Gramercy Property Trust 10-Q 2012 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 .

Commission File Number: 000-53200

CHAMBERS STREET PROPERTIES

(Exact name of registrant as specified in its charter)

Maryland	56-2466617
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

47 Hulfish Street, Suite 210, Princeton, New Jersey 08542

(Address of principal executive offices) (Zip Code)

(609) 683-4900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer  ¨	Non-accelerated filer  x	Smaller reporting company  ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

The number of shares outstanding of the registrant’s common shares, $0.01 par value, was 249,364,156 of November 14, 2012.

CHAMBERS STREET PROPERTIES

INDEX

		Page
Part I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2012 and 2011		2
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2012 and 2011		3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011		4
	Condensed Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September 30, 2012 and 2011		5
	Notes to the Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2012 and 2011		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		54
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		92
Item 4.	Controls and Procedures		92
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings		93
Item 1A.	Risk Factors		93
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		93
Item 3.	Defaults Upon Senior Securities		94
Item 4.	Mine Safety Disclosure		94
Item 5.	Other Information		94
Item 6.	Exhibits		95
	Signatures		96

i

PART I.

FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

CHAMBERS STREET PROPERTIES

Condensed Consolidated Balance Sheets

as of September 30, 2012 and December 31, 2011 (unaudited)

(In Thousands, Except Share Data)

	September 30, 2012			December 31, 2011
ASSETS
Investments in Real Estate:
Land	$	358,146		$	338,401
Site Improvements		164,721			150,936
Buildings and Improvements		1,017,471			938,640
Tenant Improvements		77,425			74,896
		1,617,763			1,502,873
Less: Accumulated Depreciation and Amortization		(120,769	)		(88,147	)
Net Investments in Real Estate		1,496,994			1,414,726
Investments in Unconsolidated Entities		487,996			537,631
Construction In Progress and Other Assets—Variable Interest Entity		66,354			17,233
Cash and Cash Equivalents		191,409			238,277
Restricted Cash		9,483			7,216
Accounts and Other Receivables, Net of Allowance of $656 and $821, respectively		8,861			5,036
Deferred Rent		23,192			17,719
Acquired Above-Market Leases, Net of Accumulated Amortization of $21,344 and $15,729, respectively		28,978			31,415
Acquired In-Place Lease Value, Net of Accumulated Amortization of $82,617 and $60,861, respectively		150,070			158,655
Deferred Financing Costs, Net of Accumulated Amortization $7,020 and $4,189, respectively		10,695			7,294
Lease Commissions, Net of Accumulated Amortization of $1,490 and $990, respectively		4,220			3,522
Other Assets		3,359			1,976
Total Assets	$	2,481,611		$	2,440,700
LIABILITIES, NON-CONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
LIABILITIES
Notes Payable, Less Discount of $2,297 and $2,838, plus premium of $8,061 and $9,595, respectively	$	619,275		$	630,146
Note Payable at Fair Value		9,208			8,775
Loan Payable		0			25,000
Security Deposits		1,000			741
Accounts Payable and Accrued Expenses		29,590			20,128
Accounts Payable, Accrued Expenses and Prepaid Rent—Variable Interest Entity		33,683			3,305
Accrued Offering Costs Payable to Related Parties		0			1,974
Acquired Below-Market Leases, Net of Accumulated Amortization of $18,226 and $13,876, respectively		24,857			29,148
Above-Market Ground Lease Obligations, Net of Accumulated Amortization $71 and $18, respectively		1,429			1,483
Property Management Fee Payable to Related Party		310			190
Investment Management Fee Payable to Related Party		2,045			1,968
Distributions Payable		37,374			32,785
Interest Rate Swaps at Fair Value—Non-Qualifying Hedges		606			958
Interest Rate Swaps at Fair Value—Qualifying Hedges		14,002			12,340
Total Liabilities		773,379			768,941
COMMITMENTS AND CONTINGENCIES (NOTE 18)
NON-CONTROLLING INTERESTS
Operating Partnership Units		2,464			2,464
Class B Interest		200			0
Non-Controlling Interest—Variable Interest Entity		826			686
SHAREHOLDERS’ EQUITY
Common Shares of Beneficial Interest, $0.01 par value, 990,000,000 shares authorized; 249,390,337 and 230,955,633 issued and outstanding as of September 30, 2012 and December 31, 2011, respectively		2,494			2,309
Additional Paid-in-Capital		2,203,812			2,038,566
Accumulated Deficit		(476,498	)		(348,602	)
Accumulated Other Comprehensive Loss		(25,066	)		(23,664	)
Total Shareholders’ Equity		1,704,742			1,668,609
Total Liabilities, Non-Controlling Interests and Shareholders’ Equity	$	2,481,611		$	2,440,700

See accompanying notes to condensed consolidated financial statements.

1

CHAMBERS STREET PROPERTIES

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

(In Thousands, Except Share Data)

	Three Months Ended September 30,						Nine Months Ended September  30,
	2012			2011			2012			2011
REVENUES
Rental	$	37,980		$	32,476		$	109,866		$	87,167
Tenant Reimbursements		9,167			7,313			25,566			19,929
Total Revenues		47,147			39,789			135,432			107,096
EXPENSES
Operating and Maintenance		4,373			4,311			14,314			11,959
Property Taxes		6,752			4,624			17,538			13,359
Interest		8,566			9,329			26,033			24,724
General and Administrative		7,541			1,474			11,974			4,264
Property Management Fee to Related Party		396			511			1,168			1,096
Investment Management Fee to Related Party		5,159			5,607			17,270			15,100
Acquisition Expenses		1,099			1,044			2,508			12,537
Depreciation and Amortization		18,787			16,656			54,749			43,901
Transition Costs		6,216			0			8,152			0
Total Expenses		58,889			43,556			153,706			126,940
OTHER INCOME AND EXPENSES
Interest and Other Income		255			460			1,800			1,271
Net Settlement Payments on Interest Rate Swaps		(171	)		(178	)		(495	)		(532	)
Gain on Interest Rate Swaps		134			32			380			177
(Loss) Gain on Note Payable at Fair Value		(26	)		75			(85	)		41
Loss on Early Extinguishment of Debt		(1,191	)		0			(1,191	)		0
Loss on Swap Termination		(495	)		0			(495	)		0
Total Other Income and (Expenses)		(1,494	)		389			(86	)		957
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED ENTITIES		(13,236	)		(3,378	)		(18,360	)		(18,887	)
PROVISION FOR INCOME TAXES		(75	)		(85	)		(218	)		(385	)
EQUITY IN INCOME OF UNCONSOLIDATED ENTITIES		927			609			2,556			4,160
NET LOSS FROM CONTINUING OPERATIONS		(12,384	)		(2,854	)		(16,022	)		(15,112	)
DISCONTINUED OPERATIONS
(Loss) Income from Discontinued Operations		0			(18	)		0			377
Realized (Loss) Gain from Sale		0			426			(415	)		301
(LOSS) INCOME FROM DISCONTINUED OPERATIONS		0			408			(415	)		678
NET LOSS		(12,384	)		(2,446	)		(16,437	)		(14,434	)
Net Loss Attributable to Non-Controlling Operating Partnership Units		5			4			7			20
NET LOSS ATTRIBUTABLE TO CHAMBERS STREET PROPERTIES SHAREHOLDERS	$	(12,379	)	$	(2,442	)	$	(16,430	)	$	(14,414	)
Basic and Diluted Net Loss Per Share from Continuing Operations Attributable to Chambers Street Properties Shareholders	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	(0.08	)
Basic and Diluted Net Loss Per Share from Discontinued Operations Attributable to Chambers Street Properties Shareholders	$	0.00		$	0.00		$	0.00		$	0.00
Basic and Diluted Net Loss Per Share Attributable to Chambers Street Properties Shareholders	$	(0.05	)	$	(0.01	)	$	(0.07	)	$	(0.08	)
Weighted Average Common Shares Outstanding—Basic and Diluted		249,173,577			199,398,630			247,718,798			183,098,748
Dividends Declared Per Share	$	0.15		$	0.15		$	0.45		$	0.45

See accompanying notes to condensed consolidated financial statements.

2

CHAMBERS STREET PROPERTIES

Condensed Consolidated Statements of Comprehensive Loss

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

(In Thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
NET LOSS	$	(12,384	)	$	(2,446	)	$	(16,437	)	$	(14,434	)
Foreign Currency Translation Gain (Loss)		3,194			(6,300	)		1,037			888
Swap Fair Value Adjustments		(361	)		(8,237	)		(2,440	)		(10,769	)
COMPREHENSIVE LOSS		(9,551	)		(16,983	)		(17,840	)		(24,315	)
Comprehensive Loss Attributable to Non-Controlling Operating Partnership Units		4			20			8			30
COMPREHENSIVE LOSS ATTRIBUTABLE TO CHAMBERS STREET PROPERTIES SHAREHOLDERS	$	(9,547	)	$	(16,963	)	$	(17,832	)	$	(24,285	)

See accompanying notes to condensed consolidated financial statements.

3

CHAMBERS STREET PROPERTIES

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2012 and 2011 (unaudited)

(In Thousands)

	Nine Months Ended September 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(16,437	)	$	(14,434	)
Adjustments to Reconcile Net Loss to Net Cash Flows Provided by Operating Activities:
Equity in Income of Unconsolidated Entities		(2,556	)		(4,160	)
Distributions from Unconsolidated Entities		30,503			17,200
Gain on Interest Rate Swaps		(380	)		(177	)
Loss (Gain) on Note Payable at Fair Value		85			(41	)
Loss on Early Extinguishment of Debt		1,191			0
Net Realized Loss (Gain) on Sale of Real Property		415			(301	)
Depreciation and Amortization of Building and Improvements		32,707			26,524
Amortization of Deferred Financing Costs		1,433			1,426
Amortization of Acquired In-Place Lease Value		21,544			17,055
Amortization of Above- and Below-Market Leases		1,311			1,487
Amortization of Lease Commissions		499			322
Amortization of Discount (Premium) on Notes Payable		(993	)		(219	)
Share Based Compensation		215			28
Changes in Assets and Liabilities:
Accounts and Other Receivables		(3,825	)		(604	)
Deferred Rent		(5,473	)		(7,270	)
Other Assets		(2,011	)		7
Accounts Payable, Accrued Expenses and Prepaid Rent		27,546			5,752
Investment and Property Management Fees Payable to Related Party		197			665
Net Cash Flows Provided By Operating Activities		85,971			43,260
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Real Property		(127,300	)		(152,943	)
Proceeds from Sale of Real Property		2,885			23,596
Investments in Unconsolidated Entities		(12,793	)		(79,073	)
Distributions from Unconsolidated Entities		32,468			0
Restricted Cash		(1,868	)		(3,951	)
Lease Commissions		(1,194	)		(2,134	)
Improvements to Investments in Real Estate		(39,274	)		(8,222	)
Net Cash Flows Used in Investing Activities		(147,076	)		(222,727	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Common Shares—Public Offering		172			433
Proceeds from Additional Paid-in-Capital—Public Offering		171,086			432,455
Redemption of Common Shares		(35,888	)		(25,477	)
Payment of Offering Costs		(20,444	)		(47,420	)
Payment of Distributions		(58,373	)		(43,561	)
Distribution to Non-Controlling Interest Operating—Partnership Units		(111	)		(111	)
Contribution from Non-Controlling Interest-Variable Interest Entity		140			0
Borrowing on Loan Payable		0			50,000
Principal Payment on Loan Payable		(25,000	)		(85,000	)
Proceeds from Notes Payable		0			81,700
Principal Payments on Notes Payable		(11,058	)		(50,324	)
Deferred Financing Costs		(6,394	)		(2,188	)
Security Deposits		259			(206	)
Net Cash Flows Provided by Financing Activities		14,389			310,301
EFFECT OF FOREIGN CURRENCY TRANSLATION		(153	)		(253	)
Net (Decrease) Increase in Cash and Cash Equivalents		(46,868	)		130,581
Cash and Cash Equivalents, Beginning of the Period		238,277			48,218
Cash and Cash Equivalents, End of the Period	$	191,409		$	178,799
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for Interest	$	24,714		$	22,577
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distributions Declared and Payable	$	37,374		$	29,911
Proceeds from Dividend Reinvestment Program	$	48,505		$	32,924
Application of Deposit to Investment in Unconsolidated Entities	$	0		$	7,500
Application of Deposit to Investment in Real Estate	$	0		$	12,500
Accrued Acquisition Cost Related to Real Property	$	0		$	100
Duke joint venture Contribution/Distribution—Amazon Expansion	$	921		$	19,605
Notes Payable Assumed on Acquisitions of Real Estate	$	0		$	238,419
Share Awards Increase in Additional Paid-In-Capital	$	215		$	28
Accrued Offering Cost	$	0		$	1,555
Accounts Payable and Accrued Expenses—Construction in Progress	$	12,763		$	0

See accompanying notes to condensed consolidated financial statements.

4

CHAMBERS STREET PROPERTIES

Condensed Consolidated Statements of Shareholders’ Equity

For the Nine Months Ended September 30, 2012 and 2011 (unaudited)

(In Thousands, Except Share Data)

	Common Shares						Additional Paid-in- Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares			Amount
Balance at December 31, 2011		230,955,633		$	2,309		$	2,038,566		$	(348,602	)	$	(23,664	)	$	1,668,609
Net Loss Attributable to Chambers Street Properties Shareholders		0			0			0			(16,430	)		0			(16,430	)
Other Comprehensive Loss		0			0			0			0			(1,402	)		(1,402	)
Net Contributions From Public Offering of Common Shares, $0.01 Par Value		22,276,303			223			219,539			0			0			219,762
Executive Common Shares		0			0			15			0			0			15
Costs Associated with Public Offering		0			0			(18,337	)		0			0			(18,337	)
Redemption of Common Shares		(3,841,599	)		(38	)		(35,850	)		0			0			(35,888	)
Adjustment to Record Non-Controlling Interest at Redemption Value		0			0			(121	)		0			0			(121	)
Distributions		0			0			0			(111,466	)		0			(111,466	)
Balance at September 30, 2012		249,390,337		$	2,494		$	2,203,812		$	(476,498	)	$	(25,066	)	$	1,704,742
	Common Shares						Additional Paid-in- Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares			Amount
Balance at December 31, 2010		164,511,253		$	1,645		$	1,446,559		$	(214,216	)	$	(11,686	)	$	1,222,302
Net Loss Attributable to Chambers Street Properties Shareholders		0			0			0			(14,414	)		0			(14,414	)
Other Comprehensive Loss		0			0			0			0			(9,871	)		(9,871	)
Net Contributions From Public Offering of Common Shares, $0.01 Par Value		46,784,125			468			465,345			0			0			465,813
Trustee Common Shares		3,000			0			28			0			0			28
Costs Associated with Public Offering		0			0			(47,943	)		0			0			(47,943	)
Redemption of Common Shares		(2,786,617	)		(28	)		(25,449	)		0			0			(25,477	)
Adjustment to Record Non-Controlling Interest at Redemption Value		0			0			(141	)		0			0			(141	)
Distributions		0			0			0			(82,343	)		0			(82,343	)
Balance at September 30, 2011		208,511,761		$	2,085		$	1,838,399		$	(310,973	)	$	(21,557	)	$	1,507,954

See accompanying notes to condensed consolidated financial statements.

5

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Unless the context otherwise requires or indicates, references to “we,” “the Company” “our,” and “us” refer to the activities of and the assets and liabilities of the business and operations of Chambers Street Properties and its subsidiaries.

1. Organization and Nature of Business

Chambers Street Properties, formerly known as CB Richard Ellis Realty Trust, was formed on March 30, 2004 under the laws of the state of Maryland. Our operating partnership, CSP Operating Partnership, LP (“CSP OP”), formerly known as CBRE Operating Partnership, L.P., was formed in Delaware on March 30, 2004. We are CSP OP’s majority owner and sole general partner. We have elected to be taxed as a real estate investment trust (“REIT”) under sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with the taxable period ended December 31, 2004. We invest in real estate properties, focusing primarily on office and industrial (primarily warehouse/distribution) properties, as well as other real estate-related assets.

We operate in an umbrella partnership REIT structure in which CSP OP owns, directly or indirectly, substantially all of the properties acquired on our behalf. For each interest in our common shares that we issue, an equal interest in the limited partnership units of CSP OP is issued to us in exchange for the cash proceeds from the issuance of the interest in our common shares. We currently own approximately 99.90% of the common partnership units of CSP OP. CBRE REIT Holdings, LLC (“REIT Holdings”), an affiliate of our former investment advisor, holds the remaining interest in CSP OP through 246,361 limited partnership units representing approximately a 0.10% ownership of the total limited partnership units. In exchange for services provided to us relating to our formation and subsequent operations, REIT Holdings also owns a Class B limited partnership interest (“Class B interest”).

On July 1, 2004, we commenced operations and issued 6,844,313 common shares of beneficial interest in connection with our initial capitalization. In addition, REIT Holdings purchased 29,937 limited partnership units in CSP OP as a limited partner. During October 2004, we issued an additional 123,449 common shares of beneficial interest to an unrelated third-party investor. On October 24, 2006, we commenced an initial public offering of up to $2,000,000,000 of our common shares, and from October 24, 2006 (effective date) through January 29, 2009 (close) we accepted subscriptions from 13,270 investors, issued 60,808,967 common shares including 1,487,943 common shares issued pursuant to our dividend reinvestment plan, and received $607,345,702 in gross proceeds. On January 30, 2009, we commenced a follow-on public offering of up to $3,000,000,000 of our common shares, and from January 30, 2009 (effective date) through January 30, 2012 (close) we accepted subscriptions from 49,990 investors, issued 190,672,251 common shares including 11,170,603 common shares issued pursuant to our dividend reinvestment plan, and received $1,901,137,211 in gross proceeds. On February 3, 2012, we filed a registration statement on Form S-3 to register 25,000,000 of our common shares for up to $237,500,000 pursuant to the amended and restated dividend reinvestment plan which we subsequently amended to reflect our name change from CB Richard Ellis Realty Trust to Chambers Street Properties.

Prior to July 1, 2012, all of our business activities were managed by CBRE Advisors LLC (the “former investment advisor”) pursuant to advisory agreements. The fourth amended and restated advisory agreement (the “Fourth Amended Advisory Agreement”) terminated according to its terms on June 30, 2012, and we transitioned to a self-managed company, in accordance with a plan determined by our Board of Trustees. Our executive officers are responsible for the management of our day-to-day operations, including the supervision of our employees and third-party service providers. Acquisitions and asset management activities are now performed by our employees, with certain services provided by third parties at market rates. In addition, effective July 1, 2012, we entered into a transitional services agreement (“Transitional Services Agreement”) with CSP OP and the former investment advisor pursuant to which the former investment advisor will, at our direction, provide certain operational and consulting services to the Company for a term ending on April 30, 2013.

See Note 11— “Investment Management and Other Fees to Related Parties” for a discussion of the Transitional Services Agreement.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules applicable to Form 10-Q and reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the

6

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

interim period. Certain information and footnotes required for annual financial statement presentation have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our interim financial statements do not include all of the information and disclosures required under U.S. GAAP for complete financial statements. The condensed consolidated financial statements and notes thereto should be read in conjunction with our current Annual Report on Form 10-K, which contains the latest available audited consolidated financial statements and notes thereto, which are as of and for the year ended December 31, 2011.

In the opinion of management, all adjustments of a normal recurring nature considered necessary in all material respects to present fairly our financial position, results of our operations and cash flows as of and for the three and nine months ended September 30, 2012 have been made. The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results of operations to be expected for the entire year.

Principles of Consolidation

Because we are the sole general partner and majority owner of CSP OP and have majority control over their management and major operating decisions, the accounts of CSP OP are consolidated in our financial statements. The interests of REIT Holdings are reflected in non-controlling interest in the accompanying consolidated financial statements. All inter-company accounts and transactions are eliminated in consolidation. CBRE Global Investors, L.L.C. (“CBRE Global Investors”), an affiliate of the former investment advisor, also owns an interest in us through its ownership of 243,229 common shares of beneficial interest at September 30, 2012 and December 31, 2011.

Investment in Unconsolidated Entities

Our determination of the appropriate accounting method with respect to our investment in CB Richard Ellis Strategic Partners Asia II-A, L.P. (“CBRE Strategic Partners Asia”), which is not considered a Variable Interest Entity (“VIE”), is partially based on CBRE Strategic Partners Asia’s sufficiency of equity investment at risk which was triggered by a substantial paydown during 2009 of its subscription line of credit, which is backed by investor capital commitments to fund its operations. We account for this investment under the equity method of accounting.

We determine if an entity is a VIE based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. In a quantitative analysis, we incorporate various estimates, including estimated future cash flows, asset holding periods and discount rates, as well as estimates of the probabilities of the occurrence of various scenarios occurring. If the entity is a VIE, we then determine whether to consolidate the entity as the primary beneficiary. We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. If we made different judgments or utilized different estimates in these evaluations, it could result in differing conclusions as to whether or not an entity is a VIE and whether or not we consolidate such entity.

With respect to our majority limited membership interests in the Duke/Hulfish, LLC joint venture (the “Duke joint venture”), the Afton Ridge Joint Venture, LLC (“Afton Ridge”), the Goodman Princeton Holdings (Jersey) Limited joint venture (the “UK JV”) and the Goodman Princeton Holdings (LUX) SARL joint venture (the “European JV”), we considered the Accounting Standards Codification (“ASC”) Topic “Consolidation” (“FASB ASC 810”) in determining that we did not have control over the financial and operating decisions of such entities due to the existence of substantive participating rights held by the minority limited members who are also the managing members of the Duke joint venture and Afton Ridge, and the investment advisors/managers of the UK JV and the European JV, respectively.

We carry our investments in CBRE Strategic Partners Asia, the Duke joint venture, Afton Ridge, the UK JV and the European JV using the equity method of accounting because we have the ability to exercise significant influence (but not control) over operating and financial policies of each such entity.

We eliminate transactions with such equity method entities to the extent of our ownership in each such entity. Accordingly, our share of net income (loss) of these equity method entities is included in consolidated net income (loss). CBRE Strategic Partners Asia is a limited partnership that qualifies for specialized industry accounting for investment companies. Specialized industry accounting allows

7

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

investment companies to carry their investments at fair value, with changes in the fair value of the investments recorded in the statement of operations. On the basis of the guidance in ASC 970-323, the Company accounts for its investment in CBRE Strategic Partners Asia under the equity method. As a result, and in accordance with ASC 810-10-25-15 the specialized accounting treatment, principally the fair value basis applied by CBRE Strategic Partners Asia under the investment company guide, is retained in the recognition of equity method earnings in the statement of operations of the Company. See Note 17 “Fair Value of Financial Instruments and Investments” for further discussion of the application of the fair value accounting to our investment in CBRE Strategic Partners Asia.

Consolidated Variable Interest Entities

In December 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-17, “Consolidations” (“Topic 810”): “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” This ASU incorporates the Statement of Financial Accounting Standards (SFAS) No. 167, “Amendments to FASB Interpretation No. 46(R),” issued by the FASB in June 2009. The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact such entity’s economic performance and (i) the obligation to absorb losses of such entity or (ii) the right to receive benefits from such entity. ASU 2009-17 also requires additional disclosures about a reporting entity’s involvement in variable interest entities, which enhances the information provided to users of financial statements.

In October 2011, one of our consolidated subsidiaries, RT Atwater Holding, LLC, entered into a real estate development venture with a subsidiary of the Trammel Crow Company (“TCC”), a wholly-owned subsidiary of CBRE Group, Inc., a former related party of ours, whereby we own 95% of the newly formed entity and TCC owns the remaining 5% of the entity. The new entity, RT/TC Atwater, LP (“Atwater”), was formed for the purpose of developing and then operating a build-to-suit suburban office and research facility for a single tenant that has agreed to a minimum lease term of 12 years starting from the completion of construction of the facility. Through the provisions of the Atwater, LP agreement, we and TCC collectively have the power to direct the activities that most significantly impact the economic performance of Atwater. Atwater was deemed a variable interest entity and we were the entity within the related party group determined to be most closely associated with Atwater. We began to consolidate the entity at its inception in October 2011.

On February 16, 2012, we entered into a construction loan agreement with Atwater, a consolidated joint venture, to provide it with up to $49,575,000 of financing which will be available for disbursements to fund construction expenditures at 1400 Atwater Drive. We will receive a $250,000 financing fee from the joint venture for providing this construction loan. The construction loan will bear interest at 5.00% of amounts outstanding and is scheduled to mature on April 30, 2013, unless otherwise extended. This construction loan has been eliminated in the consolidation of Atwater for reporting purposes.

Atwater’s construction in progress and other assets, including the initial land acquired by Atwater in October 2011, was $66,354,000 and $17,233,000 at September 30, 2012 and December 31, 2011. The assets of the entity are the sole collateral for the other liabilities of the entity. For the three and nine months ended September 30, 2012 and 2011, there were no revenues and operating expenses relating to the operating activities of the entity. All activity of the entity has been strictly geared toward the development of the property. The Atwater cash balance was $5,939,000 at September 30, 2012. The capital account of TCC is included in non-controlling interest—variable interest entity on the accompanying consolidated balance sheets at September 30, 2012 and December 31, 2011, respectively.

Use of Estimates

The preparation of financial statements, in conformity with U.S. GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

8

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Segment Information

We currently operate our consolidated properties in two geographic areas, the United States and the United Kingdom. We view our consolidated property operations as three reportable segments, a Domestic Industrial segment, a Domestic Office segment and an International Office/Retail segment, which participate in the acquisition, development, ownership, and operation of high quality real estate in their respective segments.

Cash Equivalents

We consider short-term investments with maturities of three months or less when purchased to be cash equivalents. As of September 30, 2012 and December 31, 2011, cash equivalents consisted primarily of investments in money market funds.

Restricted Cash

Restricted cash represents those cash accounts for which the use of funds is restricted by loan covenants. As of September 30, 2012 and December 31, 2011, our restricted cash balance was $9,483,000 and $7,216,000, respectively, which represents amounts set aside as impounds for future property tax payments, property insurance payments and tenant improvement payments as required by our agreements with our lenders.

Discontinued Operations and Real Estate Held for Sale

In a period in which a property has been disposed of or is classified as held for sale, the statements of operations for current and prior periods report the results of operations of the property as discontinued operations.

At such time as a property is deemed held for sale, such property is carried at the lower of: (1) its carrying amount or (2) fair value less costs to sell. In addition, a property being held for sale ceases to be depreciated. We classify operating properties as property held for sale in the period in which all of the following criteria are met:

¡ management, having the authority to approve the action, commits to a plan to sell the asset;

¡ the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

¡ an active program to locate a buyer and other actions required to complete the plan to sell the asset has been initiated;

¡ the sale of the asset is probable and the transfer of the asset is expected to qualify for recognition as a completed sale within one year;

¡ the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

¡ given the actions required to complete the plan to sell the asset, it is unlikely that significant changes to the plan would be made or that the plan would be withdrawn.

Accounting for Derivative Financial Instruments and Hedging Activities

All of our derivative instruments are carried at fair value on the balance sheet. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking each hedge transaction. We periodically review the effectiveness of each hedging transaction, which involves estimating future cash flows. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in other comprehensive income within shareholders’ equity. Calculation of a fair value of derivative instruments also requires management to use estimates. Amounts will be reclassified from other comprehensive income to the income statement in the period or periods the hedged forecasted transaction affects earnings.

We have certain interest rate swap derivatives that are designated as qualifying cash flow hedges and follow the accounting treatment discussed above. We also have certain interest rate swap derivatives that do not qualify for hedge accounting, and accordingly, changes in fair values are recognized in current earnings.

9

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

We disclose the fair values of derivative instruments and their gains and losses in a tabular format. We also provide more information about our liquidity by disclosing derivative features that are credit risk-related. Finally, we cross-reference within these footnotes to enable financial statement users to locate important information about derivative instruments (see Note 15 “Derivative Instruments” and Note 17 “Fair Value of Financial Instruments and Investments” for a further discussion of our derivative financial instruments).

Investments in Real Estate and Related Long Lived Assets (Impairment Evaluation)

Our investments in real estate are stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:

Buildings and Improvements	39 years
Site Improvements	15 and 25 years
Tenant Improvements	Shorter of the useful lives or the terms of the related leases

Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Repairs and maintenance are charged to expense as incurred. As of September 30, 2012 and December 31, 2011, we owned on a consolidated basis 78 and 77 real estate investments, respectively.

On March 20, 2012, we acquired 2400 Dralle Road, a single tenant warehouse/distribution building located in University Park, Illinois, a suburb of Chicago. The purchase price was $64,250,000.

On August 16, 2012, we acquired Midwest Commerce Center I, a single tenant warehouse/distribution building located in Gardner, Kansas, a suburb of Kansas City. The purchase price was $62,950,000.

We assess whether there has been impairment in the value of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The estimated fair value of the asset group indentified for step two testing is based on either the income approach with market discount rate, terminal capitalization rate and rental rate assumptions being most critical, or on the sales comparison approach to similar properties. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

No impairment of long-lived assets was recognized during the nine months ended September 30, 2012 and 2011.

Other Assets

Other assets include the following as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Prepaid insurance	$	2,408	$	401
Prepaid real estate taxes		309		184
Other		642		1,391
Total	$	3,359	$	1,976

Concentration of Credit Risk

Our consolidated properties are located throughout the United States and in the United Kingdom. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory, and social factors affecting the communities in which the tenants operate. Our credit risk relates primarily to cash, restricted cash, and interest rate swap agreements. Cash accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000 through December 31, 2013.

We have not experienced any losses to date on our invested cash and restricted cash. The interest rate swap agreements create credit risk. Credit risk arises from the potential failure of counterparties to perform in accordance with the terms of their contracts. Our risk

10

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

management policies define parameters of acceptable market risk and limit exposure to credit risk. Credit exposure resulting from derivative financial instruments is represented by their fair value amounts, increased by an estimate of potential adverse position exposure arising from changes over time in interest rates, maturities, and other relevant factors. We do not anticipate nonperformance by any of our counterparties.

Non-Controlling Interest Operating Partnership Units

We owned a 99.90%, 99.89% and 99.88% partnership interest in CSP OP as of September 30, 2012, December 31, 2011 and September 30, 2011, respectively. The remaining 0.10%, 0.11% and 0.12% partnership interest as of September 30, 2012, December 31, 2011 and September 30, 2011, respectively, was owned by REIT Holdings in the form of 246,361 non-controlling operating partnership units which are exchangeable on a one for one basis for common shares of the Company, with an estimated aggregate redemption value of $2,464,000.

With respect to the operating partnership units, FASB ASC 480-10 Distinguishing Liabilities from Equity requires non-controlling interests with redemption provisions that permit the issuer to settle in either cash or common shares at the option of the issuer to be further evaluated under the Codification Sub-Topic “Derivatives and Hedging—Conditions Necessary for Equity Classification” (“FASB ASC 815-40-25-10”) to determine whether permanent equity or temporary equity classification on the balance sheet is appropriate. Since the operating partnership units contain such a provision, we evaluated this guidance and determined that the operating partnership units do not meet the requirements to qualify for equity presentation. As a result, upon the adoption of FASB ASC 810 Consolidation and the related revisions to FASB ASC 480-10 the operating partnership units are presented in the temporary equity section of the consolidated balance sheets and reported at the higher of their proportionate share of the net assets of CSP OP or fair value, with period to period changes in value reported as an adjustment to shareholder’s equity. Under the terms of the April 27, 2012 third amended and restated agreement of limited partnership, as amended from time to time (the “Third Amended Partnership Agreement”), the fair value of the operating partnership units is determined as an amount equal to the redemption value as defined therein.

Purchase Accounting for Acquisition of Investments in Real Estate

We apply the acquisition method to all acquired real estate investments. The purchase consideration of the real estate is allocated to the acquired tangible assets, which consist primarily of land, site improvements, building and tenant improvements and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases, value of tenant relationships and acquired ground leases, based in each case on their fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market loans, will be recorded based on the fair value of any loans assumed in connection with acquiring the real estate.

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is the basis for the purchase consideration allocated to land (or acquired ground lease if the land is subject to a ground lease), site improvements, building and tenant improvements based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and other related costs.

In allocating the purchase consideration of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases; and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below-market fixed-rate renewal periods. The capitalized below-market lease values, also referred to as acquired lease obligations, are amortized as an increase to rental income over the initial terms of the respective leases and any below-market fixed-rate renewal periods. The capitalized above-market lease values are amortized as a decrease to rental income over the initial terms of the prospective leases.

11

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationships, is measured by the estimated cost of operations during a theoretical lease-up period to replace in-place leases, including lost revenues and any unreimbursed operating expenses, plus an estimate of deferred leasing commissions for in-place leases. This aggregate value is allocated between in-place lease value and tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease; however, the value of tenant relationships has not been separated from in-place lease value for the real estate acquired, as such value and its consequence to amortization expense is immaterial for these particular acquisitions. Should future acquisitions of properties result in allocating material amounts to the value of tenant relationships, an amount would be separately allocated and amortized over the estimated life of the relationship. The value of in-place leases is amortized as an expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written-off.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). In the accompanying consolidated balance sheets, accumulated other comprehensive income (loss) consists of foreign currency translation adjustments and swap fair value adjustments for qualifying hedges.

Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, beginning with our taxable year ended December 31, 2004. To qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) as defined in the Internal Revenue Code, to our shareholders and satisfy certain other organizational and operating requirements. We generally will not be subject to U.S. federal income taxes if we distribute 100% of our net taxable income each year to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income taxes (including any applicable alternative minimum tax) on our taxable income at regular corporate rates and may not be able to qualify as a REIT for the four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and to U.S. federal income taxes and excise taxes on our undistributed taxable income. Except as discussed below, we believe that we have met all of the REIT distribution and technical requirements for the nine months ended September 30, 2012 and the year ended December 31, 2011. We intend to continue to adhere to these requirements and maintain our REIT qualification.

In order for distributions to be deductible for U.S. federal income tax purposes and count towards our distribution requirement, they must not be “preferential dividends.” A distribution will not be treated as preferential if it is pro rata among all outstanding shares of stock within a particular class. IRS guidance, however, allows a REIT to offer shareholders participating in its dividend reinvestment program (“DRIP”) up to a 5% discount on shares purchased through the DRIP without treating such reinvested dividends as preferential. Our DRIP offers a 5% discount. In 2007, 2008 and the first two quarters of 2009, common shares issued pursuant to our DRIP were treated as issued as of the first day following the close of the quarter for which the distributions were declared, and not on the date that the cash distributions were paid to shareholders not participating in our DRIP. Because we declare dividends on a daily basis, which includes common shares issued pursuant to our DRIP, the IRS could take the position that distributions paid by us during these periods were preferential on the grounds that the discount provided to DRIP participants effectively exceeded the authorized 5% discount or, alternatively, that the overall distributions were not pro rata among all shareholders. In addition, in the years 2007 through 2009 we paid certain individual retirement account (“IRA”) custodial fees with respect to IRA accounts that invested in our common shares. The payment of those fees could have been treated as dividend distributions to the IRAs, and therefore as preferential dividends because those fees were not paid with respect to our other outstanding common shares. Although we believe that the effect of the operation of our DRIP and the payment of such fees was immaterial, the REIT rules do not provide an exception for de minimis preferential dividends.

We submitted a request to the IRS for a closing agreement under which the IRS would grant us relief with respect to payments we made to shareholders under our DRIP and in respect of certain custodial fees we paid on behalf of some of our IRA shareholders, in each case, which payments could be treated as preferential dividends under the rules applicable to REITs. On July 8, 2011, we and our former investment advisor entered into a closing agreement with the IRS pursuant to which (i) the IRS agreed not to challenge our dividends as preferential for its taxable years 2007, 2008 and 2009 as a result of the matters described above, and (ii) our former investment advisor paid a compliance fee of approximately $135,000 to the IRS. In accordance with the terms of the closing

12

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

agreement, neither we, nor any of our subsidiaries have directly or indirectly reimbursed or will directly or indirectly reimburse the former investment advisor for its payment of this compliance fee. We expect to remain in compliance with the terms of the closing agreement, but any inadvertent non-compliance with such terms could result in adverse consequences for us. As a result of the closing agreement, we have met our distribution requirements for our taxable years ended December 31, 2007, 2008 and 2009.

Revenue Recognition and Valuation of Receivables

All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. In connection with various leases, we have received irrevocable stand-by letters of credit totaling $17,810,000 and $16,714,000 as security for such leases at September 30, 2012 and December 31, 2011, respectively.

Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance and other recoverable costs, are recognized as revenue in the period the expenses are incurred. Tenant reimbursements are recognized and presented on a gross basis when we are the primary obligor, with respect to incurring expenses and with respect to having the credit risk.

Tenant receivables and deferred rent receivables are carried net of the allowances for uncollectible current tenant receivables and deferred rent. Management’s determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, individual receivables, current economic conditions, and other relevant factors. The allowances are increased or decreased through the provision for bad debts. The allowance for uncollectible rent receivable was $656,000 and $821,000 as of September 30, 2012 and December 31, 2011, respectively.

Offering Costs

Offering costs totaling $18,337,000 and $47,943,000 were incurred during the nine months ended September 30, 2012 and 2011, respectively, and are recorded as a reduction of additional paid-in-capital in the consolidated statement of shareholders’ equity. Offering costs incurred through September 30, 2012 totaled $237,676,000. Of the total amount, $217,959,000 was incurred to CNL Securities Corp., as the former dealer manager of our public offerings (the “former dealer manager”); $3,969,000 was incurred to CBRE Group, Inc., an affiliate of the former investment advisor; $912,000 was incurred to the former investment advisor for reimbursable marketing costs and $14,836,000 was incurred to other service providers. Each party was paid the amount incurred from proceeds of our public offering. As of September 30, 2012 and December 31, 2011, the accrued offering costs payable to related parties included in our consolidated balance sheets were $0 and $1,974,000, respectively. Offering costs payable to unrelated parties of $0 and $133,000 at September 30, 2012 and December 31, 2011, respectively, were included in accounts payable and accrued expenses.

Deferred Financing Costs and Discounts or Premiums on Notes Payable

Direct costs incurred in connection with obtaining financing are amortized over the respective term of the loan on a straight-line basis, which approximates the effective interest method.

Discounts or premiums on notes payable are amortized to interest expense based on the effective interest method.

Translation of Non-U.S. Currency Amounts

The financial statements and transactions of our United Kingdom and European real estate operation are recorded in their functional currency, namely the Great Britain Pound (“GBP”) and Euro (“EUR”), respectively and are then translated into U.S. Dollars (“USD”).

Assets and liabilities of this operation are denominated in the functional currency and are then translated at exchange rates in effect at the balance sheet date. Revenues and expenses are translated at the average exchange rate for the reporting period. Translation adjustments are reported in “Accumulated Other Comprehensive Loss,” a component of Shareholders’ Equity.

13

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

The carrying value of our United Kingdom assets and liabilities fluctuate due to changes in the exchange rate between the USD and the GBP. The exchange rate of the USD to the GBP was $1.6147 and $1.5535 at September 30, 2012 and December 31, 2011, respectively. The profit and loss weighted average exchange rate of the USD to the GBP was approximately $1.5755 and $1.6243 for the three months ended September 30, 2012 and 2011, respectively; and $1.5790 and $1.6193 for the nine months ended September 30, 2012 and 2011, respectively.

The carrying value of our European assets and liabilities fluctuate due to changes in the exchange rate between the USD and the EUR. The exchange rate of the USD to the EUR was $1.2844 and $1.2945 at September 30, 2012 and December 31, 2011. The profit and loss weighted average exchange rate of the USD to the EUR was approximately $1.2510 and $1.4425 for the three months ended September 30, 2012 and 2011, respectively; and $1.2859 and $1.4154 for the nine months ended September 30, 2012 and 2011, respectively.

Class B Interest—Related Party

Effective July 1, 2004, REIT Holdings, an affiliate of the former investment advisor, was granted a Class B interest in CSP OP. The Class B interest is an equity instrument that was issued in exchange for services provided to us relating to our formation and subsequent operations. The holder is entitled to receive distributions made by CSP OP in an amount equal to 15% of all net sales proceeds on dispositions of properties or other assets (including by liquidation, merger or otherwise) after the other partners, including us, have received in the aggregate, cumulative distributions from property income, sales proceeds or other services equal to (i) the total capital contributions made to CSP OP and (ii) a 7% annual, uncompounded return on such capital contributions.

Effective May 1, 2012, we entered into the Third Amended Partnership Agreement which revised the redemption rights of the Class B interest. Accordingly, the Class B interest may be redeemed upon the earliest to occur of (i) the exercise by the holder of the Class B interest of its right to require CSP OP to redeem its interest, which right continues for five years from the date of the agreement, (ii) the fifth anniversary of the date of the agreement, (iii) certain other liquidity events, (iv) a merger or sale transaction (a “Merger or Sale”), or (v) our common shares becoming listed or admitted to trading on a national securities exchange or designated for quotation on the NASDAQ Global Select Market or the NASDAQ Global Market (a “Listing”). CSP OP may reject a redemption and institute a blackout period with respect to redemptions upon the determination by our Board of Trustees that an appraisal process would not be in the best interest of CSP OP at the time of the proposed redemption. A blackout period may only be imposed as the result of a potential Merger or Sale or potential Listing. The consideration received for the redemption of the Class B interest will depend upon the event triggering the redemption. In the event of a redemption in connection with (a) a Listing, the consideration will be determined based on the market value of our shares for a 30 day period beginning 150 days after the Listing, or (b) a Merger or Sale, the consideration will be determined based on our aggregate share value in the transaction. In the event of a redemption as a result of (a) the exercise by the holder of the Class B interest of its redemption right, (b) the fifth anniversary of the date of the agreement or (c) certain other liquidity events, the consideration will be determined based on an appraisal process. As a result, future changes in the fair value of the Class B interest will be deferred from recognition in the financial statements until a Listing or Merger or Sale transaction takes place.

As a result of the modification of the terms of the Class B interest pursuant to the Third Amended Partnership Agreement, it was no longer required that the Class B interest be redeemed or forfeited upon a termination of the former investment advisor as investment advisor to the Company. Consequently, we recognized expense of $200,000 during the nine months ended September 30, 2012 for the current economic fair value resulting from the modification of the terms of the Class B interest.

With respect to the Class B interest in CSP OP, FASB ASC 480-10 “Distinguishing Liabilities from Equity” requires non-controlling interests with redemption provisions that permit the issuer to settle in either cash or common shares at the option of the issuer to be further evaluated under the Codification Sub-Topic “Derivatives and Hedging—Conditions Necessary for Equity Classification” (“FASB ASC 815-40-25-10”) to determine whether permanent equity or temporary equity classification on the balance sheet is appropriate. Since the Class B interest contains such a provision, we evaluated this guidance and determined that the Class B interest does not meet the requirements to qualify for equity presentation. As a result, the Class B interest in CSP OP is presented in the temporary equity section of the consolidated balance sheets and reported at fair value, with period to period changes in value reported as an adjustment to shareholder’s equity. Under the terms of the Third Amended Partnership Agreement, the fair value of the Class B Interest is determined as an amount equal to the redemption value as defined therein.

14

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Transition Costs

We incurred certain costs in connection with our transition from being an externally managed company to a self-managed company (“Transition Costs”). These Transition Costs consist of legal, consulting and other third-party service provider costs incurred by us in order to execute on our Board of Trustees’ decision to become a self-managed company. The Transition Costs include legal and consulting costs resulting from the amendment of our management structure and various corporate relationships, including with respect to our relations with the former investment advisor, as well as exploring and implementing strategic alternatives for information technology, office space and personnel needs, among other expenses. Transition costs totaling $6,216,000 and $8,152,000 were incurred during the three and nine months ended September 30, 2012, respectively.

Earnings Per Share Attributable to Chambers Street Properties

Basic net income (loss) per share is computed by dividing income (loss) by the weighted average number of common shares outstanding during each period. The computation of diluted net income (loss) further assumes the dilutive effect of stock options, stock warrants and contingently issuable shares, if any. We have recorded a net loss for the three and nine months ended September 30, 2012 and 2011, respectively, the effect of share awards, stock warrants and contingently issuable shares, would be anti–dilutive for the three and nine months ended September 30, 2012 and 2011, and accordingly, they are excluded from the earnings per share computation. As a result, there is no difference in basic and diluted shares in either period presented.

Fair Value of Financial Instruments and Investments

We elected to apply the fair value option for one of our eligible mortgage notes payable that was newly issued debt during the year ended December 31, 2008. The measurement of the elected mortgage note payable at its fair value and its impact on the statement of operations is described in Note 16 “Fair Value Option-Note Payable” and Note 17 “Fair Value of Financial Instruments and Investments.”

We generally determine or calculate the fair value of financial instruments using appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating available market discount rate information for similar types of instruments and our estimates for non-performance and liquidity risk. These techniques are significantly affected by the assumptions used, including the discount rate, credit spreads, and estimates of future cash flow. The Investment Manager of CBRE Strategic Partners Asia applies valuation techniques for our investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to our ownership interest therein. The financial assets and liabilities recorded at fair value in our consolidated financial statements are the two interest rate swaps, one interest rate cap, our investment in CBRE Strategic Partners Asia (a real estate entity which qualifies as an investment company under the Investment Company Act), and one mortgage note payable that is economically hedged by one of the interest rate swaps.

The remaining financial assets and liabilities which are only disclosed at fair value are comprised of all other notes payable, the unsecured line of credit and other debt instruments. We determined the fair value of our secured notes payable and other debt instruments by performing discounted cash flow analyses using an appropriate market discount rate. We calculate the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or London Inter-Bank Offering Rate (“LIBOR”) rates for variable-rate debt, for maturities that correspond to the maturities of our debt and then adding an appropriate credit spread derived from information obtained from third-party financial institutions. These credit spreads take into account factors such as our credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt.

The carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to their short-term maturities.

We adopted the fair value measurement criteria described herein for our non-financial assets and non-financial liabilities on January 1, 2009. The adoption of the fair value measurement criteria to our non-financial assets and liabilities did not have a material impact to our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis include:

¡ Non-financial assets and liabilities initially measured at fair value in an acquisition or business combination;

¡ Long-lived assets measured at fair value due to an impairment assessment; and

15

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

¡ Asset retirement obligations initially measured under the ASC Topic “Asset Retirement and Environmental Obligations” (“FASB ASC 410”).

Share-based Compensation

For share-based awards for which there is no pre-established performance period, we recognize compensation costs over the service vesting period, which represents the requisite service period, on a straight-line basis.

For share-based awards in which the performance period precedes the grant date, we recognize compensation costs over the requisite service period, which includes both the performance and service vesting periods, using the accelerated attribution expense method. The requisite service period begins on the date the Compensation Committee of the Board of Trustees authorizes the award and adopts any relevant performance measures.

During the performance period for a share-based award program, we estimate the total compensation cost of the potential future awards. We then record compensation costs equal to the portion of the requisite service period that has elapsed through the end of the reporting period.

For share based awards granted by the Company, CSP OP issues a number of common units equal to the number of common shares ultimately granted by the Company in respect of such awards.

Adoption of Accounting Standards

New Accounting Standards

In May 2011, the FASB issued, ASU 2011-04 to theFair Value Measurement topic of the Accounting Standards Codification (“ASC”). The ASU eliminates unnecessary wording differences between U.S. GAAP and International Financial Reporting Standards, expands the disclosure requirements of the Fair Value Measurements topic of the ASC for fair value measurements and makes other amendments, including:

¡ limiting the highest-and-best-use and valuation-premise concepts only to measuring the fair value of nonfinancial assets;

¡ permitting an exception to fair value measurement principles for financial assets and financial liabilities (and derivatives) with offsetting positions in market risk or counterparty credit risk when several criteria are met. When the criteria are met, an entity can measure the fair value of the net risk position;

¡ clarifying that premiums or discounts that reflect size as a characteristic of the reporting entity’s holding rather than as a characteristic of the asset or liability (for example, a control premium when measuring the fair value of a controlling interest) are not permitted in a fair value measurement; and

¡ prescribing a model for measuring the fair value of an instrument classified in shareholders’ equity; this model is consistent with the guidance on measuring the fair value of liabilities.

ASU 2011-04 expands theFair Value Measurements topic’s disclosure requirements, particularly for fair value measurements categorized in Level 3 of the fair value hierarchy: (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) a description of the valuation processes in place (e.g., how the entity decides its valuation policies and procedures, as well as changes in its analyses of fair value measurements, from period to period), (3) a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs, (4) discussion of the use of a nonfinancial asset that differs from the asset’s highest and best use, and (5) the level of the fair value hierarchy of financial instruments for items that are not measured at fair value but for which disclosure of fair value is required.

ASU 2011-04 is applicable to our company for interim and annual periods beginning after December 15, 2011. The adoption of this ASU had a material effect on the disclosures in our consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05,Presentation of Comprehensive Income (included in ASC 220, Comprehensive Income), or ASU 2011-05, which amends existing guidance to allow only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous statement of comprehensive income, or (2) in two separate but consecutive

16

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

financial statements consisting of an income statement followed by a statement of other comprehensive income. ASU 2011-05 requires retrospective application, and it is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. We early adopted ASU 2011-05 during the year ended December 31, 2011 and included the statements of comprehensive income or loss in the consolidated financial statements presented in the 2011 10-K.

Other Accounting Standards Updates not effective until after November 2012 are not expected to have a significant effect on our consolidated financial position or results of operations.

3. Acquisition of Real Estate

The fair value of the real estate acquired is recorded to the acquired tangible assets, consisting of land, site improvements, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above and below-market leases and the value of in-place leases and tenant relationships, if any, based in each case on their respective fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market loans, will be recorded based on the fair value of any loans assumed in connection with acquiring the real estate. Above-market ground leases will be recorded based on the respective fair value of the ground leases.

The fair value of the real estate assets acquired during the nine months ended September 30, 2012 (in thousands):

Property	Land		Site Improvements		Building Improvements		Tenant Improvements		Acquired In- Place Lease Value		Above- Market Lease Value		Net Assets Acquired
2400 Dralle Road	$	11,706	$	4,732	$	38,175	$	912	$	6,645	$	2,080	$	64,250
Midwest Commerce Center I(1)		6,861		8,610		39,750		614		5,995		1,120		62,950
	$	18,567	$	13,342	$	77,925	$	1,526	$	12,640	$	3,200	$	127,200

⁽¹⁾  Fair value determinations are preliminary. Final valuations of assets acquired are not yet complete.

Acquisition related expenses of $1,099,000 and $1,044,000, $2,508,000 and $12,537,000 associated with the acquisitions of real estate were expensed as incurred during the three and nine months ended September 30, 2012 and 2011, respectively.

Building Improvements are depreciated over 39 years; Site Improvements are depreciated over 15 and 25 years; Tenant Improvements, Acquired In-Place Lease Value, Above-Market Lease Value and Below-Market Lease Value are amortized over the remaining lease terms at the time of acquisition. The 2400 Dralle Road and Midwest Commerce Center I properties are included in the Domestic/Industrial segment and their operations contributed to a $1,710,000 and $2,973,000 increase in segment income for the three and nine months ended September 30, 2012, respectively.

Unaudited pro forma results, assuming the above noted acquisitions had occurred as of January 1, 2011 for purposes of the 2012 acquisitions and assuming our 2011 acquisitions had occurred as of January 1, 2010 for purposes of presenting the 2012 and 2011 pro forma disclosures, respectively, are presented below. Non-recurring acquisition costs of $2,508,000 and of $12,537,000 were excluded from 2012 and 2011 pro forma results and included in the nine months ended September 30, 2011 and 2010 pro forma results, respectively, as an operating expense. These unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as increased depreciation and amortization expenses as a result of tangible and intangible assets acquired in the acquisitions. These unaudited pro forma results do not purport to be indicative of what operating results would have been had the acquisitions actually occurred on January 1, 2011 or 2010, respectively, and may not be indicative of future operating results (dollars in thousands, except share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenue	$	47,845		$	44,056		$	138,892		$	128,220
Operating Loss		(11,423	)		(5,350	)		(16,718	)		(24,121	)
Net Loss		(12,060	)		(4,337	)		(14,187	)		(18,738	)
Basic and Diluted Loss Per Share	$	(0.05	)	$	(0.02	)	$	(0.06	)	$	(0.10	)
Weighted Average Shares Outstanding for Basic and Diluted Loss		249,173,577			199,398,630			247,718,798			183,098,748

17

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

4. Real Estate and Other Assets Held for Sale and Related Liabilities

Real estate and other assets held for sale include real estate for sale in their present condition that have met all of the “held for sale” criteria of ASC 360 “Accounting for the Impairment or Disposal of Long-Lived Assets,” and other assets directly related to such projects. Liabilities related to real estate and other assets held for sale have been included as a single line item in the accompanying consolidated balance sheets.

There were no real estate and other assets held for sale and related liabilities as of September 30, 2012 and December 31, 2011.

In accordance with ASC 205-20 Presentation of Financial Statement-Discontinued Operation, the income and the net gain on dispositions of operating properties are reflected in the consolidated statements of operations as discontinued operations for all periods presented.

For the nine months ended September 30, 2012, the Company recognized a loss from discontinued operations of $415,000 associated with the disposition of the Cherokee Corporate Park property on July 9, 2012.

Revenues and expenses from discontinued operations for the three and nine months ended September 30, 2011 represent the activities of the held for sale portfolio of warehouse distribution buildings acquired during the year ended December 31, 2010. On August 12, 2011, we sold the Rickenbacker II and Rickenbacker III properties located in Groveport, OH for approximately $22,639,000.

Discontinued operations for the three and nine months ended September 30, 2011 (in thousands):

	Three Months Ended September 30, 2011		Nine Months Ended September 30, 2011
Revenues:
Rental	$	193	$	878
Tenant Reimbursement		48		194
Total Revenues.		241		1,072
Expenses:
Operating and Maintenance		51		297
Property Taxes		16		89
General and Administrative		0		21
Investment Management Fee to Related Party		19		96
Total Expenses		86		503
Provision for Income Taxes in Discontinued Operations		173		192
Net Realized Gain from Sale		426		301
Total Income from Discontinued Operations	$	408	$	678

5. Investments in Unconsolidated Entities

Investments in unconsolidated entities at September 30, 2012 and December 31, 2011 consist of the following (in thousands):

	September 30, 2012		December 31, 2011
CBRE Strategic Partners Asia	$	7,779	$	8,381
Duke Joint Venture		350,896		377,145
Afton Ridge Joint Venture		17,405		18,274
UK JV		37,543		26,590
European JV		74,373		107,241
	$	487,996	$	537,631

18

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

The following is a summary of the investments in unconsolidated entities for the nine months ended September 30, 2012 and the year ended December 31, 2011 (in thousands):

	September 30, 2012			December 31, 2011
Investment Balance, January 1	$	537,631		$	410,062
Contributions		12,793			149,132
Company’s Equity in Net Income (including adjustments for basis differences)		2,556			3,590
Other Comprehensive Loss of Unconsolidated Entities		(2,014	)		(1,487	)
Distributions		(62,970	)		(23,666	)
Investment Balance, End of Period	$	487,996		$	537,631

CBRE Strategic Partners Asia

We have agreed to a capital commitment of $20,000,000 in CBRE Strategic Partners Asia, which extended for 57 months (to October 31, 2012) after the close of the final capital commitment. As of September 30, 2012, we have contributed $17,526,000 of our capital commitment which was funded using net proceeds from our public offerings. CBRE Global Investors formed CBRE Strategic Partners Asia to purchase, reposition, develop, hold for investment and sell institutional quality real estate and related assets in targeted markets in Asia, including China, Japan, India, South Korea, Hong Kong, Singapore and other Asia Pacific markets. The initial closing date of CBRE Strategic Partners Asia was in July 2007, with additional commitments being accepted through January 2008. CBRE Strategic Partners Asia closed on January 31, 2008, with aggregate capital commitments of $394,203,000. CBRE Strategic Partners Asia has an eight-year term, which may be extended for up to two one-year periods with the approval of two-thirds of the limited partners.

As of September 30, 2012, CBRE Strategic Partners Asia, with its parallel fund, CB Richard Ellis Strategic Asia II, L.P., had aggregate investor commitments of $394,203,000 from institutional investors including CBRE Global Investors, an affiliate of the former investment advisor. We own an ownership interest of approximately 5.07% in CBRE Strategic Partners Asia. As of September 30, 2012, CBRE Strategic Partners Asia had acquired ownership interests in ten properties, five in China and five in Japan. Two of the five ownership interests in China were sold in 2010 and one was sold in 2012.

We carry our investment in CBRE Strategic Partners Asia using the equity method of accounting. Those investments where we have the ability to exercise significant influence (but not control) over operating and financial policies of such entities (including certain entities where we have less than 20% ownership) are accounted for using the equity method. Accordingly, our share of the earnings or losses of these equity method entities is included in consolidated net loss.

CBRE Strategic Partners Asia is a limited partnership that qualifies for specialized industry accounting for investment companies. Specialized industry accounting allows investment companies to carry their investments at fair value, with changes in the fair value of the investments recorded in the statement of operations. On the basis of the guidance in ASC 970-323, the Company accounts for its investment in CBRE Strategic Partners Asia under the equity method. As a result, and in accordance with ASC 810-10-25-15 the specialized accounting treatment, principally the fair value basis, applied by CBRE Strategic Partners Asia under the investment company guide is retained in the recognition of equity method earnings in the statement of operations of the Company. See Note 17 “Fair Value of Financial Instruments and Investments” for further discussion of the application of the fair value accounting to our investment in CBRE Strategic Partners Asia.

19

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Consolidated Balance Sheets of CBRE Strategic Partners Asia as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Assets
Real Estate	$	159,433	$	215,948
Other Assets		54,262		11,545
Total Assets	$	213,695	$	227,493
Liabilities and Equity
Notes Payable	$	44,329	$	45,466
Other Liabilities		12,930		13,948
Total Liabilities		57,259		59,414
Company’s Equity		7,779		8,383
Other Investors’ Equity		148,657		159,696
Total Liabilities and Equity	$	213,695	$	227,493

Consolidated Statements of Operations of CBRE Strategic Partners Asia for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Total Revenues and Appreciation (Depreciation)	$	1,930	$	(2,184	)	$	(1,142	)	$	(5,740	)
Total Expenses		1,096		1,410			3,201			5,249
Net (Loss) Income		834		(3,594	)		(4,343	)		(10,989	)
Company’s Equity in Net (Loss) Income	$	38	$	(210	)	$	(234	)	$	(603	)

Duke Joint Venture

On May 5, 2008, we entered into a contribution agreement with Duke Realty Limited Partnership (“Duke”), a subsidiary of Duke Realty Corporation (NYSE: DRE), to form the Duke joint venture to acquire $248,900,500 in industrial real property assets (the “Industrial Portfolio”). The Industrial Portfolio consisted of six bulk industrial built-to-suit, fully leased properties. On September 12, 2008, we entered into a first amendment to the contribution agreement to acquire a fully leased office building for $37,111,000 and to increase and revise the total purchase commitment to $282,400,000. We own an 80% interest and Duke owns a 20% interest in the Duke joint venture.

We entered into an operating agreement for the Duke joint venture with Duke on June 12, 2008. Duke acts as the managing member of the Duke joint venture and is entitled to receive fees in connection with the services it provides to the Duke joint venture, including asset management, construction, development, leasing and property management services. Duke is also entitled to a promoted interest in the Duke joint venture. We have joint approval rights over all major policy decisions.

On December 17, 2010, we entered into an amended and restated operating agreement for the Duke joint venture. The amended and restated operating agreement generally contains the same terms and conditions as the operating agreement dated June 12, 2008 described above, except for the following material changes: (i) Duke has granted us a call option to acquire Duke’s entire interest in the Duke joint venture which such interest shall be valued based on the opinions of qualified appraisers and which we can elect to exercise anytime after June 30, 2012 upon the occurrence and adoption by resolution of certain triggering events and (ii) the Duke joint venture has certain rights to participate in the development of certain adjacent and nearby parcels of land currently owned by Duke.

20

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

We carry our investment in the Duke joint venture using the equity method of accounting because it is an entity under common control with Duke. Those investments where we have the ability to exercise significant influence (but not control) over operating and financial policies of such entities are accounted for using the equity method. We eliminate transactions with such equity method subsidiaries to the extent of our ownership in such entities.

On March 24, 2011, in connection with the acquisition of 13 properties for $342,800,000 of which our share was $274,240,000 exclusive of closing costs and acquisition fees which were both expensed as incurred, the Duke joint venture entered into a $275,000,000 unsecured term loan (the “Term Loan”) with Wells Fargo Bank, N.A. While the Term Loan was non-recourse to us, the pro rata share of the Term Loan obligation attributable to us was initially $220,000,000 in accordance with our ownership interest in the Duke joint venture. The Term Loan had a six-month term and two six-month extension options. The Term Loan had an interest rate of LIBOR plus 2.50% and was fully pre-payable at any time, subject to any customary costs. An origination fee of $1,650,000 was paid to Wells Fargo Bank, N.A. at the closing of the term loan. The Term Loan Agreement contained customary representations and warranties and covenants. During the term of the loan, the Duke joint venture agreed to comply with certain financial covenants related to its leverage ratio, net asset value, unencumbered leverage ratio and the inability to enter into certain types of investments.

On April 28, 2011, the Duke joint venture entered into lease amendments to expand the Buckeye Logistics Center property, a warehouse/distribution center located in Phoenix, AZ. On May 2, 2011, the Duke joint venture closed on the acquisition of additional land and entered into a construction agreement (along with the lease amendments collectively, the “Buckeye Expansion Agreements”). The existing property was 100% leased to a subsidiary of Amazon.com through September 2018. Pursuant to the Buckeye Expansion Agreements, Buckeye Logistics Center (i) was expanded from the current 604,678 square feet to approximately 1,009,351 square feet and (ii) remained 100% leased to a subsidiary of Amazon.com, which lease was extended through September 2021. The total cost of the expansion is anticipated to be approximately $21,609,000 to the Duke joint venture. We expect to make cash contributions of approximately $17,287,000 to the Duke joint venture in connection with the Buckeye Expansion Agreements. We paid a construction supervision fee of $254,000 to our former investment advisor in connection with the Buckeye Expansion Agreements.

On August 4, 2011, we contributed $31,200,000, our 80% share of $39,000,000, to the Duke joint venture. The contribution was used towards a pay down of the Term Loan on August 8, 2011. On August 8, 2011, the Duke joint venture closed on two loans with Woodman of the World Life Insurance Society totaling $14,425,000. The loans are secured by the Fairfield Distribution Center IX, $4,675,000, and West Lake at Conway, $9,750,000, properties. Net proceeds from the financing totaling approximately $13,818,000 were used to pay down the Term Loan. Approximately $52,818,000 of the $275,000,000 Term Loan was paid down on August 8, 2011 reducing the outstanding balance as of that date to approximately $222,182,000.

On August 16, 2011, the Duke joint venture closed on three loans with Wells Fargo Bank, N.A., totaling $43,400,000. The three loans are individually secured by the Easton III, Point West I and Atrium I properties. Upon closing the $6,900,000 loan secured by the Easton III property, the Duke joint venture entered into an interest rate swap agreement with Wells Fargo to effectively fix the annual interest rate on this loan at 3.95% for its entire term until this loan’s scheduled maturity on January 31, 2019. Upon closing the $11,800,000 loan secured by the Point West I property, the Duke joint venture entered into an interest rate swap agreement with Wells Fargo Bank, N.A. to effectively fix the annual interest rate on this loan to 3.41% for its entire term until this loan’s scheduled maturity on December 6, 2016. Upon closing the $24,700,000 loan secured by the Atrium I property, the Duke joint venture entered into an interest rate swap agreement with Wells Fargo Bank, N.A., to effectively fix the annual interest rate on this loan to 3.775% for its entire term until this loan’s scheduled maturity on May 31, 2018. Principal and interest payments are due monthly on the three loans. Upon closing, the Duke joint venture paid down approximately $42,700,000 of the $222,182,000 remaining balance of the Term Loan reducing the outstanding balance as of August 16, 2011 to approximately $179,482,000.

On August 25, 2011, the Duke joint venture closed on two loans with Principal Life Insurance Company totaling approximately $25,000,000 ($20,000,000 at our 80% pro rata share of the Duke joint venture). The loans are secured by the Sam Houston Crossing I and McAuley Place properties. The loans represent a 41.3% loan-to-cost on the $60,500,000 total allocated acquisition costs of the properties. The loan secured by the Sam Houston Crossing I property has an interest rate of 4.42%, a ten-year term and a 30-year amortization schedule. The loan secured by the McAuley Place property has an interest rate of 3.98%, a seven-year term and a 25-year amortization schedule. Principal and interest payments are due monthly on the loans. Upon closing, the Duke joint venture paid down approximately $25,000,000 of the $179,482,000 remaining balance of the Term Loan reducing its outstanding balance as of August 25, 2011 to approximately $154,482,000.

21

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

On September 12, 2011, the Duke joint venture closed on five loans with John Hancock Life Insurance Company (U.S.A.) totaling approximately $156,250,000 ($125,000,000 at our 80% pro rata share of the Duke joint venture). The loans are secured by the 533 Maryville Centre, 555 Maryville Centre, The Landings I, The Landings II, Norman Pointe I, Norman Pointe II, Weston Pointe I, Weston Pointe II, Weston Pointe III, Weston Pointe IV and Regency Creek properties. The loans have a fixed interest rate of 5.24%, a ten-year term and a 30-year amortization schedule. The loans may not be prepaid during the first two years of their terms, but thereafter may be fully prepaid subject to yield maintenance. Principal and interest payments are due monthly on the loans. Upon closing, the Duke joint venture paid down the remaining approximately $154,482,000 balance of the Term Loan.

As of September 30, 2012, the Duke joint venture had purchased approximately $1,023,000,000 of assets, exclusive of acquisition fees and closing costs, and held interests in 37 properties, 10 located in Florida, eight located in Ohio, four each located in North Carolina and Texas, two each located in Arizona, Illinois, Indiana, Minnesota and Missouri and one located in Tennessee.

The following table provides further detailed information concerning the properties held in the Duke joint venture at September 30, 2012:

Property and Market	Property Type	Net Rentable Square Feet		Primary Tenants	Lease Expiration		Approximate Purchase Price(1)		Pro Rata Share of Approximate Purchase Price(2)		Approximate Debt Financing(3)		Acquisition Fees(4)
Buckeye Logistics Center, Phoenix, AZ	Warehouse/ Distribution		1,009,351	Amazon.com(6)		09/2021	$	65,131,000	$	52,104,800	$	20,000,000	$	349,000
201 Sunridge Blvd., Dallas, TX	Warehouse/ Distribution		822,550	Unilever(5)		09/2018		31,626,000		25,300,800		19,400,000		253,000
12200 President’s Court, Jacksonville, FL	Warehouse/ Distribution		772,210	Unilever(5)		09/2018		36,956,000		29,564,800		21,600,000		296,000
AllPoints at Anson Bldg. 1, Indianapolis, IN	Warehouse/ Distribution		1,036,573	Amazon.com(6)		04/2021		52,819,000		42,255,200		17,000,000		267,000
Aspen Corporate Center 500, Nashville, TN	Office		180,147	Verizon Wireless(7)		10/2018		36,989,000		29,591,200		21,200,000		297,000
125 Enterprise Parkway, Columbus, OH	Warehouse/ Distribution		1,142,400	Kellogg’s		03/2019		47,905,000		38,324,000		26,800,000		383,000
AllPoints Midwest Bldg. 1, Indianapolis, IN	Warehouse/ Distribution		1,200,420	Prime Distribution		05/2019		51,800,000		41,440,000		24,000,000		414,000
22535 Colonial Pkwy., Houston, TX	Office		89,750	Det Norske Veritas		06/2019		14,700,000		11,760,000		8,245,000		176,000
Celebration Office Center III, Orlando, FL	Office		100,924	Disney Vacation Development		04/2016		17,050,000		13,640,000		9,215,000		205,000
Fairfield Distribution Ctr. IX, Tampa, FL	Warehouse/ Distribution		136,212	Iron Mountain		08/2025		9,300,000		7,440,000		4,579,000		112,000
Northpoint III, Orlando, FL	Office		108,499	Florida Power Corporation		10/2021		18,240,000		14,592,000		10,670,000		219,000
Goodyear Crossing Ind. Pk II, Phoenix, AZ	Warehouse/ Distribution		820,384	Amazon.com(6)		09/2019		45,645,000		36,516,000		20,370,000		548,000
3900 N. Paramount Pkwy., Raleigh, NC	Office		100,987	PPD Development		11/2023		13,969,000		11,175,200		8,003,000		168,000
3900 S. Paramount Pkwy., Raleigh, NC	Office		119,170	PPD Development/ LSSI		11/2023 10/2015		16,319,000		13,055,200		8,003,000		196,000
1400 Perimeter Park Drive, Raleigh, NC	Office		44,916	PPD Development		11/2023		4,962,000		3,969,600		2,425,000		60,000
Miramar I, Miami, FL(8)	Office		94,060	DeVry		06/2021		17,056,000		13,644,800		9,506,000		0
Miramar II, Miami, FL(8)	Office		128,540	Royal Caribbean		05/2016		26,124,000		20,899,200		12,804,000		0
McAuley Place, Cincinnati, OH	Office		190,096	Mercy Health Partners of South West Ohio(9)(10)		08/2023		35,000,000		28,000,000		13,666,000		420,000

22

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Property and Market	Property Type	Net Rentable Square Feet		Primary Tenants	Lease Expiration		Approximate Purchase Price(1)		Pro Rata Share of Approximate Purchase Price(2)		Approximate Debt Financing(3)		Acquisition Fees(4)
Easton III, Columbus, OH	Office		135,485	Lane Bryant(9)(11)		01/2019		18,000,000		14,400,000		6,699,000		216,000
Point West I, Dallas, TX	Office		182,700	American Home Mortgage Services, Inc(9)(12)		12/2016		29,500,000		23,600,000		11,448,000		354,000
Sam Houston Crossing I, Houston, TX	Office		159,175	AMEC Paragon, Inc.(9)(13)		05/2018		25,500,000		20,400,000		10,820,000		306,000
Regency Creek I, Raleigh, NC	Office		122,087	ABB, Inc.(9)(14)		08/2017		22,500,000		18,000,000		11,105,000		270,000
533 Maryville Centre, St. Louis, MO	Office		125,296	Eveready Battery Company, Inc.(9)(15)		04/2021		23,878,000		19,102,400		13,320,000		287,000
555 Maryville Centre, St. Louis, MO	Office		127,082	Eveready Battery Company, Inc.(9)(15)		04/2021		19,472,000		15,577,600		10,863,000		234,000
Norman Pointe I, Minneapolis, MN	Office		212,722	NCS Pearson, Inc.(9)(16)		05/2017		42,600,000		34,080,000		20,907,000		511,200
Norman Pointe II, Minneapolis MN	Office		324,296	General Services Administration(9)(17)		05/2016		46,900,000		37,520,000		23,018,000		562,800
				Hartford Fire Insurance Co(9)(18)		06/2013
The Landings I, Cincinnati, OH	Office		175,695	Citicorp North America(9)(19)		01/2022		29,659,500		23,727,600		15,734,000		355,914
The Landings II, Cincinnati, OH	Office		175,076	Multi-Tenant		—		26,160,500		20,928,400		13,878,000		313,926
One Easton Oval, Columbus, OH	Office		125,031	Multi-Tenant		—		11,911,000		9,528,800		0		142,932
Two Easton Oval, Columbus, OH	Office		128,674	Multi-Tenant		—		12,744,000		10,195,200		0		152,928
Weston Pointe I, Ft. Lauderdale, FL	Office		97,579	Multi-Tenant		—		19,384,250		15,507,400		9,304,000		232,611
Weston Pointe II, Ft. Lauderdale, FL	Office		97,180	Multi-Tenant		—		23,375,950		18,700,760		11,220,000		280,511
Weston Pointe III, Ft, Lauderdale, FL	Office		97,178	American Intercontinental University(9)(20)		09/2015		23,583,550		18,866,840		11,320,000		283,002
Weston Pointe IV, Ft. Lauderdale, FL	Office		96,175	General Services Administration(9)(17)		04/2019		28,256,250		22,605,000		13,562,000		339,075
One Conway Park, Chicago, IL	Office		105,000	Multi-Tenant		—		15,400,000		12,320,000		0		184,800
West Lake at Conway, Chicago, IL	Office		98,304	Multi-Tenant		—		17,575,000		14,060,000		9,549,000		210,900
Atrium I, Columbus, OH	Office		315,102	Nationwide Mutual Insurance Co(9)(21)(22)		05/2019		45,250,000		36,200,000		23,686,000		543,000
							$	1,023,241,000	$	818,592,800	$	473,919,000	$	10,143,599

⁽¹⁾  Approximate total purchase price including the AllPoints at Anson Bldg. 1 and Buckeye Logistics Center expansion costs, exclusive of closing costs, paid by the Duke joint venture for each of these properties.

⁽²⁾  Pro rata share of approximate purchase price is at our pro rata share of effective ownership for each of these properties.

⁽³⁾  Approximate debt financing net of amortization.

⁽⁴⁾  Acquisition fees paid to our former investment advisor are included in the total acquisition cost for the properties acquired prior to January 1, 2009, but are included as acquisition expenses for properties acquired subsequent to December 31, 2008.

23

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

⁽⁵⁾  Our tenant CONOPCO, Inc. is a wholly-owned subsidiary of Unilever United States, Inc., which is wholly-owned by Unilever N.V. and Unilever PLC, together Unilever.

⁽⁶⁾  Our tenants Amazon.com.indc, LLC, Amazon.com.axdc, Inc. and Amazon.com.azdc, Inc. are wholly-owned subsidiaries of Amazon.com. AllPoints at Anson Bldg. 1, Buckeye Logistics Center and Goodyear Crossing Ind. Park II are three of Amazon’s largest fulfillment centers in North America.

⁽⁷⁾  Our tenant Cellco Partnership does business as Verizon Wireless.

⁽⁸⁾  Consolidated properties acquired on December 31, 2009 and contributed to the Duke joint venture on March 31, 2010.

⁽⁹⁾  This tenant currently occupies more than 50,000 of net rentable square feet.

⁽¹⁰⁾  Mercy Health Partners of South West Ohio is a healthcare system comprised of five hospitals and 38 physician practices serving the greater Cincinnati, Ohio area.

⁽¹¹⁾  Lane Bryant, a division of Charming Shoppes, Inc. (NASDAQ:CHRS), is a chain of women’s retail clothing stores with over 850 stores in 48 states.

⁽¹²⁾  American Home Mortgage Services, Inc. is one of the country’s largest servicers of Alt-A and subprime loans on behalf of banks and other investors.

⁽¹³⁾  AMEC Paragon, Inc. is a provider of project management and engineering services to the oil and gas industry.

⁽¹⁴⁾  ABB, Inc. is a leader in power and automation technologies for utility and industrial customers.

⁽¹⁵⁾  Eveready Battery Company, Inc. is a division of Energizer Holdings, Inc. (NYSE:ENR), which manufactures batteries and lighting products.

⁽¹⁶⁾  NCS Pearson, Inc. provides services, software, systems, and Internet-based technologies for the collection management, and interpretation of data.

⁽¹⁷⁾  The General Services Administration is an independent agency of the Federal Government of the United States of America, which supplies products and communications for U.S. government offices, provides transportation and office space to federal employees and develops government-wide cost-minimizing policies and other management tasks.

⁽¹⁸⁾  Hartford Fire Insurance Company is a subsidiary of the Hartford Financial Services Group and one on the world’s leading providers of fire, marine and casualty insurance.

⁽¹⁹⁾  Citicorp North America, Inc. provides regional banking services and is a subsidiary of Citigroup, Inc. (NYSE: C).

⁽²⁰⁾  American Intercontinental University is an international for profit university with both physical and online campuses.

⁽²¹⁾  Nationwide Mutual Insurance Company is one of the nation’s largest insurance and financial services companies.

⁽²²⁾  This tenant has two separate leases within this property.

24

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Consolidated Balance Sheet of the Duke joint venture as of September 30, 2012 (in thousands):

	September 30, 2012		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	786,278	$	1,950	$	788,228
Other Assets		152,951		0		152,951
Total Assets	$	939,229	$	1,950	$	941,179
Liabilities and Equity
Notes Payable	$	473,919	$	0	$	473,919
Other Liabilities		29,128		0		29,128
Total Liabilities		503,047		0		503,047
Company’s Equity		348,946		1,950		350,896
Other Investor’s Equity		87,236		0		87,236
Total Liabilities and Equity	$	939,229	$	1,950	$	941,179

⁽¹⁾  REIT Basis Adjustments include those costs incurred by the Company outside of the Duke joint venture that are directly capitalizable to its investment in real estate assets acquired within the Duke joint venture including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisition fees were expensed as incurred.

Consolidated Balance Sheet of the Duke joint venture as of December 31, 2011 (in thousands):

	December 31, 2011		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	807,959	$	2,052	$	810,011
Other Assets		163,709		0		163,709
Total Assets	$	971,668	$	2,052	$	973,720
Liabilities and Equity
Notes Payable	$	478,482	$	0	$	478,482
Other Liabilities		24,320		0		24,320
Total Liabilities		502,802		0		502,802
Company’s Equity		375,093		2,052		377,145
Other Investor’s Equity		93,773		0		93,773
Total Liabilities and Equity	$	971,668	$	2,052	$	973,720

⁽¹⁾  REIT Basis Adjustments include those costs incurred by the Company outside of the Duke joint venture that are directly capitalizable to its investment in real estate assets acquired within the Duke joint venture including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisition fees were expensed as incurred.

25

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Consolidated Statement of Operations of the Duke joint venture for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total Revenues	$	31,271		$	30,625		$	93,551		$	80,570
Operating Expenses		10,621			10,166			31,234			26,152
Interest		6,125			6,022			18,429			15,230
Depreciation and Amortization		14,909			14,313			44,700			36,150
Net (Loss) Income	$	(384	)	$	124		$	(812	)	$	3,038
Company’s Share in Net Income	$	(307	)	$	99		$	(649	)	$	2,430
Adjustments for REIT Basis		(34	)		(30	)		(102	)		(88	)
Company’s Equity in Net (Loss) Income	$	(341	)	$	69		$	(751	)	$	2,342

Afton Ridge Joint Venture

On September 18, 2008, we acquired a 90% ownership interest in Afton Ridge, the owner of Afton Ridge Shopping Center, from unrelated third parties. CK Afton Ridge Shopping Center, LLC, a subsidiary of Childress Klein Properties, Inc. (“CK Afton Ridge”), retained a 10% ownership interest in Afton Ridge and continues to manage Afton Ridge Shopping Center. CK Afton Ridge acts as the managing member of Afton Ridge and is entitled to receive fees, including management, construction management and property management fees. We have joint approval rights over all major operating and policy decisions.

Afton Ridge Shopping Center is located at the intersection of I-85 and Kannapolis Parkway, in Kannapolis, North Carolina. We acquired our ownership interest in Afton Ridge for approximately $45,000,000, exclusive of customary closing costs, which was funded using net proceeds from our initial public offering. Upon closing, we paid our former investment advisor an acquisition fee of approximately $450,000. This acquisition fee is not included in the $45,000,000 total acquisition cost of Afton Ridge, but is included as additional cost basis at our wholly-owned investment subsidiary.

Afton Ridge Shopping Center is a 470,288 square foot regional shopping center, completed in 2006, in which Afton Ridge owns 296,388 rentable square feet that is currently 99% leased. One of the shopping center’s anchors, a 173,900 square foot SuperTarget, is not owned by us. Additional anchor tenants in Afton Ridge Shopping Center are Best Buy, Marshalls, PetSmart, Dick’s Sporting Goods, Stein Mart and Ashley Furniture. Afton Ridge Shopping Center is the retail component of a 260 acre master planned mixed-use development.

On October 15, 2008, Afton Ridge obtained a $25,500,000 loan from the Metropolitan Life Insurance Company, secured by the Afton Ridge Shopping Center which was originally acquired on September 18, 2008. The loan is for a term of five years, plus a 12 month extension option, and bears interest at a fixed rate of 5.70%. Interest payments only are due monthly for the term of the loan with principal due at maturity.

We carry our investment in Afton Ridge using the equity method of accounting because it is an entity under common control with CK Afton Ridge. Those investments where we have the ability to exercise significant influence (but not control) over operating and financial policies of such entities are accounted for using the equity method. We eliminate transactions with such equity investees to the extent of our ownership in such entities.

26

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Consolidated Balance Sheet of Afton Ridge as of September 30, 2012 (in thousands):

	September 30, 2012		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	43,835	$	570	$	44,405
Other Assets		3,097		0		3,097
Total Assets	$	46,932	$	570	$	47,502
Liabilities and Equity
Note Payable	$	25,500	$	0	$	25,500
Other Liabilities		2,726		0		2,726
Total Liabilities		28,226		0		28,226
Company’s Equity		16,835		570		17,405
Other Investor’s Equity		1,871		0		1,871
Total Liabilities and Equity	$	46,932	$	570	$	47,502

⁽¹⁾  REIT Basis Adjustments include those costs incurred by the Company outside of Afton Ridge that are directly capitalizable to its investment in real estate assets acquired within Afton Ridge including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisitions fees were expensed as incurred.

Consolidated Balance Sheet of Afton Ridge as of December 31, 2011 (in thousands):

	December 31, 2011		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	44,839	$	585	$	45,424
Other Assets		3,064		0		3,064
Total Assets	$	47,903	$	585	$	48,488
Liabilities and Equity
Note Payable	$	25,500	$	0	$	25,500
Other Liabilities		2,749		0		2,749
Total Liabilities		28,249		0		28,249
Company’s Equity		17,689		585		18,274
Other Investor’s Equity		1,965		0		1,965
Total Liabilities and Equity	$	47,903	$	585	$	48,488

⁽¹⁾  REIT Basis Adjustments include those costs incurred outside of Afton Ridge that are directly capitalizable to its investment in real estate assets acquired within Afton Ridge including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisitions fees were expensed as incurred.

27

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Consolidated Statements of Operations of Afton Ridge for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total Revenues	$	1,219		$	1,258		$	3,869		$	3,904
Operating Expenses		286			335			990			1,048
Interest		376			376			1,128			1,128
Depreciation and Amortization		446			462			1,369			1,377
Net Income	$	111		$	85		$	382		$	351
Company’s Share in Net Income	$	100		$	77		$	344		$	316
Adjustments for REIT Basis		(5	)		(5	)		(14	)		(14	)
Company’s Equity in Net Income	$	95		$	72		$	330		$	302

UK JV and European JV

On June 10, 2010, we entered into two joint ventures with subsidiaries of the Goodman Group (ASX: GMG), or Goodman, one of which seeks to invest in logistics focused warehouse/distribution properties in the United Kingdom, or the UK JV, and the other which seeks to invest in logistics focused warehouse/distribution properties in France, Belgium, the Netherlands, Luxembourg and Germany, or the European JV. We own an 80% interest in each joint venture and Goodman owns a 20% interest in each joint venture. The terms of each joint venture are described in more detail below.

UK JV

The shareholders’ agreement pertaining to the UK JV is by and among RT Princeton UK Holdings, LLC (our wholly-owned subsidiary), Goodman Jersey Holding Trust and Goodman Princeton Holdings (Jersey) Limited, the UK JV, for the purpose of acquiring and holding, either directly or indirectly, up to £400,000,000 in logistics focused warehouse/distribution properties. On June 10, 2010, we initially funded the UK JV with capital contributions of $26,180,000. The UK JV acquired an initial portfolio of two properties, Amber Park and Brackmills, which were previously owned by a subsidiary of Goodman and which were purchased by the UK JV simultaneously with the closing of the UK JV.

On March 19, 2012, we contributed an additional capital contribution of $10,764,000 to acquire Valley Park, Unit D from an unaffiliated third party.

Property and Market	Year Built		Property Type		Tenant	Net Rentable Sq. Feet		Percentage Leased			Lease Expiration		Approximate Total Acquisition Cost (in thousands)
Amber Park, Nothingham, UK		1997		Warehouse/ Distribution	UniDrug Distribution Group		208,423		100	%		3/2017	$	15,642
Brackmills, Northampton, UK		1984		Warehouse/ Distribution	GE Lighting Operations Limited		186,618		100	%		3/2017	$	16,759
Valley Park, Unit D, Rugby, UK		2000		Warehouse/ Distribution	Exel Europe, Ltd.		146,491		100	%		9/2016	$	12,808

A board of directors, comprised of members representing us and Goodman, in each case with an equal number of votes, has the responsibility for the supervision, management and major operating decisions of the UK JV and its business, except with respect to certain reserved matters which will require the unanimous approval of us and Goodman.

During the investment period, the UK JV has a right of first offer, with respect to certain logistics development or logistics investment assets considered for investment in the UK by Goodman or us. If a deadlock has arisen pertaining to a major decision regarding a

28

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

specific property, either shareholder may exercise a buy-sell option in relation to the relevant property. After the initial investment period, either shareholder wishing to exit the UK JV may exercise a buy-sell option with respect to their entire interest in the UK JV.

The UK JV will pay certain fees to certain Goodman subsidiaries in connection with the services they provide to the UK JV, including but not limited to investment advisory, development management and property management services. Goodman may also be entitled to a promoted interest in the UK JV.

Consolidated Balance Sheets of UK JV as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Assets
Real Estate Net	$	46,047	$	32,545
Other Assets		2,755		1,788
Total Assets	$	48,802	$	34,333
Liabilities and Equity
Other Liabilities	$	1,874	$	1,095
Total Liabilities		1,874		1,095
Company’s Equity		37,543		26,590
Other Investor’s Equity		9,385		6,648
Total Liabilities and Equity	$	48,802	$	34,333

Consolidated Statements of Operations of UK JV for the three and nine months ended September 30, 2012 and 2011 (in thousands);

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Total Revenues	$	1,159	$	860	$	3,139	$	2,514
Operating Expenses		231		166		1,135		338
Depreciation and Amortization		494		359		1,343		1,075
Net Income	$	434	$	335	$	661	$	1,101
Company’s Equity in Net Income	$	347	$	268	$	529	$	881

European JV

The shareholders’ agreement pertaining to the European JV is by and among RT Princeton CE Holdings, LLC (our wholly-owned subsidiary), Goodman Europe Development Trust acting by its trustee Goodman Europe Development Pty Ltd. and Goodman Princeton Holdings (LUX) S.À.R.L., the European JV, for the purpose of acquiring and holding, either directly or indirectly, up to€400,000,000 in logistics focused warehouse/ distribution properties. On June 10, 2010, we initially funded the European JV with capital contributions of $26,802,000. The European JV acquired an initial portfolio of two properties, Düren and Schönberg, which were previously owned by a subsidiary of Goodman and which were purchased by the European JV simultaneously with the closing of the European JV.

On October 28, 2010, we contributed an additional capital contribution of $18,672,000 to the European JV to acquire Langenbach which was also previously owned by a subsidiary of Goodman.

On December 20, 2011, we made an additional capital contribution of $62,559,000 to the European JV to acquire Graben Distribution Center I and II which were previously owned by a subsidiary of Goodman.

On July 27, 2012, the European JV closed on a loan with Dekabank Deutsche Gironzentrale for approximately€31,100,000 (approximately $38,390,000 assuming an exchange rate of€1.00:$1.2344 at closing, or $30,712,000 at our 80% pro rata share),

29

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

exclusive of customary fees and expenses. The loan is secured by the European Joint Venture’s Graben Distribution Center I and Graben Distribution Center II properties. The loan is interest only, with a fixed interest rate of 2.39% per annum, and has a five-year term. The loan may be prepaid subject to customary prepayment fees and restrictions. Interest payments are due quarterly on the loan.

Property and Market	Year Built	Property Type	Tenant	Net Rentable Sq. Feet		Percentage Leased			Lease Expiration		Approximate Total Acquisition Cost (in thousands)
Düren, Rhine-Ruhr, Germany	2008	Warehouse/ Distribution	Metsä Tissue GmbH		391,494		100	%		11/2013	$	16,435
Schönberg, Hamburg, Germany	2009	Warehouse/ Distribution	LK Logistik GmbH		453,979		100	%		5/2017	$	17,274
Langenbach, Munich, Germany	2010	Warehouse/ Distribution	DSV Stuttgart GmbH & Co. KG		225,106		100	%		7/2015	$	23,216
Graben Distribution Center I, Munich, Germany	2011	Warehouse/ Distribution	Amazon Fulfillment GmbH		1,017,868		100	%		4/2022	$	68,703
Graben Distribution Center II, Munich, Germany	2011	Warehouse/ Distribution	Deutche Post Immobolien GmbH		73,367		100	%		11/2021	$	8,585

A board of directors, comprised of members representing us and Goodman, in each case with an equal number of votes, has the responsibility for the supervision, management and major operating decisions of the European JV and its business, except with respect to certain reserved matters which will require the unanimous approval of us and Goodman.

During the investment period, the European JV has a right of second offer (after another investment vehicle managed by Goodman) with respect to certain logistics development or logistics investment assets considered for investment by Goodman, and has a right of first offer with respect to certain logistics development or logistics investment assets considered for investment by us. If a deadlock has arisen pertaining to a major decision regarding a specific property, either shareholder may exercise a buy-sell option in relation to the relevant property. After the initial investment period, either shareholder wishing to exit the European JV may exercise a buy-sell option with respect to their entire interest in the European JV.

The European JV will pay certain fees to certain Goodman subsidiaries in connection with the services they provide to the European JV, including but not limited to investment advisory, development management and property management services. Certain Goodman subsidiaries may also be entitled to a promoted interest in the European JV.

Consolidated Balance Sheets of European JV as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Assets
Real Estate Net	$	126,478	$	131,783
Other Assets		9,077		11,552
Total Assets	$	135,555	$	143,335
Liabilities and Equity
Notes Payable	$	39,943	$	9,284
Other Liabilities		2,645		0
Total Liabilities		42,588		9,284
Company’s Equity		74,373		107,241
Other Investor’s Equity		18,594		26,810
Total Liabilities and Equity	$	135,555	$	143,335

30

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Consolidated Statements of Operations of European JV for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Total Revenues	$	2,845	$	1,590	$	8,704	$	4,737
Operating Expenses		382		280		1,154		836
Interest		165		0		165		0
Depreciation and Amortization		1,313		796		4,032		2,352
Net Income	$	985	$	514	$	3,353	$	1,549
Company’s Equity in Net Income	$	788	$	411	$	2,682	$	1,238

6. Acquisition Related Intangible Assets And Liabilities

Our acquisition related intangible assets and liabilities are included in the consolidated balance sheets as acquired in-place lease value, acquired above-market lease value and acquired below-market lease value.

The following is a schedule of future amortization of acquisition related intangible assets and liabilities as of September 30, 2012 (in thousands):

	Assets				Liabilities
	Above-Market Lease Value		Acquired In-Place Lease Value		Below-Market Lease Value		Above-Market Ground Lease Obligations
2012 (Three months ending December 31, 2012)	$	1,928	$	6,967	$	843	$	18
2013		6,897		23,600		2,787		71
2014		5,376		21,174		2,688		71
2015		5,061		19,349		2,527		71
2016		2,169		15,205		2,505		71
2017		1,840		14,469		2,445		71
Thereafter		5,707		49,306		11,062		1,056
	$	28,978	$	150,070	$	24,857	$	1,429

The amortization of the above- and below-market lease values included in rental revenue was ($1,903,000) and $2,093,000, respectively, for the three months ended September 30, 2012, and ($1,845,000) and $1,128,000, respectively, for the three months ended September 30, 2011. The amortization of in-place lease value included in amortization expense was $7,420,000 and $6,761,000 for the three months ended September 30, 2012 and 2011, respectively. The amortization of above-market ground lease obligations was $18,000 and $0 for the three months ended September 30, 2012 and 2011, respectively.

The amortization of the above- and below-market lease values included in rental revenue was ($5,637,000) and $4,326,000, respectively, for the nine months ended September 30, 2012, and ($4,540,000) and $3,053,000, respectively, for the nine months ended September 30, 2011. The amortization of in-place lease value included in amortization expense was $21,544,000 and $17,055,000 for the nine months ended September 30, 2012 and 2011, respectively. The amortization of above-market ground lease obligations was $53,000 and $0 for the nine months ended September 30, 2012 and 2011, respectively.

31

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

7. Debt

Notes Payable secured by real property are summarized as follows (in thousands):

	Interest Rate as of							Notes Payable as of
Property	September 30, 2012			December 31, 2011			Maturity Date	September 30, 2012			December 31, 2011
Deerfield Commons I.		5.23	%		5.23	%	December 1, 2015	$	9,479		$	9,587
Bolingbrook Point III		5.26			5.26		January 1, 2015		7,900			7,900
Fairforest Bldg. 5(1)		6.33			6.33		February 1, 2024		8,975			9,368
Fairforest Bldg. 6(1)		5.42			5.42		June 1, 2019		2,479			2,703
HJ Park—Bldg. 1(1)		4.98			4.98		March 1, 2013		150			369
North Rhett I(1)		5.65			5.65		August 1, 2019		2,929			3,547
North Rhett II(1)		5.20			5.20		October 1, 2020		1,869			2,005
North Rhett IV(1)		5.80			5.80		February 1, 2025		9,061			9,427
Mt Holly Bldg.(1)		5.20			5.20		October 1, 2020		1,869			2,006
Orangeburg Park Bldg.(1)		5.20			5.20		October 1, 2020		1,900			2,040
Kings Mountain I(1)		5.27			5.27		October 1, 2020		1,618			1,737
Kings Mountain II(1)		5.47			5.47		January 1, 2020		4,721			5,105
Union Cross Bldg. I(1)		5.50			5.50		July 1, 2021		2,397			2,552
Union Cross Bldg. II(1)		5.53			5.53		June 1, 2021		7,313			7,791
Thames Valley Five(2)(3)		6.42			6.42		May 30, 2013		9,107			8,762
Lakeside Office Center		6.03			6.03		September 1, 2015		8,890			8,973
Albion Mills Retail Park(2)(4)(5)		5.25			5.25		October 10, 2013		9,318			8,965
Avion Midrise III & IV(6)		5.52			5.52		April 1, 2014		20,582			20,920
12650 Ingenuity Drive(7)		5.62			5.62		October 1, 2014		12,376			12,677
Maskew Retail Park(2)(8)		5.68			5.68		August 10, 2014		22,566			21,710
One Wayside Road(9)		5.66			5.66		August 1, 2015		13,839			14,115
One Wayside Road(9)		5.92			5.92		August 1, 2015		11,536			11,743
100 Tice Blvd(10)		5.97			5.97		September 15, 2017		20,226			20,612
100 Tice Blvd(10)		5.97			5.97		September 15, 2017		20,226			20,611
Ten Parkway North		4.75			4.75		January 1, 2021		12,144			12,354
Pacific Corporate Park(11)		4.89			4.89		December 7, 2017		79,750			81,750
4701 Gold Spike Drive(12)		4.45			4.45		March 1, 2018		10,387			10,521
1985 International Way(12)		4.45			4.45		March 1, 2018		7,217			7,310
Summit Distribution Center(12)		4.45			4.45		March 1, 2018		6,535			6,619
3770 Deerpark Boulevard(12)		4.45			4.45		March 1, 2018		7,461			7,557
Tolleson Commerce Park II(12)		4.45			4.45		March 1, 2018		4,486			4,544
100 Kimball Drive(13)		5.25			5.25		March 1, 2021		32,023			32,521
70 Hudson Street(14)		5.65			5.65		April 11, 2016		118,440			119,740
90 Hudson Street(14)		5.66			5.66		May 1, 2019		106,959			107,918
Kings Mountain III(15)		4.47			4.47		July 1, 2018		11,401			11,595
Sabal Pavilion(16)		6.38			6.38		August 1, 2013		14,700			14,700
Notes Payable									622,829			632,354
Plus Premium									8,061			9,595
Less Discount									(2,297	)		(2,838	)
Less Albion Mills Retail Park Fair Value Adjustment									(110	)		(190	)
Notes Payable Net of Premium / Discount and Fair Value Adjustment								$	628,483		$	638,921

⁽¹⁾  These notes payable were assumed from the seller of these properties on August 30, 2007 as part of the property acquisitions and were recorded at estimated fair value which includes the discount. The North Rhett III loan was paid off in full on November 22, 2011.

⁽²⁾  These loans are subject to certain financial covenants (interest coverage and loan to value).

⁽³⁾  We entered into an interest rate swap agreement that fixes the GBP-based LIBOR at 5.41% through its expiration on May 30, 2013, and therefore, including the mortgage note’s spread of 1.01% over GBP-based LIBOR, effectively fixed the mortgage note’s all-in interest rate at 6.42% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 1.79% and 1.98% at September 30, 2012 and December 31, 2011, respectively, and were based on GBP LIBOR plus a spread of 1.01%.

32

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

⁽⁴⁾  The Albion Mills Retail Park notes payable balance is presented at cost basis. This loan is carried on our balance sheet at fair value. See Note 17 “Fair Value of Financial Instruments and Investments.”

⁽⁵⁾  We entered into an interest rate swap agreement that fixes the GBP-based LIBOR at 3.94% through its expiration on October 10, 2013, and therefore, including the mortgage note’s spread of 1.31% over GBP-based LIBOR, effectively fixed the mortgage note’s all-in interest rate at 5.25% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 2.09% and 2.28% at September 30, 2012 and December 31, 2011, respectively, and were based on GBP LIBOR plus a spread of 1.31%.

⁽⁶⁾  The loan was assumed from the seller of Avion Midrise III & IV on November 18, 2008 and was recorded at estimated fair value which includes the discount.

⁽⁷⁾  The loan was assumed from the seller of 12650 Ingenuity Drive on August 5, 2009 and was recorded at estimated fair value which includes the discount.

⁽⁸⁾  We entered into an interest rate swap agreement that fixes the GBP-based LIBOR at 3.42% through its expiration on August 10, 2014, and therefore, including the mortgage note’s spread of 2.26% over GBP-based LIBOR, effectively fixed the mortgage note’s all-in interest rate at 5.68% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 3.04% and 3.23% at September 30, 2012 and December 31, 2011, respectively, and were based on GBP LIBOR plus a spread of 2.26%.

⁽⁹⁾  The two loans were assumed from the seller of One Wayside Road on June 24, 2010 and were recorded at estimated fair value which includes the premiums.

⁽¹⁰⁾  The two loans were assumed from the seller of 100 Tice Blvd. on September 28, 2010 and were recorded at estimated fair value which includes the premiums.

⁽¹¹⁾  We entered into an interest rate swap agreement that fixes LIBOR at 2.69% through its expiration on December 7, 2017, and therefore, including the mortgage note’s spread of 2.26% over LIBOR, effectively fixed the mortgage note’s all-in interest rate at 4.98% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 2.45% and 2.52% at September 30, 2012 and December 31, 2011, respectively, and were based on LIBOR plus a spread of 2.20%.

⁽¹²⁾  We entered into five loans totaling $37,000,000 on February 8, 2011 that are cross-collateralized by these properties.

⁽¹³⁾  We entered into an interest rate swap agreement that fixes LIBOR at 3.50% through its expiration on March 1, 2021, and therefore, including the mortgage note’s spread of 1.75% over LIBOR, effectively fixed the mortgage note’s all-in interest rate at 5.25% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 1.98% and 2.02% at September 30, 2012 and December 31, 2011, respectively, and were based on LIBOR plus a spread of 1.75%.

⁽¹⁴⁾  The two loans were assumed from the seller of 70 Hudson Street and 90 Hudson Street, respectively, on April 11, 2011 and were recorded at estimated fair value which includes the premiums.

⁽¹⁵⁾  We entered into an interest rate swap agreement that fixes LIBOR at 2.47% through its expiration on July 1, 2018 and therefore, including the mortgage note’s spread of 2.00% over LIBOR, effectively fixed the mortgage note’s all-in interest rate at 4.47% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 2.23% and 2.27% at September 30, 2012 and December 31, 2011, respectively, and were based on LIBOR plus a spread of 2.00%.

⁽¹⁶⁾  The loan was assumed from the seller of Sabal Pavilion on December 30, 2011 and was recorded at estimated fair value which includes the premium. The anticipated maturity date as presented represents the early prepayment option date prior to the automatic debt extension that would include an increase in the interest rate to 11.38% and extend until the loan is paid in full.

Notes Payable

In connection with our acquisition of the Carolina Portfolio on August 30, 2007, we assumed 13 loans with principal balances totaling $66,110,000 ($62,944,000 at estimated fair value including the discount of $3,166,000) from various lenders that are secured by first deeds of trust on the properties and the assignment of related rents and leases. The loans bear interest at rates ranging from 4.98% to 6.33% per annum and mature between March 1, 2013 and February 1, 2025. The loans require monthly payments of interest and principal, fully amortized over the lives of the loans. One of the 13 loans, North Rhett III, was paid off in full on November 22, 2011. Principal payments totaling $3,367,000 were made during the nine months ended September 30, 2012. We indemnify the lenders against environmental costs and expenses and guarantee the loans under certain conditions.

33

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

On December 27, 2007, we entered into a $9,000,000 financing agreement secured by the Bolingbrook Point III property with the Northwestern Mutual Life Insurance Company. The loan is for a term of seven years and bears a fixed interest rate of 5.26% per annum with principal due at maturity. On January 14, 2011, we paid down $1,100,000 of principal in connection with the lease termination settlement with one of the tenants.

On May 30, 2008, we entered into a £7,500,000 financing arrangement with the Royal Bank of Scotland plc secured by the Thames Valley Five property. On July 27, 2010, we paid down the loan by £1,860,000 leaving a loan balance of £5,640,000 ($9,107,000 at September 30, 2012). The loan is for a term of five years (with a two year extension option) and bears interest at a variable rate adjusted quarterly, based on nine month GBP-based LIBOR plus 1.01%. On August 14, 2008, we entered into an interest rate swap agreement that fixed the GBP-based LIBOR at 5.41% for the loan’s remaining term and therefore effectively fixed the mortgage note’s all-in interest rate at 6.42% per annum for its remaining term. In conjunction with the loan paydown, we incurred a cost of £227,000 ($361,000 at August 3, 2010) to reduce the notional amount of the interest rate swap from £7,500,000 to £5,640,000. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On October 10, 2008, we entered into a £5,771,000 ($9,318,000 at September 30, 2012) financing agreement with the Royal Bank of Scotland plc secured by Albion Mills Retail Park property. The loan is for a term of five years and bears interest at a variable rate adjusted quarterly, based on three month GBP-based LIBOR plus 1.31%. On November 25, 2008, we entered into an interest rate swap agreement that fixed the GBP-based LIBOR at 3.94% and therefore effectively fixed the mortgage note’s all-in interest rate at 5.25% per annum for its remaining term. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On November 18, 2008, in connection with the acquisition of Avion Midrise III & IV, we assumed a $20,851,000 ($22,186,000 face value less discount of $1,335,000) fixed rate mortgage loan from Capmark Finance, Inc. that bears interest at a rate of 5.52% per annum and matures on April 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $338,000 were made during the nine months ended September 30, 2012.

On August 5, 2009, in connection with the acquisition of 12650 Ingenuity Drive, we assumed a $12,572,000 ($13,539,000 face value less a discount of $967,000) fixed-rate mortgage loan from PNC Bank, National Association that bears interest at a rate of 5.62% per annum and matures on October 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $300,000 were made during the nine months ended September 30, 2012.

On August 10, 2009, we entered into a £13,975,000 ($22,566,000 at September 30, 2012) financing agreement with the Abbey National Treasury Services plc secured by the Maskew Retail Park property. On September 24, 2009, we drew the full amount of the loan and concurrently entered into an interest rate swap agreement that fixed the GBP-based LIBOR at 3.42% and therefore effectively fixed the mortgage note’s all-in interest rate at 5.68% per annum for the its remaining term. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On June 24, 2010, we assumed two loans in connection with the acquisition of One Wayside Road: (i) a $14,888,000 ($14,633,000 at face value plus a premium of $255,000) fixed rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.66% and matures on August 1, 2015; and (ii) a $12,479,000 ($12,132,000 at face value plus a premium of $347,000) fixed rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.92% and matures on August 1, 2015. Principal and interest payments are due monthly for the remaining loan terms and principal payments totaling $484,000 were made during the nine months ended September 30, 2012 on the two loans.

On September 28, 2010, we assumed two loans in connection with the acquisition of 100 Tice Blvd.: (i) a $23,136,000 ($21,218,000 at face value plus a premium of $1,918,000) fixed-rate loan from Principal Life Insurance Company that bears interest at a rate of 5.97%, matures on September 15, 2022 and the lender has the right to call the loan due and payable on September 15, 2017; (ii) a $23,136,000 ($21,217,000 at a face value plus a premium of $1,919,000) fixed rate mortgage from Hartford Life and Accidental Insurance Company that bears interest at a rate of 5.97%, matures on September 15, 2022 and the lender has the right to call the loan due and payable on September 15, 2017. Principal and interest payments are due monthly for the remaining loan terms and principal payments totaling $771,000 were made during the nine months ended September 30, 2012 on the two loans.

On December 7, 2010, we entered into a $85,000,000 secured term loan through a subsidiary with Wells Fargo Bank, National Association, or the Pacific Corporate Park Loan. The Pacific Corporate Park Loan has a seven-year term, monthly amortization of

34

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

$250,000 and is secured by Pacific Corporate Park. Upon closing of the Pacific Corporate Park Loan on December 7, 2010, we entered into an interest rate swap agreement with Wells Fargo Bank, National Association to effectively fix the interest rate on the entire outstanding Pacific Corporate Park Loan amount at 4.89% for its seven-year term. Principal and interest payments are due monthly and principal payments totaling $2,000,000 were made during the nine months ended September 30, 2012.

On December 29, 2010, we entered into a $12,600,000 secured term loan through Woodmen of The World Life Insurance Society secured by the Ten Parkway North property. The Ten Parkway North loan bears interest at a fixed rate of 4.75% per annum and matures on January 1, 2021. Principal and interest payments are due monthly and principal payments totaling $210,000 were made during the nine months ended September 30, 2012.

Beginning January 2011, principal and interest payments are due monthly on the $9,725,000 term loan secured by the Deerfield Commons I that was originally entered into on November 29, 2005. The loan bears interest at a fixed rate of 5.23% per annum and interest only payments were due monthly for the first 60 months. Principal payments totaling $108,000 were made during the nine months ended September 30, 2012.

On February 8, 2011, we entered into five cross-collateralized secured term loans totaling $37,000,000 with ING USA Annuity and Life Insurance Company secured by the following properties: 4701 Gold Spike Road, $10,650,000, Summit Distribution Center, $6,700,000, Tolleson Commerce Park II, $4,600,000, 3660 Deerpark Blvd., $7,650,000 and 1985 International Way, $7,400,000. The loans bear interest at a fixed rate of 4.45% and mature on March 1, 2018. Principal and interest payments are due monthly and principal payments totaling $464,000 were made during the nine months ended September 30, 2012.

On February 28, 2011, we entered into a $33,000,000 secured term loan with TD Bank secured by the 100 Kimball Drive property. Upon closing the 100 Kimball Drive loan, we simultaneously entered into an interest rate swap agreement with TD Bank to effectively fix the interest rate on the entire outstanding loan amount to 5.25% for its ten-year term. Principal and interest payments are due monthly and principal payments totaling $498,000 were made during the nine months ended September 30, 2012.

On April 11, 2011, in connection with the acquisition of 70 Hudson Street, we assumed a $124,113,000 ($120,857,000 face value plus a premium of $3,256,000) fixed rate mortgage loan from Lehman Brothers Bank, FSB that bears interest at a rate of 5.65% and matures on April 11, 2016. Principal and interest payments are due monthly and principal payments totaling $1,300,000 were made during the nine months ended September 30, 2012.

On April 11, 2011, in connection with the acquisition of 90 Hudson Street, we assumed a $120,247,000 ($117,562,000 face value plus a premium of $2,685,000) fixed rate mortgage loan from Teachers Insurance and Annuity Association of America that bears interest at a rate of 5.66% and matures on May 1, 2016. On July 14, 2011, we and Teachers Insurance and Annuity Association of America agreed to modify the $117,562,000 existing mortgage loan assumed by us. The loan was modified to extend its maturity by three years, from May 1, 2016 to May 1, 2019. The 5.66% annual interest rate was unchanged but is subject to a new 30-year amortization schedule. We pre-paid approximately $8,600,000 of loan’s balance (with no pre-payment penalty) in connection with the modification. Principal and interest payments are due monthly and principal payments totaling $960,000 were made during the nine months ended September 30, 2012.

On June 24, 2011, we entered into a $11,700,000 secured term loan with TD Bank secured by the Kings Mountain III property. Effective July 1, 2011, we entered into an interest rate swap agreement with TD Bank to effectively fix the interest rate on the entire outstanding loan amount to 4.47% for its seven-year term. Principal and interest payments are due monthly and principal payments totaling $194,000 were made during the nine months ended September 30, 2012.

On December 30, 2011, in connection with the acquisition of Sabal Pavilion, we assumed a $15,428,000 ($14,700,000 face value plus a premium of $728,000) fixed-rate mortgage loan from U.S. Bank National Association that bears interest at a rate of 6.38% and matures on August 1, 2013. Interest payments are due monthly with principal due at maturity.

Loan Payable

On May 26, 2010, we entered into a $70,000,000 revolving credit facility with Wells Fargo Bank, N.A., or the Wells Fargo Credit Facility. The initial maturity date of the Wells Fargo Credit Facility was May 26, 2014, however we could extend the maturity date to

35

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

May 26, 2015, subject to certain conditions. $15,000,000 of the Wells Fargo Credit Facility was initially drawn upon closing on May 26, 2010, with $55,000,000 initially remaining available for disbursement during the term of the facility. We had the right to prepay any outstanding amount of the Wells Fargo Credit Facility, in whole or in part, without premium or penalty at any time during the term of this Wells Fargo Credit Facility, however, we initially could not reduce the outstanding principal balance below a minimum outstanding amount of $15,000,000, without reducing the total $70,000,000 Wells Fargo Credit Facility capacity. Initially, the Wells Fargo Credit Facility had a floating interest rate of 300 basis points over LIBOR, however this interest rate would be at least 4.00% for any of the outstanding balance that was not subject to an interest rate swap with an initial term of at least two years.

Upon closing on May 26, 2010, we entered into an interest rate swap agreement with Wells Fargo Bank, N.A. to effectively fix the interest rate on the initial $15,000,000 outstanding loan amount at 5.10% for the four-year term of the facility. The interest rate swap was designated as a qualifying cash flow hedge at the start date of the hedge relationship as described in Note 15 “Derivative Instruments.” The Wells Fargo Credit Facility was initially secured by our 13201 Wilfred, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, Crest Ridge Corporate Center I and West Point Trade Center properties. In addition, CSP OP provided a limited guarantee for the Wells Fargo Credit Facility.

On August 31, 2010, we entered into an amended and restated credit agreement with Wells Fargo Bank, N.A. to expand the Wells Fargo Credit Facility from its initial capacity of $70,000,000 to an amended capacity of $125,000,000 (the “Amended Wells Fargo Credit Facility”). In connection with the Amended Wells Fargo Credit Facility, the minimum outstanding amount was increased to $25,000,000 and as such an additional $10,000,000 was drawn (in addition to the $15,000,000 initially drawn on May 26, 2010) with the remaining $100,000,000 available for disbursement during the term of the facility. The Amended Wells Fargo Credit Facility was secured by an additional three of our properties, for a total of eight properties in all: 13201 Wilfred Lane, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, Crest Ridge Corporate Center, West Point Trade Center, 5160 Hacienda Drive, 10450 Pacific Center Court and 225 Summit Avenue. The interest rate was reduced by 25 basis points to 275 basis points over LIBOR (which rate would apply to all withdrawals from the Amended Wells Fargo Credit Facility other than the initial $15,000,000 that was drawn on May 26, 2010) and the initial interest rate floor of 4.00% was eliminated. The initial maturity date remained May 26, 2014, however we could extend the maturity date to May 26, 2015, subject to certain conditions.

On September 13, 2012, we entered into a credit agreement (the “Credit Agreement”) with a group of lenders to provide CSP OP with an unsecured, revolving credit facility (the “Unsecured Credit Facility”) with an initial capacity of $700,000,000. The Unsecured Credit Facility replaced the Amended Wells Fargo Credit Facility, which was terminated concurrently with the closing of the Unsecured Credit Facility. The Company paid the $25,000,000 outstanding balance of the Amended Wells Fargo Credit Facility with cash on hand and expensed the unamortized deferred financing costs associated with obtaining the loan totaling $1,191,000. No borrowings were outstanding under the Unsecured Credit Facility as of September 30, 2012. The Unsecured Credit Facility has a term of four years, which term may be extended for one year at the option of CSP OP provided that CSP OP is not then in default and upon payment of customary extension fees. The Unsecured Credit Facility has no minimum outstanding balance requirements. Under certain circumstances, CSP OP may request an increase in the capacity of the Unsecured Credit Facility by up to an additional $700,000,000, to an aggregate size of $1,400,000,000, although none of the lenders has any obligation to participate in such increase. The Unsecured Credit Facility includes a $25,000,000 swingline sub-facility and a $25,000,000 letter of credit sub-facility. CSP OP paid customary arrangement and commitment fees to the lenders in connection with the Unsecured Credit Facility. The Company and certain of its subsidiaries have provided a guaranty in connection with the Unsecured Credit Facility.

The loans under the Unsecured Credit Facility will bear interest, at CSP OP’s election, based on (i) LIBOR, for interest periods of one, three or six months, plus the applicable margin, or (ii) the LIBOR Market Index Rate plus the applicable margin (if the LIBOR Market Index Rate is unavailable, the per annum rate of interest would be the Federal Funds Rate plus 1.5%, plus the applicable margin). The LIBOR Market Index Rate is LIBOR in respect of loans of one-month interest periods, determined on a daily basis, plus the applicable margin. The applicable margin is (i) for periods prior to the Company or CSP OP having a credit rating, based on the Company’s then current leverage ratio, and (ii) during such periods when the Company or CSP OP has a credit rating, based on its then current credit rating. The applicable margin can vary from (i) 1.60% to 2.35% based upon the then current leverage ratio, or (ii) 1.00% to 1.80% based upon a then current credit rating of the Company or CSP OP. As of the closing of the Unsecured Credit Facility, the current stated applicable margin was 1.60%. CSP OP will pay customary fees in connection with borrowings under the Unsecured Credit Facility. Further, CSP OP may prepay any revolving or swingline loan, in whole or in part, at anytime without premium or penalty.

Under the Unsecured Credit Facility, the Company will be subject to certain financial covenants that require, among other things: the maintenance of (i) a leverage ratio of not more than 0.60; (ii) a fixed charge coverage ratio of at least 1.50; (iii) a secured leverage

36

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

ratio of not more than (a) 0.45 prior to the Unsecured Credit Facility’s second anniversary, or (b) 0.40 thereafter; (iv) an unencumbered leverage ratio of not more than 0.60; (v) a ratio of unencumbered net operating income to unsecured interest expense of at least 1.75 (unless the Company or CSP OP obtains an investment grade credit rating, in which case this requirement is eliminated); (vi) minimum tangible net worth of $1,653,403,000 plus 85% of the net proceeds of certain future equity issuances; and (vii) unencumbered asset value of at least $400,000,000. In addition, the Unsecured Credit Facility contains a number of customary non-financial covenants including those restricting liens, mergers, sales of assets, certain investments in unimproved land and mortgage receivables, intercompany transfers, transactions with affiliates and distributions.

The minimum principal payments due for the notes payable from our consolidated properties are as follows as of September 30, 2012 (in thousands):

2012 (Three months ending December 31, 2012)	$	3,811
2013		48,538
2014		69,458
2015		64,121
2016		125,109
2017		111,655
Thereafter		200,137
	$	622,829

Our organizational documents contain a limitation on the amount of indebtedness that we may incur, so that unless our shares are listed on a national securities exchange, our aggregate borrowing may not exceed 300% of our net assets unless any excess borrowing is approved by a majority of our independent trustees and is disclosed to shareholders in our next quarterly report.

8. Minimum Future Rents Receivable

The following is a schedule of minimum future rentals to be received on non-cancelable operating leases from consolidated properties as of September 30, 2012 (in thousands):

2012 (Three months ending December 31, 2012)	$	36,166
2013		137,126
2014		132,351
2015		124,266
2016		111,369
2017		104,747
Thereafter		406,310
	$	1,052,335

9. Concentrations

Tenant Revenue Concentrations

For the nine months ended September 30, 2012 and 2011, respectively, there were no significant revenue concentrations.

Geographic Concentrations

As of September 30, 2012, we owned 78 consolidated properties, located in 17 states (Arizona, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Massachusetts, Minnesota, New Jersey, North Carolina, South Carolina, Pennsylvania, Texas, Utah, and Virginia) and in the United Kingdom.

As of September 30, 2011 we owned 74 consolidated properties, located in 14 states (Arizona, California, Florida, Georgia, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, North Carolina, South Carolina, Texas, Utah, and Virginia) and in the United Kingdom.

37

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Our geographic revenue concentrations from consolidated properties for the nine months ended September 30, 2012, and 2011 were as follows:

	Nine Months Ended September 30,
	2012			2011
Domestic
New Jersey		28.41	%		26.67	%
Virginia		10.93			13.70
California		8.93			11.23
South Carolina		8.48			8.86
Texas		8.38			8.85
Massachusetts		5.78			6.85
Florida		5.45			5.20
Illinois		4.37			2.84
Arizona		4.18			0.75
Minnesota		3.53			4.59
North Carolina		2.62			2.26
Colorado		1.46			0
Georgia		1.25			1.52
Kentucky		0.82			1.03
Utah		0.75			0.92
Kansas		0.51			0
Total Domestic		95.85			95.27
International
United Kingdom		4.15			4.73
Total		100.00	%		100.00	%

Our geographic long-lived asset concentrations from consolidated properties as of September 30, 2012 and December 31, 2011 were as follows:

	September 30, 2012			December 31, 2011
Domestic
New Jersey		26.34	%		29.44	%
Virginia		9.74			10.90
South Carolina		8.46			9.66
California		7.37			8.18
Texas		6.82			7.58
Illinois		5.81			2.42
Massachusetts		4.91			5.44
Florida		4.82			5.34
Arizona		3.82			4.26
Kansas		3.60			0
Pennsylvania		3.55			0.76
North Carolina		3.08			3.40
Minnesota		2.25			2.50
Colorado		1.36			1.51
Kentucky		0.76			0.86
Georgia		0.74			0.81
Utah		0.69			0.78
Total Domestic		94.12			93.84
International
United Kingdom		5.88			6.16
Total		100.00	%		100.00	%

38

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

10. Segment Disclosure

Our reportable segments consist of three types of commercial real estate properties, namely, Domestic Industrial Properties, Domestic Office Properties and International Office/Retail Properties. Management internally evaluates the operating performance and financial results of our segments based on net operating income. We also have certain general and administrative level activities including legal, accounting, tax preparation and shareholder servicing costs that are not considered separate operating segments. Our reportable segments are on the same basis of accounting as described in Note 2—”Basis of Presentation and Summary of Significant Accounting Policies.”

We evaluate the performance of our segments based on net operating income, defined as: rental income and tenant reimbursements less property and related expenses (operating and maintenance, property management fees, property level general and administrative expenses and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization, and our general and administrative expenses. The following table compares the net operating income for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic Industrial Properties
Revenues:
Rental	$	11,880	$	8,344	$	31,646	$	22,455
Tenant Reimbursements		2,077		1,748		6,994		5,091
Total Revenues		13,957		10,092		38,640		27,546
Property and Related Expenses:
Operating and Maintenance		529		432		1,781		1,366
General and Administrative		234		179		505		503
Property Management Fee to Related Party		79		68		238		205
Property Taxes		2,086		1,612		6,127		4,824
Total Expenses		2,928		2,291		8,651		6,898
Net Operating Income		11,029		7,801		29,989		20,648
Domestic Office Properties
Revenues:
Rental		24,230		22,415		72,862		59,861
Tenant Reimbursements		6,996		5,481		18,314		14,620
Total Revenues		31,226		27,896		91,176		74,481
Property and Related Expenses:
Operating and Maintenance		3,750		3,704		12,243		10,060
General and Administrative		78		16		277		194
Property Management Fee to Related Party		234		213		695		515
Property Taxes		4,666		3,012		11,411		8,535
Total Expenses		8,728		6,945		24,626		19,304
Net Operating Income		22,498		20,951		66,550		55,177

39

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
International Office/Retail Properties
Revenues:
Rental		1,870			1,717			5,358			4,851
Tenant Reimbursements		94			84			258			218
Total Revenues		1,964			1,801			5,616			5,069
Property and Related Expenses:
Operating and Maintenance		94			175			290			533
General and Administrative		67			107			219			181
Property Management Fee to Related Party		83			230			235			376
Total Expenses		244			512			744			1,090
Net Operating Income		1,720			1,289			4,872			3,979
Reconciliation to Consolidated Net Loss
Total Segment Net Operating Income		35,247			30,041			101,411			79,804
Interest Expense		8,566			9,329			26,033			24,724
General and Administrative		7,162			1,172			10,973			3,386
Investment Management Fee to Related Party		5,159			5,607			17,270			15,100
Acquisition Expenses		1,099			1,044			2,508			12,537
Depreciation and Amortization		18,787			16,656			54,749			43,901
Transition Costs		6,216			0			8,152
		(11,742	)		(3,767	)		(18,274	)		(19,844	)
Other Income and Expenses
Interest and Other Income		255			460			1,800			1,271
Net Settlement Payments on Interest Rate Swaps		(171	)		(178	)		(495	)		(532	)
Gain on Interest Rate Swaps		134			32			380			177
(Loss) Gain on Note Payable at Fair Value		(26	)		75			(85	)		41
Loss on Early Extinguishment of Debt		(1,191	)		0			(1,191	)		0
Loss on Swap Termination		(495	)		0			(495	)		0
Loss from Continuing Operations Before Provision for Income Taxes and Equity in Income of Unconsolidated Entities		(13,236	)		(3,378	)		(18,360	)		(18,887	)
Provision for Income Taxes		(75	)		(85	)		(218	)		(385	)
Equity in Income of Unconsolidated Entities		927			609			2,556			4,160
Net Loss from Continuing Operations		(12,384	)		(2,854	)		(16,022	)		(15,112	)
Discontinued Operations
(Loss) Income from Discontinued Operations		0			(18	)		0			377
Realized (Loss) Gain from Sale		(0	)		426			(415	)		301
Income (Loss) From Discontinued Operations		(0	)		408			(415	)		678
Net Loss		(12,384	)		(2,446	)		(16,437	)		(14,434	)
Net Loss Attributable to Non-Controlling Operating Partnership Units		5			4			7			20
Net Loss Attributable to Chambers Street Properties Shareholders	$	(12,379	)	$	(2,442	)	$	(16,430	)	$	(14,414	)

40

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Condensed Assets	September 30, 2012		December 31, 2011
Domestic Industrial Properties—Continuing Operations	$	574,291	$	463,869
Domestic Office Properties—Continuing Operations		1,060,975		1,091,120
International Office/Retail Properties		105,549		102,992
Non-Segment Assets		674,442		765,486
Non-Segment Construction in Progress—Variable Interest Entity		66,354		17,233
Total Assets	$	2,481,611	$	2,440,700

	Nine Months Ended September 30,
Capital Expenditures(1)	2012		2011
Domestic Industrial Properties—Continuing Operations		$124,852		$45,604
Domestic Office Properties—Continuing Operations		520		353,658
International Office/Retail Properties		644		90
Non-Segment Assets		527		232
Non-Segment Construction in Progress—Variable Interest Entity		42,495		0
Total Capital Expenditures	$	169,038	$	399,584

⁽¹⁾  This table presents acquisitions and improvements on real estate investments.

11. Investment Management and Other Fees to Related Parties

Prior to July 1, 2012, all of our business activities were managed by the former investment advisor pursuant to the Fourth Amended Advisory Agreement, which terminated according to its terms on June 30, 2012. Effective July 1, 2012, we entered into the Transitional Services Agreement with CSP OP and the former investment advisor pursuant to which the former investment advisor will provide certain consulting related services to us at the direction of our officers and other personnel for a term ending on April 30, 2013. For consulting services provided to us in connection with the investment management of our assets, the former investment advisor shall be paid an investment management consulting fee payable in cash consisting of (i) a monthly fee equal to one-twelfth of 0.5% of the aggregate cost (before non-cash reserves and depreciation) of all real estate investments within our portfolio and (ii) a monthly fee equal to 5.0% of the aggregate monthly net operating income derived from all real estate investments within our portfolio, subject to certain adjustments. For consulting services provided to us in connection with the acquisition of assets, the former investment advisor or its affiliates shall be paid acquisition fees up to 1.5% of (i) the contract purchase price of real estate investments acquired by us, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity. The total of all acquisition consulting fees payable with respect to real estate investments shall not exceed an amount equal to 6% of the contract purchase price (or 6% of funds advanced with respect to mortgages) provided, however, that a majority of the uninterested members of the Board of Trustees may approve amounts in excess of this limit.

Upon the termination date of the Transitional Services Agreement, we and the former investment advisor shall agree on a list of unacquired real estate investments for which the former investment advisor has performed certain acquisition related consulting services (a “Qualifying Property”). If any Qualifying Property is acquired by us within the nine months following the termination of the Transitional Services Agreement then we shall pay an acquisition consulting fee equal to 0.75% of (i) the contract purchase price of the real estate investments (including debt), or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity to the former investment advisor. Real estate investments for which there is a dispute as to whether it is a Qualifying Property that are acquired within the nine months following the termination of the Transitional Services Agreement will be submitted to arbitration.

For consulting services provided to us in connection with property management, leasing or construction services, the former investment advisor shall be paid based upon the customary property management, leasing and construction supervision fees applicable to the geographic location and type of property. Such fees for each service provided are expected to range from 2.0% to 5.0% of gross revenues received from a property that we own. We shall pay the former investment advisor a real estate commission fee upon the sale of properties in an amount equal to the lesser of (i) one-half of the competitive real estate commission or (ii) 3% of the sales price of each property sold. The total brokerage commission paid may not exceed the lesser of the competitive real estate commission or an amount equal to 6% of the sales price of the property.

41

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

To the extent that the we assume or incur prior to the termination of the Transition Services Agreement a cost that was previously borne by the former investment advisor during the term of the Transition Services Agreement or its predecessor agreement, then amounts otherwise owed under the Transition Services Agreement shall be correspondingly reduced on a monthly basis; provided that (i) any Assumed Costs resulting from hiring of any targeted personnel shall reduce the amounts payable by us under this agreement for such month only to the extent of their base salary and benefits (as in effect immediately prior to their hiring by us) and any related other direct employer costs (but excluding any bonus amounts) earned or incurred during the month.

We will reimburse the former investment advisor for certain expenses paid or incurred in connection with services provided under the Transitional Services Agreement. In addition, the former investment advisor will only be entitled to reimbursement for third party expenses incurred in connection with services provided pursuant to the Transitional Services Agreement that we have approved in writing. Our sole obligation to reimburse the former investment advisor for expenses incurred related to personnel costs was to make an aggregate payment equal to $2,500,000 on the effective date of the agreement.

Previously, pursuant to the Fourth Amended Advisory Agreement, the former investment advisor and its affiliates performed services relating to the management of our assets. We also have paid fees to the former dealer manager for services it performed with respect to our prior public offerings. Items of compensation and equity participation are as follows:

Offering Costs Relating to Public Offerings

Offering costs totaling $0 and $18,589,000, $17,530,000 and $44,856,000 were incurred during the three and nine months ended September 30, 2012 and 2011, respectively, and are recorded as a reduction of additional paid-in-capital in the consolidated statement of shareholders’ equity. Of the total amounts, $0 and $18,517,000, $17,504,000 and $44,584,000 was incurred to CNL Securities Corp., as the former dealer manager of our follow-on public offering, and $0 and $72,000, $26,000 and $273,000 was incurred to the former investment advisor for reimbursable marketing for the three and nine months ended September 30, 2012 and 2011, respectively. Each party will be paid the amount incurred from proceeds of our follow-on public offering. As of September 30, 2012 and December 31, 2011, the accrued offering costs payable to related parties included in our consolidated balance sheets were $0 and $1,974,000. We believe that all offering costs have been paid as of September 30, 2012.

Investment Management Fee to Related Party

Prior to October 24, 2006, the former investment advisor received an annual fee equal to 0.75% of the book value of the total assets, as defined in the advisory agreement, based on the assets of CSP OP. The investment management fee was calculated monthly based on the average of total assets, as defined, during such period. On October 24, 2006, we entered into that certain amended and restated agreement of limited partnership of CSP OP (the “Amended Partnership Agreement”) and that certain amended and restated advisory agreement (the “Amended Advisory Agreement”). The Amended Advisory Agreement provided an investment management fee of (i) a monthly fee equal to one twelfth of 0.6% of the aggregate cost (before non-cash reserves and depreciation) of all real estate investments within our portfolio and (ii) a monthly fee equal to 7.0% of the aggregate monthly net operating income derived from all real estate investments within our portfolio. On January 30, 2009, we entered into that certain second amended and restated advisory agreement (the “Second Amended Advisory Agreement”) and that certain second amended agreement of limited partnership of CBRE Operating Partnership, L.P. (the “Second Amended Partnership Agreement”). The Second Amended Advisory Agreement modified, among other things, the investment management fee to consist of (a) a monthly fee equal to one twelfth of 0.5% of the aggregate costs (before non-cash reserves and depreciation) of all real estate investment in our portfolio and (b) a monthly fee equal to 5.0% of the aggregate monthly net operating income derived from all real estate investments in our portfolio The Second Amended Partnership Agreement generally contained the same terms and conditions as the Amended Partnership Agreement, except for clarification regarding the timing of potential distributions that the holder of the Class B interest would have been entitled to.

On December 21, 2010, we entered into that certain third amended and restated advisory agreement (the “Third Amended Advisory Agreement”). The Third Amended Advisory Agreement contained the same terms and conditions as the Second Amended Advisory Agreement, except that the term of the agreement was extended to April 30, 2011, subject to an unlimited number of successive one-year renewals upon the mutual consent of the parties. The former investment advisor did not waive any investment management fees during the three and nine months ended September 30, 2012 and 2011, respectively.

42

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

On April 27, 2012, the Company entered into the Fourth Amended Advisory Agreement with CSP OP and the former investment advisor, effective May 1, 2012. The Fourth Amended Advisory Agreement generally contains the same terms and conditions as the Third Amended and Restated Advisory Agreement dated December 21, 2010, except for the following material changes: (i) the term of the agreement was modified to expire on the earlier of (a) June 30, 2012 or (b) such date that we became self-managed through the hiring of a majority of 14 identified current employees of the former investment advisor and/or its affiliates, subject to up to four successive two-month renewals; provided, however, that no renewal shall have been permitted if we became self-managed; (ii) to the extent we assume costs prior to the termination of the Fourth Amended Advisory Agreement in connection with our transition to self-management of the type which were previously borne by the former investment advisor pursuant to the Third Amended Advisory Agreement, then the fees paid to the former investment advisor would be correspondingly reduced on a monthly basis, subject to certain adjustments; and (iii) the indemnification provisions were modified to specify that we would indemnify the former investment advisor and its affiliates under any predecessor advisory agreement, future services agreement or arising from the performance of duties as an officer or trustee of the Company or another entity for which they served at our request. The Fourth Amendment and Restated Advisory Agreement terminated according to its terms on June 30, 2012.

On April 27, 2012, we entered into the Third Amended Partnership Agreement with each of the limited partners of the CSP OP, effective May 1, 2012. The Third Amended Partnership Agreement generally contains the same terms and conditions as the Second Amended Partnership Agreement, except with respect to the redemption of the Class B interest. Under the Third Amended Partnership Agreement, the Class B interest may be redeemed upon the earliest to occur of (i) the exercise by the holder of the Class B interest of its right to require CSP OP to redeem its interest, which such right continues for five years from the date of the agreement, (ii) the fifth anniversary of the date of the agreement, (iii) certain other liquidity events, (iv) a merger or sale transaction (a “Merger or Sale”), or (v) our common shares becoming listed or admitted to trading on a national securities exchange or designated for quotation on the NASDAQ Global Select Market or the NASDAQ Global Market (a “Listing”). CSP OP may reject a redemption and institute a blackout period with respect to redemptions upon the determination by our Board of Trustees that an appraisal process would not be in the best interest of CSP OP at the time of the proposed redemption. A blackout period may only be imposed as the result of a potential Merger or Sale or potential Listing. The consideration received for the redemption of the Class B interest will depend upon the event triggering the redemption. In the event of a redemption in connection with (a) a Listing, the consideration will be determined based on the market value of our shares for a 30 day period beginning 150 days after the Listing, or (b) a Merger or Sale, the consideration will be determined based on our aggregate share value in the transaction. In the event of a redemption as a result of (a) the exercise by the holder of the Class B interest of its redemption right, (b) the fifth anniversary of the date of the agreement or (c) certain other liquidity events, the consideration will be determined based on an appraisal process.

We recognized $200,000 in expense associated with the Class B interest during the nine months ended September 30, 2012. The former investment advisor earned investment management fees of $5,159,000 and $5,626,000 for the three months ended September 30, 2012 and 2011, respectively; and $17,270,000 and $15,196,000 for the nine months ended September 30, 2012 and 2011, respectively. The fee earned during the three months ended September 30, 2012 is based on the Transitional Services Agreement which allows for certain adjustments. Adjustments totaling $1,087,000 were recorded as a reduction of the Investment Management Fee during the three and nine months ended September 30, 2012, respectively. As of September 30, 2012 and December 31, 2011, the investment management fees payable to a related party in our consolidated balance sheets were $2,045,000 and $1,968,000, respectively. In connection with services provided to the former investment advisor, CFG VIII, Inc., the former sub-advisor and affiliate of the former dealer manager pursuant to a sub-advisory agreement dated August 21, 2006 (which such agreement terminated by its terms on June 30, 2012 in connection with the termination of the Fourth Amended Advisory Agreement), was paid by the former investment advisor $0 and $777,000 for the three months ended September 30, 2012 and 2011, respectively; and $1,672,000 and $2,098,000 for the nine months ended September 30, 2012 and 2011, respectively.

Acquisition Fee and Expenses to Related Party

The advisory agreement and/or the Transitional Services Agreement permits the former investment advisor to earn an acquisition fee of up to 1.5% of (i) the purchase price of real estate investments acquired by us, including any debt attributable to such investments, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity. The former investment advisor earned acquisition fees of $944,000 and $803,000 for the three months ended September 30, 2012 and 2011, respectively; and $2,061,000 and $10,179,000 for the nine months ended September 30, 2012 and 2011, respectively. In connection with services provided to the former investment advisor, the sub advisor,

43

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

pursuant to a sub advisory agreement, was paid by the former investment advisor acquisition fees of $0 and $150,000 for the three months ended September 30, 2012 and 2011, respectively; and $209,000 and $1,903,000 for the nine months ended September 30, 2012 and 2011, respectively. The former investment advisor earned $0 and $54,000 in acquisition related expenses during the three months ended September 30, 2012 and 2011, respectively; and $64,000 and $679,000 for the nine months ended September 30, 2012 and 2011, respectively. Prior to the adoption of “Business Combinations” on January 1, 2009, these acquisition fees and expenses were capitalized to investments in real estate and related intangibles.

Management Services to Related Party

Affiliates of the former investment advisor may also provide leasing, brokerage, property management, construction management or mortgage banking services for us. CBRE Group, Inc., an affiliate of the former investment advisor, received property management fees of approximately $396,000 and $511,000 for the three months ended September 30, 2012 and 2011, respectively; and $1,168,000 and $1,096,000 for the nine months ended September 30, 2012 and 2011, respectively. As of September 30, 2012 and December 31, 2011, the property management fees payable to related party included in our consolidated balance sheets were $310,000 and $190,000, respectively. Brokerage fees of $203,000 and $85,000 were paid to affiliates of the former investment advisor for the three months ended September 30, 2012 and 2011, respectively; and $203,000 and $111,000 for the nine months ended September 30, 2012 and 2011, respectively. Mortgage banking fees of $0 and $1,362,000 were paid to CBRE Capital Markets, as affiliate of the former investment advisor, for the three months ended September 30, 2012 and 2011, respectively; and $0 and $2,113,000 for the nine months ended September 20, 2012 and 2011, respectively.

Affiliates of the former investment advisor received leasing fees of $292,000 and $156,000 for the three months ended September 30, 2012 and 2011, respectively; and $581,000 and $1,266,000 for the nine months ended September 30, 2012 and 2011, respectively. An affiliate of the former investment advisor received construction management fees of $246,000 and $5,000 for the three months ended September 30, 2012 and 2011, respectively; and $803,000 and $24,000 for the nine months ended September 30, 2012 and 2011, respectively.

12. Equity Incentive Plan and Performance Bonus Plan

Equity Incentive Plan

We have adopted a 2004 equity incentive plan which was amended and restated in July 2012 to reflect our name change. The purpose of the amended and reinstated 2004 equity incentive plan is to provide us with the flexibility to use share options and other awards to provide a means of performance-based compensation. Our key employees, directors, trustees, officers, advisors, consultants or other personnel and our subsidiaries or other persons expected to provide significant services or our subsidiaries would be eligible to be granted share options, restricted shares, phantom shares, distribution equivalent rights and other share-based awards under the amended and reinstated 2004 equity incentive plan.

On April 20, 2010, our Board’s independent trustees, Messrs. Black, Reid and Orphanides, were awarded equity grants under our 2004 equity incentive plan on the following terms: (i) each award was for $80,000 in restricted common shares of the Company (or 8,000 shares at $10.00 per share) for a total of $240,000; (ii) each award vested in its entirety, upon issuance; and (iii) the independent trustee would not be able to redeem any of the restricted common shares prior to the third anniversary of date of issuance, but retains the rights to dividends declared and paid during such restriction period. We recognized a stock based compensation expense of $240,000 during the year ended December 31, 2010 as a result of granting these awards to our independent trustees.

On June 17, 2011, our Board’s independent trustees, Messrs. Black, Reid and Orphanides, were awarded equity grants under our 2004 equity incentive plan on the following terms: (i) each award was for $9,200 in restricted common shares of the Company (or 1,000 shares at $9.20 per share) for a total of $27,600; (ii) each award vested in its entirety, upon issuance; and (iii) the independent trustee would not be able to redeem any of the restricted common shares prior to the third anniversary of date of issuance, but retains the rights to dividends declared and paid during such restriction period. We recognized a stock based compensation expense of $27,600 during the year ended December 31, 2011 as a result of granting these awards to our independent trustees.

On September 25, 2012, Mr. Cuneo, our president and chief executive officer, entered into an employment agreement with us, pursuant to which, on September 28, 2012, Mr. Cuneo was awarded an equity grant under our amended and restated 2004 equity

44

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

incentive plan on the following terms: an award of 150,000 restricted common shares, one-third of which will vest on each of the first, second and third anniversaries of the date of the grant, provided that Mr. Cuneo is still employed by the Company on the applicable date of vesting subject to the terms of the amended and restated 2004 equity incentive plan and the restricted award agreement pursuant to which it was granted. Further, provided that the Company achieves a Liquidity Event (as defined in Mr. Cuneo’s employment agreements) within two years of the initial effective date of his employment agreement, an award of 150,000 restricted common shares, which award shall be (a) granted no later than 60 days after a Liquidity Event, and (b) subject to the terms of the amended and restated 2004 equity incentive plan and the award agreement pursuant to which it is granted. If the Company is not a surviving entity following a Liquidity Event, Mr. Cuneo shall be entitled to receive the consideration he would have received if the restricted share award had been granted immediately prior to the Liquidity Event, in lieu of the restricted share award. Also on September 25, 2012, Mr. Kianka, our executive vice president and chief operating officer, entered into an employment agreement with us, pursuant to which Mr. Kianka was awarded an equity grant under our amended and restated 2004 equity incentive plan on the following terms: an award of 75,000 restricted common shares, one-third of which will vest on each of the first, second and third anniversaries of the date of the grant, provided that Mr. Kianka is still employed by the Company on the applicable date of vesting, subject to the terms of the amended and restated 2004 equity incentive plan and the restricted award agreement pursuant to which it was granted. Further, provided that the Company achieves a Liquidity Event (as defined in Mr. Kianka’s employment agreement) within two years of the initial effective date of his employment agreement, an award of 75,000 restricted common shares, which award shall be (a) granted no later than 60 days after a Liquidity Event, and (b) subject to the terms of the amended and restated 2004 equity incentive plan and the award agreement pursuant to which it is granted. If the Company is not a surviving entity following a Liquidity Event, Mr. Kianka shall be entitled to receive the consideration he would have received if the restricted share award had been granted immediately prior to the Liquidity Event, in lieu of the restricted share award.

A total of 300,000 restricted common shares were granted to Mr. Cuneo, Mr. Kianka and other officers of the Company on September 28, 2012, and the grant date fair value of the awards was $2,850,000 (based on the $9.50 per share price of the Company’s common stock offered under the Dividend Reinvestment Plan on the grant date). Compensation expense will be recognized on a straight-line basis over the service vesting period of three years and will take into consideration an estimated forfeiture rate of 5%. We recognized a stock based compensation expense of $15,000 during the quarter ended September 30, 2012 as a result of granting the awards to Mr. Cuneo, Mr. Kianka and other officers.

Summary of Time-Based Restricted Common Shares

A summary of our time-based Restricted Common Shares from January 1, 2012 through September 30, 2012 is presented below:

	Nonvested
	Shares		Weighted-Average Grant Date Fair Value Per Share		Vested		Total
Outstanding at January 1, 2012		0	$	0		0		0
Granted		300,000		9.50		0		300,000
Vested		0		0		0		0
Canceled		0		0		0		0
Outstanding as of September 30, 2012		300,000		0		0		0

Performance Bonus Plan

We have adopted a 2004 performance bonus plan which was amended and restated in July 2012 to reflect our name change. Annual bonuses under our 2004 performance bonus plan are awarded by our Compensation Committee to selected key employees based on corporate factors or individual factors (or a combination of both). Subject to the provisions of the 2004 performance bonus plan, the Compensation Committee will (i) determine and designate those key employees to whom bonuses are to be granted; (ii) determine, consistently with the 2004 performance bonus plan, the amount of the bonus to be granted to any key employee for any performance period; and (iii) determine, consistently with the 2004 performance bonus plan, the terms and conditions of each bonus. Bonuses may be so awarded by the Compensation Committee prior to the commencement of any performance period, during or after any performance period. No bonus shall exceed 200% of the key employee’s aggregate salary for the year. The Compensation Committee

45

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

may provide for partial bonus payments at target and other levels. Corporate performance hurdles for bonuses may be adjusted by the Compensation Committee in its discretion to reflect (i) dilution from corporate acquisitions and share offerings, and (ii) changes in applicable accounting rules and standards. The Compensation Committee may determine that bonuses shall be paid in cash or shares or other equity-based grants, or a combination thereof. The Compensation Committee may also provide that any such share grants be made under our 2004 equity incentive plan or any other equity-based plan or program we may establish. The Compensation Committee may provide for programs under which the payment of bonuses may be deferred at the election of the employee. There were no bonuses awarded and no bonus related expenses incurred by us under the 2004 performance bonus plan during the three and nine months ended September 30, 2012 and 2011, respectively.

13. Shareholders’ Equity

Under our declaration of trust, we have the authority to issue a total of 1,000,000,000 shares of beneficial interest. Of the total shares authorized, 990,000,000 shares are designated as common shares with a par value of $0.01 per share and 10,000,000 shares are designated as preferred shares.

The registration statement relating to our initial public offering was declared effective by the SEC on October 24, 2006. CNL Securities Corp. was the dealer manager of our initial public offering. The registration statement covered up to $2,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by the former investment advisor, or another firm we choose for that purpose. As of January 29, 2009, we had issued 60,808,967 common shares in our initial public offering. We terminated the initial public offering effective as of the close of business on January 29, 2009. The registration statement relating to our follow-on public offering was declared effective by the SEC on January 30, 2009. CNL Securities Corp. was the dealer manager of the follow-on offering. The registration statement covered up to $3,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by the former investment advisor. We closed our follow-on offering on January 30, 2012. From January 30, 2009 (effective date) through January 30, 2012, we received gross offering proceeds of approximately $1,901,137,211 from the sale of 190,672,251 shares.

During the nine months ended September 30, 2012 and 2011, we repurchased 3,841,599 common shares and 2,786,617 common shares, respectively, under our Share Redemption Program for $35,888,000 and $25,477,000, respectively.

Accumulated Other Comprehensive Income (Loss)

The following presents the changes in the balances of each component of accumulated other comprehensive income for the nine months ended September 30, 2012 and 2011 (in thousands):

	Foreign Currency Translation Gain (Loss)			Swap Fair Value Adjustment			Accumulated Other Comprehensive Income (Loss)
January 1, 2012	$	(10,579	)	$	(13,085	)	$	(23,664	)
Other Comprehensive Income (Loss)		1,036			(2,438	)		(1,402	)
September 30, 2012	$	(9,543	)	$	(15,523	)	$	(25,066	)

	Foreign Currency Translation Gain (Loss)			Swap Fair Value Adjustment			Accumulated Other Comprehensive Income (Loss)
January 1, 2011	$	(9,758	)	$	(1,928	)	$	(11,686	)
Other Comprehensive Income (Loss)		885			(10,756	)		(9,871	)
September 30, 2011	$	(8,873	)	$	(12,684	)	$	(21,557	)

46

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

14. Distributions

Earnings and profits, which determine the taxability of distributions to shareholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes including the treatment of loss on extinguishment of debt, revenue recognition, compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.

The following table reconciles the distributions declared per common share to the distributions paid per common share during the nine months ended September 30, 2012 and 2011:

	Nine Months Ended September 30,
	2012			2011
Distributions declared per common share	$	0.45		$	0.45
Less: Distributions declared in the current period, and paid in the subsequent period		(0.15	)		(0.15	)
Add: Distributions declared in the prior year, and paid in the current year		0.15			0.15
Distributions paid per common share	$	0.45		$	0.45

Distributions to shareholders during the nine months ended September 30, 2012 and 2011 totaled $106,877,000 and $76,485,000, respectively.

We issued 5,105,711 common shares and 3,465,611 common shares pursuant to our dividend reinvestment plan for the nine months ended September 30, 2012 and 2011, respectively.

15. Derivative Instruments

The following table sets forth the terms of our interest rate swap derivative instruments at September 30, 2012 (amounts in thousands):

Type of Instrument	Notional Amount		Fair Value			Pay Fixed Rate			Receive Variable Rate			Maturity Date
Non-qualifying Interest Rate Swap on Thames Valley Retail Park debt(1)	$	9,107		(288	)		5.41	%		0.68	%		May 30, 2013
Non-qualifying Interest Rate Swap on Albion Mills debt(1)	$	9,227		(317	)		3.94	%		0.86	%		October 10, 2013
Qualifying Interest Rate Swap on Maskew Retail Park debt(1)	$	22,566		(1,170	)		3.42	%		0.78	%		August 10, 2014
Qualifying Interest Rate Swap on Pacific Corporate Park debt	$	79,750		(7,006	)		2.69	%		0.25	%		December 7, 2017
Qualifying Interest Rate Swap on 100 Kimball Drive debt	$	32,023		(4,869	)		3.50	%		0.23	%		March 1, 2021
Qualifying Interest Rate Swap on Kings Mountain III debt	$	11,401		(957	)		2.47	%		0.23	%		July 1, 2018

⁽¹⁾  Based on three month GBP-based LIBOR BBA Index with variable rate reset dates every 90 days during the term of the swaps.

47

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

The following table sets forth the terms of our interest rate swap derivative instruments at December 31, 2011 (amounts in thousands):

Type of Instrument	Notional Amount		Fair Value			Pay Fixed Rate			Receive Variable Rate			Maturity Date
Non-qualifying Interest Rate Swap on Thames Valley Drive Retail Park debt(1)	$	8,762		(520	)		5.41	%		1.04	%		May 30, 2013
Non-qualifying Interest Rate Swap on Albion Mills debt(1)	$	8,877		(438	)		3.94	%		0.96	%		October 10, 2013
Qualifying Interest Rate Swap on Maskew Retail Park debt(1)	$	21,710		(1,250	)		3.42	%		0.97	%		August 10, 2014
Qualifying Interest Rate Swap on Wells Fargo Credit Facility loan	$	15,000		(540	)		2.10	%		0.27	%		May 26, 2014
Qualifying Interest Rate Swap on Pacific Corporate Park debt	$	82,000		(5,721	)		2.69	%		0.32	%		December 7, 2017
Qualifying Interest Rate Swap on 100 Kimball Drive debt	$	32,521		(4,120	)		3.50	%		0.27	%		March 1, 2021
Qualifying Interest Rate Swap on Kings Mountain III debt	$	11,595		(709	)		2.47	%		0.27	%		July 1, 2018

⁽¹⁾  Based on three month GBP-based LIBOR BBA Index with variable-rate reset dates every 90 days during the term of the swaps.

We marked our two non-qualifying economic hedge interest rate swap instruments to their estimated liability value of $605,000 and $958,000 on the consolidated balance sheet at September 30, 2012 and December 31, 2011, respectively, which are included in Liabilities as Interest Rate Swaps at Fair Value. We recognized a gain on interest rate swaps of $380,000 and $177,000 for the nine months ended September 30, 2012 and 2011, respectively, included in Gain on Interest Rate Swaps on the Consolidated Statement of Operations.

Our $22,566,000 notional amount interest rate swap has been designated as a qualifying cash flow hedge of the LIBOR base payments due under our Maskew Retail Park variable-rate note payable from its inception on September 24, 2009. The estimated fair value of the interest rate swap liability value of $1,170,000 and $1,250,000 as of September 30, 2012 and December 31, 2011, respectively, has resulted in a swap fair value adjustment being recorded to other comprehensive (loss) gain totaling ($80,000) and $292,000 for the nine months ended September 30, 2012 and 2011, respectively.

Our $15,000,000 notional amount interest rate swap has been terminated under our Wells Fargo Credit Facility variable-rate loan payable on September 13, 2012. We incurred a $495,000 cost in relation to the termination of this swap arrangement.

Our $79,750,000 notional amount interest rate swap has been designated as a qualifying cash flow hedge of the LIBOR base payments due under our Pacific Corporate Park variable-rate loan payable from its inception on December 7, 2010. The estimated fair value of the interest rate swap value of $7,006,000 and $5,721,000 as of September 30, 2012 and December 31, 2011, respectively, has resulted in a swap fair value adjustment being recorded to other comprehensive loss totaling $1,285,000 and $5,013,000 for the nine months ended September 30, 2012 and 2011, respectively.

Our $32,023,000 notional amount interest rate swap has been designated as a qualifying cash flow hedge of the LIBOR base payments due under our 100 Kimball Drive variable-rate loan payable from its inception on March 1, 2011. The estimated fair value of the interest rate swap liability value of $4,869,000 and $4,120,000 as of September 30, 2012 and December 31, 2011, respectively, has resulted in a swap fair value adjustment being recorded to other comprehensive loss totaling $749,000 and $3,981,000 for the nine months ended September 30, 2012 and 2011, respectively.

Our $11,401,000 notional amount interest rate swap has been designated as a qualifying cash flow hedge of the LIBOR base payments due under our Kings Mountain III variable-rate loan payable from its inception on July 1, 2011. The estimated fair value of the interest rate swap liability value of $957,000 and $709,000 as of September 30, 2012 and December 31, 2011, respectively, has resulted in a swap fair value adjustment being recorded to other comprehensive loss totaling $248,000 and $656,000 for the nine months ended September 30, 2012 and 2011, respectively.

48

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

There was no measured ineffectiveness for any of our qualifying hedges during the nine months ended September 30, 2012 and 2011. There were no amounts of deferred gains or losses that are reported in AOCI that are expected to be reclassified into earnings in the next 12 months.

16. Fair Value Option—Note Payable

During the fourth quarter of 2008 we elected to apply the fair value option on a note payable which bears interest at a variable-rate and is currently subject to an economic hedge by an interest rate swap with similar terms and the same notional amount. We have elected to apply the fair value option on the Albion Mills Retail Park variable-rate note payable to match the fair value treatment of interest rate swap derivative on the same note payable thereby achieving a reduction in the artificial volatility in net income or loss that occurs when related financial assets and liabilities are measured and reported on a different basis in the consolidated financial statements.

We applied the fair value option for the Albion Mills Retail Park note payable at each reporting period. Included in gain (loss) on notes payable at fair value in the statement of operations were ($26,000) and $75,000 for the three months ended September 30, 2012 and 2011, respectively; and ($85,000) and $41,000 for the nine months ended September 30, 2012 and 2011, respectively. In addition, there were $347,000 and $12,000 translation adjustments recorded to Other Comprehensive Loss for the nine months ended September 30, 2012 and 2011, respectively.

17. Fair Value of Financial Instruments and Investments

We apply the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical financial instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. We have classified the Albion Mills Retail Park notes payable as Level 3 as of September 30, 2012 and December 31, 2011 due to the lack of current market activity and our reliance on unobservable inputs to estimate the fair value of the mortgage note payable.

As of September 30, 2012 and December 31, 2011, we held certain items that are required to be measured at fair value on a recurring basis. These included cash equivalents, interest rate swap derivative contracts and our equity method investment in CBRE Strategic Partners Asia. Cash equivalents consist of short-term, highly liquid, income-producing investments, all of which have maturities of 90 days or less, including money market funds and U.S. Government obligations. Derivative instruments are related to our economic hedging activities with respect to interest rates.

The fair values of the interest rate swap derivative agreements are estimated with the assistance of a third party valuation specialist, as reviewed by management, using the market standard methodology of discounting the future expected cash payments and receipts on the pay and receive legs of the interest rate swap agreements that swap the estimated variable-rate mortgage note payment stream for a fixed-rate receive payment stream over the period of the loan. The variable interest rates used in the calculation of projected receipts on the interest rate swap agreements are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements (where appropriate). Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of September 30, 2012 and December 31, 2011, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We have consistently applied these valuation techniques in all periods presented and believe we have obtained the most accurate information available for the types of derivative contracts we hold.

The Class B Interest is based on Level 3 valuation inputs for valuing subordinated equity instruments at the Operating Partnership level.

49

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

Our investment in CBRE Strategic Partners Asia is based on the Level 3 valuation inputs applied by the Investment Manager of this investment company utilizing the following approaches for valuing the underlying real estate related investments within the investment company:

¡ The income approach is generally based on a discounted cash flow analysis. Such an analysis for a real property includes projecting net cash flows from the property from a buyer’s perspective and computing the present value of the cash flows using a market discount rate. The cash flows include a projection of the net sales proceeds at the end of our estimate of a market participant holding period, computed using market reversionary capitalization rates and projected cash flows from the property for the year following the holding period.

¡ The direct market comparison approach to property valuation is primarily based on the principle of substitution, which holds that the value of a property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time. Transactions of similar properties are analyzed and compared to the subject property. Factors affecting value include differences in the location, size, quality of construction and other physical features, property rights appraised, timing of sale, and economic and market conditions.

¡ The replacement cost approach to property valuation is a theoretical breakdown of the property into land and building components. The theory is that the value of a property can be estimated by summing the land value and the depreciated value of any improvements. While the replacement cost of the improvements can be determined by adding the labor, material, and other costs, land values must be derived from an analysis of comparable data. The cost approach is considered reliable when used on newer structures, but the method tends to become less reliable for older properties.

¡ For investments owned more than one year, except for investments under construction or incurring significant renovation, it is CBRE Strategic Partners Asia’s policy to obtain a third-party appraisal. For investments in real estate under construction or incurring significant renovation, the valuation analysis is prepared by the investment manager.

The following items are measured at fair value on a recurring and non-recurring basis at September 30, 2012 and December 31, 2011 (in thousands):

	As of September 30, 2012
				Fair Value Measurements Using:
	Total Fair Value			Quoted Markets Prices (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets (Liabilities)
Recurring Fair Value Measurements:
Cash and Cash Equivalents	$	137,467		$	137,467	$	0		$	0
Interest Rate Swaps at Fair Value—Non Qualifying Hedges	$	(605	)	$	0	$	(605	)	$	0
Interest Rate Swaps at Fair Value—Qualifying Hedges	$	(14,002	)	$	0	$	(14,002	)	$	0
Investment in CBRE Strategic Partners Asia	$	7,779		$	0	$	0		$	7,779
Class B Interest	$	(200	)	$	0	$	0		$	(200	)
Note Payable at Fair Value	$	(9,208	)	$	0	$	0		$	(9,208	)

	As of December 31, 2011
				Fair Value Measurements Using:
	Total Fair Value			Quoted Markets Prices (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets (Liabilities)
Recurring Fair Value Measurements:
Cash and Cash Equivalents	$	184,160		$	184,160	$	0		$	0
Interest Rate Swaps at Fair Value—Non Qualifying Hedges	$	(958	)	$	0	$	(958	)	$	0
Interest Rate Swaps at Fair Value—Qualifying Hedges	$	(12,340	)	$	0	$	(12,340	)	$	0
Investment in CBRE Strategic Partners Asia	$	8,381		$	0	$	0		$	8,381
Note Payable at Fair Value	$	(8,775	)	$	0	$	0		$	(8,775	)

50

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

The following table presents our activity for our investment in CBRE Strategic Partners Asia, the variable-rate note payable and the Class B Interest measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2012 (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Investment in CBRE Strategic Partners Asia			Note Payable			Class B Interest
Balance at January 1, 2012	$	8,381		$	(8,775	)	$	0
Contributions		2,029			0			0
Distributions		(2,400	)		0			0
Fair Value Adjustment		(231	)		(85	)		(200	)
Translation Adjustment in Other Comprehensive Income	$	0			(348	)		0
Balance at September 30, 2012	$	7,779		$	(9,208	)	$	(200	)
The Amount of Total Loss for the Period Included in the ending balance at September 30, 2012	$	(231	)	$	(85	)	$	(200	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Investment in CBRE Strategic Partners Asia			Note Payable
Balance at January 1, 2011	$	9,471		$	(8,769	)
Contributions		457			0
Distributions		0			0
Total Loss on Fair Value Adjustment		(603	)		41
Translation Adjustment in Other Comprehensive Income		0			(12	)
Balance at September 30, 2011	$	9,325		$	(8,740	)
The Amount of Total Income (Loss) for the Period Included in the ending balance at September 30, 2011	$	(603	)	$	41

Gains and losses (realized and unrealized) included in earnings related to the interest rate swaps, as well as for the elected fair value note payable for the three and nine months ended September 30, 2012 and 2011, respectively, are reported as components of “Other Income and Expense” on the consolidated statements of operations.

The Company uses derivative instruments to mitigate the effects of interest rate fluctuations on specific forecasted transactions as well as recognized financial obligations or assets. The Company does not use derivative instruments for speculative or trading purposes.

The primary risks associated with derivative instruments are market and credit risk. Market risk is defined as the potential for loss in value of a derivative instrument due to adverse changes in market prices (interest rates). Utilizing derivative instruments allows the Company to effectively manage the risk of fluctuations in interest rates related to the potential effects these changes could have on future earnings and forecasted cash flows.

Credit risk is the risk that one of the parties to a derivative contract fails to perform or meet their financial obligation. The Company does not obtain collateral associated with its derivative instruments, but monitors the credit standing of its counterparties on a regular basis. Should a counterparty fail to perform, the Company would incur a financial loss to the extent that the associated derivative contract was in an asset position. At September 30, 2012, the Company does not anticipate non-performance by the counterparties to its outstanding derivative contracts.

At September 30, 2012, the Company expects that the hedged forecasted transactions, for each of the outstanding qualifying cash flow hedging relationships, remain probable of occurring and that no gains or losses recorded to accumulated other comprehensive loss are expected to be reclassified to earnings.

To illustrate the effect of movements in the interest rate markets, the Company performed a market sensitivity analysis on its outstanding hedging instruments. The Company applied various basis point spreads to the underlying interest rate curves of the

51

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

derivative portfolio in order to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed (dollars in thousands):

Type of Instrument	Notional Amount		Maturity Date		Effects of Change in Interest Rates
					-100 Basis Points			-50 Basis Points			+50 Basis Points		+100 Basis Points
Non-qualifying Interest Rate Swap on Thames Valley Retail Park debt(1)	$	9,107		May 30, 2013		(24	)		(23	)		23		46
Non-qualifying Interest Rate Swap on Albion Mills debt(1)	$	9,227		October 10, 2013		(48	)		(46	)		46		92
Qualifying Interest Rate Swap on Maskew Retail Park debt(1)	$	22,566		August 10, 2014		(220	)		(204	)		202		401
Qualifying Interest Rate Swap on Pacific Corporate Park debt	$	79,750		December 7, 2017		(2,514	)		(1,783	)		1,772		3,728
Qualifying Interest Rate Swap on 100 Kimball Drive debt	$	32,023		March 1, 2021		(2,133	)		(1,160	)		1,122		2,313
Qualifying Interest Rate Swap on Kings Mountain III debt	$	11,401		July 1, 2018		(477	)		(289	)		285		598

⁽¹⁾  Based on three month GBP-based LIBOR BBA Index with variable rate reset dates every 90 days during the term of the swaps.

The estimated fair value of our investment in CBRE Strategic Partners Asia is most sensitive to changes in capitalization rates for commercial properties in large urban areas in China and Japan, and among other factors, is also sensitive to currency exchange rate fluctuations and changes in the interest rates of China, Japan and the U.S., respectively. Decreases in capitalization rates and increases in interest rates generally increase the value of our investments. Changes in currency exchanges rates where the U.S. Dollar increases in value against the Chinese Yuan and Japanese Yen generally decrease the value of our investments. The estimated fair value of the Albion Mills variable-rate loan is not sensitive to changes in index interest rates, but remains somewhat sensitive to changes in credit spreads available to the Company. If credit spreads increase, the fair value of this note payable balance decreases.

Disclosure of Fair Value Financial Instruments

For disclosure purposes only, the following table summarizes our notes payable and loan payable and their estimated fair value at September 30, 2012 and December 31, 2011 (in thousands):

	Book Value				Fair Value
Financial Instrument	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Notes Payable(1)	$	619,275	$	630,146	$	654,145	$	656,135
Note Payable at Fair Value(1)		9,208		8,775		9,208		8,775
Total Notes Payable(1)	$	628,483	$	638,921	$	663,353	$	664,910
Loan Payable(1)	$	0	$	25,000	$	0	$	25,000

⁽¹⁾  Level 3: For purposes of this fair value disclosure, we based our fair value estimate for notes payable on our internal valuation that includes a representative sample of our lenders’ market interest rate quotes as of September 30, 2012 and December 31, 2011 for debt with similar risk characteristics and maturities. We based the Note Payable carried at fair value on a third party appraiser’s valuation, which used similar techniques as our internal valuation model as of September 30, 2012 and December 31, 2011.

These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. We have classified the notes payable as Level 3 as of September 30, 2012 and December 31, 2011 due to the lack of current market activity and our reliance on unobservable inputs to estimate the fair value of the mortgage note payable.

52

CHAMBERS STREET PROPERTIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)

18. Commitments and Contingencies

We have agreed to a capital commitment of up to $20,000,000 in CBRE Strategic Partners Asia, which extended to October 31, 2012. As of September 30, 2012, we funded $17,526,000 of our capital commitment. CBRE Global Investors formed CBRE Strategic Partners Asia to purchase, reposition, develop, hold for investment and sell institutional quality real estate and related assets in targeted markets in China, Japan, India, South Korea, Hong Kong, Singapore and other Asia Pacific markets. If we and all other currently committed capital investors had funded our entire commitments in CBRE Strategic Partners Asia as of September 30, 2012, we would have owned an ownership interest of approximately 5.07% in CBRE Strategic Partners Asia. A majority of our trustees (including a majority of our independent trustees) not otherwise interested in this transaction approved the transaction as being fair, competitive and commercially reasonable. CBRE Strategic Partners Asia is managed by CB Richard Ellis Investors SP Asia II, LLC or the Fund Manager, a subsidiary of CBRE Global Investors, an affiliate of the former investment advisor.

Litigation—From time to time, we and our properties may be subject to legal proceedings, which arise in the ordinary course of our business. Currently, neither our company nor any of our properties are subject to, or threatened with, any legal proceedings for which the outcome is reasonably likely to have a material effect on our results of operations, or financial condition, or cash flows.

Environmental Matters—We are not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.

19. Income Taxes

We elected to be taxed as a REIT under the Internal Revenue Code commencing with our taxable year ended December 31, 2004. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gain). It is our current intention to adhere to these requirements and maintain our REIT qualification. As a REIT, we generally will not be subject to corporate level U.S. federal income tax on net income we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable year, then we will be subject to U.S. federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income, if any.

ASC 740-10 Income Taxes requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We did not have a liability for any unrecognized benefits as of September 30, 2012. The tax years from 2008 through 2011 remain open to examination by the taxing jurisdictions to which the company is subject.

Included as a component of our tax provision, we have incurred income and other taxes (franchise, local and state government and international) related to our continuing operations in the amount of $75,000 and $85,000, $218,000 and $385,000 for California, Georgia, Massachusetts, Minnesota, New Jersey, North Carolina and Texas impacting our operations during the three and nine months ended September 30, 2012 and 2011, respectively. The United Kingdom taxes real property operating results at a statutory rate of 22%. The United Kingdom taxable losses to date have generated a deferred tax asset of approximately $1,126,000 consisting of these net operating loss carryforwards. We have provided for a full valuation allowance of ($1,126,000) as of September 30, 2012 on deferred tax assets because it is not likely that future operating profits in the United Kingdom would be sufficient to absorb the net operating losses.

20. Subsequent Events

On November 7, 2012, we acquired 20000 S. Diamond Lake Road, located in Rogers, Minnesota, a suburb of Minneapolis, for approximately $18,500,000, exclusive of fees and customary closing costs. We funded the acquisition using the net proceeds from our completed public offering of common shares of beneficial interest. 20000 S. Diamond Lake Road is a 280,577 square foot warehouse/distribution center completed in 2004 that is 100% leased to Archway Marketing Services, Inc. through October 2016 and is used as a regional storage and fulfillment center. Archway Marketing Services, Inc. is a subsidiary of Archway Marketing Holdings, Inc., which is a national marketing and logistics service provider.

53

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Explanatory Note

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements, the notes thereto, and the other financial data included elsewhere in this Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This document contains various “forward-looking statements.” You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “would,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Statements regarding the following subjects may be impacted by a number of risks and uncertainties:

¡ our business strategy;

¡ our ability to obtain future financing arrangements;

¡ estimates relating to our future distributions;

¡ our understanding of our competition;

¡ market trends;

¡ projected capital expenditures;

¡ the impact of technology on our products, operations and business; and

¡ the use of the proceeds of our dividend reinvestment plan offering and subsequent offerings.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our common shares, along with the following factors that could cause actual results to vary from our forward-looking statements:

¡ national, regional and local economic climates;

¡ changes in supply and demand for office and industrial properties;

¡ adverse changes in the real estate markets, including increasing vacancy, decreasing rental revenue and increasing insurance costs;

¡ availability and credit worthiness of prospective tenants;

¡ our ability to maintain rental rates and maximize occupancy;

¡ our ability to identify and secure acquisitions;

¡ our failure to successfully manage growth or operate acquired properties;

¡ our pace of acquisitions and/or dispositions of properties;

¡ risks related to development projects (including construction delay, cost overruns or our inability to obtain necessary permits);

¡ payment of distributions from sources other than cash flows and operating activities;

¡ receiving a corporate debt rating and changes in the general interest rate environment;

¡ availability of capital (debt and equity);

¡ our ability to refinance existing indebtedness or incur additional indebtedness;

¡ failure to comply with our debt covenants;

54

¡ unanticipated increases in financing and other costs, including a rise in interest rates;

¡ the actual outcome of the resolution of any conflict;

¡ material adverse actions or omissions by any of our joint venture partners;

¡ our ability to operate as a self-managed company;

¡ availability of and ability to retain our executive officers and other qualified personnel;

¡ future terrorist attacks in the United States or abroad;

¡ the ability of CSP OP to qualify as a partnership for U.S. federal income tax purposes;

¡ foreign currency fluctuations;

¡ changes to accounting principles, policies and guidelines applicable to REITs;

¡ legislative or regulatory changes adversely affecting REITs and the real estate business;

¡ environmental, regulatory and/or safety requirements; and

¡ other factors discussed under Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2011 and those factors that may be contained in any filing we make with the SEC, including Part II, Item 1A of Form 10-Qs.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Item 1A. “Risk Factors.”

Overview

Chambers Street Properties is a self-managed Maryland REIT that was formed on March 30, 2004. Our management team manages our day-to-day operations and oversee and supervise our employees and outside service providers. Acquisitions and asset management services are performed principally by the Company, with certain services provided by third parties. Prior to July 1, 2012, all of the business activities of the Company were managed by CBRE Advisors LLC (the “former investment advisor”) pursuant to the fourth amended and restated advisory agreement (the “Fourth Amended Advisory Agreement”), which terminated according to its terms on June 30, 2012. In addition, effective July 1, 2012, the Company entered into a transitional services agreement with CSP OP and the former investment advisor pursuant to which the former investment advisor will provide certain operational and consulting services to the Company at the direction of our officers and other personnel for a term ending not later than April 30, 2013 which is described further below.

We invest in real estate properties, focusing primarily on office and industrial (primarily warehouse/distribution) properties, as well as other real estate-related assets. We may also utilize our expertise and resources to capitalize on unique opportunities that may exist elsewhere in the marketplace. We intend to invest primarily in properties located in geographically-diverse metropolitan areas in the United States. In addition, we currently seek to invest up to 30% of our total assets in properties outside of the United States. We expect that our international investments will focus on properties typically located in significant business districts and suburban markets. Some of our domestic and international investments may be in partnership with other entities that have significant local-market expertise.

Our business objective is to maximize shareholder value through: (1) maintaining an experienced management team of investment professionals; (2) investing in properties in certain markets where property fundamentals will support stable income returns and where capital appreciation is expected to be above average; (3) acquiring properties at a discount to replacement cost and where there is expected positive rent growth; and (4) repositioning our properties where the potential exists to increase their value in the market place. Operating results at our individual properties are impacted by the supply and demand for office, industrial, and retail space, trends of national and regional economies, the financial health of current and prospective tenants and their customers, capital and credit market trends, construction costs, and interest rate movements. Individual operating property performance is monitored and calculated using certain non-GAAP financial measures such as an analysis of net operating income. An analysis of net operating income as compared to local regional and national statistics may provide insight into short or longer term trends exclusive of capital markets or capital structuring issues. Interest rates are a critical factor in our results of operations. Our properties may be financed with significant amounts of debt, so changes in interest rates may affect both net income and the health of capital markets. For investments outside of the United States, in addition to monitoring local property market fundamentals and capital and credit market trends, we evaluate currency hedging strategies, taxes, the stability of the local government and economy and the experience of our management team in the region.

55

All of our real estate investments are held directly by, or indirectly through wholly owned subsidiaries of, CSP OP. Generally, we contribute the proceeds we receive from the issuance of common shares for cash to CSP OP and CSP OP, in turn, issues units of limited partnership to us, which entitle us to receive our share of CSP OP’s earnings or losses and net cash flow. Provided we have sufficient available cash flow, we intend to continue to pay our shareholders quarterly cash dividends. We are structured in a manner that allows CSP OP to issue limited partnership interests from time to time in exchange for real estate properties. By structuring our acquisitions in this manner, the contributors of real estate to CSP OP are generally able to defer gain recognition for U.S. federal income tax purposes. We have elected to be taxed as a REIT for U.S. federal income tax purposes. As a REIT, we generally will not be subject to U.S. federal income tax on that portion of our income that is distributed to our shareholders if at least 90% of our net taxable income is distributed to our shareholders.

As of September 30, 2012, we owned, on a consolidated basis, 78 office, industrial (primarily warehouse/distribution) and retail properties located in 17 states (Arizona, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Massachusetts, Minnesota, New Jersey, North Carolina, Pennsylvania, South Carolina, Texas, Utah and Virginia) and in the United Kingdom encompassing approximately 16,831,000 rentable square feet in the aggregate. In addition, we had ownership interests in five unconsolidated entities that, as of September 30, 2012, owned interests in 53 properties. Excluding those properties owned through our investment in CB Richard Ellis Strategic Partners Asia II, L.P. (“CBRE Strategic Partners Asia”), we owned, on an unconsolidated basis, 46 office, industrial (primarily warehouse/distribution) and retail properties located in 10 states (Arizona, Florida, Illinois, Indiana, Minnesota, Missouri, North Carolina, Ohio, Tennessee and Texas) and in the United Kingdom and Europe encompassing approximately 13,997,000 rentable square feet in the aggregate.

As of September 30, 2012, our portfolio was 98.10% leased, and the total effective annual rents for our office properties, industrial properties and retail properties were approximately $149,859,000, $79,648,000 and $8,599,000, respectively (net of any rent concessions). The average effective annual rent per square foot for our office properties, industrial (primarily warehouse/distribution) properties and retail properties was approximately $19.30, $4.02 and $18.09 as of September 30, 2012, respectively (net of any rent concessions). As of September 30, 2011, our portfolio was 97.18% leased, and the total effective annual rents for our office properties, industrial properties and retail properties were approximately $144,895,000, $60,125,000 and $8,430,000, respectively (net of any rent concessions). The average effective annual rent per square foot for our office properties, industrial properties and retail properties was approximately $18.98, $3.82 and $17.82 as of September 30, 2011, respectively (net of any rent concessions).

We commenced operations in July 2004, following an initial private placement of our common shares of beneficial interest. We raised aggregate net proceeds (after commissions and expenses) of approximately $55,500,000 from July 2004 to October 2004 in private placements of our common shares. On October 24, 2006, we commenced an initial public offering of up to $2,000,000,000 in our common shares. Our initial public offering was terminated effective as of the close of business on January 29, 2009, at which time we had sold a total of 60,808,967 common shares in the initial public offering, including 1,487,943 common shares which were issued pursuant to our dividend reinvestment plan, and received $607,345,702 in gross proceeds. On January 30, 2009, we commenced a follow-on public offering of up to $3,000,000,000 in our common shares. Our follow-on public offering was terminated effective as of the close of business on January 30, 2012, at which time we had sold a total of 190,672,251 common shares in the follow-on public offering, including 11,170,603 common shares which were issued pursuant to our dividend reinvestment plan, and received $1,901,137,211 in gross proceeds. On February 3, 2012, we filed a registration statement on Form S-3 to register 25,000,000 of our common shares for up to $237,500,000 pursuant to the amended and restated dividend reinvestment plan. On July 5, 2012, we filed post-effective amendment No. 1 to the registration statement on Form S-3 to reflect our name change.

In 2010, our Board of Trustees established a Special Committee of the Board (the “Special Committee”) consisting of the Board’s independent trustees to explore and review our strategic alternatives and liquidity events in accordance with our investment objectives. The Special Committee engaged Robert A. Stanger & Co., Inc. as its financial advisor, to assist with its exploration and review of our strategic alternatives and liquidity events in accordance with our investment objectives (as discussed above). During 2011, with the assistance of its financial advisor and in consultation with the former investment advisor and our Board of Trustees, the Special Committee discussed and considered various strategic alternatives, including potentially continuing as a going concern under our current business plan, a potential liquidation of our assets either through a sale or merger of our company (including through either a bulk sale of our portfolio or through a sale of our individual properties) as well as a potential listing of our shares on a national securities exchange. In December 2011, after consideration of the recent general economic and capital market conditions, market conditions for listed REITs, credit market conditions, our operational performance, the status of our portfolio, our then current offering and our current and anticipated deployment of available capital to investments, the Special Committee and our Board of Trustees determined it was in the best interests of our shareholders for our shares to remain unlisted and to continue operations rather than commencing a liquidation of our assets. The Special Committee and our Board of Trustees believed that remaining unlisted and continuing our operations would provide us with the ability to purchase additional properties in order to continue to expand and diversify our portfolio and thus potentially better position us for a liquidity event. Our Board of Trustees continues to monitor market conditions and explore strategic alternatives and liquidity options.

56

In March 2012, the Special Committee determined that our company and its shareholders would benefit from an internal management structure in that such a structure could provide cost savings, improved distribution coverage, flexibility to pursue a variety of strategic initiatives, the ability to take advantage of opportunities created by changing market conditions and an opportunity to enhance the trading values of our common shares to the extent that we pursue and complete a listing of our common shares on a national securities exchange, the NASDAQ Global Select Market or the NASDAQ Global Market. Our Board of Trustees, based on the recommendation of the Special Committee, authorized the Special Committee to commence a process to achieve internal management.

On April 27, 2012, we entered into a transition to self-management agreement (the “Transition to Self-Management Agreement”) with CSP OP, CBRE Global Investors, and the former investment advisor, which sets forth certain tasks to be performed by each of the parties to the agreement in order to facilitate our self-management, including but not limited to our hiring of the 19 identified employees of the former investment advisor and/or its affiliates who were dedicated to our operations. At this time, the tasks set forth in the Transition to Self-Management Agreement have been fulfilled.

Additionally, on June 29, 2012, effective June 30, 2012, we undertook several management and board changes as follows: (i) appointed Louis P. Salvatore to serve as an independent trustee, the Chairman of the Audit Committee of the Board of Trustees and as a member of each of the Compensation and Nominating and Corporate Governance Committees of the Board of Trustees, to fill the vacancy left by Peter E. DiCorpo, who stepped down as a trustee in connection with the termination of the Fourth Amended Advisory Agreement, (ii) appointed Jack A. Cuneo to serve as our President and Chief Executive Officer, (iii) appointed Philip L. Kianka to serve as our Executive Vice President and Chief Operating Officer and (iv) appointed Martin A. Reid to serve as our Executive Vice President and Chief Financial Officer. In connection with Mr. Reid’s appointment as Chief Financial Officer, Laurie E. Romanak stepped down as our Chief Financial Officer and Mr. Reid stepped down as the Chairman and as a member of the Audit Committee of the Board of Trustees and as a member of each of the Compensation Committee and the Conflicts Committee of the Board of Trustees. In addition, on June 19, 2012, our Board of Trustees appointed Charles E. Black to serve as the Chairman of the Board of Trustees in accordance with a provision in our bylaws that requires the chairman be an independent member.

Effective July 1, 2012, we entered into a transitional services agreement (the “Transitional Services Agreement”) with CSP OP and the former investment advisor pursuant to which the former investment advisor will provide certain operational and consulting related services to us at the direction of our officers and other personnel for a term ending April 30, 2013.

For consulting services provided to us in connection with the investment management of our assets, the former investment advisor shall be paid an investment management consulting fee payable in cash consisting of (i) a monthly fee equal to one-twelfth of 0.5% of the aggregate cost (before non-cash reserves and depreciation) of all real estate investments within our portfolio and (ii) a monthly fee equal to 5.0% of the aggregate monthly net operating income derived from all real estate investments within our portfolio, subject to certain adjustments. For consulting services provided to us in connection with the acquisition of assets, the former investment advisor or its affiliates shall be paid acquisition fees up to 1.5% of (i) the contract purchase price of real estate investments acquired by us, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity. The total of all acquisition consulting fees payable with respect to real estate investments shall not exceed an amount equal to 6% of the contract purchase price (or 6% of funds advanced with respect to mortgages) provided, however, that a majority of the uninterested members of the Board of Trustees may approve amounts in excess of this limit.

Upon the termination date of the Transitional Services Agreement, we and the former investment advisor shall agree on a list of unacquired real estate investments for which the former investment advisor has performed certain acquisition related consulting services (a “Qualifying Property”). If any Qualifying Property is acquired by us within the nine months following the termination of the Transitional Services Agreement then we shall pay an acquisition consulting fee equal to 0.75% of (i) the contract purchase price of the real estate investments (including debt), or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity to the former investment advisor. Real estate investments for which there is a dispute as to whether it is a Qualifying Property that are acquired within the nine months following the termination of the Transitional Services Agreement will be submitted to arbitration.

For consulting services provided to us in connection with property management, leasing or construction services, the former investment advisor shall be paid based upon the customary property management, leasing and construction supervision fees applicable to the geographic location and type of property. Such fees for each service provided are expected to range from 2.0% to 5.0% of gross revenues received from a property that we own. We shall pay the former investment advisor a real estate commission fee upon the sale of properties in an amount equal to the lesser of (i) one-half of the competitive real estate commission or (ii) 3% of the sales price of each property sold. The total brokerage commission paid may not exceed the lesser of the competitive real estate commission or an amount equal to 6% of the sales price of the property.

57

To the extent that the Company assumes or incurs prior to the termination of the Transition Services Agreement a cost that was previously borne by the former investment advisor during the term of the Transition Services Agreement or its predecessor agreement, then amounts otherwise owed under the Transition Services Agreement shall be correspondingly reduced on a monthly basis; provided that (i) any Assumed Costs resulting from hiring of any targeted personnel shall reduce the amounts payable by the Company under this agreement for such month only to the extent of their base salary and benefits (as in effect immediately prior to their hiring by the Company) and any related other direct employer costs (but excluding any bonus amounts) earned or incurred during the month.

We will reimburse the former investment advisor for certain expenses paid or incurred in connection with services provided under the Transitional Services Agreement. In addition, the former investment advisor will only be entitled to reimbursement for third party expenses incurred in connection with services provided pursuant to the Transitional Services Agreement that we have approved in writing. Our sole obligation to reimburse the former investment advisor for expenses incurred related to personnel costs was to make an aggregate payment equal to $2,500,000 on the effective date of the agreement.

In early 2010, the commercial real estate market experienced gradual indications of market stabilization and improved access to debt financing on attractive terms began to reappear. During 2010 and into 2011, we also noted the initial signs of added competition for commercial real estate investments, particularly for high-quality stabilized properties leased to credit worthy tenants on a long-term basis, and we additionally experienced a willingness of our tenants to commit to extended lease maturities, and in some instances expand existing facilities.

As economic activity progressed in 2011 and during the initial nine months of 2012, a slower pace of recovery in the general economy continued with a gradual improvement in certain key metrics such as exports and corporate profits. In the current environment, capital availability continues to remain concentrated on the highest quality, well-leased and strategically positioned properties that provide lower risk and stable investment return potential, and for well sponsored real estate investment programs with experienced management teams.

Construction and development of new properties has shown signs of improvement, primarily with regard to new, single-tenant, built-to-suit opportunities leased on a long-term basis. As a well-capitalized core investor with modest levels of leverage, we expect to continue to have access to attractive investment opportunities in the U.S. markets. We also anticipate there will be enhanced opportunities to acquire high-quality properties in strong European markets. Moreover, we were able to execute on our investment objectives during 2011 and the first nine months of 2012 in the same disciplined and selective manner we have employed since our inception.

We believe we are well positioned with a relative advantage due to our modest leverage, modest near-term capital needs and strong liquidity position. All of our management decisions are done with the same goals in mind; growing our portfolio for steady income, sustaining our tenant relationships and enhancing the value of our portfolio.

58

The following table provides information relating to our properties, excluding those owned through our investment in CBRE Strategic Partners Asia, as of September 30, 2012. These properties consisted of 65 industrial properties, encompassing 21,852,000 rentable square feet, 56 office properties, encompassing 8,480,000 rentable square feet and three retail properties, encompassing 496,000 rentable square feet.

Property and Market	Date Acquired		Year Built		Property Type	Our Effective Ownership			Net Rentable Square Feet (in thousands)			Percentage Leased			Approximate Total Acquisition Cost(1) (in thousands)
Domestic Consolidated Properties:
REMEC Corporate Campus 1(2) San Diego, CA		9/15/2004		1983	Office		100.00	%		34			100.00	%	$	6,833
REMEC Corporate Campus 2(2) San Diego, CA		9/15/2004		1983	Office		100.00	%		30			100.00	%		6,125
REMEC Corporate Campus 3(2) San Diego, CA		9/15/2004		1983	Office		100.00	%		37			100.00	%		7,523
REMEC Corporate Campus 4(2) San Diego, CA		9/15/2004		1983	Office		100.00	%		31	��		100.00	%		6,186
300 Constitution Drive(2) Boston, MA		11/3/2004		1998	Warehouse/Distribution		100.00	%		330			100.00	%		19,805
Deerfield Commons(3) Atlanta, GA		6/21/2005		2000	Office		100.00	%		122			100.00	%		21,834
505 Century(2) Dallas, TX		1/9/2006		1997	Warehouse/Distribution		100.00	%		100			100.00	%		6,095
631 International(2) Dallas, TX		1/9/2006		1998	Warehouse/Distribution		100.00	%		73			100.00	%		5,407
660 North Dorothy(2) Dallas, TX		1/9/2006		1997	Warehouse/Distribution		100.00	%		120			79.17	%		6,836
Bolingbrook Point III Chicago, IL		8/29/2007		2006	Warehouse/Distribution		100.00	%		185			100.00	%		18,170
Community Cash Complex 1(2) Spartanburg, SC		8/30/2007		1960	Warehouse/Distribution		100.00	%		206			46.44	%		2,690
Community Cash Complex 2(2) Spartanburg, SC		8/30/2007		1978	Warehouse/Distribution		100.00	%		144			100.00	%		2,225
Community Cash Complex 3(2) Spartanburg, SC		8/30/2007		1981	Warehouse/Distribution		100.00	%		116			100.00	%		1,701
Community Cash Complex 4(2) Spartanburg, SC		8/30/2007		1984	Warehouse/Distribution		100.00	%		33			100.00	%		547
Community Cash Complex 5(2) Spartanburg, SC		8/30/2007		1984	Warehouse/Distribution		100.00	%		53			100.00	%		824
Fairforest Building 1(2) Spartanburg, SC		8/30/2007		2000	Warehouse/Distribution		100.00	%		51			100.00	%		2,974
Fairforest Building 2(2) Spartanburg, SC		8/30/2007		1999	Warehouse/Distribution		100.00	%		104			100.00	%		5,379
Fairforest Building 3(2) Spartanburg, SC		8/30/2007		2000	Warehouse/Distribution		100.00	%		100			100.00	%		5,760
Fairforest Building 4(2) Spartanburg, SC		8/30/2007		2001	Warehouse/Distribution		100.00	%		101			100.00	%		5,640
Fairforest Building 5 Spartanburg, SC		8/30/2007		2006	Warehouse/Distribution		100.00	%		316			100.00	%		16,968
Fairforest Building 6 Spartanburg, SC		8/30/2007		2005	Warehouse/Distribution		100.00	%		101			100.00	%		7,469
Fairforest Building 7(2) Spartanburg, SC		8/30/2007		2006	Warehouse/Distribution		100.00	%		101			83.78	%		5,626
Greenville/Spartanburg Industrial Park(2) Spartanburg, SC		8/30/2007		1990	Warehouse/Distribution		100.00	%		67			100.00	%		3,388
Highway 290 Commerce Park Building 1(2) Spartanburg, SC		8/30/2007		1995	Warehouse/Distribution		100.00	%		150			100.00	%		5,388
Highway 290 Commerce Park Building 5(2) Spartanburg, SC		8/30/2007		1993	Warehouse/Distribution		100.00	%		30			100.00	%		1,420
Highway 290 Commerce Park Building 7(2) Spartanburg, SC		8/30/2007		1994	Warehouse/Distribution		100.00	%		94			100.00	%		4,889
HJ Park Building 1 Spartanburg, SC		8/30/2007		2003	Warehouse/Distribution		100.00	%		70			100.00	%		4,216
Jedburg Commerce Park(2) Charleston, SC		8/30/2007		2007	Warehouse/Distribution		100.00	%		513			100.00	%		41,991
Kings Mountain I Charlotte, NC		8/30/2007		1998	Warehouse/Distribution		100.00	%		100			100.00	%		5,497

59

Property and Market	Date Acquired		Year Built		Property Type	Our Effective Ownership			Net Rentable Square Feet (in thousands)		Percentage Leased			Approximate Total Acquisition Cost(1) (in thousands)
Domestic Consolidated Properties:
Kings Mountain II Charlotte, NC		8/30/2007		2002	Warehouse/Distribution		100.00	%		301		100.00	%		11,311
Mount Holly Building Charleston, SC		8/30/2007		2003	Warehouse/Distribution		100.00	%		101		100.00	%		6,208
North Rhett I Charleston, SC		8/30/2007		1973	Warehouse/Distribution		100.00	%		285		28.09	%		10,302
North Rhett II Charleston, SC		8/30/2007		2001	Warehouse/Distribution		100.00	%		102		100.00	%		7,073
North Rhett III(2) Charleston, SC		8/30/2007		2002	Warehouse/Distribution		100.00	%		80		100.00	%		4,812
North Rhett IV Charleston, SC		8/30/2007		2005	Warehouse/Distribution		100.00	%		316		100.00	%		17,060
Orangeburg Park Building Charleston, SC		8/30/2007		2003	Warehouse/Distribution		100.00	%		101		100.00	%		5,474
Orchard Business Park 2(2) Spartanburg, SC		8/30/2007		1993	Warehouse/Distribution		100.00	%		18		100.00	%		761
Union Cross Building I Winston-Salem, NC		8/30/2007		2005	Warehouse/Distribution		100.00	%		101		100.00	%		6,585
Union Cross Building II Winston-Salem, NC		8/30/2007		2005	Warehouse/Distribution		100.00	%		316		100.00	%		17,216
Highway 290 Commerce Park Building 2(2) Spartanburg, SC		9/24/2007		1995	Warehouse/Distribution		100.00	%		100		100.00	%		4,626
Highway 290 Commerce Park Building 6(2) Spartanburg, SC		11/1/2007		1996	Warehouse/Distribution		100.00	%		105		100.00	%		3,760
Lakeside Office Center Dallas, TX		3/5/2008		2006	Office		100.00	%		99		93.44	%		17,994
Kings Mountain III Charlotte, NC		3/14/2008		2007	Warehouse/Distribution		100.00	%		542		100.00	%		25,728
Enclave on the Lake(2) Houston, TX		7/1/2008		1999	Office		100.00	%		171		100.00	%		37,827
Avion Midrise III Washington, DC		11/18/2008		2002	Office		100.00	%		72		100.00	%		21,111
Avion Midrise IV Washington, DC		11/18/2008		2002	Office		100.00	%		72		100.00	%		21,112
13201 Wilfred(2) Minneapolis, MN		6/29/2009		1999	Warehouse/Distribution		100.00	%		335		100.00	%		15,340
3011, 3055 & 3077 Comcast Place(2) East Bay, CA		7/1/2009		1988	Office		100.00	%		220		100.00	%		49,000
140 Depot Street(2) Boston, MA		7/31/2009		2009	Warehouse/Distribution		100.00	%		238		100.00	%		18,950
12650 Ingenuity Drive Orlando, FL		8/5/2009		1999	Office		100.00	%		125		100.00	%		25,350
Crest Ridge Corporate Center 1(2) Minneapolis, MN		8/17/2009		2009	Office		100.00	%		116		100.00	%		28,419
West Point Trade Center(2) Jacksonville, FL		12/30/2009		2009	Warehouse/Distribution		100.00	%		602		100.00	%		29,000
5160 Hacienda Drive(2) East Bay, CA		4/8/2010		1988	Office		100.00	%		202		100.00	%		38,500
10450 Pacific Center Court(2) San Diego, CA		5/7/2010		1985	Office		100.00	%		134		100.00	%		32,750
225 Summit Ave(2) Northern NJ		6/21/2010		1966	Office		100.00	%		143		100.00	%		40,600
One Wayside Road Boston, MA		6/24/2010		1998	Office		100.00	%		201		100.00	%		55,525
100 Tice Blvd. Northern NJ		9/28/2010		2007	Office		100.00	%		209		100.00	%		67,600
Ten Parkway North Chicago, IL		10/12/2010		1999	Office		100.00	%		100		100.00	%		25,000
4701 Gold Spike Drive Dallas, TX		10/27/2010		2002	Warehouse/Distribution		100.00	%		420		100.00	%		20,300
1985 International Way Cincinnati, OH		10/27/2010		1998	Warehouse/Distribution		100.00	%		189		100.00	%		14,800
Summit Distribution Center Salt Lake City, UT		10/27/2010		2001	Warehouse/Distribution		100.00	%		275		100.00	%		13,400

60

Property and Market	Date Acquired		Year Built		Property Type	Our Effective Ownership			Net Rentable Square Feet (in thousands)		Percentage Leased			Approximate Total Acquisition Cost(1) (in thousands)
Domestic Consolidated Properties:
3660 Deerpark Boulevard Jacksonville, FL		10/27/2010		2002	Warehouse/Distribution		100.00	%		322		100.00	%		15,300
Tolleson Commerce Park II Phoenix, AZ		10/27/2010		1999	Warehouse/Distribution		100.00	%		217		100.00	%		9,200
Pacific Corporate Park(3) Washington, DC		11/15/2010		2002	Office		100.00	%		696		100.00	%		144,500
100 Kimball Drive Northern NJ		12/10/2010		2006	Office		100.00	%		175		100.00	%		60,250
70 Hudson Street New York City Metro, NJ		4/11/2011		2000	Office		100.00	%		409		100.00	%		155,000
90 Hudson Street New York City Metro, NJ		4/11/2011		1999	Office		100.00	%		418		100.00	%		155,000
Millers Ferry Road(2) Dallas, TX		6/2/2011		2011	Warehouse/Distribution		100.00	%		1,020		100.00	%		40,366
Sky Harbor Operations Center(2) Phoenix, AZ		9/30/2011		2003	Office		100.00	%		396		100.00	%		53,500
1400 Atwater Drive(2)(4) Philadelphia, PA		10/27/2011		—	Office		100.00	%		—		—			61,877
Aurora Commerce Center Bldg. C(2) Denver, CO		11/30/2011		2007	Warehouse/Distribution		100.00	%		407		100.00	%		24,500
Sabal Pavilion Tampa, FL		12/30/2011		1998	Office		100.00	%		121		100.00	%		21,368
2400 Dralle Road(2)(3) Chicago, IL		3/20/2012		2011	Warehouse/Distribution		100.00	%		1,350		100.00	%		64,250
Midwest Commerce Center I Kansas City, KS		8/16/2012		2010	Warehouse/Distribution		100.00	%		1,107		100.00	%		62,950
Total Domestic Consolidated Properties										16,541		97.81	%		1,790,961
International Consolidated Properties:
602 Central Blvd.(2) Coventry, UK		4/27/2007		2001	Office		100.00	%		50		100.00	%		23,847
Thames Valley Five Reading, UK		3/20/2008		1998	Office		100.00	%		40		100.00	%		29,572
Albion Mills Retail Park Wakefield, UK		7/11/2008		2000	Retail		100.00	%		55		100.00	%		22,098
Maskew Retail Park Peterborough, UK		10/23/2008		2007	Retail		100.00	%		145		100.00	%		53,740
Total International Consolidated Properties										290		100.00	%		129,257
Total Consolidated Properties								��		16,831		97.84	%		1,920,218
Domestic Unconsolidated Properties(5):
Buckeye Logistics Center(6) Phoenix, AZ		6/12/2008		2008	Warehouse/Distribution		80.00	%		1,009		100.00	%		52,797
Afton Ridge Shopping Center(7) Charlotte, NC		9/18/2008		2007	Retail		90.00	%		296		98.57	%		44,530
AllPoints at Anson Bldg. 1(6) Indianapolis, IN		9/30/2008		2008	Warehouse/Distribution		80.00	%		1,037		100.00	%		42,684
12200 President’s Court(6) Jacksonville, FL		9/30/2008		2008	Warehouse/Distribution		80.00	%		772		100.00	%		29,995
201 Sunridge Blvd.(6) Dallas, TX		9/30/2008		2008	Warehouse/Distribution		80.00	%		823		100.00	%		25,690
Aspen Corporate Center 500(6) Nashville, TN		9/30/2008		2008	Office		80.00	%		180		100.00	%		29,936
125 Enterprise Parkway(6) Columbus, OH		12/10/2008		2008	Warehouse/Distribution		80.00	%		1,142		100.00	%		38,088
AllPoints Midwest Bldg. I(6) Indianapolis, IN		12/10/2008		2008	Warehouse/Distribution		80.00	%		1,200		100.00	%		41,428
Celebration Office Center(6) Orlando, FL		5/13/2009		2009	Office		80.00	%		101		100.00	%		13,640
22535 Colonial Pkwy(6) Houston, TX		5/13/2009		2009	Office		80.00	%		90		100.00	%		11,596
Fairfield Distribution Ctr. IX(6) Tampa, FL		5/13/2009		2008	Warehouse/Distribution		80.00	%		136		100.00	%		7,151

61

Property and Market	Date Acquired		Year Built		Property Type	Our Effective Ownership			Net Rentable Square Feet (in thousands)		Percentage Leased			Approximate Total Acquisition Cost(1) (in thousands)
Northpoint III(6) Orlando, FL		10/15/2009		2001	Office		80.00	%		108		100.00	%		14,592
Goodyear Crossing Ind. Park II(6) Phoenix, AZ		12/7/2009		2009	Warehouse/Distribution		80.00	%		820		100.00	%		36,516
3900 North Paramount Parkway(6) Raleigh, NC		3/31/2010		1999	Office		80.00	%		101		100.00	%		11,176
3900 South Paramount Parkway(6) Raleigh, NC		3/31/2010		1999	Office		80.00	%		119		100.00	%		13,055
1400 Perimeter Park Drive(6) Raleigh, NC		3/31/2010		1991	Office		80.00	%		45		100.00	%		3,970
Miramar I(6)(8) Ft. Lauderdale, FL		3/31/2010		2001	Office		80.00	%		94		100.00	%		13,645
Miramar II(6)(8) Ft. Lauderdale, FL		3/31/2010		2001	Office		80.00	%		129		100.00	%		20,899
McAuley Place(6) Cincinnati, OH		12/21/2010		2001	Office		80.00	%		191		100.00	%		28,000
Point West I(6) Dallas, TX		12/21/2010		2008	Office		80.00	%		183		100.00	%		23,600
Sam Houston Crossing I(6) Houston, TX		12/21/2010		2007	Office		80.00	%		160		100.00	%		20,400
Regency Creek(6) Raleigh, NC		12/21/2010		2008	Office		80.00	%		122		100.00	%		18,000
Easton III(6) Columbus, OH		12/21/2010		1999	Office		80.00	%		136		100.00	%		14,400
533 Maryville Centre(6) St. Louis, MO		12/21/2010		2000	Office		80.00	%		125		100.00	%		19,102
555 Maryville Centre(6) St. Louis, MO		12/21/2010		2000	Office		80.00	%		127		90.49	%		15,578
Norman Pointe I(6) Minneapolis, MN		3/24/2011		2000	Office		80.00	%		213		72.97	%		34,080
Norman Pointe II(6) Minneapolis, MN		3/24/2011		2007	Office		80.00	%		324		100.00	%		37,520
One Conway Park(2)(6) Chicago, IL		3/24/2011		1989	Office		80.00	%		105		66.82	%		12,320
West Lake at Conway(6) Chicago, IL		3/24/2011		2008	Office		80.00	%		98		100.00	%		14,060
The Landings I(6) Cincinnati, OH		3/24/2011		2006	Office		80.00	%		176		100.00	%		23,728
The Landings II(6) Cincinnati, OH		3/24/2011		2007	Office		80.00	%		175		96.06	%		20,928
One Easton Oval(2)(6) Columbus, OH		3/24/2011		1997	Office		80.00	%		125		57.26	%		9,529
Two Easton Oval(2)(6) Columbus, OH		3/24/2011		1995	Office		80.00	%		129		81.92	%		10,195
Atrium I(6) Columbus, OH		3/24/2011		1996	Office		80.00	%		315		100.00	%		36,200
Weston Pointe I(6) Ft. Lauderdale, FL		3/24/2011		1999	Office		80.00	%		98		85.32	%		15,507
Weston Pointe II(6) Ft. Lauderdale, FL		3/24/2011		2000	Office		80.00	%		97		84.87	%		18,701
Weston Pointe III(6) Ft. Lauderdale, FL		3/24/2011		2003	Office		80.00	%		97		100.00	%		18,867
Weston Pointe IV(6) Ft. Lauderdale, FL		3/24/2011		2006	Office		80.00	%		96		100.00	%		22,605
Total Domestic Unconsolidated Properties(5)										11,294		98.04	%		864,708
International Unconsolidated Properties(5):
Amber Park(2)(9) South Normanton, UK		6/10/2010		1997	Warehouse/Distribution		80.00	%		208		100.00	%		12,514
Brackmills(2)(9) Northampton, UK		6/10/2010		1984	Warehouse/Distribution		80.00	%		187		100.00	%		13,407
Düren(2)(10) Rhine-Ruhr, Germany		6/10/2010		2008	Warehouse/Distribution		80.00	%		392		100.00	%		13,148
Schönberg(2)(10) Hamburg, Germany		6/10/2010		2009	Warehouse/Distribution		80.00	%		454		100.00	%		13,819

62

Property and Market	Date Acquired		Year Built		Property Type	Our Effective Ownership			Net Rentable Square Feet (in thousands)		Percentage Leased			Approximate Total Acquisition Cost(1) (in thousands)
Langenbach(2)(10) Munich, Germany		10/28/2010		2010	Warehouse/Distribution		80.00	%		225		100.00	%		18,573
Graben Distribution Center I(2)(10) Munich, Germany		12/20/2011		2012	Warehouse/Distribution		80.00	%		1,018		100.00	%		54,962
Graben Distribution Center II(2)(10) Munich, Germany		12/20/2011		2012	Warehouse/Distribution		80.00	%		73		100.00	%		6,868
Valley Park, Unit D(2)(9) Rugby, UK		3/19/2012		2000	Warehouse/Distribution		80.00	%		146		100.00	%		10,247
Total International Unconsolidated Properties(5)										2,703		100.00	%		143,538
Total Unconsolidated Properties(5)										13,997		98.42	%		1,008,246
Total Properties(5)										30,828		98.10	%	$	2,928,464

⁽¹⁾  Approximate total acquisition cost represents the purchase price inclusive of customary costs and acquisition fees for properties acquired prior to January 1, 2009 and exclusive of customary costs and acquisition fees for properties acquired on dates subsequent to January 1, 2009.

⁽²⁾  This property is unencumbered.

⁽³⁾  Includes undeveloped land zoned for future use.

⁽⁴⁾  This property is a consolidated joint venture office development property currently under construction. This property’s Approximate Total Acquisition Cost reflects the costs incurred as of September 30, 2012. This property’s projected 300,000 square footage upon completion is not included in the Net Rentable Square Feet and Percentage Lease statistics on this table.

⁽⁵⁾  Does not include CBRE Strategic Partners Asia properties.

⁽⁶⁾  This property is held through the Duke joint venture.

⁽⁷⁾  This property is held through the Afton Ridge joint venture.

⁽⁸⁾  Consolidated properties acquired on December 31, 2009 and contributed to the Duke joint venture.

⁽⁹⁾  This property is held through the UK JV.

⁽¹⁰⁾  This property is held through the European JV.

63

Single- and Multi-Tenant Property Distribution

Our Triple Net Single-Tenant Properties as of September 30, 2012 are as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):

	Consolidated Properties						Unconsolidated Properties(1)						Consolidated & Unconsolidated Properties(1)
Property Type	Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost
Triple Net Single-Tenant Properties(2)		57		13,225	$	1,382,396		27		11,195	$	629,320		84		24,420	$	2,011,716
Multi-Tenant Properties		14		2,567		359,189		15		2,379		312,403		29		4,946		671,592
Other Single-Tenant Properties		7		1,039		178,633		4		423		66,523		11		1,462		245,156
Total		78		16,831	$	1,920,218		46		13,997	$	1,008,246		124		30,828	$	2,928,464

⁽¹⁾  Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

⁽²⁾  Net Rentable Square Feet does not include the projected 300,000 square footage upon completion of 1400 Atwater Drive property. Triple Net Single-Tenant Properties include certain properties that have di minimis secondary tenant(s).

Property Type Distribution

Our property type distributions as of September 30, 2012 are as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):

	Consolidated Properties						Unconsolidated Properties(1)						Consolidated & Unconsolidated Properties(1)
Property Type	Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost
Office(2)		27		4,421	$	1,214,203		29		4,059	$	545,829		56		8,480	$	1,760,032
Warehouse/Distribution		49		12,210		630,177		16		9,642		417,887		65		21,852		1,048,064
Retail		2		200		75,838		1		296		44,530		3		496		120,368
Total		78		16,831	$	1,920,218		46		13,997	$	1,008,246		124		30,828	$	2,928,464

⁽¹⁾ Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

⁽²⁾  Net Rentable Square Feet does not include the projected 300,000 square footage upon completion of 1400 Atwater Drive property.

64

Geographic Distribution

Our geographic concentrations as of September 30, 2012 are as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):

	Consolidated Properties						Unconsolidated Properties(1)						Consolidated & Unconsolidated Properties(1)
Domestic	Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost
New Jersey		5		1,354	$	478,450		—		—	$	—		5		1,354	$	478,450
Florida		4		1,170		91,018		10		1,728		175,602		14		2,898		266,620
Texas		7		2,003		134,825		4		1,256		81,286		11		3,259		216,111
Virginia		3		840		186,723		—		—		—		3		840		186,723
Ohio		—		—		—		8		2,389		181,068		8		2,389		181,068
South Carolina		27		3,558		179,171		—		—		—		27		3,558		179,171
North Carolina		5		1,360		66,337		5		683		90,731		10		2,043		157,068
Arizona		2		613		62,700		2		1,829		89,313		4		2,442		152,013
California		7		688		146,917		—		—		—		7		688		146,917
Illinois		3		1,635		107,420		2		203		26,380		5		1,838		133,800
Minnesota		2		451		43,759		2		537		71,600		4		988		115,359
Massachusetts		3		769		94,280		—		—		—		3		769		94,280
Indiana		—		—		—		2		2,237		84,112		2		2,237		84,112
Kansas		1		1,107		62,950		—		—		—		1		1,107		62,950
Pennsylvania(2)		1		—		61,877		—		—		—		1		—		61,877
Missouri		—		—		—		2		252		34,680		2		252		34,680
Tennessee		—		—		—		1		180		29,936		1		180		29,936
Colorado		1		407		24,500		—		—		—		1		407		24,500
Georgia		1		122		21,834		—		—		—		1		122		21,834
Kentucky		1		189		14,800		—		—		—		1		189		14,800
Utah		1		275		13,400		—		—		—		1		275		13,400
Total Domestic		74		16,541		1,790,961		38		11,294		864,708		112		27,835		2,655,669
International
United Kingdom		4		290		129,257		3		541		36,168		7		831		165,425
Germany		—		—		—		5		2,162		107,370		5		2,162		107,370
Total International		4		290		129,257		8		2,703		143,538		12		2,993		272,795
Total		78		16,831	$	1,920,218		46		13,997	$	1,008,246		124		30,828	$	2,928,464

⁽¹⁾  Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

⁽²⁾  Net Rentable Square Feet does not include the projected 300,000 square footage upon completion of 1400 Atwater Drive property.

65

Significant Tenants

The following table details our largest tenants as of September 30, 2012 (in thousands):

			Consolidated Properties				Unconsolidated Properties(1)				Consolidated & Unconsolidated Properties(1)
	Tenant	Primary Industry	Net Rentable Square Feet		Annualized Base Rent		Net Rentable Square Feet		Annualized Base Rent		Net Rentable Square Feet		Annualized Base Rent
1.	Amazon.com, Inc(2)	Internet Retail		—	$	—		3,884	$	14,951		3,884	$	14,951
2.	Barclay’s Capital	Financial Services		409		12,278		—		—		409		12,278
3.	U.S. Government	Government		71		2,158		378		8,458		449		10,616
4.	Raytheon Company	Defense and Aerospace		666		9,755		—		—		666		9,755
5.	National Union Fire Insurance Co	Insurance		172		6,010		—		—		172		6,010
6.	JP Morgan Chase	Financial Services		396		5,893		—		—		396		5,893
7.	Nuance Communications	Software		201		5,623		—		—		201		5,623
8.	Lord Abbett & Co	Financial Services		149		5,211		—		—		149		5,211
9.	Eisai	Pharmaceutical and Health Care Related		209		5,189		—		—		209		5,189
10	Comcast	Telecommunications		220		4,819		—		—		220		4,819
11	The Coleman Company, Inc	Consumer Product		1,107		4,528		—		—		1,107		4,528
12	Deloitte	Professional Services		175		4,390		—		—		175		4,390
13	Clorox International Co.	Consumer Products		1,350		4,310		—		—		1,350		4,310
14	Barr Laboratories	Pharmaceutical and Health Care Related		142		4,061		—		—		142		4,061
15	Unilever(3)	Consumer Products		—		—		1,595		3,864		1,595		3,864
16	PPD Development	Pharmaceutical and Health Care Related		—		—		252		3,762		252		3,762
17	Eveready Battery Company	Consumer Products		—		—		168		3,568		168		3,568
18	ConAgra Foods	Food Service and Retail		742		3,422		—		—		742		3,422
19	NDB Capital Markets	Financial Services		97		3,400		—		—		97		3,400
20	Carl Zeiss	Pharmaceutical and Health Care Related		202		3,337		—		—		202		3,337
21	Whirlpool Corp	Consumer Product		1,020		3,264		—		—		1,020		3,264
22	American LaFrance	Vehicle Related Manufacturing		513		3,163		—		—		513		3,163
23	Prime Distribution Services	Logistics and Distribution		—		—		1,201		2,958		1,201		2,958
24	Nationwide Mutual Ins	Insurance		—		—		315		2,869		315		2,869
25	Kellogg’s	Consumer Products		—		—		1,142		2,817		1,142		2,817
26	Time Warner	Telecommunications		134		2,814		—		—		134		2,814
27	B&Q	Home Furnishings/Home Improvement		104		2,697		—		—		104		2,697
28	REMEC	Defense and Aerospace		133		2,504		—		—		133		2,504
29	Syngenta Seeds	Agriculture		116		2,473		—		—		116		2,473
30	Dr. Pepper	Food Service and Retail		602		2,460		—		—		602		2,460
31	NCS Pearson, Inc	Education		—		—		153		2,424		153		2,424
32	Verizon Wireless(4)	Telecommunications		—		—		180		2,306		180		2,306
33	Citicorp North America	Financial Services		—		—		194		2,264		194		2,264
34	Iowa College Acquisition Corp.(5)	Education		124		2,241		—		—		124		2,241
35	Royal Caribbean Cruises	Travel/Leisure		—		—		129		2,182		129		2,182
36	American Home Mortgage	Financial Services		—		—		183		2,024		183		2,024
37	Best Buy	Specialty Retail		238		1,657		30		332		268		1,989
38	Markel Midwest, Inc.	Financial Services		100		1,981		—		—		100		1,981
39	Mercy Health Partners of SW Ohio	Pharmaceutical and Health Care Related		—		—		121		1,903		121		1,903
40	Lockheed Martin	Defense and Aerospace		72		1,903		—		—		72		1,903
	Other (231 tenants)			7,004		34,895		3,851		34,986		10,855		69,881
				16,468	$	146,436		13,776	$	91,668		30,244	$	238,104

⁽¹⁾  Net Rentable Square Feet for Unconsolidated Properties is at 100%. Annualized Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

66

⁽²⁾  Our tenants are Amazon.com.azdc, Inc., in the Buckeye Logistics Center and Goodyear Crossing Park II properties, Amazon.com.indc, LLC, in the AllPoints at Anson Bldg. 1 property, and Amazon Fulfillment GmbH, in the Graben Distribution Center I property, which are all wholly-owned subsidiaries of Amazon.com.

⁽³⁾  Our tenant is CONOPCO, Inc., a wholly-owned subsidiary of Unilever.

⁽⁴⁾  Verizon Wireless is the d/b/a for Cellco Partnership.

⁽⁵⁾  Our tenant is Iowa College Acquisitions Corp., an operating subsidiary of Kaplan, Inc. The lease is guaranteed by Kaplan Inc.

Tenant Industries

Our tenants operate across a wide range of industries. The following table details our tenant-industry concentrations as of September 30, 2012 (in thousands):

	Consolidated Properties				Unconsolidated Properties(1)				Consolidated & Unconsolidated Properties(1)
Primary Tenant Industry Category	Net Rentable Square Feet		Annualized Base Rent		Net Rentable Square Feet		Annualized Base Rent		Net Rentable Square Feet		Annualized Base Rent
Financial Services		1,233	$	28,495		514	$	5,768		1,747	$	34,263
Consumer Products		3,727		13,294		3,510		13,290		7,237		26,584
Pharmaceutical and Health Care Related		888		14,021		710		8,427		1,598		22,448
Internet Retail		330		1,426		3,884		14,951		4,214		16,377
Defense and Aerospace		901		14,926		—		—		901		14,926
Logistics and Distribution		1,226		5,163		2,243		7,932		3,469		13,095
Insurance		271		7,992		438		4,515		709		12,507
Telecommunications		737		9,788		194		2,467		931		12,255
Government		72		2,158		378		8,458		450		10,616
Food Service and Retail		2,032		8,320		40		515		2,072		8,835
Vehicle Related Manufacturing		1,542		8,571		—		—		1,542		8,571
Education		124		2,241		362		5,668		486		7,909
Professional Services		258		5,127		144		1,875		402		7,002
Business Services		733		2,889		310		3,801		1,043		6,690
Software		201		5,623		10		181		211		5,804
Home Furnishings/Home Improvement		554		4,726		70		1,036		624		5,762
Other Manufacturing		850		2,661		154		2,493		1,004		5,154
Specialty Retail		391		3,196		111		1,193		502		4,389
Travel and Leisure		—		—		240		4,228		240		4,228
Agriculture		116		2,472		9		97		125		2,569
Petroleum and Mining		174		1,492		55		646		229		2,138
Apparel Retail		—		—		225		1,897		225		1,897
Executive Office Suites		86		1,728		—		—		86		1,728
Utilities		—		—		127		1,538		127		1,538
Other Retail		22		127		48		692		70		819
Total		16,468	$	146,436		13,776	$	91,668		30,244	$	238,104

⁽¹⁾  Net Rentable Square Feet for Unconsolidated Properties is at 100%. Annualized Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

67

Tenant Lease Expirations

The following table sets forth a schedule of expiring leases for our consolidated and unconsolidated properties as of September 30, 2012, (Expiring Net Rentable Square Feet and Expiring Base Rent in thousands):

	Consolidated Properties				Unconsolidated Properties(1)				Consolidated & Unconsolidated Properties(1)
	Expiring Net Rentable Square Feet		Expiring Base Rent		Expiring Net Rentable Square Feet		Expiring Base Rent		Number Of Expiring Leases		Expiring Net Rentable Square Feet		Expiring Base Rent		Percentage of Expiring Base Rent
2012 (Three months ending December 31, 2012)		735	$	7,295		62	$	866		18		797	$	8,161		3.17	%
2013		1,584		8,379		644		4,768		43		2,228		13,147		5.10	%
2014		1,266		7,648		156		2,187		35		1,422		9,835		3.82	%
2015		723		6,273		397		3,959		31		1,120		10,232		3.97	%
2016		868		15,487		927		12,972		31		1,795		28,459		11.05	%
2017		425		6,493		1,314		10,905		34		1,739		17,398		6.75	%
2018		813		8,859		2,184		12,177		22		2,997		21,036		8.16	%
2019		2,156		15,631		3,737		18,426		23		5,893		34,057		13.22	%
2020		1,875		18,621		30		457		12		1,905		19,078		7.40	%
2021		4,126		33,703		2,538		16,436		17		6,664		50,139		19.46	%
Thereafter		1,897		30,547		1,787		15,565		20		3,684		46,112		17.90	%
Total		16,468	$	158,936		13,776	$	98,718		286		30,244	$	257,654		100.00	%
Weighted Average Remaining Term (years)(2)				7.37				6.80								7.15

⁽¹⁾  Expiring Net Rentable Square Feet for Unconsolidated Properties is at 100%. Expiring Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

⁽²⁾  Weighted Average Remaining Term is the average remaining term weighted by Expiring Base Rent.

68

Property Portfolio Size

Our portfolio size at the end of each quarter since commencement of our initial public offering through September 30, 2012 is as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):

	Consolidated Properties						Unconsolidated Properties(1)						Consolidated & Unconsolidated Properties(1)
Cumulative Property Portfolio as of:	Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost		Properties		Net Rentable Square Feet		Approximate Total Acquisition Cost
9/30/2006		9		878	$	86,644		—		—	$	—		9		878	$	86,644
12/31/2006		9		878		86,644		—		—		—		9		878		86,644
3/31/2007		9		878		86,644		—		—		—		9		878		86,644
6/30/2007		10		928		110,491		—		—		—		10		928		110,491
9/30/2007		42		5,439		348,456		—		—		—		42		5,439		348,456
12/31/2007		44		5,576		353,594		—		—		—		44		5,576		353,594
3/31/2008		47		6,257		426,856		—		—		—		47		6,257		426,856
6/30/2008		47		6,257		426,856		1		605		35,636		48		6,862		462,492
9/30/2008		49		6,483		486,777		6		3,307		193,773		55		9,790		680,550
12/31/2008		52		6,771		582,682		8		5,649		273,205		60		12,420		855,887
3/31/2009		52		6,771		582,717		8		5,649		273,130		60		12,420		855,847
6/30/2009		53		7,106		598,103		11		5,976		305,308		64		13,082		903,411
9/30/2009		57		7,805		719,822		11		5,976		305,202		68		13,781		1,025,024
12/31/2009		60		8,630		791,314		13		6,904		356,158		73		15,534		1,147,472
3/31/2010		58		8,407		748,835		18		7,392		418,818		76		15,799		1,167,653
6/30/2010		62		9,086		916,210		22		8,633		471,615		84		17,719		1,387,825
9/30/2010		63		9,295		983,810		22		8,633		471,615		85		17,928		1,455,425
12/31/2010		73		12,800		1,308,560		30		9,901		629,268		103		22,701		1,937,828
3/31/2011		73		12,800		1,308,560		43		11,950		903,508		116		24,750		2,212,068
6/30/2011		75		14,614		1,657,966		43		12,356		917,566		118		26,970		2,575,532
9/30/2011		74		13,906		1,689,048		43		12,355		918,771		117		26,261		2,607,819
12/31/2011(2)		77		14,434		1,747,299		45		13,851		997,506		122		28,285		2,744,805
3/31/2012(2)		78		15,784		1,824,403		46		13,997		1,007,753		124		29,781		2,832,156
6/30/2012(2)		78		15,784		1,842,359		46		13,997		1,007,753		124		29,781		2,850,112
9/30/2012(2)………….		78		16,831		1,920,218		46		13,997		1,008,246		124		30,828		2,928,464

⁽¹⁾  Net Rentable Square Feet for unconsolidated properties is at 100%. Approximate Total Acquisition Cost is at our pro rata share of effective ownership and does not include our investment in CBRE Strategic Partners Asia.

⁽²⁾  Net Rentable Square Feet does not include the projected 300,000 square footage upon completion of 1400 Atwater Drive property.

Critical Accounting Policies

Management believes our most critical accounting policies are accounting for lease revenues (including straight-line rent), regular evaluation of whether the value of a real estate asset has been impaired, real estate purchase price allocations, accounting for our derivatives and hedging activities and fair value of financial instruments and investments, if any. Each of these items involves estimates that require management to make judgments that are subjective in nature. Management relies on its experience, collects historical data and current market data, and analyzes these assumptions in order to arrive at what it believes to be reasonable estimates. Under different conditions or assumptions, materially different amounts could be reported related to the accounting policies described below. In addition, application of these accounting policies involves the exercise of judgments on the use of assumptions as to future uncertainties and, as a result, actual results could materially differ from these estimates.

Revenue Recognition and Valuation of Receivables

All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. In connection with various leases, we have received irrevocable stand-by letters of credit totaling $17,810,000 and $16,714,000 as security for such leases at September 30, 2012 and December 31, 2011.

69

Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance and other recoverable costs, are recognized as revenue in the period the expenses are incurred. Tenant reimbursements are recognized and presented on a gross basis, when we are the primary obligor with respect to incurring expenses and with respect to having the credit risk.

Tenant receivables and deferred rent receivables are carried net of the allowances for uncollectible current tenant receivables and deferred rent. Management’s determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, individual receivables, current economic conditions, and other relevant factors. The allowances are increased or decreased through the provision for bad debts. The allowance for uncollectible rent receivable was $656,000 and $821,000 as of September 30, 2012 and December 31, 2011, respectively.

Investments in Real Estate and Related Long-Lived Assets (Impairment Evaluation)

We record investments in real estate at cost (including third-party acquisition expenses) and we capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset. We expense costs of repairs and maintenance as incurred. We compute depreciation using the straight-line method over the estimated useful lives of our real estate assets, which we expect to be approximately 39 years for buildings and improvements, three to five years for equipment and fixtures and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

We are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because, if we were to shorten the expected useful lives of our investments in real estate, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis throughout the expected useful lives of the related assets.

We have adopted,“Accounting for the Impairment or Disposal of Long-Lived Assets” (“FASB ASC 360-10”), which establishes a single accounting model for the impairment or disposal of long-lived assets including discontinued operations. This accounting provision requires that the operations related to properties that have been sold or that we intend to sell be presented as discontinued operations in the statement of operations for all periods presented, and properties we intend to sell be designated as “held for sale” on our balance sheet.

When circumstances such as adverse market conditions, excessive property vacancies, or declining sales values indicate a possible impairment of the value of a property, we review the recoverability of the property’s carrying value. The review of recoverability is based on our estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. Our forecast of these cash flows considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. These factors contain subjectivity and thus are not able to be precisely estimated. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. We are required to make subjective assessments as to whether there are impairments in the values of our investments in real estate and the most critical assumption is the expected exit cap rate applied in determining the terminal value.

We assess whether there has been impairment in the value of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The estimated fair value of the asset group identified for step two testing is based on either the income approach with market discount rate, terminal capitalization rate and rental rate assumptions being most critical, or on the sales comparison approach to similar properties. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

Purchase Accounting for Acquisition of Investments in Real Estate

We apply the acquisition method to all acquired real estate investments. The purchase consideration of the real estate is allocated to the acquired tangible assets, consisting primarily of land, site improvements, building and tenant improvements and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases, value of tenant relationships and acquired ground leases, based in each case on their fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market loans, will be recorded based on the fair value of any loans assumed in connection with acquiring the real estate.

70

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land (or acquired ground lease if the land is subject to a ground lease), site improvements, building and tenant improvements based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and other related costs.

In allocating the purchase consideration of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases; and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below-market fixed-rate renewal periods. The capitalized below-market lease values, also referred to as acquired lease obligations, are amortized as an increase to rental income over the initial terms of the respective leases and any below-market fixed-rate renewal periods. The capitalized above-market lease values are amortized as a decrease to rental income over the initial terms of the prospective leases.

The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationships, is measured by the estimated cost of operations during a theoretical lease-up period to replace in-place leases, including lost revenues and any unreimbursed operating expenses, plus an estimate of deferred leasing commissions for in-place leases. This aggregate value is allocated between in-place lease value and tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease; however, the value of tenant relationships has not been separated from in-place lease value for the real estate acquired as such value and its consequence to amortization expense is immaterial for these particular acquisitions. Should future acquisitions of properties result in allocating material amounts to the value of tenant relationships, an amount would be separately allocated and amortized over the estimated life of the relationship. The value of in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written-off.

Accounting for Derivative Financial Investments and Hedging Activities

All of our derivative instruments are carried at fair value on the balance sheet. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking each hedge transaction. We periodically review the effectiveness of each hedging transaction, which involves estimating future cash flows. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in other comprehensive income within shareholders’ equity. Calculation of a fair value of derivative instruments also requires management to use estimates. Amounts will be reclassified from other comprehensive income to the income statement in the period or periods the hedged forecasted transaction affects earnings.

Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. The changes in fair value hedges are accounted for by recording the fair value of the derivative instruments on the balance sheet as either assets or liabilities, with the corresponding amount recorded in current period earnings. We have certain interest rate swap derivatives that are designated as qualifying cash flow hedges and follow the accounting treatment discussed above. We also have certain interest rate swap derivatives that do not qualify for hedge accounting, and accordingly, changes in fair values are recognized in current earnings.

We disclose the fair values of derivative instruments and their gains and losses in a tabular format. We also provide more information about our liquidity by disclosing derivative features that are credit risk-related. Finally, we cross-reference within footnotes to enable financial statement users to locate important information about derivative instruments. See Note 15 to the Consolidated Financial Statements “Derivative Instruments” and Note 17 to the Consolidated Financial Statements “Fair Value of Financial Instruments and Investments” for a further discussion of our derivative financial instruments.

71

Fair Value of Financial Instruments and Investments

We elected to apply the fair value option for one of our eligible mortgage notes payable that was newly issued debt during the year ended December 31, 2008. The measurement of the elected mortgage note payable at its fair value and its impact on the statement of operations is described in Note 16 to the Consolidated Financial Statements “Fair Value Option—Note Payable” and Note 17 to the Consolidated Financial Statements “Fair Value of Financial Instruments and Investments.”

We generally determine or calculate the fair value of financial instruments using the appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating available market discount rate information for similar types of instruments and our estimates for non-performance and liquidity risk. These techniques are significantly affected by the assumptions used, including the discount rate, credit spreads, and estimates of future cash flow. The Investment Manager of CBRE Strategic Partners Asia applies valuation techniques for our investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to our ownership interest therein. The financial assets and liabilities recorded at fair value in our consolidated financial statements are the seven interest rate swaps, our investment in CBRE Strategic Partners Asia (a real estate entity which qualifies as an investment company under the Investment Company Act with respect to its accounting treatment) and one mortgage note payable that is economically hedged by one of the interest rate swaps.

The remaining financial assets and liabilities which are only disclosed at fair value are comprised of all other notes payable, the unsecured line of credit and other debt instruments. We determined the fair value of our secured notes payable and other debt instruments by performing discounted cash flow analyses using an appropriate market discount rate. We calculate the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or London Inter-Bank Offering Rate (“LIBOR”) rates for variable-rate debt, for maturities that correspond to the maturities of our debt and then adding an appropriate credit spread derived from information obtained from third-party financial institutions. These credit spreads take into account factors such as our credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt.

The carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to their short-term maturities.

We adopted the fair value measurement criteria described herein for our non-financial assets and non-financial liabilities on January 1, 2009. The adoption of the fair value measurement criteria to our non-financial assets and liabilities did not have a material impact on our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis include:

¡ Non-financial assets and liabilities initially measured at fair value in an acquisition or business combination;

¡ Long-lived assets measured at fair value due to an impairment assessment and

¡ Asset retirement obligations initially measured under the Codification Topic“Asset Retirement and Environmental Obligations” (“FASB ASC 410”).

Rental Operations

Our reportable segments consist of three types of commercial real estate properties, namely, Domestic Industrial Properties, Domestic Office Properties and International Office/Retail Properties. Management internally evaluates the operating performance and financial results of our segments based on net operating income. We also have certain general and administrative level activities including legal, accounting, tax preparation and shareholder servicing costs which are not considered separate operating segments. Our reportable segments are on the same basis of accounting as described in Note 2—”Basis of Presentation and Summary of Significant Accounting Policies.”

72

We evaluate the performance of our segments based on net operating income, defined as: rental income and tenant reimbursements less property and related expenses (operating and maintenance, property management fees, property level general and administrative expenses and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization, and our general and administrative expenses. The following table compares the net operating income for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic Industrial Properties
Revenues:
Rental	$	11,880	$	8,344	$	31,646	$	22,455
Tenant Reimbursements		2,077		1,748		6,994		5,091
Total Revenues		13,957		10,092		38,640		27,546
Property and Related Expenses:
Operating and Maintenance		529		432		1,781		1,366
General and Administrative		234		179		505		503
Property Management Fee to Related Party		79		68		238		205
Property Taxes		2,086		1,612		6,127		4,824
Total Expenses		2,928		2,291		8,651		6,898
Net Operating Income		11,029		7,801		29,989		20,648
Domestic Office Properties
Revenues:
Rental		24,230		22,415		72,862		59,861
Tenant Reimbursements		6,996		5,481		18,314		14,620
Total Revenues		31,226		27,896		91,176		74,481
Property and Related Expenses:
Operating and Maintenance		3,750		3,704		12,243		10,060
General and Administrative		78		16		277		194
Property Management Fee to Related Party		234		213		695		515
Property Taxes		4,666		3,012		11,411		8,535
Total Expenses		8,728		6,945		24,626		19,304
Net Operating Income		22,498		20,951		66,550		55,177
International Office/Retail Properties
Revenues:
Rental		1,870		1,717		5,358		4,851
Tenant Reimbursements		94		84		258		218
Total Revenues		1,964		1,801		5,616		5,069
Property and Related Expenses:
Operating and Maintenance		94		175		290		533
General and Administrative		67		107		219		181
Property Management Fee to Related Party		83		230		235		376
Total Expenses		244		512		744		1,090
Net Operating Income		1,720		1,289		4,872		3,979

73

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Reconciliation to Consolidated Net Loss
Total Segment Net Operating Income		35,247			30,041			101,411			79,804
Interest Expense		8,566			9,329			26,033			24,724
General and Administrative		7,162			1,172			10,973			3,386
Investment Management Fee to Related Party		5,159			5,607			17,270			15,100
Acquisition Expenses		1,099			1,044			2,508			12,537
Depreciation and Amortization		18,787			16,656			54,749			43,901
Transition Costs		6,216			0			8,152			0
		(11,742	)		(3,767	)		(18,274	)		(19,844	)
Other Income and Expenses
Interest and Other Income		255			460			1,800			1,271
Net Settlement Payments on Interest Rate Swaps		(171	)		(178	)		(495	)		(532	)
Gain on Interest Rate Swaps		134			32			380			177
(Loss) Gain on Note Payable at Fair Value		(26	)		75			(85	)		41
Loss on Early Extinguishment of Debt		(1,191	)		0			(1,191	)		0
Loss on Swap Termination		(495	)		0			(495	)		0
Loss from Continuing Operations Before Provision for Income Taxes and Equity in Income of Unconsolidated Entities		(13,236	)		(3,378	)		(18,360	)		(18,887	)
Provision for Income Taxes		(75	)		(85	)		(218	)		(385	)
Equity in Income of Unconsolidated Entities		927			609			2,556			4,160
Net Loss from Continuing Operations		(12,384	)		(2,854	)		(16,022	)		(15,112	)
Discontinued Operations
(Loss) Income from Discontinued Operations		0			(18	)		0			377
Realized (Loss) Gain from Sale		(0	)		426			(415	)		301
Income (Loss) From Discontinued Operations		(0	)		408			(415	)		678
Net Loss		(12,384	)		(2,446	)		(16,437	)		(14,434	)
Net Loss Attributable to Non-Controlling Operating Partnership Units		5			4			7			20
Net Loss Attributable to Chambers Street Properties Shareholders	$	(12,379	)	$	(2,442	)	$	(16,430	)	$	(14,414	)

⁽¹⁾  Total Segment Net Operating Income is a Non-GAAP financial measure which may be useful as a supplemental measure for evaluating the relationship of each reporting segment to the combined total. This measure should not be viewed as an alternative measure of operating performance to our U.S. GAAP presentations provided. Segment “Net Operating Income” is defined as operating revenues (rental income, tenant reimbursements and other property income) less property and related expenses (property expenses, including real estate taxes) before depreciation and amortization expense. The Net Operating Income segment information presented consists of the same Net Operating Income segment information disclosed in Note 10 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Consolidated Results of Operations

Comparison of Three Months Ended September 30, 2012 to Three Months Ended September 30, 2011

Revenues

Rental

Rental revenue increased $5,504,000, or 17%, to $37,980,000 during the three months ended September 30, 2012 compared to $32,476,000 for the three months ended September 30, 2011. The increase was due to the acquisitions of 70 Hudson Street, 90 Hudson Street, Millers Ferry Road, Sky Harbor Operations Center, Aurora Commerce Center, and Sabal Pavilion (the “2011 Acquisitions”) during the year ended December 31, 2011 and the acquisitions of 2400 Dralle Road and Midwest Commerce Center I (the “2012 Acquisitions”, together with the “2011 Acquisitions”, the “2011 and 2012 Acquisitions”) during the year ended December 31, 2012.

74

Tenant Reimbursements

Tenant reimbursements increased $1,854,000, or 25%, to $9,167,000 for the three months ended September 30, 2012 compared to $7,313,000 for the three months ended September 30, 2011, due to tenant reimbursement revenue from the 2011 and 2012 Acquisitions.

Expenses

Operating and Maintenance

Property operating and maintenance expenses increased $62,000, or 1%, to $4,373,000 for the three months ended September 30, 2012 compared to $4,311,000 for the three months ended September 30, 2011. The increase was primarily due to operating and maintenance expenses attributable to the 2011 and 2012 Acquisitions.

Property Taxes

Property tax expense increased $2,128,000, or 46%, to $6,752,000 for the three months ended September 30, 2012 compared to $4,624,000 for the three months ended September 30, 2011. The increase in property taxes was due to the 2011 and 2012 Acquisitions.

Interest

Interest expense decreased $763,000, or 8%, to $8,566,000 for the three months ended September 30, 2012 compared to $9,329,000 for the three months ended September 30, 2011 as a result of the payoff of notes payable on REMEC, North Rhett III and 300 Constitution on September 6, 2011, November 22, 2011 and December 21, 2011, respectively, and the payoff of the $25,000,000 loan payable in September 2012.

General and Administrative

General and administrative expense increased $6,067,000, or 412%, to $7,541,000 for the three months ended September 30, 2012 compared to $1,474,000 for the three months ended September 30, 2011. Of the total increase, $5,068,000 was due to salary and other expenses incurred as a result of internalization of management on July 1, 2012; $699,000 was due to the increase in professional fees; $123,000 in general audit fees and Sarbanes-Oxley assistance; $93,000 was due to the increase in directors’ and officers’ insurance and expenses; $41,000 was due to the increase in shareholders servicing fees and report production costs; $28,000 was due to the increase in legal expenses and $15,000 was related to restricted common shares granted to certain of our officers in 2012.

Property Management Fee and Investment Management Fee to Related Party

Property management fee and investment management fee to related party decreased $563,000, or 9%, to $5,555,000 for the three months ended September 30, 2012 compared to $6,118,000 for the three months ended September 30, 2011. The decrease was due to certain adjustments made in accordance with the Transitional Services Agreement.

Acquisition Expenses

Acquisition expenses increased $55,000, or 5%, to $1,099,000 for the three months ended September 30, 2012 compared to $1,044,000 for the three months ended September 30, 2011. The increase was due to an increased value of properties acquired during three months ended September 30, 2012.

Depreciation and Amortization

Depreciation and amortization expense increased $2,131,000, or 13%, to $18,787,000 for the three months ended September 30, 2012 as compared to $16,656,000 for the three months ended September 30, 2011. The net increase was related to the 2011 and 2012 Acquisitions.

Transition Costs

Transition costs increased $6,216,000, or 100%, to $6,216,000 for the three months ended September 30, 2012 as compared to $0 for the three months ended September 30, 2011. The increase was due to expenses incurred during our transition to self-management.

75

Interest and Other Income

Interest and other income decreased $205,000, or 45%, to $255,000 for the three months ended September 30, 2012 compared to $460,000 for the three months ended September 30, 2011. The decrease was primarily due to lower interest rates in cash and cash equivalents during the three months ended September 30, 2012.

Net Settlement Payments on Interest Rate Swaps

During the three months ended September 30, 2012, we made net payments on interest rate swaps of $171,000 compared to $178,000 during the three months ended September 30, 2011. The decrease is a result of lower variable interest rates for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011.

Gain on Interest Rate Swaps

During the three months ended September 30, 2012, our derivative instruments generated income of $134,000 as compared to $32,000 for the three months ended September 30, 2011 or a year-to-year increase of $102,000.

(Loss) Gain on Note Payable on Fair Value

Loss on notes payables was $26,000 for the three months ended September 30, 2012 compared to a gain of $75,000 for the three months ended September 30, 2011. The year-to-year change is attributable to a stabilization of UK interest rate spreads and base rates used to value the loan.

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt increased $1,191,000, or 100%, to $1,191,000 for the three months ended September 30, 2012 compared to $0 for the three months ended September 30, 2011. The increase in loss is due to the payoff of a $25,000,000 loan payable during the three months ended September 30, 2012.

Loss on Swap Termination

Loss on swap termination increased $495,000, or 100%, to $495,000 for the three months ended September 30, 2012 compared to $0 for the three months ended September 30, 2011. The increase in loss is due to the termination of an interest rate swap upon the payoff of a $25,000,000 loan payable during the three months ended September 30, 2012.

Provision for Income Taxes

Provision for income taxes decreased $10,000, or 12%, to $75,000 for the three months ended September 30, 2012 compared to $85,000 for the three months ended September 30, 2011 resulting primarily from decreased state liabilities.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities increased $318,000, or 52%, to $927,000 for the three months ended September 30, 2012 compared $609,000 for the three months ended September 30, 2011. The increase was primarily due to an increase in rental revenue from the acquisitions of Graben Distribution Center I and II by our European JV in December 2011.

Discontinued Operations

Loss from discontinued operations for the three months ended September 30, 2012 was $0. Income from discontinued operations for the three months ended September 30, 2011 was $408,000. Revenues and expenses from discontinued operations represent the activities of the held for sale portfolio of light industrial and warehouse distribution buildings acquired during the year ended December 31, 2010 and sold during the year ended December 31, 2011.

Net Loss Attributable to Non-Controlling Operating Partnership Units

During the three months ended September 30, 2012, net loss attributable to non-controlling interest was $5,000 compared to $4,000 for the three months ended September 30, 2011, or a year-to-year increase of $1,000.

76

Comparison of Nine Months Ended September 30, 2012 to Nine Months Ended September 30, 2011

Revenues

Rental

Rental revenue increased $22,699,000, or 26%, to $109,866,000 during the nine months ended September 30, 2012 compared to $87,167,000 for the nine months ended September 30, 2011. The increase was due to the 2011 and 2012 Acquisitions.

Tenant Reimbursements

Tenant reimbursements increased $5,637,000, or 28%, to $25,566,000 for the nine months ended September 30, 2012 compared to $19,929,000 for the nine months ended September 30, 2011, due to tenant reimbursement revenue from the 2011 and 2012 Acquisitions.

Expenses

Operating and Maintenance

Property operating and maintenance expenses increased $2,355,000, or 20%, to $14,314,000 for the nine months ended September 30, 2012 compared to $11,959,000 for the nine months ended September 30, 2011. The increase was primarily due to operating and maintenance expenses attributable to the 2011 and 2012 Acquisitions.

Property Taxes

Property tax expense increased $4,179,000, or 31%, to $17,538,000 for the nine months ended September 30, 2012 compared to $13,359,000 for the nine months ended September 30, 2011. The increase in property taxes was due to the 2011 and 2012 Acquisitions and increased property taxes in the Carolina Portfolio.

Interest

Interest expense increased $1,309,000, or 5%, to $26,033,000 for the nine months ended September 30, 2012 compared to $24,724,000 for the nine months ended September 30, 2011 as a result of the assumption of debt related to the 2011 acquisitions of 70 Hudson Street, 90 Hudson Street and Sabal Pavilion, and the placement of debt on Kings Mountain III.

General and Administrative

General and administrative expense increased $7,710,000, or 181%, to $11,974,000 for the nine months ended September 30, 2012 compared to $4,264,000 for the nine months ended September 30, 2011. Of the total increase, $5,068,000 was due to salary and other expenses incurred as a result of the internalization of management on July 1, 2012; $1,208,000 was due to the increase in professional fees; $715,000 was due to the increase in shareholders servicing fees and report production costs; $477,000 was due to the increase in legal expenses; $186,000 was due to the increase in directors’ and officers’ insurance and expenses; $68,000 was due to the increase in general audit fees and Sarbanes-Oxley assistance; and $1,000 was due to increase in organizational costs offset by the reduction of $13,000 related to restricted common shares granted to our independent trustees in 2011 and to certain of our officers in 2012.

Property Management Fee and Investment Management Fee to Related Party

Property management fee and investment management fee to related party increased $2,242,000, or 14%, to $18,438,000 for the nine months ended September 30, 2012 compared to $16,196,000 for the nine months ended September 30, 2011. The increase resulted from the year to year growth in assets under management.

Acquisition Expenses

Acquisition expenses decreased $10,029,000, or 80%, to $2,508,000 for the nine months ended September 30, 2012 compared to $12,537,000 for the nine months ended September 30, 2011. The decrease was due to a reduction of the value of properties acquired during the nine months ended September 30, 2012 as compared to those acquired during the same period in 2011.

Depreciation and Amortization

Depreciation and amortization expense increased $10,848,000, or 25%, to $54,749,000 for the nine months ended September 30, 2012 as compared to $43,901,000 for the nine months ended September 30, 2011. The net increase was related to 2011 and 2012 Acquisitions.

77

Transition Costs

Transition costs increased $8,152,000, or 100%, to $8,152,000 for the nine months ended September 30, 2012 as compared to $0 for the nine months ended September 30, 2011. The increase was due to expenses incurred during our 2012 transition to self-management.

Interest and Other Income

Interest and other income increased $529,000, or 42%, to $1,800,000 for the nine months ended September 30, 2012 compared to $1,271,000 for the nine months ended September 30, 2011. The increase was primarily due to the recognition of approximately $600,000 of revenue for the lease termination at Fairforest Bldg. 3 in 2012.

Net Settlement Payments on Interest Rate Swaps

During the nine months ended September 30, 2012, we made net payments on interest rate swaps of $495,000 compared to $532,000 during the nine months ended September 30, 2011. The decrease is a result of lower variable interest rates for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011.

Gain on Interest Rate Swaps

During the nine months ended September 30, 2012, our derivative instruments generated income of $380,000 compared to $177,000 for the nine months ended September 30, 2011 or a year-to-year increase of $203,000.

(Loss) Gain on Note Payable at Fair Value

Loss on notes payables was $85,000 for the nine months ended September 30, 2012 compared to a gain of $41,000 for the nine months ended September 30, 2011. The year-to-year change is attributable to a stabilization of UK interest rate spreads and base rates used to value the loan.

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt increased $1,191,000, or 100%, to $1,191,000 for the nine months ended September 30, 2012 compared to $0 for the nine months ended September 30, 2011. The increase in loss is due to payoff of a $25,000,000 loan payable during the three months ended September 30, 2012.

Loss on Swap Termination

Loss on swap termination increased $495,000, or 100%, to $495,000 for the nine months ended September 30, 2012 compared to $0 for the nine months ended September 30, 2011. The increase in loss is due to payoff of a $25,000,000 loan payable during the three months ended September 30, 2012.

Provision for Income Taxes

Provision for income taxes decreased $167,000, or 43%, to $218,000 for the nine months ended September 30, 2012 compared to $385,000 for the nine months ended September 30, 2011 resulting primarily from decreased state liabilities.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities decreased $1,604,000, or 39%, to $2,556,000 for the nine months ended September 30, 2012 compared $4,160,000 for the nine months ended September 30, 2011. The decrease was primarily due to the increase in interest expense related to the 2011 placement of debt on 18 Duke joint venture properties and valuation loss related to CBRE Strategic Partners Asia joint venture.

Discontinued Operations

Loss from discontinued operations for the nine months ended September 30, 2012 was $415,000. The loss was attributable to a realized loss from sale of Cherokee Corporate Park which closed in July 2012. Income from discontinued operations for the nine months ended September 30, 2011 was $678,000. Revenues and expenses from discontinued operations represent the activities of the held for sale portfolio of light industrial and warehouse distribution buildings acquired during the year ended December 31, 2010 and sold during the year ended December 31, 2011.

78

Net Loss Attributable to Non-Controlling Operating Partnership Units

During the nine months ended September 30, 2012, net loss attributable to non-controlling interest was $7,000 compared to $20,000 for the nine months ended September 30, 2011, or a year-to-year decrease of $13,000.

Financial Condition, Liquidity and Capital Resources

Overview

Liquidity is a measurement of the ability to meet cash requirements, including funding investments and ongoing commitments, to repay borrowings, to make distributions to our shareholders and other general business needs. Our sources of funds will primarily be the remaining net proceeds of our follow-on public offering, our current dividend reinvestment plan offering, operating cash flows and borrowings, including under our Amended Wells Unsecured Credit Facility. We believe that these cash resources will be sufficient to satisfy our cash requirements and we do not anticipate a need to raise funds from other than these sources within the next twelve months. Cash flow from operations is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent and operating escalations and recoveries from our tenants and the level of operating and other costs. Depending on market conditions, we expect that once the net proceeds of our follow-on offering are fully invested, our debt financing may be as much as approximately 65% of the value of the cost of our assets before non-cash reserves and depreciation. The amount of debt we place on an individual property, or the amount of debt incurred by an individual entity in which we invest, may be more or less than 65% of the value of such property or the value of the assets owned by such entity, depending on market conditions and other factors.

In fact, depending on market conditions and other factors, we may choose not to place debt on our portfolio or our assets and may choose not to borrow to finance our operations or to acquire properties. Our declaration of trust limits our borrowing to 300% of our net assets unless any excess borrowing is approved by a majority of our independent trustees and is disclosed to our shareholders in our next quarterly report. Our declaration of trust defines “net assets” as our total assets (other than intangibles) at cost, before deducting depreciation, reserves for bad debts or other non-cash reserves, less total liabilities, calculated at least quarterly by us on a basis consistently applied; provided, however, that during such periods in which we are obtaining regular independent valuations of the current value of its net assets for purposes of enabling fiduciaries of employee benefit plan shareholders to comply with applicable Department of Labor reporting requirements, “net assets” means the greater of (i) the amount determined pursuant to the foregoing and (ii) the assets’ aggregate valuation established by the most recent such valuation report without reduction for depreciation, bad debts or other non-cash reserves. Any indebtedness we do incur will likely be subject to continuing covenants, and we will likely be required to make continuing representations and warranties in connection with such debt. Moreover, some or all of our debt may be secured by some or all of our assets. If we default in the payment of interest or principal on any such debt, breach any representation or warranty in connection with any borrowing or violate any covenant in any loan document, our lender may accelerate the maturity of such debt requiring us to immediately repay all outstanding principal. If we are unable to make such payment, our lender could foreclose on our assets that are pledged as collateral to such lender. The lender could also sue us or force us into bankruptcy. Any such event would have a material adverse effect on the value of our common shares. We believe that, even without any proceeds raised from our public offering, we have sufficient cash flow from operations to continue as a going concern for the next twelve months and into the foreseeable future.

In addition to making investments in accordance with our investment objectives, we expect to use our capital resources to make certain payments to the former investment advisor. During the acquisition and operational stages, certain services related to the acquisition and management of our investments and our operations were provided to us by the former investment advisor pursuant to an advisory agreement entered into in July 2004 which was amended and restated in October 2006, in December 2010 and again in April 2012. The advisory agreement terminated according to its terms on June 30, 2012. Pursuant to the advisory agreement, we made various payments to the former investment advisor, including acquisition fees, investment management fees and payments for reimbursements of certain costs incurred by the former investment advisor in providing related services to us. See Note 11 to the Consolidated Financial Statements “Investment Management and Other Fees to Related Parties,” for a discussion of fees and expenses paid to the former investment advisor for the three and nine months ended September 30, 2012 and 2011, respectively, and for a discussion of our transition to self-management.

In order to avoid corporate-level tax on our net taxable income, we are required to pay distributions to our shareholders equal to our net taxable income. In addition, to qualify as a REIT, we generally are required to pay annual distributions to our shareholders equal to at least 90% of our net ordinary taxable income. Therefore, once the net proceeds we received from our follow on public offering are substantially fully invested, we will need to raise additional capital in order to grow our business and acquire additional real estate investments. We anticipate borrowing funds to obtain additional capital, but there can be no assurance that we will be able to do so on terms acceptable to us, if at all.

79

As of September 30, 2012, we had $191,409,000 cash and cash equivalents available as well as $700,000,000 available under the Unsecured Credit Facility.

Historical Cash Flows

Our net cash provided by operating activities increased by $42,711,000 to $85,971,000 for the nine months ended September 30, 2012, compared to $43,260,000 for the nine months ended September 30, 2011. The increase was primarily due to the positive operating results from 2011 consolidated property acquisitions, the Duke joint venture, the European JV and the receipt of deferred rent from the tenant at 1400 Atwater.

Net cash used in investing activities decreased by $75,651,000 to $147,076,000 for the nine months ended September 30, 2012, compared to $222,727,000 for the nine months ended September 30, 2011. The decrease was primarily due to a reduction in aggregate acquisitions, a decrease in investments in unconsolidated entities and increase in distribution from unconsolidated entities offset by an increase in improvements to investments in real estate and decrease in proceeds from the sale of discontinued operations during the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011.

Net cash provided by financing activities decreased by $295,912,000 to $14,389,000 for the nine months ended September 30, 2012, compared to $310,301,000 for the nine months ended September 30, 2011. The decrease was primarily due to a decrease in proceeds from the public offering of $261,630,000, a decrease in proceeds from notes payable of $81,700,000, an increase in distributions to shareholders of $14,812,000, an increase in shareholder redemptions of $10,411,000, a decrease in borrowing on loan payable of $50,000,000 and an increase in deferred financing costs of $4,206,000 offset by a decrease in payment of offering costs of $26,976,000, a decrease in principal payment on loan payable of $60,000,000 and a decrease in principal payments on notes payable of $39,266,000.

Non-GAAP Supplemental Financial Measure: Funds from Operations

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors consider presentations of operating results for REITs that use historical cost accounting to be insufficient by themselves. Consequently, the National Association of Real Estate Investment Trusts, or NAREIT, created Funds from Operations, or FFO, as a supplemental measure of REIT operating performance.

FFO is a non-GAAP measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net income. FFO, as we define it, is presented as a supplemental financial measure. Management believes that FFO is a useful supplemental measure of REIT performance. FFO does not present, nor do we intend for it to present, a complete picture of our financial condition and/or operating performance. We believe that net income, as computed under GAAP, appropriately remains the primary measure of our performance and that FFO, when considered in conjunction with net income, improves the investing public’s understanding of the operating results of REITs and makes comparisons of REIT operating results more meaningful.

We compute FFO in accordance with standards established by NAREIT. Modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business and provide greater transparency to the investing public as to how our management team considers our results of operations. As a result, our FFO may not be comparable to FFO as reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do. The revised NAREIT White Paper on FFO defines FFO as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, impairment charges and gains and losses from sales of depreciable operating property, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures.

Management believes that NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time, and that depreciation charges required by GAAP do not always reflect the underlying economic realities. Likewise, the exclusion from NAREIT’s definition of FFO of impairment charges and gains and losses from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods. Thus, FFO provides a performance measure that, when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates and operating costs. Management also believes that FFO provides useful information to the investment community about our financial performance when compared to other REITs, since FFO is generally recognized as the industry standard for reporting the operations of REITs.

However, changes in the accounting and reporting rules under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that have been put into effect since the establishment of NAREIT’s definition of FFO have prompted an increase in the non-cash and non-operating items included in FFO. Furthermore, publicly registered, non-traded

80

REITs typically have a significant amount of acquisition activity during their initial years of investment and operation and therefore we believe require additional adjustments to FFO in evaluating performance. As a result, in addition to presenting FFO in accordance with the NAREIT definition, we also disclose FFO, as adjusted, which excludes the effects of acquisition costs and unrealized gain/loss in investments in unconsolidated entities carried at fair value for GAAP to comply with specialized accounting of the investee, amongst other items discussed in the next paragraph below. FFO, as adjusted, is a useful measure to management’s decision-making process. As discussed below, period to period fluctuations in the excluded items can be driven by short-term factors that are not particularly relevant to our long-term investment decisions, long-term capital structures or long-term tax planning and tax structuring decisions.

We believe that adjusting FFO to exclude these acquisition costs, transition costs unrealized gains/losses and non-cash impairment changes more appropriately presents our results of operations on a comparative basis. The items that we exclude from net income are subject to significant fluctuations from period to period that cause both positive and negative effects on our results of operations, often in inconsistent and unpredictable directions. For example, our acquisition costs are primarily the result of the volume of our acquisitions completed during each period, and therefore we believe such acquisition costs are not reflective of our operating results during each period. Similarly, unrealized gains/losses or non-cash impairment charges that we have recognized during a given period are based primarily upon changes in the estimated fair market value of certain of our investments due to deterioration in market conditions and do not necessarily reflect the operating performance of these properties during the corresponding period. Lastly, during the three month period ended June 30, 2012, the Company began the process of transitioning from being an externally managed company to a self-managed company and we believe the costs incurred to accomplish this transition involve many non-recurring costs which are being excluded to arrive at FFO, as adjusted.

We believe that FFO, as adjusted, is useful to investors as a supplemental measure of operating performance. We believe that adjusting FFO to exclude acquisition costs and transition to self-management costs provides investors a view of the performance of our portfolio over time, including after we cease to acquire properties on a frequent and regular basis and complete our transition to self-management, and allows for a comparison of the performance of our portfolio with other REITs that are not currently engaging in acquisitions or transitioning to self-management. In addition, as many other non-traded REITs adjust FFO to exclude acquisition costs and impairment charges, we believe that our calculation and reporting of FFO, as adjusted, will assist investors and analysts in comparing our performance with that of other non-traded REITs. We also believe that FFO, as adjusted, may provide investors with a useful indication of our future performance, particularly after our acquisition stage and transition to self management, and of the sustainability of our current distribution policy. However, because FFO, as adjusted, excludes acquisition costs, which are an important component in an analysis of our historical performance, such supplemental measure should not be construed as a historical performance measure and may not be as useful a measure for estimating the value of our common shares. In addition, the impairment charges that we exclude from FFO, as adjusted, may be realized as a loss in the future upon the ultimate disposition of the related properties or other assets through the form of lower cash proceeds. FFO and FFO as adjusted measure cash generated from operating activities not in accordance with GAAP and should not be considered as alternatives to (i) net income (determined in accordance with GAAP), as indications of our financial performance, or (ii) to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. We believe that to further understand our performance, each of FFO and FFO, as adjusted, should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our Consolidated Financial Statements. Not all REITs calculate FFO and FFO, as adjusted (or an equivalent measure), in the same manner and therefore comparisons with other REITs may not be meaningful.

81

The following table presents our FFO and FFO, as adjusted for the three and nine months ended September 30, 2012 and 2011 (in thousands, except share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Reconciliation of Net Loss to Funds from Operations
Net Loss Attributable to Chambers Street Properties Shareholders	$	(12,379	)	$	(2,442	)	$	(16,430	)	$	(14,414	)
Adjustments:
Non-Controlling Interest		(5	)		(4	)		(7	)		(20	)
Real Estate Depreciation and Amortization		18,787			16,656			54,749			43,901
Realized (Gain) Loss from sale of Discontinued Operations		(0	)		(426	)		415			(301	)
Net Effect of FFO Adjustment from Unconsolidated Entities(1)		13,369			12,830			40,522			33,750
FFO	$	19,772		$	26,614		$	79,249		$	62,916
Other Adjustments:
Acquisition Expenses		1,099			1,044			3,027			12,537
Loss on Early Extinguishment of Debt		1,191			0			1,191			0
Loss on Swap Termination		495			0			495			0
Transition Costs		6,216			0			8,152			0
Unrealized Loss / (Gain) from Unconsolidated Entity		(55	)		369			743			596
FFO, as adjusted	$	28,718		$	28,027		$	92,857		$	76,049
Net loss per share (basic and diluted)	$	(0.05	)	$	(0.01	)	$	(0.07	)	$	(0.08	)
FFO per share (basic and diluted)	$	0.08		$	0.13		$	0.32		$	0.34
FFO as adjusted, per share (basic and diluted)	$	0.12		$	0.14		$	0.37		$	0.42

⁽¹⁾  Represents our share of the FFO adjustments allowable under the NAREIT definition (primarily depreciation) for each of our unconsolidated entities multiplied by the percentage of income or loss recognized by us for each of these unconsolidated entities during each of the quarters.

Notes Payable

In connection with our acquisition of the Carolina Portfolio on August 30, 2007, we assumed 13 loans with principal balances totaling $66,110,000 ($62,944,000 at estimated fair value including the discount of $3,166,000) from various lenders that are secured by first deeds of trust on the properties and the assignment of related rents and leases. The loans bear interest at rates ranging from 4.98% to 6.33% per annum and mature between March 1, 2013 and February 1, 2025. The loans require monthly payments of interest and principal, fully amortized over the lives of the loans. One of the 13 loans, North Rhett III, was paid off in full on November 22, 2011. Principal payments totaling $3,367,000 were made during the nine months ended September 30, 2012. We indemnify the lenders against environmental costs and expenses and guarantee the loans under certain conditions.

On December 27, 2007, we entered into a $9,000,000 financing agreement secured by the Bolingbrook Point III property with the Northwestern Mutual Life Insurance Company. The loan is for a term of seven years and bears a fixed interest rate of 5.26% per annum with principal due at maturity. On January 14, 2011, we paid down $1,100,000 of principal in connection with the lease termination settlement with one of the tenants.

On May 30, 2008, we entered into a £7,500,000 financing arrangement with the Royal Bank of Scotland plc secured by the Thames Valley Five property. On July 27, 2010, we paid down the loan by £1,860,000 leaving a loan balance of £5,640,000 ($9,107,000 at September 30, 2012). The loan is for a term of five years (with a two year extension option) and bears interest at a variable rate adjusted quarterly, based on nine month GBP-based LIBOR plus 1.01%. On August 14, 2008, we entered into an interest rate swap agreement that fixed the GBP-based LIBOR at 5.41% for the loan’s remaining term and therefore effectively fixed the mortgage note’s all-in interest rate at 6.42% per annum for its remaining term. In conjunction with the loan paydown, we incurred a cost of £227,000 ($361,000 at August 3, 2010) to reduce the notional amount of the interest rate swap from £7,500,000 to £5,640,000. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On October 10, 2008, we entered into a £5,771,000 ($9,318,000 at September 30, 2012) financing agreement with the Royal Bank of Scotland plc secured by Albion Mills Retail Park property. The loan is for a term of five years and bears interest at a variable rate adjusted quarterly, based on three month GBP-based LIBOR plus 1.31%. On November 25, 2008, we entered into an interest rate swap agreement that fixed the GBP-based LIBOR at 3.94% and therefore effectively fixed the mortgage note’s all-in interest rate at 5.25% per annum for its remaining term. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

82

On November 18, 2008, in connection with the acquisition of Avion Midrise III & IV, we assumed a $20,851,000 ($22,186,000 face value less discount of $1,335,000) fixed-rate mortgage loan from Capmark Finance, Inc. that bears interest at a rate of 5.52% per annum and matures on April 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $338,000 were made during the nine months ended September 30, 2012.

On August 5, 2009, in connection with the acquisition of 12650 Ingenuity Drive, we assumed a $12,572,000 ($13,539,000 face value less a discount of $967,000) fixed-rate mortgage loan from PNC Bank, National Association which bears interest at a rate of 5.62% and matures on October 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $300,000 were made during the nine months ended September 30, 2012.

On August 10, 2009, we entered into a £13,975,000 ($22,566,000 at September 30, 2012) financing agreement with the Abbey National Treasury Services plc secured by the Maskew Retail Park property. On September 24, 2009, we drew the full amount of the loan and concurrently entered into an interest rate swap agreement that fixed the GBP-based LIBOR at 3.42% and therefore effectively fixed the mortgage note’s all-in interest rate at 5.68% per annum for its remaining term. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On June 24, 2010, we assumed two loans in connection with the acquisition of One Wayside Road: (i) a $14,888,000 ($14,633,000 at face value plus a premium of $255,000) fixed-rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.66% and matures on August 1, 2015; and (ii) a $12,479,000 ($12,132,000 at face value plus a premium of $347,000) fixed-rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.92% and matures on August 1, 2015. Principal and interest payments are due monthly for the remaining loan terms and principal payments totaling $484,000 were made during the nine months ended September 30, 2012 on the two loans.

On September 28, 2010, we assumed two loans in connection with the acquisition of 100 Tice Blvd.: (i) a $23,136,000 ($21,218,000 at face value plus a premium of $1,918,000) fixed-rate loan from Principal Life Insurance Company that bears interest at a rate of 5.97%, matures on September 15, 2022 and the lender has the right to call the loan due and payable on September 15, 2017; (ii) a $23,136,000 ($21,217,000 at a face value plus a premium of $1,919,000) fixed-rate mortgage from Hartford Life and Accidental Insurance Company that bears interest at a rate of 5.97%, matures on September 15, 2022 and the lender has the right to call the loan due and payable on September 15, 2017. Principal and interest payments are due monthly for the remaining loan terms and principal payments totaling $771,000 were made during the nine months ended September 30, 2012 on the two loans.

On December 7, 2010, we entered into a $85,000,000 secured term loan through a subsidiary with Wells Fargo Bank, National Association, or the Pacific Corporate Park Loan. The Pacific Corporate Park Loan has a seven-year term, monthly amortization of $250,000 and is secured by Pacific Corporate Park. Upon closing of the Pacific Corporate Park Loan on December 7, 2010, we entered into an interest rate swap agreement with Wells Fargo Bank, National Association to effectively fix the interest rate on the entire outstanding Pacific Corporate Park Loan amount at 4.89% for its seven-year term. Principal and interest payments are due monthly and principal payments totaling $2,000,000 were made during the nine months ended September 30, 2012.

On December 29, 2010, we entered into a $12,600,000 secured term loan through Woodmen of The World Life Insurance Society secured by the Ten Parkway North property. The Ten Parkway North loan bears interest at a fixed rate of 4.75% per annum and matures on January 1, 2021. Principal and interest payments are due monthly and principal payments totaling $210,000 were made during the nine months ended September 30, 2012.

Beginning January 2011, principal and interest payments are due monthly on the $9,725,000 term loan secured by the Deerfield Commons I that was originally entered into on November 29, 2005. The loan bears interest at a fixed rate of 5.23% per annum and interest only payments were due monthly for the first 60 months. Principal payments totaling $108,000 were made during the nine months ended September 30, 2012.

On February 8, 2011, we entered into five cross-collateralized secured term loans totaling $37,000,000 with ING USA Annuity and Life Insurance Company secured by the following properties: 4701 Gold Spike Road, $10,650,000, Summit Distribution Center, $6,700,000, Tolleson Commerce Park II, $4,600,000, 3660 Deerpark Blvd., $7,650,000 and 1985 International Way, $7,400,000. The loans bear interest at a fixed rate of 4.45% and mature on March 1, 2018. Principal and interest payments are due monthly and principal payments totaling $464,000 were made during the nine months ended September 30, 2012.

On February 28, 2011, we entered into a $33,000,000 secured term loan with TD Bank secured by the 100 Kimball Drive property. Upon closing the 100 Kimball Drive loan, we simultaneously entered into an interest rate swap agreement with TD Bank to effectively fix the interest rate on the entire outstanding loan amount to 5.25% for its ten-year term. Principal and interest payments are due monthly and principal payments totaling $498,000 were made during the nine months ended September 30, 2012.

83

On April 11, 2011, in connection with the acquisition of 70 Hudson Street, we assumed a $124,113,000 ($120,857,000 face value plus a premium of $3,256,000) fixed-rate mortgage loan from Lehman Brothers Bank, FSB that bears interest at a rate of 5.65% and matures on April 11, 2016. Principal and interest payments are due monthly and principal payments totaling $1,300,000 were made during the nine months ended September 30, 2012.

On April 11, 2011, in connection with the acquisition of 90 Hudson Street, we assumed a $120,247,000 ($117,562,000 face value plus a premium of $2,685,000) fixed-rate mortgage loan from Teachers Insurance and Annuity Association of America that bears interest at a rate of 5.66% and matures on May 1, 2016. On July 14, 2011, we and Teachers Insurance and Annuity Association of America, agreed to modify the $117,562,000 existing mortgage loan assumed by us. The loan was modified to extend its maturity by three years, from May 1, 2016 to May 1, 2019. The 5.66% annual interest rate was unchanged but is subject to a new 30-year amortization schedule. We pre-paid approximately $8,600,000 of loan’s balance (with no pre-payment penalty) in connection with the modification. Principal and interest payments are due monthly and principal payments totaling $960,000 were made during the nine months ended September 30, 2012.

On June 24, 2011, we entered into a $11,700,000 secured term loan with TD Bank secured by the Kings Mountain III property. Effective July 1, 2011, we entered into an interest rate swap agreement with TD Bank to effectively fix the interest rate on the entire outstanding loan amount to 4.47% for its seven-year term. Principal and interest payments are due monthly and principal payments totaling $194,000 were made during the nine months ended September 30, 2012.

On December 30, 2011, in connection with the acquisition of Sabal Pavilion, we assumed a $15,428,000 ($14,700,000 face value plus a premium of $728,000) fixed-rate mortgage loan from U.S. Bank National Association that bears interest at a rate of 6.38% and matures on August 1, 2013. Interest payments are due monthly with principal due at maturity.

Loan Payable

On May 26, 2010, we entered into a $70,000,000 revolving credit facility with Wells Fargo Bank, N.A., or the Wells Fargo Credit Facility. The initial maturity date of the Wells Fargo Credit Facility was May 26, 2014, however we could extend the maturity date to May 26, 2015, subject to certain conditions. $15,000,000 of the Wells Fargo Credit Facility was initially drawn upon closing on May 26, 2010, with $55,000,000 initially remaining available for disbursement during the term of the facility. We had the right to prepay any outstanding amount of the Wells Fargo Credit Facility, in whole or in part, without premium or penalty at any time during the term of this Wells Fargo Credit Facility, however, we initially could not reduce the outstanding principal balance below a minimum outstanding amount of $15,000,000, without reducing the total $70,000,000 Wells Fargo Credit Facility capacity. Initially, the Wells Fargo Credit Facility had a floating interest rate of 300 basis points over LIBOR, however this interest rate would be at least 4.00% for any of the outstanding balance that was not subject to an interest rate swap with an initial term of at least two years.

Upon closing on May 26, 2010, we entered into an interest rate swap agreement with Wells Fargo Bank, N.A. to effectively fix the interest rate on the initial $15,000,000 outstanding loan amount at 5.10% for the four-year term of the facility. The interest rate swap was designated as a qualifying cash flow hedge at the start date of the hedge relationship as described in Note 15 “Derivative Instruments.” The Wells Fargo Credit Facility was initially secured by our 13201 Wilfred, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, Crest Ridge Corporate Center I and West Point Trade Center properties. In addition, CSP OP provided a limited guarantee for the Wells Fargo Credit Facility.

On August 31, 2010, we entered into an amended and restated credit agreement with Wells Fargo Bank, N.A. to expand the Wells Fargo Credit Facility from its initial capacity of $70,000,000 to an amended capacity of $125,000,000 (the “Amended Wells Fargo Credit Facility”). In connection with the Amended Wells Fargo Credit Facility, the minimum outstanding amount was increased to $25,000,000 and as such an additional $10,000,000 was drawn (in addition to the $15,000,000 initially drawn on May 26, 2010) with the remaining $100,000,000 available for disbursement during the term of the facility. The Amended Wells Fargo Credit Facility was secured by an additional three of our properties, for a total of eight properties in all: 13201 Wilfred Lane, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, Crest Ridge Corporate Center, West Point Trade Center, 5160 Hacienda Drive, 10450 Pacific Center Court and 225 Summit Avenue. The interest rate was reduced by 25 basis points to 275 basis points over LIBOR (which rate would apply to all withdrawals from the Amended Wells Fargo Credit Facility other than the initial $15,000,000 that was drawn on May 26, 2010) and the initial interest rate floor of 4.00% was eliminated. The initial maturity date remained May 26, 2014, however we could extend the maturity date to May 26, 2015, subject to certain conditions.

On September 13, 2012, we entered into a credit agreement (the “Credit Agreement”) with a group of lenders to provide CSP OP with an unsecured, revolving credit facility (the “Unsecured Credit Facility”) with an initial capacity of $700,000,000. The Unsecured Credit Facility replaced the Amended Wells Fargo Credit Facility, which was terminated concurrently with the closing of the Unsecured Credit

84

Facility. The Company paid the $25,000,000 outstanding balance of the Amended Wells Fargo Credit Facility with cash on hand and expensed the unamortized deferred financing costs associated with obtaining the loan totaling $1,191,000. No borrowings were outstanding under the Unsecured Credit Facility as of September 30, 2012. The Unsecured Credit Facility has a term of four years, which term may be extended for one year at the option of CSP OP provided that CSP OP is not then in default and upon payment of customary extension fees. The Unsecured Credit Facility has no minimum outstanding balance requirements. Under certain circumstances, CSP OP may request an increase in the capacity of the Unsecured Credit Facility by up to an additional $700,000,000, to an aggregate size of $1,400,000,000, although none of the lenders has any obligation to participate in such increase. The Unsecured Credit Facility includes a $25,000,000 swingline sub-facility and a $25,000,000 letter of credit sub-facility. CSP OP paid customary arrangement and commitment fees to the lenders in connection with the Unsecured Credit Facility. The Company and certain of its subsidiaries have provided a guaranty in connection with the Unsecured Credit Facility.

The loans under the Unsecured Credit Facility will bear interest, at CSP OP’s election, based on (i) LIBOR, for interest periods of one, three or six months, plus the applicable margin, or (ii) the LIBOR Market Index Rate plus the applicable margin (if the LIBOR Market Index Rate is unavailable, the per annum rate of interest would be the Federal Funds Rate plus 1.5%, plus the applicable margin). The LIBOR Market Index Rate is LIBOR in respect of loans of one-month interest periods, determined on a daily basis, plus the applicable margin. The applicable margin is (i) for periods prior to the Company or CSP OP having a credit rating, based on the Company’s then current leverage ratio, and (ii) during such periods when the Company or CSP OP has a credit rating, based on its then current credit rating. The applicable margin can vary from (i) 1.60% to 2.35% based upon the then current leverage ratio, or (ii) 1.00% to 1.80% based upon a then current credit rating of the Company or CSP OP. As of the closing of the Unsecured Credit Facility, the current stated applicable margin was 1.60%. CSP OP will pay customary fees in connection with borrowings under the Unsecured Credit Facility. Further, CSP OP may prepay any revolving or swingline loan, in whole or in part, at anytime without premium or penalty.

Under the Unsecured Credit Facility, the Company will be subject to certain financial covenants that require, among other things: the maintenance of (i) a leverage ratio of not more than 0.60; (ii) a fixed charge coverage ratio of at least 1.50; (iii) a secured leverage ratio of not more than (a) 0.45 prior to the Unsecured Credit Facility’s second anniversary, or (b) 0.40 thereafter; (iv) an unencumbered leverage ratio of not more than 0.60; (v) a ratio of unencumbered net operating income to unsecured interest expense of at least 1.75 (unless the Company or CSP OP obtains an investment grade credit rating, in which case this requirement is eliminated); (vi) minimum tangible net worth of $1,653,403,000 plus 85% of the net proceeds of certain future equity issuances; and (vii) unencumbered asset value of at least $400,000,000. In addition, the Unsecured Credit Facility contains a number of customary non-financial covenants including those restricting liens, mergers, sales of assets, certain investments in unimproved land and mortgage receivables, intercompany transfers, transactions with affiliates and distributions.

Distribution Policy

In order to qualify as a REIT under the Internal Revenue Code, we generally must make distributions to our shareholders each year in an amount at least equal to 90% of our REIT taxable income (as determined without regard to the dividends paid deduction and excluding net capital gain).

It is anticipated that distributions generally will be taxable as ordinary income to our shareholders, although a portion of such distributions may be designated by us as a return of capital or as capital gain. We will furnish annually to each of our shareholders a statement setting forth distributions paid during the preceding year and their characterization as ordinary income, return of capital or capital gains.

2012 Quarters	First		Second		Third
Total distributions declared and paid	$	36,726,000	$	37,366,000	$	37,374,000
Distributions per share	$	0.15	$	0.15	$	0.15
Amount of distributions per share funded by cash flows provided by operating activities	$	0.1282	$	0.1005	$	0.1186
Amount of distributions per share funded by uninvested proceeds from financings of our properties	$	0.0218	$	0.0495	$	0.0314

2011 Quarters	First		Second		Third		Fourth
Total distributions declared and paid	$	25,306,000	$	27,125,000	$	29,911,000	$	32,785,000
Distributions per share	$	0.15	$	0.15	$	0.15	$	0.15
Amount of distributions per share funded by cash flows provided by operating activities	$	0.0758	$	0.0707	$	0.0888	$	0.0716
Amount of distributions per share funded by uninvested proceeds from financings of our properties	$	0.0742	$	0.0793	$	0.0612	$	0.0784

85

On September 18, 2012, our Board of Trustees approved a quarterly distribution to shareholders of $0.15 per common share for the fourth quarter of 2012. The distribution will be calculated on a daily basis and paid on January 11, 2013 to shareholders of record during the period October 1, 2012 through and including December 31, 2012. However, no assurance can be made that distributions will be sustained at current levels.

For the quarter ended September 30, 2012, distributions were funded 79.04% by cash flows provided by operating activities and 20.96% from uninvested proceeds from financings of our properties. In addition, distributions totaling $16,917,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during the quarter ended September 30, 2012.

For the quarter ended June 30, 2012, distributions were funded 67.02% by cash flows provided by operating activities and 32.98% from uninvested proceeds from financings of our properties. In addition, distributions totaling $16,991,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during the quarter ended June 30, 2012.

For the quarter ended March 31, 2012, distributions were funded 85.46% by cash flows provided by operating activities and 14.54% from uninvested proceeds from financings of our properties. In addition, distributions totaling $16,777,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during the quarter ended March 31, 2012.

Our 2011 distributions were funded 51.17% by cash flows provided by operating activities and 48.83% from uninvested proceeds from financings of our properties. In addition, 2011 distributions totaling $50,674,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during 2011.

Total distributions declared and paid for the period from inception (July 1, 2004) through September 30, 2012 were $401,637,000 and total Funds from Operations for the period from inception (July 1, 2004) through September 30, 2012 were $268,456,000. For a discussion of our supplemental financial measures, see “—Non-GAAP Supplemental Financial Measure: Funds from Operations.”

To the extent that our cash available for distribution is less than the amount we are required to distribute to qualify as a REIT, we may consider various funding sources to cover any shortfall, including borrowing funds on a short-term, or possibly long-term, basis or selling properties. In addition, we may utilize these funding sources to make distributions that exceed the amount we are required to distribute to qualify as a REIT.

Off-Balance Sheet Arrangements

As of September 30, 2012, we had five Investments in Unconsolidated Entities: (i) a 5.07% ownership interest in CBRE Strategic Partners Asia; (ii) an 80% ownership interest in the Duke joint venture; (iii) a 90% ownership interest in Afton Ridge; (iv) an 80% ownership interest in the UK JV; and (v) an 80% ownership interest in the European JV. Our investments are discussed in Note 5, to the accompanying consolidated financial statements “Investments in Unconsolidated Entities.”

86

Contractual Obligations and Commitments

The following table provides information with respect to our consolidated property contractual obligations at September 30, 2012 (in thousands):

Contractual Obligations	Total			Less than One Year			One to Three Years			Three to Five Years			More than Five Years
Note Payable (and interest payments) Collateralized by Deerfield Commons I		(11,049	)		(643	)		(1,286	)		(9,120	)		—
Note Payable (and interest payments) Collateralized by Bolingbrook Point III		(8,870	)		(416	)		(8,454	)		—			—
Notes Payable (and interest payments) Collateralized by the Carolina Portfolio		(58,865	)		(6,579	)		(12,852	)		(12,852	)		(26,582	)
Note Payable (and interest payments) Collateralized by Lakeside Office Center		(10,467	)		(650	)		(9,817	)		—			—
Note Payable (and interest payments) Collateralized by Thames Valley Five(1)		(9,651	)		(9,651	)		—			—			—
Note Payable (and interest payments) Collateralized by Albion Mills Retail Park(1)		(9,813	)		(482	)		(9,331	)		—			—
Note Payable (and interest payments) Collateralized by Avion Midrise III & IV		(22,371	)		(1,618	)		(20,753	)		—			—
Note Payable (and interest payments) Collateralized by 12650 Ingenuity Drive		(13,794	)		(1,118	)		(12,676	)		—			—
Note Payable (and interest payments) Collateralized by Maskew Retail Park(1)		(25,286	)		(1,280	)		(24,006	)		—			—
Note Payable (and interest payments) Collateralized by One Wayside Road		(29,485	)		(2,127	)		(27,358	)		—			—
Note Payable (and interest payments) Collateralized by 100 Tice Blvd.		(51,673	)		(3,469	)		(6,939	)		(41,265	)		—
Note Payable (and interest payments) Collateralized by Ten Parkway North		(16,419	)		(862	)		(1,724	)		(1,724	)		(12,109	)
Note Payable (and interest payments) Collateralized by Pacific Corporate Park(1)		(98,293	)		(6,833	)		(13,225	)		(12,638	)		(65,597	)
Note Payable (and interest payments) Collateralized by 4701 Gold Spike Drive		(12,800	)		(644	)		(1,288	)		(1,288	)		(9,580	)
Note Payable (and interest payments) Collateralized by 1985 International Way		(8,894	)		(447	)		(895	)		(895	)		(6,657	)
Note Payable (and interest payments) Collateralized by Summit Distribution Center		(8,052	)		(405	)		(810	)		(810	)		(6,027	)
Note Payable (and interest payments) Collateralized by 3660 Deerpark Boulevard		(9,193	)		(462	)		(925	)		(925	)		(6,881	)
Note Payable (and interest payments) Collateralized by Tolleson Commerce Park II		(5,528	)		(278	)		(556	)		(556	)		(4,138	)
Note Payable (and interest payments) Collateralized by 100 Kimball Drive(1)		(44,991	)		(2,391	)		(4,783	)		(4,783	)		(33,034	)
Note Payable (and interest payments) Collateralized by 70 Hudson Street		(142,037	)		(8,585	)		(17,169	)		(116,283	)		—
Note Payable (and interest payments) Collateralized by 90 Hudson Street		(145,247	)		(7,524	)		(15,048	)		(15,048	)		(107,627	)
Note Payable (and interest payments) Collateralized by Kings Mountain III(1)		(14,194	)		(783	)		(1,567	)		(1,567	)		(10,277	)
Note Payable (and interest payments) Collateralized by Sabal Pavilion		(15,482	)		(15,482	)		—			—			—
Total	$	(772,454	)	$	(72,729	)	$	(191,462	)	$	(219,754	)	$	(288,509	)

⁽¹⁾  These contractual obligations include the expected net payments due under interest rate swap agreements where in each case we have swapped our variable interest rate payments due under the debt agreements for fixed rates of interest payments.

87

The following table provides information with respect to our unconsolidated property contractual obligations at September 30, 2012 (in thousands):

Contractual Obligations	Total			Less than One Year			One to Three Years			Three to Five Years			More than Five Years
Notes Payable (and interest payments) Collateralized by Duke Joint Venture properties.	$	(457,883	)	$	(23,753	)	$	(154,550	)	$	(100,704	)	$	(178,876	)
Note Payable (and interest payments) Collateralized by Afton Ridge Joint Venture properties		(24,367	)		(1,308	)		(23,059	)		—			—
Note Payable (and interest payments) Collateralized by European JV		(35,829	)		(749	)		(1,549	)		(1,555	)		(31,976	)
Total Notes Payable Collateralized by Unconsolidated Properties(1)	$	(518,079	)	$	(25,810	)	$	(179,158	)	$	(102,259	)	$	(210,852	)

⁽¹⁾  Unconsolidated payment amounts are at our pro rata share of effective ownership and exclude our investment in CBRE Strategic Partners Asia.

As of September 30, 2012, we were committed to pay $0 in accrued offering costs. We believe that all offering costs have been paid as of September 30, 2012.

As of September 30, 2012, we had an unfunded investment commitment in CBRE Strategic Partners Asia totaling $2,474,000. The timing of future payment is uncertain.

Income Taxes

We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2004. As a REIT, we generally will not be subject to U.S. federal income tax on income that we distribute currently to our shareholders. Under the Internal Revenue Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they generally distribute at least 90% of their annual net taxable income (excluding net capital gains) to their shareholders. If we fail to qualify for taxation as a REIT in any year, our income will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify. Even if we qualify as a REIT, we may still be subject to state, local and foreign taxes on our income and property and to U.S. federal income and excise taxes on our undistributed gross income. Our properties located in Texas are subject to a Texas Gross Margin Tax, Deerfield Commons I is subject to a Georgia Net Worth Tax, properties located in Massachusetts are subject to a Massachusetts Net Worth Tax and properties located in North Carolina are subject to a North Carolina Franchise Tax under which we incurred a total of approximately $75,000 and $85,000, $218,000 and $385,000 of taxes for the three and nine months ended September 30, 2012 and 2011, respectively.

Inflation

The real estate market has not been affected significantly by inflation in the past several years due to the relatively low inflation rate. With the exception of leases with tenants in multifamily properties, we expect to include provisions in the majority of our tenant leases designed to protect us from the impact of inflation. These provisions will include reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements, or in some cases, annual reimbursement of operating expenses above a certain allowance. Due to the generally long-term nature of these leases, annual rent increases may not be sufficient to cover inflation and rent may be below-market. Leases in multifamily properties generally turn over on an annual basis and do not typically present the same issue regarding inflation protection due to their short-term nature.

Quantitative and Qualitative Disclosures About Market Risk

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risk to which we will be exposed is interest rate risk.

We may be exposed to the effects of interest rate changes primarily as a result of long-term debt used to maintain liquidity and fund expansion of our real estate investment portfolio and operations. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we will borrow primarily at fixed rates or variable rates and, in some cases, with the ability to convert variable rates to fixed rates. We may also enter into derivative financial instruments such as interest rate swaps and caps in order to mitigate our interest rate risk on a related financial instrument. We will not enter into derivative or interest rate transactions for speculative purposes.

88

Notes Payable secured by real property are summarized as follows (in thousands):

	Interest Rate as of						Maturity Date	Notes Payable as of
Property	September 30, 2012			December 31, 2011				September 30, 2012			December 31, 2011
Deerfield Commons I.		5.23	%		5.23	%	December 1, 2015	$	9,479		$	9,587
Bolingbrook Point III		5.26			5.26		January 1, 2015		7,900			7,900
Fairforest Bldg. 5(1)		6.33			6.33		February 1, 2024		8,975			9,368
Fairforest Bldg. 6(1)		5.42			5.42		June 1, 2019		2,479			2,703
HJ Park—Bldg. 1(1)		4.98			4.98		March 1, 2013		150			369
North Rhett I(1)		5.65			5.65		August 1, 2019		2,929			3,547
North Rhett II(1)		5.20			5.20		October 1, 2020		1,869			2,005
North Rhett IV(1)		5.80			5.80		February 1, 2025		9,061			9,427
Mt Holly Bldg.(1)		5.20			5.20		October 1, 2020		1,869			2,006
Orangeburg Park Bldg.(1)		5.20			5.20		October 1, 2020		1,900			2,040
Kings Mountain I(1)		5.27			5.27		October 1, 2020		1,618			1,737
Kings Mountain II(1)		5.47			5.47		January 1, 2020		4,721			5,105
Union Cross Bldg. I(1)		5.50			5.50		July 1, 2021		2,397			2,552
Union Cross Bldg. II(1)		5.53			5.53		June 1, 2021		7,313			7,791
Thames Valley Five(2)(3)		6.42			6.42		May 30, 2013		9,107			8,762
Lakeside Office Center		6.03			6.03		September 1, 2015		8,890			8,973
Albion Mills Retail Park(2)(4)(5)		5.25			5.25		October 10, 2013		9,318			8,965
Avion Midrise III & IV(6)		5.52			5.52		April 1, 2014		20,582			20,920
12650 Ingenuity Drive(7)		5.62			5.62		October 1, 2014		12,376			12,677
Maskew Retail Park(2)(8)		5.68			5.68		August 10, 2014		22,566			21,710
One Wayside Road(9)		5.66			5.66		August 1, 2015		13,839			14,115
One Wayside Road(9)		5.92			5.92		August 1, 2015		11,536			11,743
100 Tice Blvd(10)		5.97			5.97		September 15, 2017		20,226			20,612
100 Tice Blvd(10)		5.97			5.97		September 15, 2017		20,226			20,611
Ten Parkway North		4.75			4.75		January 1, 2021		12,144			12,354
Pacific Corporate Park(11)		4.89			4.89		December 7, 2017		79,750			81,750
4701 Gold Spike Drive(12)		4.45			4.45		March 1, 2018		10,387			10,521
1985 International Way(12)		4.45			4.45		March 1, 2018		7,217			7,310
Summit Distribution Center(12)		4.45			4.45		March 1, 2018		6,535			6,619
3770 Deerpark Boulevard(12)		4.45			4.45		March 1, 2018		7,461			7,557
Tolleson Commerce Park II(12)		4.45			4.45		March 1, 2018		4,486			4,544
100 Kimball Drive(13)		5.25			5.25		March 1, 2021		32,023			32,521
70 Hudson Street(14)		5.65			5.65		April 11, 2016		118,440			119,740
90 Hudson Street(14)		5.66			5.66		May 1, 2019		106,959			107,918
Kings Mountain III(15)		4.47			4.47		July 1, 2018		11,401			11,595
Sabal Pavilion(16)		6.38			6.38		August 1, 2013		14,700			14,700
Notes Payable									622,829			632,354
Plus Premium									8,061			9,595
Less Discount									(2,297	)		(2,838	)
Less Albion Mills Retail Park Fair Value Adjustment									(110	)		(190	)
Notes Payable Net of Premium / Discount and Fair Value Adjustment								$	628,483		$	638,921

⁽¹⁾  These notes payable were assumed from the seller of these properties on August 30, 2007 as part of the property acquisitions and were recorded at estimated fair value which includes the discount. The North Rhett III loan was paid off in full on November 22, 2011.

⁽²⁾  These loans are subject to certain financial covenants (interest coverage and loan to value).

⁽³⁾  We entered into an interest rate swap agreement that fixes the GBP-based LIBOR at 5.41% through its expiration on May 30, 2013, and therefore, including the mortgage note’s spread of 1.01% over GBP-based LIBOR, effectively fixed the mortgage note’s all-in interest rate at 6.42% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 1.79% and 1.98% at September 30, 2012 and December 31, 2011, respectively, and were based on GBP LIBOR plus a spread of 1.01%.

⁽⁴⁾  The Albion Mills Retail Park notes payable balance is presented at cost basis. This loan is carried on our balance sheet at fair value. See Note 17 “Fair Value of Financial Instruments and Investments.”

89

⁽⁵⁾  We entered into an interest rate swap agreement that fixes the GBP-based LIBOR at 3.94% through its expiration on October 10, 2013, and therefore, including the mortgage note’s spread of 1.31% over GBP-based LIBOR, effectively fixed the mortgage note’s all-in interest rate at 5.25% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 2.09% and 2.28% at September 30, 2012 and December 31, 2011, respectively, and were based on GBP LIBOR plus a spread of 1.31%.

⁽⁶⁾  The loan was assumed from the seller of Avion Midrise III & IV on November 18, 2008 and was recorded at estimated fair value which includes the discount.

⁽⁷⁾  The loan was assumed from the seller of 12650 Ingenuity Drive on August 5, 2009 and was recorded at estimated fair value which includes the discount.

⁽⁸⁾  We entered into an interest rate swap agreement that fixes the GBP-based LIBOR at 3.42% through its expiration on August 10, 2014, and therefore, including the mortgage note’s spread of 2.26% over GBP-based LIBOR, effectively fixed the mortgage note’s all-in interest rate at 5.68% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 3.04% and 3.23% at September 30, 2012 and December 31, 2011, respectively, and were based on GBP LIBOR plus a spread of 2.26%.

⁽⁹⁾  The two loans were assumed from the seller of One Wayside Road on June 24, 2010 and were recorded at estimated fair value which includes the premiums.

⁽¹⁰⁾  The two loans were assumed from the seller of 100 Tice Blvd. on September 28, 2010 and were recorded at estimated fair value which includes the premiums.

⁽¹¹⁾  We entered into an interest rate swap agreement that fixes LIBOR at 2.69% through its expiration on December 7, 2017, and therefore, including the mortgage note’s spread of 2.26% over LIBOR, effectively fixed the mortgage note’s all-in interest rate at 4.98% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 2.45% and 2.52% at September 30, 2012 and December 31, 2011, respectively, and were based on LIBOR plus a spread of 2.20%.

⁽¹²⁾  We entered into five loans totaling $37,000,000 on February 8, 2011 that are cross-collateralized by these properties.

⁽¹³⁾  We entered into an interest rate swap agreement that fixes LIBOR at 3.50% through its expiration on March 1, 2021, and therefore, including the mortgage note’s spread of 1.75% over LIBOR, effectively fixed the mortgage note’s all-in interest rate at 5.25% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 1.98% and 2.02% at September 30, 2012 and December 31, 2011, respectively, and were based on LIBOR plus a spread of 1.75%.

⁽¹⁴⁾  The two loans were assumed from the seller of 70 Hudson Street and 90 Hudson Street, respectively, on April 11, 2011 and were recorded at estimated fair value which includes the premiums.

⁽¹⁵⁾  We entered into an interest rate swap agreement that fixes LIBOR at 2.47% through its expiration on July 1, 2018 and therefore, including the mortgage note’s spread of 2.00% over LIBOR, effectively fixed the mortgage note’s all-in interest rate at 4.47% per annum for its remaining term. The stated rates, not including the interest rate swap, on the mortgage note payable were 2.23% and 2.27% at September 30, 2012 and December 31, 2011, respectively, and were based on LIBOR plus a spread of 2.00%.

⁽¹⁶⁾  The loan was assumed from the seller of Sabal Pavilion on December 30, 2011 and was recorded at estimated fair value which includes the premium. The anticipated maturity date as presented represents the early prepayment option date prior to the automatic debt extension which would include an increase in the interest rate to 11.38% and extend until the loan is paid in full.

Upon the maturity of our debt, there is a market risk as to the prevailing rates at the time of refinancing. Changes in market rates on our fixed-rate debt affect the fair market value of our debt but it has no impact on interest expense or cash flow. A 100 basis point increase or decrease in interest rates on our fixed-rate debt would not increase or decrease our annual interest expense on our fixed-rate debt.

The fair value of long-term debt was estimated based on current interest rates available to us for debt instruments with similar terms. The following tables summarize our financial instruments and their calculated fair value at September 30, 2012 and December 31, 2011 (in thousands):

	As of September 30, 2012
	Carrying       Value			Total Fair       Value
Financial Assets (Liabilities):
Interest Rate Swaps—Non Qualifying	$	(605	)	$	(605	)
Interest Rate Swaps—Qualifying		(14,002	)		(14,002	)
Notes Payable		(628,483	)		(663,353	)

90

A 100 basis point increase or decrease in interest rates would increase or decrease the fair market value of our notes payable by $25,169,000 at September 30, 2012. In addition, a 100 basis point increase or decrease in interest rates would either increase or decrease annual variable interest expense as follows: approximately $91,000 on the Thames Valley Five property, approximately $93,000 on the Albion Mills Retail Park property and approximately $226,000 on the Maskew Retail Park property.

	As of December 31, 2011
	Carrying       Value			Total Fair       Value
Financial Assets (Liabilities):
Interest Rate Swaps—Non Qualifying	$	(958	)	$	(958	)
Interest Rate Swaps—Qualifying		(12,340	)		(12,340	)
Notes Payable		(638,921	)		(664,910	)
Loan Payable		(25,000	)		(25,000	)

In addition to changes in interest rates, the value of our real estate is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of lessees, which may affect our ability to refinance our debt if necessary.

Debt Maturities

The following table details our consolidated and unconsolidated debt maturities as of September 30, 2012 (in thousands):

	Consolidated Debt							Unconsolidated Debt(1)							Consolidated & Unconsolidated Debt(1)
	Scheduled Amortization		Term Maturities		Total			Scheduled Amortization		Term Maturities		Total			Scheduled Amortization		Term Maturities		Total
2012 (Three months ending December 31, 2012)	$	3,811		—	$	3,811		$	1,239	$	—	$	1,239		$	5,050	$	—	$	5,050
2013(2)		15,413		33,125		48,538			5,071		102,310		107,381			20,484		135,435		155,919
2014		15,580		53,878		69,458			5,262		40,640		45,902			20,842		94,518		115,360
2015		15,372		48,749		64,121			5,337		66,959		72,296			20,709		115,708		136,417
2016		13,833		111,276		125,109			4,137		8,052		12,189			17,970		119,328		137,298
2017		13,328		98,327		111,655			4,031		31,955		35,986			17,359		130,282		147,641
2018		8,946		41,789		50,735			3,640		23,822		27,462			12,586		65,611		78,197
2019		6,882		95,265		102,147			3,121		4,416		7,537			10,003		99,681		109,684
2020		5,379		—		5,379			3,273		—		3,273			8,652		—		8,652
2021		2,650		34,032		36,682			2,518		118,257		120,775			5,168		152,289		157,457
2022		1,870		—		1,870			—		—		—			1,870		—		1,870
Thereafter		3,324		—		3,324			—		—		—			3,324		—		3,324
Total	$	106,388	$	516,441	$	622,829		$	37,629	$	396,411	$	434,040		$	144,017	$	912,852	$	1,056,869
Weighted Average Remaining Term (Years)						4.89							4.80							4.85
Weighted Average Interest Rate						5.47	%						4.81	%						5.20	%

⁽¹⁾  Unconsolidated debt amounts are at our pro rata share of effective ownership.

⁽²⁾  The Thames Valley Five consolidated debt ($9,107,000 at September 30, 2012) maturity date may be extended for an additional two years from May, 2013 to May, 2015. In addition, Afton Ridge has the option to extend the maturity date of the unconsolidated debt ($22,950,000 at September 30, 2012—our share) for one additional year from October 2013 to October 2014.

91

Encumbered and Unencumbered Properties

The following table details our Encumbered and Unencumbered properties as of September 30, 2012 (Approximate Acquisition Cost and Debt Balance in thousands):

	Consolidated Properties						Unconsolidated Properties(1)						Consolidated & Unconsolidated Properties(1)
	Properties		Approximate Total Acquisition Cost		Debt Balance		Properties		Approximate Acquisition Cost		Debt Balance		Properties		Approximate Acquisition Cost		Debt Balance
Encumbered Properties.		35	$	1,141,430	$	622,829		37	$	894,494	$	434,040		72	$	2,035,924	$	1,056,869
Unencumbered Properties.		43		778,788		—		9		113,752		—		52		892,540		—
Total Properties		78	$	1,920,218	$	622,829		46	$	1,008,246	$	434,040		124	$	2,928,464	$	1,056,869

⁽¹⁾  Number of Properties at 100%. Approximate Acquisition Cost and Debt Balance for Unconsolidated Properties are at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

Subsequent Events

On November 7, 2012, we acquired 20000 S. Diamond Lake Road, located in Rogers, Minnesota, a suburb of Minneapolis, for approximately $18,500,000, exclusive of fees and customary closing costs. We funded the acquisition using the net proceeds from our completed public offering of common shares of beneficial interest. 20000 S. Diamond Lake Road is a 280,577 square foot warehouse/distribution center completed in 2004 that is 100% leased to Archway Marketing Services, Inc. through October 2016 and is used as a regional storage and fulfillment center. Archway Marketing Services, Inc. is a subsidiary of Archway Marketing Holdings, Inc., which is a national marketing and logistics service provider.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of quantitative and qualitative disclosures about market risk, see the “Quantitative and Qualitative Disclosures About Market Risk” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations above.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We have formally adopted a policy for disclosure controls and procedures that provides guidance on the evaluation of disclosure controls and procedures and is designed to ensure that all corporate disclosure is complete and accurate in all material respects and that all information required to be disclosed in the periodic reports submitted by us under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods and in the manner specified in the Securities and Exchange Commission’s rules and forms and that disclosure controls and procedures were effective to ensure that the information required to be disclosed by us is accumulated and communicated to our management, including our chief executive officer and chief financial offer, as appropriate to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports. We have an investment in three unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to these entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, as required by the Securities Exchange Act Rule 13(a)-15(e), our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Controls Over Financial Reporting

No changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

92

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to any material legal proceedings as of September 30, 2012.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Item 1.A. to Part I of our Annual Report on Form 10-K for the year ended December 31, 2011 and in Item 1.A. to Part II of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Securities and Repurchases of Securities

During the three months ended September 30, 2012, we did not sell any equity securities that are not registered under the Securities Act of 1933, as amended.

93

The following table provides information with respect to our Share Redemption Program for the three months ended September 30, 2012:

Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or approximate dollar value) of Shares that May  Yet Be Purchased Under the Plans or Programs
July		1,737,284.20	$	9.36			N/A		N/A
August		—		—	��		N/A		N/A
September		—		—			N/A		N/A
Total		1,737,284.20	$	9.36			N/A		N/A

Use of Proceeds from Sale of Registered Securities

The registration statement relating to our initial public offering (No. 333-127405) was declared effective on October 24, 2006. CNL Securities Corp. was the dealer manager of our initial public offering. The registration statement covered up to $2,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date as determined by our former investment advisor. Our initial public offering was terminated effective as of the close of business on January 29, 2009. As of the close of business on January 29, 2009, we had sold a total of 60,808,967 common shares in the initial public offering, including 1,487,943 common shares which were issued pursuant to our dividend reinvestment plan. We withdrew from registration a total of 140,243,665 common shares that were registered but not sold in connection with the initial public offering. From October 24, 2006 (effective date) through January 29, 2009 (termination date), we had accepted subscriptions from 13,270 investors, issued 60,808,967 common shares and received $607,345,702 in gross offering proceeds pursuant to our initial public offering. After payment of approximately $8,290,000 in acquisition fees and related expenses, payment of approximately $26,335,000 in selling commission, $8,898,000 in dealer manager fees, $4,008,000 in marketing support fees and payment of approximately $12,147,000 in organization and offering expenses, as of January 29, 2009, we had raised aggregate net offering proceeds of approximately $548,000,000.

The registration statement relating to our follow-on public offering (No. 333-152653) was declared effective on January 30, 2009. CNL Securities Corp. was the dealer manager of our follow-on offering. The registration statement covered up to $3,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date as determined by our former investment advisor. Our follow on offering was closed on January 30, 2012. From January 30, 2009 (effective date) through September 30, 2012, we had accepted subscriptions from 49,888 follow-on investors, issued 190,672,251 common shares and received $1,901,137,211 in gross offering proceeds pursuant to our public offering after payment of $40,812,935 in acquisition fees and related expenses, payment of approximately $108,365,000 in selling commissions, $35,900,000 in dealer manager fees, $17,833,000 in marketing support fees and payment of approximately $24,189,000 in organization and offering expenses. As of September 30, 2012, we had raised aggregate net offering proceeds of approximately $1,674,037,276.

Item 3 Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

None.

Item 5. Other Information

None.

94

Item 6. Exhibits

10.1	Credit Agreement, dated September 13, 2012, by and among CSP Operating Partnership, LP as Borrower, Chambers Street Properties, as Parent, Wells Fargo Bank, National Association as Administrative Agent, the financial institutions party thereto as Lenders, Wells Fargo Securities, LLC, RBC Capital Markets, as Joint Lead Arrangers and Joint Bookrunners, Royal Bank of Canada, as Syndication Agent and each of Bank of Montreal, Barclays Bank PLC, JPMorgan Chase Bank, N.A., Regions Bank and TD Bank, N.A. as a Documentation Agent (Previously filed as Exhibit 10.1 to the Current Report on Form 8-K (File 000-53200) filed September 19, 2012 and incorporated herein by reference).
10.2	Employment Agreement by and among Chambers Street Properties, CSP Operating Partnership, LP and Jack A. Cuneo (Previously filed as Exhibit 10.1 to the Current Report on Form 8-K (File 000-53200) filed October 1, 2012 and incorporated herein by reference).
10.3	Employment Agreement by and among Chambers Street Properties, CSP Operating Partnership, LP and Philip L. Kianka (Previously filed as Exhibit 10.2 to the Current Report on Form 8-K (File 000-53200) filed October 1, 2012 and incorporated herein by reference).
10.4	Employment Agreement by and among Chambers Street Properties, CSP Operating Partnership, LP and Martin A. Reid (Previously filed as Exhibit 10.3 to the Current Report on Form 8-K (File 000-53200) filed October 1, 2012 and incorporated herein by reference).
10.5	Form of Restricted Share Award Agreement (Previously filed as Exhibit 10.4 to the Current Report on Form 8-K (File 000-53200) filed October 1, 2012 and incorporated herein by reference).
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101*	The following materials from Chambers Street Properties’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders’ Equity and (vi) the Notes to the Condensed Consolidated Financial Statements, furnished herewith.

* Users of this data are advised that pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

95

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Chambers Street Properties
Date: November 14, 2012	/S/    JACK A.  CUNEO
	Jack A. Cuneo President and Chief Executive Officer
Date: November 14, 2012	/S/    MARTIN A. REID
	Martin A. Reid Chief Financial Officer

96