Franklin Street Properties (FSP) 8-K Results of Operations and Financial Condition

Exhibit 99.2

   

Supplemental Operating and Financial Data

First Quarter 2011

Franklin Street Properties Corp.  ●  401 Edgewater Place  ●  Wakefield, MA 01880  ●  (781) 557-1300

www.franklinstreetproperties.com

   Table of Contents

	Page		Page
Company Overview	3-5	Tenant Analysis
		20 Largest tenants with annualized rent and remaining term	21
Key Financial Data		20 Largest Tenants, Industry Profile	22
Financial Highlights	6	Lease Expirations by Square Feet	23
Management’s Key Operating Measures	7	Lease Expirations with annualized rent per square foot	24
Income Statements	8
EPS, FFO, GOS and FFO+GOS	9	Transactional Drivers
Balance Sheets	10	Capital Recycling	25
Cash Flow Statements	11	Investment Banking Performance	26
Segment Information	12-13
Property Net Operating Income (NOI): Cash and GAAP Basis	14	FFO and FFO+GOS Reconciliations	27
Capital Analysis	15	FFO and FFO+GOS Definitions	28
		FAD Reconciliation and Definition	29
Portfolio Overview		EBITDA Reconciliation and Definition	30
Property by Form of FSP Participation	16	NOI Reconciliation and Definition	31
Regional Analysis and Map	17
Owned Property List	18
Properties with annualized rent per square foot	19
Capital Expenditures	20

All financial information contained in this supplemental information package is unaudited. In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from FSP’s current expectations include general economic conditions, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, detailed from time to time in FSP’s SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

March 31, 2011  2

   Company Overview

Overview

Franklin Street Properties Corp. (FSP) (NYSE Amex: FSP) is an investment firm focused on achieving current income and long-term growth through investments in commercial properties. FSP’s portfolio of real estate assets consists primarily of suburban office buildings and includes select investments in central business district (CBD) properties. FSP’s real estate operations include property acquisitions and dispositions, interim acquisition and short-term financing, leasing, development and asset management. FSP’s subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and registered broker/dealer.

Our Business

FSP operates in two business segments and has two principal sources of revenue; real estate operations and investment banking/investment services. Real estate operations include rental income from real estate leasing, interest income from loans made for interim acquisition or other purposes, and fee income from asset management. Investment banking/investment services generate brokerage commissions, loan origination fees, development services and other fees related to the organization of single-purpose entities that own real estate and the private placement of equity in those entities.

Strategy

FSP’s investment strategy is to make selective acquisitions based on market and/or property specific criteria, actively manage the property to maximize its value and dispose of the property when the ideal time or situation arises. Proceeds from property sales are redeployed into other specific real estate assets, used for other corporate purposes and/or paid out to shareholders as special dividends. Unlike many real estate investment companies, which have utilized significant leverage in an attempt to enhance their real estate portfolio’s returns, FSP has used very moderate leverage. FSP’s historical growth has been achieved without the use of permanent mortgage debt on any of our properties. This model has significantly reduced FSP’s risk profile by reducing foreclosure, financing and refinancing risk. The Company’s strategy is to employ modest leverage to accelerate its growth and capitalize on market conditions and opportunities as they arise. In addition, FSP believes that it can lower investment risk while enhancing current income and long-term appreciation potential by owning properties in diversified geographic locations that have sound long-term economic growth potential.

Snapshot
(as of March 31, 2011)
Corporate Headquarters	Wakefield, MA
Fiscal Year-End	31-Dec
Total Properties	35
Total Square Feet	6.8 Million
Common Shares Outstanding	81,437,405
Quarterly Dividend	$0.19
Dividend Yield	5.40%
Total Market Capitalization	$1.5 Billion
Insider Holdings	12.8%

March 31, 2011 3

   Company Overview

Structure of the Company

FSP has elected to be taxed as a Real Estate Investment Trust (REIT) under the Internal Revenue Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income to our shareholders. Management intends to continue to adhere to these requirements and to maintain our REIT status. As a REIT we are entitled to a tax deduction for some or all of the dividends we pay to shareholders. Accordingly, we generally will not be subject to federal income taxes as long as we distribute an amount equal to or in excess of our taxable income to shareholders.

Dividend Philosophy

FSP has been able to offer shareholders high-quality, risk-adjusted returns. The ongoing and recurring rental revenue stream provides stability to our regular quarterly dividend. In addition, the possibility exists for the payment of annual special dividends resulting from the sale of properties in the portfolio and the income from FSP’s investment banking business.

Board of Directors and Management
George J. Carter	Dennis J. McGillicuddy	Scott H. Carter
President, Chief Executive Officer	Director	Executive Vice President, General
Chairman of the Board	Member, Audit Committee	Counsel and Assistant Secretary
	Member, Compensation Committee
Barbara J. Fournier		John G. Demeritt
Executive Vice President,  Chief Operating Officer,	Georgia Murray	Executive Vice President and
Treasurer, Secretary and Director	Director	Chief Financial Officer
	Chair, Compensation Committee
Janet Notopoulos	Member, Audit Committee	William W. Gribbell
Executive Vice President and Director		Executive Vice President
	Barry Silverstein
John N. Burke	Director	R. Scott MacPhee
Director	Member, Audit Committee	Executive Vice President
Chair, Audit Committee	Member, Compensation Committee
Member, Compensation Committee

March 31, 2011 4

   Company Overview

Corporate Headquarters	Trading Symbol	Inquiries
401 Edgewater Place, Suite 200	NYSE Amex	Inquires should be directed to:
Wakefield, MA 01880	Symbol: FSP	John Demeritt, CFO
(t) 781-557-1300		877-686-9496 or InvestorRelations@
(f) 781-246-2807		franklinstreetproperties.com
www.franklinstreetproperties.com

Common Stock Data (NYSE Amex: FSP)
	For the Three Months Ended
	31-Mar-11	31-Dec-10	30-Sep-10	30-Jun-10	31-Mar-10
High Price	15.63	14.42	12.86	15.70	15.01
Low Price	13.52	12.2	10.99	11.04	11.64
Closing Price, at the end of the quarter	14.07	14.25	12.42	11.81	14.43
Dividends paid per share – quarterly	0.19	0.19	0.19	0.19	0.19
Closing dividend yield – annualized	5.40%	5.33%	6.12%	6.44%	5.27%
Common shares outstanding (millions)	81.44	81.44	79.84	79.68	79.68

Timing

Quarterly and Annual results are expected to be announced during the week ending on these dates:

First Quarter:	4-May-12	Third Quarter:	4-Nov-11
Second Quarter:	5-Aug-11	Fourth Quarter:	24-Feb-12

March 31, 2011  5

   Financial Highlights (in thousands, except per share data)

													For the Year
	For the Three Months Ended												Ended
	31-Mar-11		31-Mar-10			30-Jun-10		30-Sep-10			31-Dec-10		31-Dec-10
Income Items:
Revenue:
Rental	$	31,270	$	28,757		$	27,219	$	29,391		$	29,953	$	115,320
Related party revenue		2,016		800			1,852		896			4,162		7,710
Other		7		9			6		20			54		89
Total revenue		33,293		29,566			29,077		30,307			34,169		123,119
Total expenses		29,398		25,384			24,547		27,047			29,319		106,297
Income before interest income, equity in earnings in non-consolidated REITs and taxes		3,895		4,182			4,530		3,260			4,850		16,822
Interest income		12		8			9		4			4		25
Equity in earnings in non-consolidated REITs		968		253			380		404			229		1,266
Income before taxes		4,875		4,443			4,919		3,668			5,083		18,113
Income tax expense (benefit)		50		(68	)		5		(37	)		317		217
Income from continuing operations		4,825		4,511			4,914		3,705			4,766		17,896
Income from discontinued operations		350		1,051			1,040		1,052			1,054		4,197
Gain on sale of assets		19,592		—			—					—		—
Net income	$	24,767	$	5,562		$	5,954	$	4,757		$	5,820	$	22,093
FFO+GOS*:
FFO	$	16,250	$	16,650		$	16,702	$	16,052		$	17,518	$	66,922
GOS		19,592		—			—		—			—		—
FFO+GOS	$	35,842	$	16,650		$	16,702	$	16,052		$	17,518	$	66,922
Per Share Data:
EPS	$	0.30	$	0.07		$	0.07	$	0.06		$	0.07	$	0.28
FFO		0.20		0.21			0.21		0.20			0.22		0.84
GOS		—		—			—		—			—		—
FFO+GOS		0.44		0.21			0.21		0.20			0.22		0.84
Weighted Aveage Shares (diluted)		81,437		79,681			79,681		79,751			80,187		79,826
Balance Sheet Items:
Real estate, net	$	984,441	$	855,661		$	874,558	$	872,038		$	867,608	$	867,608
Other assets, net		382,461		295,770			311,492		316,340			371,127		371,127
Total assets, net		1,366,902		1,151,431			1,186,050		1,188,378			1,238,735		1,238,735
Total liabilities, net		435,801		223,654			267,198		278,091			317,177		317,177
Shareholders' equity		931,101		927,777			918,852		910,287			921,558		921,558

* See page 27 for a reconciliation of Net Income to FFO and FFO+GOS and page 28 for definitions of FFO and FFO+GOS

March 31, 2011 6

   Management’s Key Operating Measures

 

* See page 27 for a reconciliation of Net Income to FFO and FFO+GOS (Total Profits) and page 28 for definitions of FFO and FFO+GOS

March 31, 2011 7

   Condensed Consolidated Income Statements ($ in thousands, except per share amounts)

													For the
	For the Three Months Ended												Year Ended
	31-Mar-11		31-Mar-10			30-Jun-10		30-Sep-10			31-Dec-10		31-Dec-10
Revenue:
Rental	$	31,270	$	28,757		$	27,219	$	29,391		$	29,953	$	115,320
Related party revenue:
Syndication fees		517		121			541		20			1,862		2,544
Transaction fees		691		146			753		246			1,582		2,727
Management fees and interest income from loans		808		533			558		630			718		2,439
Other		7		9			6		20			54		89
Total revenue		33,293		29,566			29,077		30,307			34,169		123,119
Expenses:
Real estate operating expenses		8,732		7,955			7,335		8,715			9,604		33,609
Real estate taxes and insurance		4,783		4,996			4,061		4,659			4,454		18,170
Depreciation and amortization		10,819		8,496			8,521		9,691			9,764		36,472
Selling, general and administrative		2,368		2,171			2,559		2,074			2,482		9,286
Commissions		287		114			336		16			1,011		1,477
Interest		2,409		1,652			1,735		1,892			2,004		7,283
Total expenses		29,398		25,384			24,547		27,047			29,319		106,297
Income before interest income, equity in earnings of non-consolidated REITs and taxes		3,895		4,182			4,530		3,260			4,850		16,822
Interest income		12		8			9		4			4		25
Equity in earnings of non-consolidated REITs		968		253			380		404			229		1,266
		4,875		4,443			4,919		3,668			5,083		18,113
Income tax expense (benefit)		50		(68	)		5		(37	)		317		217
Income from continuing operations		4,825		4,511			4,914		3,705			4,766		17,896
Income from discontinued operations		350		1,051			1,040		1,052			1,054		4,197
Gain on sale of assets		19,592		—			—		—			—		—
Net income	$	24,767	$	5,562		$	5,954	$	4,757		$	5,820	$	22,093
Weighted average number of shares outstanding, basic and diluted		81,437		79,681			79,681		79,751			80,187		79,826
Earnings per share, basic and diluted, attributable to:
Continuing operations	$	0.06	$	0.06		$	0.06	$	0.05		$	0.06	$	0.23
Discontinued operations		0.00		0.01			0.01		0.01			0.01		0.05
Gains on sales of assets		0.24		—			—		—			—		—
Net income per share, basic and diluted	$	0.30	$	0.07		$	0.07	$	0.06		$	0.07	$	0.28

March 31, 2011 8

   EPS, FFO, GOS and FFO+GOS*

*See page 27 for a reconciliation of Net Income to FFO and FFO+GOS and page 28 for definitions of FFO and FFO+GOS

March 31, 2011 9

   Condensed Consolidated Balance Sheets (in thousands)

	March 31,			March 31,			June 30,			September 30,			December 31,
	2011			2010			2010			2010			2010
Assets:
Real estate assets:
Land	$	131,385		$	114,677		$	123,305		$	123,305		$	123,305
Buildings and improvements		983,417			845,504			861,986			865,810			867,858
Fixtures and equipment		600			354			458			458			578
		1,115,402			960,535			985,749			989,573			991,741
Less accumulated depreciation		130,961			104,874			111,191			117,535			124,133
Real estate assets, net		984,441			855,661			874,558			872,038			867,608
Acquired real estate leases, net		85,290			30,822			45,871			43,185			40,578
Investment in non-consolidated REITs		88,652			91,787			90,782			89,995			89,327
Assets held for syndication, net		47,630			2,791			—			—			2,976
Assets held for sale		—			71,593			70,991			70,391			69,790
Cash and cash equivalents		49,488			22,815			21,487			20,554			68,213
Restricted cash		440			50			59			55			420
Tenant rent receivables, net		1,688			1,385			900			2,123			1,922
Straight-line rent receivable, net		20,992			13,994			14,645			15,757			18,752
Prepaid expenses		1,400			2,236			2,280			2,511			1,654
Related party mortgage loan receivable		60,116			41,325			46,270			53,756			57,684
Other assets		6,339			1,220			1,620			1,387			1,356
Deferred leasing commissions, net		20,426			15,752			16,587			16,626			18,455
Total assets	$	1,366,902		$	1,151,431		$	1,186,050		$	1,188,378		$	1,238,735
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	404,000		$	119,968			162,968			167,968			209,968
Term loan payable		—			75,000			75,000			75,000			74,850
Accounts payable and accrued expenses		20,562			20,467			18,766			25,064			22,435
Accrued compensation		603			274			1,040			1,334			1,803
Tenant security deposits		2,533			1,696			2,004			1,922			1,930
Other liabilities: derivative termination value		828			1,995			1,735			1,416			1,077
Acquired unfavorable real estate leases, net		7,275			4,254			5,685			5,387			5,114
Total liabilities		435,801			223,654			267,198			278,091			317,177
Commitments and contingencies
Stockholders’ Equity:
Preferred stock		—			—			—			—			—
Common stock		8			8			8			8			8
Additional paid-in capital		1,025,491			1,003,712			1,003,712			1,005,211			1,025,491
Accumulated other comprehensive loss		(828	)		(1,995	)		(1,735	)		(1,416	)		(1,077	)
Accumulated distributions in excess of accumulated earnings		(93,570	)		(73,948	)		(83,133	)		(93,516	)		(102,864	)
Total stockholders’ equity		931,101			927,777			918,852			910,287			921,558
Total liabilities and stockholders’ equity	$	1,366,902		$	1,151,431		$	1,186,050		$	1,188,378		$	1,238,735

March 31, 2011  10

   Condensed Consolidated Statements of Cash Flows (in thousands)

	Three Months ended March 31,						Twelve Months ended December 31
	2011			2010			2010			2009			2008
Cash flows from operating activities:
Net income	$	24,767		$	5,562		$	22,093		$	27,872		$	31,959
Adjustments to reconcile net income to net cash provided by  operating activities:
Gains on assets sold		(19,592	)		—			—			(424	)		—
Depreciation and amortization expense		11,109			9,284			39,627			36,561			30,444
Amortization of above market lease		(6	)		716			1,362			3,359			4,283
Equity in earnings (losses) from non-consolidated REITs		(1,066	)		(253	)		(1,183	)		(2,012	)		(2,747	)
Distributions from non-consolidated REITs		1,767			1,407			5,170			5,628			5,348
Increase in bad debt reserve		(375	)		380			980			111			79
Changes in operating assets and liabilities:
Restricted cash		(20	)		284			(86	)		2			—
Tenant rent receivables		609			17			(1,120	)		(564	)		64
Straight-line rents		(2,303	)		(1,020	)		(4,249	)		(1,879	)		(1,406	)
Prepaid expenses and other assets		88			265			865			907			(901	)
Accounts payable and accrued expenses		(1,212	)		(3,917	)		(351	)		2,760			448
Accrued compensation		(1,200	)		(1,142	)		387			(238	)		90
Tenant security deposits		603			(112	)		122			(66	)		—
Payment of deferred leasing commissions		(2,819	)		(5,566	)		(10,515	)		(2,659	)		(3,353	)
Net cash provided by operating activities		10,350			5,905			53,102			69,358			64,308
Cash flows from investing activities:
Purchase of real estate assets, office computers and furniture, capitalized merger costs and acquired real estate leases		(169,339	)		(3,529	)		(54,344	)		(132,323	)		(78,396	)
Investment in non-consolidated REITs		(9	)		—			(11	)		(13,218	)		(10	)
Investment in related party mortgage loan receivable		(2,432	)		(4,790	)		(21,149	)		(35,410	)		(1,125	)
Changes in deposits on real estate assets		200			—			(200	)		—			(1,300	)
Investment in assets held for syndication, net		(45,186	)		2,005			1,319			8,159			12,236
Proceeds received on sales of real estate assets		89,382			—			—			672			—
Net cash used in investing activities		(127,384	)		(6,314	)		(74,385	)		(172,120	)		(68,595	)
Cash flows from financing activities:
Distributions to stockholders		(15,473	)		(15,139	)		(60,586	)		(55,313	)		(70,481	)
Proceeds from equity offering, net		(90	)		(1	)		21,868			114,695			—
Borrowings under bank note payable, net		194,032			10,960			100,960			41,540			(17,282	)
Borrowing (repayment) of term loan payable		(74,850	)		—			(150	)		—			75,000
Deferred Financing Costs		(4,328	)		—			—			—			(694	)
Swap termination payment		(982	)		—			—			—			—
Net cash (used in) provided by financing activities		98,309			(4,180	)		62,092			100,922			(13,457	)
Net decreases in cash and cash equivalents		(18,725	)		(4,589	)		40,809			(1,840	)		(17,744	)
Cash and cash equivalents, beginning of period		68,213			27,404			27,404			29,244			46,988
Cash and cash equivalents, end of period	$	49,488		$	22,815		$	68,213		$	27,404		$	29,244

March 31, 2011  11

   Segment Information* ($ in thousands except per share amounts)

	Three Months Ended March 31, 2011								Three Months Ended March 31, 2010
				Investment								Investment
	Real Estate			Banking		Total			Real Estate			Banking			Total
Revenue:
Rental Income	$	31,270		$	—	$	31,270		$	28,757		$	—		$	28,757
Syndication Fees		—			517		517			—			122			122
Transaction Fees		—			691		691			—			146			146
Management Fees & Interest Income		808			—		808			533			—			533
Other Income		7			—		7			8			—			8
Total Revenue		32,085			1,208		33,293			29,298			268			29,566
Expenses
Rental Operating Expenses		8,732			—		8,732			7,954			—			7,954
Real Estate Taxes and Insurance		4,783			—		4,783			4,996			—			4,996
Depreciation and Amortization		10,781			38		10,819			8,463			34			8,497
Selling, general  and administrative		1,645			724		2,369			1,447			724			2,171
Commissions and  Broker Expenses		—			287		287			—			114			114
Interest & Commitment Fees		2,408			—		2,408			1,652			—			1,652
Total Expenses		28,349			1,049		29,398			24,512			872			25,384
Income before Equity, Interest and Taxes		3,736			159		3,895			4,786			(604	)		4,182
Interest Income		11			1		12			7			—			7
Equity Income SARs		968			—		968			253			—			253
Income before Taxes		4,715			160		4,875			5,046			(604	)		4,442
Income Taxes		50			—		50			57			(125	)		(68	)
Income from continuing operations		4,665			160		4,825			4,989			(479	)		4,510
Income from discontinued operations		350			—		350			1,051			—			1,051
Gain on sale of assets		19,592			—		19,592			—			—			—
Net Income (loss)	$	24,607		$	160	$	24,767		$	6,040		$	(479	)	$	5,561
Funds From Operations (FFO)*
Net Income	$	24,607		$	160	$	24,767		$	6,040		$	(479	)	$	5,561
Gain on sale of assets, net		(19,592	)		—		(19,592	)		—			—			—
Equity in income of SARs		(1,773	)		—		(1,773	)		(253	)		—			(253	)
Cash received from SARs		1,767			—		1,767			1,407			—			1,407
Acquisition costs		269			—		269			—			—			—
Depreciation and amortization		10,774			38		10,812			9,901			34			9,935
Funds From Operations (FFO)*		16,052			198		16,250			17,095			(445	)		16,650
EPS	$	0.29		$	0.00	$	0.30		$	0.07		$	(0.01	)	$	0.07
FFO per Share*	$	0.20		$	0.00	$	0.20		$	0.21		$	(0.01	)	$	0.21
Weighted Average Shares							81,437									79,681

*See page 27 for a reconciliation of Net Income to FFO and FFO+GOS and page 28 for definitions of FFO and FFO+GOS

March 31, 2011  12

   Segment Information* ($ in thousands except per share amounts)

	Year Ended December 31, 2010								Year Ended December 31, 2009									Year Ended December 31, 2008
	Real			Investment					Real			Investment						Real			Investment
	Estate			Banking		Total			Estate			Banking			Total			Estate			Banking			Total
Revenue:
Rental Income	$	115,320		$	—	$	115,320		$	120,013		$	—		$	120,013		$	111,198		$	—		$	111,198
Syndication Fees		—			2,544		2,544			—			2,428			2,428			—			3,766			3,766
Transaction Fees		—			2,727		2,727			—			2,080			2,080			—			3,641			3,641
Management Fees & Interest Income		2,439			—		2,439			1,740			—			1,740			1,739			—			1,739
Other Income		89			—		89			61			—			61			72			—			72
Total Revenue		117,848			5,271		123,119			121,814			4,508			126,322			113,009			7,407			120,416
Expenses
Rental Operating Expenses		33,609			—		33,609			30,810			—			30,810			28,999			—			28,999
Real Estate Taxes and Insurance		18,170			—		18,170			18,981			—			18,981			17,740			—			17,740
Depreciation and Amortization		36,299			173		36,472			35,447			123			35,570			30,222			138			30,360
Selling, general  and administrative		6,399			2,887		9,286			4,452			4,062			8,514			4,229			4,039			8,268
Commissions and  Broker Expenses		—			1,477		1,477			—			1,801			1,801			100			2,051			2,151
Interest & Commitment Fees		7,283			—		7,283			6,570			—			6,570			4,921			—			4,921
Total Expenses		101,760			4,537		106,297			96,260			5,986			102,246			86,211			6,228			92,439
Income before Equity, Interest and Taxes		16,088			734		16,822			25,554			(1,478	)		24,076			26,798			1,179			27,977
Interest Income		24			1		25			92			4			96			709			36			745
Equity Income SARs		1,266			—		1,266			1,994			—			1,994			2,747			—			2,747
Income before Taxes		17,378			735		18,113			27,640			(1,474	)		26,166			30,254			1,215			31,469
Income Taxes		217			—		217			248			(827	)		(579	)		246			(736	)		(490	)
Income from continuing operations		17,161			735		17,896			27,392			(647	)		26,745			30,008			1,951			31,959
Income from discontinued operations		4,197			—		4,197			703			—			703			—			—			—
Gain on sale of assets		—			—		—			424			—			424			—			—			—
Net Income	$	21,358		$	735	$	22,093		$	28,519		$	(647	)	$	27,872		$	30,008		$	1,951		$	31,959
Funds From Operations (FFO)*
Net Income	$	21,358		$	735	$	22,093		$	28,519		$	(647	)	$	27,872		$	30,008		$	1,951		$	31,959
Gain on sale of assets, net		—			—		—			(424	)		—			(424	)		—			—			—
Equity in income of SARs		(1,190	)		—		(1,190	)		(2,012	)		—			(2,012	)		(2,747	)		—			(2,747	)
Cash received from SARs		5,170			—		5,170			5,628			—			5,628			5,348			—			5,348
Acquisition costs		125			—		125			643			—			643			—			—			—
Depreciation and amortization		40,551			173		40,724			39,529			123			39,652			34,505			138			34,643
Funds From Operations (FFO)*		66,014			908		66,922			71,883			(524	)		71,359			67,114			2,089			69,203
EPS	$	0.27		$	0.01	$	0.28		$	0.39		$	(0.01	)	$	0.38		$	0.42		$	0.03		$	0.45
FFO per Share*	$	0.83		$	0.01	$	0.84		$	0.99		$	(0.01	)	$	0.98		$	0.95		$	0.03		$	0.98
Weighted Average Shares							79,826									73,001									70,481

*See page 27 for a reconciliation of Net Income to FFO and FFO+GOS and page 28 for definitions of FFO and FFO+GOS

March 31, 2011 13

   Property Net Operating Income (NOI):
Cash and GAAP Basis (in thousands)

Property NOI Cash*			Three
			Months					Year
			Ended	Three Months Ended				Ended
		31-Mar-11
Region	Division	Sq Feet	31-Mar-11	31-Mar-10	30-Jun-10	30-Sep-10	31-Dec-10	2010
Eastern	Mideast	1,550	$    3,476	$    4,031	$    4,390	$    5,551	$    4,931	$   18,903
Midwest	East North Central	597	1,586	1,103	1,574	1,184	1,123	4,984
	West North Central	1,104	2,405	2,034	2,000	2,991	3,028	10,053
		1,701	3,991	3,137	3,574	4,175	4,151	15,037
South	Southeast	600	2,068	2,307	2,251	2,285	1,917	8,760
	Southwest	1,906	3,747	4,234	4,238	3,597	3,564	15,633
		2,506	5,815	6,541	6,489	5,882	5,481	24,393
West	Mountain	790	922	3,254	2,212	810	894	7,170
	Pacific	299	518	443	491	498	480	1,912
		1,089	1,440	3,697	2,703	1,308	1,374	9,082
Total		6,846	$   14,722	$   17,406	$   17,156	$   16,916	$   15,937	$   67,415
Property NOI GAAP*			Three
			Months					Year
			Ended	Three Months Ended				Ended
		31-Mar-11
Region	Division	Sq Feet	31-Mar-11	31-Mar-10	30-Jun-10	30-Sep-10	31-Dec-10	2010
Eastern	Mideast	1,550	$    4,007	$    4,666	$    5,002	$    5,992	$    5,362	$   21,022
Midwest	East North Central	597	1,552	1,110	1,602	1,210	1,166	5,088
	West North Central	1,104	2,886	2,164	2,106	3,136	3,135	10,541
		1,701	4,438	3,274	3,708	4,346	4,301	15,629
South	Southeast	600	1,572	2,356	2,355	2,359	2,033	9,103
	Southwest	1,906	4,629	4,404	4,395	3,797	3,778	16,374
		2,506	6,201	6,760	6,750	6,156	5,811	25,477
West	Mountain	790	1,162	3,229	2,502	1,100	1,231	8,062
	Pacific	299	555	497	533	524	513	2,067
		1,089	1,717	3,726	3,035	1,624	1,744	10,129
Total		6,846	$   16,363	$   18,426	$   18,495	$   18,118	$   17,218	$   72,257

*See page 31 for a reconciliation and definition of Net Income to Property NOI cash and Property NOI GAAP.

March 31, 2011  14

   Capital Analysis (in thousands, except per share amounts)

	31-Mar-11			31-Mar-10			30-Jun-10			30-Sep-10			31-Dec-10
Market Data:
Shares Outstanding		81,437			79,681			79,681			79,837			81,437
Closing market price per share	$	14.07		$	14.43		$	11.81		$	12.42		$	14.25
Market capitalization	$	1,145,824		$	1,149,793		$	941,029		$	991,581		$	1,160,483
Total Debt		404,000			194,968			237,968			242,968		$	284,118
Total Market Capitalization	$	1,549,824		$	1,344,761		$	1,178,997		$	1,234,549		$	1,444,601
Dividend Data:
Total dividends paid	$	15,473		$	15,139		$	15,139		$	15,139		$	15,169
Common dividend per share	$	0.19		$	0.19		$	0.19		$	0.19		$	0.19
Quarterly dividend as a % of FFO*		95%			90%			90%			95%			86%
Liquidity:
Cash and cash equivalents	$	49,488		$	22,815		$	21,487		$	20,554		$	68,213
Revolving credit facilities:
Gross potential available under current credit facilities		500,000			250,000			250,000			250,000			250,000
Less:
Outstanding balance		(404,000	)		(119,968	)		(162,968	)		(167,968	)		(209,968	)
Total Liquidity	$	145,488		$	152,847		$	108,519		$	102,586		$	108,245

*See page 27 for a reconciliation of Net Income to FFO and FFO+GOS and page 28 for definitions of FFO and FFO+GOS

March 31, 2011  15

   Portfolio Overview

	31-Mar-11	31-Dec-10	30-Sep-10	30-Jun-10	31-Mar-10
Owned portfolio of commercial real estate:
Number of properties (1)	35	33	33	33	32
Square feet	6,845,176	6,422,357	6,417,299	6,418,835	5,942,299
Leased percentage	88%	86%	82%	85%	85%
Investments in non-consolidated commercial real estate:
Number of properties	3	3	3	3	3
Square feet	1,995,932	1,995,913	1,998,519	1,998,519	1,995,041
Leased percentage	85%	77%	76%	77%	78%
Single Asset REITs (SARs) managed:
Number of properties	13	12	11	11	11
Square feet *	3,325,694	2,915,896	2,702,287	2,406,370	2,406,370
Leased percentage*	79%	75%	73%	76%	76%
Total owned, investments and managed properties:
Number of properties	51	48	47	47	46
Square feet *	12,166,802	11,334,166	11,118,105	10,823,724	10,343,710
Leased percentage*	85%	81%	79%	82%	82%

(1) Includes asset held for sale for 12/31/10 and prior periods

*Prior to September 30, 2010, excludes a property that completed construction on July 9, 2010 with approximately 295,891 square feet

March 31, 2011  16

   Regional Analysis and Map

Owned:
Name	City	State	Region	Square Feet
Park Seneca	Charlotte	NC	East	109,550
Forest Park	Charlotte	NC	East	62,212
Emperor Boulevard	Durham	NC	East	259,531
Meadow Point	Chantilly	VA	East	138,537
Stonecroft	Chantilly	VA	East	111,469
Innsbrook	Glen Allen	VA	East	308,771
East Baltimore	Baltimore	MD	East	325,445
Loudoun Tech Center	Dulles	VA	East	135,888
Bollman Place (1)	Savage	MD	East	98,745
Southfield Centre	Southfield	MI	MidWest	214,697
Northwest Point	Elk Grove Village	IL	MidWest	176,848
River Crossing	Indianapolis	IN	MidWest	205,059
Timberlake	Chesterfield	MO	MidWest	232,766
Timberlake East	Chesterfield	MO	MidWest	116,197
Lakeside Crossing	Maryland Heights	MO	MidWest	127,778
Eden Bluff	Eden Prairie	MN	MidWest	153,028
121 South 8th Street	Minneapolis	MN	MidWest	473,884
Blue Lagoon Drive	Miami	FL	South	212,619
One Overton Place	Atlanta	GA	South	387,267
Willow Bend Office Center	Plano	TX	South	116,622
Legacy Tennyson Center	Plano	TX	South	202,600
One Legacy Circle	Plano	TX	South	214,110
Park Ten	Houston	TX	South	155,715
Addison Circle	Addison	TX	South	293,787
Collins Crossing	Richardson	TX	South	298,766
Eldridge Green	Houston	TX	South	248,399
Park Ten Phase II	Houston	TX	South	156,746
Liberty Plaza	Addison	TX	South	218,934
Centennial Technology Center	Colorado Springs	CO	West	110,730
380 Interlocken	Broomfield	CO	West	240,184
Greenwood Plaza	Englewood	CO	West	197,527
390 Interlocken	Broomfield	CO	West	241,516
Hillview Center	Milpitas	CA	West	36,288
Federal Way	Federal Way	WA	West	117,010
Montague Business Center	San Jose	CA	West	145,951
Total				6,845,176
Managed:
Name	City	State	Region	Square Feet
1441 Main Street	Columbia	SC	East	267,982
303 East Wacker Drive	Chicago	IL	MidWest	844,953
Monument Circle	Indianapolis	IN	MidWest	213,609
505 Waterford	Plymouth	MN	MidWest	256,348
50 South Tenth Street	Minneapolis	MN	MidWest	498,768
Grand Boulevard	Kansas City	MO	MidWest	532,472
Lakeside Crossing II	Maryland Heights	MO	MidWest	116,000
Centre Pointe V	West Chester	OH	MidWest	135,936
Union Centre	West Chester	OH	MidWest	409,798
Satellite Place	Duluth	GA	South	134,785
5601 Executive Drive	Irving	TX	South	152,121
Galleria North	Dallas	TX	South	379,518
Energy Tower I	Houston	TX	South	325,796
Phoenix Tower	Houston	TX	South	618,507
Highland Place I	Centennial	CO	West	139,142
385 Interlocken	Broomfield	CO	West	295,891
Total				5,321,626

(1) Industrial property, all others are office properties

Properties by Division/Region
($ in thousands)
				NBV (a)	% Leased
	# of Properties	Square Feet	% of Portfolio	31-Dec-10	31-Dec-10
East Region Total	9	1,550,148	22.7%	$      230,847	86.5%
East North Central Division	3	596,604	8.7%	78,503	83.9%
West North Central	5	1,103,653	16.1%	107,768	96.2%
Midwest Region Total	8	1,700,257	24.8%	186,272	91.9%
Southeast	2	599,886	8.8%	119,984	95.1%
Southwest	9	1,905,679	27.8%	286,272	90.0%
South Region Total	11	2,505,565	36.6%	406,256	91.2%
Mountain	4	789,957	11.5%	125,798	79.6%
Pacific	3	299,249	4.4%	35,268	77.3%
West Region Total	7	1,089,206	15.9%	161,066	79.0%
Grand Total	35	6,845,176	100%	$       984,441	88.4%

(a) NBV is for real estate assets, excluding intangibles

 

March 31, 2011  17

   Owned Property List (in thousands)

					NBV (1)	% Leased
Division	Name	City	State	S.F.	31-Mar-11	31-Mar-11
Pacific	Hillview Center	Milpitas	CA	36	$       4,155	100.0%
Pacific	Montague	San Jose	CA	146	16,801	100.0%
Mountain	380 Interlocken	Broomfield	CO	240	43,005	85.1%
Mountain	390 Interlocken	Broomfield	CO	242	42,655	95.9%
Mountain	Centennial Technology Center	Colorado Springs	CO	111	11,371	66.9%
Mountain	Greenwood Plaza	Englewood	CO	198	28,768	60.1%
Southeast	Blue Lagoon Drive	Miami	FL	213	46,690	100.0%
Southeast	One Overton Place	Atlanta	GA	387	73,294	92.4%
East North Central	Northwest Point	Elk Grove Village	IL	177	28,468	100.0%
East North Central	River Crossing	Indianapolis	IN	205	35,486	93.8%
Mideast	East Baltimore	Baltimore	MD	325	55,308	84.5%
Mideast	Bollman Place	Savage	MD	99	4,881	100.0%
East North Central	Southfield Centre	Southfield	MI	215	14,549	61.1%
West North Central	Eden Bluff	Eden Prairie	MN	153	14,299	100.0%
West North Central	121 South 8th Street	Minneapolis	MN	474	23,774	92.2%
West North Central	Timberlake	Chesterfield	MO	233	34,833	97.7%
West North Central	Timberlake East	Chesterfield	MO	116	17,737	100.0%
West North Central	Lakeside Crossing	Maryland Heights	MO	128	17,125	100.0%
Mideast	Park Seneca	Charlotte	NC	110	7,490	78.5%
Mideast	Forest Park	Charlotte	NC	62	6,189	77.5%
Mideast	Emperor Boulevard	Durham	NC	260	56,305	100.0%
Southwest	Addison Circle	Addison	TX	294	48,119	95.8%
Southwest	Liberty Plaza	Addison	TX	219	24,212	75.6%
Southwest	Park Ten	Houston	TX	156	18,201	98.8%
Southwest	Eldridge Green	Houston	TX	248	42,215	100.0%
Southwest	Park Ten Phase II	Houston	TX	157	30,694	100.0%
Southwest	Willow Bend Office Center	Plano	TX	117	17,455	67.0%
Southwest	Legacy Tennyson Center	Plano	TX	203	25,084	100.0%
Southwest	One Legacy Circle	Plano	TX	214	39,198	89.7%
Southwest	Collins Crossing	Richardson	TX	299	41,094	79.1%
Mideast	Meadow Point	Chantilly	VA	139	23,219	100.0%
Mideast	Stonecroft	Chantilly	VA	111	19,296	100.0%
Mideast	Loudoun Tech Center	Dulles	VA	136	17,332	100.0%
Mideast	Innsbrook	Glen Allen	VA	309	40,827	60.8%
Pacific	Federal Way	Federal Way	WA	117	14,312	42.0%
				6,845	$     984,441	88.4%
	(1) NBV is for real estate assets, excluding intangibles

March 31, 2011  18

   Properties with Annualized Rent per Square Foot

							Percentage	Annualized	Average
				Year Built			Leased as of	Rent as of	Annualized
				or	Net Rentable	Leased	March 31,	March 31,	Rent per Leased
Property Name	City	State	Type	Renovated	Square Feet	Sq. Ft.	2011 (a)	2011 (b)	Square Feet (c)
Park Seneca	Charlotte	NC	Office	1969	109,550	86,039	78.5%	1,343,179	$     15.61
Forest Park	Charlotte	NC	Office	1999	62,212	48,237	77.5%	768,213	15.93
Meadow Point	Chantilly	VA	Office	1999	138,537	138,537	100.0%	3,392,491	24.49
Innsbrook	Glen Allen	VA	Office	1999	308,771	187,836	60.8%	1,272,606	6.78
East Baltimore	Baltimore	MD	Office	1989	325,445	275,113	84.5%	6,900,297	25.08
Loudoun Tech Center	Dulles	VA	Office	1999	135,888	135,888	100.0%	1,788,430	13.16
Bollman Place	Savage	MD	Industrial	1984	98,745	98,745	100.0%	624,068	6.32
Stonecroft	Chantilly	VA	Office	2008	111,469	111,469	100.0%	3,970,770	35.62
Emperor Boulevard	Durham	NC	Office	2009	259,531	259,531	100.0%	8,190,181	31.56
East total					1,550,148	1,341,395	86.5%	28,250,235	21.06
Southfield Centre	Southfield	MI	Office	1977	214,697	131,182	61.1%	1,148,310	8.75
Northwest Point	Elk Grove Village	IL	Office	1999	176,848	176,848	100.0%	3,511,335	19.86
River Crossing	Indianapolis	IN	Office	1998	205,059	192,279	93.8%	4,528,754	23.55
Timberlake	Chesterfield	MO	Office	1999	232,766	227,292	97.7%	2,574,395	11.33
Timberlake East	Chesterfield	MO	Office	2000	116,197	116,197	100.0%	2,790,640	24.02
Lakeside Crossing	Sl. Louis	MO	Office	2008	127,778	127,778	100.0%	3,089,672	24.18
Eden Bluff	Eden Praire	MN	Office	2006	153,028	153,028	100.0%	3,984,757	26.04
121 South 8th Street	Minneapolis	MN	Office	1974	473,884	437,065	92.2%	6,678,480	15.28
Midwest total					1,700,257	1,561,669	91.9%	28,306,343	18.13
Blue Lagoon Drive	Miami	FL	Office	2002	212,619	212,619	100.0%	4,440,795	20.89
One Overton Place	Atlanta	GA	Office	2002	387,267	357,790	92.4%	7,245,055	20.25
Willow Bend Office Center	Plano	TX	Office	1999	116,622	78,112	67.0%	1,321,754	16.92
Park Ten	Houston	TX	Office	1999	155,715	153,820	98.8%	2,141,781	13.92
Addison Circle	Addison	TX	Office	1999	293,787	281,503	95.8%	6,673,058	23.71
Collins Crossing	Richardson	TX	Office	1999	298,766	236,267	79.1%	2,428,974	10.28
Eldridge Green	Houston	TX	Office	1999	248,399	248,399	100.0%	7,150,326	28.79
Park Ten Phase II	Houston	TX	Office	2006	156,746	156,746	100.0%	3,920,209	25.01
Liberty Plaza	Addison	TX	Office	1985	218,934	165,426	75.6%	3,028,974	18.31
Denbury Park	Plano	TX	Office	1999/2008	202,600	202,600	100.0%	3,290,040	16.24
One Legacy Circle	Plano	TX	Office	2008	214,110	191,958	89.7%	3,391,503	17.67
South Total					2,505,565	2,285,240	91.2%	45,032,468	19.71
Centennial Technology Center	Colorado Springs	CO	Office	1999	110,730	74,030	66.9%	1,284,850	17.36
380 Interlocken	Broomfield	CO	Office	2000	240,184	204,347	85.1%	4,241,610	20.76
Greenwood Plaza	Englewood	CO	Office	2000	197,527	118,725	60.1%	804,066	6.77
390 Interlocken	Broomfield	CO	Office	2002	241,516	231,676	95.9%	6,240,274	26.94
Hillview Center	Milpitas	CA	Office	1984	36,288	36,288	100.0%	526,298	14.50
Federal Way	Federal Way	WA	Office	1982	117,010	49,149	42.0%	656,856	13.36
Montague Business Center	San Jose	CA	Office	1982	145,951	145,951	100.0%	2,201,077	15.08
West Total					1,089,206	860,166	79.0%	15,955,031	18.55
Grand Total					6,845,176	6,048,470	88.4%	$    117,544,078	$    19.43

(a) Based on all leases in effect, including month-to-month tenants, divided by the Property's net rentable square footage.

(b) Represents gross rental charges for the month of March 2011 (including month-to-month leases) multiplied by 12, which can result in unusual per square foot amounts calculated when there are free rent periods (usually with new leases).

(c) Represents the annualized gross rent as of March 2011 divided by leased square feet.

March 31, 2011  19

   Owned Property Capital Expenditures (in thousands)

	Three Months
	Ended
	31-Mar-11
Tenant improvements	$	2,506
Deferred leasing costs		2,819
Building improvements		449
Total	$	5,774

									Year
	For the Three Months Ended								Ended
	31-Mar-10		30-Jun-10		29-Sep-10		31-Dec-10		31-Dec-10
Tenant improvements	$	1,305	$	935	$	3,634	$	1,126	$	7,000
Deferred leasing costs		5,566		1,519		808		2,622		10,515
Building improvements		380		498		671		1,053		2,602
Total	$	7,251	$	2,952	$	5,113	$	4,801	$	20,117

									Year
	For the Three Months Ended								Ended
	31-Mar-09		30-Jun-09		30-Sep-09		31-Dec-09		31-Dec-09
Tenant improvements	$	1,373	$	912	$	931	$	1,528	$	4,744
Deferred leasing costs		162		1,395		645		457		2,659
Building improvements		466		116		265		619		1,466
Total	$	2,001	$	2,423	$	1,841	$	2,604	$	8,869

March 31, 2011 20

   20 Largest Tenants with Annualized Rent
and Remaining Term

			Remaining	Aggregate	% of Aggregate	Annualized	% of
	Tenant	Number of	Lease Term	Leased	Leased	Rent (1)	Aggregate
	Name	Leases	in Months	Square Feet	Square Feet	(in 000's)	Annualized Rent
1	TCF National Bank	2	57	266,495	3.89%	2,863	2.44%
2	Quintiles Transnational Corp	1	96	259,531	3.79%	8,190	6.97%
3	CITGO Petroleum Corporation	1	131	248,399	3.63%	7,150	6.08%
4	Burger King Corporation	1	90	212,619	3.11%	4,441	3.78%
5	Denbury Onshore LLC	2	45	202,600	2.96%	3,290	2.80%
6	RGA Reinsurance Company	2	45	185,501	2.71%	3,800	3.23%
7	Citigroup Credit Services, Inc	1	69	176,848	2.58%	3,334	2.84%
8	C.H. Robinson Worldwide, Inc	1	123	153,028	2.24%	3,985	3.39%
9	SunTrust Bank (a)	2	67,126	145,204	2.12%	1,393	1.18%
10	Murphy Exploration & Production Company (b)	1	73	144,677	2.11%	3,637	3.09%
11	Giesecke & Devrient America, Inc.	1	47	135,888	1.99%	1,788	1.52%
12	Monsanto Company	1	46	127,778	1.87%	3,090	2.63%
13	Vail Holdings, Inc (c)	1	144	121,913	1.78%	3,144	2.67%
14	Northrop Grumman Systems Corporation	1	85	111,469	1.63%	3,971	3.38%
15	Maines Paper & Food Service, Inc	1	32	98,745	1.44%	624	0.53%
16	Federal National Mortgage Association	1	29	92,358	1.35%	1,755	1.49%
17	Amdocs, Inc (d)	1	69	91,928	1.34%	-	0.00%
18	County of Santa Clara	1	81	90,467	1.32%	1,381	1.17%
19	Ober Kaler Grimes & Shriver (e)	1	-	88,736	1.30%	2,348	2.00%
20	International Business Machines Corp. (f)	1	57	87,587	1.28%	754	0.64%
				3,041,771	44.44%	$     60,937	51.84%

(1) Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at March 31, 2011 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(a) Sun Tust Bank leases 55,388 sf at our Baltimore, Maryland property and also leases 89,816 sf at our Glen Allen, Virginia property.

(b) Murphy signed a lease on January 1, 2011 that includes expansion into 5,362 sf at the expiration of the current tenant's lease term.

(c) Vail signed a lease on March 22, 2010 that includes expansion into 13,467 sf and 24,826 sf at the expiration of various subleases and other tenant leases.

(d) Amdocs signed an amendment extending their lease on January 28, 2011 through December 31, 2016.

(e) Ober Kaler's lease expired on March 31, 2011 and the space became vacant on April 1, 2011.

(f) 46,977 sf of this space expired by April 30, 2011.

March 31, 2011 21

   Tenant Analysis – 20 Largest Tenants, Industry Profile (as a % of square feet)

 

March 31, 2011 22

   Lease Expirations by Square Feet

 

Year	Total Square Feet	% of Square Feet Commercial
2011	459,617	6.7%
2012	301,049	4.4%
2013	553,847	8.1%
2014	467,768	6.8%
2015	781,852	11.4%
2016	978,697	14.3%
2017	498,172	7.3%
2018	501,136	7.3%
2019	464,107	6.8%
2020	151,357	2.2%
2021	464,470	6.8%
2022	342,778	5.0%
2023	83,620	1.2%
Vacant	796,706	11.7%
Total	6,845,176	100.0%

March 31, 2011 23

   Lease Expirations with Annualized Rent per Square Foot

				Rentable				Annualized		Percentage
	Number of			Square				Rent		of Total
Year of	Leases			Footage		Annualized		Per Square		Annualized
Lease	Expiring			Subject to		Rent Under		Foot Under		Rent Under
Expiration	Within the			Expiring		Expiring		Expiring		Expiring
December 31,	Year			Leases		Leases (a)		Leases (a)		Leases (a)
2011		84	(b)		459,617	$	8,489,675	$	18.47		7.22%
2012		54			301,049		6,600,360		21.92		5.62%
2013		51			553,847		11,044,886		19.94		9.40%
2014		37			467,768		8,274,070		17.69		7.04%
2015		31			781,852		16,326,889		20.88		13.89%
2016		25			978,697		16,235,791		16.59		13.81%
2017		10			498,172		8,963,388		17.99		7.63%
2018		10			501,136		11,808,002		23.56		10.05%
2019		7			464,107		11,631,975		25.06		9.90%
2020 and thereafter		17			1,042,225		18,169,043		17.43		15.46%
		326			6,048,470	$	117,544,078	$	19.43		100.00%
Vacancies as of 3/31/11					796,706
Total Portfolio Square Footage					6,845,176

(a) Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at March 31, 2011 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(b) 35 leases are Month to Month represent 0.53% of aggregate square feet and 1.57% represent other leases, which expired on April 1, 2011.

March 31, 2011 24

   Capital Recycling ($ in thousands)

Recent Acquisitions:
	State/Region	Property Type	Square Feet	Date Acquired	Purchase Price
2011
Emperor Boulevard	NC/East	Office	259,531	3/4/11	$             75,800
Legacy Tennyson Center	TX/South	Office	202,600	3/10/11	37,000
One Legacy Circle	TX/South	Office	214,110	3/24/11	52,983
2010
121 South 8th Street	MN/Midwest	Office	474,646	6/29/10	39,405
2009
Stonecroft-Chantilly	VA/East	Office	111,469	6/26/09	29,000
Eden Bluff - Eden Prairie	MN/Midwest	Office	153,028	6/30/09	22,784
Fairview	VA/East	Office	252,613	9/30/09	73,000
2008
Park Ten Phase II	TX/South	Office	156,746	5/15/08	35,079
Lakeside Crossing	MO/Midwest	Office	127,778	12/11/08	20,003
Loudoun Tech Center	VA/East	Office	135,888	12/23/08	18,628
2007
East Baltimore	MD/East	Office	325,298	6/13/07	63,592
Recent Dispositions:
					Net Sales	Gain (Loss)
	State/Region	Property Type	Square Feet	Date Sold	Proceeds	on Sale
2011
Fairview	VA/East	Office	252,613	1/21/11	$             89,382	$             19,592
2007
Piedmont Center	SC/East	Office	144,029	1/31/07	5,830	(4,849)
Royal Ridge	GA/South	Office	161,366	6/21/07	32,535	6,601
Goldentop Technology Center	CA/West	Office	141,405	6/27/07	36,199	14,741
Lyberty Way	MA/East	Office	104,711	7/16/07	10,861	1,942
Austin N.W. (Canyon Hills)	TX/South	Office	68,533	12/20/07	10,429	257

March 31, 2011 25

   Investment Banking Performance

 

March 31, 2011 26

   FFO and FFO+GOS Reconciliations (in thousands, except per share amounts)

	For the three months ended																											For the year ended
	31-Mar-11			31-Mar-10			30-Jun-10			30-Sep-10			31-Dec-10			31-Mar-09			30-Jun-09			30-Sep-09			31-Dec-09			2010			2009
Net income	$	24,767		$	5,562		$	5,954		$	4,757		$	5,820		$	7,808		$	4,865		$	6,941		$	8,258		$	22,093		$	27,872
(Gain) Loss on sale of assets		(19,592	)		—			—			—			—			—			—			—			(424	)		—			(424	)
GAAP income from non-consolidated REITs		(1,773	)		(253	)		(380	)		(404	)		(153	)		(792	)		(443	)		(475	)		(301	)		(1,190	)		(2,011	)
Distributions from non-consolidated REITs		1,767			1,407			1,324			1,192			1,247			1,615			1,523			1,119			1,371			5,170			5,628
Acquisition costs		269			—			129			(4	)		—			—			248			391			4			125			643
Depreciation & amortization		10,812			9,934			9,675			10,510			10,605			8,707			11,216			9,561			10,167			40,724			39,651
Funds From Operations (FFO)		16,250			16,650			16,702			16,051			17,519			17,338			17,409			17,537			19,075			66,922			71,359
Plus gains on sales of assets (GOS)		19,592			—			—			—			—			—			—			—			424			—			424
FFO+GOS (Total Profits)	$	35,842		$	16,650		$	16,702		$	16,051		$	17,519		$	17,338		$	17,409		$	17,537		$	19,499		$	66,922		$	71,783
Per Share Data:
EPS	$	0.30		$	0.07		$	0.07		$	0.06		$	0.07		$	0.11		$	0.07		$	0.10		$	0.10		$	0.28		$	0.38
FFO		0.20			0.21			0.21			0.20			0.22			0.25			0.25			0.25			0.24			0.84			0.98
GOS		0			—			—			—			—			—			—			—			—			—			—
FFO+GOS		0.44			0.21			0.21			0.20			0.22			0.25			0.25			0.25			0.24			0.84			0.98
Weighted Average Shares (basic and diluted)		81,437			79,681			79,681			79,751			80,187			70,481			70,481			71,281			79,681			79,826			73,001

March 31, 2011 27

   FFO and FFO+GOS  Definitions

Definition of Funds From Operations (“FFO”), and FFO plus Gains on Sales (“FFO+GOS”)

The Company evaluates the performance of its reportable segments based on several measures including, Funds From Operations (“FFO”) and FFO plus Gains on Sales (“FFO+GOS” or “Total Profits”) as management believes they represent important measures of activity and are an important consideration in determining distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with generally accepted accounting principles, or GAAP), excluding gains (or losses) from sales of property, and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs. The Company defines FFO+GOS as FFO as defined above, plus gains (or losses) from sales of properties and provisions for assets held for sale, if applicable.

FFO and FFO+GOS should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company’s financial performance, nor as alternatives to cash flows from operating activities (determined in accordance with GAAP), nor as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define these terms in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FFO and FFO+GOS should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

March 31, 2011 28

   Funds Available for Distribution (FAD)
Reconciliation and Definition (in thousands, except per share amounts)

	For the three months ended:
	31-Mar-11			31-Mar-10			30-Jun-10			30-Sep-10			31-Dec-10			31-Mar-09			30-Jun-09			30-Sep-09			31-Dec-09
Net income	$	24,767		$	5,562		$	5,954		$	4,757		$	5,820		$	7,808		$	4,865		$	6,941		$	8,258
(Gain) Loss on sale of assets		(19,592	)		—			—			—			—			—			—			—			(424	)
GAAP income from non-consolidated REITs		(1,773	)		(253	)		(380	)		(404	)		(153	)		(792	)		(443	)		(475	)		(301	)
Distributions from non-consolidated REITs		1,767			1,407			1,324			1,192			1,247			1,615			1,522			1,119			1,371
Acquisition costs		269			—			129			(4	)		—			—			248			391			4
Depreciation & amortization		10,812			9,934			9,675			10,510			10,605			8,707			11,217			9,561			10,167
Funds From Operations (FFO)		16,250			16,650			16,702			16,051			17,519			17,338			17,409			17,537			19,075
Plus gains on sales of assets (GOS)		19,592			—			—			—			—			—			—			—			424
FFO+GOS (Total Profits)	$	35,842		$	16,650		$	16,702		$	16,051		$	17,519		$	17,338		$	17,409		$	17,537		$	19,499
Funds Available for Distribution:
Funds From Operations (FFO)		16,250			16,650			16,702			16,051			17,519			17,338			17,409			17,537			19,075
Straight-line rent		(2,303	)		(1,018	)		(740	)		(1,203	)		(1,288	)		(374	)		(69	)		(405	)		(1,030	)
Capital expenditures		(449	)		(380	)		(498	)		(671	)		(1,053	)		(466	)		(115	)		(265	)		(619	)
Funds Available for Distribution (FAD)	$	13,498		$	15,252		$	15,464		$	14,177		$	15,178		$	16,498		$	17,225		$	16,867		$	17,426
Per Share Data:
EPS	$	0.30		$	0.07		$	0.07		$	0.06		$	0.07		$	0.11		$	0.07		$	0.10		$	0.10
FFO		0.20			0.21			0.21			0.20			0.22			0.25			0.25			0.25			0.24
GOS		0.24			—			—			—			—			—			—			—			—
FFO+GOS		0.44			0.21			0.21			0.20			0.22			0.25			0.25			0.25			0.24
FAD		0.17			0.19			0.19			0.18			0.19			0.23			0.24			0.24			0.22
Weighted Average Shares (basic and diluted)		81,437			79,681			79,681			79,751			80,187			70,481			70,481			71,281			79,681

The Company defines FAD as the sum of (1) FFO, (2) less the effect of straight-line rent, (3) less recurring capital expenditures that are generally for maintenance of properties and are not recovered through rental income from tenants, and (4) plus non-cash compensation expenses, if any. FAD should not be considered as an alternative to net income (determined in accordance with GAAP), as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FAD should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

March 31, 2011 29

   EBITDA Reconciliation and Definition (in thousands, except ratio amounts)

													Year Ended													Year Ended
	For the three months ended:												31-Dec-10		For the three months ended:											31-Dec-09
	31-Mar-11		31-Mar-10			30-Jun-10		30-Sep-10			31-Dec-10				31-Mar-09			30-Jun-09			30-Sep-09			31-Dec-09
Net income	$	24,767	$	5,562		$	5,954	$	4,757		$	5,820	$	22,093	$	7,808		$	4,865		$	6,941		$	8,258	$	27,872
Interest expense		2,408		1,652			1,735		1,892			2,004		7,283		1,577			1,599			1,744			1,650		6,570
Depreciation and amortization		10,812		9,934			9,675		10,510			10,605		40,724		8,707			11,216			9,561			10,167		39,651
Income taxes		50		(68	)		5		(37	)		317		217		(299	)		(75	)		(270	)		65		(579	)
EBITDA		38,037		17,080			17,369		17,122			18,746		70,317		17,793			17,605			17,976			20,140		73,514
Interest expense	$	2,408	$	1,652		$	1,735	$	1,892		$	2,004	$	7,283	$	1,577		$	1,599		$	1,744		$	1,650	$	6,570
Scheduled principal payments (1)		—		—			—		—			150		150		—			—			—			—		—
Interest and scheduled principal payments	$	2,408	$	1,652		$	1,735	$	1,892		$	2,154	$	7,433	$	1,577		$	1,599		$	1,744		$	1,650	$	6,570
Interest coverage ratio		15.80		10.34			10.01		9.05			9.35		9.65		11.28			11.01			10.31			12.21		11.19
Debt service coverage ratio		15.80		10.34			10.01		9.05			8.70		9.46		11.28			11.01			10.31			12.21		11.19

(1) Scheduled principal payments exclude repayment of our Term Loan on February 22, 2011 in its entirety.

EBITDA, a non-GAAP financial measure, is defined as net income, plus interest expense, income tax expense and depreciation and amortization expense. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and is not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA the same way, this presentation of EBITDA may not be comparable to similarly titled measures of other companies. The Company believes that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA.

March 31, 2011 30

   Reconciliation of Net Income to Property NOI:
Cash & GAAP Basis and Definition (in thousands)

	Three months ended:															2010			Three months ended:												2009
	31-Mar-11			31-Mar-10			30-Jun-10			30-Sep-10			31-Dec-10			Total			31-Mar-09			30-Jun-09			30-Sep-09			31-Dec-09			Total
Net Income	$	24,767		$	5,562		$	5,954		$	4,757		$	5,820		$	22,093		$	7,808		$	4,865		$	6,941		$	8,258		$	27,872
Add (deduct):
Investment banking segment net loss (income)		(160	)		479			(263	)		401			(1,352	)		(735	)		778			346			625			(1,103	)		646
Gain on sale of assets		(19,592	)		—			—			—			—			—			—			—			—			(424	)		(424	)
Management fees (before elimination)		(364	)		(484	)		(359	)		(362	)		(535	)		(1,740	)		(425	)		(398	)		(402	)		(408	)		(1,633	)
Depreciation and Amortization		10,781			9,184			9,205			10,348			10,453			39,190			7,887			10,200			8,768			9,314			36,169
Amortization of favorable leases		(39	)		716			432			96			119			1,363			793			992			759			815			3,359
Selling, general and administrative		1,644			1,447			1,854			1,400			1,698			6,399			983			1,163			1,324			1,359			4,829
Interest expense		2,408			1,652			1,736			1,892			2,003			7,283			1,577			1,599			1,744			1,650			6,570
Interest income		(600	)		(338	)		(374	)		(431	)		(491	)		(1,634	)		(347	)		(136	)		(170	)		(278	)		(931	)
Equity in earnings of nonconsolidated REITs		(968	)		(253	)		(380	)		(404	)		(229	)		(1,266	)		(792	)		(443	)		(475	)		(283	)		(1,993	)
Non-property specific income and expenses, net		(1,514	)		461			690			421			(268	)		1,304			57			(145	)		(13	)		(34	)		(135	)
GAAP Property NOI		16,363			18,426			18,495			18,118			17,218			72,257			18,319			18,043			19,101			18,866			74,329
Straight-line rent		(1,641	)		(1,020	)		(1,339	)		(1,202	)		(1,281	)		(4,842	)		(374	)		92			(405	)		(1,033	)		(1,720	)
Cash Property NOI	$	14,722		$	17,406		$	17,156		$	16,916		$	15,937		$	67,415		$	17,945		$	18,135		$	18,696		$	17,833		$	72,609

GAAP Property NOI is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus selling, general and administrative expenses, depreciation and amortization, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, gains or losses on the sale of assets and excludes non-property specific income and expenses. The Company also presents this on a cash basis (Cash Property NOI), which is GAAP Property NOI after eliminating the effects of straight-line rent. GAAP Property NOI and Cash Property NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

March 31, 2011 31