##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 1-9900
   PACIFIC OFFICE PROPERTIES
    TRUST, INC.
 (Exact name of registrant as
    specified in its charter)
  Maryland

86-0602478(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer Identification
    No.)   233 Wilshire Boulevard, Suite 830
 Santa Monica, CA 90401
 (Address of principal executive
    offices) (Zip Code)
  (Registrants
    telephone number, including area code):
    (310) 395-2083
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of exchange on which registeredCommon Stock, par value $0.0001 per share

NYSE Amex   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Portions of the registrants definitive proxy statement
    to be issued in conjunction with the registrants annual
    meeting of shareholders to be held in 2009 (Proxy
    Statement) are incorporated by reference in Part III
    of this Report on
    Form 10-K
    (this Report). The Proxy Statement will be filed by
    the registrant with the Securities and Exchange Commission not
    later than 120 days after the end of the registrants
    fiscal year ended December 31, 2008.




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##### 





PACIFIC
    OFFICE PROPERTIES TRUST, INC.
  TABLE OF
    CONTENTS
  FORM 10-K
  PageExplanatory Note


iiPART IItem 1.


Business


1Item 1A.


Risk Factors


6Item 1B.


Unresolved Staff Comments


16Item 2.


Properties


17Item 3.


Legal Proceedings


26Item 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.


Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


26Item 6.


Selected Financial Data


28Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


28Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


41Item 8.


Financial Statements and Supplementary Data


41Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


41Item 9A(T).


Controls and Procedures


41Item 9B.


Other Information


41PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


42Item 11.


Executive Compensation


45Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


45Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


47Item 14.


Principal Accountant Fees and Services


50PART IVItem 15.


Exhibits and Financial Statement Schedules


50Signatures


53EX-21.1EX-31.1EX-31.2EX-32.1EX-32.2   i




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##### Table of Contents



PACIFIC
    OFFICE PROPERTIES TRUST, INC.
  FORM 10-K
 Explanatory
    Note    Business Combinations Form 10-K Form 10-K
 ii




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PART I  FORWARD-LOOKING
    STATEMENTS
  Form 10-K
    Form 10-K
  Item 1.
    Business.  Form 10-K.
          (310) 395-2083.
 1




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Business
    Objectives and Growth Strategies
      
    External Growth.    
    Opportunistic Acquisition and
    Repositioning.  We intend to selectively acquire
    existing office properties at significant discounts to
    replacement cost, that are under-managed or under-leased, and
    which are best positioned to benefit from improving office
    market fundamentals;
    Co-investment Strategy.  We believe that we are
    one of the first REITs to have as a business plan the
    acquisition of commercial properties primarily in partnership
    with institutional co-investors providing us the opportunity to
    earn greater returns on invested equity through incentive
    participations and management fees; and
    Recycling of Capital.  We intend to seek
    opportunities to sell stabilized properties and reinvest
    proceeds into new value-added office acquisition
    opportunities.  
    Internal Growth.  The majority of our existing
    properties are located in what we believe are some of the
    healthiest office markets in the United States, including
    Southern California and Honolulu. These markets are
    characterized by office employment growth, low office vacancy
    and low office construction starts. We expect to utilize our
    in-depth local market knowledge and managerial expertise to
    execute on our leasing and management initiatives as follows:  
    Tenant Retention and
    Lease-up.  We
    expect to realize increased rental income by focusing on our
    strategic leasing initiatives, including focusing on near-term
    expiring leases and aggressively marketing available space to
    prospective tenants;
    Contractual Rent Increases.  We expect to
    realize increased rental income through scheduled increases of
    rental rates included in the majority of our lease agreements
    with tenants; and
    Operational Leverage.  We seek increased
    operating efficiencies through greater economies of scale as a
    result of future property acquisitions in our existing markets,
    and through the reduction of operating expenses on an
    incremental basis.  Transactions
   2




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Business Combinations Form 10-K Form 10-K
    one-for-one
  one-for-one
   3




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AZL
    History
   4




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Advisor
  day-to-day
    Regulation
  and/or
  Competitive
    Factors
   5




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Employment
  day-to-day
  Available
    Information
  http://www.pacificofficeproperties.com Form 10-K, Form 10-Q, Form 8-K, (1-800-SEC-0330), http://www.sec.gov
  Item 1A.
    Risk
    Factors  You should carefully consider each of the risks described
    below, together with all of the other information contained in
    this prospectus before deciding to invest in shares of our
    common stock. If any of the following risks develop into actual
    events, our business, financial condition or results of
    operations could be materially adversely affected, the trading
    price of your shares could decline and you may lose all or part
    of your investment.
  Risks
    Related To Our Business And Properties
  The
    current turmoil in the credit markets could limit demand for our
    office properties and affect the overall availability and cost
    of credit.
      
    Our tenants may experience a deterioration in their sales or
    other revenue, or experience a constraint on the availability of
    credit necessary to fund operations, which in turn may adversely
    impact those tenants ability to pay contractual base rents
    and tenant recoveries. Some tenants may terminate their
    occupancy due to an inability to operate profitably for an
    extended period of time, impacting our ability to maintain
    occupancy levels.
    Constraints on the availability of credit to tenants, necessary
    to purchase and install improvements, fixtures and equipment,
    and fund
    start-up
    business expenses, could impact our ability to procure new
    tenants for spaces currently vacant in existing operating
    properties or properties under development. 6




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
    Our co-investment partners could experience difficulty obtaining
    financing in the future for the same reasons discussed above.
    Their inability to obtain financing on acceptable terms, or at
    all, could negatively impact our ability to acquire additional
    properties.  All of
    our properties are located in Southern California, Phoenix, and
    Honolulu. We are dependent on the Southern California, Phoenix
    and Honolulu office markets and economies, and are therefore
    susceptible to risks of events in those markets that could
    adversely affect our business, such as adverse market
    conditions, changes in local laws or regulations, and natural
    disasters.
    We are
    prohibited from disposing of or refinancing the Contributed
    Properties under certain circumstances until March
    2018.
    Our
    operating performance is subject to risks associated with the
    real estate industry.
    
    adverse changes in economic and demographic conditions;
    vacancies or our inability to rent space on favorable terms;
    adverse changes in financial conditions of buyers, sellers and
    tenants of properties;
    inability to collect rent from tenants;
    competition from other real estate investors with significant
    capital, including other real estate operating companies,
    publicly traded REITs and institutional investment funds; 7




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
    reductions in the level of demand for office space, and changes
    in the relative popularity of properties;
    increases in the supply of office space;
    fluctuations in interest rates, which could adversely affect our
    ability, or the ability of buyers and tenants of properties, to
    obtain financing on favorable terms or at all;
    increases in expenses, including insurance costs, labor costs,
    energy prices, real estate assessments and other taxes and costs
    of compliance with laws, regulations and governmental policies,
    and our inability to pass on some or all of these increases to
    our tenants; and
    changes in, and changes in enforcement of, laws, regulations and
    governmental policies, including, without limitation, health,
    safety, environmental, zoning and tax laws, governmental fiscal
    policies and the Americans with Disabilities Act of 1990, which
    we call the ADA.    We
    have a substantial amount of indebtedness outstanding on a
    consolidated basis, which may affect our ability to pay
    dividends, may expose us to interest rate fluctuation risk and
    may expose us to the risk of default under our debt
    obligations.
    and/or
  
    our cash flow may be insufficient to meet our required principal
    and interest payments;
    we may be unable to borrow additional funds as needed or on
    favorable terms, which could adversely affect our liquidity for
    acquisitions or operations;
    we may be unable to refinance our indebtedness at maturity or
    the refinancing terms may be less favorable than the terms of
    our original indebtedness;
    we may be forced to dispose of one or more of our properties,
    possibly on disadvantageous terms;
    we will be exposed to interest and future interest rate
    volatility with respect to indebtedness that is variable
    rate; and
    any property-owning entity may default on its obligations and
    the lenders or mortgagees may foreclose on our properties and
    execute on any collateral that secures their loans.   8




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We
    will be subject to risks and liabilities unique to joint venture
    relationships.
    
    co-investment partners may control or share certain approval
    rights over major decisions;
    co-investment partners may fail to fund their share of any
    required capital commitments;
    co-investment partners might have economic or other business
    interests or goals that are inconsistent with our business
    interests or goals that would affect our ability to operate the
    property;
    co-investment partners may have the power to act contrary to our
    instructions and policies, including our current policy with
    respect to maintaining our REIT qualification;
    joint venture agreements often restrict the transfer of a
    members or co-investment partners interest or
    buy-sell or may otherwise restrict our ability to
    sell the interest when we desire or on advantageous terms;
    disputes between us and our co-investment partners may result in
    litigation or arbitration that would increase our expenses and
    divert attention from other elements of our business and result
    in subjecting the properties owned by the applicable joint
    venture to additional risk; and
    we may in certain circumstances be liable for the actions of our
    co-investment partners.    If we
    are deemed an investment company under the
    Investment Company Act of 1940, it could have a material adverse
    effect on our business.
    Our
    success depends on the ability of our Advisor to operate
    properties, and our Advisors failure to operate our
    properties in a sufficient manner could have a material adverse
    effect on the value of our real estate investments and results
    of operations.
   9




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We
    depend on the experience and expertise of our and our
    Advisors senior management team, and the loss of the
    services of our key personnel could have a material adverse
    effect on our business strategy, financial condition and results
    of operations.
    Our
    Advisors corporate management fee is payable regardless of
    our performance, which may reduce its incentive to devote time
    and resources to our portfolio.
    The
    actual rents we receive for the properties in our portfolio may
    be less than our asking rents, and we may experience lease roll
    down from time to time.
    
    competitive pricing pressure in our submarkets:
    adverse conditions in the Southern California, Phoenix or
    Honolulu real estate markets:
    general economic downturn; and
    the desirability of our properties compared to other properties
    in our submarkets.    We may
    be unable to renew leases or lease vacant space.
   10




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Potential
    losses may not be covered by insurance.
        Terrorism
    and other factors affecting demand for our properties could harm
    our operating results.
    We
    face intense competition, which may decrease, or prevent
    increases of, the occupancy and rental rates of our
    properties.
    Because
    we own real property, we will be subject to extensive
    environmental regulation which creates uncertainty regarding
    future environmental expenditures and liabilities.
   11




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Compliance
    with the Americans with Disabilities Act and fire, safety and
    other regulations may require us to make unanticipated
    expenditures that could significantly reduce the cash available
    for distribution to our shareholders.
      We may
    be unable to complete acquisitions that would grow our business
    and, even if consummated, we may fail to successfully integrate
    and operate acquired properties.
    
    we may be unable to acquire desired properties because of
    competition from other real estate investors with better access
    to less expensive capital, including other real estate operating
    companies, publicly traded REITs and investment funds; 12




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
    we may acquire properties that are not accretive to our results
    upon acquisition, and we may not successfully manage and lease
    those properties to meet our expectations;
    competition from other potential acquirers may significantly
    increase purchase prices;
    we may be unable to generate sufficient cash from operations, or
    obtain the necessary debt or equity financing to consummate an
    acquisition on favorable terms or at all;
    we may need to spend more than anticipated amounts to make
    necessary improvements or renovations to acquired properties;
    we may spend significant time and money on potential
    acquisitions that we do not consummate;
    we may be unable to quickly and efficiently integrate new
    acquisitions into our existing operations;
    we may suffer higher than expected vacancy rates
    and/or lower
    than expected rental rates; and
    we may acquire properties without any recourse, or with only
    limited recourse, for liabilities, against the former owners of
    the properties.    We may
    be unable to successfully expand our operations into new markets
    in the western United States.
    If we
    default on the ground leases to which two of our properties and
    a portion of a third are subject, our business could be
    adversely affected.
    Our
    property taxes could increase due to property tax rate changes
    or reassessment, which would impact our cash
    flows.
   13




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Risks
    Related to Conflicts of Interest and Certain
    Relationships
  There
    may be various conflicts of interest resulting from the
    relationships among us, our management, our Advisor and other
    parties.
    
    Certain of our affiliates are also shareholders, directors or
    officers of our Advisor and may, therefore, benefit from the
    compensation arrangements relating to our Advisor under the
    Advisory Agreement, which were not the result of
    arms-length negotiations.
    The sole director and certain of the officers of our Advisor,
    and certain of the individuals that are our officers and
    directors, currently are engaged, and in the future will engage,
    in the management of other business entities and properties,
    resulting in a potential conflict with respect to the allocation
    of the time of such key personnel of our Advisor.
    In the event that the sale by us of any of the Contributed
    Properties would be beneficial to us but would negatively impact
    the tax treatment of Venture, it is possible that any of our
    directors or officers with a financial interest in Venture may
    experience a conflict of interest.
    In the registration rights agreement we entered into with
    Venture, we retained certain rights to defer registration in
    circumstances where such registration would be detrimental to
    us. It is possible that any of our directors, officers or other
    affiliates having a financial interest in Venture or its
    affiliates receiving registration rights may experience a
    conflict of interest in circumstances where a registration would
    be advantageous to such persons, but detrimental to us.
    Certain entities affiliated with us hold promissory notes
    payable by our Operating Partnership. Those entities have rights
    under these promissory notes, and their exercise of these rights
    and pursuit of remedies may be affected by their relationship
    with each other.
    In connection with our formation transactions, certain
    properties were contributed to our Operating Partnership by
    Venture. Some of these contributed properties were encumbered by
    debt or, in the case of one contributed property, which we refer
    to as Clifford Center, obligations under the ground
    lease. These encumbrances are secured, in part, by certain
    guaranty and indemnity obligations of Messrs. Shidler and
    Reynolds and entities wholly-owned or controlled by them, or the
    Indemnitees. Our Operating Partnership entered into
    certain indemnity agreements with the Indemnitees on
    March 19, 2008, referred to as the Indemnity
    Agreements, in order to indemnify the Indemnitees under
    these guaranties and indemnities. Our Operating
    Partnerships specific indemnity obligations in each
    Indemnity Agreement are basically to defend, indemnify and hold
    harmless the Indemnitee from and against any and all demands,
    claims, causes of action, judgments, losses, costs, damages and
    expenses, including, attorneys fees and costs of
    litigation arising from or relating to any or all of the
    guaranty or indemnity obligations of the Indemnitee following
    formation.  and/or
  We are
    substantially controlled by Jay H. Shidler.
   14




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Jay H.
    Shidler may compete with us and, therefore, may have conflicts
    of interest with us.
    
    business conducted on our behalf;
    investments in which Mr. Shidler obtained an interest prior
    to our formation transactions;
    investments in areas in which we do not own office property at
    the time of such investment;
    activities of First Industrial Realty Trust, Inc., Corporate
    Office Properties Trust and their respective affiliates;
    investment opportunities considered and rejected by us; and
    investments in any entity as long as Mr. Shidler does not
    own more than 4.9% of the entity and is not actively engaged in
    the management of such entity.    Risks
    Related to Our Status as a REIT
  If we
    fail to remain qualified as a REIT, we will be subject to
    taxation as a regular corporation and could face substantial tax
    liability.
      
    we would not be required to make distributions to our
    shareholders;
    we would not be allowed to deduct distributions to our
    shareholders in computing our taxable income;
    we would be subject to federal income tax at regular corporate
    rates; and
    any resulting tax liability could be substantial and could
    require us to borrow money or sell assets to pay such liability,
    and would reduce the amount of cash available for distribution
    to shareholders. Unless we were 15




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entitled to relief under applicable statutory provisions, we
    would be disqualified from treatment as a REIT for the
    subsequent four taxable years following the year during which we
    lost our qualification, and thus, our cash available for
    distribution to shareholders would be reduced for each of the
    years during which we did not qualify as a REIT.  Even
    if we remain qualified as a REIT, we may face other tax
    liabilities that reduce our cash flow.
    Complying
    with REIT requirements may force us to borrow to make
    distributions to shareholders.
      We may
    be subject to adverse legislative or regulatory tax changes that
    could reduce the market price of our common stock.
    REIT
    restrictions on ownership of our common stock may delay or
    prevent our acquisition by a third party, even if an acquisition
    is in the best interests of our shareholders.
      Item 1B.
    Unresolved
    Staff Comments   16




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Item 2.
    Properties        Consolidated
    Properties
  AnnualizedName

Market/Submarket

Buildings

RSF(1)

Rent(2)Waterfront Plaza

Honolulu/Downtown(CBD)


1



534,475


$
15,666,744Davies Pacific Center

Honolulu/Downtown(CBD)


1



353,224



10,991,088Pan Am Building

Honolulu/Kapiolani


1



209,889



7,897,884First Insurance Center

Honolulu/Kapiolani-Ward


1



202,992



7,058,748Pacific Business News Building

Honolulu/ Kapiolani


1



90,559



2,067,468Clifford Center

Honolulu/Downtown(CBD)


1



72,415



1,729,320Sorrento Technology Center

San Diego/Sorrento Mesa


2



63,363



1,501,632City Square

Phoenix/(CBD) North Central


3



738,422



11,566,866Total  Consolidated Properties




11



2,265,339


$
58,479,750       (1)
    
    RSF as shown in the above table is defined as market rentable
    square feet.(2)
    
    Annualized Rent represents the monthly contractual rent under
    existing leases as of December 31, 2008, multiplied by
    twelve. This amount reflects total rent before abatements and
    includes expense reimbursements, which may be estimated as of
    such date. Total abatements for the twelve months ended
    December 31, 2008, were approximately $0.865 million
    for our wholly owned properties and $0.881 million for our
    joint venture properties. Annualized rent for the joint venture
    properties are reported with respect to each property in its
    entirety, rather than the portion of the property represented by
    our managing ownership interest. 17




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##### Table of Contents



Joint
    Venture Properties
  ManagingOwnership








AnnualizedName

Market

Interest


Buildings


RSF(1)(3)


Rent(2)POP San Diego I Joint Venture:Torrey Hills Corporate Center

San Diego


32.167
%


1



24,066


$
962,568Palomar Heights Plaza

San Diego


32.167
%


3



45,538



1,008,156Palomar Heights Corporate Center

San Diego


32.167
%


1



64,812



1,619,352Scripps Ranch Center

San Diego


32.167
%


2



47,248



761,784SoCal II Joint Venture:Via Frontera Business Park

San Diego


10
%


2



78,819



1,419,756Poway Flex

San Diego


10
%


1



112,000



1,008,000Carlsbad Corporate Center

San Diego


10
%


1



121,037



1,333,692Savi Tech Center

Orange County


10
%


4



372,327



6,789,540Yorba Linda Business Park

Orange County


10
%


5



166,042



1,683,903South Coast Executive Center

Orange County


10
%


1



61,025



924,912Gateway Corporate Center

Los Angeles


10
%


1



85,216



2,204,028Seville Plaza

San Diego


7.5
%


3



138,576



2,878,308Black Canyon Corporate Center

Phoenix


17.5
%


1



221,784



2,322,696U.S. Bank Center

Phoenix


7.5
%


2



374,274



6,677,688Bank of Hawaii Waikiki Center

Honolulu


17.5
%


1



152,288



7,162,869Total  Joint Venture Properties








29



2,065,052


$
38,757,252PORTFOLIO TOTALS








40



4,330,391


$
97,237,002Companys Share of Annualized Rent:















$
63,792,669       (1)
    
    RSF as shown in the above table is defined as market rentable
    square feet.(2)
    
    Annualized Rent represents the monthly contractual rent under
    existing leases as of December 31, 2008, multiplied by
    twelve. This amount reflects total rent before abatements and
    includes expense reimbursements, which may be estimated as of
    such date. Total abatements for the twelve months ended
    December 31, 2008, were approximately $0.865 million
    for our wholly owned properties and $0.881 million for our
    joint venture properties. Annualized rent for the joint venture
    properties are reported with respect to each property in its
    entirety, rather than the portion of the property represented by
    our managing ownership interest.(3)
    
    The market rentable square feet for the joint venture properties
    listed above are reported with respect to each property in its
    entirety rather than the portion of the property represented by
    our managing ownership interest, 18




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Occupancy
    Rates and Annualized Rents
    Consolidated
    Properties
  Occupancy Rates(1)


Annualized Rent Per SF(3)(4)Property

2004


2005


2006


2007


2008(2)


2004


2005


2006


2007


2008Waterfront Plaza


88
%


85
%


94
%


91
%


87
%

$
26.39


$
29.52


$
29.41


$
31.37


$
34.01Davies Pacific Center


84
%


89
%


90
%


84
%


87
%


25.94



27.25



30.10



31.84



36.38Pan Am Building


90
%


93
%


93
%


97
%


96
%


27.11



28.77



31.60



32.15



39.59First Insurance Center






97
%


97
%


96
%


96
%






24.54



30.59



33.34



36.22PBN Building


82
%


81
%


75
%


72
%


72
%


21.97



24.66



27.92



29.16



31.93Clifford Center


68
%


69
%


79
%


78
%


80
%


21.72



20.46



24.36



27.63



29.94Sorrento Tech. Center






100
%


100
%


100
%


100
%






24.90



21.41



22.14



23.70City Square






63
%


73
%


76
%


76
%






17.11



18.39



18.49



20.56Total/Weighted Average


86
%


80
%


86
%


85
%


85
%

$
25.88


$
24.71


$
26.33


$
27.47


$
30.69Joint Venture PropertiesOccupancy Rates(1)


Annualized Rent Per SF(3)(4)Property

2004


2005


2006


2007


2008(2)


2004


2005


2006


2007


2008Bank of Hawaii Waikiki Center














88
%


86
%

$



$



$



$
38.98


$
54.38Palomar Heights Plaza


















88
%


















25.08Palomar Heights Corp. Center


















90
%


















27.67Torrey Hills Corp. Center


















100
%


















40.00Scripps Ranch Center


















85
%


















18.89Carlsbad Corp. Center










44
%


44
%


86
%










15.15



15.42



16.47Via Frontera Business Park










70
%


93
%


100
%










17.21



16.47



19.39Poway Flex










100
%


100
%


100
%










8.40



9.49



9.00Seville Plaza






94
%


90
%


92
%


83
%






21.54



24.93



26.94



26.84Savi Tech Center










97
%


97
%


97
%










16.87



18.39



18.80Yorba Linda Business Park










94
%


90
%


88
%










9.99



10.79



11.65South Coast Executive Center










100
%


80
%


60
%










24.34



24.10



25.43Gateway Corp. Center










84
%


94
%


94
%










24.62



25.90



27.45Black Canyon Corp. Center














64
%


64
%














15.60



16.43U.S. Bank Center










77
%


79
%


81
%










18.64



20.67



22.43Total/Weighted Average






94
%


85
%


84
%


86
%

$



$
21.54


$
17.21


$
19.98


$
22.41Portfolio Totals


86
%


81
%


85
%


85
%


85
%

$
25.88


$
24.50


$
22.70


$
24.10


$
26.75     (1)
    
    Based on leases commenced as of December 31 of each historical
    year.(2)
    
    Occupancy includes leases signed as of December 31, 2008
    but not commenced.(3)
    
    Annualized Rent Per SF represents annualized gross rent divided
    by total occupied square feet. 19




---



##### Table of Contents



(4)
    
    Annualized rent for existing net rents are converted to gross
    rent by adding estimated expense reimbursements to base rents.  Tenant
    Diversification
    Consolidated
    Properties
  MarketRentable


Annualized


% of TotalLease


Square


Rental


AnnualizedTenant

Expiration


Feet


Revenue(1)


Rent


Property

Industry(In thousands, except square feet)First Insurance Company of Hawaii Ltd.


02/28/18



108,168


$
4,020



4.1
%

First Insurance Center

InsuranceHawaii Insurance Consultants, Ltd.


12/31/12



76,828



2,762



2.8
%

Waterfront Plaza

InsuranceAZ Dept. of Economic Security


06/30/12



104,059



1,975



2.0
%

City Square

GovernmentStraub Clinic & Hospital


01/31/13



52,604



1,782



1.8
%

First Insurance Center

Health CareMc Corriston, Miller, Mukai, MacKinnon, LLP


12/31/11



34,543



1,095



1.1
%

Waterfront Plaza

Legal ServicesAT&T Corp.


06/30/10



26,160



1,086



1.1
%

Waterfront Plaza

CommunicationsOahu Publications, Inc.


01/31/13



25,691



1,017



1.0
%

Waterfront Plaza

JournalismFujitsu Transaction Solutions, Inc.


12/31/10



37,886



879



0.9
%

Sorrento Technology Center

TechnologyRoyal State Financial Corp.


10/31/11



21,237



853



0.9
%

Pan Am Building

InsuranceHilton Grand Vacations


04/16/13



16,107



785



0.8
%

Pan Am Building

TourismTotal Annualized Rental Revenue for Top Ten Tenants









$
16,254



16.50
%Total Annualized Rental Revenue









$
58,480       (1)
    
    Annualized Rental Revenue represents monthly base rental revenue
    and tenant reimbursements as of December 31, 2008, on an
    annualized basis. 20




---



##### Table of Contents



Tenant
    Diversification
  Unconsolidated
    Joint Venture Properties
  MarketRentable





Annualized


% of TotalLease


Square


Ownership


Rental


AnnualizedTenant

Expiration


Feet


Interest %


Revenue(1)


Rent


Property

Industry(In thousands, except square feet and percentages)Viasys Healthcare, Inc.


02/28/15



130,000



10.0
%

$
2,601



2.7
%

Savi Tech Center

Health CareNobel Biocare USA, Inc.


10/31/17



122,361



10.0
%


2,345



2.4
%

Savi Tech Center

Health CareBank of Hawaii


01/31/38



6,971



17.5
%


1,911



2.0
%

Bank of Hawaii
    Waikiki Center

Financial ServicesHigh-Tech Institute, Inc.


04/04/18



92,974



17.5
%


1,427



1.5
%

Black Canyon
    Corporate Center

EducationValley Metro Rail, Inc.


06/30/16



57,007



7.5
%


1,262



1.3
%

U.S. Bank Center

TransportationJTB Hawaii, Inc.


12/31/12



35,623



17.5
%


1,261



1.3
%

Bank of Hawaii
    Waikiki Center

TourismGeneral Atomics Aeronautical Systems, Inc.


05/31/15



112,000



10.0
%


1,008



1.0
%

Poway Flex

AerospaceCarter & Burgess, Inc.


10/31/11



53,457



7.5
%


1,181



1.2
%

U.S. Bank Center

EngineeringAshley Furniture Homestore


09/30/16



61,541



10.0
%


966



1.0
%

Savi Tech Center

RetailPaychex North America, Inc.


06/30/12



48,427



17.5
%


896



0.9
%

Black Canyon
    Corporate Center

Business ServicesTotal Annualized Rental Revenue for Top Ten Tenants













$
14,858



15.3
%Total Annualized Rental Revenue













$
38,757     Notes:
  (1)
    
    Annualized Rental Revenue represents monthly aggregate base
    rental revenue and tenant reimbursements per property as of
    December 31, 2008, on an annualized basis.  Lease
    Distribution by Square Footage
    Consolidated
    Properties
  SquareLeases as


Market


Feet as a





AnnualizedNumber


a % of


Rentable


% of


Annualized


Rent as a % ofSquare Feet Under Lease

of Leases


Total


Square Feet


Total


Rent(1)(2)


Total2,500 or less


417



71.0
%


320,519



14.1
%

$
11,670,780



20.0
%2,501  10,000


119



20.3
%


579,083



25.5
%


17,272,962



29.5
%10,001  20,000


31



5.3
%


428,212



18.9
%


13,096,764



22.4
%20,001  40,000


10



1.7
%


288,575



12.7
%


7,711,692



13.2
%40,001  100,000


1



0.2
%


76,828



3.4
%


2,761,668



4.7
%Greater than 100,000


2



0.3
%


212,227



9.5
%


5,965,884



10.2
%Subtotal


580



98.8
%


1,905,444



84.1
%

$
58,479,750



100.0
%Available










350,125



15.5
%






Signed Leases Not Commenced


7



1.2
%


9,770



0.4
%






Total/Weighted Average


587



100.0
%


2,265,339



100.0
%

$
58,479,750



100.0
%  21




---



##### Table of Contents



Notes:
  (1)
    
    Represents annualized monthly rent under commenced leases as of
    December 31, 2008. This amount reflects total cash rent
    before abatements. Total abatements for the twelve months ending
    December 31, 2008 were $0.865 million.(2)
    
    Existing net rents are converted to gross rent by adding
    estimated annualized operating expense reimbursements to base
    rents.  Unconsolidated
    Joint Venture Properties
  EffectiveMarket


Square





Annualized





AnnualizedLeases as


Rentable


Feet as a





Rent as


Effective


Rent asNumber of


a % of


Square


% of


Annualized


a % of


Annualized


a % ofSquare Feet Under Lease

Leases


Total


Feet


Total


Rent(1)(2)


Total


Rent(1)(2)


Total2,500 or less


158



57.0
%


142,292



6.9
%

$
3,840,651



9.9
%

$
537,388



10.1
%2,501  10,000


79



28.5
%


365,348



8.4
%


10,813,620



27.9
%


1,577,848



29.7
%10,001  20,000


13



4.7
%


179,890



4.2
%


4,680,681



12.1
%


799,501



15.0
%20,001  40,000


10



3.6
%


270,673



6.3
%


6,366,048



16.4
%


1,012,458



19.1
%40,001  100,000


10



3.6
%


529,419



12.2
%


9,447,036



24.4
%


1,024,803



19.3
%Greater than 100,000


2



0.7
%


242,000



5.6
%


3,609,216



9.3
%


360,921



6.8
%Subtotal


272



98.1
%


1,729,622



43.6
%

$
38,757,252



100.0
%

$
5,312,919



100.0
%Available






0.0
%


291,274



6.7
%














Signed Leases Not Commenced


5



1.9
%


44,156



1.0
%














Total/Weighted Average


277



100.0
%


2,065,052



51.3
%


38,757,252



100.0
%

$
5,312,919



100.0
%       (1)
    
    Represents annualized monthly rent under commenced leases as of
    December 31, 2008. This amount reflects total cash rent
    before abatements.(2)
    
    Existing net rents are converted to gross rent by adding
    estimated annualized operating expense reimbursements to base
    rents. 22




---



##### Table of Contents



Lease
    Expirations
    Consolidated
    Properties
  Annualized





AnnualizedMarket


Square





Annualized


Rent Per





RentNumber


Rentable


Feet as a





Rent


Leased


Annualized


Per Squareof


Square


% of


Annualized


as a % of


Square


Rent at


Foot atYear of Lease Expiration

Leases


Feet


Total


Rent(1)


Total


Foot(2)


Expiration


Expiration(3)Available For Lease






350,125



15.5
%2009


161



290,528



12.8
%

$
8,698,428



14.9
%

$
29.94


$
8,692,140


$
29.922010


104



323,675



14.3
%


10,641,612



18.2
%


32.88



10,731,084



33.152011


128



310,013



13.7
%


9,813,216



16.8
%


31.65



10,204,500



32.922012


79



382,739



16.9
%


11,399,688



19.5
%


29.78



12,148,152



31.742013


60



294,906



13.0
%


8,690,028



14.9
%


29.47



8,510,277



28.862014


7



40,375



1.8
%


1,300,986



2.2
%


32.22



1,407,870



34.872015


10



69,848



3.1
%


1,212,840



2.1
%


17.36



1,293,720



18.522016


11



43,860



1.9
%


1,560,204



2.7
%


35.57



1,775,568



40.482017


2



5,726



0.3
%


256,452



0.4
%


44.79



287,544



50.22Thereafter


18



143,774



6.3
%


4,906,296



8.3
%


34.13



5,742,204



39.94Subtotal


580



2,255,569



99.6
%

$
58,479,750



100.0
%

$
30.69


$
60,793,059


$
31.90Signed Leases Not Commenced


7



9,770



0.4
%


















Total/Weighted Average


587



2,265,339



100.0
%

$
58,479,750



100.0
%

$
30.69


$
60,793,059


$
31.90       (1)
    
    Annualized Rent represents gross rental revenue which consists
    of monthly aggregate base rental revenue and tenant
    reimbursements per property as of December 31, 2008, on an
    annualized basis.(2)
    
    Represents annualized rent divided by leased square feet.(3)
    
    Represents annualized rent at expiration divided by leased
    square feet. 23




---



##### Table of Contents



Lease
    Expirations
  Joint
    Venture Properties
 Expiring














Annualized





EffectiveNo. of


Market


Square Feet





Annualized


Annualized Rent


Annualized


Rent Per Square


Effective


AnnualizedYear of Lease

Leases


Rentable


as a % of


Annualized


Rent as a %


Per Leased


Rent at


Foot at


Annualized


Rent atExpiration

Expiring


Square Feet


Total


Rent(1)(2)


of Total


Square Foot(3)


Expiration


Expiration(4)


Rent


Expiration2009


82



306,586



14.80
%

$
6,731,856



17.40
%

$
21.96


$
6,642,972


$
21.67


$
957,419


$
951,8892010


62



170,532



8.30
%


4,264,023



11.00
%


25.00



4,408,887



25.85



809,681



838,1862011


47



128,143



6.20
%


3,348,792



8.60
%


26.13



3,425,496



26.73



360,221



371,7792012


17



199,199



9.60
%


4,778,304



12.30
%


23.99



5,415,684



27.19



669,898



762,4072013


25



182,078



8.80
%


4,565,889



11.80
%


25.08



5,072,721



27.86



732,373



811,0632014


11



67,357



3.30
%


1,584,216



4.10
%


23.52



1,765,056



26.20



148,875



167,4912015


8



307,692



14.90
%


4,928,232



12.70
%


16.02



5,898,768



19.17



556,590



663,9322016


8



131,710



6.40
%


2,507,412



6.50
%


19.04



2,898,204



22.00



212,203



243,6502017


3



129,558



6.30
%


2,514,468



6.50
%


19.41



3,054,408



23.58



247,199



300,228Thereafter


8



106,767



5.20
%


3,534,060



9.10
%


33.10



5,430,168



50.86



618,460



950,281Subtotal


271



1,729,622



83.80
%


38,757,252



100.00
%

$
22.41



44,012,364


$
25.45



5,312,919



6,060,906Available For Lease






291,274



14.10
%


























Signed Leases Not Commenced


6



44,156



2.10
%


























Total/Wtd. Avg.


277



2,065,052



100.00
%

$
38,757,252



100.00
%

$
22.41


$
44,012,364


$
25.45


$
5,312,919


$
6,060,906       (1)
    
    Annualized Rent represents gross rental revenue which consists
    of monthly aggregate base rental revenue and tenant
    reimbursements per property as of December 31, 2008, on an
    annualized basis.(2)
    
    The following table summarizes the lease expiration for leases
    in place as of December 31, 2008 for all our properties.
    The information set forth in the table assumes that tenants
    exercise no renewal options or early termination rights.(3)
    
    Represents annualized rent divided by leased square feet.(4)
    
    Represents annualized rent at expiration divided by leased
    square feet.  Ground
    Leased Properties
    Minimum Payment Due by PeriodProperty

Total


2009


2010


2011


2012


2013


Thereafter(In thousands)Waterfront Plaza(1)

$
221,042


$
2,014


$
2,128


$
2,128


$
2,128


$
2,128


$
210,516Clifford Center(2)


9,326



292



302



312



323



335



7,762Total

$
230,368


$
2,306


$
2,430


$
2,440


$
2,451


$
2,463


$
218,278       (1)
    
    Lease term expires in 2060. The annual rental obligations reset
    on January 1, 2036, January 1, 2041, January 1,
    2046, January 1, 2051, and January 1, 2056 in an
    amount equal to 8.0% of the fair market value of the land. We
    have estimated the minimum future rental payments after 2035 to
    be an amount equal to the annual rent for 2035. 24




---



##### Table of Contents



(2)
    
    Lease term expires May 31, 2035. Ground lease also imposes
    obligation to pay 3% of tenant revenues collected, other than
    operating expense reimbursements. On June 1, 2016 and 2026
    the annual rental obligation will reset to an amount equal to 6%
    of the fair market value of the land and not less than the rent
    for the prior period. For the period prior to June 1, 2016,
    we have only included the base rent component in the minimum
    future payments. For the period after June 1, 2016 we
    estimated the annual minimum future rental payments to be an
    amount equal to the base rent paid for the immediately preceding
    12 month-period.  Indebtedness
    Market
    Information
    Honolulu
    Office Market
    Phoenix
    Office Market
    San Diego
    Office Market
   25




---



##### Table of Contents



Orange
    County Office Market
    Los
    Angeles Office Market
    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    High

Low

Dividends2008Fourth Quarter

$
6.65


$
2.52


$
0.05Third Quarter

$
7.32


$
6.10


$
0.05Second Quarter

$
7.30


$
5.92


$
0.00First Quarter

$
7.75


$
4.65


$
0.002007Fourth Quarter

$
7.33


$
4.90


$
0.05Third Quarter

$
9.22


$
5.70


$
0.00Second Quarter

$
8.85


$
6.36


$
0.00First Quarter

$
14.39


$
7.05


$
0.00  26




---



##### Table of Contents



Number of SecuritiesNumber of Securities to





Remaining Available forbe Issued upon Exercise


Weighted Average


Future Issuance underof Outstanding


Exercise Price of


Equity Compensation PlansOptions, Warrants


Outstanding Options,


(excluding SecuritiesPlan Category

and Rights


Warrants and Rights


reflected in column (a))(a)


(b)


(c)Equity compensation plans approved by security holders










Equity compensation plans not approved by security holders


24,240
(1)






125,760Total


24,240
(1)






125,760     (1)
    
    On May 21, 2008, the compensation committee of the board of
    directors approved the grant, to four of our directors, of 6,060
    restricted stock units each (Director RSUs) under
    the 2008 Directors Stock Plan (Directors
    Stock Plan). The Director RSUs will vest only upon
    approval of the Directors Stock Plan by our shareholders
    at the 2009 meeting of our shareholders. Subject to approval by
    our shareholders and vesting, each Director RSU will become
    exchangeable for one share of our common stock. In accordance
    with the award terms of the Director RSUs, should our
    shareholders fail to approve the Directors Stock Plan, the
    Director RSUs will be settled in cash in an amount based on the
    closing price of our common stock on the NYSE Amex on the date
    that the award is terminated. 27




---



##### Table of Contents



Recent
    Sales of Unregistered Securities
        Item 6.
    Selected
    Financial Data    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K, Form 10-K Form 10-K Form 10-K
 28




---



##### Table of Contents



Overview
  Form 10-K.
  day-to-day
  Critical
    Accounting Policies
    Investment in Real Estate. Business Combinations No. 90-5; Exchanges of Ownership Interests between Entities under
    Common Control
  No. 99-12; Determination of the Measurement Date for the Market
    Price of Acquirer Securities Issued in a Purchase Business
    Combination No. 99-12,
   29




---



##### Table of Contents



Impairment of Long-Lived Assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets
  Other-Than-Temporary
    Impairment. other-than-temporary.
  Goodwill. Goodwill and Other Intangible
    Assets
  Revenue Recognition. Revenue Recognition in Financial Statements
  
    persuasive evidence of an arrangement exists;
    the delivery has occurred or services rendered; 30




---



##### Table of Contents




    the fee is fixed and determinable; and
    collectability is reasonably assured.    month-to-month
      Monitoring of Rents and Other Receivables.
    Investments in Joint Ventures. Consolidation of Variable Interest
    Entities EITF 96-16, Investors Accounting for an Investee When the Investor
    Has a Majority of the Voting Interest but the Minority
    Shareholder or Shareholders Have Certain Approval or Veto
    Rights, 78-9, Accounting for Investments in Real Estate Ventures EITF 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights.
  The Equity Method of
    Accounting for Investments in Common Stock No. 04-5. Consolidation of Variable Interest Entities.
  Income Taxes.
 31




---



##### Table of Contents



Results
    of Operations
    Overview
  Form 10-K
           32




---



##### Table of Contents



Comparison
    of our Combined Entity year ended December 31, 2008 to
    Waterfronts year ended December 31, 2007
  Revenues
  Rental Revenue.
  Tenant Reimbursements.
  Parking Revenue.
  Expenses
  Rental Property Operating Expenses.
  General and Administrative.
  Interest Expense.
  Depreciation and Amortization
    Expense.
 33




---



##### Table of Contents



Other Expense.
  Liquidity
    and Capital Resources
  Cash
    Balances, Available Borrowings and Capital
    Resources
          transaction-by-transaction
    Cash
    Flows
     34




---



##### Table of Contents



35




---



##### Table of Contents



Indebtedness
  Mortgage
    and Collateralized Loans
    BalanceDue atInterest

Maturity


Maturity


Prepayment/Property

Amount


Rate

Date


Date


DefeasanceClifford Center(1)

$
3,760


6.00%


8/15/2011


$
3,032



(2
)Davies Pacific Center


95,000


5.86%


11/11/2016



95,000



(3
)First Insurance Center


38,000


5.74%


1/1/2016



38,000



(4
)First Insurance Center


14,000


5.40%


1/6/2016



14,000



(5
)Pacific Business News Building(6)


11,799


6.98%


4/6/2010



11,613



(7
)Pan Am Building


60,000


6.17%


8/11/2016



60,000



(8
)Waterfront Plaza


100,000


6.37%


9/11/2016



100,000



(9
)Waterfront Plaza


11,000


6.37%


9/11/2016



11,000



(10
)City Square


27,500


5.58%


9/1/2010



27,500



(11
)City Square(12)


26,612


LIBOR + 2.35%


9/1/2010



26,612



(13
)Sorrento TechnologyCenter(14)


11,800


5.75%(15)


1/11/16
(15)


11,800



(16
)Subtotal


399,471Revolving Line of Credit(17)


3,000


Prime Rate +
    2.25% or
    LIBOR + 3.50%


8/25/2010



3,000Outstanding principal balance


402,471Less: Unamortized discount, net


(2,363
)Net

$
400,108     (1)
    
    Requires monthly principal and interest payments of $39.8. The
    initial maturity date is August 15, 2011. We have the
    option to extend the maturity date to August, 15, 2014 for a
    payment of a nominal fee.(2)
    
    Loan is prepayable, subject to prepayment premium equal to
    greater of 2% of amount prepaid or yield maintenance.(3)
    
    Loan is prepayable, after second anniversary of its
    securitization, subject to prepayment premium equal to greater
    of (a) 1% of amount prepaid or (b) yield maintenance.
    No premium due after August 11, 2016.(4)
    
    Loan is prepayable subject to a prepayment premium in an amount
    equal to the greater of 3% of outstanding principal amount or
    yield maintenance. No premium due after October 1, 2015.
    Loan may also be defeased after earlier of December 2008 or two
    years after the
    start-up
    date of the loan, if securitized.(5)
    
    Loan is not prepayable until October 6, 2015; however, loan
    may be defeased after earlier of August 2009 and two years after
    the
    start-up
    date of the loan, if securitized. No premium is due upon
    prepayment.(6)
    
    Requires monthly principal and interest payments of $81.(7)
    
    Loan may not be prepaid until February 6, 2010. No premium
    is due upon prepayment. Loan may be defeased after the earlier
    of September 2008 or two years after the
    start-up
    date of the loan, if securitized. 36




---



##### Table of Contents



(8)
    
    Loan may be prepaid following second anniversary of its
    securitization subject to a prepayment premium equal to greater
    of 1% of principal balance of loan or yield maintenance. No
    premium is due after May 11, 2016.(9)
    
    Loan may be prepaid subject to payment of a yield
    maintenance-based prepayment premium; no premium is due after
    June 11, 2016. Loan may also be defeased after the date
    that is two years from the
    start-up
    date of the loan, if securitized.(10)
    
    Loan may be prepaid subject to payment of a yield
    maintenance-based prepayment premium; no premium is due after
    June 11, 2016.(11)
    
    Loan may not be prepaid until June 1, 2010. Loan may be
    defeased at any time.(12)
    
    Maximum loan amount to be advanced is $28.5 million. In
    addition, the Company has an interest rate cap on this loan for
    the notional amount of $28.5 million, which effectively
    limits the LIBOR rate on this loan to 7.45%. The interest rate
    cap expires on September 1, 2010.(13)
    
    Loan may be prepaid subject to payment of a fee in amount of
    $142.(14)
    
    From and after January 11, 2010, requires monthly principal
    and interest payments in the amount of $69.(15)
    
    Although the maturity date is January 11, 2036,
    January 11, 2016 is the anticipated repayment date because
    the interest rate adjusts as of January 11, 2016 to greater
    of 7.75% or treasury rate plus 70 basis points,
    plus 2.0%.(16)
    
    No prepayment is permitted prior to October 11, 2016. Loan
    may be defeased after the earlier of December 15, 2009 or
    second anniversary of the
    start-up
    date of the loan, if securitized.(17)
    
    The revolving line of credit matures on August 15, 2010,
    but may be extended to February 25, 2011, subject to the
    satisfaction of certain conditions, including the compliance of
    debt covenants and payment of a fee. At December 31, 2008,
    the interest rate on the revolving line of credit was 5.50%,
    based on KeyBank National Associations Prime Rate plus a
    spread of 2.25% per annum. The
    30-day LIBOR
    rate at December 31, 2008 was 0.43625%.  30-day
         37




---



##### Table of Contents



Revolving
    Line of Credit
        Subordinated
    Promissory Notes
      Derivative
    Instruments
    Distributions
   38




---



##### Table of Contents



Related
    Party Transactions
  Form 10-K.
  New
    Accounting Pronouncements
  SFAS No. 157
  Fair Value Measurements,
   39




---



##### Table of Contents



SFAS No. 141R
  Business Combinations Business Combinations
  SFAS No. 160
  Non-controlling Interests in Consolidated Financial
    Statements  An Amendment to ARB No. 51.
  FSP EITF
    03-6-1
  No. 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities No. 03-6-1 No. 03-6-1
  EITF
    No. 08-6
  No. 08-6, Equity Method Investment Accounting Consideration (EITF 08-6), other-than-temporary EITF 08-6
 40




---



##### Table of Contents



FSP
    FAS 142-3
  No. 142-3, Determination of the Useful Life of Intangible Assets Goodwill and Other Intangibles FSP 142-3
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Item 8.
    Financial
    Statements and Supplementary Data.    Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A(T).
    Controls
    and Procedures  Evaluation
    of disclosure controls and procedures.
  Rule 13a-15(b) Form 10-K, Rules 13a-15 15d-15(e) Form 10-K.
  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f) Internal Controls - Integrated
    Framework
    Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information   41




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Name

Age*

PositionJay H. Shidler


62


Chairman of the Board of DirectorsDallas E. Lucas


46


President, Chief Executive Officer and DirectorThomas R. Hislop


60


DirectorClay W. Hamlin


64


DirectorMichael W. Brennan


52


DirectorRobert L. Denton


56


DirectorPaul M. Higbee


54


DirectorJames M. Kasim


40


Chief Financial OfficerMatthew J. Root


43


Chief Investment OfficerJames R. Ingebritsen


46


Executive Vice President, Capital Markets/OperationsLawrence J. Taff


51


Executive Vice President, Honolulu OperationsKimberly F. Aquino


44


Corporate Secretary     *
    
    At March, 2009    Jay H. Shidler
  Dallas E. Lucas
  Thomas R. Hislop
  Clay W. Hamlin, III
 42




---



##### Table of Contents



Michael W. Brennan
  Robert L. Denton
  Paul M. Higbee
  James M. Kasim
  Matthew J. Root
  James R. Ingebritsen
  Lawrence J. Taff
 43




---



##### Table of Contents



Kimberly F. Aquino
  Term of
    Office
    Involvement
    in Certain Legal Proceedings
    Compliance
    with Section 16(a) of the Exchange Act
    Code of
    Ethics
  http://www.pacificofficeproperties.com
  Corporate
    Governance
    Audit
    Committee
    
    the integrity of our financial statements;
    our compliance with legal and regulatory requirements and
    ethical behavior;
    the retention of independent public auditors, including
    oversight of their performance, qualifications and independence,
    as well as the terms of their engagement; and
    our accounting and financial reporting processes, internal
    control systems and internal audit function. 44




---



##### Table of Contents



Compensation
    Committee
    
    to establish and periodically review the adequacy of the
    compensation plans for our executive officers and other
    employees;
    to review the performance of executive officers and adjust
    compensation arrangements as appropriate;
    to establish compensation arrangements for directors; and
    to review and monitor management development and succession
    plans and activities.  Nominating/Corporate
    Governance Committee
    
    to identify and recommend to the board individuals qualified to
    serve as directors and on committees;
    to advise the board with respect to board composition,
    procedures and committees;
    to advise the board with respect to corporate governance
    principles and to develop and recommend a set of corporate
    governance guidelines; and
    to lead the board in its review of the performance of the board
    and our management team.  Investment
    Committee
    
    oversee the implementation of our investment strategy, the
    principal goal of which is to enhance shareholder value through
    increases in earnings cash flow and net asset value;
    review and approve, within parameters set by the board, specific
    transactions; and
    regularly apprise the board of our progress and performance with
    respect to our investment strategy  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Beneficial Owners and Management and Related
    Stockholder Matters   45




---



##### Table of Contents



Shares Beneficially Owned(2)Number of



Percent ofShares of

Percent

Total VotingName and Address(1)

Common Stock

of Class

Power(3)Jay H. Shidler(4)


46,597,193



14.0
%


94.7
%Dallas E. Lucas










Thomas R. Hislop


7,700



*



*Clay W. Hamlin










Michael W. Brennan










Robert L. Denton










Paul M. Higbee










James M. Kasim










Matthew J. Root


110,000
(5)


3.6
%


*James R. Ingebritsen


90,000
(6)


3.0
%


*Lawrence J. Taff


100,000



3.3
%


*Kimberly F. Aquino










All directors and executive officers as a group
    (12 persons)(7)


46,904,893



24.1
%


95.3
%James C. Reynolds(8)


276,500



9.1
%


*Steven J. Lewis(9)


180,000



5.9
%


*     *
    
    Less than 1%.(1)
    
    Unless otherwise indicated, the address for each listed person
    is
    c/o Pacific
    Office Properties Trust, Inc., 233 Wilshire Boulevard,
    Suite 830, Santa Monica, California 90401.(2)
    
    Beneficial ownership is determined in accordance with
    Rule 13d-3
    promulgated under the Exchange Act and generally includes
    securities that a person has the right to acquire within
    60 days of the date hereof.(3)
    
    In calculating the percentage of total voting power, the voting
    power of shares of common stock (one vote per share) and
    Proportionate Voting Preferred Stock (one vote for each share of
    common stock for which the Common Units and Preferred Units held
    by Venture could be redeemed) has been aggregated.(4)
    
    This includes 423,500 shares of common stock held
    indirectly by Mr. Shidler and 46,173,693 shares of
    common stock represented by the Common Units and Preferred Units
    held by POP Venture LLC, which is controlled by
    Mr. Shidler, and into which the Common Units and Preferred
    Units would be convertible absent the restrictions currently
    placed on such conversion. The percentage reported under
    Percent of Class does not reflect the
    46,173,693 shares of common stock represented by the Common
    Units and Preferred Units, as referenced above. Pursuant to a
    Schedule 13D filed with the SEC on March 31, 2008,
    Mr. Shidler, Shidler Equities L.P., a Hawaii limited
    partnership (Shidler LP), and Shidler Equities
    Corp., a Hawaii corporation (Shidler Corp. and
    collectively, with Mr. Shidler and Shidler LP,
    Shidler) have sole voting and sole dispositive power
    over 423,500 shares of common stock. The address for
    Shidler is 841 Bishop Street Suite 1700, Honolulu, HI 96813.(5)
    
    This includes 10,000 shares of common stock held directly by MJR
    Equities, LLC, of which Mr. Root is the managing member and
    100,000 shares of common stock held by a trust of which
    Mr. Root is the trustee. Mr. Root disclaims beneficial
    ownership of the 100,000 shares held by this trust.
    Mr. Roots minor children are the beneficiaries of the
    Root Family Investment Trust, an irrevocable trust that owns an
    additional 90,000 shares of common stock; Mr. Root
    does not have investment or voting control over these shares.(6)
    
    All 90,000 shares of common stock are held by a trust of which
    Mr. Ingebritsen is the trustee. Mr. Ingebritsen
    disclaims beneficial ownership of the 90,000 shares held by the
    trust. Mr. Ingebritsens minor children are the
    beneficiaries of the Ingebritsen Children Trust, an irrevocable
    trust that owns 100,000 shares of common stock;
    Mr. Ingebritsen does not have investment or voting control
    over these shares. 46




---



##### Table of Contents



(7)
    
    Includes 46,173,693 shares of common stock represented by the
    Common Units and Preferred Units held by POP Venture LLC, which
    is controlled by Mr. Shidler, and into which the Common
    Units and Preferred Units would be convertible absent the
    restrictions currently placed on such conversion.(8)
    
    Information based on a Schedule 13G filed with the SEC on
    March 31, 2008, by James C. Reynolds and The James C.
    Reynolds Revocable Living Trust, under a Trust Agreement
    dated May 25, 1982 for The James C. Reynolds Revocable
    Living Trust (the Reynolds Trust), of which
    Mr. Reynolds is the trustee. The Schedule 13G states
    that Mr. Reynolds and the Reynolds Trust have sole voting
    and sole dispositive power over 276,500 shares of common
    stock. The address for Mr. Reynolds and the Reynolds Trust
    is 10188 Telesis Court Suite 222, San Diego, CA 92121.(9)
    
    Information based on a Schedule 13G filed with the SEC on
    March 31, 2008, by Steven J. Lewis, Cheryl Lewis and The
    Lewis Family Foundation, under a Trust Agreement dated
    June 20, 2007 for The Lewis Family Foundation (the
    Lewis Trust), of which Mr. Lewis and
    Mrs. Lewis are co-trustees. The Schedule 13G states
    that each of Mr. Lewis, Mrs. Lewis and the Lewis Trust
    have shared voting and shared dispositive power over
    180,000 shares of common stock. The address for each of
    Mr. Lewis, Mrs. Lewis and the Lewis Trust is
    841 Bishop Street Suite 1700, Honolulu, HI 96813.  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  day-to-day
       47




---



##### Table of Contents



Pacific OfficeProperties Trust,Inc.

WaterfrontTotal

For the Period

For the PeriodFor the Period from

from March 20,

from January 1,January 1, 2008

2008 through

2008 through

Year Endedthrough December 31,

December 31,

March 19,

December 31,2008

2008

2008

2007Property management fees to affiliates of Advisor

$
2,573


$
2,410


$
163


$
851Leasing commissions


388



388







209Corporate management fees to Advisor


587



587







Interest


1,172



1,172







Construction management fees and other


111



108



3



13Total

$
4,831


$
4,665


$
166


$
1,073     on-site
      The Equity Method of
    Accounting for Investments in Common Stock No. 04-5. Consolidation of Variable Interest Entities.
  No. 99-12.
   48




---



##### Table of Contents



Director
    Independence
   49




---



##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.      Page No.

Report of Independent Registered Public Accounting Firm
    PricewaterhouseCoopers LLP.


F-1

Report of Independent Registered Public Accounting Firm
    McGladrey & Pullen, LLP.


F-2

Consolidated Balance Sheets of the Company as of
    December 31, 2008, and for Waterfront, as of
    December 31, 2007


F-3

Consolidated Statements of Operations, of the Company for the
    period from March 20, 2008 through December 31, 2008
    and for Waterfront, for the period from January 1, 2008
    through March 19, 2008, and for the year ended
    December 31, 2007


F-4

Consolidated Statements of Stockholders Equity
    (Members Deficit) of the Company for the period from
    March 20, 2008 through December 31, 2008, and for
    Waterfront, for the period from January 1, 2008 through
    March 19, 2008, and for the year ended December 31,
    2007


F-5

Consolidated Statements of Cash Flows, of the Company for the
    period from March 20, 2008 through December 31, 2008,
    and for Waterfront, for the period from January 1, 2008
    through March 19, 2008, and for the year ended
    December 31, 2007


F-6

Notes to Consolidated Financial Statements


F-7     
    Schedule III  Consolidated Real Estate and
    Accumulated Depreciation of the Company as of December 31,
    2008  All other schedules have been omitted since the required
    information is not present or not present in amounts sufficient
    to require submission of the schedule, or because the
    information required is included in the consolidated financial
    statements or notes thereto.    Exhibit No.

Description3
.1

Amended and Restated Articles of Incorporation of the Company
    (previously filed as Exhibit 3.1 to the Companys
    Current Report on
    Form 8-K
    filed March 25, 2008, (File
    No. 000-53143)
    (the March 25, 2008
    Form 8-K)
    and incorporated herein by reference).3
.2

Amended and Restated Bylaws (previously filed as
    Exhibit 3.2 to the March 25, 2008
    Form 8-K
    and incorporated herein by reference). 50




---



##### Table of Contents



Exhibit No.

Description3
.3

Articles Supplementary of Board of Directors Classifying
    and Designating a Series of Preferred Stock as Proportionate
    Voting Preferred Stock
    (Articles Supplementary)(previously filed as
    Exhibit 3.3 to the March 25, 2008
    Form 8-K
    and incorporated herein by reference).3
.4

Articles of Amendment to Articles Supplementary (previously
    filed as Exhibit 3.1 to the Companys Current Report
    on
    Form 8-K
    filed March 10, 2009, (File
    No. 1-09900)
    and incorporated herein by reference).10
.1

June 13, 1988 Advisory and Servicing Agreement between ALI
    Advisor, Inc. and the Company (previously filed as
    Exhibit 10.1 to the Companys Annual Report on
    Form 10-KSB
    filed March 31, 2005, and incorporated herein by reference).10
.2

Indemnification Agreement dated May 12, 1992 between the
    Company and Robert Blackwell (previously filed as
    Exhibit 10.2 to the Companys Annual Report on
    Form 10-KSB
    filed March 31, 2005, and incorporated herein by reference).10
.3

Indemnification Agreement dated October 1, 1991 between the
    Company and Burton Freireich (previously filed as
    Exhibit 10.3 to the Companys Annual Report on
    Form 10-KSB
    filed March 31, 2005, and incorporated herein by reference).10
.4

Master Formation and Contribution Agreement dated
    October 3, 2006 between the registrant and POP Venture, LLC
    (previously filed as Exhibit 10.1 to the Companys
    current report on
    Form 8-K,
    filed with the Commission on October 3, 2006, and
    incorporated herein by reference).10
.5

Amendment and Exhibit Acknowledgement to Master Formation
    and Contribution Agreement, dated November 2, 2006, between
    the Company and POP (previously filed as Exhibit 10.1 to
    the Companys current report on
    Form 8-K,
    filed with the Commission on November 6, 2006, and
    incorporated herein by reference).10
.6

Second Amendment to Master Formation and Contribution Agreement,
    dated December 7, 2006, between the Company and Pacific
    Office Contributor (previously filed as Exhibit 10.1 to the
    Companys current report on
    Form 8-K,
    filed with the Commission on December 11, 2006, and
    incorporated herein by reference).10
.7

Third Amendment to Master Formation and Contribution Agreement,
    dated December 7, 2006, between the Company and Pacific
    Office Contributor (previously filed as Exhibit 10.1 to the
    Companys current report on
    Form 8-K,
    filed with the Commission on March 29, 2007, and
    incorporated herein by reference).10
.8

Fourth Amendment to Master Formation and Contribution Agreement,
    dated November 9, 2007, between the Company and Pacific
    Office Contributor (previously filed as Exhibit 10.1 to the
    Companys current report on
    Form 8-K
    filed with the Commission on November 13, 2007, and
    incorporated herein by reference).10
.9

Master Amendment to Contribution Agreements, dated
    November 9, 2007, between the Company and Pacific Office
    Contributor (previously filed as Exhibit 10.2 to the
    Companys current report on
    Form 8-K
    filed with the Commission on November 13, 2007, and
    incorporated herein by reference).10
.10

Form of Contribution Agreement, dated November 2, 2006,
    between the Company and Pacific Office Contributor (previously
    filed as Exhibit 2.1 to the Companys current report
    on
    Form 8-K
    filed with the Commission on November 6, 2006, and
    incorporated herein by reference).10
.11

Purchase and Contribution Agreement and Joint Escrow
    Instructions dated as of February 27, 2008 between 5 Torrey
    Hills Venture, LLC and Shidler West Investment Partners, LP
    (previously filed as Exhibit 10.1 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008 (File
    No. 1-09900)
    (the 2008 3Q
    Form 10-Q)
    and incorporated herein by reference).10
.12

Purchase and Sale Agreement and Joint Escrow Instructions dated
    as of February 27, 2008 by and among Buie Carlsbad Building
    A, LLC, Buie Carlsbad Lot 10, LLC and Shidler West Investment
    Partners, LP (previously filed as Exhibit 10.2 to the 2008
    3Q
    Form 10-Q
    and incorporated herein by reference).10
.13

Purchase and Sale Agreement and Joint Escrow Instructions dated
    as of February 27, 2008 by and among Buie Carlsbad Building
    B LLC and Shidler West Investment Partners, LP (previously filed
    as Exhibit 10.3 to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference). 51




---



##### Table of Contents



Exhibit No.

Description10
.14

Purchase and Sale Agreement and Joint Escrow Instructions dated
    as of February 27, 2008 between Buie Scripps Ranch Office
    Building LLC and Shidler West Investment Partners, LP
    (previously filed as Exhibit 10.4 to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.15

Purchase and Contribution Agreement and Joint Escrow
    Instructions dated as of February 27, 2008 between Buie
    Carlsbad LLC and Shidler West Investment Partners, LP
    (previously filed as Exhibit 10.5 to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.16

Membership Interest Purchase Agreement dated as of
    April 30, 2008 by and among the Pacific Office Properties,
    L.P., and STIRR Black Canyon, LLC, and POP/BC Mezzanine, L.L.C.
    (previously filed as Exhibit 10.6 to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.17

Membership Interest Purchase Agreement dated as of May 23,
    2008 by and among the Pacific Office Properties, L.P., STIRR USB
    Towers, LLC and POP/USB Partners, LLC (previously filed as
    Exhibit 10.7 to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.18

Membership Interest Purchase Agreement dated as of May 23,
    2008 by and among the Pacific Office Properties, L.P., STIRR
    2155 Kalakaua, LLC and 2155 Mezzanine, LLC (previously filed as
    Exhibit 10.8 to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.19

First Amendment to Amended and Restated Agreement of Limited
    Partnership of Pacific Office Properties, L.P. dated as of
    April 30, 2008 (previously filed as Exhibit 10.9 to
    the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.20

Second Amendment to Amended and Restated Agreement of Limited
    Partnership of Pacific Office Properties, L.P. dated as of
    June 19, 2008 (previously filed as Exhibit 10.10 to
    the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.21

Form of Promissory Note (previously filed as Exhibit 10.11
    to the 2008 3Q
    Form 10-Q
    and incorporated herein by reference).10
.22

Membership Interest Purchase Agreement dated as of
    August 14, 2008, by and between STIRR SoCal Portfolio II,
    LLC and Pacific Office Properties, L.P. (previously filed as
    Exhibit 10.1 to the Companys current report on
    Form 8-K
    filed August 20, 2008, (File
    No. 1-09900)
    and incorporated herein by reference).10
.23

Credit Agreement dated as of August 25, 2008, by and among
    Pacific Office Properties, L.P., Keybank National Association,
    and Keybank Capital Markets (previously filed as
    Exhibit 10.1 to the Companys current report on
    Form 8-K
    filed August 29, 2008, (File
    No. 1-09900)
    and incorporated herein by reference).10
.24

Amended and Restated Advisory Agreement dated as of
    March 3, 2009, by and among the Company, Pacific Office
    Properties, L.P., and Pacific Office Management, Inc.
    (previously filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    filed March 9, 2009, (File
    No. 1-0990)
    and incorporated herein by reference).21
.1

Subsidiaries of Pacific Office Properties Trust, Inc. (Filed
    herewith)31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002. (Filed
    herewith.)31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002. (Filed
    herewith.)32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
    herewith.)32
.2

Certification of Chief Financial Officer pursuant to 18 U.S.C.
    § 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002. (Filed herewith.)  52




---



##### Table of Contents



SIGNATURES    PACIFIC OFFICE PROPERTIES TRUST, INC.Date: March 27, 2009

By:

/s/ Jay H. ShidlerJay
    H. Shidler
    Chairman of the Board     Date: March 27, 2009



/s/ Dallas E. LucasDallas
    E. Lucas,
    Chief Executive Officer, PresidentDate: March 27, 2009



/s/ James M. KasimJames
    M. Kasim
    Chief Financial OfficerDate: March 27, 2009



/s/ Michael W. BrennanMichael
    W. Brennan, DirectorDate: March 27, 2009



/s/ Robert L. DentonRobert
    L. Denton, DirectorDate: March 27, 2009



/s/ Clay W. HamlinClay
    W. Hamlin, DirectorDate: March 27, 2009



/s/ Paul M. HigbeePaul
    M. Higbee, DirectorDate: March 27, 2009



/s/ Thomas R. HislopThomas
    R. Hislop, Director  53




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  
    
    F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
          
     
 F-2




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Consolidated
    Balance Sheets
  WaterfrontDecember 31,


December 31,2008


2007(In thousands, except shareand per share data)ASSETSInvestments in real estate, net (Note 3)

$
392,657


$
59,587Cash and cash equivalents


4,463



2,619Restricted cash


7,267



1,708Rents and other receivables, net (Note 2)


6,342



1,743Intangible assets, net (Note 4)


41,379



6,009Other assets, net (Note 6)


4,680



8,505Goodwill


61,519



Investment in unconsolidated joint ventures (Note 5)


11,590



Total assets

$
529,897


$
80,171LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS EQUITY
    (MEMBERS DEFICIT)Mortgage and other collateralized loans, net (Note 9)

$
400,108


$
111,000Unsecured notes payable to related parties (Note 10)


23,776



Accounts payable and other liabilities (Note 8)


17,088



5,831Acquired below market leases, net (Note 4)


11,817



107Total liabilities


452,789



116,938Minority interests (Note 13)


75,823



Commitments and contingencies (Note 12)Stockholders equity (members deficit):Proportionate Voting Preferred Stock






Preferred stock, $0.0001 par value, 100,000,000 shares
    authorized, no shares issued and outstanding at
    December 31, 2008






Common Stock, $0.0001 par value, 200,000,000 shares
    authorized, 3,031,025 shares issued and outstanding at
    December 31, 2008


185



Class B Common Stock, $0.0001 par value,
    200,000 shares authorized, 100 shares issued and
    outstanding at December 31, 2008






Additional paid-in capital


8,144



Retained deficit


(7,044
)


Members deficit






(36,767
)Total stockholders equity (members deficit)


1,285



(36,767
)Total liabilities, minority interests and stockholders
    equity (members deficit)

$
529,897


$
80,171    F-3




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Consolidated
    Statements of Operations
  Pacific OfficeTotal(1)


Properties Trust, Inc.


WaterfrontFor the Period


For the Period


For the Periodfrom January 1,


from March 20,


from January 1,2008 Through


2008 Through


2008 Through


Year EndedDecember 31,


December 31,


March 19,


December 31,2008


2008


2008


2007(In thousands)Revenue:Rental

$
37,447


$
34,446


$
3,001


$
12,505Tenant reimbursements


19,375



17,805



1,570



4,922Parking


6,890



6,328



562



2,569Other


394



365



29



164Total revenue


64,106



58,944



5,162



20,160Expenses:Rental property operating


37,744



34,098



3,646



14,859General and administrative


18,547



18,547







390Interest


22,932



21,380



1,552



7,227Depreciation and amortization


22,295



21,468



827



4,272Other


143



35



108



1,538Total expenses


101,661



95,528



6,133



28,286Loss before equity in net earnings of unconsolidated joint
    ventures, non-operating income and minority interests


(37,555
)


(36,584
)


(971
)


(8,126
)Equity in net earnings of unconsolidated joint ventures


93



93







Non-operating income


85



85







Loss before minority interests


(37,377
)


(36,406
)


(971
)


(8,126
)Minority interests


29,665



29,665







Net loss

$
(7,712
)

$
(6,741
)

$
(971
)

$
(8,126
)     (1)
    
    Amounts reflected in the Total column represent the sum of the
    amounts included herein as the consolidated results of
    operations of Waterfront and the Company (the Combined
    Entities) for the period from January 1, 2008 through
    March 19, 2008 and March 20, 2008 through
    December 31, 2008, respectively.   F-4




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Consolidated
    Statements of Stockholders Equity (Members
    Deficit)
  Pacific OfficeProperties Trust, Inc.


WaterfrontFor the Period from


For the Period fromMarch 20, 2008


January 1, 2008


Year Endedthrough December 31,


through March 19,


December 31,2008


2008


2007(In thousands, except share and unit data)Common Units:Balance at beginning of period






3,494,624



3,494,624Issuance of Common Units










Balance at end of period:






3,494,624



3,494,624Preferred Units:Balance at beginning of period










Issuance of Preferred Units










Balance at end of period:










Shares of Common Stock:Balance at beginning of period


1,851,125







Issuance of common stock


1,180,000







Balance at end of period:


3,031,125







Common Stock:Balance at beginning of period

$



$



$
AZL stock converted to PCE stock


185







Issuance of common stock










Balance at end of period:

$
185


$



$
Additional Paid-in Capital:Balance at beginning of period

$



$



$
AZL stock converted to PCE stock


9,255







Adjustments for minority interest


(7,554
)






Issuance of common stock


6,350







Stock compensation


93







Balance at end of period:

$
8,144


$



$
Retained Deficit (Members Deficit):Balance at beginning of period

$
(37,738
)

$
(36,767
)

$
(33,013
)Reclassify Waterfront deficit to minority interests


37,738







Net loss


(6,741
)


(971
)


(8,126
)Contributions










4,372Distributions










Dividends


(303
)






Balance at end of period:

$
(7,044
)

$
(37,738
)

$
(36,767
)Total Stockholders Equity (Members Deficit):Balance at beginning of period

$
(37,738
)

$
(36,767
)

$
(33,013
)Reclassify Waterfront deficit to minority interests


37,738







AZL stock converted to PCE stock


9,440







Net loss


(6,741
)


(971
)


(8,126
)Issuance of common stock


6,350







Contributions










4,372Distributions










Dividends


(303
)






Adjustments for minority interest


(7,554
)






Stock compensation


93







Balance at end of period:

$
1,285


$
(37,738
)

$
(36,767
)    F-5




---



##### Table of Contents





Pacific
    Office Properties Trust, Inc.
  Consolidated
    Statements of Cash Flows
  Pacific OfficeTotal(2)


Properties Trust, Inc.


WaterfrontFor the Period from


For the Period from


For the Period fromJanuary 1, 2008


March 20, 2008


January 1, 2008


Year EndedThrough December 31,


Through December 31,


Through March 19,


December 31,2008


2008


2008


2007(In thousands)Operating activitiesNet loss

$
(7,712
)

$
(6,741
)

$
(971
)

$
(8,126
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization


22,295



21,468



827



3,712Interest amortization


985



985







Share based compensation charge attributable to the Transaction


16,194



16,194







Other share based compensation


93



93







Minority interests


(29,662
)


(29,662
)






Below market lease amortization, net


(2,439
)


(2,392
)


(47
)


(175
)Equity in net earnings of unconsolidated joint ventures


(92
)


(92
)






Net operating distributions received from unconsolidated joint
    ventures


178



178







Bad debt expense


937



857



80



358Other


365



(3
)


368



Changes in operating assets and liabilities:Rents and other receivables


(1,941
)


(2,295
)


354



(514
)Other assets


1,021



477



544



761Accounts payable and other liabilities


1,932



2,149



(217
)


3,578Net cash provided by (used in) operating activities


2,154



1,216



938



(406
)Investing activitiesAcquisition and improvement of real estate


(8,541
)


(8,514
)


(27
)


(1,397
)Cash held by properties upon Effective Date


6,470



6,470







Capital distributions from unconsolidated joint ventures


866



866







Increase in leasing commissions


(789
)


(789
)






(663
)Deferred acquisition costs and other


(4,059
)






(4,059
)


(3,990
)(Increase) decrease in restricted cash


(2,797
)


(2,139
)


(658
)


156Net cash used in investing activities


(8,850
)


(4,106
)


(4,744
)


(5,894
)Financing activitiesProceeds from issuance of equity securities


6,350



6,350







Repayment of mortgage notes payable


(252
)


(252
)






Proceeds from revolving credit facility


13,000



13,000







Repayment of revolving credit facility


(10,000
)


(10,000
)Deferred financing costs


(1,339
)


(1,339
)






Security deposits


116



116







Dividends


(152
)


(152
)






Distributions to minority interests


(1,925
)


(1,925
)






Equity contributions


4,167







4,167



4,372Equity distributions


(1,425
)






(1,425
)


Net cash provided by financing activities


8,540



5,798



2,742



4,372Increase (decrease) in cash and cash equivalents


1,844



2,908



(1,064
)


(1,928
)Balance at beginning of period


2,619



1,555



2,619



4,547Balance at end of period

$
4,463


$
4,463


$
1,555


$
2,619Supplemental cash flow information:Interest paid

$
22,804


$
20,839


$
1,965


$
7,173Supplemental Disclosure of Non-Cash Investing and Financing
    Activities:Assets, net, acquired on the Effective Date

$
386,132


$
386,132


$



$
Liabilities, net, assumed on the Effective Date

$
305,047


$
305,047


$



$
Issuance of unsecured notes payable to related parties to
    acquire managing interests in joint ventures

$
7,285


$
7,285


$



$
Issuance of Common Units to acquire managing interest in joint
    ventures

$
4,824


$
4,824


$



$
     (2)
    
    Amounts reflected in the Total column represent the sum of the
    amounts included herein as the consolidated cash flows of the
    Combined Entities for the period from January 1, 2008
    through March 19, 2008 and for the period from
    March 20, 2008 through December 31, 2008.   F-6




---



##### Table of Contents





Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial Statements
 (in
    thousands, except share and per share data)
  1.
    Organization
    and Ownership  Pacific
    Office Properties
  Form 10-K day-to-day
    Property

EffectiveNumber of

Portfolio

PortfolioProperties

Buildings

Sq. Ft.

Sq. Ft.Wholly-owned properties


8



11



2,265,339



2,265,339Unconsolidated joint ventures properties


15



29



2,065,052



262,009Total


23



40



4,330,391



2,527,348     Transactions
    Business Combinations
 F-7




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Form 10-K Form 10-K
    one-for-one
  one-for-one
     F-8




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Advisor
  day-to-day
 F-9




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    The Advisory Agreement terminates on March 19,
    2018.
  2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
  Form 10-K Regulation S-X
  Form 10-K. Form 10-K
    Principles
    of Consolidation
    The Equity Method of
    Accounting for Investments in Common Stock No. 04-5, EITF 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights Consolidation of Variable Interest Entities
  Investment
    in Unconsolidated Joint Ventures
  EITF 04-5, EITF 04-5 states
 F-10




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    EITF 04-5.
      Income
    Taxes
     F-11




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Earnings
    per Share
  Pacific
    Office Properties Trust, Inc.
      Waterfront
    Real
    Estate Properties
  Acquisitions
  Business
    Combinations,
           F-12




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    lease-up lease-up
  Goodwill and Other
    Intangible Assets,
  Mortgage
    and Other Collateralized Loans
      Depreciation
    Pro
    Forma Financial Information
     F-13




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended


Year EndedDecember 31,


December 31,2008


2007(In thousands, except per share data)Proforma revenue

$
75,440


$
69,536Proforma net loss  basic and diluted

$
(8,156
)

$
(5,001
)Proforma net loss per share  basic and diluted

$
(2.69
)

$
(1.65
)     Revenue
    Recognition
  Revenue Recognition in Financial Statements
    month-to-month
    Accounting for Sales of
    Real Estate
    Cash
    and Cash Equivalents
   F-14




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Restricted
    Cash
    Impairment
  Accounting for the
    Impairment or Disposal of Long-Lived Asset
    Other-Than-Temporary
    Impairment
  other-than-temporary.
  Repairs,
    Maintenance and Major Improvements
   F-15




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Tenant
    Receivables
    Preferred
    Units
    Deferred
    Loan Fees
    Derivative
    Financial Instruments
      Use of
    Estimates in Financial Statements
    
    the initial valuation and underlying allocations of purchase
    price for investments in real estate;
    the assessment of recoverability of long-lived assets;
    the valuation of investments in unconsolidated joint ventures;
    the valuation and recognition of equity instruments issued,
    including:
     minority or non-controlling interests; and
     share-based compensation F-16




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    the valuation and recognition of derivative financial
    instruments; and
    the determination of useful lives of investments in real estate
    and related assets  Stock-Based
    Compensation
  Stock-Based Compensation
  Segments
  Disclosures about Segments of an
    Enterprise and Related Information
  Revolving
    Line of Credit
    Recent
    Accounting Pronouncements
  SFAS No. 157
  Fair Value Measurements,
    SFAS No. 141R
  Business Combinations Business Combinations
 F-17




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    SFAS No. 160
  Non-controlling Interests in Consolidated Financial
    Statements  An Amendment to ARB No. 51.
  FSP EITF
    03-6-1
  No. 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities No. 03-6-1 No. 03-6-1
  EITF
    No. 08-6
  No. 08-6, Equity Method Investment Accounting Consideration (EITF 08-6), EITF 08-6
  FSP
    FAS 142-3
  No. 142-3, Determination of the Useful Life of Intangible Assets Goodwill and Other Intangibles FSP 142-3
 F-18




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    3.
    Investments
    in Real Estate    WaterfrontDecember 31,


December 31,2008


2007(In thousands)Land and land improvements

$
76,008


$
452Building and building improvements


308,125



60,910Tenant improvements


24,489



5,808Furniture, fixtures and equipment


1,210



729Construction in progress


4,082



474Investments in real estate


413,914



68,373Less: accumulated depreciation


(21,257
)


(8,786
)Investments in real estate, net

$
392,657


$
59,587   Acquisitions
    of Consolidated Properties
  Business
    Combinations No. 90-5; Exchanges of Ownership Interests between Entities under
    Common Control
  No. 99-12; Determination of the Measurement Date for the Market Price of
    Acquirer Securities Issued in a Purchase Business Combination, No. 99-12,
 F-19




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Investments in real estate, net

$
337,162Rents and other receivables, net


2,502Intangible assets, net


44,087Other assets, net


2,381Assets, net, acquired on the Effective Date


386,132Accounts payable and other liabilities


4,595Mortgage and other collateralized loans, net


286,060Acquired below market leases, net


14,392Liabilities, net, assumed on the Effective Date


305,047Net assets acquired

$
81,085   4.
    Intangible
    Assets and Acquired Below Market Leases Liabilities    WaterfrontDecember 31,


December 31,2008


2007(In thousands)Acquired leasing commissionsGross amount

$
8,316


$
3,109Accumulated amortization


(2,950
)


(1,688
)Net balance


5,366



1,421Acquired leases in placeGross amount


18,109



4,165Accumulated amortization


(6,724
)


(2,080
)Net balance


11,385



2,085Acquired tenant relationship costsGross amount


19,588



Accumulated amortization


(1,941
)


Net balance


17,647



Acquired other intangiblesGross amount


7,879



2,922Accumulated amortization


(898
)


(419
)Net balance


6,981



2,503Intangible assets, net

$
41,379


$
6,009 F-20




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  WaterfrontDecember 31,


December 31,2008


2007(In thousands)Acquired below market leasesGross amount

$
16,608


$
1,886Accumulated amortization


(3,755
)


(1,404
)Net balance


12,853



482Acquired above market leasesGross amount


2,449



1,439Accumulated amortization


(1,413
)


(1,064
)Net balance


1,036



375Acquired below market leases, net

$
11,817


$
107     Weighted AverageAmortization2009


2010


2011


2012


2013


Thereafter


Total


Period (In years)(In thousands)Leasing Commissions

$
1,621


$
1,280


$
947


$
704


$
292


$
522


$
5,366



2.8Other Intangibles


474



373



277



226



177



5,454



6,981



18.1Lease in Place


4,131



2,866



1,807



1,128



471



982



11,385



2.7Tenant Relationship Value


2,480



2,480



2,480



2,479



2,337



5,391



17,647



4.6Total

$
8,706


$
6,999


$
5,511


$
4,537


$
3,277


$
12,349


$
41,379Net below market lease accretion

$
2,350


$
1,925


$
1,539


$
1,039


$
600


$
4,364


$
11,817



5.7      F-21




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Pacific OfficeProperties Trust,

WaterfrontTotal

Inc.

For the PeriodFor the Period from

For the Period from

from January 1,January 1, 2008

March 20, 2008

2008 through

Year Endedthrough December 31,

through December 31,

March 19,

December 31,2008

2008

2008

2007(In thousands)Total acquired below/above- market lease accretion

$
2,439


$
2,392


$
47


$
175Total intangibles amortization expense

$
9,176


$
8,924


$
252


$
1,248   5.
    Investment
    in Unconsolidated Joint Ventures        Period from March 20, 2008through December 31, 2008Total revenues

$
46,438Total expenses


56,365Net loss

$
(9,927
)Balance as ofDecember 31, 2008Investment in real estate, net

$
336,409Other assets


61,591Total assets

$
398,000Mortgage and other collateralized loans

$
314,324Other liabilities


18,139Total liabilities

$
332,463  F-22




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Acquisitions
    of Unconsolidated Joint Ventures
  The Equity Method of
    Accounting for Investments in Common Stock No. 04-5. Consolidation of Variable Interest Entities.
  No. 99-12.
       F-23




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          6.
    Other
    Assets    WaterfrontDecember 31,


December 31,2008


2007Deferred loan fees, net of accumulated amortization of $769 and
    $172 at December 31, 2008 and 2007, respectively

$
3,447


$
1,137Deferred acquisition costs, net






6,824Prepaid expenses


1,232



494Other


1



50Total other assets

$
4,680


$
8,505   Amortization
    of Deferred Loan Fees
    Pacific OfficeTotal


Properties Trust, Inc.


WaterfrontFor the Period from


For the Period from


For the Period fromJanuary 1, 2008


March 20, 2008


January 1, 2008


Year Endedthrough December 31,


through December 31,


through March 19,


December 31,2008


2008


2008


2007Amortization expense

$
602


$
574


$
28


$
129  F-24




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  7.
    Minimum
    Future Lease Rentals    Year2009

$
37,0942010


32,3422011


26,4012012


19,1562013


8,808Thereafter


21,750Total future minimum base rental revenue

$
145,551       Pacific OfficeTotal


Properties Trust, Inc.


WaterfrontFor the Period from


For the Period from


For the Period fromJanuary 1, 2008


March 20, 2008


January 1, 2008


Year Endedthrough December 31,


through December 31,


through March 19,


December 31,2008


2008


2008


2007Percentage rental income

$
109


$
85


$
24


$
260   8.
    Accounts
    Payable and Other Liabilities    WaterfrontDecember 31,


December 31,2008


2007Accounts payable

$
1,276


$
3,738Interest payable


1,353



Deferred revenue


1,278



524Security deposits


2,558



672Deferred straight-line ground rent


2,811



895Related party payable (see footnote 14)


1,060



2Accrued expenses


6,281



Asset retirement obligations


471



Total accounts payable and other liabilities

$
17,088


$
5,831  F-25




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  9.
    Mortgage
    and Other Collateralized Loans    Outstanding


Unamortized





Interest Rate atPrincipal


Premium





December 31,

MaturityProperty

Balance


(Discount)


Net


2008

Date


AmortizationClifford Center

$
3,760


$



$
3,760


6.00%


8/15/2011
(a)


132 monthsDavies Pacific Center


95,000



(1,060
)


93,940


5.86%


11/11/2016



Interest OnlyFirst Insurance Center


38,000



(654
)


37,346


5.74%


1/1/2016



Interest OnlyFirst Insurance Center


14,000



(244
)


13,756


5.40%


1/6/2016



Interest OnlyPacific Business News Building


11,799



62



11,861


6.98%


4/6/2010



360 monthsPan Am Building


60,000



(43
)


59,957


6.17%


8/11/2016



Interest OnlyWaterfront Plaza


100,000







100,000


6.37%


9/11/2016



Interest OnlyWaterfront Plaza


11,000







11,000


6.37%


9/11/2016



Interest OnlyCity Square


27,500



(220
)


27,280


5.58%


9/1/2010



Interest OnlyCity Square(b)


26,612







26,612


LIBOR + 2.35%


9/1/2010



Interest OnlySorrento Technology Center


11,800



(204
)


11,596


5.75%


1/11/2016



Interest OnlySubtotal

$
399,471


$
(2,363
)

$
397,108Revolving line of credit(c)


3,000







3,000


Prime Rate + 2.25%
    or LIBOR +3.50%


8/25/2010



Interest OnlyTotal

$
402,471


$
(2,363
)

$
400,108     (a)
    
    The terms of the Clifford Center note payable provide the
    Company with the option to extend the maturity date to
    August 15, 2014 subject to a nominal fee, which the Company
    expects to exercise.(b)
    
    The City Square note payable with an outstanding balance of
    $26.612 million at December 31, 2008 has an additional
    $1.888 million available to be drawn. In addition, the
    Company has an interest rate cap on this loan for the notional
    amount of $28.5 million, which effectively limits the LIBOR
    rate on this loan to 7.45%. The interest rate cap expires on
    September 1, 2010, commensurate with the maturity date of
    this note payable.(c)
    
    The revolving line of credit matures on August 25, 2010,
    but may be extended to February 25, 2011, subject to the
    satisfaction of certain conditions. At December 31, 2008,
    the interest rate on the revolving line of credit was 5.50%,
    based on KeyBank National Associations Prime Rate plus a
    spread of 2.25% per annum. The
    30-day LIBOR
    rate at December 31, 2008 was 0.43625%.   F-26




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year2009

$
4052010


66,0402011


3,2922012


3102013


329Thereafter


332,095Total mortgage and other collateralized loans

$
402,471   Revolving
    Line of Credit
        10.
    Unsecured
    Notes Payable to Related Parties     F-27




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  11.
    Derivative
    Instruments    12.
    Commitments
    and Contingencies  Minimum
    Future Ground Rents
    Pacific OfficeProperties Trust,Total


Inc.


WaterfrontFor the Period from


For the Period


For the Period fromJanuary 1, 2008


from March 20, 2008


January 1, 2008


Year Endedthrough December 31,


through December 31,


through March 19,


December 31,2008


2008


2008


2007(In thousands)Ground lease rent expense(1)

$
3,900


$
3,117


$
783


$
3,600     (1)
    
    The amount of percentage rent is not significant.    Year2009

$
2,3062010


2,4302011


2,4402012


2,4512013


2,463Thereafter


218,278Total future minimum ground lease payments

$
230,368   12-month
  12-month
 F-28




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Contingencies
    Concentration
    of Credit Risk
      Conditional
    Asset Retirement Obligations
  Accounting for
    Conditional Asset Retirement Obligations  an
    interpretation of FASB Statement No. 143 Accounting for Asset Retirement Obligations and/or
  Clifford Center Ground Lease
  and/or
 F-29




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Waterfront Ground Lease
    Restaurant Row Theatre Venture Lease Termination
    Purchase
    Commitments
    Tax
    Protection Arrangements
    13.  Description
    of Equity Securities and Calculation of Minority Interests and
    Earnings per Share/Earnings per Unit
     F-30




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
             F-31




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Loss
    per Share/Loss per Unit
    Pacific OfficeTotal

Properties Trust, Inc.

WaterfrontFor the Period from

For the Period from

For the Period fromJanuary 1, 2008

March 20, 2008

January 1, 2008

Year Endedthrough December 31,

through December 31,

through March 19,

December 31,2008

2008(2)

2008

2007Net loss

$
(7,712
)

$
(6,741
)

$
(971
)

$
(8,126
)Priority allocation to preferred unit holders


(108
)






(108
)


(497
)Net loss attributable to common share/unit holders 
    basic and diluted

$
(7,820
)

$
(6,741
)

$
(1,079
)

$
(8,623
)Weighted average number of common shares






3,031,125Potentially dilutive common shares(1) Restricted Stock Units
    (RSU)






Weighted average number of common shares outstanding 
    basic and diluted






3,031,125Net loss per share  basic and diluted





$
(2.22
)Weighted average number of units outstanding  basic
    and diluted










3,494,624



3,494,624Net loss per unit  basic and diluted(3)









$
(0.31
)

$
(2.47
)       (1)
    
    For the year ended December 31, 2008 the potentially
    dilutive shares were not included in the net loss per share
    calculation as their effect is anti-dilutive.(2)
    
    For the period from March 20, 2008 through
    December 31, 2008, net loss attributable to common
    stockholders includes $1.781 million of priority allocation
    to preferred unit holders, which is included in minority
    interests in the consolidated statements of operations. F-32




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (3)
    
    We computed net loss per Common Unit for the periods prior to
    the transactions by increasing the historical net loss of
    Waterfront by the 2% cumulative distributions payable on the
    Preferred Units received by the former owners of Waterfront and
    dividing that total by the weighted average number of Common
    Units received by the former owners of Waterfront. We did not
    include the dilution impact of Preferred Units because the units
    are contingently convertible and the probability that the
    contingency will be satisfied is currently not determinable.  Dividends
    and Distributions
        14.
    Related
    Party Transactions    co-investment
 F-33




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Pacific OfficeTotal

Properties Trust, Inc.

WaterfrontFor the Period from

For the Period from

For the Period fromJanuary 1, 2008

March 20, 2008

January 1, 2008

Year Endedthrough December 31,

through December 31,

through March 19,

December 31,2008

2008

2008

2007Property management fees to affiliates of Advisor

$
2,573


$
2,410


$
163


$
851Leasing commissions


388



388







209Corporate management fees to Advisor


587



587







Interest


1,172



1,172







Construction management fees and other


111



108



3



13Total

$
4,831


$
4,665


$
166


$
1,073     on-site
         F-34




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      15.
    Share-Based
    Payments        16.
    Segment
    Reporting   F-35




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Mainland Honolulu


Western U.S.


Corporate


TotalRevenue:Rental

$
23,549


$
10,885


$
12


$
34,446Tenant reimbursements


16,832



973







17,805Parking


5,503



825







6,328Other


190



56



119



365Total revenue


46,074



12,739



131



58,944Expenses:Rental property operating


27,585



6,513







34,098General and administrative










18,547



18,547Interest


16,775



3,145



1,460



21,380Depreciation and amortization


14,784



6,684







21,468Other










35



35Total expenses


59,144



16,342



20,042



95,528Loss before equity in earnings of unconsolidated joint ventures,
    non-operating income and minority interests

$
(13,070
)

$
(3,603
)

$
(19,911
)

$
(36,584
)Equity in earnings of unconsolidated joint ventures














93Non-operating income














85Minority interests














29,665Net (loss) income













$
(6,741
)Total assets

$
383,966


$
130,062


$
15,869


$
529,897Goodwill

$
40,144


$
21,375


$



$
61,519Capital expenditures

$
7,000


$
1,514


$



$
8,514     17.
    Fair
    Value of Financial Instruments  Disclosures about the Fair Value of
    Financial Instruments
   F-36




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        18.
    Quarterly
    Financial Information (unaudited)    Pacific Office Properties Trust, Inc.Three Months Ended



WaterfrontDecember 31,

September 30,

June 30,

March 20, 2008 to

January 1, 2008 to2008

2008

2008

March 31, 2008(1)

March 19, 2008(In thousands, except common share information)Total revenue

$
19,765


$
18,599


$
18,254


$
2,326


$
5,162Loss before minority interests

$
(6,157
)

$
(6,221
)

$
(7,106
)

$
(16,922
)

$
(971
)Net loss

$
(1,077
)

$
(1,188
)

$
(1,374
)

$
(3,102
)

$
(971
)Net loss per common share  basic and diluted

$
(0.36
)

$
(0.39
)

$
(0.45
)

$
(1.02
)Weighted average number of common shares outstanding 
    basic and diluted


3,031,125



3,031,125



3,031,125



3,031,125       (1)
    
    Amounts have been updated to reflect the deconsolidation of a
    property, in which we own 7.5% managing interest, which was
    consolidated in the financial statements reported in our
    Form 10-Q
    for the quarter ended March 31, 2008. On April 1,
    2008, the partnership agreement was modified which provided
    substantive participating rights to the non-managing member.  F-37




---



##### Table of Contents



Pacific
    Office Properties Trust, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  WaterfrontThree Months EndedDecember 31,


September 30,


June 30,


March 31,2007


2007


2007


2007(In thousands)Total revenue

$
5,006


$
5,014


$
5,162


$
4,978Net loss

$
(1,253
)

$
(2,331
)

$
(3,296
)

$
(1,246
)   19.
    Subsequent
    Events  Form S-11
   F-38




---



##### Table of Contents



PACIFIC
    OFFICE PROPERTIES TRUST, INC.
    SCHEDULE III
    CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
    (dollars in thousands)
  Gross AmountsCosts


at Which CarriedInitial Costs


Capitalized


at December 31, 2008











DepreciableOffice









Bldg. and


Subsequent to





Bldg. and





Accumulated


Date


Date


LifeProperty Name

Location

Encumbrances


Land


Imp.(A)


Acquisition


Land


Imp.(A)


Total


Depreciation


Built(B)


Acquired


(Years)Clifford Center

Hawaii

$
3,760


$
50


$
8,279


$
1,054


$
50


$
9,333


$
9,383


$
513



1964



2008



5-39Pacific Business News Building

Hawaii


11,799



5,414



5,911



880



5,472



6,732



12,204



430



1964



2008



5-39Davies Pacific Center

Hawaii


95,000



15,587



83,181



2,822



15,587



86,002



101,589



3,054



1972



2008



3-34Pan Am Building

Hawaii


60,000



17,700



52,027



813



17,700



52,840



70,540



1,880



1969



2008



4-42City Square

Arizona


54,112



20,208



61,099



1,387



20,208



62,485



82,693



3,069



1961/65/71



2008



2-40Sorrento Technology Center

California


11,800



5,872



7,711



12



5,872



7,723



13,595



366



1984



2008



5-35First Insurance Center

Hawaii


52,000



10,588



43,482



659



10,588



44,140



54,728



1,116



1983



2008



5-41Waterfront

Hawaii


111,000







63,068



6,431







69,126



69,126



10,829



1988/2006
(C)


2004



5-42AZL Land

Arizona






56











56







56











2008Total



$
399,471


$
75,475


$
324,758


$
14,058


$
75,533


$
338,381


$
413,914


$
21,257     (A)
    
    Includes building and improvements; land improvements; tenant
    improvements, furniture, fixtures and equipment; and
    construction in progress.(B)
    
    Represents the year in which the property was first placed in
    service.(C)
    
    Year built/renovated  Pacific OfficeProperties Trust, Inc.


WaterfrontFrom March 20, 2008


From January 1, 2008


Year Endedthrough December 31,


through March 19,


December 31,2008


2008


2007(In thousands)Real Estate Properties:Balance, beginning of period

$
68,062


$
68,373


$
67,712Additions and improvements


346,168



(311
)


1,397Write off of property


(316
)






(736
)Balance, end of period

$
413,914


$
68,062


$
68,373Accumulated Depreciation:Balance, beginning of period

$
9,015


$
8,786


$
6,541Depreciation


12,379



229



2,738Write off of property


(137
)






(493
)Balance, end of period

$
21,257


$
9,015


$
8,786  F-39