First Potomac Realty Trust (FPO) 8-K First Potomac Realty Trust Reports Third Quarter 2006 Results

Exhibit 99.2

Third Quarter 2006 Supplemental Financial Report

Matters other than historical facts set forth within this Supplemental Financial Report are forward-looking statements within the meaning of the federal securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, the financial condition of tenants, the uncertainties of acquisition activity, the cost and availability of financing, the effects of general and local economic and market conditions, regulatory changes and other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Quarterly Supplemental Disclosure
September 30, 2006

Index to Supplemental Information
September 30, 2006

	Page
Company Information		2
Reconciliation of EBITDA to Net Income		3
Financial Measures		4
Net Operating Income (NOI) — Same Property Analysis		5
Consolidated Balance Sheets		6
Total Market Capitalization		7
Debt Analysis		8
Selected Operating Ratios		10
Description of Properties		11
Land Available for Development		12
Summary of Largest Tenants		13
Lease Expirations		14
Leasing Analysis		15
Portfolio by Size		16
Market Concentration		17
Portfolio Analysis		18
Washington Market		19
Norfolk Market		20
Baltimore Market		21
Richmond Market		22
Management Statements		23

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Quarterly Supplemental Disclosure
September 30, 2006

Company Information

First Potomac Realty Trust is a self-managed, self-administered real estate investment trust that focuses on owning and operating industrial and flex properties in the Washington, DC metropolitan area and other major markets in Virginia and Maryland. Our focus is acquiring properties that can benefit from our intensive property management and seeking to reposition these properties to increase their profitability and value.

Corporate Headquarters	7600 Wisconsin Avenue	Investor Relations	Tripp Sullivan
	11th Floor		Corporate Communications, Inc.
	Bethesda, MD 20814		(615) 254-3376
			tripp.sullivan@cci-ir.com
New York Stock Exchange			Barry H. Bass Chief Financial Officer (301) 986-9200 bbass@first-potomac.com
Web Site	www.first-potomac.com

Note that figures are rounded to the nearest thousand throughout this document which may impact footing and/or crossfooting of subtotals and totals.

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Quarterly Supplemental Disclosure
September 30, 2006

RECONCILIATION OF EBITDA TO NET INCOME
(unaudited, in thousands)

	Three Months Ended
	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
OPERATING REVENUES
Rental revenues	$	22,865		$	21,093		$	20,319		$	18,496		$	16,315
Tenant reimbursements and other		4,264			4,131			4,055			3,653			4,095
		27,129			25,224			24,374			22,149			20,410
PROPERTY EXPENSES
Property operating		5,536			4,413			4,702			4,066			3,277
Real estate taxes and insurance		2,257			2,149			2,172			1,978			1,610
NET OPERATING INCOME	$	19,336		$	18,662		$	17,500		$	16,105		$	15,523
OTHER INCOME (EXPENSE)
General and administrative		(2,436	)		(2,530	)		(2,534	)		(2,249	)		(2,054	)
Interest and other income		175			165			403			59			41
EBITDA		17,075			16,297			15,369			13,915			13,510
Depreciation and amortization		(9,174	)		(7,957	)		(7,863	)		(7,340	)		(6,577	)
Interest expense		(7,155	)		(7,253	)		(6,590	)		(5,862	)		(5,407	)
Loss on interest-rate lock agreement		—			(671	)		—			—			—
Loss on early retirement of debt		—			(121	)		—			(2,451	)		—
Income (loss) from continuing operations before minority interests		746			295			916			(1,738	)		1,526
Minority interests		(28	)		(15	)		(52	)		110			(95	)
Income (loss) from continuing operations		718			280			864			(1,628	)		1,431
DISCONTINUED OPERATIONS
Income (loss) from operations of disposed property		—			116			259			(161	)		139
Gain on sale of disposed property		—			7,475			—			—			—
Minority interests in discontinued operations		—			(370	)		(15	)		13			(9	)
Income (loss) from discontinued operations		—			7,221			244			(148	)		130
NET INCOME (LOSS)	$	718		$	7,501		$	1,108		$	(1,776	)	$	1,561

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Quarterly Supplemental Disclosure
September 30, 2006

FINANCIAL MEASURES
(unaudited, in thousands, except per share data)

	Three Months Ended
	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
FUNDS FROM OPERATIONS (“FFO”)
Net income (loss)	$	718		$	7,501		$	1,108		$	(1,776	)	$	1,561
Add back:
Depreciation & amortization of real estate assets1		9,174			7,957			7,863			7,340			6,577
Depreciation & amortization related to discontinued operations		—			—			3			40			36
Minority interest		28			385			67			(123	)		104
Deduct:
Gain on sale of asset		—			(7,475	)		—			—			—
FFO	$	9,920		$	8,368		$	9,041		$	5,481		$	8,278
Charges:
Accelerated restricted share charges		246			178			—			—			—
Debt retirement charges		—			121			—			2,451			95
Loss on interest-rate lock agreement		—			671			—			—			—
Debt retirement charges related to discontinued operations		—			—			—			325			—
FFO BEFORE CHARGES	$	10,166		$	9,338		$	9,041		$	8,257		$	8,373
ADJUSTED FUNDS FROM OPERATIONS (“AFFO”)
FFO before charges	$	10,166		$	9,338		$	9,041		$	8,257		$	8,373
Non-cash stock-based compensation		338			123			460			91			82
Straight-line rent, net2		(253	)		(398	)		(328	)		(320	)		(214	)
Deferred market rent		(676	)		(486	)		(546	)		(504	)		(319	)
Non real-estate depreciation		107			108			57			46			33
Debt fair value amortization		(760	)		(677	)		(652	)		(681	)		(599	)
Amortization of finance costs		203			244			209			208			177
Tenant improvements3		(202	)		(324	)		(379	)		(226	)		(548	)
Leasing commissions3		(290	)		(392	)		(337	)		(572	)		(360	)
Capital expenditures3,4		(901	)		(655	)		(552	)		(436	)		(520	)
AFFO	$	7,732		$	6,881		$	6,973		$	5,863		$	6,105
Total weighted average shares and OP units
Basic		24,163			21,451			21,440			20,407			17,655
Diluted		24,440			21,661			21,675			20,627			17,895
FFO per share:
FFO per share and unit — basic	$	0.41		$	0.39		$	0.42		$	0.27		$	0.47
FFO per share and unit — diluted	$	0.41		$	0.39		$	0.42		$	0.27		$	0.46
FFO per share and unit — diluted before charges	$	0.42		$	0.43		$	0.42		$	0.40		$	0.47
FPO per share and unit — diluted before charges, plus gain on sale	$	0.42		$	0.78		$	0.42		$	0.40		$	0.47
AFFO per share:
AFFO per share and unit — basic	$	0.32		$	0.32		$	0.33		$	0.29		$	0.35
AFFO per share and unit — diluted	$	0.32		$	0.32		$	0.32		$	0.28		$	0.34

1	Non-real estate depreciation is classified in General and Administrative expense.
2	Straight-line rent is net of rent abatement and write-off of uncollectible accounts.
3	The following first-generation and development costs have been excluded from the calculation of AFFO:

Tenant improvements	$	100	$	625	$	97	$	20	$	29
Leasing commissions		156		131		63		51		—
Capital expenditures		2,134		208		348		771		384
Development		1,626		392		138		38		13
	$	4,016	$	1,356	$	646	$	880	$	426

⁴ Capital expenditures exclude $0.4 million of non-real estate expenditures during third quarter 2005.

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Quarterly Supplemental Disclosure
September 30, 2006

NET OPERATING INCOME (NOI)
SAME-PROPERTY ANALYSIS
(unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Total base rent	$	16,116		$	15,787		$	42,458		$	41,805
Tenant reimbursement and other		2,675			2,769			7,574			6,563
Property operating expenses		(3,835	)		(3,194	)		(9,367	)		(8,688	)
Real estate taxes and insurance		(1,451	)		(1,563	)		(4,144	)		(4,125	)
Same-property1NOI — accrual basis		13,505			13,799			36,521			35,555
Straight-line revenue, net		(178	)		(294	)		(542	)		(903	)
Deferred market rental revenue		(300	)		(309	)		(705	)		(766	)
Same-property NOI — cash basis	$	13,027		$	13,196		$	35,274		$	33,886
Change in same-property NOI — accrual basis		-2.1	%					2.7	%
Change in same-property NOI — cash basis		-1.3	%					4.1	%
Components of Same Property NOI Change — accrual basis
Rental revenue increase	$	428					$	855
Tenant reimbursement and other increase (decrease)		(94	)					1,011
Occupancy decrease		(99	)					(202	)
Expense increase		(529	)					(698	)
	$	(294	)				$	966
Same property percentage of total portfolio (sf)		57.4	%		84.4	%		51.5	%		75.8	%
Reconciliation of GAAP to Same Property NOI:
Total revenue	$	27,129		$	20,410		$	76,727		$	54,289
Property operating expenses		5,536			3,277			14,652			9,411
Real estate taxes and insurance		2,257			1,610			6,578			4,462
NOI		19,336			15,523			55,497			40,416
Less: Non-same property NOI		(5,831	)		(1,724	)		(18,976	)		(4,861	)
Same-property1 NOI — accrual basis		13,505			13,799			36,521			35,555
Straight-line revenue, net		(178	)		(294	)		(542	)		(903	)
Deferred market rental revenue		(300	)		(309	)		(705	)		(766	)
Same-property NOI — cash basis	$	13,027		$	13,196		$	35,274		$	33,886
Change in same-property NOI — accrual basis		-2.1	%					2.7	%
Change in same-property NOI — cash basis		-1.3	%					4.1	%

¹ Same-property comparisons are based upon those properties owned for the entirety of the quarterly periods presented. Same property results for the periods compared exclude the results of the following non-same properties: 6600 Business Parkway, Gateway Centre, 1434 Crossways Boulevard, 2000 Gateway Boulevard, 403/405 Glenn Drive, Diamond Hill Distribution Center, Linden Business Center, Prosperity Business Center, Owings Mills Business Center, 1000 Lucas Way, River’s Bend Center, Northridge I & II, Crossways I, Sterling Park Business Center, 1408 Stephanie Way, Airpark Business Center, Chesterfield Business Center, Hanover Business Center, Gateway 270 West, Davis Drive and Indian Creek Court. Also, same-property results for the nine months ended September 30, 2006 and 2005 exclude Reston Business Campus, 1400 Cavalier Boulevard, Enterprise Center and Glenn Dale Business Center.

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Quarterly Supplemental Disclosure
September 30, 2006

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

	September 30, 2006			December 31, 2005
	(unaudited)
Assets
Rental property, net	$	840,433		$	668,730
Cash and cash equivalents		3,201			3,356
Escrows and reserves		11,527			9,818
Accounts and other receivables, net		2,995			2,705
Accrued straight-line rents, net		4,304			3,638
Deferred costs, net		8,514			6,676
Prepaid expenses and other assets		6,085			3,322
Intangible assets, net		33,070			29,518
Total assets	$	910,129		$	727,763
Liabilities
Mortgage loans	$	389,950		$	369,266
Notes payable		75,000			—
Credit facility		28,800			26,999
Accounts payable and accrued expenses		5,048			4,734
Accrued interest		3,334			1,618
Rents received in advance		2,616			2,932
Tenant security deposits		4,663			3,973
Deferred market rent		8,942			7,281
Total liabilities		518,353			416,803
Minority interest		14,334			21,629
Shareholders’ equity
Common shares, $0.001 par value, 100,000,000 common shares authorized: 24,102,261 and 20,072,755 shares issued and outstanding, respectively		24			20
Additional paid-in capital		437,327			338,564
Dividends in excess of accumulated earnings		(59,909	)		(49,253	)
Total shareholders’ equity		377,442			289,331
Total liabilities and shareholders’ equity	$	910,129		$	727,763

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Quarterly Supplemental Disclosure
September 30, 2006

TOTAL MARKET CAPITALIZATION
(unaudited, in thousands)

			Percent of
			Total Market
			Capitalization
Total common shares outstanding		24,102
Common operating partnership (“OP”) units held by third parties		946
Total common shares and OP units		25,048
Market price at September 30, 2006	$	30.22
Total equity capitalization	$	756,951		60.5	%
Debt capitalization
Fixed-rate debt	$	464,950		37.2	%
Floating-rate debt		28,800		2.3	%
Total debt capitalization	$	493,750		39.5	%
Total market capitalization	$	1,250,701		100.0	%

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Quarterly Supplemental Disclosure
September 30, 2006

DEBT ANALYSIS
(unaudited, in thousands)

			Principal
			Balance				Effective
	GAAP		September 30,		Annualized		Maturity		Balance at
Encumbered Properties	Interest Rate		2006		Debt Service2		Date		Maturity
Fixed Rate Debt
4200 Tech Court		8.07%	$	1,781	$	168		10/1/2009	$	1,705
4212 Tech Court		8.53%		1,735		169		6/1/2010		1,654
Crossways Commerce Center		6.70%		25,812		2,087		10/1/2012		23,313
Newington Business Park Center		6.70%		16,282		1,316		10/1/2012		14,706
Interstate Plaza1		5.30%		8,344		726		1/1/2007		8,282
Herndon Corporate Center1		5.66%		8,682		603		4/1/2008		8,548
Aquia Commerce Center I1		6.50%		857		165		2/1/2013		42
Deer Park1
6900 English Muffin Way1
Gateway Center1
Gateway West1
4451 Georgia Pacific1
20270 Goldenrod Lane1
15 Worman’s Mills Court1
Girard Business Center1		5.54%		76,409		6,434		9/11/2008		71,825
Girard Place1
Old Courthouse1
Patrick Center1
7561 Lindbergh Drive1
West Park1
Woodlands Business Center1
Norfolk Commerce Park II1		5.28%		7,516		648		8/7/2008		7,034
4612 Navistar Drive1		5.20%		14,081		1,131		7/11/2011		11,921
Campus at Metro Park North1		5.25%		25,768		2,028		2/11/2012		21,581
Plaza 500
Van Buren Office Park
Rumsey Center
Snowden Center		5.19%		100,000		5,190		8/1/2015		100,000
Greenbrier Technology Center II
Norfolk Business Center
Alexandria Corporate Park
Enterprise Center1		5.20%		19,567		1,647		12/1/2010		16,712
Glenn Dale Business Center1		5.13%		8,905		780		5/1/2009		8,033
Gateway Centre1		5.88%		1,818		239		11/1/2016		—
1434 Crossways Boulevard Building I1		5.38%		9,280		1,491		3/5/2013		7,597
1434 Crossways Boulevard Building II1		5.38%		10,930		826		8/5/2012		8,866
403 and 405 Glenn Drive1		5.50%		9,098		746		7/1/2011		7,807
Linden Business Center1		5.58%		7,676		559		10/1/2013		6,596
Owings Mills Business Center1		5.75%		5,850		425		3/1/2014		5,066
Prosperity Business Center1		5.75%		3,991		332		1/1/2013		3,242
Airpark Business Center1		6.63%		1,628		173		6/1/2021		14
Hanover Business Center1
Hanover Building II B1		8.00%		1,959		154		6/15/2016		1,911
Hanover Building C1		6.63%		1,475		161		12/1/2017		13
Hanover Building D1		6.63%		1,077		161		8/1/2015		13
Chesterfield Business Center1		6.63%		5,782		318		8/1/2015		26
Indian Creek Court1		5.90%		13,647		1,162		1/1/2011		11,982
			$	389,950	$	29,839			$	348,489
Senior Unsecured Debt
Series A Notes		6.41%		37,500		2,404		6/15/2013		37,500
Series B Notes		6.55%		37,500		2,456		6/15/2016		37,500
			$	75,000	$	4,860			$	75,000
Total Fixed Rate Debt			$	464,950	$	34,699			$	423,489

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Quarterly Supplemental Disclosure
September 30, 2006

DEBT ANALYSIS CONTINUED
(unaudited, in thousands)

		Principal
		Balance				Effective
	GAAP	September 30,		Annualized		Maturity		Balance at
	Interest Rate	2006		Debt Service2		Date		Maturity
Floating Rate Debt
Credit Facility3	LIBOR + 1.30%		28,800		1,907		4/26/2009		28,800
Total at September 30, 2006		$	493,750	$	36,606			$	452,289

¹ The balance includes the fair value impacts recorded at acquisition upon assumption of the mortgages encumbering these properties. The fair value impact and actual interest rates are:

Property	Fair Value	Interest Rate
Interstate Plaza	$0.4 million		7.45	%
Herndon Corporate Center	$0.2 million		5.11	%
Deer Park through Woodlands Business Center	$3.6 million		6.71	%
Norfolk Commerce Park II	$0.3 million		6.90	%
4612 Navistar Drive	$1.7 million		7.48	%
Campus at Metro Park North	$2.7 million		7.11	%
Enterprise Center	$2.5 million		8.03	%
Glenn Dale Business Center	$0.8 million		7.83	%
Gateway Centre	$0.1 million		7.35	%
1434 Crossways Boulevard Building I	$0.8 million		6.25	%
1434 Crossways Boulevard Building II	$1.3 million		7.05	%
403 and 405 Glenn Drive	$0.9 million		7.60	%
Linden Business Center	$0.2 million		6.01	%
Owings Mills Business Center	$0.4 million		5.85	%
Prosperity Business Center	$0.1 million		6.25	%
Airpark Business Center	$0.1 million		7.45	%
Hanover Building II B	$7 thousand		4.00	%
Hanover Building C	$0.1 million		7.88	%
Hanover Building D	$0.1 million		8.88	%
Chesterfield Business Center	$0.1 million		7.45	%
Indian Creek Court	$0.9 million		7.80	%

The Company repaid the debt associated with Hanover Building II A and Interstate Plaza in July and October 2006, respectively. The mortgage assumed upon acquisition of Aquia Commerce Center I approximated its market value.

2

Annual debt service for floating rate loans reflects the principal balance at the end of the period multiplied by the variable interest rate in effect at the end of the period.

3

As of September 30, 2006, the borrowing base for the Credit Facility included the following properties: 13129 Airpark Road, Virginia Center, Aquia Commerce Center II, Airpark Place, 15395 John Marshall Highway, Gateway West II, Crossways II, Windsor at Battlefield, Reston Business Campus, 1400 Cavalier Boulevard, Gateway Centre II, 2000 Gateway Boulevard, Diamond Hill Distribution Center, Linden II (Building I), 1000 Lucas Way, River’s Bend Center, Northridge I & II, Crossways I, Sterling Park Business Center and Sterling Park Land.

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Quarterly Supplemental Disclosure
September 30, 2006

SELECTED OPERATING RATIOS
(unaudited, in thousands)

	Three Months Ended
	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
COVERAGE RATIOS
Interest Coverage Ratio
EBITDA	$	17,075		$	16,297		$	15,369		$	13,915		$	13,510
Divided by Interest Expense		7,155			7,253			6,590			5,862			5,407
		2.39x			2.25x			2.33x			2.37x			2.50x
Fixed Charge Coverage Ratio
EBITDA	$	17,075		$	16,297		$	15,369		$	13,915		$	13,510
Divided by Interest Expense		7,155			7,253			6,590			5,862			5,407
+ Principal Amortization		1,059			977			971			1,095			909
		2.08x			1.98x			2.03x			2.00x			2.14x
OVERHEAD RATIO
G&A to Real Estate Revenues
General and Administrative Expense	$	2,436		$	2,530		$	2,534		$	2,249		$	2,054
Real Estate Revenues		27,129			25,224			24,374			22,149			20,410
		9.0	%		10.0	%		10.4	%		10.2	%		10.1	%
LEVERAGE RATIO
Debt/Total Market Capitalization
Total Debt	$	493,750		$	509,390		$	485,651		$	396,266		$	390,043
Total Market Capitalization		1,250,701			1,152,079			1,092,772			967,553			843,699
		39.5	%		44.2	%		44.4	%		41.0	%		46.2	%

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Quarterly Supplemental Disclosure
September 30, 2006

FIRST POTOMAC REALTY TRUST
DESCRIPTION OF PROPERTIES

							Annualized		Leased at
			Year of		Square		Cash Base		September
Property	Property Type	Location	Acquisition		Footage		Rent1		30, 2006
Plaza 500	Multi-tenant Industrial	Alexandria, VA		1997		506,725	$	4,837,470		96.1	%
Van Buren Business Park	Flex	Herndon, VA		1997		109,310		1,593,740		96.5	%
13129 Airpark Road	Multi-tenant Industrial	Culpeper, VA		1997		150,400		761,134		100.0	%
Tech Court	Flex	Chantilly, VA		1998		64,064		555,192		74.6	%
Newington Business Park Center	Multi-tenant Industrial	Lorton, VA		1999		254,242		2,351,216		94.7	%
Crossways Commerce Center I	Multi-tenant Industrial	Chesapeake, VA		1999		348,615		1,828,853		100.0	%
Crossways Commerce Center ll	Flex	Chesapeake, VA		1999		147,736		1,522,206		100.0	%
Coast Guard Building	Flex	Chesapeake, VA		1999		61,992		834,150		100.0	%
Snowden Center	Flex	Columbia, MD		2002		140,186		1,847,213		89.7	%
Rumsey Center	Flex	Columbia, MD		2002		133,375		1,280,505		70.8	%
Greenbrier Technology Center II	Flex	Chesapeake, VA		2002		79,684		691,123		99.0	%
Norfolk Business Center	Flex	Norfolk, VA		2002		90,682		772,666		92.9	%
Virginia Center	Flex	Glen Allen, VA		2003		118,884		1,250,178		89.4	%
Interstate Plaza	Single-tenant Industrial	Alexandria, VA		2003		107,320		1,146,298		100.0	%
Alexandria Corporate Park	Multi-tenant Industrial	Alexandria, VA		2003		278,130		3,846,892		81.9	%
Herndon Corporate Center	Flex	Herndon, VA		2004		127,353		1,987,427		97.7	%
Aquia Commerce Center I & II	Flex	Stafford, VA		2004		64,488		1,010,176		100.0	%
Deer Park	Flex	Randallstown, MD		2004		171,140		1,101,184		79.3	%
Gateway Center	Flex	Gaithersburg, MD		2004		44,307		603,557		100.0	%
Gateway West	Flex	Westminster, MD		2004		110,147		944,174		79.7	%
Girard Business Center	Flex	Gaithersburg, MD		2004		123,900		1,156,779		85.5	%
Girard Place	Flex	Gaithersburg, MD		2004		175,217		1,420,490		100.0	%
15 Worman’s Mill Court	Flex	Frederick, MD		2004		39,966		378,542		100.0	%
20270 Goldenrod Lane	Flex	Germantown, MD		2004		24,468		286,169		75.2	%
6900 English Muffin Way	Multi-tenant Industrial	Frederick, MD		2004		165,690		1,120,757		100.0	%
4451 Georgia Pacific Boulevard	Multi-tenant Industrial	Frederick, MD		2004		169,750		1,172,013		100.0	%
7561 Lindbergh Drive	Single-tenant Industrial	Gaithersburg, MD		2004		36,000		300,437		100.0	%
Patrick Center	Office	Frederick, MD		2004		66,706		1,125,388		83.3	%
West Park	Office	Frederick, MD		2004		28,950		382,266		93.4	%
Woodlands Business Center	Office	Largo, MD		2004		37,940		357,986		60.1	%
Old Courthouse Square	Retail	Martinsburg, WV		2004		201,350		1,221,218		96.6	%
Airpark Place	Flex	Gaithersburg, MD		2004		82,208		916,228		89.1	%
15395 John Marshall Highway	Single-tenant Industrial	Haymarket, VA		2004		123,777		1,147,416		100.0	%
Norfolk Commerce Park II	Flex	Norfolk, VA		2004		128,147		1,310,086		100.0	%
Crossways II	Flex	Chesapeake, VA		2004		85,004		914,625		100.0	%
Windsor at Battlefield	Flex	Manassas, VA		2004		154,226		1,448,270		83.1	%
Campus at Metro Park North	Flex	Rockville, MD		2004		190,238		3,473,154		100.0	%
4612 Navistar Drive	Single-tenant Industrial	Frederick, MD		2004		215,085		1,816,655		100.0	%
Reston Business Campus	Flex	Reston, VA		2005		82,469		1,309,210		91.6	%
Enterprise Center	Flex	Chantilly, VA		2005		188,941		2,430,565		82.5	%
1400 Cavalier Boulevard	Multi-tenant Industrial	Chesapeake, VA		2005		299,963		1,256,717		100.0	%
Glenn Dale Business Center	Multi-tenant Industrial	Glenn Dale, MD		2005		315,191		1,736,187		99.2	%
Gateway Centre	Flex	Manassas, VA		2005		99,607		890,507		94.9	%
1434 Crossways Boulevard	Office	Chesapeake, VA		2005		220,501		2,576,291		100.0	%
403/405 Glenn Drive	Flex	Sterling, VA		2005		197,201		1,233,328		81.7	%
Diamond Hill Distribution Center	Multi-tenant Industrial	Chesapeake, VA		2005		712,550		2,734,266		90.2	%
Linden Business Center	Flex	Manassas, VA		2005		110,117		1,349,360		90.4	%
Owings Mills Business Center	Flex	Owings Mills, MD		2005		85,035		995,452		100.0	%
Prosperity Business Center	Multi-tenant Industrial	Merrifield, VA		2005		71,572		829,807		100.0	%
1000 Lucas Way	Flex	Hampton, VA		2005		182,175		1,088,418		91.5	%
River’s Bend Center	Multi-tenant Industrial	Richmond, VA		2006		492,200		2,855,365		93.1	%
Northridge I, II	Multi-tenant Industrial	Ashland, VA		2006		140,390		803,701		100.0	%
Crossways I	Flex	Chesapeake, VA		2006		143,398		1,483,407		85.1	%
Sterling Park Business Center	Flex	Sterling, VA		2006		127,907		1,180,447		80.8	%
1408 Stephanie Way	Flex	Chesapeake, VA		2006		51,209		314,080		64.6	%
Airpark Business Center	Flex	Richmond, VA		2006		42,178		305,531		100.0	%
Chesterfield Business Center	Flex	Richmond, VA		2006		189,871		1,137,515		93.1	%
Hanover Business Center	Flex	Ashland, VA		2006		183,546		1,058,770		92.8	%
Gateway 270 West	Flex	Clarksburg, MD		2006		255,460		1,621,385		53.7	%
Davis Drive	Flex	Sterling, VA		2006		52,581		397,235		86.2	%
Indian Creek Court	Multi-tenant Industrial	Beltsville, MD		2006		185,496		1,820,524		84.2	%
Total						9,586,960	$	82,121,901		91.7	%
2000 Gateway Boulevard	Multi-tenant Industrial	Hampton, VA		2005		421,100		—		—
						10,008,060	$	82,121,901		87.9	%

¹ Annualized cash rents have been normalized to reflect NNN equivalent.

-11-

Quarterly Supplemental Disclosure
September 30, 2006

			SQUARE FOOTAGE
			UNDER
	DEVELOPABLE		DEVELOPMENT /
	SQUARE FOOTAGE		PRE- DEVELOPMENT
Plaza 500		200,000		—
Crossways Commerce Center I		30,000		30,000
Snowden Center		4,500		4,500
15395 John Marshall Highway1		112,000		112,000
Norfolk Commerce Park II		15,000		—
4612 Navistar Drive		50,000		—
1400 Cavalier Boulevard		96,000		96,000
Glenn Dale Business Center		200,000		—
Linden Business Center		30,000		—
Sterling Park Business Center		450,000		50,000
		1,187,500		292,500

¹ Construction in progress for building addition pre-leased to Engineering Solutions & Products. Completion is anticipated in 1Q 2007.

-12-

Quarterly Supplemental Disclosure
September 30, 2006

TOP TEN TENANTS

								Percentage of
								Total			Weighted
								Annualized			Average
				Total				Rental			Remaining
		Number of		Leased		Total Annualized		Revenue -			Lease
Ranking	Tenant	Leases		Square Feet		Rental Revenue1		Cash Basis			Years
1	U.S. Government		28		731,248	$	8,224,657		10.0	%		4.0
2	EDS		2		220,501		2,576,291		3.1	%		4.7
3	FKI Logistex		1		215,085		1,816,655		2.2	%		10.0
4	Sentara Healthcare		5		145,019		1,415,431		1.7	%		6.4
5	TDS Logistics, Inc		3		248,050		1,265,238		1.5	%		1.6
6	First Data Corporation		1		117,336		1,238,622		1.5	%		2.2
7	CACI		6		76,472		1,190,813		1.5	%		4.3
8	Engineering Solutions		1		123,777		1,147,416		1.4	%		6.0
9	Stock Building Supply, Inc		1		124,501		1,137,283		1.4	%		3.4
10	Capital One Financial Corp		1		158,400		1,047,024		1.3	%		4.8
	Subtotal Top 10 Tenants		49		2,160,389	$	21,059,430		25.6	%		4.6
	All Remaining Tenants		671		6,632,876	$	61,062,471		74.4	%		3.6
	Total / Weighted Average		720		8,793,265	$	82,121,901		100.0	%		3.7

¹ Annualized rental revenue is based on triple-net equivalent rental revenue as of September 30, 2006.

-13-

Quarterly Supplemental Disclosure
September 30, 2006

FIRST POTOMAC REALTY TRUST
LEASE EXPIRATIONS

			Gross Leased Area					Annualized Cash Rental Revenue
	Number of												Average
	Leases		Square		Percent of					Percent			Base Rent1
	Expiring		Footage		Total			Amount		of Total			per Sq. Ft.
Year of Lease Expiration
MTM		18		102,585		1.2	%	$	1,122,297		1.4	%	$	10.94
2006		37		631,461		7.2	%		3,186,639		3.9	%		5.05
2007		142		1,324,164		15.1	%		12,289,917		15.0	%		9.28
2008		136		1,284,339		14.6	%		11,569,607		14.1	%		9.01
2009		136		1,449,288		16.5	%		13,320,717		16.2	%		9.19
2010		82		1,065,099		12.1	%		10,757,765		13.1	%		10.10
2011		90		1,543,008		17.5	%		14,215,761		17.3	%		9.21
2012		26		370,876		4.2	%		3,729,333		4.5	%		10.06
Thereafter		53		1,022,445		11.6	%		11,929,865		14.5	%		11.67
Total		720		8,793,265		100.0	%	$	82,121,901		100.0	%	$	9.34

LEASE EXPIRATIONS—NEXT FOUR QUARTERS

			Gross Leased Area					Annualized Cash Rental Revenue
	Number of												Average
	Leases		Square		Percent					Percent of			Base Rent1
	Expiring		Footage		of Total			Amount		Total			per Sq. Ft.
Quarter of Lease Expiration
2006 - Q4		34		613,761		7.0	%	$	3,046,134		3.7	%	$	4.96
2007 - Q1		29		256,847		2.9	%		2,257,109		2.7	%		8.79
2007 - Q2		36		245,962		2.8	%		2,455,604		3.0	%		9.98
2007 - Q3		37		331,495		3.8	%		2,975,808		3.6	%		8.98
Total		136		1,448,065		16.5	%	$	10,734,655		13.0	%	$	7.41

¹ Triple-net Equivalent

-14-

Quarterly Supplemental Disclosure
September 30, 2006

LEASING ANALYSIS

	3 months ended			9 months ended
Leasing Production1	September 30, 2006			September 30, 2006
New and Renewal Leases
Square footage of new and renewal leases		193,186			1,370,457
Number of new and renewal leases commencing		37			117
Expired/Early Renewal/Terminated leases
Square footage of expired/early renewal leases		148,005			1,184,688
Square footage of terminated leases		41,246			69,633
Total — expired/early renewal/terminated leases		189,251			1,254,321
Signed in advance of existing lease expiration		892			892
Pre-Leasing2		—			112,305
Net Absorption		3,043			45,077
New Leases
New square footage		101,916			417,382
Number of new leases commencing		17			52
Rental Change — Cash
New base rent	$	10.85		$	10.67
Percentage change in base rent		26.4	%		16.0	%
Rental Change — GAAP
New base rent	$	12.48		$	10.95
Percentage change in base rent		17.5	%		7.9	%
Average capital cost per square foot	$	11.12		$	7.20
Average downtime between leases (months)		9.5			6.3
Average lease term (months)		67.0			76.7
Renewal Leases
Square footage of renewal leases		91,270			953,075
Number of renewal leases commencing		20			65
Retention rate		62	%		80	%
Suburban MD		86	%		81	%
Northern VA		55	%		82	%
Southern VA		55	%		79	%
Rental Change — Cash
New base rent	$	11.87		$	9.07
Expiring base rent	$	11.34		$	8.05
Percentage change in base rent		4.7	%		12.6	%
Rental Change — GAAP
New base rent	$	12.41		$	8.84
Expiring base rent	$	10.55		$	8.22
Percentage change in base rent		17.7	%		7.6	%
Average capital cost per square foot	$	0.91		$	0.33
Average lease term (months)		40.0			43.8

1	Includes 185,482 square feet and associated costs for leases signed in 3rd quarter for subsequent periods.
2	Leasing at 15395 John Marshall Highway; estimated construction completion in 1Q 2007.

-15-

Quarterly Supplemental Disclosure
September 30, 2006

FIRST POTOMAC REALTY TRUST
PORTFOLIO BY SIZE

										% of
Square Feet Under	Number of		Leased Square		% of Total			Annualized		Annualized			Base Rent1
Lease	Leases		Feet		Square Feet			Base Rent1		Base Rent1			per SF
0-4,999		364		877,757		10.0	%	$	9,716,603		11.8	%	$	11.07
5,000-9,999		144		998,601		11.4	%		10,627,159		12.9	%		10.64
10,000-14,999		72		862,728		9.8	%		9,361,546		11.4	%		10.85
15,000-19,999		33		557,091		6.3	%		5,379,628		6.6	%		9.66
20,000-24,999		18		398,203		4.5	%		4,851,957		5.9	%		12.18
25,000-29,999		19		504,937		5.7	%		6,256,669		7.6	%		12.39
30,000-34,999		15		486,683		5.5	%		3,711,824		4.5	%		7.63
35,000-39,999		11		402,164		4.6	%		2,697,175		3.3	%		6.71
40,000-44,999		5		209,770		2.4	%		1,728,707		2.1	%		8.24
45,000-49,999		10		467,337		5.3	%		3,489,956		4.2	%		7.47
50,000-54,999		3		159,108		1.8	%		2,057,359		2.5	%		12.93
55,000-59,999		2		114,805		1.3	%		1,598,043		1.9	%		13.92
60,000-64,999		4		246,072		2.8	%		3,126,645		3.8	%		12.71
65,000-69,999		2		135,321		1.5	%		623,188		0.8	%		4.61
70,000-74,999		2		143,860		1.6	%		896,572		1.1	%		6.23
90,000-94,999		1		94,950		1.1	%		559,256		0.7	%		5.89
100,000-104,999		1		104,218		1.2	%		1,158,424		1.4	%		11.12
105,000-109,999		1		107,320		1.2	%		1,146,298		1.4	%		10.68
115,000-119,999		2		233,619		2.7	%		2,656,489		3.2	%		11.37
120,000-124,999		6		732,078		8.3	%		5,264,724		6.4	%		7.19
125,000-129,999		1		127,108		1.4	%		603,763		0.7	%		4.75
155,000-159,999		1		158,400		1.9	%		1,047,024		1.4	%		6.61
215,000-219,999		2		431,135		4.9	%		2,842,892		3.5	%		6.59
240,000-244,999		1		240,000		2.8	%		720,000		0.9	%		3.00
Total		720		8,793,265		100.0	%	$	82,121,901		100.0	%	$	9.34

¹ Triple-Net Equivalent

-16-

Quarterly Supplemental Disclosure
September 30, 2006

MARKET CONCENTRATION

Market Concentration by Square Footage

	Washington						Subtotal			Norfolk			Baltimore			Richmond			Total
	Suburban			Northern
	MD			VA
Single-tenant Industrial		2.5	%		2.3	%		4.8	%		—			—			—			4.8	%
Multi-tenant Industrial		6.5	%		12.6	%		19.1	%		17.8	%		1.9	%		6.3	%		45.1	%
Flex		9.4	%		13.8	%		23.2	%		9.7	%		6.4	%		5.3	%		44.6	%
Office		1.3	%		—			1.3	%		2.2	%		—			—			3.5	%
Retail		—			2.0	%		2.0	%		—			—			—			2.0	%
Total		19.7	%		30.7	%		50.4	%		29.7	%		8.3	%		11.6	%		100.0	%

Market Concentration by Annualized Rent

	Washington						Subtotal			Norfolk			Baltimore			Richmond			Total
	Suburban			Northern
	MD			VA
Single-tenant Industrial		2.6	%		2.8	%		5.4	%		—			—			—			5.4	%
Multi-tenant Industrial		4.9	%		15.4	%		20.3	%		7.1	%		2.2	%		4.4	%		34.0	%
Flex		12.0	%		18.7	%		30.7	%		10.9	%		7.5	%		4.6	%		53.7	%
Office		2.3	%		—			2.3	%		3.1	%		—			—			5.4	%
Retail		—			1.5	%		1.5	%		—			—			—			1.5	%
Total		21.8	%		38.4	%		60.2	%		21.1	%		9.7	%		9.0	%		100.0	%

-17-

PORTFOLIO ANALYSIS

PORTFOLIO BY MARKET

										Percentage
								Annualized		of
	Number of				Percent			Base Rent1 -		Annualized
	Buildings		Square Feet		Leased			Cash Basis		Base Rent1
Suburban MD		32		1,971,076		91.1	%		17,867,995		21.8	%
Northern VA		49		3,071,780		90.5	%		31,526,908		38.4	%
Washington		81		5,042,856		90.7	%	$	49,394,903		60.2	%
Norfolk		22		2,972,756		80.9	%		17,326,886		21.1	%
Baltimore		24		825,379		86.0	%		7,989,052		9.7	%
Richmond		21		1,167,069		94.6	%		7,411,060		9.0	%
Total		148		10,008,060		87.9	%	$	82,121,901		100.0	%

PORTFOLIO BY PROPERTY TYPE

										Percentage
								Annualized		of
	Number of				Percent			Base Rent1 -		Annualized
	Buildings		Square Feet		Leased			Cash Basis		Base Rent1
Single-tenant Industrial		4		482,182		100.0	%	$	4,410,806		5.4	%
Multi-tenant Industrial		34		4,512,014		85.5	%		27,954,901		34.0	%
Flex		104		4,458,417		88.2	%		44,093,044		53.7	%
Office		5		354,097		92.7	%		4,441,932		5.4	%
Retail		1		201,350		96.6	%		1,221,218		1.5	%
Total		148		10,008,060		87.9	%	$	82,121,901		100.0	%

PORTFOLIO BY LEASE TYPE

					Percentage
	Number of				of Leased
	Leases		Square Feet2		Portfolio
Triple Net		435		6,297,339		71.6	%
Industrial Gross		125		850,767		9.7	%
Full Service		160		1,645,159		18.7	%
Total		720		8,793,265		100.0	%

1	Triple-net Equivalent
2	Does not include vacant and core factor space.

-18-

FIRST POTOMAC REALTY TRUST
WASHINGTON MARKET

			Square
Washington	Buildings		Feet		% of Total			% Leased
Suburban MD
15 Worman’s Mill Court		1		39,966		0.8	%		100.0	%
20270 Goldenrod Lane		1		24,468		0.5	%		96.1	%
4451 Georgia Pacific Boulevard		1		169,750		3.4	%		100.0	%
4612 Navistar Drive		1		215,085		4.3	%		100.0	%
6900 English Muffin Way		1		165,690		3.3	%		100.0	%
7561 Lindbergh Drive		1		36,000		0.7	%		100.0	%
Airpark Place		3		82,208		1.5	%		87.9	%
Campus at Metro Park North		4		190,238		3.8	%		100.0	%
Gateway 270 West		6		255,460		5.0	%		53.7	%
Gateway Center		2		44,307		0.9	%		100.0	%
Girard Business Center		3		123,900		2.5	%		85.5	%
Girard Place		4		175,217		3.5	%		100.0	%
Glenn Dale Business Center		1		315,191		6.3	%		99.2	%
Patrick Center		1		66,706		1.3	%		88.4	%
West Park		1		28,950		0.5	%		90.2	%
Woodlands Business Center		1		37,940		0.8	%		60.1	%
Subtotal		32		1,971,076		39.1	%		91.1	%
Northern VA
13129 Airpark Road		1		150,400		3.0	%		100.0	%
15395 John Marshall Highway		1		123,777		2.5	%		100.0	%
403/405 Glenn Drive		2		197,201		3.9	%		81.7	%
Alexandria Corporate Park		1		278,130		5.5	%		81.9	%
Aquia Commerce Center I & II		2		64,488		1.3	%		100.0	%
Davis Drive		1		52,581		1.0	%		86.2	%
Enterprise Center		4		188,941		3.7	%		74.8	%
Gateway Centre		3		99,607		2.0	%		86.1	%
Herndon Corporate Center		4		127,353		2.5	%		97.7	%
Interstate Plaza		1		107,320		2.1	%		100.0	%
Linden Business Center		3		110,117		2.2	%		85.3	%
Newington Business Park Center		7		254,242		5.0	%		94.7	%
Old Courthouse Square		1		201,350		4.0	%		96.6	%
Plaza 500		2		506,725		10.0	%		96.1	%
Prosperity Business Center		1		71,572		1.5	%		100.0	%
Reston Business Campus		4		82,469		1.6	%		92.2	%
Tech Court		2		64,064		1.3	%		74.6	%
Van Buren Business Park		5		109,310		2.2	%		96.5	%
Windsor at Battlefield		2		154,226		3.1	%		83.1	%
Sterling Park Business Center		2		127,907		2.5	%		80.8	%
Subtotal		49		3,071,780		60.9	%		90.5	%
Total		81		5,042,856		100.0	%		90.7	%

LEASE EXPIRATIONS

	SF of Expiring		% of			Annual		% of Annual			Base Rent1
Year of Lease Expiration	Leases		Total SF			Base Rent1		Base Rent1			per SF
Vacant		467,070		9.3	%	$	—		—		$	—
MTM		38,780		0.8	%		747,063		1.5	%		19.26
2006		162,500		3.2	%		1,308,947		2.6	%		8.06
2007		669,141		13.3	%		7,343,488		14.9	%		10.97
2008		496,568		9.8	%		5,697,869		11.5	%		11.47
2009		776,128		15.4	%		7,348,120		14.9	%		9.47
2010		765,547		15.2	%		8,239,077		16.7	%		10.76
2011		589,381		11.7	%		6,186,935		12.5	%		10.50
2012		286,952		5.7	%		3,009,344		6.1	%		10.49
2013		125,916		2.4	%		2,533,832		5.1	%		20.12
2014		224,215		4.4	%		2,576,488		5.2	%		11.49
2015		135,019		2.7	%		1,766,049		3.7	%		13.08
2016		266,462		5.3	%		2,441,806		4.9	%		9.16
2023		39,177		0.8	%		195,885		0.4	%		5.00
		5,042,856		100.0	%	$	49,394,903		100.0	%	$	10.79

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Quarterly Supplemental Disclosure
September 30, 2006

FIRST POTOMAC REALTY TRUST
NORFOLK MARKET

								%
Norfolk	Buildings		Square Feet		% of Total			Leased
1000 Lucas Way		2		182,175		6.1	%		91.5	%
1400 Cavalier Boulevard		3		299,963		10.1	%		100.0	%
1434 Crossways Boulevard		2		220,501		7.4	%		100.0	%
2000 Gateway Boulevard		1		421,100		14.2	%		0.0	%
Coast Guard Building		1		61,992		2.1	%		100.0	%
Crossways Commerce Center I		1		348,615		11.7	%		95.5	%
Crossways Commerce Center ll		2		147,736		5.0	%		100.0	%
Crossways I		1		143,398		4.8	%		85.1	%
Crossways II		1		85,004		2.9	%		100.0	%
Diamond Hill Distribution Center		4		712,550		24.0	%		90.2	%
Greenbrier Technology Center II		1		79,684		2.6	%		99.0	%
Norfolk Business Center		1		90,682		3.1	%		92.9	%
Norfolk Commerce Park II		1		128,147		4.3	%		100.0	%
1408 Stephanie Way		1		51,209		1.7	%		64.6	%
Total		22		2,972,756		100.0	%		80.9	%

LEASE EXPIRATIONS

								% of
	SF of							Annual
	Expiring		% of Total			Annual		Base			Base Rent1
Year of Lease Expiration	Leases		SF			Base Rent1		Rent1			per SF
Vacant		569,089		19.1	%	$	—		—		$	—
MTM		48,000		1.6	%		268,944		1.6	%		5.60
2006		381,754		12.8	%		1,384,254		8.0	%		3.63
2007		345,688		11.6	%		2,288,336		13.2	%		6.62
2008		468,771		15.8	%		3,246,357		18.7	%		6.93
2009		358,541		12.1	%		3,106,046		17.9	%		8.66
2010		39,428		1.3	%		434,146		2.5	%		11.01
2011		620,313		20.9	%		5,284,686		30.5	%		8.52
2012		27,889		0.9	%		254,302		1.5	%		9.12
2013		47,448		1.7	%		647,665		3.7	%		13.65
2014		5,835		0.2	%		67,744		0.4	%		11.61
2017		60,000		2.0	%		344,406		2.0	%		5.74
Total		2,972,756		100.0	%	$	17,326,886		100.0	%	$	7.21

¹ Triple-net Equivalent

-20-

Quarterly Supplemental Disclosure
September 30, 2006

FIRST POTOMAC REALTY TRUST
BALTIMORE MARKET

			Square					%
Baltimore	Buildings		Feet		% of Total			Leased
Deer Park		4		171,140		20.7	%		81.0	%
Gateway West		4		110,147		13.3	%		79.7	%
Indian Creek Court		4		185,496		22.5	%		84.2	%
Owings Mills Business Center		4		85,035		10.3	%		100.0	%
Rumsey Center		4		133,375		16.2	%		87.0	%
Snowden Center		4		140,186		17.0	%		89.8	%
Total		24		825,379		100.0	%		86.0	%

LEASE EXPIRATIONS

								% of
	SF of							Annual
	Expiring		% of			Annual		Base			Base Rent1 per
Year of Lease Expiration	Leases		Total SF			Base Rent1		Rent1			SF
Vacant		115,734		14.0	%	$	—		—		$	—
2006		10,556		1.3	%		95,956		1.2	%		9.09
2007		139,260		16.9	%		1,526,909		19.1	%		10.96
2008		94,538		11.5	%		1,153,732		14.4	%		12.20
2009		159,629		19.3	%		1,827,218		22.9	%		11.45
2010		83,711		10.1	%		778,756		9.7	%		9.30
2011		127,147		15.4	%		1,384,715		17.3	%		10.89
2012		16,638		2.0	%		218,071		2.8	%		13.11
2015		78,166		9.5	%		1,003,695		12.6	%		12.84
Total		825,379		100.0	%	$	7,989,052		100.0	%	$	11.26

¹ Triple-net Equivalent

-21-

Quarterly Supplemental Disclosure
September 30, 2006

FIRST POTOMAC REALTY TRUST
RICHMOND MARKET

Richmond	Buildings		Square Feet		% of Total			% Leased
Virginia Center		1		118,884		10.2	%		92.6	%
River’s Bend Center		4		492,200		42.2	%		93.2	%
Northridge I, II		2		140,390		12.0	%		100.0	%
Airpark Business Center		2		42,178		3.6	%		100.0	%
Chesterfield Business Center		8		189,871		16.3	%		91.7	%
Hanover Business Center		4		183,546		15.7	%		97.5	%
Total		21		1,167,069		100.0	%		94.6	%

LEASE EXPIRATIONS

	SF of Expiring		% of Total			Annual		% of Annual			Base Rent1
Year of Lease Expiration	Leases		SF			Base Rent1		Base Rent1			per SF
Vacant		62,902		5.4	%	$	—		—		$	—
MTM		15,805		1.4	%		106,290		1.4	%		6.73
2006		76,651		6.6	%		397,482		5.4	%		5.19
2007		170,075		14.6	%		1,131,185		15.3	%		6.65
2008		224,462		19.2	%		1,471,648		19.9	%		6.56
2009		154,990		13.3	%		1,039,333		14.0	%		6.71
2010		176,413		15.1	%		1,305,786		17.6	%		7.40
2011		206,167		17.7	%		1,359,425		18.3	%		6.59
2012		39,397		3.3	%		247,616		3.3	%		6.29
2013		3,593		0.3	%		41,319		0.6	%		11.50
2014		23,254		2.0	%		237,356		3.2	%		10.21
2015		13,360		1.1	%		73,620		1.0	%		5.51
Total		1,167,069		100.0	%	$	7,411,060		100.0	%	$	6.71

¹ Triple-net Equivalent

-22-

Quarterly Supplemental Disclosure
September 30, 2006

MANAGEMENT STATEMENTS ON NON-GAAP SUPPLEMENTAL MEASURES

Investors and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), EBITDA and adjusted funds from operations (“AFFO”), variously defined, as supplemental performance measures.

While the Company believes net income available to common stockholders as defined by GAAP is the most appropriate measure, it considers FFO, NOI, EBITDA, and AFFO appropriate supplemental measures given their wide use by and relevance to investors and analysts. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation/amortization of real estate assets. NOI provides a measure of rental operations and does not factor in depreciation/amortization and non-property specific expenses such as general and administrative expenses. EBITDA provides a further tool to evaluate the ability to incur and service debt and to fund dividends and other cash needs. AFFO provides a further tool to evaluate the ability to fund dividends. In addition, FFO, NOI, EBITDA and AFFO are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

Net Operating Income

Management believes that NOI is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as operating revenues (rental income, tenant reimbursements, and other income) less property and related expenses (property expenses, real estate taxes, and insurance). Other real estate investment trust (“REITs”) may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.

Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, gains and losses from property dispositions, discontinued operations, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, lease rates, and tenant base have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s financial and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of performance in the real estate industry.

However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, interest expense, depreciation and amortization costs, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties.

EBITDA

Management believes that EBITDA is a useful supplemental measure of the Company’s operating performance. EBITDA is defined as earnings before interest, taxes, depreciation and amortization.

Management considers EBITDA to be an appropriate supplemental performance measure since it represents earnings prior to the impact of depreciation, amortization, gain (loss) from property dispositions and loss on early retirement of debt. This calculation facilitates the review of income from operations without considering the effect of non-cash depreciation and amortization or the cost of debt.

Funds From Operations

Management believes that FFO is a useful supplemental measure of the Company’s operating performance. As defined by the National Association of Real Estate Investment Trusts, or NAREIT, FFO represents net income (loss) before minority interest (computed in accordance with GAAP), including gains (or losses) from debt restructuring and excluding gain on sale of property, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Other REITs may use different methodologies for calculating FFO and, accordingly, the Company’s FFO may not be comparable to other REITs.

Management considers FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a more meaningful and accurate indication of our performance. In addition, management believes that FFO provides useful information to the investment community about the Company’s financial performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.

However, FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, which are significant economic costs that could materially impact the Company’s results of operations.

Adjusted Funds From Operations

Management believes that AFFO is a useful measure of the Company’s liquidity. The Company computes AFFO by adding to FFO equity based compensation expense and the non-cash amortization of deferred financing costs and non-real estate depreciation, and then subtracting cash paid for any recurring tenant improvements, leasing commissions, and recurring capital expenditures, and eliminating the net effect of straight-line rents, deferred market rent and debt fair value amortization. First generation costs include non-recurring tenant improvements, leasing commissions and capital expenditures that were taken into consideration when underwriting the purchase of a property or incurred to bring the property to operating standard for its intended use. The Company also excludes development related expenditures. AFFO provides an additional perspective on the Company’s ability to fund cash needs and make distributions to shareholders by adjusting for the effect of these non-cash items included in FFO, as well as recurring capital expenditures and leasing costs. However, other REIT’s may use different Company’s AFFO may not be comparable to other REITs.

-23-