AGREEMENT AND PLAN OF MERGER

        THIS AGREEMENT AND PLAN OF MERGER, dated as of April 16, 2004 (this Agreement), is by and among HRPT PROPERTIES TRUST, a Maryland real estate investment trust (Parent), HWP LP ACQUISITION LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (Purchaser), HALLWOOD REALTY PARTNERS, L.P., a Delaware limited partnership (the Partnership) and HALLWOOD REALTY, LLC, a Delaware limited liability company and the general partner (the General Partner) of the Partnership.

RECITALS:

        The Board of Trustees of Parent and the sole Member of the Purchaser have approved the merger (the Merger) of the Purchaser into the Partnership on the terms and subject to the conditions set forth in this Agreement, whereby each unit of limited partner interest in the Partnership (the Units) outstanding immediately before the closing of the Merger, shall be converted into the right to receive an amount in cash equal to the Merger Price.

        The Board of Directors of the General Partner has determined that the Merger is fair to, and in the best interests of, the holders of Units, has approved the Merger and resolved to recommend that holders of Units approve this Agreement and the Merger.

        The Parent, HRP GP, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (Successor GP), the General Partner, HWG, LLC, a Delaware limited liability company (HWG, LLC), Hallwood Commercial Real Estate, LLC, a Delaware limited liability company (HCRE), HWG Realty Investors, LLC, a Delaware limited liability company (HWG Realty), HWG 98 Advisors, Inc., a Delaware corporation (HWG98), HWG 95 Advisors, Inc., a Delaware corporation (HWG95) and The Hallwood Group Incorporated, a Delaware corporation (Group) (the General Partner, HWG, LLC, HCRE, HWG Realty, HWG98, HWG95 and Group are referred to collectively as the HWG Parties), have separately entered into an agreement (the Purchase Agreement), dated the same date as this Agreement, providing for the consummation of certain other transactions (the Other Transactions), including, without limitation, the acquisition (x) by Parent from HWG, LLC of all of the Units owned by HWG, LLC and (y) by Successor GP from the General Partner of the entire general partner interest in the Partnership immediately before the closing of the Merger.

        NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and other terms contained in this Agreement, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

THE MERGER

        1.01 The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware Revised Uniform Limited Partnership Act (the DRULPA) and the Delaware Limited Liability Company Act (the DLLCA), the Purchaser shall be merged with and into the Partnership at the Effective Time. At the Effective Time, the