. Actual results may differ significantly from those expressed or
implied by the forward-looking statements. Factors that might cause such a
difference include the various risks set forth below that we believe are
material to investors who purchase or own our securities. Before deciding to
purchase the securities offered hereby, prospective investors should carefully
consider the following information together with the other information contained
in this Prospectus.

Our lack of geographic diversification ties our performance to the economic
conditions of the Suburban Philadelphia Office and Industrial Market.

     The vast majority of our Properties are located in the Suburban
Philadelphia Office and Industrial Market, which includes Berks, Bucks, Chester,
Delaware, Lehigh, Montgomery and Northampton counties in Pennsylvania and
Burlington and Camden counties in New Jersey. As we continue to grow, we intend
to acquire more properties located in this market. Consequently, adverse
economic conditions in this market could adversely affect our performance and
ability to make distributions to shareholders. In addition, the concentration of
our Properties in this market rather than in several markets may cause the risks
associated with adverse economic conditions in this market to be magnified.

There can be no assurance that we will effectively manage our rapid growth.

     We have been growing rapidly. Since August 1, 1996, we have acquired 175 of
the 179 Properties owned by us on June 1, 1998. We plan on managing this growth
by applying our experience to newly acquired properties and expect to be
successful in that effort. No assurances can be given, however, that we will
succeed in our integration efforts or that newly acquired properties will
perform as we expect. If we do not effectively manage our rapid growth, our cash
flow and ability to make distributions to shareholders may be adversely
affected.

Our ability to make distributions is subject to various risks.

     We pay regular distributions to our shareholders. Our ability to make
distributions in the future will depend upon:

     o    the timing of future issuances of additional Common Shares;

     o    the performance of our Properties;

     o    expenditures with respect to existing and newly acquired properties;

     o    the amount of, and the interest rates on, our debt; and

     o    the absence of significant expenditures relating to environmental or
          other regulatory matters.

Certain of these matters are beyond our control and any significant difference
between our expectations and actual results could have a material adverse effect
our cash flow and its ability to make or sustain distributions.

Our performance and the value of our securities are subject to risks associated
with the real estate industry.

     In General. The economic performance and value of our Properties may be
adversely affected by:

     o    changes in the national, regional and local economic climate;

     o    local conditions, such as, an oversupply of, or a reduction in demand
          for, office properties

     o    the attractiveness of our Properties to tenants;


                                       -6-


<PAGE>
     o    competition from other available office and industrial properties;

     o    changes in market rental rates; and

     o    the need to periodically repair, renovate and relet space.

Our performance also depends on our ability to collect rent from tenants and to
pay for adequate maintenance, insurance and other operating costs (including
real estate taxes and utilities) which could increase over time. In addition,
market factors causing a reduction in income from a property do not necessarily
cause a corresponding reduction in the expenses related to such property.

     We may be unable to renew leases or relet space as leases expire. If our
tenants fail to renew their leases upon expiration, we may be unable to relet
the subject space. Even if the tenants do renew their leases or we can relet the
space, the terms of renewal or reletting (including the cost of required
renovations) may be less favorable than current lease terms. Certain leases
grant the tenants an early termination right upon payment of a termination
penalty. While we have estimated the expenditures for new and renewal leases for
1998 and 1999, no assurances can be given as to the accuracy of such estimates.
Any of these factors could have an adverse affect on our cash flow and ability
to make distributions to shareholders.

     Financially distressed tenants may limit our ability to realize the value
of our investments. Following a tenant's lease default, we may experience delays
in enforcing our rights as a landlord and may incur substantial costs in
protecting our investment. In addition, a tenant may seek bankruptcy law
protection which could cause the tenant's lease to be rejected. Tenant defaults
or rejections could have an adverse affect on our cash flow and ability to make
distributions to shareholders.

     We face significant competition from other real estate developers. We
compete with a number of real estate developers, operators and institutions for
tenants and acquisition opportunities. Some of these competitors have
significantly greater resources than we do. No assurances can be given that this
competition will not adversely affect our cash flow and ability to make
distributions to shareholders.

     Because real estate is illiquid, we may not be able to sell properties when
appropriate. Real estate investments generally cannot be sold quickly. We may
not be able to vary our portfolio promptly in response to economic or other
conditions. In addition, the Internal Revenue Code of 1986, as amended (the
"Code"), limits our ability to sell properties held for fewer than four years.
We have also agreed with certain of the sellers of properties to us not to
resell the properties for varying periods of time. Purchase options and rights
of first refusal held by certain tenants may limit our ability to sell certain
properties. Any of these factors could adversely affect our cash flow and
ability to make distributions to shareholders.

     Changes in the law may adversely affect our cash flow. Because increases in
income and service taxes are generally not passed through to tenants under
leases, such increases may adversely affect our cash flow and ability to make
expected distributions to shareholders. The Properties are also subject to
various federal, state and local regulatory requirements, such as those relating
to fire and safety. Failure to comply with these requirements could result in
the imposition of fines or damage awards to private litigants. While we believe
that the Properties are currently in material compliance with all such
requirements, there can be no assurance that these requirements will not change
or that newly imposed requirements will not require significant unanticipated
expenditures having an adverse affect on our cash flow and ability to make
distributions to shareholders.

     Compliance with the Americans with Disabilities Act may adversely affect
our cash flow. The Americans with Disabilities Act of 1990 (the "ADA") requires
all public accommodations and commercial facilities to meet certain federal
requirements related to access and use by disabled persons. Compliance with
these requirements could require removal of access barriers and noncompliance
could result in imposition of fines or a damage awards to private litigants.
While we believe that the Properties are in material compliance with these
requirements, we may incur additional costs to comply with the ADA. If required
changes involved a greater expenditure than currently anticipated, our cash flow
and ability to make distributions to shareholders could be adversely affected.

     By holding properties through the Operating Partnership and various joint
ventures, we are exposed to certain additional risks. We own our Properties and
our interests in the Development Entities through the Operating

                                       -7-


<PAGE>
Partnership. In the future, we expect to continue to participate with other
entities in property ownership through joint ventures or partnerships.
Partnership or joint venture investments may, under certain circumstances,
involve risks not otherwise present in direct investments. Such risks include:

          o    the potential bankruptcy of our partners or co-venturers;

          o    a conflict between our business goals and those of our partners
               or co-venturers; and

          o    actions taken by our partners or co-venturers contrary to our
               instructions or objectives, including our policy of maintaining
               the Company's REIT qualification.

We will, however, seek to maintain sufficient control of such partnerships and
joint ventures to enable us to achieve our business objectives. Investors should
be aware that there is no limitation under our organizational documents as to
the amount of funds which we may invest in partnerships or joint ventures.

Future acquisitions may fail to perform in accordance with our expectations and
may require development and renovation costs exceeding our estimates.

         We intend to continue acquiring office and industrial properties.
Changing market conditions, however, including competition from others, may
diminish our opportunities for making attractive acquisitions. Once made, our
investments may fail to perform in accordance with our expectations. In
addition, the estimated renovation and improvement costs incurred in bringing an
acquired property up to market standards may exceed our estimates. We anticipate
financing future acquisitions and renovations through a combination of advances
under lines of credit and other forms of secured or unsecured financing. If new
developments are financed through construction loans, there is a risk that, upon
completion of construction, permanent financing for newly developed properties
may not be available or may be available only on disadvantageous terms.

         While we have limited our business primarily to the Suburban
Philadelphia Office and Industrial Market, recently we have begun to expand into
new geographic markets. Our unfamiliarity with such new markets could adversely
affect our operations in these new localities.

         In addition to acquisitions, we periodically consider developing,
redeveloping and constructing office buildings and other commercial properties.
Risks associated with development, redevelopment and construction activities
include:

          o    the unavailability of favorable financing;

          o    the abandonment of such activities prior to completion;

          o    construction costs exceeding original estimates;

          o    costs and construction and lease-up delays resulting in increased
               debt service expense and construction costs; and

          o    insufficient occupancy rates and rents at a newly completed
               property causing a property to be unprofitable.

Development and redevelopment activities also require a substantial portion of
our management's time and attention and are subject to risks relating to our
inability to obtain, or delays in obtaining, all necessary zoning, land-use,
building, occupancy and other required governmental permits and authorizations.

Our indebtedness subjects us to additional risks.

         Debt Financing and Existing Debt Maturities. We are subject to risks
normally associated with debt financing, such as the insufficiency of cash flow
to meet required payment obligations and the inability to refinance existing
indebtedness. If our debt cannot be paid, refinanced or extended at maturity, in
addition to our failure to repay our debt, we may not be able to make
distributions to shareholders at all or at expected levels. Furthermore, if


                                       -8-


<PAGE>
any refinancing is done at higher interest rates, the increased interest expense
could adversely affect our cash flow and ability to make distributions to
shareholders. In addition, if we do not meet our mortgage financings
obligations, any properties securing such indebtedness could be foreclosed on,
which would have a material adverse effect our cash flow and ability to make
distributions and, depending on the number of properties foreclosed on, could
threaten our continued viability.

         Risk of Rising Interest Rates and Variable Rate Debt. Increases in
interest rates on variable rate indebtedness would increase our interest
expense, which could adversely affect our cash flow and ability to make
distributions to shareholders.

         No Limitation on Debt. Although we have adopted a policy that limits
the Company's debt-to-total market capitalization ratio of to 50%, the Company's
organizational documents do not contain any such numerical limitation.
Accordingly, the Board of Trustees could leverage the Company in excess of such
threshold. The increased debt service could adversely affect our cash flow and
ability to make distributions and could increase the risk of default on our
indebtedness.

The Company's ability to satisfy the Guarantees is dependent upon the Operating
Partnership's performance.

         All operations of the Company are conducted by the Operating
Partnership, and the only revenue-generating asset of the Company is its
interest in the Operating Partnership. As a result, the Company is dependent
upon the receipt of distributions or other payments from the Operating
Partnership in order to meet its financial obligations, including its
obligations under any Guarantees. Any Guarantees will be effectively
subordinated to existing and future liabilities of the Operating Partnership. At
June 1, 1998, the Operating Partnership had approximately $421.9 million of
indebtedness outstanding, of which approximately $65.3 was secured and $356.6
was unsecured.

Our success as a REIT is dependent on compliance with Federal Income Tax
requirements.

         Our failure to qualify as a REIT would have serious adverse
consequences to our securityholders. We believe that, since 1986, the Company
has qualified for taxation as a REIT for federal income tax purposes. We plan to
continue to meet the requirements for taxation as a REIT. Many of these
requirements, however, are highly technical and complex. The determination that
the Company is a REIT requires an analysis of various factual matters and
circumstances that may not be totally within our control. For example, to
qualify as a REIT, at least 95% of our gross income must come from certain
sources that are itemized in the REIT tax laws. The Company is also required to
distribute to shareholders at least 95% of its REIT taxable income (excluding
capital gains). The fact that we hold our assets through the Operating
Partnership and its subsidiaries further complicates the application of the REIT
requirements. Even a technical or inadvertent mistake could jeopardize our REIT
status. Furthermore, Congress and the IRS might make changes to the tax laws and
regulations, and the courts might issue new rulings that make it more difficult,
or impossible, for the Company to remain qualified as a REIT. We do not believe,
however, that any pending or proposed tax law changes would jeopardize our REIT
status.

         To maintain REIT status, a REIT may not own more than 10% of the voting
stock of any corporation, except for a qualified REIT subsidiary (which must be
wholly-owned by the REIT) or another REIT. In order to comply with this rule,
the Operating Partnership owns 5% of the voting common stock and all of the
non-voting preferred stock of the Management Company. The Internal Revenue
Service ("IRS"), however, could contend that the Operating Partnership's
ownership of all of the non-voting preferred stock of the Management Company
should be viewed as voting stock because of the Operating Partnership's
substantial economic position in the Management Company. If successful in such a
contention, the Company's status as a REIT would be lost and the Company would
be subject to the consequences set forth below.

         Arthur Andersen LLP, special tax advisor to the Company, has given us
an opinion to the effect that, beginning with its taxable year ended December
31, 1986, the Company was organized and has operated in conformity with the
requirements for qualification and taxation as a REIT under the Code for each of
its taxable years and that the Company's current method of organization and
operation will enable it to continue to so qualify. See "Federal Income Tax
Considerations -- General." The opinion of Arthur Andersen LLP is based on
assumptions and factual representations made by us regarding the Company's
ability to meet the requirements for qualification as a REIT and the opinion of
Pepper Hamilton LLP that the shares of preferred stock issued by the Management


                                       -9-


<PAGE>
Company to the Operating Partnership do not constitute voting securities for
purposes of the Investment Company Act of 1940, as amended. Such opinion is not
binding on the IRS or any court. Moreover, Arthur Andersen LLP does not review
or monitor the Company's compliance with the requirements for REIT qualification
on an ongoing basis. We cannot guarantee that the Company will be qualified and
taxed as a REIT, because the Company's qualification and taxation as a REIT will
depend upon the Company's ability to meet, on an ongoing basis, the requirements
imposed under the Code.

         If the Company fails to qualify as a REIT, the Company would be subject
to federal income tax at regular corporate rates. Also, unless the IRS granted
the Company relief under certain statutory provisions, the Company would remain
disqualified as a REIT for four years following the year the Company first
failed to qualify. If the Company failed to qualify as a REIT, the Company would
have to pay significant income taxes and would therefore have less money
available for investments or for distributions to shareholders. This would
likely have a significant adverse affect of the value of our securities. In
addition, the Company would no longer be required to make any distributions to
shareholders. See "Federal Income Tax Considerations -- Failure to Qualify."

         In order to make the distributions required to maintain the Company's
REIT status, we may need to borrow funds. To obtain the favorable tax treatment
associated with REIT qualification, the Company generally will be required to
distribute to its shareholders at least 95% of its annual REIT taxable income
(excluding net capital gain). In addition, the Company will be subject to tax on
its undistributed net taxable income and net capital gain and a 4% nondeductible
excise tax on the amount, if any, by which certain distributions paid by it with
respect to any calendar year are less than the sum of 85% of its ordinary income
plus 95% of its capital gain net income for the calendar year, plus certain
undistributed amounts from prior years.

         We intend to make distributions to shareholders to comply with the
distribution provisions of the Code and to avoid income and other taxes. The
Company's income will consist primarily of the Company's share of the income of
the Operating Partnership and the Company's cash flow will consist primarily of
its share of distributions from the Operating Partnership. Differences in timing
between the receipt of income and the payment of expenses in arriving at taxable
income (of the Company or the Operating Partnership) and the effect of required
debt amortization payments could require us to borrow funds on a short-term
basis or liquidate funds on adverse terms to meet the REIT qualification
distribution requirements.

         The failure of the Operating Partnership (or a subsidiary partnership)
to be treated as a partnership would have serious adverse consequences to our
securityholders. If the IRS were to successfully challenge the tax status of the
Operating Partnership or any of its subsidiary partnerships for federal income
tax purposes, the Operating Partnership or the affected subsidiary partnership
would be taxable as a corporation. In such event, the Company would cease to
qualify as a REIT and the imposition of a corporate tax on the Operating
Partnership or a subsidiary partnership would reduce the amount of cash
available for distribution from such partnership to the Company and its
shareholders. See "Federal Income Tax Considerations - Income Taxation of the
Operating Partnership, the Title Holding Partnerships and Their Partners."

          We do pay some taxes. Even if the Company qualifies as a REIT, we are
required to pay certain federal, state and local taxes on our income and
property. In addition, the Management Company is subject to federal, state and
local income tax at regular corporate rates on its net taxable income derived
form its management, leasing and related service business. If the Company has
net income from a prohibited transaction, such income will be subject to a 100%
tax. See "Federal Income Tax Considerations - Taxation of the Company as a
REIT."

Environmental problems are possible and may be costly.

         Federal, state and local laws, ordinances and regulations may require a
current or previous owner or operator of real estate to investigate and clean up
hazardous or toxic substances or releases at such property. The owner or
operator may have to pay a governmental entity or third parties for property
damage and for investigation and clean-up costs incurred by such parties in
connection with the contamination. Such laws typically impose clean-up
responsibility and liability without regard to whether the owner or operator
knew of or caused the presence of the contaminants. Even if more than one person
may have been responsible for the contamination, each person covered by the
environmental laws may be held responsible for all of the clean-up costs
incurred. In addition, third parties may sue the owner or operator of a site for
damages and costs resulting from environmental contamination emanating


                                      -10-


<PAGE>
from that site. These costs may be substantial and the presence of such
substances may adversely affect the owner's ability to sell or rent such
property or to borrow using such property as collateral.

         All of our Properties have been subject to a Phase I or similar
environmental site assessment (which involves general inspections without soil
sampling or groundwater analysis) completed by independent environmental
consultants. Except with respect to 110 Summit Drive at the Whitelands Business
Park in Exton, Pennsylvania (the "Whitelands Property") and the Affected
Properties at Paint Works (as defined below), we are not aware of any
environmental liability with respect to the Properties which we believe would
have a material adverse affect on us.

         An environmental assessment has identified environmental contamination
of potential concern with respect to the Whitelands Property. Petroleum
products, solvents and heavy metals were detected in the groundwater. These
contaminants are believed to be associated with debris deposited by third
parties in a quarry formerly located on the Whitelands Property. The Whitelands
Property previously appeared on the Comprehensive Environmental Response
Compensation and Liability Information System List, a list maintained by the
United States Environmental Protection Agency (the "EPA") of abandoned, inactive
or uncontrolled hazardous waste sites which may require cleanup. The EPA
conducted a preliminary assessment of the Whitelands Property in 1984, and
subsequently the Whitelands Property was removed from the list. Although we can
offer no assurance, we believe it unlikely that we will be required to undertake
remedial action with respect to such contamination. However, if we were required
to undertake remedial action on the Whitelands Property, we have been
indemnified by Safeguard Scientifics, Inc. ("SSI") through August 2001 against
the cost of such remediation up to approximately $2.0 million. If SSI failed to
fulfill its indemnity obligations or if we were required to undertake remedial
action after the expiration of the indemnity, the costs associated with any
remediation could materially and adversely impact our cash flow and ability to
make distributions to shareholders. Because we do not believe that any
remediation at the Whitelands Property is probable, we have not accrued any
amounts for any such potential liability.

         An environmental assessment has identified environmental contamination
at land acquired by us as part of our acquisition of certain Properties that
include 6 East Clementon and 1, 4, 5, 7 and 10 Foster Avenue and an adjacent
parking lot. These Properties (the "Affected Properties") and certain
non-affected Properties are commonly referred to as the Paint Works Corporate
Center ("Paint Works"). Volatile organic compounds, semi-volatile organic
compounds and metals were detected in the groundwater, surface soils and
sub-surface soils, principally on land acquired by us which is adjacent to the
buildings located on the Affected Properties. These contaminants are associated
with the use by prior owners and operators of the properties and are believed to
be associated with the historic use of the Affected Properties as a paint and
varnish factory since the mid-nineteenth century. The Affected Properties have
been the subject of investigation by the New Jersey Department of Environmental
Protection ("NJDEP") since the mid-1970's. The NJDEP has issued two directives
to the former owners and operators of the site, ordering them to investigate and
remediate the contamination at the site. The NJDEP has also entered into two
administrative consent orders (the "ACO's") with Sherwin-Williams, the former
owner and operator primarily responsible for the environmental contamination at
the site, pursuant to which Sherwin-Williams has agreed to investigate and
commence certain remediation. The NJDEP has provided written assurances to the
Company that the NJDEP will not require us to investigate or remediate the site
so long as Sherwin-Williams continues to comply with the ACO's. In addition to
the foregoing, the NJDEP has also issued a letter of non-applicability for the
remainder of the Paint Works properties owned by us at the site. We have also
been indemnified against Sherwin-Williams' failure to comply with the ACO's and
from any migration of the aforesaid compounds onto the adjacent Company-owned
properties which are not part of the Affected Properties by PWCCW, a New Jersey
general partnership, and Robert K. Scarborough (collectively, "Scarborough"). If
Sherwin-Williams ceases to comply with the ACO's and Scarborough fails to
fulfill its indemnity, we could be responsible for costs associated with any
remediation. Because the Company does not believe that the occurrence of both of
these events is probable, we have not accrued any amounts for any such potential
liability.

         We cannot give any assurance that existing environmental studies of our
Properties reveal all environmental liabilities or that any prior owner of any
such property did not create any material environmental condition unknown to us.



                                      -11-


<PAGE>
Some potential losses are not covered by insurance.

         We carry comprehensive liability, fire, extended coverage and rental
loss insurance on all of our Properties. We believe the policy specifications
and insured limits of these policies are adequate and appropriate. There are,
however, certain types of losses, such as lease and other contract claims, that
generally are not insured. Should an uninsured loss or a loss in excess of
insured limits occur, we could lose all or a portion of the capital we have
invested in a property, as well as the anticipated future revenue from the
property. In such an event, we might nevertheless remain obligated for any
mortgage debt or other financial obligations related to the property.

We do not control the Management Company.

          While we own substantially all (95%) of the economic interest in the
Management Company, to maintain our REIT qualification, certain of the executive
officers of the Company indirectly hold 95% of the voting common stock of the
Management Company. Therefore, we do not control the timing or amount of
distributions by, or the management and operation of, the Management Company. As
a result, decisions relating to the payment of distributions by, and the
business policies and operations of, the Management Company could be adverse to
our interests.

Management contracts with third parties may be terminated.

         We intend to selectively pursue the management of properties owned by
third parties. Our management fee income, however, is subject to decline, at any
time, because our management contracts with third parties are generally
terminable upon limited notice, may fail to be renewed upon expiration and
generate rental revenues based upon the then current real estate market
conditions.

The Board of Trustees may change our policies without shareholder approval.

         The Board of Trustees controls our policies concerning investment,
financing, borrowing and distribution, as well as our operational and growth
activities. The Board of Trustees may amend or revise such policies or
activities without notice to, or a vote of, the Company's shareholders. Such
amendments or revisions may not fully serve the interests of all shareholders
and could adversely affect our distributions, financial condition, results of
operations or the market price of the Common Shares.

We are dependent upon our key personnel.

         We are dependent upon the efforts of our executive officers,
particularly Anthony A. Nichols, Sr. and Gerard H. Sweeney. While we believe
that we could replace our key personnel, the loss of their services could have
an adverse affect on our operations. Although we have employment agreements with
Messrs. Nichols and Sweeney, such agreements do not restrict their ability to
become employed by a competitor following the termination of their employment
with us.

Certain limitations exist with respect to a third party's ability to acquire us
or effectuate a changes in control.

         Limitations imposed to protect our REIT status. In order to protect the
Company against loss of its REIT status, the Company's Declaration of Trust
limits any shareholder from owning more than 9.8% in value of the Company's
outstanding shares, subject to certain exceptions. If you or anyone else
acquires shares in excess of the ownership limit, we may:

               o    consider the transfer to be null and void;

               o    not reflect the transaction on our books;

               o    institute legal action to enjoin the transaction;

               o    not pay dividends or other distributions with respect to
                    those shares;

               o    not recognize any voting rights for those shares; and


                                      -12-


<PAGE>
               o    consider the shares held in trust for the benefit of a
                    person to whom such shares may be transferred.

         Limitation due to our ability to issue preferred shares. Our
Declaration of Trust authorizes the Board of Trustees to issue Preferred Shares.
The Board of Trustees may establish the preferences and rights of any Preferred
Shares issued which could have the effect of delaying or preventing someone from
taking control of us, even if a change in control were in our shareholders' best
interests.

         Limitations imposed by the Business Combination Law. The Maryland
General Corporation Law establishes special restrictions against "business
combinations" between a Maryland real estate investment trust and "interested
shareholders" or their affiliates unless an exemptions is applicable. An
interested shareholder includes a person who beneficially owns, and an affiliate
of the trust who, at any time within the two-year period prior to the date in
question, was the beneficial owner of, ten percent or more of the voting power
of our then-outstanding voting shares. Among other things, the law prohibits
(for a period of five years) a merger and certain other transactions between the
Company and an interested shareholder unless the Board of Trustees approved the
transaction before the party become an interested shareholder. The five-year
period runs from the most recent date on which the interested shareholder became
an interested shareholder. Thereafter, any such business combination must be
recommended by the board of trustees and approved by two super-majority
shareholder votes unless, among other conditions, the trust's common
shareholders receive a minimum price for their shares and the consideration is
received in cash or in the same form as previously paid by the interested
shareholder for its shares or unless the Board of Trustees approved the
transaction before the party in question became an interested shareholder. The
business combination statute could have the effect of discouraging offers to
acquire us and of increasing the difficulty of consummating any such offers,
even if our acquisition would be in our shareholders' best interests.

         Pursuant to the statute, we have previously exempted any business
combination involving SSI, The Nichols Company ("TNC"), Gerard H. Sweeney or
their affiliates (the Company's President and Chief Executive Officer) and any
of their affiliates. As a result, SSI, TNC, Mr. Sweeney and their affiliates and
associates (including Anthony A. Nichols, Sr., the Company's Chairman of the
Board) may be able to enter into business combinations with the Company which
may not be in the best interest of the shareholders. In addition, the Company
has exempted any business combination involving the Commonwealth of Pennsylvania
State Employees' Retirement System ("SERS") and a voting trust established for
its benefit (the "SERS Voting Trust"), Morgan Stanley Asset Management Inc. and
two funds (the "Morgan Stanley Funds") managed by it and any of their respective
affiliates or associates. See "Certain Provisions of Maryland Law and the
Company's Declaration of Trust and Bylaws Business Combinations."

         Limitations imposed by the Maryland Control Share Statute. The Maryland
General Corporation Law provides that "control shares" of a Maryland real estate
investment trust acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of beneficial interest owned by the
acquiror, by officers or by trustees who are employees of the trust. If voting
rights are not approved at a meeting of shareholders or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the trust may redeem any or all
of the control shares (except those for which voting rights have previously been
approved) for fair value. If voting rights for control shares are approved at a
shareholders meeting and the acquiror becomes entitled to vote a majority of the
shares entitled to vote, all other shareholders may exercise appraisal rights.
The control share statute could have the effect of discouraging offers to
acquire us and of increasing the difficulty of consummating any such offers,
even if our acquisition would be in our shareholders' best interests.

         Pursuant to the statute, the Company has exempted acquisitions by SSI,
TNC, and any current or future affiliate or associate of theirs from the control
shares statute. As a result, SSI or TNC will be able to possess voting power not
generally available to other persons. In addition, pursuant to the statute, the
Company has exempted any and all acquisitions by SERS, the SERS Voting Trust,
Morgan Stanley Asset Management Inc., the Morgan Stanley Funds and any of their
respective current or future affiliates or associates from the control share
statute.

                                      -13-


<PAGE>
Sales of a substantial number of Common Shares, or the perception that such
sales could occur, could adversely affect prevailing prices for the Common
Shares.

         As of June 1, 1998, the Company has reserved: (i) 998,439 Common Shares
for issuance upon redemption of Operating Partnership Units and (ii) 2,805,808
Common Shares for issuance upon exercise of outstanding options and warrants.
The Company's Declaration of Trust permits the Board of Trustees to increase the
aggregate number of authorized shares of any class without shareholder approval.
We cannot predict the effect that future sales of Company securities will have
on the market price of the Common Shares.

The Issuance of Preferred Shares may adversely affect the rights of holders of
Common Shares.

         Because the Board of Trustees has the power to establish the
preferences and rights of each class or series of Preferred Shares, it may
afford the holders in any series or class of Preferred Shares preferences,
distributions, powers and rights, voting or otherwise, senior to the rights of
holders of Common Shares.

Fluctuations in market interest rates may affect the price of the Common Shares.

         One of the factors that influences the market price of the Common
Shares in the public market is the annual distribution rate on the shares.
Increasing market interest rates may lead prospective purchasers of the Common
Shares to demand a higher annual distribution rate from future distributions.
Such an increase in the required distribution may adversely affect the market
price of Common Shares.

 RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DISTRIBUTIONS

         The following table sets forth the ratios of earnings to fixed charges 
and preferred share distributions for the Company for each of the five years 
ended December 31, 1997, 1996, 1995, 1994 and 1993 and for the three months 
ended March 31, 1998 and 1997.

                             Brandywine Realty Trust
                Computation of Ratio of Earnings to Fixed Charges
                        and Preferred Share Distributions
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                   For the three months
                                                 For the years ended December 31,                     ended March 31,
                                     -----------------------------------------------------------  ------------------------
                                       1993        1994        1995        1996        1997          1997        1998
                                       ----        ----        ----        ----        ----          ----        ----
<S>                                  <C>          <C>         <C>         <C>         <C>          <C>          <C>
FIXED CHARGE COVERAGE RATIO (1)       N/A (2)       (3)         (3)         (3)        2.71          1.94        2.94
                                     ===========================================================  ========================
</TABLE>
(1) The fixed charge coverage ratio represents the number of times fixed charges
    were covered by earnings. The ratio is computed by dividing fixed charges
    and preferred share distributions into earnings before extraordinary items,
    plus fixed charges. Fixed charges include interest expense and amortization
    of debt issuance costs.

(2) Ratio cannot be computed as there were no fixed charges during fiscal year
    1993.

(3) Ratio calculated to be a less than one-to-one coverage. The amount of the
    deficiency to cover fixed charges is $563,000, $824,000 and $1,841,000 for
    the years 1996, 1995 and 1994, respectively.

         The following table sets forth the ratios of earnings to fixed charges
for the Operating Partnership for the period August 22, 1996 to December 31, 
1996, the year ended December 31, 1997 and for the three months ended March 31,
1998 and 1997.
<PAGE>

                     Brandywine Operating Partnership, L.P.
                Computation of Ratio of Earnings to Fixed Charges
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                   For the three months
                                                       For the period            For the              ended March 31,
                                                     August 22, 1996 to         year ended        -----------------------
                                                     December 31, 1996      December 31, 1997        1997        1998
                                                    ---------------------  ---------------------     ----        ----
<S>                                                 <C>                     <C>                   <C>           <C>    
FIXED CHARGE COVERAGE RATIO (1)                             (2)                     2.92             2.87        2.96
                                                    =====================  =====================  ========================
</TABLE>
(1) The fixed charge coverage ratio represents the number of times fixed charges
    were covered by earnings. The ratio is computed by dividing fixed charges
    into earnings before extraordinary items, plus fixed charges. Fixed charges 
    include interest expense and amortization of debt issuance costs.

(2) Ratio calculated to be a less than one-to-one coverage. The amount of the
    deficiency to cover fixed charges is $26,000.

                                 USE OF PROCEEDS

         Unless otherwise indicated in the accompanying prospectus supplement,
the Company will contribute or otherwise transfer the net proceeds of any sale
of any of its equity securities hereunder to the Operating Partnership in
exchange for additional partnership interests in the Operating Partnership, the
economic terms of which will be substantially identical to the Securities sold.
The Operating Partnership will use such net proceeds and any net proceeds from
the sale of any of its debt securities hereunder for general business purposes
including, without limitation, the repayment of certain outstanding debt and the
acquisition of office and industrial properties.

                                      -14-
<PAGE>
                         DESCRIPTION OF DEBT SECURITIES

General

         The Company conducts substantially all of its business, and indirectly
holds substantially all of its interests in the Properties, through the
Operating Partnership. Consequently, pursuant to this Prospectus, the Operating
Partnership, and not the Company, may from time to time offer the Debt
Securities. The Debt Securities will be direct unsecured obligations of the
Operating Partnership and may be either senior Debt Securities ("Senior
Securities") or subordinated Debt Securities ("Subordinated Securities"). The
Debt Securities will be issued under one or more indentures, each dated as of a
date prior to the issuance of the Debt Securities to which it relates. Senior
Securities and Subordinated Securities may be issued pursuant to separate
indentures (respectively, a "Senior Indenture" and a "Subordinated Indenture"),
in each case between the Operating Partnership and a trustee (a "Trustee"),
which may be the same Trustee, and in the form that has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part, subject to
such amendments or supplements as may be adopted from time to time. The Senior
Indenture and the Subordinated Indenture, as amended or supplemented from time
to time, are sometimes hereinafter referred to collectively as the "Indentures."
The Indentures will be subject to and governed by the Trust Indenture Act of
1939, as amended (the "TIA"). The statements made under this heading relating to
the Debt Securities and the Indentures are summaries of the anticipated material
provisions thereof, do not purport to be complete and are qualified in their
entirety by reference to the Indentures and such Debt Securities.

         Capitalized terms used herein and not defined shall have the meanings
assigned to them in the applicable Indenture.

           If any Debt Securities issued by the Operating Partnership are rated
below investment grade at the time of issuance, such Debt Securities will be
fully and unconditionally guaranteed by the Company as to payment of principal,
premium, if any, and interest (the "Guarantees").

Terms

         The indebtedness represented by the Senior Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Operating
Partnership. The indebtedness represented by Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the Senior Debt
of the Operating Partnership as described under "--Subordination." The
particular terms of the Debt Securities offered by a prospectus supplement will
be described in the applicable prospectus supplement, along with any applicable
modifications of or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any applicable federal
income tax considerations. Accordingly, for a description of the terms of any
series of Debt Securities, reference must be made to both the prospectus
supplement relating thereto and the description of the Debt Securities set forth
in this Prospectus.

         Except as set forth in any prospectus supplement, the Debt Securities
may be issued without limit as to aggregate principal amount, in one or more
series, in each case as established from time to time by the Operating
Partnership or as set forth in the applicable Indenture or in one or more
indentures supplemental to such Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the holders of the Debt Securities of such
series, for issuance of additional Debt Securities of such series.

         Each Indenture will provide that the Operating Partnership may, but
need not, designate more than one Trustee thereunder, each with respect to one
or more series of Debt Securities. Any Trustee under an Indenture may resign or
be removed with respect to one or more series of Debt Securities and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a Trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any other
Trustee, and, except as otherwise indicated herein, any action described herein
to be taken by each Trustee may be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Debt Securities for which it
is Trustee under the applicable Indenture.



                                      -15-


<PAGE>
         The following summaries set forth certain general terms and provisions
of the Indentures and the Debt Securities. The prospectus supplement relating to
the series of Debt Securities being offered will contain further terms of such
Debt Securities, including the following specific terms:

         (1)      The title of such Debt Securities and whether such Debt
                  Securities are Senior Securities or Subordinated Securities;

         (2)      The aggregate principal amount of such Debt Securities and any
                  limit on such aggregate principal amount;

         (3)      The price (expressed as a percentage of the principal amount
                  thereof) at which such Debt Securities will be issued and, if
                  other than the principal amount thereof, the portion of the
                  principal amount thereof payable upon declaration of
                  acceleration of the maturity thereof;

         (4)      The date or dates, or the method for determining such date or
                  dates, on which the principal of such Debt Securities will be
                  payable;

         (5)      The rate or rates (which may be fixed or variable), or the
                  method by which such rate or rates shall be determined, at
                  which such Debt Securities will bear interest, if any;

         (6)      The date or dates, or the method for determining such date or
                  dates, from which any such interest will accrue, the dates on
                  which any such interest will be payable, the record dates for
                  such interest payment dates, or the method by which such dates
                  shall be determined, the persons to whom such interest shall
                  be payable, and the basis upon which interest shall be
                  calculated if other than that of a 360-day year of twelve
                  30-day months;

         (7)      The place or places where the principal of (and premium, if
                  any) and interest, if any, on such Debt Securities will be
                  payable, where such Debt Securities may be surrendered for
                  conversion or registration of transfer or exchange and where
                  notices or demands to or upon the Operating Partnership in
                  respect of such Debt Securities and the applicable Indenture
                  may be served;

         (8)      The period or periods, if any, within which, the price or
                  prices at which and the other terms and conditions upon which
                  such Debt Securities may, pursuant to any optional or
                  mandatory redemption provisions, be redeemed, as a whole or in
                  part, at the option of the Operating Partnership;

         (9)      The obligation, if any, of the Operating Partnership to
                  redeem, repay or purchase such Debt Securities pursuant to any
                  sinking fund or analogous provision or at the option of a
                  holder thereof, and the period or periods within which, the
                  price or prices at which and the other terms and conditions
                  upon which such Debt Securities will be redeemed, repaid or
                  purchased, as a whole or in part, pursuant to such obligation;

         (10)     If other than U.S. dollars, the currency or currencies in
                  which such Debt Securities are denominated and payable, which
                  may be a foreign currency or units of two or more foreign
                  currencies or a composite currency or currencies, and the
                  terms and conditions relating thereto;

         (11)     Whether the amount of payments of principal of (and premium,
                  if any) or interest, if any, on such Debt Securities may be
                  determined with reference to an index, formula or other method
                  (which index, formula or method may, but need not be, based on
                  a currency, currencies, currency unit or units, or composite
                  currency or currencies) and the manner in which such amounts
                  shall be determined;

         (12)     Whether such Debt Securities will be issued in certificated or
                  book-entry form and, if in book entry form, the identity of
                  the depository for such Debt Securities;



                                      -16-


<PAGE>
         (13)     Whether such Debt Securities will be in registered or bearer
                  form and, if in registered form, the denominations thereof if
                  other than $1,000 and any integral multiple thereof and, if in
                  bearer form, the denominations thereof and terms and
                  conditions relating thereto;

         (14)     The applicability, if any, of the defeasance and covenant
                  defeasance provisions described herein or set forth in the
                  applicable Indenture, or any modification thereof;

         (15)     Whether and under what circumstances the Operating Partnership
                  will pay any additional amounts on such Debt Securities in
                  respect of any tax, assessment or governmental charge and, if
                  so, whether the Company will have the option to redeem such
                  Debt Securities in lieu of making such payment;

         (16)     Any deletions from, modifications of or additions to the
                  events of default or covenants of the Operating Partnership,
                  to the extent different from those described herein or set
                  forth in the applicable Indenture with respect to such Debt
                  Securities, and any change in the right of any Trustee or any
                  of the holders to declare the principal amount of any of such
                  Debt Securities due and payable;

         (17)     With respect to any Debt Securities that provide for optional
                  redemption or prepayment upon the occurrence of certain events
                  (such as a change of control of the Operating Partnership),
                  (i) the possible effects of such provisions on the market
                  price of the Operating Partnership's or the Company's
                  securities or in deterring certain mergers, tender offers or
                  other takeover attempts, and the intention of the Operating
                  Partnership to comply with the requirements of Rule 14e-1
                  under the Exchange Act and any other applicable securities
                  laws in connection with such provisions; (ii) whether the
                  occurrence of the specified events may give rise to
                  cross-defaults on other indebtedness such that payment on such
                  Debt Securities may be effectively subordinated; and (iii) the
                  existence of any limitation on the Operating Partnership's
                  financial or legal ability to repurchase such Debt Securities
                  upon the occurrence of such an event (including, if true, the
                  lack of assurance that such a repurchase can be effected) and
                  the impact, if any, under the Indenture of such a failure,
                  including whether and under what circumstances such a failure
                  may constitute an Event of Default;

         (18)     With respect to any Debt Securities rated below investment
                  grade at the time of issuance, the Guarantees (the "Guaranteed
                  Securities"); and

         (19)     Any other terms of such Debt Securities not inconsistent with
                  the provisions of the applicable Indenture.

         If so provided in the applicable prospectus supplement, the Debt
Securities may be issued at a discount below their principal amount and provide
for less than the entire principal amount thereof to be payable upon declaration
of acceleration of the maturity thereof ("Original Issue Discount Securities").
In such cases, any special U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable prospectus supplement.

         Except as described under "Merger, Consolidation or Sale of Assets" or
as may be set forth in any prospectus supplement, the Debt Securities will not
contain any provisions that would limit the ability of the Operating Partnership
to incur indebtedness or that would afford holders of Debt Securities protection
in the event of (i) a highly leveraged or similar transaction involving the
Operating Partnership, the management of the Operating Partnership or the
Company, or any affiliate of any such party, (ii) a change of control, or (iii)
a reorganization, restructuring, merger or similar transaction involving the
Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "Merger,
Consolidation or Sale of Assets," the Operating Partnership may, in the future,
enter into certain transactions, such as the sale of all or substantially all of
its assets or the merger or consolidation of the Operating Partnership, that
would increase the amount of the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's assets, which may
have an adverse effect on the Operating Partnership's ability to service its
indebtedness, including the Debt Securities. Restrictions on ownership and
transfers of the Common Shares and Preferred Shares are designed to preserve the
Company's status


                                      -17-


<PAGE>
as a REIT and, therefore, may act to prevent or hinder a change of control. See
"Description of Shares of Beneficial Interest--Restrictions on Transfer."
Reference is made to the applicable prospectus supplement for information with
respect to any deletions from, modifications of, or additions to, the events of
default or covenants that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.

Guarantees

    The Company will fully, unconditionally and irrevocably guarantee the due
and punctual payment of principal of, premium, if any, and interest on any Debt
Securities rated below investment grade at the time of issuance by the Operating
Partnership, and the due and punctual payment of any sinking fund payments
thereon, when and as the same shall become due and payable, whether at a
maturity date, by declaration of acceleration, call for redemption or otherwise.

Denomination, Registration and Transfer

         Unless otherwise described in the applicable prospectus supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof.

         Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for any
authorized denomination of other Debt Securities of the same series and of a
like aggregate principal amount and tenor upon surrender of such Debt Securities
at the corporate trust office of the applicable Trustee or at the office of any
transfer agent designated by the Operating Partnership for such purpose. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee or at the office of any transfer agent designated by the
Operating Partnership for such purpose. Every Debt Security surrendered for
registration of transfer or exchange must be duly endorsed or accompanied by a
written instrument of transfer, and the person requesting such action must
provide evidence of title and identity satisfactory to the applicable Trustee or
transfer agent. No service charge will be made for any registration of transfer
or exchange of any Debt Securities, but the Trustee or the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. If the applicable prospectus supplement
refers to any transfer agent (in addition to the applicable Trustee) initially
designated by the Operating Partnership with respect to any series of Debt
Securities, the Operating Partnership may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Operating Partnership will be required
to maintain a transfer agent in each place of payment for such series. The
Operating Partnership may at any time designate additional transfer agents with
respect to any series of Debt Securities.

         Neither the Operating Partnership nor any Trustee shall be required (i)
to issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption of any Debt Securities that may be selected
for redemption and ending at the close of business on the day of such mailing;
(ii) to register the transfer of or exchange any Debt Security, or portion
thereof, so selected for redemption, in whole or in part, except the unredeemed
portion of any Debt Security being redeemed in part; or (iii) to issue, register
the transfer of or exchange any Debt Security that has been surrendered for
repayment at the option of the holder, except the portion, if any, of such Debt
Security not to be so repaid.

Merger, Consolidation or Sale of Assets

         The Indentures will provide that the Operating Partnership may, without
the consent of the holders of any outstanding Debt Securities, consolidate with,
or sell, lease or convey all or substantially all of its assets to, or merge
with or into, any other entity provided that (i) either the Operating
Partnership shall be the continuing entity, or the successor entity (if other
than the Operating Partnership) formed by or resulting from any such
consolidation or merger or which shall have received the transfer of such
assets, shall expressly assume (A) the Operating Partnership's obligations to
pay principal of (and premium, if any) and interest on all of the Debt
Securities and (B) the due and punctual performance and observance of all of the
covenants and conditions contained in each Indenture; (ii) immediately after
giving effect to such transaction and treating any indebtedness that becomes an
obligation of the Operating Partnership or any subsidiary as a result thereof as
having been incurred by the Operating Partnership or such subsidiary at the time
of such transaction, no event of default under the Indentures, and no event
which, after


                                      -18-


<PAGE>
notice or the lapse of time, or both, would become such an event of default,
shall have occurred and be continuing; and (iii) an officers' certificate and
legal opinion covering such conditions shall be delivered to each Trustee.

Certain Covenants

         Existence. Except as permitted under "--Merger, Consolidation or Sale
of Assets," the Indentures will require the Operating Partnership to do or cause
to be done all things necessary to preserve and keep in full force and effect
its existence, rights and franchises; provided, however, that the Operating
Partnership shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the conduct
of its business.

         Maintenance of Properties. The Indentures will require the Operating
Partnership to cause all of its material properties used or useful in the
conduct of its business or the business of any subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Operating Partnership may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Operating Partnership and its subsidiaries shall not
be prevented from selling or otherwise disposing of their properties for value
in the ordinary course of business.

         Insurance. The Indentures will require the Operating Partnership to
cause each of its and its subsidiaries' insurable properties to be insured
against loss or damage at least equal to their then full insurable value with
insurers of recognized responsibility and, if described in the applicable
prospectus supplement, having a specified rating from a recognized insurance
rating service.

         Payment of Taxes and Other Claims. The Indentures will require the
Operating Partnership to pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon it or any subsidiary or upon the
income, profits or property of the Operating Partnership or any subsidiary and
(ii) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Operating Partnership or any
subsidiary; provided, however, that the Operating Partnership shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith.

         Additional Covenants. Any additional covenants of the Operating
Partnership with respect to any series of Debt Securities will be set forth in
the prospectus supplement relating thereto.

Events of Default, Notice and Waiver

         Unless otherwise provided in the applicable prospectus supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder: (i) default for 30
days in the payment of any installment of interest on any Debt Security of such
series; (ii) default in the payment of principal of (or premium, if any, on) any
Debt Security of such series at its maturity; (iii) default in making any
sinking fund payment as required for any Debt Security of such series; (iv)
default in the performance or breach of any other covenant or warranty of the
Operating Partnership contained in the Indenture (other than a covenant added to
the Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in the applicable Indenture; (v) a default under any bond,
debenture, note or other evidence of indebtedness for money borrowed (except
mortgage indebtedness) by the Operating Partnership or any of its subsidiaries
in an aggregate principal amount in excess of $25,000,000 or under any indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed (except mortgage indebtedness)
by the Operating Partnership or any of its subsidiaries in an aggregate
principal amount in excess of $25,000,000, whether such indebtedness exists on
the date of such Indenture or shall thereafter be created, which default shall
have resulted in such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable or
such obligations being accelerated, without such acceleration having been
rescinded or annulled; (vi) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of the
Operating Partnership or any Significant Subsidiary of the Operating
Partnership; and (vii) any other event of default provided with respect to a
particular series of Debt Securities. The term "Significant Subsidiary" has the
meaning ascribed to such term in Regulation S-X promulgated under the Securities
Act of 1933, as amended (the "Securities Act").


                                      -19-


<PAGE>
         If an Event of Default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the holders of not less than 25% in
principal amount of the Debt Securities of that series will have the right to
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Operating Partnership (and to the applicable Trustee if given by
the holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
outstanding under any Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the holders of not less than a majority in principal amount
of outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may rescind and
annul such declaration and its consequences if (i) the Operating Partnership
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium, if any) and interest on the Debt Securities of such
series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the applicable Trustee; and (ii) all events of default, other than
the non- payment of accelerated principal (or specified portion thereof), with
respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) have been cured
or waived as provided in such Indenture. The Indentures will also provide that
the holders of not less than a majority in principal amount of the outstanding
Debt Securities of any series (or of all Debt Securities then outstanding under
the applicable Indenture, as the case may be) may waive any past default with
respect to such series and its consequences, except a default (i) in the payment
of the principal of (or premium, if any) or interest on any Debt Security of
such series; or (ii) in respect of a covenant or provision contained in the
applicable Indenture that cannot be modified or amended without the consent of
the holder of each outstanding Debt Security affected thereby.

         The Indentures will require each Trustee to give notice to the holders
of Debt Securities within 90 days of a default under the applicable Indenture
unless such default shall have been cured or waived; provided, however, that
such Trustee may withhold notice to the holders of any series of Debt Securities
of any default with respect to such series (except a default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such holders.

         The Indentures will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the case of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an event of default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it. This provision will not prevent, however, any holder of Debt
Securities from instituting suit for the enforcement of payment of the principal
of (and premium, if any) and interest on such Debt Securities at the respective
due dates thereof.

         The Indentures will provide that, subject to provisions in each
Indenture relating to its duties in case of default, a Trustee will be under no
obligation to exercise any of its rights or powers under an Indenture at the
request or direction of any holders of any series of Debt Securities then
outstanding under such Indenture, unless such holders shall have offered to the
Trustee thereunder reasonable security or indemnity. The holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series (or of all Debt Securities then outstanding under an Indenture, as the
case may be) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee, or
of exercising any trust or power conferred upon such Trustee. However, a Trustee
may refuse to follow any direction which is in conflict with any law or the
applicable Indenture, which may involve such Trustee in personal liability or
which may be unduly prejudicial to the holders of Debt Securities of such series
not joining therein.

         Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed by
one of several specified officers of the Operating Partnership, stating whether
or not such officer has knowledge of any default under the applicable Indenture
and, if so, specifying each such default and the nature and status thereof.



                                      -20-


<PAGE>
Modification of the Indentures

         Modifications and amendments of an Indenture will be permitted to be
made only with the consent of the holders of not less than a majority in
principal amount of all outstanding Debt Securities issued under such Indenture
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the holder of each such
Debt Security affected thereby, (i) change the stated maturity of the principal
of, or any installment of interest (or premium, if any) on, any such Debt
Security; (ii) reduce the principal amount of, or the rate or amount of interest
on, or any premium payable on redemption of, any such Debt Security, or reduce
the amount of principal of an Original Issue Discount Security that would be due
and payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the holder
of any such Debt Security; (iii) change the place of payment, or the coin or
currency, for payment of principal of, premium, if any, or interest on any such
Debt Security; (iv) impair the right to institute suit for the enforcement of
any payment on or with respect to any such Debt Security; (v) reduce the
above-stated percentage of any outstanding Debt Securities necessary to modify
or amend the applicable Indenture with respect to such Debt Securities, to waive
compliance with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
applicable Indenture; (vi) modify or affect in any manner adverse to the holders
of Guaranteed Securities the terms and conditions of the obligations of the
Company in respect of the payment of principal, premium, if any, and interest on
the Guaranteed Securities; or (vii) modify any of the foregoing provisions or
any of the provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the holder of such Debt Security.

         The holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series may, on behalf of all holders of Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Operating Partnership with certain restrictive covenants of
the applicable Indenture.

         Modifications and amendments of an Indenture will be permitted to be
made by the Operating Partnership and the respective Trustee thereunder without
the consent of any holder of Debt Securities for any of the following purposes:
(i) to evidence the succession of another person to the Operating Partnership as
obligor or the Company as guarantor under such Indenture; (ii) to add to the
covenants of the Operating Partnership for the benefit of the holders of all or
any series of Debt Securities or to surrender any right or power conferred upon
the Operating Partnership in such Indenture; (iii) to add events of default for
the benefit of the holders of all or any series of Debt Securities; (iv) to add
or change any provisions of an Indenture to facilitate the issuance of, or to
liberalize certain terms of, Debt Securities in bearer form, or to permit or
facilitate the issuance of Debt Securities in uncertificated form, provided that
such action shall not adversely affect the interests of the holders of the Debt
Securities of any series in any material respect; (v) to change or eliminate any
provisions of an Indenture, provided that any such change or elimination shall
become effective only when there are no Debt Securities outstanding of any
series created prior thereto which are entitled to the benefit of such
provision; (vi) to secure the Debt Securities; (vii) to establish the form or
terms of Debt Securities of any series; (viii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under an Indenture by more than one Trustee; (ix) to cure any ambiguity,
defect or inconsistency in an Indenture, provided that such action shall not
adversely affect the interests of holders of Debt Securities of any series
issued under such Indenture; or (x) to supplement any of the provisions of an
Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of such Debt Securities, provided that such action shall
not adversely affect the interests of the holders of the outstanding Debt
Securities of any series. In addition, with respect to Guaranteed Securities,
without the consent of any holder of Guaranteed Securities, the Company, or a
subsidiary thereof, may directly assume the due and punctual payment of the
principal of, any premium and interest on all the Guaranteed Securities and the
performance of every covenant of the Indenture on the part of the Operating
Partnership to be performed or observed. Upon any such assumption, the Company
or such subsidiary shall succeed to, and be substituted for and may exercise
every right and power of, the Operating Partnership under the Indenture with the
same effects if the Company or such subsidiary had been the issuer of the
Guaranteed Securities and the Operating Partnership shall be released from all
obligations and covenants with respect to the Guaranteed Securities. No such
assumption shall be permitted unless the Company has delivered to the Trustee
(i) an officers' certificate and an opinion of counsel, stating, among other
things, that the Guarantee and all other covenants of the Company in the
Indenture remain in full force and effect and (ii) an opinion of independent
counsel that the holders of Guaranteed Securities shall have no United States
federal tax consequences as a result of such assumption, and that, if any Debt
Securities are then listed on a stock exchange, that such Debt Securities shall
not be delisted as a result of such assumption.


                                      -21-


<PAGE>
         The Indentures will provide that in determining whether the holders of
the requisite principal amount of outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof; (ii) the principal amount
of any Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above); (iii) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to such
Indenture; and (iv) Debt Securities owned by the Operating Partnership or any
other obligor upon the Debt Securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.

         The Indentures will contain provisions for convening meetings of the
holders of Debt Securities of a series. A meeting will be permitted to be called
at any time by the applicable Trustee, and also, upon request, by the Operating
Partnership or the holders of at least 10% in principal amount of the
outstanding Debt Securities of such series, in any such case upon notice given
as provided in such Indenture. Except for any consent that must be given by the
holder of each Debt Security affected by certain modifications and amendments of
an Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with an Indenture will be binding on all holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding Debt
Securities of a series, the persons holding or representing such specified
percentage in principal amount of the outstanding Debt Securities of such series
will constitute a quorum.

         Notwithstanding the foregoing provisions, the Indentures will provide
that if any action is to be taken at a meeting of holders of Debt Securities of
any series with respect to any request, demand, authorization, direction,
notice, consent, waiver and other action that such Indenture expressly provides
may be made, given or taken by the holders of a specified percentage in
principal amount of all outstanding Debt Securities affected thereby, or of the
holders of such series and one or more additional series: (i) there shall be no
minimum quorum requirement for such meeting; and (ii) the principal amount of
the outstanding Debt Securities of such series that vote in favor of such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under such Indenture.

Subordination

         Unless otherwise provided in the applicable prospectus supplement,
Subordinated Securities will be subject to the following subordination
provisions.

         Upon any distribution to creditors of the Operating Partnership in a
liquidation, dissolution or reorganization, the payment of the principal of and
interest on any Subordinated Securities will be subordinated to the extent
provided in the applicable Indenture in right of payment to the prior payment in
full of all Senior Debt (as defined below), but the obligation of the Operating
Partnership to make payments of the principal of and interest on such
Subordinated Securities will not otherwise be affected. No payment of principal
or interest will be permitted to be made on Subordinated Securities at any time
if a default on Senior Debt exists that permits the holders of such Senior Debt
to accelerate its maturity and the default is the subject of judicial
proceedings or the Operating

                                      -22-


<PAGE>
Partnership receives notice of the default. After all Senior Debt is paid in
full and until the Subordinated Securities are paid in full, holders will be
subrogated to the rights of holders of Senior Debt to the extent that
distributions otherwise payable to holders have been applied to the payment of
Senior Debt. The Subordinated Indenture will not restrict the amount of Senior
Debt or other indebtedness of the Operating Partnership and its subsidiaries. As
a result of these subordination provisions, in the event of a distribution of
assets upon insolvency, holders of Subordinated Indebtedness may recover less,
ratably, than general creditors of the Operating Partnership.

         Senior Debt will be defined in the applicable Indenture as the
principal of and interest on, or substantially similar payments to be made by
the Operating Partnership in respect of, the following, whether outstanding at
the date of execution of the applicable Indenture or thereafter incurred,
created or assumed: (i) indebtedness of the Operating Partnership for money
borrowed or represented by purchase-money obligations; (ii) indebtedness of the
Operating Partnership evidenced by notes, debentures, or bonds, or other
securities issued under the provisions of an indenture, fiscal agency agreement
or other agreement; (iii) obligations of the Operating Partnership as lessee
under leases of property either made as part of any sale and leaseback
transaction to which the Operating Partnership is a party or otherwise; (iv)
indebtedness, obligations and liabilities of others in respect of which the
Operating Partnership is liable contingently or otherwise to pay or advance
money or property or as guarantor, endorser or otherwise or which the Operating
Partnership has agreed to purchase or otherwise acquire; and (v) any binding
commitment of the Operating Partnership to fund any real estate investment or to
fund any investment in any entity making such real estate investment, in each
case other than (A) any such indebtedness, obligation or liability referred to
in clauses (i) through (iv) above as to which, in the instrument creating or
evidencing the same pursuant to which the same is outstanding, it is provided
that such indebtedness, obligation or liability is not superior in right of
payment to the Subordinated Securities or ranks without preference to the
Subordinated Securities; (B) any such indebtedness, obligation or liability
which is subordinated to indebtedness of the Operating Partnership to
substantially the same extent as or to a greater extent than the Subordinated
Securities are subordinated; and (C) the Subordinated Securities. There will not
be any restrictions in any Indenture relating to Subordinated Securities upon
the creation of additional Senior Debt.

         If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying prospectus supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Debt outstanding as of the end of the Operating Partnership's
most recent fiscal quarter.

Discharge, Defeasance and Covenant Defeasance

         Unless otherwise indicated in the applicable prospectus supplement, the
Operating Partnership will be permitted, at its option, to discharge certain
obligations to holders of any series of Debt Securities issued under any
Indenture that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.

         The Indentures will provide that, unless otherwise indicated in the
applicable prospectus supplement, the Operating Partnership may elect either (i)
to defease and discharge itself and the Company (if such Debt Securities are
Guaranteed Securities) from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities, to hold moneys for payment in trust)
("defeasance"); or (ii) to release itself and the Company (if such Debt
Securities are Guaranteed Securities) from their obligations with respect to
such Debt Securities under the applicable Indenture (being the restrictions
described under "--Certain Covenants") or, if provided in the applicable
prospectus supplement, their obligations with respect to any other covenant, and
any omission to comply with such obligations shall not constitute an event of
default with respect to such Debt Securities ("covenant defeasance"), in either
case upon the irrevocable deposit by the Operating Partnership or the Company
(if the Debt Securities are Guaranteed Securities) with the applicable Trustee,
in trust, of
                                      -23-


<PAGE>

an amount, in such currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are payable at stated
maturity, or Government Obligations (as defined below), or both, applicable to
such Debt Securities, which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and interest on such
Debt Securities, and any mandatory sinking fund or analogous payments thereon,
on the scheduled due dates therefor.

         Such a trust will only be permitted to be established if, among other
things, the Operating Partnership or the Company (if such Debt Securities are
Guaranteed Securities) has delivered to the applicable Trustee an opinion of
counsel (as specified in the applicable Indenture) to the effect that the
holders of such Debt Securities will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of counsel,
in the case of defeasance, will be required to refer to and be based upon a
ruling received from or published by the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date of the
Indenture. In the event of such defeasance, the holders of such Debt Securities
would thereafter be able to look only to such trust fund for payment of
principal (and premium, if any) and interest.

         "Government Obligations" means securities that are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged; or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt; provided,
however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the Government
Obligation evidenced by such depository receipt.

         Unless otherwise provided in the applicable prospectus supplement, if
after the Operating Partnership or the Company (if such Debt Securities are
Guaranteed Securities) has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series, (i) the holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the applicable Indenture or the terms of such Debt
Security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such Debt
Security; or (ii) a Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which such deposit has been
made, the indebtedness represented by such Debt Security will be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency, currency
unit or composite currency both by the government of the country which issued
such currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community; (ii) the
European Currency Unit ("ECU") both within the European Monetary System and for
the settlement of transactions by public institutions of or within the European
Communities; or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable prospectus supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.

         In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any event of default other than the event
of default described in clause (iv) under "--Events of Default, Notice and
Waiver" with respect to specified sections of an Indenture (which sections would
no longer be applicable to such Debt Securities) or described in clause (vii)
under "--Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has
                                      -24-


<PAGE>
been covenant defeasance, the amount in such currency, currency unit or
composite currency in which such Debt Securities are payable, and Government
Obligations on deposit with the applicable Trustee, will be sufficient to pay
amounts due on such Debt Securities at the time of their stated maturity but may
not be sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such event of default. However, the Operating
Partnership and the Company (if such Debt Securities are Guaranteed Securities)
would remain liable to make payment of such amounts due at the time of
acceleration.

         The applicable prospectus supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.

No Conversion Rights

         The Debt Securities will not be convertible into or exchangeable for
any shares of beneficial interest of the Company or any equity interest in the
Operating Partnership.

Payment

         Unless otherwise specified in the applicable prospectus supplement, the
principal of (and applicable premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee, the
address of which will be stated in the applicable prospectus supplement;
provided, however, that, at the option of the Operating Partnership, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained within the United
States.

         All moneys paid by the Operating Partnership to a paying agent or a
Trustee for the payment of the principal of or any premium or interest on any
Debt Security which remain unclaimed at the end of two years after such
principal, premium or interest has become due and payable will be repaid to the
Operating Partnership, and the holder of such Debt Security thereafter may look
only to the Operating Partnership for payment thereof.

Global Securities

         The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the applicable
prospectus supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the applicable prospectus supplement
relating to such series.

                  DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

         The following summary of the terms of the shares of beneficial interest
of the Company does not purport to be complete and is subject to and qualified
in its entirety by reference to the Declaration of Trust and Bylaws of the
Company, as amended, which are incorporated by reference into the Registration
Statement of which this Prospectus is a part.

General

         The Declaration of Trust of the Company provides that the Company is
authorized to issue up to 105,000,000 shares of beneficial interest of the
Company ("Shares"), consisting of 100,000,000 Common Shares and 5,000,000
Preferred Shares. The Declaration of Trust may be amended by the Board of
Trustees, without shareholder approval, to increase or decrease the aggregate
number of authorized Shares of any class. The authorized Common Shares and
Preferred Shares are available for future issuance without further action by the
Company's shareholders, unless such action is required by applicable law or the
rules of any stock exchange or automated quotation system on which the Company's
securities may be listed or traded.



                                      -25-


<PAGE>
         Both Maryland statutory law governing real estate investment trusts
organized under Maryland law (the "Maryland REIT Law") and the Company's
Declaration of Trust provide that no shareholder of the Company will be
personally liable, by reason of his status as a shareholder of the Company, for
any obligation of the Company. The Company's Bylaws further provide that the
Company shall indemnify any shareholder or former shareholder against any claim
or liability to which such shareholder may become subject by reason of his being
or having been a shareholder, and that the Company shall reimburse each
shareholder who has been successful, on the merits or otherwise, in the defense
of a proceeding to which he has been made a party by reason of his status as
such for all reasonable expenses incurred by him in connection with any such
claim or liability. In addition, it is a requirement of the Declaration of Trust
that all written contracts to which the Company is a party shall include a
provision to the effect that shareholders shall not be personally liable
thereon.

         The Declaration of Trust provides that, subject to the provisions of
any class or series of preferred shares then outstanding and to the mandatory
provisions of applicable law, the shareholders are entitled to vote only on the
following matters: (i) election or removal of Trustees; (ii) amendment of the
Declaration of Trust (other than an amendment to increase or decrease the
aggregate number of authorized Shares of any class); (iii) a determination by
the Trust to invest in commodities contracts (other than interest rate futures
intended to hedge the Company against interest rate risk), engage in securities
trading (as compared to investment) activities or hold properties primarily for
sale to customers in the ordinary course of business; and (iv) a merger of the
Company with another entity. Except with respect to the foregoing, no action
taken by the shareholders of the Company at any meeting shall in any way bind
the Board of Trustees.

Transfer Agent and Registrar

         The transfer agent and registrar for the Common Shares is The Bank of
New York.

Shares

         Common Shares of Beneficial Interest

         Each outstanding Common Share entitles the holder thereof to one vote
on all matters submitted to a vote of shareholders, including the election of
Trustees. There is no cumulative voting in the election of Trustees, which means
that, subject to such voting rights as may be granted by the Board of Trustees
in connection with future issuances of Preferred Shares, the holders of a
majority of the outstanding Common Shares can elect all of the Trustees then
standing for election. Subject to such preferential rights as may be granted by
the Board of Trustees of the Company in connection with the future issuance, if
any, of Preferred Shares, holders of Common Shares are entitled to such
distributions as may be declared from time to time by the Board of Trustees out
of funds legally available therefor.

         Holders of Common Shares have no conversion, exchange, redemption or
preemptive rights to subscribe to any securities of the Company. All outstanding
Common Shares will be fully paid and nonassessable. In the event of any
liquidation, dissolution or winding-up of the affairs of the Company, subject to
such preferential rights as may be granted by the Board of Trustees of the
Company in connection with the future issuance, if any, of Preferred Shares,
holders of Common Shares will be entitled to share ratably in the assets of the
Company remaining after provision for payment of liabilities to creditors. All
Common Shares have equal dividend, distribution, liquidation and other rights.

         Preferred Shares of Beneficial Interest

         The Preferred Shares authorized by the Company's Declaration of Trust
may be issued from time to time in one or more series. Prior to the issuance of
Preferred Shares of each such series, the Board of Trustees is required by the
Maryland REIT Law and the Company's Declaration of Trust to set for each series
the terms, preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms or conditions of
redemption, as are permitted by the Maryland REIT Law. Such rights, powers,
restrictions and limitations could include the right to receive specified
distributions and payments on liquidation prior to any such payments being made
to the holders of Common Shares. Under certain circumstances, the issuance of
Preferred Shares could have the effect of delaying, deferring or preventing a
change of control of the Company and may adversely affect the voting and other
rights of the holders of the Common Shares.

                                      -26-


<PAGE>
         Classification or Reclassification of Preferred Shares

         The Declaration of Trust authorizes the Trustees to classify or
reclassify, in one or more series, any unissued Preferred Shares by setting or
changing the number of Preferred Shares constituting such series and the
designation, preferences, conversion or other rights, voting powers,
restrictions, limitations as to distributions, qualifications or terms or
conditions of redemption of such Preferred Shares.

Preferred Shares

         The prospectus supplement relating to any Preferred Shares offered
thereby will contain the specific terms thereof, including, without limitation:

         (1) The title and stated value of such Preferred Shares;

         (2) The number of such Preferred Shares offered, the liquidation
preference per share and the offering price of such Preferred Shares;

         (3) The distribution rate(s), period(s) and /or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Shares;

         (4) The date from which distributions on such Preferred Shares shall
accumulate, if applicable;

         (5) The procedures for any auction and remarketing, if any, for such
Preferred Shares;

         (6) The provision for a sinking fund, if any, for such Preferred
Shares;

         (7) The provision for redemption, if applicable, of such Preferred
Shares;

         (8) Any listing of such Preferred Shares on any securities exchange;

         (9) The terms and conditions, if applicable, upon which such Preferred
Shares will be convertible into Common Shares of the Company, including the
conversion price (or manner of calculation thereof);

         (10) Whether interests in such Preferred Shares will be represented by
Depositary Shares;

         (11) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;

         (12) A discussion of all material federal income tax considerations, if
any, applicable to such Preferred Shares that are not discussed in this
Prospectus;

         (13) The relative ranking and preferences of such Preferred Shares as
to distribution rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;

         (14) Any limitations on issuance of any series of Preferred Shares
ranking senior to or on a parity with such series of Preferred Shares as to
distribution rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; and

         (15) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the status of the
Company as a REIT.

Restrictions on Transfer

         For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Shares may be owned, directly or indirectly, by five
or fewer individuals (defined in the Code to include certain entities such as
qualified pension plans) during the last half of a taxable year and Shares must
be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of twelve months (or during a proportionate part of a shorter
taxable year).


                                      -27-


<PAGE>
         Because the Board of Trustees believes it is at present essential for
the Company to continue to qualify as a REIT, the Declaration of Trust, subject
to certain exceptions, contains provisions that restrict the number of Shares
that a person may own and that are designed to safeguard the Company against an
inadvertent loss of REIT status. In order to prevent any shareholder from owning
Shares in an amount that would cause more than 50% in value of the outstanding
Shares to be held by five or fewer individuals, the Board, pursuant to authority
granted in the Declaration of Trust, has passed a resolution that, subject to
certain exceptions described below, provides that no person may own, or be
deemed to own by virtue of the attribution provisions of the Code, more than
9.8% in value of the outstanding Shares, except for Safeguard Scientifics, Inc.
("SSI") which, pursuant to a separate agreement with the Company, may own no
more than 14.75% in value of the outstanding Shares (the "Ownership Limit"). The
Board of Trustees, subject to limitations, retains the authority to effect
additional increases to, or establish exemptions from, the Ownership Limit. The
Board of Trustees, pursuant to authority granted in the Declaration of Trust,
has passed a resolution that provides that, for purposes of determining
applicable ownership limitations: (i) the beneficiaries of SERS (in accord with
their actuarial interests therein), and not SERS or the SERS Voting Trust, shall
be deemed the direct owners of Shares held by the SERS Voting Trust, and (ii)
the owners of the Morgan Stanley Funds (in proportion to their ownership
therein), and not such Morgan Stanley Funds nor a related entity, shall be
deemed the direct owners of Shares held by such Morgan Stanley Funds.

         In addition, pursuant to the Declaration of Trust, no purported
transfer of Shares may be given effect if it would result in ownership of all of
the outstanding Shares by fewer than 100 persons (determined without any
reference to the rules of attribution) or result in the Company being "closely
held" within the meaning of Section 856(h) of the Code (the "Ownership
Restrictions"). In the event of a purported transfer or other event that would,
if effective, result in the ownership of Shares in violation of the Ownership
Limit or the Ownership Restrictions, such transfer would be deemed void ab
initio and such Shares would automatically be exchanged for "Excess Shares"
authorized by the Declaration of Trust, according to rules set forth in the
Declaration of Trust, to the extent necessary to ensure that the purported
transfer or other event does not result in the ownership of Shares in violation
of the Ownership Limit or the Ownership Restrictions.

         Holders of Excess Shares are not entitled to voting rights (except to
the extent required by law), dividends or distributions. If, after the purported
transfer or other event resulting in an exchange of Shares for Excess Shares and
prior to the discovery by the Company of such exchange, dividends or
distributions are paid with respect to Shares that were exchanged for Excess
Shares, then such dividends or distributions would be repayable to the Company
upon demand. While outstanding, Excess Shares would be held in trust by the
Company for the benefit of the ultimate transferee of an interest in such trust,
as described below. While Excess Shares are held in trust, an interest in that
trust may be transferred by the purported transferee or other purported holder
with respect to such Excess Shares only to a person whose ownership of the
Shares would not violate the Ownership Limit or the Ownership Restrictions, at
which time the Excess Shares would be automatically exchanged for Shares of the
same type and class as the Shares for which the Excess Shares were originally
exchanged. The Declaration of Trust contains provisions that are designed to
ensure that the purported transferee or other purported holder of the Excess
Shares may not receive in return for such a transfer an amount that reflects any
appreciation in the Shares for which such Excess Shares were exchanged during
the period that such Excess Shares were outstanding. Any amount received by a
purported transferee or other purported holder in excess of the amount permitted
to be received would be required to be turned over to the Company.

         The Declaration of Trust also provides that Excess Shares shall be
deemed to have been offered for sale to the Company, or its designee, which
shall have the right to accept such offer for a period of 90 days after the
later of: (i) the date of the purported transfer or event which resulted in an
exchange of Shares for such Excess Shares; and (ii) the date the Board of
Trustees determines that a purported transfer or other event resulting in an
exchange of Shares for such Excess Shares has occurred if the Company does not
receive notice of any such transfer. The price at which the Company may purchase
such Excess Shares would be equal to the lesser of: (i) in the case of Excess
Shares resulting from a purported transfer for value, the price per share in the
purported transfer that caused the automatic exchange for such Excess Shares or,
in the case of Excess Shares resulting from some other event, the market price
of such Shares on the date of the automatic exchange for Excess Shares; or (ii)
the market price of such Shares on the date that the Company accepts such Excess
Shares. Any dividend or distribution paid to a proposed transferee on Excess
Shares prior to the discovery by the Company that such Shares have been
transferred in violation of the provisions of the Declaration of Trust shall be
repaid to the Company upon demand. If the foregoing restrictions are determined
to be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the intended transferee or holder of any Excess Shares may be
deemed, at the option of the Company, to have acted as


                                      -28-


<PAGE>
an agent on behalf of the Company in acquiring or holding such Excess Shares and
to hold such Excess Shares on behalf of the Company.

         The Trustees may waive the Ownership Restrictions if evidence
satisfactory to the Trustees and the Company's tax counsel or tax accountants is
presented showing that such waiver will not jeopardize the Company's status as a
REIT under the Code. As a condition of such waiver, the Trustees may require
that an intended transferee give written notice to the Company, furnish such
opinions of counsel, affidavits, undertakings, agreements and information as may
be required by the Trustees and/or an undertaking from the applicant with
respect to preserving the status of the Company. The Ownership Restrictions will
not apply if the Company determines that it no longer will attempt to qualify,
or continue to qualify, as a REIT. Any transfer of Shares, or any security
convertible into Shares that would: (i) create a direct or indirect ownership of
Shares in excess of the Ownership Limit; or (ii) result in the violation of the
Ownership Restrictions will be void with respect to the intended transferee and
will result in Excess Shares as described above.

         Neither the Ownership Restrictions nor the Ownership Limit will be
automatically removed even if the REIT provisions of the Code are changed so as
no longer to contain any ownership concentration limitation or if the ownership
concentration limitation is increased. Except as otherwise described above, any
change in the Ownership Restrictions would require an amendment to the
Declaration of the Trust. Amendments to the Declaration require the affirmative
vote of holders owning not less than a majority of the outstanding Shares
entitled to vote thereon. In addition to preserving the Company's status as a
REIT, the Ownership Restrictions and the Ownership Limit may have the effect of
precluding an acquisition of control of the Company without the approval of the
Board of Trustees.

         All persons who own, directly or by virtue of the applicable
attribution provisions of the Code, more than 4.0% of the value of any class of
outstanding Shares, must file an affidavit with the Company containing the
information specified in the Declaration by January 31 of each year. In
addition, each shareholder shall upon demand be required to disclose to the
Company in writing such information with respect to the direct, indirect and
constructive ownership of Shares as the Trustees deem necessary to comply with
the provisions of the Code applicable to REITs, to comply with the requirements
of any taxing authority or governmental agency or to determine any such
compliance.

         The Ownership Limit could have the effect of delaying, deferring or
preventing a transaction or a change in control of the Company that might
involve a premium price for the Common Shares or otherwise be in the best
interest of the shareholders of the Company.

         All certificates representing Shares that are hereafter issued will
bear a legend referring to the restrictions and limitations described above.


                        DESCRIPTION OF DEPOSITARY SHARES

General

         The Company may issue receipts ("Depositary Receipts") for the
Depository Shares, each of which will represent a fractional interest of a share
of a particular series of Preferred Shares, as specified in the applicable
prospectus supplement. Preferred Shares of each series represented by Depositary
Shares will be deposited under a separate Deposit Agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (the "Preferred
Share Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the Deposit Agreement, each owner of a Depositary
Receipt will be entitled, in proportion to the fractional interest of a share of
a particular series of Preferred Shares represented by the Depositary Shares
evidenced by such Depositary Receipt, to all the rights and preferences of the
Preferred Shares represented by such Depositary Shares (including distribution,
voting, conversion, redemption and liquidation rights).

         The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Shares by the Company to the Preferred Share
Depositary, the Company will cause the Preferred Share Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request, and the following summary of the form thereof filed as an exhibit


                                      -29-


<PAGE>
to the Registration Statement of which this Prospectus is a part is qualified in
its entirety by reference to these documents.

Distributions

         The Preferred Share Depositary will distribute all cash distributions
received in respect of the Preferred Shares to the record holders of Depositary
Receipts evidencing the related Depositary Shares in proportion to the number of
such Depositary Receipts owned by such holders, subject to certain obligations
of holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Share Depositary.

         In the event of a distribution other than in cash, the Preferred Share
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled to such distributions, subject to certain
obligations of holders to file proofs, certificates and other information and to
pay certain charges and expenses to the Preferred Share Depositary, unless the
Preferred Share Depositary determines that it is not feasible to make such
distribution, in which case the Preferred Share Depositary may, with the
approval of the Company, sell such property and distribute the net proceeds from
such sale to such holders.

         No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Shares converted into Excess Shares.

Withdrawal of Shares

         Upon surrender of the Depositary Receipts at the corporate trust office
of the Preferred Share Depositary (unless the related Depositary Shares have
previously been called for redemption or converted into Excess Shares), the
holders thereof will be entitled to delivery at such office, to or upon such
holder's order, of the number of whole or fractional Preferred Shares and any
money or other property represented by the Depositary Shares evidenced by such
Depositary Receipts. Holders of Depositary Receipts will be entitled to receive
whole or fractional shares of the related Preferred Shares on the basis of the
proportion of the Preferred Shares represented by each Depositary Share as
specified in the applicable prospectus supplement, but holders of such Preferred
Shares will not thereafter be entitled to receive Depositary Shares therefor. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
Preferred Shares to be withdrawn, the Preferred Share Depositary will deliver to
such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares.

Redemption of Depositary Shares

         Whenever the Company redeems Preferred Shares held by the Preferred
Share Depositary, the Preferred Share Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Company shall have paid in full to the
Preferred Share Depositary the redemption price of the Preferred Shares to be
redeemed plus an amount equal to any accrued and unpaid distributions thereon to
the date fixed for redemption. The redemption price per Depositary Share will be
equal to the redemption price and any other amounts per share payable with
respect to the Preferred Shares. If fewer than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Company that will not result in
the issuance of any Excess Shares.

         From and after the date fixed for redemption, all distributions in
respect of the Preferred Shares so called for redemption will cease to accrue,
the Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts evidencing
the Depositary Shares so called for redemption will cease, except the right to
receive any monies payable upon such redemption and any money or other property
to which the holders of such Depositary Receipts were entitled upon such
redemption upon surrender thereof to the Preferred Share Depositary.



                                      -30-


<PAGE>
Voting of the Preferred Shares

         Upon receipt of notice of any meeting at which the holders of the
Preferred Shares are entitled to vote, the Preferred Share Depositary will mail
the information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Shares) will be entitled to instruct the Preferred Share
Depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Shares represented by such holder's Depositary Shares. The Preferred
Share Depositary will vote the amount of Preferred Shares represented by such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
Preferred Share Depositary in order to enable the Preferred Share Depositary to
do so. The Preferred Share Depositary will abstain from voting the amount of
Preferred Shares represented by such Depositary Shares to the extent it does not
receive specific instructions from the holders of Depositary Receipts evidencing
such Depositary Shares. The Preferred Share Depositary shall not be responsible
for any failure to carry out any instruction to vote, or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
Preferred Share Depositary.

Liquidation Preference

         In the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of each Depositary
Receipt will be entitled to the fraction of the liquidation preference accorded
each Preferred Share represented by the Depositary Share evidenced by such
Depositary Receipt, as set forth in the applicable prospectus supplement.

Conversion of Preferred Shares

         The Depositary Shares, as such, are not convertible into Common Shares
or any other securities or property of the Company, except in connection with
certain conversions in connection with the preservation of the Company's status
as a REIT. Nevertheless, if so specified in the applicable prospectus supplement
relating to an offering of Depositary Shares, the Depositary Receipts may be
surrendered by holders thereof to the Preferred Share Depositary with written
instructions to the Preferred Share Depositary to instruct the Company to cause
conversion of the Preferred Shares represented by the Depositary Shares
evidenced by such Depositary Receipts into whole Common Shares, other Preferred
Shares (including Excess Shares) of the Company or other shares of beneficial
interest, and the Company has agreed that upon receipt of such instructions and
any amounts payable in respect thereof, it will cause the conversion thereof
utilizing the same procedures as those provided for delivery of Preferred Shares
to effect such conversion. If the Depositary Shares evidenced by a Depositary
Receipt are to be converted in part only, a new Depositary Receipt or Receipts
will be issued for any Depositary Shares not to be converted. No fractional
Common Shares will be issued upon conversion, and if such conversion will result
in a fractional share being issued, an amount will be paid in cash by the
Company equal to the value of the fractional interest based upon the closing
price of the Common Shares on the last business day prior to the conversion.

Amendment and Termination of the Deposit Agreement

         The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Share
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Shares will not be effective unless such amendment has been approved
by the existing holders of at least a majority of the Depositary Shares
evidenced by the Depositary Receipts then outstanding. No amendment shall impair
the right, subject to certain exceptions in the Depositary Agreement, of any
holder of Depositary Receipts to surrender any Depositary Receipt with
instructions to deliver to the holder the related Preferred Shares and all money
and other property, if any, represented thereby, except in order to comply with
law. Every holder of an outstanding Depositary Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold such
Depositary Receipt, to consent and agree to such amendment and to be bound by
the Deposit Agreement as amended thereby.



                                      -31-


<PAGE>
         The Deposit Agreement may be terminated by the Company upon not less
than 30 days' prior written notice to the Preferred Share Depositary if: (i)
such termination is necessary to assist in maintaining the Company's status as a
REIT or (ii) a majority of each series of Preferred Shares affected by such
termination consents to such termination, whereupon the Preferred Share
Depositary shall deliver or make available to each holder of Depositary
Receipts, upon surrender of the Depositary Receipts held by such holder, such
number of whole or fractional Preferred Shares as are represented by the
Depositary Shares evidenced by such Depositary Receipts together with any other
property held by the Preferred Share Depositary with respect to such Depositary
Receipts. The Company has agreed that if the Deposit Agreement is terminated to
assist in maintaining the Company's status as a REIT, then, if the Depositary
Shares are listed on a national securities exchange, the Company will use its
best efforts to list the Preferred Shares issued upon surrender of the related
Depositary Shares on a national securities exchange. In addition, the Deposit
Agreement will automatically terminate if: (i) all outstanding Depositary Shares
shall have been redeemed, (ii) there shall have been a final distribution in
respect of the related Preferred Shares in connection with any liquidation,
dissolution or winding up of the Company and such distribution shall have been
distributed to the holders of Depositary Receipts evidencing the Depositary
Shares representing such Preferred Shares or (iii) each share of the related
Preferred Shares shall have been converted into shares of beneficial interest of
the Company not so represented by Depositary Shares.

Charges of Preferred Share Depositary

         The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the Deposit Agreement. In addition,
the Company will pay the fees and expenses of the Preferred Share Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay certain other transfer and
other taxes and governmental charges as well as the fees and expenses of the
Preferred Share Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.

Resignation and Removal of Depositary

         The Preferred Share Depositary may resign at any time by delivering to
the Company notice of its election to do so, and the Company may at any time
remove the Preferred Share Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Share Depositary. A
successor Preferred Share Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.

Miscellaneous

         The Preferred Share Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Share Depositary with respect to the related Preferred Shares.

         Neither the Preferred Share Depositary nor the Company will be liable
if it is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The obligations
of the Company and the Preferred Share Depositary under the Deposit Agreement
will be limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Shares represented by the Depositary Shares), gross negligence or willful
misconduct, and the Company and the Preferred Share Depositary will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or Preferred Shares represented thereby
unless satisfactory indemnity is furnished. The Company and the Preferred Share
Depositary may rely on written advice of counsel or accountants, or information
provided by persons presenting Preferred Shares represented thereby for deposit,
holders of Depositary Receipts or other persons believed in good faith to be
competent to give such information, and on documents believed in good faith to
be genuine and signed by a proper party.

         In the event the Preferred Share Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on the
one hand, and the Company, on the other hand, the Preferred Share Depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.

                                      -32-


<PAGE>
                             DESCRIPTION OF WARRANTS

         The Company may issue Warrants to purchase of Preferred Shares,
Depositary Shares or Common Shares. Warrants may be issued independently or
together with any Securities and may be attached to or separate from such
securities. Each series of Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between the Company
and a specified warrant agent ("Warrant Agent"). The Warrant Agent will act
solely as an agent of the Company in connection with the Warrants of such series
and will not assume any obligation or relationship of agency or trust for or
with any holders or beneficial owners of Warrants.

         The applicable prospectus supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currencies in which the price or prices of such Warrants may be payable; (v)
the designation, amount and terms of the Securities purchasable upon exercise of
such Warrants; (vi) the designation and terms of the other Securities with which
such Warrants are issued and the number of such Warrants issued with each such
security; (vii) if applicable, the date on and after which such Warrants and the
Securities purchasable upon exercise of such Warrants will be separately
transferable; (viii) the price or prices at which and currency or currencies in
which the Securities purchasable upon exercise of such Warrants may be
purchased; (ix) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire; (x) the minimum or
maximum amount of such Warrants which may be exercised at any one time; (xi)
information with respect to book-entry procedures, if any; (xii) a discussion of
certain Federal income tax considerations; and (xiii) any other material terms
of such Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Warrants.

                    CERTAIN PROVISIONS OF MARYLAND LAW AND OF
                  THE COMPANY'S DECLARATION OF TRUST AND BYLAWS

         The following summary of certain provisions of Maryland law and of the
Declaration of Trust and Bylaws does not purport to be complete and is subject
to and qualified in its entirety by reference to Maryland law and to the
Declaration of Trust and Bylaws of the Company, as amended, which are
incorporated by reference into this Registration Statement.

Duration

         Under the Company's Declaration of Trust, the Company has a perpetual
term and will continue perpetually subject to the authority of the Board of
Trustees to terminate the Company's existence and liquidate its assets and
subject to termination pursuant to the Maryland REIT Law.

Board of Trustees

         The Company's Declaration of Trust provides that the number of Trustees
of the Company shall not be less than three nor more than 15. Any vacancy
(including a vacancy created by an increase in the number of Trustees) will be
filled, at any regular meeting or at any special meeting called for that
purpose, by a majority of the Trustees (although less than a quorum). The
Trustees will each serve for a term of one year (except that an individual who
has been elected to fill a vacancy will hold office only until the next annual
meeting of shareholders and until his successor has been duly elected and
qualified).

         The Declaration of Trust provides that a Trustee may be removed from
office only at a meeting of the shareholders called for that purpose, by the
affirmative vote of the holders of not less than a majority of the Shares
entitled to vote in the election of Trustees; provided, however, that in the
case of any Trustees elected solely by holders of a series of Preferred Shares,
such Trustees may be removed by the affirmative vote of a majority of the
Preferred Shares of that series then outstanding and entitled to vote in the
election of Trustees, voting together as a single class.



                                      -33-


<PAGE>
Meetings of Shareholders

         The Declaration of Trust requires the Company to hold an annual meeting
of shareholders for the election of Trustees and the transaction of any other
proper business. Special meetings of shareholders may be called upon the written
request of shareholders holding at least 10% of the Common Shares. Special
meetings of shareholders may also be called by the holders of Preferred Shares
to the extent, if any, determined by the Board of Trustees in connection with
the establishment of a class or series of Preferred Shares. Any action required
or permitted to be taken by shareholders must be taken at a duly called annual
or special meeting of shareholders and may not be effected by any consent in
writing of shareholders.

Business Combinations

         Under the MGCL, as applicable to Maryland real estate investment
trusts, certain "business combinations" (including certain mergers,
consolidations, share exchanges, or, in certain circumstances, asset transfers
or issuances or reclassifications of equity securities) between a Maryland real
estate investment trust and an Interested Shareholder or an affiliate of the
Interested Shareholder are prohibited for five (5) years after the most recent
date on which the Interested Shareholder becomes an Interested Shareholder.
Thereafter, any such business combination must be: (a) recommended by the
trustees of such trust and (b) approved by the affirmative vote of at least: (i)
80% of the votes entitled to be cast by holders of outstanding voting shares of
beneficial interest of the trust; and (ii) two-thirds of the votes entitled to
be cast by holders of outstanding voting shares of beneficial interest other
than shares held by the Interested Shareholder with whom (or with whose
affiliate) the business combination is to be effected, unless, among other
conditions, the trust's common shareholders receive a minimum price (as defined
in the MGCL) for their shares and the consideration is received in cash or in
the same form as previously paid by the Interested Shareholder for its shares.
These provisions of the MGCL do not apply, however, to business combinations
that are approved or exempted by the board of trustees of the trust prior to the
time that the Interested Shareholder becomes an Interested Shareholder. An
amendment to a Maryland REIT's declaration of trust electing not to be subject
to the foregoing requirements must be approved by the affirmative vote of at
least 80% of the votes entitled to be cast by holders of outstanding voting
shares of beneficial interest of the trust, voting together as a single voting
group, and two-thirds of the votes entitled to be cast by holders of outstanding
voting shares of beneficial interest other than shares of beneficial interest
held by Interested Shareholders. Any such amendment shall not be effective until
18 months after the vote of shareholders and does not apply to any business
combination of the trust with an Interested Shareholder on the date of the
shareholder vote. The Board of Trustees has exempted any business combinations
involving SSI, TNC, Gerard H. Sweeney and their respective affiliates from the
business combination provisions of the MGCL and, consequently, the five-year
prohibition and the super-majority vote requirements will not apply to business
combinations between any of them and the Company. As a result, SSI, TNC, Gerard
H. Sweeney and their respective affiliates may be able to enter into business
combinations that may not be in the best interest of the shareholders without
compliance by the Company with the super-majority vote requirements and the
other provisions of the statute. In addition, the Company has exempted any
business combination involving SERS or the SERS Voting Trust and any of their
respective existing or future affiliates and Morgan Stanley Asset Management
Inc. and the Morgan Stanley Funds and any of their respective existing or future
affiliates from the business combination provisions of the MGCL.

         The business combination statute could have the effect of delaying,
deferring or preventing offers to acquire the Company and of increasing the
difficulty of consummating any such offer.

Control Share Acquisitions

         The MGCL, as applicable to Maryland real estate investment trusts,
provides that "control shares" of a Maryland real estate investment trust
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter by shareholders, excluding shares owned by the acquiror, by officers or
by trustees who are employees of the trust in question. "Control shares" are
voting shares of beneficial interest which, if aggregated with all other shares
previously acquired by such acquiror or in respect of which the acquiror is able
to exercise or direct the exercise of voting power (except solely by virtue of a
revocable proxy), would entitle the acquiror to exercise the voting power in the
election of trustees within one of the following ranges of voting power: (a)
one-fifth or more but less than one-third, (b) one-third or more but less than a
majority, or (c) a majority or more of all voting power. Control shares do not
include shares the acquiring person is then entitled to vote as a result of
having previously obtained shareholder approval. A "control share acquisition"
means the acquisition of control shares, subject to certain exceptions.


                                      -34-


<PAGE>
         A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the trust's board of trustees to call a special meeting of
shareholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the trust may itself present
the question at any shareholders meeting.

         If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then, subject to certain conditions and limitations, the trust may
redeem any or all of the control shares, except those for which voting rights
have previously been approved, for fair value determined, without regard to the
absence of voting rights for the control shares, as of the date of the last
control share acquisition by the acquiror or of any meeting of shareholders at
which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a shareholders meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to vote, all
other shareholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition,
and certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.

         The control share acquisition statute does not apply to shares acquired
in a merger, consolidation or share exchange if the trust is a party to the
transaction, or to acquisitions approved or exempted by the declaration of trust
or bylaws of the trust. Pursuant to the statute, the Company has exempted any
and all acquisitions of Shares by SSI, TNC and any current or future affiliate
or associate of theirs from the control share provisions of the MGCL. As a
result, SSI or TNC and their affiliates will be able to possess voting power not
generally available to other persons and the effect may be to further enhance
their ability to control the Company. In addition, pursuant to the statute, the
Company has exempted any and all acquisitions of Shares by SERS and the SERS
Voting Trust and any of their respective current or future affiliates or
associates and Morgan Stanley Asset Management Inc. and the Morgan Stanley Funds
and any of their respective current or future affiliates or associates from the
control share provisions of the MGCL.

         The control share acquisition statute could have the effect of
delaying, deferring or preventing offers to acquire the Company and of
increasing the difficulty of consummating any such offer.

Amendment to the Declaration of Trust

         The Company's Declaration of Trust may be amended only by the
affirmative vote of the holders of not less than a majority of the Shares then
outstanding and entitled to vote thereon, except for the provisions of the
Declaration of Trust relating to (i) increases or decreases in the aggregate
number of Shares of any class (which may be made by the Board of Trustees
without shareholder approval) and (ii) the MGCL provisions on business
combinations, amendment of which requires the affirmative vote of the holders of
not less than 80% of the Shares then outstanding and entitled to vote. In
addition, in the event that the Board of Trustees shall have determined, with
the advice of counsel, that any one or more of the provisions of the Company's
Declaration of Trust (the "Conflicting Provisions") are in conflict with the
Maryland REIT Law, the Code or other applicable Federal or state law(s), the
Conflicting Provisions shall be deemed never to have constituted a part of the
Declaration of Trust, even without any amendment thereof.

Termination of the Company and REIT Status

         Subject to the rights of any outstanding Preferred Shares and to the
provisions of the Maryland REIT Law, the Company's Declaration of Trust permits
the Board of Trustees to terminate the Company and to discontinue the election
of the Company to be taxed as a REIT.

Transactions Between the Company and its Trustees or Officers

         The Company's Declaration of Trust provides that any contract or
transaction between the Company and one or more Trustees, officers, employees or
agents of the Company must be approved by a majority of the Trustees who have no
interest in the contract or transaction.



                                      -35-


<PAGE>
Limitation of Liability and Indemnification

         The Maryland REIT Law permits a Maryland real estate investment trust
to include in its Declaration of Trust a provision limiting the liability of its
trustees and officers to the trust and its shareholders for money damages except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. The
Declaration of Trust of the Company contains such a provision which eliminates
such liability to the maximum extent permitted by the Maryland REIT Law.

         The Company's Bylaws require it to indemnify, without requiring a
preliminary determination of the ultimate entitlement to indemnification, (a)
any present or former Trustee, officer or shareholder who has been successful,
on the merits or otherwise, in the defense of a proceeding to which he was made
a party by reason of such status, against reasonable expenses incurred by him in
connection with the proceeding; (b) any present or former Trustee or officer
against any claim or liability to which he may become subject by reason of such
status unless it is established that (i) his act or omission was committed in
bad faith or was the result of active and deliberate dishonesty, (ii) he
actually received an improper personal benefit in money, property or services or
(iii) in the case of a criminal proceeding, he had reasonable cause to believe
that his act or omission was unlawful; and (c) each shareholder or former
shareholder against any claim or liability to which he may be subject by reason
of such status as a shareholder or former shareholder. However, under the MGCL,
a Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the Company's Bylaws
require it to pay or reimburse, in advance of final disposition of a proceeding,
reasonable expenses incurred by a present or former Trustee, officer or
shareholder made a party to a proceeding by reason of his status as a Trustee,
officer or shareholder provided that, in the case of a Trustee or officer, the
Company shall have received (i) a written affirmation by the Trustee or officer
of his good faith belief that he has met the applicable standard of conduct
necessary for indemnification by the Company as authorized by the Bylaws and
(ii) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the Company if it shall ultimately be determined that the
applicable standard of conduct was not met. The Company's Bylaws also (i) permit
the Company, with the approval of its Trustees, to provide indemnification and
payment or reimbursement of expenses to a present or former Trustee, officer or
shareholder who served a predecessor of the Company in such capacity, and to any
employee or agent of the Company or a predecessor of the Company, (ii) provide
that any indemnification or payment or reimbursement of the expenses permitted
by the Bylaws shall be furnished in accordance with the procedures provided for
indemnification and payment or reimbursement of expenses under Section 2-418 of
the MGCL for directors of Maryland corporations and (iii) permit the Company to
provide such other and further indemnification or payment or reimbursement of
expenses as may be permitted by the MGCL for directors of Maryland corporations.

         The limited partnership agreement of the Operating Partnership also
provides for indemnification by the Operating Partnership of the Company, as
general partner, and its Trustees and officers for any costs, expenses or
liabilities incurred by them by reason of any act performed by them for or on
behalf of the Operating Partnership or the Company; provided that such person's
actions were taken in good faith and in the belief that such conduct was in the
best interests of the Operating Partnership and that such person was not guilty
of fraud, willful misconduct or gross negligence.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to Trustees and officers of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that, although
the validity and scope of the governing statute has not been tested in court, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In addition, indemnification may be limited by state securities
laws.

Maryland Asset Requirements

         To maintain its qualification as a Maryland real estate investment
trust, the Maryland REIT Law requires that the Company hold, either directly or
indirectly, at least 75% of the value of its assets in real estate assets,
mortgages or mortgage related securities, government securities, cash and cash
equivalent items, including high-grade short-term securities and receivables.
The Maryland REIT Law also prohibits using or applying land for farming,
agricultural, horticultural or similar purposes.

                                      -36-


<PAGE>
                   POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

         The following is a discussion of certain investment, financing and
other policies of the Company. These policies have been determined by the
Company's Board of Trustees and may be amended or revised from time to time by
the Board of Trustees without a vote of shareholders. No assurance can be given
that the Company's investment objectives will be attained or that the value of
the Company will not decrease.

Investment Policies

         Investments in Real Estate or Interests in Real Estate. The Company's
business objective is to increase cash available for distribution and to
maximize shareholder value by: (i) maximizing cash flow through leasing
strategies designed to capture potential rental growth as rental rates increase
and as below-market leases are renewed; (ii) ensuring a high tenant retention
rate through an aggressive tenant services program responsive to the varying
needs of the Company's diverse base of tenants; (iii) broadening its geographic
and economic diversification while maximizing economies of scale; (iv) acquiring
high-quality office and industrial properties and portfolios of such properties
at attractive yields in selected submarkets within the Mid-Atlantic region
(including Delaware, Maryland, New Jersey, New York, Ohio, Pennsylvania,
Virginia and the District of Columbia), which management expects will experience
economic growth; (v) capitalizing on management's redevelopment expertise to
selectively acquire, redevelop and reposition underperforming properties in
desirable locations; (vi) acquiring land in anticipation of developing office or
industrial properties on a build-to-suit basis, under circumstances where
significant pre-leasing can be arranged or as otherwise warranted by market
conditions; (vii) enhancing the Company's investment strategy through the
pursuit of joint venture opportunities with high quality partners having
attractive real estate holdings or significant financial resources; and (viii)
optimizing the use of debt and equity financing to create a flexible and
conservative capital structure that will enable the Company to continue its
aggressive growth strategy.

         As a result of its business objective of increasing cash available for
distribution and maximizing shareholder value, the Company has recently
experienced rapid growth. Between January 1, 1997 and June 1, 1998 the Company
has acquired 117 office properties containing approximately 8.6 million net
rentable square feet and 25 industrial facilities containing approximately 1.7
million net rentable square feet and, together with the Development Entities,
has acquired ownership of, or rights to acquire, approximately 349.3 acres of
undeveloped land. The aggregate purchase price for the 142 Properties acquired
by the Company between January 1, 1997 and June 1, 1998 was approximately $986.4
million. The Company believes that, through the expertise and extensive
relationships of its management and its flexible capital structure, it will
continue to identify and capitalize on substantial opportunities for additional
real estate investments from a variety of sources, including institutional and
private holders of real estate seeking liquidity or reduction in their holdings
or tax-deferred dispositions.

         The Company expects to continue to concentrate its real estate
activities in submarkets within the Mid-Atlantic region where it believes that:
(i) barriers to entry (such as zoning restrictions, infrastructure limitations
and limited developable land) are likely to create supply constraints on office
and industrial space; (ii) current market rents do not justify new construction;
(iii) it can maximize market penetration by accumulating a critical mass of
properties and thereby enhance operating efficiencies; and (iv) there is
potential for economic growth.

         The Company may develop, purchase or lease income-producing properties
for long-term investment, expand and improve the Properties presently owned or
other properties purchased, or sell such properties, in whole or in part, when
circumstances warrant. Although there is no limitation on the types of
development activities that the Company may undertake, the Company expects that
its development activities will generally be on a build-to-suit basis for
particular tenants, or where a significant portion of the building is pre-leased
before construction begins. The Company may also participate with other entities
in property ownership and development through joint ventures, such as the
Development Entities, or other types of co-ownership. Equity investments may be
subject to existing or future mortgage financing and other indebtedness that
will have priority over the equity interests in the Company.

         Securities of or Interests in Entities Primarily Engaged in Real Estate
Activities and Other Issuers. Subject to the percentage of ownership limitations
and gross income tests necessary for REIT qualification, the Company also may
invest in securities of other REITS, other entities engaged in real estate
activities or securities of other issuers. The Company may enter into additional
joint ventures or partnerships for the purpose of obtaining an equity interest
in a particular property in accordance with the Company's investment policies.



                                      -37-


<PAGE>
         Investments in Real Estate Mortgages. While the Company's current
portfolio consists of, and the Company's business objectives emphasize, equity
investments in commercial real estate, the Company may, in the discretion of the
Board of Trustees, invest in other types of equity real estate investments,
mortgages and other real estate interests. The Company may also invest in
participating or convertible mortgages if the Company concludes that it may
benefit from the cash flow or any appreciation in the value of the property.

         Investment through the Operating Partnership. The Company has made no
determination to conduct all of its activities through the Operating
Partnership. As of the date of this Prospectus, the Company owns all of the
Properties or the economic interest therein indirectly through the Operating
Partnership. Although the Partnership Agreement of the Operating Partnership
contains no provision restricting the Company's ability to acquire additional
properties outside the Operating Partnership, the Partnership Agreement provides
that if the Company acquires additional properties outside the Operating
Partnership, the percentage of administrative fees of the Company allocated to
the Operating Partnership will be reduced to an amount that is fair and
equitable under the circumstances.

Dispositions

         The Company does not currently intend to dispose of any of the
Properties (other than an approximately 156,000 net rentable square foot office
property located in Ohio which is the subject of an agreement of sale) although
it reserves the right to do so if, based upon management's periodic review of
the Company's portfolio, the Board of Trustees determines that such action would
be in the best interests of the Company.

Financing Policies

         The Company has adopted a policy to operate with a ratio of
debt-to-total market capitalization (i.e., the total consolidated debt of the
Company as a percentage of the market value of issued and outstanding Shares and
Units plus total consolidated debt) of not more than 50%. The Company's
Declaration of Trust and Bylaws do not, however, limit the amount or percentage
of indebtedness that the Company may incur. In addition, the Company may, from
time to time modify its debt policy in light of current economic conditions,
relative costs of debt and equity capital, market values of its properties,
general conditions in the market for debt and equity securities, fluctuations in
the market price of its Common Shares, growth opportunities and other factors.
Accordingly, the Company may increase or decrease its debt-to-market
capitalization ratio beyond the limit described above. To the extent that the
Board of Trustees decides to obtain additional capital, the Company may raise
such capital through additional equity offerings (including offerings of senior
or convertible securities), debt financings or retention of cash flow (subject
to provisions in the Code concerning taxability of undistributed REIT income),
or a combination of these methods. Borrowing may be unsecured or secured by any
or all of the assets of the Company, the Operating Partnership or any existing
or new property-owning partnership and may have full or limited recourse to all
or any portion of the assets of the Company, the Operating Partnership or any
existing or new property-owning partnership. Indebtedness incurred by the
Company may be in the form of bank borrowing, purchase money obligations to
sellers of the properties, publicly or privately placed debt instruments or
financing from institutional investors or other lenders. The proceeds from any
borrowing by the Company may be used for working capital, to refinance existing
indebtedness, to finance acquisition, expansion or development of new properties
and for the payment of distributions. The Company has not established any limit
on the number or amount of mortgages that may be placed on any single property
or on its portfolio as a whole.

         The Company has established its debt policy relative to the total
market capitalization of the Company rather than relative to the book value of
its assets. The Company has used total market capitalization because it believes
that the book value of its assets (which to a large extent is the depreciated
value of real property, the Company's primary tangible asset) does not
accurately reflect its ability to borrow and to meet debt service requirements.
The market capitalization of the Company, however, is more variable than book
value, and does not necessarily reflect the fair market value of the underlying
assets of the Company at all times. The Company will also consider factors other
than market capitalization in making decisions regarding the incurrence of
indebtedness, such as the purchase price of properties to be acquired with debt
financing, the estimated market value of its properties upon refinancing and the
ability of particular properties and the Company as a whole to generate cash
flow to cover expected debt service.



                                      -38-


<PAGE>
Working Capital Reserves

         The Company will maintain working capital reserves (and when not
sufficient, access to borrowings) in amounts that the Board of Trustees
determines to be adequate to meet normal contingencies in connection with the
Company's business and investments.

Conflict of Interests Policies

         The Company has not adopted any formal or informal policies intended to
eliminate the influence of conflicts of interest. Under the Company's
Declaration of Trust, a transaction effected by the Company or any entity
controlled by the Company in which a Trustee or officer has a financial interest
may only be consummated if the transaction is first approved by a majority of
the Trustees who have no interest in the transaction.

Policies with Respect to Other Activities

         The Company has authority to offer Common Shares, Preferred Shares,
senior securities or options to purchase shares in exchange for property and, to
the extent permitted by applicable law, to repurchase or otherwise acquire its
Common Shares or other securities in the open market or otherwise and may engage
in such activities in the future. The Board of Trustees has no present intention
of causing the Company to repurchase any Common Shares. The Company expects (but
is not obligated) to issue Common Shares to holders of Units in the Operating
Partnership upon exercise of their redemption rights. The Company may issue
Preferred Shares from time to time, in one or more series, as authorized by the
Board of Trustees without the need for shareholder approval. The Company has not
engaged in trading, underwriting or agency distribution or sale of securities of
issuers, nor has the Company invested in the securities of issuers (other than
the Operating Partnership and its subsidiaries and the Development Entities) for
the purposes of exercising control, and does not intend to do so. The Company
intends to operate in a manner that will not subject it to regulation as an
investment company under the Investment Company Act. At all times, the Company
intends to make investments in such a manner as to qualify as a REIT, unless
because of circumstances or changes in the Code (or the Treasury Regulations),
the Board of Trustees determines that it is no longer in the best interest of
the Company to qualify as a REIT. The Company may make loans to third parties,
including, without limitation, to joint ventures in which it participates. The
Company's policies with respect to such activities may be reviewed and modified
or amended from time to time by the Company's Board of Trustees without a vote
of the shareholders.


                        FEDERAL INCOME TAX CONSIDERATIONS

         The following discussion of material Federal income tax considerations
is for general information only and is not tax advice. The following discussion
summarizes all material federal income tax considerations to a holder of Common
Shares and Debt Securities. The applicable prospectus supplement will contain
information about additional federal income tax considerations, if any, relating
to Securities other than Common Shares or Debt Securities. In the opinion of
Arthur Andersen LLP, tax advisor to the Company (the "Tax Advisor") the
discussion below, insofar as it relates to Federal income tax matters, is
correct in all material respects, and fairly summarizes the federal income tax
considerations that are material to a shareholder and/or a holder of Debt
Securities. This discussion does not purport to deal with all aspects of
taxation that may be relevant to particular shareholders and/or a  holder of
Debt Securities in light of their personal investment or tax circumstances, or 
to certain types of shareholders and/or a holder of Debt Securities (including
insurance companies, tax-exempt organizations, financial institutions or broker
dealers, foreign corporations and persons who are not citizens or residents of
the United States, except to the extent discussed under "Taxation of Foreign
Shareholders" and "Taxation of Holders of Debt Securities - U.S. Alien Holders"
below) subject to special treatment under the Federal income tax laws. The
information in this section is based on the Code, current, temporary and
proposed Treasury Regulations thereunder, the legislative history of the Code,
current administrative interpretations and practices of the IRS (including its
practices and policies as endorsed in private letter rulings, which are not
binding on the IRS except with respect to a taxpayer that receives such a
ruling), and court decisions, all as of the date hereof. The Taxpayer Relief Act
of 1997 (the "1997 Act") was enacted on August 5, 1997. The 1997 Act contains
many provisions which generally make it easier to operate and to continue to
qualify as a REIT for taxable years beginning after the date of enactment
(which, for the Company, would be applicable commencing with its taxable year
beginning January 1, 1998).

                                      -39-


<PAGE>
         EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE, OWNERSHIP AND
SALE OF SECURITIES AND OF THE COMPANY'S ELECTION TO BE TAXED AS A REAL ESTATE
INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.

General

         The Company first elected to be taxed as a REIT for its taxable year
ended December 31, 1986, and has operated and expects to continue to operate in
such a manner so as to remain qualified as a REIT for Federal income tax
purposes. In the opinion of the Tax Advisor, and based on certain
representations made by the Company relating to the organization and operation
of the Company and the Operating Partnership, the Company will continue to
qualify as a REIT under the Code. However, the opinion of the Tax Advisor is not
binding upon the IRS and no absolute assurance can be given that the Company
will continue to operate in a manner so as to remain qualified as a REIT.

         The following is a general summary of the Code sections that govern the
Federal income tax treatment of a REIT and its shareholders. These sections of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, rules and regulations promulgated
thereunder ("Treasury Regulations"), and administrative and judicial
interpretations thereof as currently in effect. There is no assurance that there
will not be future changes in the Code or administrative or judicial
interpretation thereof which could adversely affect the Company's ability to
continue to qualify as a REIT or adversely affect the taxation of holders of
Common Shares or which could further limit the amount of income the Company may
derive from the management, construction, development, leasing or sale of
properties owned by the Operating Partnership or by third parties or in
partnerships with third parties.

Taxation of the Company as a REIT

         An entity that qualifies for taxation as a REIT and distributes to its
shareholders at least 95% of its REIT taxable income is generally not subject to
Federal corporate income taxes on net income that it currently distributes to
shareholders. This treatment substantially eliminates the "double taxation" (at
the corporate and shareholder levels) that generally results from investment in
a corporation. However, the Company will be subject to Federal income tax as
follows:

         The Company will be taxed at regular corporate rates on any
undistributed REIT taxable income, including undistributed net capital gains.

                  (i) Under certain circumstances, the Company may be subject to
the "alternative minimum tax" on its items of tax preference, if any.

                  (ii) If the Company has net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property other than foreclosure property held primarily for sale to customers in
the ordinary course of business) such income will be subject to a 100% tax. See
"- Sale of Partnership Property."

                  (iii) If the Company should fail to satisfy the 75% gross
income test or the 95% gross income test (as discussed below), and has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which the Company fails the 75% or
95% test, multiplied by a fraction intended to reflect the Company's
profitability.

                  (iv) If the Company should fail to distribute during each
calendar year at least the sum of (1) 85% of its REIT ordinary income for such
year, (2) 95% of its REIT capital gain net income for such year, and (3) any
undistributed taxable income from prior years, it would be subject to a 4%
excise tax on the excess of such required distribution over the amounts actually
distributed.

                  (v) If the Company has (1) net income from the sale or other
disposition of "foreclosure property" (which is, in general, property acquired
by the Company by foreclosure or otherwise or default on a loan secured by the


                                      -40-


<PAGE>
property) which is held primarily for sale to customers in the ordinary course
of business or (2) other nonqualifying income from foreclosure property, it will
be subject to tax on such income at the highest corporate rate.

                  (vi) If the Company acquires any asset from a C corporation
(i.e., generally a corporation subject to tax at the corporate level) in a
transaction in which the basis of the asset in the Company's hands is determined
by reference to the basis of the asset (or any other property) in the hands of
the C corporation, and the Company recognizes gain on the disposition of such
asset during the 10-year period (the "Restriction Period") beginning on the date
on which such asset was acquired by the Company then, pursuant to guidelines
issued by the IRS, the excess of the fair market value of such property at the
beginning of the applicable Restriction Period over the Company's adjusted basis
in such asset as of the beginning of such Restriction Period will be subject to
a tax at the highest regular corporate rate. The results described above with
respect to the recognition of built-in gain assume that the Company will make an
election pursuant to IRS Notice 88-19 or applicable future administrative rules
or Treasury Regulations to avail itself of the benefits of the Restriction
Period.

Qualification of the Company as a REIT

         The Code defines a REIT as a corporation, trust or association:

                  (1) which is managed by one or more trustees or directors;

                  (2) the beneficial ownership of which is evidenced by
transferable shares or by transferable certificates of beneficial interest;

                  (3) which would be taxable as a domestic corporation but for
Sections 856 through 859 of the Code;

                  (4) which is neither a financial institution nor an insurance
company subject to certain provisions of the Code;

                  (5) which has the calendar year as its taxable year;

                  (6) the beneficial ownership of which is held by 100 or more
persons;

                  (7) during the last half of each taxable year not more than
50% in value of the outstanding stock of which is owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include certain exempt
organizations); and

                  (8) which meets certain income, asset and distribution tests,
described below.

                  Conditions (1) through (5), inclusive, must be satisfied
during the entire taxable year, and condition (6) must be satisfied during at
least 335 days of a taxable year of 12 months, or during a proportionate part of
a taxable year of less than 12 months. The Company has previously issued Common
Shares in sufficient proportions to allow it to satisfy requirements (6) and (7)
(the "100 Shareholder" and "five-or-fewer" requirements), respectively. In
addition, the Company's Declaration of Trust provides restrictions regarding the
transfer of its Shares that are intended to assist the Company in continuing to
satisfy the share ownership requirements described in (6) and (7) above. See
"Description of Shares of Beneficial Interest - Restrictions on Transfer."
However, these restrictions may not ensure that the Company will, in all cases,
be able to satisfy the share ownership requirements described in (6) and (7)
above. If the Company fails to satisfy such share ownership requirements, the
Company's status as a REIT will terminate. Pursuant to the 1997 Act, for the
Company's taxable years commencing on and after January 1, 1998, if the Company
complies with regulatory rules pursuant to which it is required to send annual
letters to certain of its shareholders requesting information regarding the
actual ownership of its shares, but does not know, or exercising reasonable
diligence would not have known, whether it failed to meet the requirement that
it not be closely held, the Company will be treated as having met the "five or
fewer" requirement. If the Company were to fail to comply with these regulatory
rules for any year, it would be subject to a $25,000 penalty. If the Company's
failure to comply was due to intentional disregard of the requirements, the
penalty would be increased to $50,000. However, if the Company's failure to
comply was due to reasonable cause and not willful neglect, no penalty would be
imposed. See "- Failure to Qualify."



                                      -41-


<PAGE>
         A REIT is permitted to have a wholly-owned subsidiary (also referred to
as a "qualified REIT subsidiary"). A qualified REIT subsidiary is not treated as
a separate entity for Federal income tax purposes. Rather, all of the assets and
items of income, deductions and credit of a qualified REIT subsidiary are
treated as if they were those of the REIT. The Company has formed several
qualified REIT subsidiaries and may in the future form one or more qualified
REIT subsidiaries. For the Company's 1997 taxable year, all of the stock of such
subsidiaries must be owned by the Company from the commencement of each such
subsidiary's existence. For taxable years of the Company beginning on and after
January 1, 1998, the Company must own all of the stock of each such subsidiary,
although it will not be required to own such stock of such subsidiary from the
commencement of such subsidiary's existence.

         A REIT is deemed to own its proportionate share of the assets of a
partnership in which it is a partner and is deemed to receive its proportionate
share of the income of the partnership. Thus, the Company's proportionate share
of the assets and items of income of the Operating Partnership and each of the
Title Holding Partnerships will be treated as assets and items of income of the
Company for purposes of applying the requirements described herein, provided
that the Operating Partnership and its subsidiary partnerships are treated as
partnerships for Federal income tax purposes. In addition, the character of the
assets and gross income of such partnerships shall retain the same character in
the hands of the REIT for purposes of the requirements applicable to REITs under
the Code including satisfying the income tests and the asset tests. See "Income
Taxation of the Operating Partnership, the Title Holding Partnerships and Their
Partners."

Income Tests

         To maintain qualification as a REIT, there are three gross income
requirements that must be satisfied annually. First, at least 75% of the
Company's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and interest on obligations secured by a mortgage on real
property) or from "qualified temporary investment income" (described below).
Second, at least 95% of the Company's gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived from investments
qualifying under the 75% test above, and from dividends, interest, and gain from
the sale or disposition of stock or securities or from any combination of the
foregoing. Third, for taxable years beginning on or before August 5, 1997,
short-term gain from the sale or other disposition of stock or securities, gain
from prohibited transactions, and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must represent less than 30% of the Company's
gross income (including gross income from prohibited transactions) for each
taxable year. In applying these tests, the Company will be treated as realizing
its share of any income and bearing its share of any loss of the Operating
Partnership and the character of such income or loss, as well as other
partnership items, will be determined at the partnership level.

         Rents received by the Company will qualify as "rents from real
property" for purposes of satisfying the 75% and 95% gross income tests only if
several conditions are met. First the amount of rent must not be based in whole
or in part on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from the term "rents from real
property" solely by reason of being based on a fixed percentage or percentages
of receipts or sales. Second, the Code provides that rents received from a
tenant will not qualify as "rents from real property" if the REIT, or an owner
of 10% or more of the REIT, directly or constructively owns 10% or more of such
tenant (a "Related Party Tenant"). For the Company's taxable year which begins
on January 1, 1998 and for all taxable years thereafter, only partners who own
25% or more of the capital or profits interest in a partnership are included in
the determination of whether a tenant is a "Related Party Tenant." Third, if
rent attributable to personal property, leased in connection with a lease of
real property, is greater than 15% of the total rent received under the lease,
then the portion of rent attributable to such personal property will not qualify
as "rents from real property." Finally, for rents received to qualify as "rents
from real property," the REIT generally must not operate or manage the property
or furnish or render services to the tenants of such property, other than
through an "independent contractor" who is adequately compensated and from whom
the REIT does not derive any income; provided, however, that the Company may
directly perform certain customary services (e.g., furnishing water, heat, light
and air conditioning, and cleaning windows, public entrances and lobbies) other
than services which are considered rendered to the occupant of the property
(e.g., renting parking spaces on a reserved basis to tenants).

         For taxable years of the Company beginning after August 5, 1997, if the
Company provides services to a tenant that are other than those usually or
customarily provided in connection with the rental of space for occupancy only,
amounts received or accrued by the Company for any such services will not be
treated as "rents from real property" for


                                      -42-


<PAGE>
purposes of the REIT gross income tests but will not cause other amounts
received with respect to the property to fail to be treated as "rents from real
property" if the amounts received in respect of such services, together with
amounts received for certain management services, do not exceed 1% of all
amounts received or accrued by the Company during the taxable year with respect
to such property. If the 1% threshold is exceeded, then all amounts received or
accrued by the Company with respect to the property will not qualify as "rents
from real property," even if the impermissible services are provided to some,
but not all, of the tenants of the property.

         The Company has represented that the Company's real estate investments,
which include its allocable share of income from the Operating Partnership, will
give rise to income that qualifies as "rents from real property" for purposes of
the 75 percent and 95 percent gross income tests, other than rents received from
a Related Party Tenant. In addition, the Company has represented that the rents
received from Related Party Tenants, in addition to all other income which is
not qualifying income for the 75 percent and 95 percent gross income tests, does
not exceed five percent of the Company's gross income, and therefore, the
Company's status as a REIT should not be jeopardized.

         The Company has represented that it does not and will not (i) charge
rent for any property that is based in whole or in part on the income or profits
of any person (other than being based on a percentage of receipts or sales);
(ii) receive rents in excess of a de minimis amount from Related Party Tenants;
(iii) derive rents attributable to personal property which constitute greater
than 15% of the total rents received under the lease; or (iv) perform services
considered to be rendered to the occupant of property, other than through an
independent contractor from whom the Company derives no income.

         The Operating Partnership owns 5% of the voting common stock, and all
of the preferred stock of the Management Company, a corporation that is taxable
as a regular corporation. The Management Company performs management,
development and leasing services for the Operating Partnership and other real
properties owned in whole or in part by third parties. The income earned by and
taxed to the Management Company would be nonqualifying income if earned directly
by the Company. As a result of the corporate structure, the income will be
earned by and taxed to the Management Company and will be received by the
Company only indirectly as dividends. Although interest and dividends are
generally qualifying income under the 95% test, the IRS has announced a
no-ruling policy on this issue when the dividends and interest are earned in
this manner.

         If the Company fails to satisfy one or both of the 75% of 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will be generally available if (i) the Company's failure
to meet such tests was due to reasonable cause and not due to willful neglect,
(ii) the Company attaches a schedule of the sources of its income to its return,
and (iii) any incorrect information on the schedule was not due to fraud with
intent to evade tax. It is not possible, however, to state whether in all
circumstances the Company would be entitled to the benefit of these relief
provisions. As discussed above in "Taxation of the Company as a REIT," even if
these relief provisions apply, a tax would be imposed with respect to the excess
net income. No similar mitigation provision applies to provide relief if the 30%
income test is failed, and if such test is not met for the taxable years of the
Company beginning before January 1, 1998, the Company would cease to qualify as
a REIT. See "-- Failure to Qualify."

Asset Tests

         In order for the Company to maintain its qualification as a REIT, at
the close of each quarter of its taxable year it must also satisfy three tests
relating to the nature of its assets. First, at least 75% of the value of the
Company's total assets must be represented by real estate assets (which for this
purpose include (i) its allocable share of real estate assets held by
partnerships in which the Company or a "qualified REIT subsidiary" of the
Company owns an interest and (ii) stock or debt instruments purchased with the
proceeds of a stock offering or a long-term (at least five years) debt offering
of the Company and held for not more than one year from the date the Company
receives such proceeds), cash, cash items, and government securities. Second,
not more than 25% of the Company's total assets may be represented by securities
other than those described above in the 75% asset class. Third, of the
investments included in the 25% asset class, the value of any one issuer's
securities owned by the Company may not exceed 5% of the value of the Company's
total assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities (excluding securities of a qualified REIT
subsidiary, of which the REIT is required to own all of such stock, or another
REIT).

         The Company anticipates that it will be able to comply with these asset
tests. The Company is deemed to hold directly its proportionate share of all
real estate and other assets of the Operating Partnership and should be
considered

                                      -43-


<PAGE>
to hold its proportionate share of all assets deemed owned by the Operating
Partnership through its ownership of partnership interests in other
partnerships. As a result, the Company plans to hold more than 75% of its assets
as real estate assets. In addition, the Company does not plan to hold any
securities representing more than 10% of any one issuer's voting securities,
other than any qualified REIT subsidiary of the Company, nor securities of any
one issuer exceeding 5% of the value of the Company's gross assets (determined
in accordance with generally accepted accounting principles). As previously
discussed, the Company is deemed to own its proportionate share of the assets of
a partnership in which it is a partner so that the partnership interest, itself,
is not a security for purposes of this asset test.

         After initially meeting the asset tests at the close of any quarter,
the Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset values.
If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter, the failure can be cured by
disposition of sufficient nonqualifying assets within 30 days after the close of
that quarter. The Company intends to maintain adequate records of the value of
its assets to ensure compliance with the asset tests, and to take such other
action within 30 days after the close of any quarter as may be required to cure
any noncompliance. However, there can be no assurance that such other action
will always be successful. If the Company fails to cure any noncompliance with
the asset test within such time period, its status as a REIT would be lost.

         As noted above, one of the requirements for qualification as a REIT is
that a REIT not own more than 10 percent of the voting stock of a corporation
other than the stock of a qualified REIT subsidiary (of which the REIT is
required to own all of such stock) and stock in another REIT. The Operating
Partnership will own only approximately 5 percent of the voting stock and all of
the non-voting preferred stock of the Management Company and therefore will
comply with this rule. However, the IRS could contend that the Company's
ownership, through its interest in the Operating Partnership, of all of the
non-voting preferred stock in the Management Company should be viewed as voting
stock because of its substantial economic position in the Management Company. If
the IRS were to be successful in such a contention, the Company's status as a
REIT would be lost and the Company would become subject to federal corporate
income tax on its net income, which would have a material adverse affect on the
Company's cash available for distribution. The Company does not have the ability
to designate a seat on the Board of Directors of the Management Company. The
Company does not believe that it will be viewed as owning in excess of 10
percent of the voting stock of the Management Company.

Administration's Proposed Changes to REIT Asset Tests

         On February 2, 1998, the Clinton Administration released a summary of
its proposed budget plan, which contained provisions that, if enacted, would
affect REITs, including the Company (the "REIT Proposals"). One such provision
would prohibit REITs from owning more than ten percent of the vote or value of
all classes of stock of any corporation (other than a "qualified REIT
subsidiary" or another REIT). This provision would be effective with respect to
stock acquired on or after the date of the first committee action. However,
under the proposal, existing ownership arrangements such as the Company's
ownership of shares of the Management Company would be grandfathered, provided
that the subsidiary does not enter into a new trade or business or acquire
substantial new assets after the effective date of the change in the law.
Because the Company owns more than 10% of the value of the Management Company,
the REIT Proposals could adversely affect the manner in which the Company
structures its ownership of the Management Company and the magnitude of the
property management activities conducted by the Company in the future. It is
important to note that the REIT Proposals are only precursors to the first stage
in the lengthy legislative process that may or may not culminate in the passage
of legislation affecting REITs. Therefore, the Company is unable to determine
whether the REIT Proposals will be enacted into legislation and, if enacted, the
impact any final legislation may have on the Company.

Annual Distribution Requirements

         The Company, in order to maintain its qualification as a REIT, is
required to distribute dividends (other than capital gain dividends) to its
shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the REIT's net capital gain) and (ii) 95% of the net income (after
tax), if any, from foreclosure property, minus (B) the excess of the sum of
certain items of non-cash income (income attributable to leveled stepped rents,
original issue discount on purchase money debt, or a like-kind exchange that is
later determined to be taxable (plus, for the Company's 1998 taxable year and
thereafter, income from cancellation of indebtedness, original issue discount,
and coupon interest) over 5% of the amount determined under clause (i) above).
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable

                                      -44-


<PAGE>
year if declared before the Company timely files its tax return for such year
and if paid on or before the first regular dividend payment after such
declaration. To the extent that the Company does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax on the undistributed
amount at regular capital gains and ordinary corporate tax rates. Furthermore,
if the Company should fail to distribute during each calendar year at least the
sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
net capital gain income for such year, and (iii) any undistributed taxable
income from prior periods, the Company would be subject to a 4% excise tax on
the excess of such required distribution over the amounts actually distributed.

         For the Company's taxable year beginning on January 1, 1998 and for all
taxable years thereafter, undistributed capital gains may be so designated by
the Company and are includable in the income of the holders of Common Shares.
Such holders are treated as having paid the capital gains tax imposed on the
Company on the designated amounts included in their income as long-term capital
gains. Such shareholders would receive an increase in their basis for income
recognized and a decrease in their basis for taxes paid by the Company. See 
"-Taxation of Taxable Domestic Shareholders."

         The Company intends to make timely distributions sufficient to satisfy
the annual distribution requirements. In this regard, the limited partnership
agreement of the Operating Partnership authorizes the Company, as general
partner, to take such steps as may be necessary to cause the Operating
Partnership to distribute to its partners an amount sufficient to permit the
Company to meet these distribution requirements. It is possible that the
Company, from time to time, may not have sufficient cash or other liquid assets
to meet the 95% distribution requirement due primarily to the expenditure of
cash for nondeductible items such as principal amortization or capital
expenditures. In order to meet the 95% distribution requirement, the Company may
borrow or may cause the Operating Partnership to arrange for short-term or other
borrowing to permit the payment of required distributions or attempt to declare
a consent dividend, which is a hypothetical distribution to holders of Common
Shares out of the earnings and profits of the Company. The effect of such a
consent dividend (which, in conjunction with distributions actually paid, must
not be preferential to those holders who agree to such treatment) would be that
such holders would be treated for federal income tax purposes as if they had
received such amount in cash, and they then had immediately contributed such
amount back to the Company as additional paid-in capital. This would result in
taxable income to those holders without the receipt of any actual cash
distribution but would also increase their tax basis in their Common Shares by
the amount of the taxable income recognized.

         Under certain circumstances, the Company may be able to rectify a
failure to meet the distribution requirement for a certain year by paying
"deficiency dividends" to shareholders in a later year that may be included in
the Company's deduction for distributions paid for the earlier year. Thus, the
Company may be able to avoid being taxed on amounts distributed as deficiency
dividends; however, the Company will be required to pay to the IRS interest
based upon the amount of any deduction taken for deficiency dividends.

Failure to Qualify

         If the Company fails to qualify for taxation as a REIT in any taxable
year and the relief provisions do not apply, the Company will be subject to tax
(including any applicable corporate alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year in
which the Company fails to qualify will not be deductible by the Company, nor
will they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable to them as ordinary income, and, subject to certain limitations of the
Code, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, the
Company also will be disqualified from taxation as a REIT for the four taxable
years following the year during which qualification was lost. It is not possible
to state whether in all circumstances the Company would be entitled to such
statutory relief.

Income Taxation of the Operating Partnership, the Title Holding Partnerships and
Their Partners

         The following discussion summarizes certain Federal income tax
considerations applicable to the Company's investment in the Operating
Partnership and its subsidiary partnerships (referred to herein as the "Title
Holding Partnerships").

                                      -45-


<PAGE>

Classification of the Operating Partnership and Title Holding, Partnerships as
Partnerships

         As of the date of this Prospectus, the Company owns all of the
Properties or the economic interests therein through the Operating Partnership.
The Company will be entitled to include in its income its distributive share of
the income and to deduct its distributive share of the losses of the Operating
Partnership (including the Operating Partnership's share of the income or losses
of the Title Holding Partnerships) only if the Operating Partnership and the
Title Holding Partnerships (collectively, the "Partnerships") are classified for
Federal income tax purposes as partnerships rather than as associations taxable
as corporations. For taxable periods prior to January 1, 1997, an organization
formed as a partnership was treated as a partnership for Federal income tax
purposes rather than as a corporation only if it had no more than two of the
four corporate characteristics that the Treasury Regulations used to distinguish
a partnership from a corporation for tax purposes. These four characteristics
were continuity of life, centralization of management, limited liability, and
free transferability of interests.

         Neither the Operating Partnership nor any of the Title Holding
Partnerships requested a ruling from the IRS that they would be treated as
partnerships for Federal income tax purposes. The Company received an opinion of
the Tax Advisor, which is not binding on the IRS, that the Operating Partnership
and the Title Holding Partnerships will each be treated as partnerships for
Federal income tax purposes and not as an association or publicly traded
partnership taxable as a corporation. The opinion of the Tax Advisor is based on
the provisions of the limited partnership agreement of the Operating Partnership
and the limited partnership agreements of the Title Holding Partnerships,
respectively, and certain factual assumptions and representations described in
the opinion.

         Effective January 1, 1997, newly promulgated Treasury Regulations
eliminated the four-factor test described above and, instead, permit
partnerships and other non-corporate entities to be taxed as partnerships for
federal income tax purposes without regard to the number of corporate
characteristics possessed by such entity. Under those Regulations, both the
Operating Partnership and each of the Title Holding Partnerships will be
classified as partnerships for federal income tax purposes unless an affirmative
election is made by the entity to be taxed as a corporation. The Company has
represented that no such election has been made, or is anticipated to be made,
on behalf of the Operating Partnership or any of the Title Holding Partnerships.
Under a special transitional rule in the Treasury Regulations, the IRS will not
challenge the classification of an existing entity such as the Operating
Partnership or a Title Holding Partnership for periods prior to January 1, 1997
if: (i) the entity has a "reasonable basis" for its classification; (ii) the
entity and each of its members recognized the federal income tax consequences of
any change in classification of the entity made within the 60 months prior to
January 1, 1997; and (iii) neither the entity nor any of its members had been
notified in writing on or before May 8, 1996 that its classification was under
examination by the IRS. Neither the Operating Partnership nor any of the Title
Holding Partnerships changed their classification within the 60 month period
preceding May 8, 1996, nor was any one of them notified that their
classification as a partnership for federal income tax purposes was under
examination by the IRS.

         If for any reason the Operating Partnership or a Title Holding
Partnership was classified as an association taxable as a corporation rather
than as a partnership for Federal income tax purposes, the Company would not be
able to satisfy the income and asset requirements for REIT status. See "--
Income Tests" and "--Asset Tests." In addition, any change in any such
Partnership's status for tax purposes might be treated as a taxable event, in
which case the Company might incur a tax liability without any related cash
distribution. See "--Annual Distribution Requirements." Further, items of income
and deduction of any such Partnership would not pass through to its partner
(e.g., the Company), and its partners would be treated as shareholders for tax
purposes. Any such Partnership would be required to pay income tax at corporate
tax rates on its net income and distributions to its partners would constitute
dividends that would not be deductible in computing such Partnership's taxable
income.

Partnership Allocations

         Although a partnership agreement will generally determine the
allocation of income and losses among partners, such allocations will be
disregarded for tax purposes if they do not comply with the provisions of
Section 704(b) and the Treasury Regulations promulgated thereunder, which
require that partnership allocations respect the economic arrangement of the
partners.

         If an allocation is not recognized for Federal income tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership, which will be determined by taking into
account all of the facts and circumstances relating to the economic arrangement
of the partners with respect to such item. The


                                      -46-


<PAGE>
Operating Partnership's allocations of taxable income and loss are intended to
comply with the requirements of Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder.

Tax Allocations With Respect to Contributed Properties

         The Company has represented that the fair market values of 44 of the
Properties contributed directly or indirectly to the Operating Partnership in
various transactions were different than the tax basis of such Properties.
Pursuant to Section 704(c) of the Code, items of income, gain, loss, and
deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated for Federal income tax purposes in a manner such that the
contributor is charged with or benefits from the unrealized gain or unrealized
loss associated with the property at the time of the contribution. The amount of
such unrealized gain or unrealized loss is generally equal to the difference
between the fair market value of the contributed property at the time of
contribution and the adjusted tax basis of such property at the time of
contribution (the "Pre-Contribution Gain or Loss"). The partnership agreement of
the Operating Partnership requires allocations of income, gain, loss and
deduction attributable to such contributed property to be made in a manner that
is consistent with Section 704(c) of the Code. Thus, if the Operating
Partnership sells contributed property at a gain or loss, such gain or loss will
be allocated to the contributing partners, and away from the Company, generally
to the extent of the Pre-Contribution Gain or Loss.

         The Treasury Department has issued final regulations under Section
704(c) of the Code (the "Regulations") which give partnerships great flexibility
in ensuring that a partner contributing property to a partnership receives the
tax benefits and burdens of any Pre-Contribution Gain or Loss attributable to
the contributed property. The Regulations permit partnerships to use any
"reasonable method" of accounting for Pre-Contribution Gain or Loss. The
Regulations specifically describe three reasonable methods, including (i) the
"traditional method" under current law, (ii) the traditional method with the use
of "curative allocations" which would permit distortions caused by
Pre-Contribution Gain or Loss to be rectified on an annual basis, and (iii) the
"remedial allocation method" which is similar to the traditional method with
"curative allocations." The Partnership Agreement permits the Company, as a
general partner, to select one of these methods to account for Pre-Contribution
Gain or Loss.

Depreciation

         The Operating Partnership's assets other than cash consist largely of
appreciated property contributed by its partners. Assets contributed to a
partnership in a tax-free transaction generally retain the same depreciation
method and recovery period as they had in the hands of the partner who
contributed them to the partnership. Accordingly, the Operating Partnership's
depreciation deductions for its real property are based largely on the historic
tax depreciation schedules for the Properties prior to their contribution to the
Operating Partnership. The Properties are being depreciated over a range of 15
to 40 years using various methods of depreciation which were determined at the
time that each item of depreciable property was placed in service. Any real
property purchased by the Partnerships will be depreciated over 40 years. In
certain instances where a partnership interest rather than real property is
contributed to the Partnership, the real property may not carry over its
recovery period but rather may, similarly, be subject to the lengthier recovery
period.

         Section 704(c) of the Code requires that depreciation as well as gain
and loss be allocated in a manner so as to take into account the variation
between the fair market value and tax basis of the property contributed. Thus,
because most of the property contributed to the Operating Partnerships is
appreciated, the Company will generally receive allocations of tax depreciation
in excess of its percentage interest in the Operating Partnership. Depreciation
with respect to any property purchased by the Operating Partnership subsequent
to the admission of its partners, however, will be allocated among the partners
in accordance with their respective percentage interests in the Partnerships.

         As described above (see "- Tax Allocations with Respect to Contributed
Properties"), the Treasury Department's Regulations give partnerships
flexibility in ensuring that a partner contributing property to a partnership
receives the tax benefits and burdens of any Pre-Contribution Gain or Loss
attributable to the contributed property.

         As described previously, the Company, as a general partner, may select
any permissible method to account for Pre-Contribution Gain or Loss. The use of
certain of these methods may result in the Company being allocated lower
depreciation deductions than if a different method were used. The resulting
higher taxable income and earnings and profits of the Company, as determined for
federal income tax purposes, should decrease the portion of distributions by the
Company which may be treated as a return of capital. See "- Annual Distribution
Requirements."



                                      -47-


<PAGE>
Basis in Operating Partnership Interest

         The Company's adjusted tax basis in each of the partnerships in which
it has an interest generally (i) will be equal to the amount of cash and the
basis of any other property contributed to such partnership by the Company, (ii)
will be increased by (a) its allocable share of such partnership's income and
(b) its allocable share of any indebtedness of such partnership, and (iii) will
be reduced, but not below zero, by the Company's allocable share of (a) such
partnership's loss and (b) the amount of cash and the tax basis of any property
distributed to the Company and by constructive distributions resulting from a
reduction in the Company's share of indebtedness of such partnership.

         If the Company's allocable share of the loss (or portion thereof) of
any partnership in which it has an interest would reduce the adjusted tax basis
of the Company's partnership interest in such partnership below zero, the
recognition of such loss will be deferred until such time as the recognition of
such loss (or portion thereof) would not reduce the Company's adjusted tax basis
below zero. To the extent that distributions from a partnership to the Company,
or any decrease in the Company's share of the nonrecourse indebtedness of a
partnership (each such decrease being considered a constructive cash
distribution to the partners), would reduce the Company's adjusted tax basis
below zero, such distributions (including such constructive distributions) would
constitute taxable income to the Company. Such distributions and constructive
distributions normally would be characterized as long-term capital gain if the
Company's interest in such partnership has been held for longer than the
long-term capital gain holding period (currently 18 months).

Sale of Partnership Property

         Generally, any gain realized by a partnership on the sale of property
held by the partnership for more than 18 months will be long-term capital gain,
except for any portion of such gain that is treated as depreciation or cost
recovery recapture. However, under the requirements applicable to REITS under
the Code, the Company's share as a partner of any gain realized by the Operating
Partnership on the sale of any property held as inventory or other property held
primarily for sale to customers in the ordinary course of a trade or business
will be treated as income from a prohibited transaction that is subject to a
100% penalty tax. See "- Taxation of the Company as a REIT." Such prohibited
transaction income will also have an adverse effect upon the Company's ability
to satisfy the income tests for REIT status. See "-- Income Tests." Under
existing law, whether property is held as inventory or primarily for sale to
customers in the ordinary course of a trade or business is a question of fact
that depends on all the facts and circumstances with respect to the particular
transaction. A safe harbor to avoid classification as a prohibited transaction
exists as to real estate assets held for the production of rental income by a
REIT for at least four years where in any taxable year the REIT has made no more
than seven sales of property or, in the alternative, the aggregate of the
adjusted bases of all properties sold does not exceed 10% of the adjusted bases
of all of the REIT's properties during the year and the expenditures includible
in a property's net sales price. The Company, as general partner of the
Operating Partnership, has represented that the Operating Partnership and the
Title Holding Partnerships intend to hold the Properties for investment with a
view to long-term appreciation, to engage in the business of acquiring,
developing, owning, and operating and leasing properties and to make such
occasional sales of the properties as are consistent with the Company's and the
Operating Partnership's investment objectives. No assurance can be given,
however, that every property sale by the Partnerships will constitute a sale of
property held for investment.

Taxation of Taxable Domestic Shareholders

         As long as the Company qualifies as a REIT, distributions made to the
Company's taxable U.S. shareholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be dividends taxable
to such U.S. shareholders as ordinary income and will not be eligible for the
dividends received deduction for corporations. Distributions that are designated
as capital gain dividends will be taxed as long-term capital gains (to the
extent they do not exceed the Company's actual net capital gain for the taxable
year) without regard to the period for which the shareholder has held its shares
of beneficial interest. However, corporate shareholders may be required to treat
up to 20% of certain capital gain dividends as ordinary income. Distributions in
excess of current and accumulated earnings and profits will not be taxable to a
shareholder to the extent that they do not exceed the adjusted basis of the
shareholder's shares, but rather will reduce the adjusted basis of such shares.
To the extent that distributions in excess of current and accumulated earnings
and profits exceed the adjusted basis of a shareholder's shares, such
distributions will be included in income as long-term capital gain (or
short-term capital gain if the shares have been held for 18 months or less)
assuming the shares are a capital asset in the hands of the shareholder. In
addition, any distribution declared by the Company in October, November or
December of any year payable to a shareholder of record on a specified date in
any such month shall be treated as both paid by the Company and received by the
shareholder on December 31 of such


                                      -48-


<PAGE>
year, provided that the distribution is actually paid by the Company during
January of the following calendar year. Shareholders may not include in their
individual income tax returns any losses of the Company.

         For taxable years of the Company beginning after August 5, 1997, U.S.
shareholders holding Shares at the close of the Company's taxable year will be
required to include, in computing their long-term capital gains for the taxable
year in which the last day of the Company's taxable year falls, such amount as
the Company may designate in a written notice mailed to its shareholders. The
Company may not designate amounts in excess of the Company's undistributed net
capital gain for the taxable year. Each U.S. shareholder required to include
such a designated amount in determining such shareholder's long-term capital
gains will be deemed to have paid, in the taxable year of the inclusion, the tax
paid by the Company in respect of such undistributed net capital gains. U.S.
shareholders subject to these rules will be allowed a credit or a refund, as the
case may be, for the tax deemed to have been paid by such shareholders. U.S.
shareholders will increase their basis in their Shares by the difference between
the amount of such includible gains and the tax deemed paid by the shareholder
in respect of such gains.

         In general, any loss upon a sale or exchange of shares by a shareholder
who has held such shares for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent such
shareholder has received distributions from the Company required to be treated
as long-term capital gain.

         Distributions from the Company and gain from the disposition of Common
Shares will not be treated as passive activity income and, therefore,
shareholders may not be able to apply any "passive losses" against such income.
Dividends from the Company (to the extent they do not constitute a return of
capital or capital gain dividends) and, on an elective basis, capital gain
dividends and gain from the disposition of Common Shares will generally be
treated as investment income for purposes of the investment income limitation.

Backup Withholding

         The Company will report to its U.S. shareholders and the IRS the amount
of distributions paid during each calendar year, and the amount of tax withheld,
if any. Under the backup withholding rules, a shareholder may be subject to
backup withholding at the rate of 31% with respect to distributions paid unless
such holder (a) is a corporation or comes within certain other exempt categories
and, when required, demonstrates this fact, or (b) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A shareholder that does not provide the Company with his
correct taxpayer identification number may also be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against the
shareholder's income tax liability. In addition, the Company may be required to
withhold a portion of capital gain distributions to any shareholders who fail to
certify their non-foreign status to the Company. See "- Taxation of Foreign
Shareholders."

Taxation of Tax-Exempt Shareholders

         Distributions by the Company to a shareholder that is a tax-exempt
entity should not constitute "unrelated business taxable income" ("UBTI"), as
defined in Section 512(a) of the Code provided that the tax-exempt entity has
not financed the acquisition of its shares with "acquisition indebtedness"
within the meaning of the Code and the shares are not otherwise used in an
unrelated trade or business of the tax-exempt entity.

         In the case of a "qualified trust" (generally, a pension or
profit-sharing trust) holding shares in a REIT, the beneficiaries of such a
trust are treated as holding shares in the REIT in proportion to their actuarial
interests in the qualified trust, instead of treating the qualified trust as a
single individual (the "look-through exception"). A qualified trust that holds
more than 10 percent of the shares of a REIT is required to treat a percentage
of REIT dividends as UBTI if the REIT incurs debt to acquire or improve real
property. This rule applies, however, only if (i) the qualification of the REIT
depends upon the application of the "look through" exception (described above)
to the restriction on REIT shareholdings by five or fewer individuals, including
qualified trusts (see "Description of Shares of Beneficial Interest Restrictions
on Transfer") and (ii) the REIT is "predominantly held" by qualified trusts,
i.e., if either (x) a single qualified trust holds more than 25 percent by value
of the interests in the REIT or (y) one or more qualified trusts, each owning
more than 10 percent by value, holds in the aggregate more than 50 percent of
the interests in the REIT. The percentage of any dividend paid (or treated as
paid) to such a qualified trust that is treated as UBTI is equal to the amount
of modified gross income (gross income less directly connected expenses) from
the unrelated trade or business of the REIT


                                      -49-


<PAGE>
(treating the REIT as if it were a qualified trust), divided by the total
modified gross income of the REIT. A de minimis exception applies where the
percentage is less than 5 percent.

Taxation of Foreign Shareholders

         The rules governing United States Federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign shareholders (collectively, "Non-U.S. Shareholders") are complex
and no attempt will be made herein to provide more than a summary of such rules.
Prospective Non-U.S. Shareholders should consult with their own tax advisors to
determine the impact of Federal, state and local income tax laws with regard to
an investment in Common Shares, including any reporting requirements.

         Distributions that are not attributable to gain from sales or exchanges
by the Company of United States real property interests and not designated by
the Company as capital gains dividends will be treated as dividends of ordinary
income to the extent that they are made out of current or accumulated earnings
and profits of the Company. Such distributions will ordinarily be subject to a
withholding tax equal to 30% of the gross amount of the distribution unless an
applicable tax treaty reduces or eliminates that tax. However, if income from
the investment in the Common Shares is treated as effectively connected with the
Non-U.S. Shareholder's conduct of a United States trade or business, the
Non-U.S. Shareholder generally will be subject to a tax at graduated rates, in
the same manner as U.S. shareholders are taxed with respect to such
distributions (and may also be subject to the 30% branch profits tax in the case
of a shareholder that is a foreign corporation). The Company expects to withhold
United States income tax at the rate of 30% on the gross amount of any such
distributions made to a Non-U.S. Shareholder unless (i) a lower treaty rate
applies or (ii) the Non-U.S. Shareholder files an IRS Form 4224 with the Company
claiming that the distribution is effectively connected income. Distributions in
excess of current and accumulated earnings and profits of the Company will not
be taxable to a shareholder to the extent that such distributions do not exceed
the adjusted basis of the shareholder's shares, but rather will reduce the
adjusted basis of such shares. To the extent that distributions in excess of
current and accumulated earnings and profits exceed the adjusted basis of a
Non-Shareholder's shares, such distributions will give rise to tax liability if
the Non-U.S. Shareholder would otherwise be subject to tax on any gain from the
sale or disposition of his shares in the Company, as described below. If it
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the distributions will be subject to withholding at the same rate as dividends.
However, amounts thus withheld are refundable if it is subsequently determined
that such distribution was, in fact, in excess of current and accumulated
earnings and profits of the Company.

         For any year in which the Company qualifies as a REIT, distributions
that are attributable to gain from sales or exchanges by the Company of United
States real property interests will be taxed to a Non-U.S. Shareholder under the
provisions of the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). Under FIRPTA, distributions attributable to gain from sales of
United States real property interests are taxed to a Non-U.S. Shareholder as if
such gain were effectively connected with a United States business. Non-U.S.
Shareholders would thus be taxed at the normal capital gain rates applicable to
U.S. shareholders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals). Also,
distributions subject to FIRPTA may be subject to a 30% branch profits tax in
the hands of a foreign corporate shareholder not entitled to treaty exemption.
The Company is required by applicable Treasury Regulations to withhold 35% of
any distribution that could be designated by the Company as a capital gains
dividend. The amount is creditable against the Non-U.S. Shareholder FIRPTA tax
liability.

         Gain recognized by a Non-U.S. Shareholder upon a sale of Shares
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the shares of beneficial
interest was held directly or indirectly by foreign persons. It is currently
anticipated that the Company will be a "domestically controlled REIT," and
therefore the sale of Shares will not be subject to taxation under FIRPTA.
However, because the Common Shares will be publicly traded, no assurance can be
given that the Company will continue to be a "domestically controlled REIT."
Gain not subject to FIRPTA will be taxable to a Non-U.S. Shareholder if (i)
investment in the shares is effectively connected with the Non-U.S.
Shareholder's United States trade or business, in which case the Non-U.S.
Shareholder will be subject to the same treatment as U.S. shareholders with
respect to such gain or (ii) the Non-U.S. Shareholder is a nonresident alien
individual who was present in the United States for 183 days or more during the
taxable year, in which case the nonresident alien individual will be subject to
a 30% tax on the individual's capital gains. If the gain on the sale of Shares
were to be subject to taxation under FIRPTA, the Non-U.S. Shareholder would be
subject to the same treatment as U.S. shareholders with respect to such gain
(subject to applicable alternative minimum tax and a special alternative minimum
tax in the case of nonresident alien individuals).

                                      -50-


<PAGE>
Taxation of Holders of Debt Securities

         Certain Definitions. As used herein, the term "U.S. Holder" means a
holder of a Debt Security who (for United States Federal income tax purposes) is
(i) a citizen or resident of the United States, (ii) a domestic corporation,
(iii) an estate, the income of which is subject to United States federal income
tax without regard to its source, (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust, or (v) any other person who is subject to
United States Federal income taxation on a net income basis with respect to a
Debt Security . As used herein, the term "U.S. Alien Holder" means a holder of a
Debt Security who is not a U.S. Holder. In the case of a holder of a Debt
Security that is a partnership for United States tax purposes, each partner will
take into account its allocable share of income or loss from the Debt Security,
and will take such income or loss into account under the rules of taxation
applicable to such partner, taking into account the partnership and the partner.

         Payments of interest to U.S. Holders. Interest on a Debt Security will
be taxable to a U.S. Holder as ordinary income at the time it is received or
accrued, depending on the U.S. Holder's method of accounting for tax purposes.

         Purchase, sale and retirement of the Debt Securities by U.S. Holders. A
U.S. Holder's tax basis in a Debt Security will generally be its U.S. dollar
cost.

         A U.S. Holder will generally recognize gain or loss on the sale or
retirement of a Debt Security equal to the difference between the amount
realized on the sale or retirement and the U.S. Holder's tax basis in the Debt
Security. Except to the extent attributable to accrued but unpaid interest, gain
or loss recognized on the sale or retirement of a Debt Security will be capital
gain or loss, will be a long-term capital gain or loss if the Debt Security was
held for more than one year and may be eligible for a reduced rate of tax if the
Debt Security was held for more than 18 months and in certain other
circumstances.

         U.S. Alien Holders. This discussion assumes that the Debt Security is
not subject to the rules of Section 871(h)(4)(A) of the Code (relating to
interest payments that are determined by reference to the income, profits,
changes in the value of property or other attributes of the debtor or a related
party).

         Under present United States Federal income and estate tax law, and
subject to the discussion of backup withholding above:

                  (i) payments of principal, premium (if any) and interest by
the Operating Partnership or any of its paying agents to any holder of a Debt
Security that is a U.S. Alien Holder will not be subject to United States
Federal withholding tax if, in the case of interest (a) the beneficial owner of
the Debt Security does not actually or constructively own 10% or more of the
capital or profits interest in the Operating Partnership, (b) the beneficial
owner of the Debt Security is not a controlled foreign corporation that is
related to the Operating Partnership through stock ownership, and (c) either (A)
the beneficial owner of the Debt Security certifies to the Operating Partnership
or its agent, under penalties of perjury, that it is not a U.S. person and
provides its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and holds the Debt
Security certifies to the Operating Partnership or its agent under penalties of
perjury that such statement has been received from the beneficial owner by it or
by a financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof;

                  (ii) a U.S. Alien Holder of a Debt Security will not be
subject to United States Federal withholding tax on any gain realized on the
sale or exchange of a Debt Security; and

                  (iii) a Debt Security held by an individual who at death is
not a citizen or resident of the United States will not be includible in the
individual's gross estate for purposes of the United States Federal estate tax
as a result of the individual's death if (a) the individual did not actually or
constructively own 10% or more of the capital or profits interest in the
Operating Partnership, and (b) the income on the Debt Security would not have
been effectively connected with a United States trade or business of the
individual at the time of the individual's death.

         Special rules may apply in the case of U.S. Alien Holders (i) that are
engaged in a United States trade or business, (ii) that are former citizens or
long term residents of the United States, "controlled foreign corporations,"
"foreign personal holding companies," corporations which accumulate earnings to
avoid United States Federal income

                                      -51-


<PAGE>
tax, and certain foreign charitable organizations, each within the meaning of
the Code, or (iii) certain non-resident alien individuals who are present in the
United States for 183 days or more during a taxable year. Such persons are urged
to consult their own tax advisors before purchasing a Debt Security.

Statement of Stock Ownership

         The Company is required to demand annual written statements from the
record holders of designated percentages of its Shares disclosing the actual
owners of the Shares. The Company must also maintain, within the Internal
Revenue District in which it is required to file its federal income tax return,
permanent records showing the information it has received as to the actual
ownership of such Shares and a list of those persons failing or refusing to
comply with such demand.

Other Tax Consequences

         The Company, the Operating Partnership, the Title Holding Partnerships
and the Company's shareholders may be subject to state or local taxation in
various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Company,
the Operating Partnership, the Title Holding Partnerships and the Company's
shareholders may not conform to the Federal income tax consequences discussed
above. Consequently, prospective shareholders should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in
the Company.

Possible Federal Tax Developments

         The rules dealing with Federal income taxation are constantly under
review by the IRS, the Treasury Department and Congress. New Federal tax
legislation or other provisions may be enacted into law or new interpretations,
rulings, Treasury Regulations or court decisions could be adopted, all of which
could adversely affect the taxation of the Company or of its shareholders. No
prediction can be made as to the likelihood of passage of any new tax
legislation or other provisions or court decisions either directly or indirectly
affecting the Company or its shareholders. Consequently, the tax treatment
described herein may be modified prospectively or retroactively by legislative,
judicial or administrative action.

                              PLAN OF DISTRIBUTION

         The Company and the Operating Partnership may sell the Securities to
one or more underwriters for public offering and sale by them or may sell the
Securities directly to one or more investors or through agents or through a
combination of any of such methods. Any such underwriter or agent involved in
the offer and sale of the Securities will be named in the applicable prospectus
supplement.

         The Company, the Operating Partnership or underwriters may offer and
sell the Securities at a fixed price or prices, which may be changed, at prices
related to the prevailing market prices at the time of sale or at negotiated
prices for cash or assets. The Company or the Operating Partnership also may,
from time to time, authorize underwriters acting as their agents to offer and
sell the Securities upon the terms and conditions as are set forth in the
applicable prospectus supplement. In connection with the sale of the Securities,
underwriters may be deemed to have received compensation from the Company or the
Operating Partnership in the form of underwriting discounts or commissions and
may also receive commissions from purchasers of the Securities for whom they may
act as agent. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.

         Any underwriting compensation paid by the Company or the Operating
Partnership to underwriters or agents in connection with the offering of the
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth or described in the
applicable prospectus supplement. Underwriters, dealers and agents participating
in the distribution of the Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the Securities may be deemed to be underwriting discounts and
commissions under the Securities Act.

         Underwriters, dealers and agents may be entitled, under agreements
entered into with the Company or the Operating Partnership, to indemnification
against and contribution toward certain civil liabilities, including liabilities


                                      -52-


<PAGE>
under the Securities Act. In the opinion of the Commission, such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

         Unless otherwise specified in the related prospectus supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Shares which are listed on the NYSE. Any Common Shares
sold pursuant to a prospectus supplement will be listed on the NYSE, subject to
official notice of issuance. The Operating Partnership or the Company may elect
to list any series of Debt Securities, Preferred Shares or American Depository
Receipts representing Depository Shares on an exchange, but is not obligated to
do so. It is possible that one or more underwriters may make a market in a
series of Securities, but will not be obligated to do so and may discontinue any
market making at any time without notice. Therefore, no assurance can be given
as to the liquidity of, or the trading market for, the Securities.

         If so indicated in the applicable prospectus supplement, the Company
will authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Equity Securities from the
Company at the public offering price set forth in such prospectus supplement
pursuant to Delayed Delivery Contracts ("Contracts") providing for payment and
delivery on the date or dates stated in such prospectus supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except: (i) the purchase by an institution of the Equity Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject, and
(ii) if the Equity Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Equity
Securities less the principal amount thereof covered by Contracts.

         If so indicated in the applicable prospectus supplement, the Operating
Partnership will authorize underwriters or other persons acting as the Operating
Partnership's agents to solicit offers by certain institutions to purchase Debt
Securities from the Operating Partnership at the public offering price set forth
in such prospectus supplement pursuant to Contracts providing for payment and
delivery on the date or dates stated in such prospectus supplement. Each
Contract will be for an amount not less than, and the aggregate principal amount
of Debt Securities sold pursuant to Contracts shall be not less nor more than,
the respective amounts stated in the applicable prospectus supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Operating Partnership.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Debt Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Debt Securities are
being sold to underwriters, the Operating Partnership shall have sold to such
underwriters the total principal amount of the Debt Securities less the
principal amount thereof covered by Contracts.

         Underwriters, dealers and agents and their affiliates may engage in
transactions with, or perform services for, or be tenants of, the Company and
its subsidiaries in the ordinary course of business.


                                     EXPERTS

         The audited financial statements and schedules (other than financial
statements identified in the next sentence) incorporated by reference in this
Prospectus and elsewhere in the Registration Statement to the extent and for the
periods indicated in their reports have been audited by Arthur Andersen LLP,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The financial
statements with respect to 1000/2000 West Lincoln Drive, 3000 West Lincoln Drive
and 4000/5000 West Lincoln Drive incorporated by reference in this Prospectus
from the Current Report on Form 8-K of the Company, dated June 27, 1997, have
been audited by Zelenkofske, Axelrod & Company, Ltd., independent public
accountants, as indicated in their report and are included herein in reliance
upon the authority of said firm as experts in giving said report.

         Future financial statements of the Company and the Operating
Partnership and the reports thereon of the Company's and the Operating
Partnership's independent public accountants also will be incorporated by
reference in this Prospectus in reliance upon the authority of that firm as
experts in giving those reports to the extent said firm has audited those
financial statements and consented to the use of their reports thereon.


                                      -53-


<PAGE>

                                  LEGAL MATTERS

         The validity of the Securities offered hereby will be passed upon for
the Company and the Operating Partnership by Pepper Hamilton LLP, Philadelphia,
Pennsylvania. Pepper Hamilton LLP will rely on Ballard Spahr Andrews &
Ingersoll, LLP Baltimore, Maryland, as to certain matters of Maryland law.


                                   TAX MATTERS

         The opinion regarding the statements in this Prospectus under the
caption "Federal Income Tax Considerations" has been rendered by Arthur Andersen
LLP, independent public accountants, and has been referred to herein in reliance
upon the authority of such firm as experts in giving said opinion.


                                      -54-


<PAGE>
================================================================================
     
                                   PROSPECTUS

                         ===============================



                             BRANDYWINE REALTY TRUST

                                  $663,129,026

         Preferred Shares, Common Shares, Depositary Shares and Warrants


                                   ----------


                     BRANDYWINE OPERATING PARTNERSHIP, L.P.

                                  $750,000,000

                                 Debt Securities


                                   ----------



                           [                  ], 1998





================================================================================
         No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
in connection with the offering covered by this Prospectus. If given or made,
such information or representations must not be relied upon as having been
authorized by the Company or the Selling Shareholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the Common
Shares, in any jurisdiction where, or to any person to whom, it is unlawful to
make any such offer or solicitation. Neither the delivery of this Prospectus nor
any offer or sale made hereunder shall, under any circumstances, create an
implication that there has not been any change in the facts set forth in this
Prospectus or in the affairs of the Company since the date hereof.
================================================================================



<PAGE>
                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

         The following table sets forth the costs and expenses for the
distribution of the securities being registered. Such costs and expenses do not
include amounts that may be incurred upon the issuance of certain types of
securities registered hereunder.

         SEC Registration Fee.....................................    $ 221,250
         Printing and Duplicating Expenses........................       50,000
         Legal Fees and Expenses (other than Blue Sky fees).......      100,000
         Accounting Fees and Expenses.............................      100,000
         Miscellaneous............................................       50,000
                                                                      ---------
         Total....................................................    $ 521,250
                                                                      =========

Item 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The Maryland REIT Law permits a Maryland real estate investment trust
to include in its Declaration of Trust a provision limiting the liability of its
trustees and officers to the trust and its shareholders for money damages except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. The
Declaration of Trust of Brandywine Realty Trust (the "Company") contains such a
provision which eliminates such liability to the maximum extent permitted by the
Maryland REIT Law.

         The Company's Bylaws require it to indemnify, without a preliminary
determination of the ultimate entitlement to indemnification, (a) any present or
former Trustee, officer or shareholder who has been successful, on the merits or
otherwise, in the defense of a proceeding to which he was made a party by reason
of such status, against reasonable expenses incurred by him in connection with
the proceeding; (b) any present or former Trustee or officer against any claim
or liability to which he may become subject by reason of such status unless it
is established that (i) his act or omission was committed in bad faith or was
the result of active and deliberate dishonesty, (ii) he actually received an
improper personal benefit in money, property or services or (iii) in the case of
a criminal proceeding, he had reasonable cause to believe that his act or
omission was unlawful; and (c) each shareholder or former shareholder against
any claim or liability to which he may be subject by reason of such status as a
shareholder or former shareholder. However, under the MGCL, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the Company's Bylaws
require it to pay or reimburse, in advance of final disposition of a proceeding,
reasonable expenses incurred by a present or former Trustee, officer or
shareholder made a party to a proceeding by reason of his status as a Trustee,
officer or shareholder provided that, in the case of a Trustee or officer, the
Company shall have received (i) a written affirmation by the Trustee or officer
of his good faith belief that he has met the applicable standard of conduct
necessary for indemnification by the Company as authorized by the Bylaws and
(ii) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the Company if it shall ultimately be determined that the
applicable standard of conduct was not met. The Company's Bylaws also (i) permit
the Company, with the approval of its Trustees, to provide indemnification and
payment or reimbursement of expenses to a present or former Trustee, officer or
shareholder who served a predecessor of the Company in such capacity, and to any
employee or agent of the Company or a predecessor of the Company, (ii) provide
that any indemnification or payment or reimbursement of the expenses permitted
by Bylaws shall be furnished in accordance with the procedures provided for
indemnification and payment or reimbursement of expenses under Section 2-418 of
the Maryland General Corporation Law ("MGCL") for directors of Maryland
corporations and (iii) permit the Company to provide such other and further
indemnification or payment or reimbursement of expenses as may be permitted by
the MGCL for directors of Maryland corporations.

         The limited partnership agreement of Brandywine Operating Partnership,
L.P. (the "Operating Partnership") also provides for indemnification by the
Operating Partnership of the Company and its Trustees and officers for any
costs, expenses or liabilities incurred by them by reason of any act performed
by them for or on behalf of the Operating

                                      II-1




<PAGE>
Partnership or the Company; provided that such person's conduct was taken in
good faith and in the belief that such conduct was in the best interests of the
Operating Partnership and that such person was not guilty of fraud, willful
misconduct or gross negligence.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to Trustees and
officers of the Trust pursuant to the foregoing provisions or otherwise, the
Company has been advised that, although the validity and scope of the governing
statute has not been tested in court, in the opinion of the Commission, such
indemnification is against public policy as expressed in Securities Act and is,
therefore, unenforceable. In addition, indemnification may be limited by state
securities laws.

ITEM 16.  EXHIBITS

          *1.0     -       Form of Underwriting Agreement.

           3.1     -       Amended and Restated Declaration of Trust of the
                           Company (Incorporated by reference to Exhibit 3.1 to
                           the Company's Current Report on Form 8-K dated June
                           9, 1997)

           3.2     -       Articles of Amendment to Declaration of Trust of the
                           Company (Incorporated by reference to Exhibit 3.1 to
                           the Company's Current Report on Form 8-K dated
                           September 10, 1997)

           3.3     -       Articles of Amendment to Declaration of Trust of the
                           Company (No. 2)(Incorporated by reference to Exhibit
                           3.1 to the Company's Current Report on Form 8-K dated
                           June 3, 1998)


           3.4    -        Amended and Restated Bylaws of the Company
                           (Incorporated by reference to Exhibit 3.2 to the
                           Company's Annual Report on Form 10-K for the year
                           ended December 31, 1996)

           3.5    -        Amended and Restated Agreement of Limited Partnership
                           of the Operating Partnership (Incorporated by
                           reference to Exhibit 10.1 to the Company's Current
                           Report on Form 8-K dated December 17, 1997)

           3.6    -        First Amendment to Amended and Restated Agreement of
                           Limited Partnership of the Operating Partnership
                           (Incorporated by reference to Exhibit 10.12 to the
                           Company's Current Report on Form 8-K dated December
                           17, 1997)

           3.7    -        Second Amendment to Amended and Restated Agreement of
                           Limited Partnership of the Operating Partnership
                           (Incorporated by reference to Exhibit 10.3 to the
                           Company's Current Report on Form 8-K dated April 13,
                           1998)

           3.8    -        Third Amendment to Amended and Restated Agreement of
                           Limited Partnership of the Operating Partnership
                           (Incorporated by reference to Exhibit 10.4 to the
                           Company's Current Report on Form 8-K dated May 14,
                           1998)

          *4.1    -        Form of Common Share Warrant Agreement

          *4.2    -        Form of Deposit Agreement

           4.3    -        Form of Indenture for Senior Debt Securities

           4.4    -        Form of Senior Debt Security (included in Exhibit
                           4.3)

           4.5    -        Form of Indenture for Subordinated Debt Security

           4.6    -        Form of Subordinated Debt Security (included in
                           Exhibit 4.5)

           5.1    -        Opinion of Pepper Hamilton LLP regarding the validity
                           of securities being registered

                                      II-2




<PAGE>

           5.2    -        Opinion of Ballard Spahr Andrews & Ingersoll, LLP
                           regarding the validity of securities being registered

           8.1    -        Opinion of Arthur Andersen LLP regarding tax matters

          12.1    -        Calculation of Ratios of Earnings to Combined Fixed
                           Charges and Preferred Share Distributions

          23.1    -        Consent of Arthur Andersen LLP

          23.2    -        Consent of Zelenkofske, Axelrod & Co., Ltd.

          23.3    -        Consent of Pepper Hamilton LLP (contained in Exhibit
                           5.1)

          23.4    -        Consent of Ballard Spahr Andrews & Ingersoll, LLP
                           (contained in Exhibit 5.2)

          23.5    -        Consent of Arthur Andersen LLP regarding opinion as
                           to tax matters (contained in Exhibit 8.1)

           24     -        Power of Attorney (filed as part of the signature
                           page to the Registration Statement)

--------------------
*    To be filed by amendment or incorporated by reference in connection with
     the offering of the Securities.


ITEM 17.  UNDERTAKINGS

     (a) The undersigned Registrants hereby undertake:

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

               (i)  To include any prospectus required by Section 10(a)(3) of
                    the Securities Act of 1933;

               (ii) To reflect in the prospectus any facts or events arising
                    after the effective date of this registration statement (or
                    the most recent post-effective amendment thereof) which,
                    individually or in the aggregate, represent a fundamental
                    change in the information set forth in this registration
                    statement. Notwithstanding the foregoing, any increase or
                    decrease in volume of securities offered (if the total
                    dollar value of securities offered would not exceed that
                    which was registered) and any deviation from the low or high
                    end of the estimated maximum offering range may be reflected
                    in the form of prospectus filed with the Commission pursuant
                    to Rule 424(b) if, in the aggregate, the changes in volume
                    and price represent no more than a 20 percent change in the
                    maximum aggregate offering price set forth in the
                    "Calculation of Registration Fee" table in the effective
                    registration statement;

              (iii) To include any material information with respect to the
                    plan of distribution not previously disclosed in this
                    registration statement or any material change to such
                    information in this registration statement;

provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrants pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.

         (2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the Securities offered herein, and the
offering of such Securities at that time shall be deemed to be the initial bona
fide offering thereof.


                                      II-3




<PAGE>
        (3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the termination of
the offering.

     (b) The undersigned Registrants hereby further undertake that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrants' annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the Securities offered herein, and the offering of such
Securities at that time shall be deemed to be the initial bona fide offering
thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the provisions described under Item 15 of this
registration statement, or otherwise (other than insurance), the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in such Act and will be governed by the final
adjudication of such issue.

     (d) The Registrants hereby undertake to file an application for the purpose
of determining the eligibility of any trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.


                                      II-4




<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrants certify that they have reasonable grounds to believe that they meet
all the requirements for filing on Form S-3 and have duly caused this
Registration Statement to be signed on their behalf by the undersigned,
thereunto duly authorized, in the City of Philadelphia, Commonwealth of
Pennsylvania, on June 5, 1998.

                              BRANDYWINE REALTY TRUST

                              By:  /s/ Gerard H. Sweeney
                                   ------------------------
                              Gerard H. Sweeney
                              President and Chief Executive Officer

                              BRANDYWINE OPERATING PARTNERSHIP, L.P.

                              By: Brandywine Realty Trust, its general partner

                                      By: /s/ Gerard H. Sweeney
                                          --------------------------------------
                                          Gerard H. Sweeney
                                          President and Chief Executive Officer



                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints each of Anthony A. Nichols, Sr.
and Gerard H. Sweeney his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on June 5,
1998, in the capacities indicated.


           Signature                                  Title
           ---------                                  -----
  /s/ Anthony A. Nichols, Sr.             Chairman of the Board of Trustees
---------------------------------
      Anthony A. Nichols, Sr.

  /s/ Gerard H. Sweeney                  President, Chief Executive Officer
---------------------------------        and Trustee (Principal Executive 
      Gerard H. Sweeney                  Officer)                         
                                         
  /s/ Mark S. Kripke                     Chief Financial Officer (Principal
---------------------------------        Financial and Accounting Officer)
      Mark S. Kripke                     

  /s/ Warren V. Musser                   Trustee
---------------------------------
      Warren V. Musser

  /s/ Walter D'Alessio                   Trustee
---------------------------------
      Walter D'Alessio

  /s/ Charles P. Pizzi                   Trustee
---------------------------------
      Charles P. Pizzi


                                      II-5


<PAGE>

                                  EXHIBIT INDEX
                                  -------------

Exhibit                                     Exhibit
 Number                                    Description
-------                                    -----------
   4.3                         Form of Indenture for Senior Debt Security

   4.4                         Form of Senior Debt Security (included in 
                               Exhibit 4.3)

   4.5                         Form of Indenture for Subordinated Debt 
                               Security

   4.6                         Form of Subordinated Debt Security (included in 
                               Exhibit 4.5)

   5.1                         Opinion of Pepper Hamilton LLP regarding the 
                               validity of securities being registered 

   5.2                         Opinion of Ballard Spahr Andrews & Ingersoll, LLP
                               regarding the validity of securities being 
                               registered

   8.1                         Opinion of Arthur Andersen LLP regarding tax 
                               matters.

  12.1                         Calculation of Ratios of Earnings to Combined
                               Fixed Charges and Preferred Share Distributions

  23.1                         Consent of Arthur Andersen LLP

  23.2                         Consent of Zelenkofske, Axelrod & Co., Ltd.

  23.3                         Consent of Pepper Hamilton LLP (contained in 
                               Exhibit 5.1)

  23.4                         Consent of Ballard Spahr Andrews & Ingersoll, LLP
                               (contained in Exhibit 5.2)

  23.5                         Consent of Arthur Andersen LLP regarding opinion 
                               as to tax matters (contained in Exhibit 8.1)

  24                           Power of Attorney (filed as part of the signature
                               page to the Registration Statement)
  
  
