UNITED
STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K





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Commission File No. 000-53165



FSP 303 East Wacker Drive Corp.

(Exact name of registrant as specified in its
charter)



|Delaware                                                        | 20-8061759                                  
|--------------------------------------------------------------- | --------------------------------------------
|(State or other jurisdiction of  incorporation or organization) | (I.R.S. Employer
        Identification No.)
|                                                                |                                             
|401
    Edgewater Place, Wakefield, Massachusetts               | 01880                                       
|(Address of principal executive offices)                        | (Zip Code)                                  



Registrant’s telephone number, including
area code:(781) 557-1300



Securities registered pursuant to Section
12(b) of the Act:None



Securities registered pursuant to Section
12(g) of the Act:



Preferred Stock, $.01 par value per share



Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes |_|  No |X|.



Indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes |_|  No |X|.



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



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







Indicate by check mark
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|



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



| | Large accelerated filer |_|                                               | Accelerated filer|_|         
| | ------------------------------------------------------------------------- | -----------------------------
| |                                                                           |                              
| | Non-accelerated filer   |_| (Do not check if a smaller reporting company) | Smaller reporting company |X|



Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes |_|  No |X|.



As of June 30, 2010 the
aggregate fair market value of Common Stock held by non-affiliates of the registrant was $0.



The number of shares of
Common Stock outstanding was 1 and the number of shares of Preferred Stock outstanding was 2,210 as of February 28, 2011.



Documents incorporated by reference: None.





TABLE OF CONTENTS



|PART I     |                                                                                                              | 1 
|---------- | ------------------------------------------------------------------------------------------------------------ | --
|Item 1.    | Business.                                                                                                    | 1 
|Item 1A.   | Risk Factors.                                                                                                | 5 
|Item 1B.   | Unresolved Staff Comments.                                                                                   | 5 
|Item 2.    | Properties.                                                                                                  | 5 
|Item 3.    | Legal Proceedings.                                                                                           | 8 
|Item 4.    | Removed and Reserved                                                                                         | 8 
|           |                                                                                                              |   
|PART II    |                                                                                                              | 9 
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 9 
|Item 6.    | Selected Financial Data.                                                                                     | 9 
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                       | 10
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk.                                                  | 15
|Item 8.    | Financial Statements and Supplementary Data.                                                                 | 15
|Item 9.    | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.                        | 15
|Item 9A.   | Controls and Procedures.                                                                                     | 15
|Item 9B.   | Other information.                                                                                           | 16
|           |                                                                                                              |   
|PART III   |                                                                                                              | 17
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                       | 17
|Item 11.   | Executive Compensation.                                                                                      | 18
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management                                               |   
|           | and Related Stockholder Matters.                                                                             | 19
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence.                                   | 20
|Item 14.   | Principal Accounting Fees and Services.                                                                      | 20
|           |                                                                                                              |   
|PART IV    |                                                                                                              | 22
|Item 15.   | Exhibits, Financial Statement Schedules.                                                                     | 22
|           |                                                                                                              |   
|SIGNATURES | 23                                                                                                          







|Item 1. | Business
|------- | --------



History



Our company, FSP 303 East
Wacker Drive Corp., which individually or together with its subsidiary, we refer to as the Company, we or our, is a Delaware corporation
formed to purchase, own and operate a twenty-eight story multi-tenant office tower containing approximately 859,187 rentable square
feet of office and retail space and a 294-stall underground parking garage located in downtown Chicago, Illinois, which we refer
to as the Property. The Company operates in a manner intended to qualify as a real estate investment trust, or REIT, for federal
income tax purposes.



The Company was organized
in December 2006 by FSP Investments LLC (member, FINRA and SIPC), a wholly-owned subsidiary of Franklin Street Properties Corp.,
which we refer to as Franklin Street (NYSE Amex: FSP). FSP Investments LLC acted as a real estate investment firm and broker/dealer
with respect to (a) the organization of the Company, (b) the acquisition of the Property by the Company and (c) the sale of equity
interests in the Company.



The Company purchased the
Property from an unaffiliated third party for $167,000,000 on January 5, 2007. The purchase price, which was determined based on
arm’s-length negotiations, was financed entirely by a loan from Franklin Street collateralized by a first mortgage, which
we refer to as the Acquisition Mortgage Loan. The Acquisition Mortgage Loan was repaid in its entirety on December 27, 2007 from
the proceeds of the sale of equity interests in the Company. Total interest and loan fees incurred on the Acquisition Mortgage
Loan were approximately $13,810,000. The Company acquired the Property through FSP 303 East Wacker Drive LLC, a wholly-owned subsidiary
of the Company. The sole business of FSP 303 East Wacker Drive LLC is to own and operate the Property.



The Company commenced operations
in January 2007.



Franklin Street holds the
sole share of the Company’s common stock, $.01 par value per share, which we refer to as the Common Stock. Between February
2007 and December 2007, FSP Investments LLC completed the sale on a best efforts basis of 2,210 shares of the Company’s preferred
stock, $.01 par value per share, which we refer to as the Preferred Stock. We sold the Preferred Stock in a private placement offering
to “accredited investors” within the meaning of Regulation D under the Securities Act of 1933. Between February 7,
2007 and December 27, 2007, the Company held 17 investor closings, at each of which shares of Preferred Stock were sold and funds
were received. On December 27, 2007, Franklin Street purchased 965.75 shares of Preferred Stock (approximately 43.7%) of the Company
for consideration totaling $82,813,000, representing $96,575,000 at the offering price net of commissions of $7,726,000 and fees
of $6,036,000 that were excluded. Prior to purchasing any shares of Preferred Stock, Franklin Street agreed to vote any shares
held by it on any matter presented to the holders of Preferred Stock in a manner that approximates as closely as possible the votes
cast in favor of and opposed to such matter by the holders of the Preferred Stock other than Franklin Street and its affiliates.
For purposes of determining how Franklin Street votes its shares of Preferred Stock, abstentions and non-votes by stockholders
other than Franklin Street are not considered. Funds from each individual closing were used to repay the Acquisition Mortgage Loan
and associated fees as well as other expenses payable to Franklin Street’s wholly-owned subsidiary, FSP Investments LLC.
The use of proceeds from the offerings of Preferred Stock, including for payments to Franklin Street and its affiliates, is set
forth in the table below:



|Use of proceeds:                                                   |  |                                  |                
|------------------------------------------------------------------ |  | -------------------------------- | ---------------
|Type                                                               |  | Affiliate paid                   | Amount         
|Operating/Capital Reserve (1)                                      |  |                                  | $    20,055,000
|Organizational, Offering and Other Expenditures for the Company(2) |  | FSP Investments LLC              | 1,200,000      
|City of Chicago Transfer Taxes                                     |  |                                  | 1,252,500      
|Selling Commissions(3)                                             |  | FSP Investments LLC              | 9,954,000      
|Acquisition-Related Costs:                                         |  |                                  |                
|Purchase Price of the Property(4)                                  |  | Franklin Street Properties Corp. | 167,000,000    
|Loan Fee Paid to Franklin Street (5)                               |  | Franklin Street Properties Corp. | 7,154,438      
|Acquisition Fee(6)                                                 |  | FSP Investments LLC              | 622,125        
|Total Uses of Gross Offering Proceeds                              |  |                                  | $ 207,238,063  



1





(1)	The
Operating/Capital Reserve proceeds were retained by the Company for operating and capital uses.

(2)	Organizational,
Offering and Other Expenditures were paid for various expenses, including legal, accounting, appraisal, engineering and organizational
expenses allocable to the offering, incurred in connection with the organization and syndication of the Company.

(3)	Selling
Commissions were paid to FSP Investments LLC, as Selling Agent.

(4)	The
Purchase Price of the Property was financed by the Acquisition Mortgage Loan, which was repaid from proceeds of the offering.

(5)	The
Loan Fee paid to Franklin Street was a fee (or points) in the amount of $7,154,438 payable to Franklin Street to obtain the Acquisition
Mortgage Loan to purchase the Property. The Acquisition Mortgage Loan was in an original principal amount equal to the purchase
price of the Property, and had a term of two years, which was pre-payable at any time without premium or penalty and carried an
interest rate equal to the rate payable by Franklin Street on borrowings under its line of credit with its bank.

(6)	The
Acquisition Fee was paid for various services related to the purchase of the Property.



Transactions between the
Company and Franklin Street and/or its affiliates were entered into without the benefit of arm’s-length bargaining and involved
conflicts of interest. Although Franklin Street sponsors the syndication of other REITs similar to the Company and has in the past
acquired some of those REITs, Franklin Street is under no obligation to acquire or to offer to acquire the Company or the outstanding
shares of Preferred Stock, and any acquisition transaction would need to be approved by the Company’s stockholders and the
boards of directors of Franklin Street and the Company. Please see Part “III, Item 13. Certain Relationships and Related
Transactions, and Director Independence”.



Our Business



Our sole business is to
own and operate the Property and we do not intend to invest in or purchase any additional properties. We derive rental revenue
from income paid to us by the tenants of the Property. Asset and property management services are provided by third parties.



The Property was completed
in 1979 and is a twenty-eight story multi-tenant office tower located in downtown Chicago, Illinois containing approximately 859,187
rentable square feet of office and retail space and a 294-stall underground parking garage.



The Property underwent
a re-measurement of space in 2002. This re-measurement concluded that the rentable space in the Property could be increased from
approximately 838,943 square feet to approximately 859,187 square feet. This Annual Report on Form 10-K makes reference to the
more recently determined 859,187 square foot number in all of its general descriptions of the Property and at this time, lease
statistics are based on 844,953 square feet. Management believes that the potential exists in the future to gain greater amounts
of rental income from leasing this extra space and intends to do so. However, the Company also believes that any such potential
gains will not come immediately as existing tenants and their respective leases are mostly based upon the previous 838,943 square
foot measurement. Accordingly, principally all tenant and lease descriptions set forth in this Annual Report on Form 10-K reflect
the terms and conditions of the respective lease documents, which generally are based on the 838,943 square foot measurement instead
of the 859,187 square foot number.



The Property, formerly
known as Three Illinois Center, is part of the multi-building, mixed-use development known as Illinois Center, which includes office
buildings, hotels, residential buildings, and a large athletic club. The Property was preceded in construction by One and Two Illinois
Center, which were developed in 1970 and 1972, respectively. The three towers share an aluminum and glass design that is characteristic
of contemporary international style, distinguished by a curtain wall of bronze-finished aluminum and reflective glass. The Property
is located in Chicago’s East Loop submarket on the eastern portion of the development along the southern edge of the Chicago
River.



The office component of
the Property is separated into low-rise, mid-rise and high-rise sections. The first floor, or Plaza, has three elevator banks,
each containing five passenger elevators and a freight elevator which services the 27 floors of office space. An additional elevator
is also provided at the Plaza level for direct access to the parking garage and Concourse. Access to the Concourse level from the
Plaza level is provided by an escalator system. Access to the Plaza level from street-level is provided by entrances on the West
and East sides of the Property and emergency exits on the south end.



2





The Property was approximately
75% leased as of December 31, 2010 to a diverse group of tenants with staggered lease expirations, representing a 1% decrease from
the prior quarter. However, as of February 28, 2011, the Property was approximately 92% leased. The increase in occupancy is primarily
a result of Groupon Inc.’s expansion at the Property subsequent to December 31, 2010. As of December 31, 2010, Groupon Inc.
leased 46,115 square feet of the Property’s rentable space pursuant to a license agreement. As of February 28, 2011, Groupon
Inc. leased 196,189 square feet of the Property’s rentable space pursuant to a license agreement. Management believes that
any tenant that leases 10% or more of the Property’s rentable space is material. As of December 31, 2010, 33 tenants were
leasing space at the Property. The following tenant information is as of February 28, 2011:



The largest tenant is KPMG LLP, or
KPMG, which leases 259,090 square feet (approximately 30%) of the Property’s rentable space through August 2012. Groupon
Inc., or Groupon, leases 196,189 square feet (approximately 23%) of the Property’s rentable space through May 2012 pursuant
to a license agreement. AECOM USA, Inc., or AECOM USA, leases 104,086 square feet (approximately 12%) of the Property’s rentable
space through September 2014. KPMG is one of the largest accounting firms in the world. Groupon is an internet-based company that
features daily bargains on local goods, services and cultural events in more than 300 markets and 35 countries. AECOM USA is a
wholly-owned subsidiary of AECOM Technology Corporation, a provider of professional, technical and management support services
(NYSE: ACM), which has guaranteed AECOM USA’s obligations under the lease.



In general, office leases
at the Property are structured on a triple-net (NNN) basis with respect to expenses, so that the tenant is responsible for its
respective pro-rata percentage of expenses. In general, concourse level (lower level) retail tenants have full service gross rent
leases under which gross rent includes expenses.



FSP
Property Management LLC, a wholly-owned subsidiary of Franklin Street, provides the Company with asset management and financial
reporting services. The asset management agreement between the Company and FSP Property Management LLC requires the Company to
pay FSP Property Management LLC a monthly fee equal toone-half of one percent (0.5%) of
that month’s gross revenues of the Property. The asset management agreement between the Company and FSP Property Management
LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice.



Hines Interests Limited
Partnership provides the Company with day-to-day property management, construction management and leasing services relating to
the operation of the Property. Hines Interests Limited Partnership is a third-party service provider that is not related to or
affiliated with Franklin Street. The management agreement between the Company and Hines Interests Limited Partnership requires
the Company to pay Hines Interests Limited Partnership a monthly fee equal to two and one-half percent (2.5%) of the net operating
receipts collected in the preceding month. The management agreement between the Company and Hines Interests Limited Partnership
is for a term of five years ending in December 2011 and may be terminated for cause.



Investment Objectives



The Company's investment
objectives are to (i) obtain cash available to pay dividends through rental receipts from operations of the Property, (ii) have
that cash increase over time as a result of rental rate step increases in existing leases and new leasing activity in currently
vacant space, (iii) have that cash potentially increase over time if rental rates increase for new leases, (iv) provide a return
of capital to holders of our Preferred Stock if we obtain permanent mortgage financing or another capital event occurs, (v) provide
increased equity in the Property to our holders of Preferred Stock as a result of potential appreciation in market value, and (vi)
preserve and protect the capital invested by the holders of our Preferred Stock. We cannot be sure of meeting our objectives.



Our policy is not to make
loans to other persons, not to invest in the securities of other issuers for the purpose of exercising control, not to underwrite
the securities of other issuers, not to offer securities in exchange for property and not to purchase or otherwise reacquire our
securities. These policies may be changed by our directors without a vote of the holders of shares of our Preferred Stock.



3





We have issued our shares
of Preferred Stock in the offering described above. No additional shares of Preferred Stock are authorized by our charter, and
authorization of any increase in the number of authorized shares or the creation of any new series or class of stock would require
the affirmative vote of the holders of 66.67% of the outstanding shares of Preferred Stock.



We intend to dispose of
the Property at such time that our directors determine that we have achieved our investment objectives. We do not intend to reinvest
the proceeds of any such disposition. We also do not intend to list our shares of Preferred Stock on an exchange and therefore
do not expect any trading market to develop in such shares.



We have the right to obtain
a permanent mortgage loan and a line of credit as described below.



Permanent Mortgage Loan



Management believes that
the Property has the potential for increased occupancy and rental rates in the future and, assuming that such increases occur,
our management believes that the holders of our Preferred Stock could benefit, in the form of a partial return of capital that
produces a positive total return on their original investment, from either the Company’s obtaining some level of permanent
mortgage debt financing, which we refer to as the Permanent Mortgage Loan, or the sale of the Property or a merger transaction
at such time. Management believes that the Permanent Mortgage Loan, if obtained in an amount and on terms considered favorable
relative to the current and anticipated future performance of the Property, could benefit the holders of our Preferred Stock by
providing them with a return of a portion of their original capital investment in the Company and by decreasing the amount of their
remaining capital investment in the Company. Assuming that the value of the Property appreciates over time and that the Property
is ultimately sold for such appreciated value, management believes that the Permanent Mortgage Loan could provide the holders of
our Preferred Stock with a leveraged rate of return on their remaining capital investment in the Company that could be enhanced
over the rate of return without the Permanent Mortgage Loan. However, there can be no assurance that the Property will appreciate
in value over time or that the Company will be able to obtain the Permanent Mortgage Loan on terms considered favorable relative
to the current and anticipated future performance of the Property, especially during this period of reduced lending activity. Subject
to any contrary REIT requirements (or any Property-specific current or anticipated future capital needs requirements in the case
of the Permanent Mortgage Loan only), any proceeds from the closing of the Permanent Mortgage Loan, the sale of the Property or
a merger transaction would be distributed to the holders of our Preferred Stock and Common Stock in accordance with our charter.



The Company has the right,
in its sole and absolute discretion and without the consent of any holder of shares of our Preferred Stock, to obtain the Permanent
Mortgage Loan. Although the Company has no obligation to obtain the Permanent Mortgage Loan, if the Company decides to obtain the
Permanent Mortgage Loan, the Company will have the right, in its sole and absolute discretion and without the consent of any holder
of shares of our Preferred Stock, to negotiate all of the terms and conditions of the Permanent Mortgage Loan and any refinancing
thereof including, without limitation, the timing of the closing and funding, the identity of the lender, the principal amount,
the interest rate, the maturity and the security. As of February 28, 2011 the Company had neither sought nor obtained the Permanent
Mortgage Loan.



Revolving Line of Credit



Given the amount of space
that needs to be leased at the Property and the potential for significant tenant improvement allowances and leasing commissions,
it is possible that we may need to borrow funds in the future. The Company may, without the consent of any holder of shares of
our Preferred Stock, obtain a revolving line of credit of up to $66,800,000 on commercially reasonable terms to be used for capital
improvements or to pay operating expenses of the Property, if needed. As of February 28, 2011, the Company had engaged a mortgage
broker to explore possibilities regarding but has not yet obtained a commitment for a line of credit.



4





Competition



The Property is
a multi-tenant office tower located in the East Loop office submarket in downtown Chicago, Illinois. The Property is
competing against the other office buildings which are or may become available in the general area in which the Property is
located and which may be priced at rental levels lower than those for space in the Property or which may otherwise be more
attractive to tenants. In order to lease existing vacancy, the Property must be competitive, in regards to cost and
amenities, with other buildings of similar use near our location. Some of our competitors may have significantly more
resources than we do and may be able to offer more attractive rental rates or services. On the other hand, some of our
competitors may be smaller or have lower fixed overhead costs, less cash or other resources that make them willing or able to
accept lower rents in order to maintain a certain occupancy level. If, at any time, there is no existing significant
competition for the Property, our competitors may decide to enter the market and build new buildings to compete with our
Property. Our competition is not only with other developers, but also with property users who choose to own their building.
In addition, larger market forces beyond our control, such as general economic conditions, may increase competition
among landlords for quality tenants and individual decisions beyond our control. Given that the Property is a multi-tenant
office tower that is leased to a diverse group of office and retail tenants with staggered lease expirations, we cannot
predict which competitive factors will be relevant to prospective future tenants at this time. Management believes that the
position of the Property within the East Loop office market is strong and management is optimistic that the existing vacant
space will ultimately be leased to new tenants.



Employees



We had no employees as of
December 31, 2010.



Available Information



We are subject to the informational
requirements of the Securities Exchange Act of 1934, and, in accordance therewith, we file reports and other information with the
Securities and Exchange Commission (SEC). This Annual Report on Form 10-K and other reports and other information we file can be
inspected and copied at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 on official business days during
the hours of 10:00 am to 3:00 pm. Such reports, proxy and information statements, if any, and other information about issuers that
file electronically with the SEC may also be obtained from the web site that the SEC maintains at http://www.sec.gov. Further information
about the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.



We will make available
and voluntarily provide, free of charge upon written request at the address on the cover of this Annual Report on Form 10-K, a
copy of our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file
such material with, or furnish such material to, the SEC. We do not maintain a website.



Item 1A.    Risk
Factors



Not applicable.



Item 1B.    Unresolved
Staff Comments



Not applicable.



5





Item 2.    Properties



Set forth below is information regarding
the Property as of December 31, 2010:

|                         |          |             |         |            |               | Annual            
|------------------------ | -------- | ----------- | ------- | ---------- | ------------- | ------------------
|                         |          |             |         |            |               | Rent Revenue      
|                         | Date of  | Approx.     | Percent | Number     | Name of       | For the Year Ended
|Property Location        | Purchase | Square Feet | Leased  | of Tenants | Major Tenants | December 31, 2010 
|                         |          |             |         |            |               |                   
|303 East Wacker Drive    | 1/5/2007 | 859,187     | 75%     | 33         | KPMG LLP      | $7,528,000        
|Chicago , Illinois 60601 |          |             |         |            | AECOM USA     | $2,501,000        



The average effective annual
rent per leased square foot for the years ended December 31, 2010 and 2009 was $16.15 and $18.13, respectively.



Weacquired the Property on January 5, 2007 through a limited liability company, all of whose equity interest is owned, directly
or indirectly, by the Company. In the opinion of our management, the Property is adequately covered
by insurance. The Property is not currently encumbered by any mortgage indebtedness.



The Property was completed
in 1979 and is a twenty-eight story multi-tenant office tower located in downtown Chicago, Illinois containing approximately 859,187
rentable square feet of office and retail space and a 294-stall underground parking garage.



The Property underwent
a re-measurement of space in 2002. This re-measurement concluded that the rentable space in the Property could be increased to
approximately 859,187 square feet. This Annual Report on Form 10-K makes reference to the more recently determined 859,187 square
foot number in all of its general descriptions of the Property and at this time, lease statistics are based on 844,953 square feet.
Management believes that the potential exists in the future to gain greater amounts of rental income from leasing this extra space
and intends to do so. However, the Company also believes that any such potential gains will not come immediately as existing tenants
and their respective leases are predominately based upon the previous 838,943 square foot measurement. Accordingly, all tenant
and lease descriptions set forth in this Annual Report on Form 10-K reflect the terms and conditions of the respective lease documents,
which generally are based on the 838,943 square foot measurement instead of the 859,187 square foot number.



The following table reflects certain information
for the leases that are expiring over the next ten years:



|      |  |           |  |             |  |                 |  | Percentage of
|----- |  | --------- |  | ----------- |  | --------------- |  | -------------
|      |  |           |  |             |  | Annualized      |  | Annualized   
|      |  | Number    |  |             |  | Rents by Year   |  | Rents by Year
|      |  | of Leases |  | Square Feet |  | of Lease        |  | of Lease     
|Year  |  | Expiring  |  | Expiring    |  | Expiration(1)   |  | Expiration   
|      |  |           |  |             |  |                 |  |              
|2011  |  | 6         |  | 60,993      |  | 1,832,102       |  | 16.27%       
|2012  |  | 5         |  | 268,373     |  | 4,013,820       |  | 35.65%       
|2013  |  | 5         |  | 23,113      |  | 360,769         |  | 3.20%        
|2014  |  | 3         |  | 105,287     |  | 2,145,273       |  | 19.06%       
|2015  |  | 4         |  | 36,426      |  | 816,854         |  | 7.26%        
|2016  |  | 3         |  | 51,226      |  | 1,045,500       |  | 9.29%        
|2017  |  | 3         |  | 17,075      |  | 316,792         |  | 2.81%        
|2018  |  | 3         |  | 16,308      |  | 318,392         |  | 2.83%        
|2019  |  | 1         |  | 1,175       |  | 23,478          |  | 0.21%        
|2020  |  | 1         |  | 9,488       |  | 256,176         |  | 2.28%        
|2021  |  | 1         |  | 7,174       |  | 129,132         |  | 1.14%        
|      |  |           |  |             |  |                 |  |              
|Total |  | 35        |  | 596,638     |  | $    11,258,288 |  | 100.00%      



(1)	Reflects
the annualized contractual minimum rental income from non-cancelable leases at December 31, 2010.



Below is certain information
with respect to the Property’s tenants and leases.

6





Tenants



The Property was approximately
75% leased as of December 31, 2010 to a diverse group of tenants with staggered lease expirations, representing a 1% decrease from
the prior quarter. However, as of February 28, 2011, the Property was approximately 92% leased. The increase in occupancy is primarily
a result of Groupon Inc.’s expansion at the Property subsequent to December 31, 2010. As of December 31, 2010, Groupon Inc.
leased 46,115 square feet of the Property’s rentable space pursuant to a license agreement. As of February 28, 2011, Groupon
Inc. leased 196,189 square feet of the Property’s rentable space pursuant to a license agreement. Management believes that
any tenant that leases 10% or more of the Property’s rentable space is material. As of December 31, 2010, 33 tenants were
leasing space at the Property. The following tenant information is as of February 28, 2011:



The largest tenant is KPMG LLP, or
KPMG, which leases 259,090 square feet (approximately 30%) of the Property’s rentable space through August 2012. Groupon
Inc., or Groupon, leases 196,189 square feet (approximately 23%) of the Property’s rentable space through May 2012 pursuant
to a license agreement. AECOM USA, Inc., or AECOM USA, leases 104,086 square feet (approximately 12%) of the Property’s rentable
space through September 2014. KPMG is one of the largest accounting firms in the world. Groupon is an internet-based company that
features daily bargains on local goods, services and cultural events in more than 300 markets and 35 countries. AECOM USA is a
wholly-owned subsidiary of AECOM Technology Corporation, a provider of professional, technical and management support services
(NYSE: ACM), which has guaranteed AECOM USA’s obligations under the lease.



Leases



In general, office leases
at the Property are structured on a triple-net (NNN) basis with respect to expenses, so that the tenant is responsible for its
respective pro-rata percentage of expenses. In general, concourse level (lower level) retail tenants have full service gross rent
leases under which gross rent includes expenses.



KPMG LLP



KPMG is currently the largest
tenant of the Property and leases eight full floors containing an aggregate of 259,090 net rentable square feet, which amount translates
into approximately 30% of the building. The lease commenced in August 1997 with a fifteen-year term that expires on August 31,
2012. On February 16, 2009, KPMG notified the Company that it will be relocating to a different property location following the
expiration of its lease on August 31, 2012.  Management has been planning for this vacancy since it received notice and,
with approximately 18 months remaining on KPMG’s lease, will continue to aggressively work with its local leasing team to
find a replacement tenant (or tenants).



Option to Renew



As long as KPMG is not
in default of its lease obligations, KPMG has two consecutive options to extend the expiration date of the lease for five years
each for a total of ten years. KPMG must exercise each option with at least 12 months' prior notification to landlord. The monthly
base rental rate for each option will be the prevailing market rental rate, as agreed by tenant and landlord, existing at the time
of notification. KPMG has the right to renew for its entire space or a portion of its space as long as the space is contiguous
and includes at least one full floor.



Options to Expand



As long as KPMG is not
in default of its lease obligations, KPMG has an option to expand onto a portion of the twelfth floor at prevailing market rental
rates, as agreed by tenant and landlord, existing at the time of notification.



Other Options



As long as KPMG is not
in default of its lease obligations, KPMG has exclusive rights to exterior and interior signage. As long as KMPG is the largest
tenant, KPMG has exclusive rights to exterior signage and naming rights of the building. KPMG also has the right to prevent the
landlord from leasing space to a specific list of public accounting competitors, any schools and certain governmental agencies.
KPMG has the right to lease storage space not exceeding 7,500 square feet at pre-determined rental rates. Although the original
terms of the lease included options to reduce the amount of space and included early termination options, those options have expired
and KPMG does not have any remaining options to terminate the lease in part or in its entirety.



7





Groupon Inc.



Groupon is currently the
second largest tenant of the Property and leases five full floors and portions of two floors containing an aggregate of 196,189
net rentable square feet pursuant to a license agreement, which translates into approximately 23% of the building. The license
commenced in November 2010, expires on May 31, 2012 and does not include renewal , expansion or other options.



AECOM USA, Inc.



AECOM USA is currently
the third largest tenant of the Property and leases three full floors and portions of two floors containing an aggregate of 104,086
net rentable square feet, which amount translates into approximately 12% of the building. The lease commenced in January 1996 and
expires on September 30, 2014. The lease is guaranteed by AECOM Technology Corporation.



Option to Renew



As long as AECOM USA is
not in default of its lease obligations, AECOM USA has two consecutive options to extend the expiration date of the lease for five
years each, for a total of ten years. In order to exercise an option, AECOM USA must give at least nine months' prior notification
to the landlord, but such notice may not be given earlier than 12 months prior to expiration of the lease. The monthly base rental
rate for each option will be the prevailing market rental rate, as reasonably determined by the landlord. AECOM USA has the right
to renew as long as the renewal includes not less than 50% of the total space leased.



Options to Expand



As long as AECOM USA is
not in default of its lease obligations, AECOM USA has a continuing right of first offer (“ROFO”) on certain space,
including floors 4, 7, 10 and 12. The monthly base rental rate for the ROFO will be the prevailing market rental rate as reasonably
determined by the landlord. The ROFO expires two years prior to the expiration of the lease.



Additional Operating Data



Additional information
regarding the amount of the Property’s annual realty taxes and insurance can be found in the Statements of Operations that
are included with this Form 10-K. Additional information regarding the Property’s Federal tax basis, rate, method and life
claimed for purposes of depreciation can be found in the Notes to Consolidated Financial Statements that are included with this
Annual Report on Form 10-K.





Item 3.    Legal Proceedings



There are no material legal
proceedings to which the Company is a party. The Company from time to time may be involved in lawsuits including, but not limited
to, lawsuits relating to the real property it owns for liability for slips and falls, damage to automobiles in the parking garage,
minor theft or similar matters. The Company expects that most of these suits will be covered by insurance, subject to customary
deductions. In addition, in the ordinary course of business, the Company may become involved in litigation to collect rents or
other income due to it from tenants.



Item 4.    Removed and Reserved



8





PART II



Item 5.Market
For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



There is no established
public trading market for the Company’s Common Stock or Preferred Stock.



As of February 28, 2011,
Franklin Street was the sole holder of record of the Common Stock and there were 821 holders
of record of the Preferred Stock. This computation is based upon the number of record holders reflected in our corporate records.
The final sale of Preferred Stock occurred on December 27, 2007 and following that date no further distributions have been or will
be declared on the Common Stock.



Set forth below are the
distributions made to the holders of our Preferred Stock in respect of each quarter during the past two fiscal years. Distributions
are determined based on the Company’s Board of Directors’ review of cash available for distribution and distribution
requirements necessary for the Company to continue to qualify as a real estate investment trust. We cannot guarantee the future
payment of dividends or the amount of any such dividends. See the Notes to Consolidated Financial Statements that are included
with this Annual Report on Form 10-K for additional information. There were no dividends on Common Stock during this period.



|                   |  | Distributions  
|------------------ |  | ---------------
|                   |  | paid to        
|Quarter            |  | Preferred      
|Ended              |  | Stockholders   
|                   |  |                
|March 31, 2009     |  | $     3,094,000
|June 30, 2009      |  | 3,094,000      
|September 30, 2009 |  | 2,238,000      
|December 31, 2009  |  | 2,239,000      
|                   |  |                
|March 31, 2010     |  | $     2,234,310
|June 30, 2010      |  | 2,203,370      
|September 30, 2010 |  | 2,019,940      
|December 31, 2010  |  | 2,019,940      



The following schedule
summarizes tax components of the distributions paid for the period ended December 31:



|(in thousands)    |  | 2010      |       | 2009
|----------------- |  | --------- | ----- | ----
|                  |  | Preferred |       | %   
|Ordinary income   |  | $         | 5,172 |     
|Return of Capital |  |           | 3,305 |     
|Total             |  | $         | 8,477 |     



The Company does not have
an equity compensation plan or any outstanding stock options or other securities convertible into the Company’s Common Stock.



Item 6.     Selected Financial Data



Not applicable.



9





Item 7.      Management’s Discussion
and Analysis of Financial Condition and Results of Operations.



The following discussion
should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Historical results
and percentage relationships set forth in the financial statements, including trends which might appear, should not be taken as
necessarily indicative of future operations. The following discussion and other parts of this Annual Report on Form 10-K may also
contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain
risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward looking
statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned
that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United
States and in the market where we own the Property, continued disruptions in the debt markets, risks of a lessening of demand for
the type of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility
rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. We may not update any of the forward-looking statements after the date this Annual
Report on Form 10-K is filed to conform them to actual results or to changes in our expectations that occur after such date, other
than as required by law.



Overview



FSP 303 East Wacker Drive
Corp., which we refer to as the Company, is a Delaware corporation formed to purchase, own, and operate a twenty-eight story multi-tenant
office tower containing approximately 859,187 rentable square feet of office and retail space and a 294-stall underground parking
garage located in downtown Chicago, Illinois, which we refer to as the Property.



Franklin Street Properties
Corp., which we refer to as Franklin Street, is the sole holder of our one share of common stock, $.01 par value per share, which
we refer to as the Common Stock, that is issued and outstanding. Between February 2007 and December 2007, FSP Investments LLC (member
FINRA and SIPC), a wholly-owned subsidiary of Franklin Street, completed the sale on a best efforts basis of 2,210 shares of our
preferred stock, $.01 par value per share, which we refer to as the Preferred Stock. FSP Investments LLC sold the Preferred Stock
in a private placement offering to “accredited investors” within the meaning of Regulation D under the Securities Act
of 1933. Since the completion of the placement of the Preferred Stock in December 2007, Franklin Street has not been entitled to
share in any earnings or dividend related to the Common Stock.



We operate in one business
segment, which is real estate operations, and own a single property. Our real estate operations involve real estate rental operations,
leasing services and property management services. The main factor that affects our real estate operations is the broad economic
market conditions in the United States and, more specifically, the economic conditions in Chicago, Illinois, the relevant submarket.
These market conditions affect the occupancy levels and the rent levels on both a national and local level. We have no influence
on national or local market conditions.



Trends and Uncertainties



The economy in the United
States is continuing to experience a period of limited economic growth, including historically high levels of unemployment, the
failure and near failure of a number of large financial institutions, reduced liquidity and increased credit risk premiums for
a number of market participants. Economic conditions may be affected by numerous factors, including but not limited to, inflation
and employment levels, energy prices, recessionary concerns, changes in currency exchange rates, the availability of debt and interest
rate fluctuations. We believe that the current state of the U.S. economy has affected real estate values, occupancy levels and
property income levels and may continue or worsen in the future. We also believe that the current state of the U.S. economy has
negatively impacted our ability to lease vacant space at the Property. At this time, we cannot predict the extent or duration of
that this negative impact will have on our business and, more specifically, on our efforts to lease vacant space and to obtain
the Permanent Mortgage Loan.



10





Real Estate Operations



The Property was approximately
75% leased as of December 31, 2010 to a diverse group of tenants with staggered lease expirations, representing a 1% decrease from
the prior quarter. However, as of February 28, 2011, the Property was approximately 92% leased. The increase in occupancy is primarily
a result of Groupon Inc.’s expansion at the Property subsequent to December 31, 2010. As of December 31, 2010, Groupon Inc.
leased 46,115 square feet of the Property’s rentable space pursuant to a license agreement. As of February 28, 2011, Groupon
Inc. leased 196,189 square feet of the Property’s rentable space pursuant to a license agreement. Management believes that
any tenant that leases 10% or more of the Property’s rentable space is material. As of December 31, 2010, 33 tenants were
leasing space at the Property. The following tenant information is as of February 28, 2011:



The largest tenant is KPMG LLP, or
KPMG, which leases 259,090 square feet (approximately 30%) of the Property’s rentable space through August 2012. Groupon
Inc., or Groupon, leases 196,189 square feet (approximately 23%) of the Property’s rentable space through May 2012 pursuant
to a license agreement. AECOM USA, Inc., or AECOM USA, leases 104,086 square feet (approximately 12%) of the Property’s rentable
space through September 2014. KPMG is one of the largest accounting firms in the world. Groupon is an internet-based company that
features daily bargains on local goods, services and cultural events in more than 300 markets and 35 countries. AECOM USA is a
wholly-owned subsidiary of AECOM Technology Corporation, a provider of professional, technical and management support services
(NYSE: ACM), which has guaranteed AECOM USA’s obligations under the lease.



On February 16, 2009, KPMG
notified the Company that it will be relocating to a different property location following the expiration of its lease on August
31, 2012. Management has been planning for this vacancy since it received notice and, with approximately 18 months remaining on
KPMG’s lease, will continue to aggressively work with its local leasing team to find a replacement tenant (or tenants).



It is difficult for management
to predict what will happen to occupancy and rents in the future because the need for space and the price tenants are willing to
pay are tied to both the local economy and to the larger trends in the national economy, such as job growth, interest rates, the
availability of credit and corporate earnings, which in turn are tied to even larger macroeconomic and political factors, such
as recessionary concerns, volatility in energy pricing and the risk of terrorism. In addition to the difficulty of predicting macroeconomic
factors, it is difficult to predict how our local market or tenants (existing and potential) will suffer or benefit from changes
in the larger economy. In addition, because the Property is in a single geographical market, these macroeconomic trends may have
a different effect on the Property and on its tenants (existing and potential), some of which may operate on a national level.
Although we cannot predict how long it will take to lease vacant space at the Property or what the terms and conditions of any
new leases will be, we expect to sign new leases at then-current market rates which may be below the expiring rates.



For the three months ended
December 31, 2010, we believe that vacancy rates and rental rates stabilized for buildings in Chicago’s East Loop office
market. This trend may continue, worsen or improve in the future. Continuing economic turmoil has slowed the pace of leasing activity
in the Chicago office market and will likely prolong the time it takes to lease the vacant space at the Property.



Management believes that
the position of the Property within the East Loop office market is strong and management is optimistic that the existing vacant
space will ultimately be leased to new tenants. In order to further improve the Property’s position in Chicago’s office
market, management has been searching for cost effective enhancements to the Property.



Given the current economic
downturn, the potential for any of our tenants to default on its lease or to seek the protection of bankruptcy laws has increased.
If any of our tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and may incur substantial
costs in protecting our investment. In addition, at any time, a tenant may seek the protection of bankruptcy laws, which could
result in the rejection and termination of such tenant’s lease and thereby cause a reduction in cash available for distribution
to our stockholders. Bankruptcy or a material adverse change in the financial condition of a material tenant would likely have
a material adverse effect on our results of operations.



In light of the amount
of vacant space that needs to be leased at the Property and the potential for significant tenant improvement allowances and leasing
commissions, it is possible that we may need to borrow funds in the future. The Company may, without the consent of any holder
of shares of our Preferred Stock, obtain a revolving line of credit of up to $66,800,000 on commercially reasonable terms to be
used for capital improvements or to pay operating expenses of the Property, if needed. As of February 28, 2011, the Company had
engaged a mortgage broker to explore possibilities regarding but has not yet obtained a commitment for a line of credit.

11





Critical Accounting
Policies and Estimates



We have certain critical
accounting policies that are subject to judgments and estimates by our management and uncertainties of outcome that affect the
application of these policies. We base our estimates on historical experience and on various other assumptions we believe to be
reasonable under the circumstances. On an on-going basis, we evaluate our estimates. In the event estimates or assumptions prove
to be different from actual results, adjustments are made in subsequent periods to reflect more current information. The accounting
policies that we believe are most critical to the understanding of our financial position and results of operations and that require
significant management estimates and judgments are discussed below.



Critical accounting policies
are those that have the most impact on the reporting of our financial condition and results of operations and those requiring significant
judgments and estimates. We believe that our judgments and estimates are consistently applied and produce financial information
that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property.
These policies affect our:



|· |  | allocation
of purchase prices between various asset categories and the related impact on our recognition of rental
income and depreciation and amortization expense; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|· |  | assessment
of the carrying values and impairments of long-lived assets.
|- |  | -----------------------------------------------------------------------



Allocation of
Purchase Price

We have allocated the purchase
price of the Property to land, buildings and improvements. Each component of the purchase price generally has a different useful
life. We allocate the value of real estate acquired among land, buildings, improvements and identified intangible assets and liabilities,
which may consist of the value of above market and below market leases, the value of in-place leases, and the value of tenant relationships.
Purchase price allocations and the determination of the useful lives are based on management’s estimates, which were partially
based upon an appraisal that we obtained from an independent real estate appraisal firm.



Purchase price allocated
to land and building and improvements is based on management’s determination of the relative fair values of these assets
assuming the Property was vacant. Management determines the fair value of the Property using methods similar to those used by independent
appraisers. Purchase price allocated to above market leases is based on the present value (using an interest rate which reflects
the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to in-place
leases and (ii) our estimate of fair market lease rates for leases, measured over a period equal to the remaining non-cancelable
term of the leases. Purchase price allocated to in-place leases and the tenant relationships is determined as the excess of (i)
the purchase price paid for the Property after adjusting the existing in-place lease to market rental rates over (ii) the estimated
fair value of the Property as if vacant. This aggregate value is allocated between the in-place lease value and tenant relationship
based on management’s evaluation of the specific characteristics of the tenant’s lease; however, the value of tenant
relationships has not been separated from in-place lease value because such value and its consequence to amortization expense is
immaterial for the acquisition reflected in our financial statements. Factors considered by us in performing these analyses include
(i) an estimate of carrying costs during the expected lease-up periods, including real estate taxes, insurance and other operating
income and expenses, and (ii) costs to execute similar leases in current market conditions, such as leasing commissions, legal
and other related costs.



Depreciation and
Amortization

We compute depreciation
expense using the straight-line method over estimated useful lives of up to 39 years for the building and improvements, and up
to 15 years for personal property. The allocated cost of land is not depreciated. The capitalized above-market lease values, if
any, are amortized as a reduction to rental income over the remaining non-cancelable terms of the lease. The value of above or
below-market leases is amortized over the remaining non-cancelable periods of the lease. The value of in-place leases, exclusive
of the value of above-market and below-market in-place leases, is also amortized over the remaining non-cancelable periods of the
respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease would
be written off. Inappropriate allocation of acquisition costs, or incorrect estimates of useful lives, could result in depreciation
and amortization expenses which do not appropriately reflect the allocation of our capital expenditures over future periods, as
is required by generally accepted accounting principles.



12





Impairment

We periodically evaluate
the Property for impairment indicators. These indicators may include declining tenant occupancy, weak or declining tenant profitability,
cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life or legislative, economic
or market changes that permanently reduce the value of our investment. If indicators of impairment are present, we evaluate the
carrying value of the Property by comparing it to its expected future undiscounted cash flows. If the sum of these expected future
cash flows is less than the carrying value, we reduce the net carrying value of the Property to the present value of these expected
future cash flows. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash
flows. If we misjudge or estimate incorrectly or if future tenant profitability, market or industry factors differ from our expectations,
we may record an impairment charge which is inappropriate or fail to record a charge when we should have done so, or the amount
of such charges may be inaccurate.



Lease Classification

Each time we enter into
a new lease or materially modify an existing lease we evaluate whether it is appropriately classified as a capital lease or as
an operating lease. The classification of a lease as capital or operating affects the carrying value of a property, as well as
our recognition of rental payments as revenue. These evaluations require us to make estimates of, among other things, the remaining
useful life and market value of a property, discount rates and future cash flows. Incorrect assumptions or estimates may result
in misclassification of our leases.



Results of Operations



The Company acquired the
Property and commenced operations on January 5, 2007. As of December 31, 2010, the Property was approximately 75% leased to a diverse
group of tenants with staggered lease expirations.



Comparison of the year
ended December 31, 2010 to the year ended December 31, 2009



Revenue



Total revenue decreased
$3.1 million to $18.6 million for the year ended December 31, 2010, as compared to $21.7 million for the year ended December 31,
2009. This decrease was primarily due to a decrease in revenue from base rents of $0.8 million along with a decrease in recovery
of expenses of approximately $2.3 million as a result of a decrease in leasing and occupancy and a decrease in termination fees
of $0.7 million, which was offset by a decrease in amortization of favorable real estate leases of $0.7 million.



Expenses



Total expenses decreased
approximately $2.7 million to $15.6 million for the year ended December 31, 2010 as compared to $18.3 million for the year ended
December 31, 2009. The decrease is predominantly due to a decrease in real estate taxes of $2.5 million and a decrease in depreciation
and amortization of $0.2 million.



Liquidity and Capital
Resources



Cash and cash equivalents
were $19.6 million and $21.0 million at December 31, 2010 and 2009, respectively. The $1.4 million decrease is attributable to
$8.1 million provided by operating activities, which was offset by $1.0 million used for investing activities and $8.5 million
used for financing activities.



Management believes that
the existing cash and cash anticipated to be generated internally by operations will be sufficient to meet working capital requirements,
distributions and anticipated capital expenditures for at least the next 12 months.



Operating Activities



The cash provided by operating
activities of $8.1 million for the year ended December 31, 2010 was primarily attributable to net income of approximately $3.0
million plus non-cash items of $6.1 million consisting primarily of depreciation and was offset by uses arising from other current
accounts of $0.4 million and payments of deferred leasing costs of $0.6 million.



13





Investing Activities



The cash used for investing
activities for the year ended December 31, 2010 of approximately $1.0 million was attributable to the purchase of real estate assets.



Financing Activities



The cash used for financing
activities of approximately $8.5 million for the year ended December 31, 2010 was attributable to distributions to stockholders.



Sources
and Uses of Funds



Our principal demands on
liquidity are cash for operations and distributions to equity holders. As of December 31, 2010, we had approximately $7.6 million
in accrued liabilities. In the near term, liquidity is generated by cash from operations.



Contingencies



We may be subject to various
legal proceedings and claims that arise in the ordinary course of our business. Although occasional adverse decisions or settlements
may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position
or results of operations.



Related Party Transactions



We have in the past engaged
in and currently engage in transactions with a related party, Franklin Street and its subsidiaries FSP Investments LLC and FSP
Property Management LLC, which we collectively refer to as FSP. We expect to continue to have related party transactions with FSP
in the form of management fees paid to FSP to manage the Company on behalf of our stockholders. FSP Property Management LLC currently
provides us with asset management and financial reporting services. The asset management agreement between us and FSP Property
Management LLC requires us to pay FSP Property Management LLC a monthly fee equal to one-half of one percent (0.5%) of the gross
revenues of the Property for the corresponding month. The asset management agreement between us and FSP Property Management LLC
may be terminated by either party without cause at any time, upon at least thirty (30) days’ written notice. For the years
ended December 31, 2010 and 2009, management fees paid were $101,000 and $107,000, respectively.



On December 27, 2007, Franklin
Street purchased 965.75 shares of the Preferred Stock (or approximately 43.7%), of the Company for consideration totaling $82,813,000.
Prior to purchasing any shares of the Preferred Stock, Franklin Street agreed to vote any shares held by it on any matter presented
to the holders of the Preferred Stock in a manner that approximates as closely as possible the votes cast in favor of and opposed
to such matter by the holders of the Preferred Stock other than Franklin Street and its affiliates. For purposes of determining
how Franklin Street votes its shares of the Preferred Stock, abstentions and non-votes by stockholders other than Franklin Street
are not considered. Franklin Street is entitled to distributions that are declared on the Preferred Stock.



Franklin Street is the
sole holder of the Company’s one share of Common Stock that is issued and outstanding. Subsequent to the completion of the
private placement of the Preferred Stock in December 2007, Franklin Street has not been entitled to share in any earnings or any
dividend as a result of its ownership of the Common Stock of the Company.



Rental Income Commitments



Our commercial real estate
operations consist of the leasing of the Property. Approximate future minimum rental income under non-cancelable operating leases
as of December 31, 2010 is as follows:

14







|Year Ending  |  | Amount        
|------------ |  | --------------
|December 31, |  | (in thousands)
|2011         |  | $       10,998
|2012         |  | 8,434         
|2013         |  | 5,907         
|2014         |  | 5,275         
|2015         |  | 3,176         
|Thereafter   |  | 10,539        
|             |  |               
|             |  | $       44,329



Off-Balance Sheet Arrangements



The Company is a party
to management, construction management and leasing agreements with an unaffiliated third party management company, Hines Interests
Limited Partnership, to provide property management, construction management and leasing services, and is party to an asset management
agreement with an affiliate, FSP Property Management LLC, to provide asset management and financial reporting services, all of
which agreements may be terminated by either party without cause at any time, upon at least thirty (30) days’ written notice.
The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management
LLC a monthly fee equal to one-half of one percent (0.5%) of the gross revenues of the Property for the corresponding month.



|Item 7A. | Quantitative and Qualitative Disclosure About Market Risk
|-------- | ---------------------------------------------------------



Not applicable.



|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------



The information required by this item is included
elsewhere herein and incorporated herein by reference. Reference is made to the Index to Consolidated Financial Statements in Item
15 of Part IV.



|Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------



Not applicable.



|Item 9A. | Controls and Procedures
|-------- | -----------------------



Disclosure Controls and Procedures



Our management, with the
participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of December 31, 2010. The term “disclosure controls and procedures,” as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act, means controls and other procedures of
a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated
to the company’s management, including its principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment
in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls
and procedures as of December 31, 2010, our principal executive officer and principal financial officer concluded that, as of such
date, our disclosure controls and procedures were effective at the reasonable assurance level.



15





Management’s Annual Report on Internal
Control Over Financial Reporting



The management of the Company
is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial
reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed
by, or under the supervision of, the Company’s principal executive and principal financial officer and effected by the Company’s
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:



•	Pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets
of the Company;



•	Provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations
of management and directors of the Company; and



•	Provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets
that could have a material effect on the financial statements.



Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.



The Company’s management
assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. In making
this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework.



Based on our assessment,
management concluded that, as of December 31, 2010, the Company’s internal control over financial reporting is effective
based on those criteria. This annual report is not required to include an attestation report of the Company's registered public
accounting firm regarding internal control over financial reporting. This report shall not be deemed to be filed for the purposes
of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.



Changes in Internal Control Over Financial
Reporting



No change in our internal
control over financial reporting occurred during the year ended December 31, 2010 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.



|Item 9B. | Other Information
|-------- | -----------------



Not applicable.

16





PART III

|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------



Directors and Executive Officers

Information regarding the
executive officers and directors of the Company as of February 28, 2011 is set forth below. The biographies of each of the directors
below contain information regarding the person’s service as a director, business experience, director positions held currently
or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if
applicable, and the experiences, qualifications, attributes or skills that caused our Board of Directors to determine that the
person should serve as a director of the Company. In addition, all of our directors bring to our Board executive leadership experience
derived from their service as executives of a public company and specifically as an executive of Franklin Street and employee of
FSP Investments, a wholly-owned subsidiary of Franklin Street, as well as other key attributes that are important to an effective
board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative
fashion. In addition, we have included information about each nominee’s specific experience, qualifications, attributes,
or skills that led the Board to conclude that he or she should serve as a director of the Company, in light of our business and
structure.



George J. Carter, age 62,
is President and a director of the Company. Since 1996 he has also been President and Chief Executive Officer and a director of
Franklin Street and is responsible for all aspects of the business of Franklin Street and its affiliates, with special emphasis
on the evaluation, acquisition and structuring of real estate investments. From 1992 through 1996 he was President of Boston Financial
Securities, Inc. (“Boston Financial”). Prior to joining Boston Financial, Mr. Carter was owner and developer of Gloucester
Dry Dock, a commercial shipyard in Gloucester, Massachusetts. From 1979 to 1988, Mr. Carter served as Managing Director in charge
of marketing at First Winthrop Corporation, a national real estate and investment banking firm headquartered in Boston, Massachusetts.
Prior to that, he held a number of positions in the brokerage industry including those with Merrill Lynch & Co. and Loeb Rhodes
& Co. Mr. Carter is a graduate of the University of Miami (B.S.). Mr. Carter is a FINRA General Securities Principal (Series
24) and holds a FINRA Series 7 general securities license and a FINRA Series 79, Investment Banker Registration license.



Barbara J. Fournier, age
55, is the Vice President, Chief Operating Officer, Treasurer and Secretary and a director of the Company. Since 1996, she has
also been Chief Operating Officer, Treasurer and Secretary and a director of Franklin Street. In 2009, Ms. Fournier became an Executive
Vice President of Franklin Street. Ms. Fournier has as her primary responsibility, together with Mr. Carter, the management of
all operating business affairs of Franklin Street and its affiliates. From 1993 through 1996, she was Director of Operations for
the private placement division of Boston Financial. Prior to joining Boston Financial, Ms. Fournier served as Director of Operations
for Schuparra Securities Corp. and as the Sales Administrator for Weston Financial Group. From 1979 through 1986, Ms. Fournier
worked at First Winthrop Corporation in administrative and management capacities, including Office Manager, Securities Operations
and Partnership Administration. Ms. Fournier attended Northeastern University and the New York Institute of Finance. Ms. Fournier
is a member of the NYSE Amex Listed Company Council. Ms. Fournier is a FINRA General Securities Principal (Series 24). She also
holds other FINRA supervisory licenses including Series 4 and Series 53, and a FINRA Series 7 general securities license and a
FINRA Series 79, Investment Banker Registration license.



William W. Gribbell, age
51, is an Executive Vice President and a director of the Company. Since 1996, he has been an Executive Vice President of Franklin
Street and has as his primary responsibility the direct equity placement of Franklin Street-sponsored investment programs. From
1993 through 1996 he was an executive officer of Boston Financial. From 1989 to 1993, Mr. Gribbell worked at Winthrop Financial
Associates. Mr. Gribbell is a graduate of Boston University (B.A.). Mr. Gribbell holds a FINRA Series 7 general securities license
and a FINRA Series 79, Investment Banker Registration license.



R. Scott MacPhee, age 53,
is an Executive Vice President and a director of the Company. Since 1996, he has been an Executive Vice President of Franklin Street
and has as his primary responsibility the direct equity placement of Franklin Street-sponsored investment programs. From 1993 through
1996 he was an executive officer of Boston Financial. From 1985 to 1993, Mr. MacPhee worked at Winthrop Financial Associates. Mr.
MacPhee attended American International College. Mr. MacPhee holds a FINRA Series 7 general securities license and a FINRA Series
79, Investment Banker Registration license.



17





Janet Prier Notopoulos,
age 63, is a Vice President and a director of the Company. In addition, she is President of FSP Property Management LLC and an
Executive Vice President and a director of Franklin Street and has as her primary responsibility the oversight of the management
of the real estate assets of Franklin Street and its affiliates. Prior to joining Franklin Street in 1997, Ms. Notopoulos was a
real estate and marketing consultant for various clients. From 1975 to 1983, she was Vice President of North Coast Properties,
Inc., a Boston real estate investment company. Between 1969 and 1973, she was a real estate paralegal at Goodwin, Procter &
Hoar. Ms. Notopoulos is a graduate of Wellesley College (B.A.) and the Harvard School of Business Administration (M.B.A).



Jeffrey B. Carter, age
39, is a Vice President and a director of the Company, and is George J. Carter's son. In addition, he is a Senior Vice President
and the Director of Acquisitions for Franklin Street. Prior to joining Franklin Street in 1998, Mr. Carter worked in Trust Administration
for Northern Trust Bank in Miami, Florida. Mr. Carter is a graduate of Arizona State University (B.A.) and The George Washington
University (M.A.). Mr. Carter holds a FINRA Series 7 general securities license and a FINRA Series 79, Investment Banker Registration
license.



Each of our directors holds
office from the time of his or her election until the next annual meeting and until a successor is elected and qualified, or until
such director’s earlier death, resignation or removal. Each of the above persons has been associated with us in the positions
described above since our inception in 2006. Each of them is an employee of FSP Investments LLC, a wholly-owned subsidiary of Franklin
Street, which is the sole owner of the Common Stock. Each of our officers serves in that capacity at the request of Franklin Street.



George J. Carter, Barbara
J. Fournier, R. Scott MacPhee, William W. Gribbell and Janet P. Notopoulos also serve as directors of FSP Galleria North Corp.,
FSP Phoenix Tower Corp. and FSP 50 South Tenth Street Corp., which are public reporting companies sponsored by Franklin Street.
Jeffrey B. Carter also serves as a director of FSP 50 South Tenth Street Corp. In their capacities as directors of FSP Galleria
North Corp., FSP Phoenix Tower Corp. and FSP 50 South Tenth Street Corp., George J. Carter, Barbara J. Fournier, R. Scott MacPhee,
William W. Gribbell, Janet P. Notopoulos and Jeffrey B. Carter, as applicable, each holds office from the time of his or her election
until the next annual meeting and until a successor is elected and qualified, or until such director's earlier death, resignation
or removal.



Sections 16(a) Beneficial Ownership
Reporting Compliance

Based solely on its
review of copies of reports filed by the directors and executive officers of the Company pursuant to Section 16(a) of the Exchange
Act, the Company believes that during 2010 all filings required to be made by its reporting persons were timely made in accordance
with the requirements of the Exchange Act.

Corporate Governance

Our board of directors
does not have standing compensation, nominating and corporate governance or audit committees. Our officers are compensated by Franklin
Street in connection with their employment by Franklin Street and serve as our executive officers at Franklin Street’s request.
Our directors are officers of Franklin Street and we do not consider it necessary to establish a nominating committee or a policy
for reviewing nominees recommended by stockholders. We do not have a director who qualifies as an “audit committee financial
expert” under the regulations of the SEC. We have not adopted a code of business conduct or code of ethics for our executive
officers because all of our officers are officers of Franklin Street and are governed by Franklin Street’s code of business
conduct and ethics.



|Item 11. | Executive Compensation
|-------- | ----------------------



Each of the executive officers
of the Company is compensated by Franklin Street in connection with his or her employment by Franklin Street and serves as an executive
officer of the Company at Franklin Street’s request without compensation. Franklin Street is subject to the informational
requirements of the Exchange Act, and, in accordance therewith, files reports and other information with the Securities and Exchange
Commission (SEC). Franklin Street’s common stock is traded on the NYSE Amex under the symbol “FSP”.



18







|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------



The following tables set
forth the beneficial ownership of the Company’s Common Stock and Preferred Stock as of February 28, 2011 by each holder who
beneficially owns more than five percent of the Company’s Common Stock or Preferred Stock, by each director, by each of the
Company’s executive officers and by all current directors and executive officers as a group. To the Company’s knowledge,
no person or group, other than as set forth below, beneficially owns more than five percent of the Company’s Common Stock
or Preferred Stock.



|Common Stock                                    | Number of Shares |  | Percentage of
|----------------------------------------------- | ---------------- |  | -------------
|                                                | Beneficially     |  | Outstanding  
|Name of Holder                                  | Owned            |  | Common Stock 
|                                                |                  |  |              
|Franklin Street Properties Corp. (1)            | 1                |  | 100%         
|                                                |                  |  |              
|George J. Carter(2)                             | -                |  | 0%           
|                                                |                  |  |              
|Barbara J. Fournier(2)                          | -                |  | 0%           
|                                                |                  |  |              
|R. Scott MacPhee(2)                             | -                |  | 0%           
|                                                |                  |  |              
|William W. Gribbell(2)                          | -                |  | 0%           
|                                                |                  |  |              
|Jeffrey B. Carter(2)                            | -                |  | 0%           
|                                                |                  |  |              
|Janet P. Notopoulos(2)                          | -                |  | 0%           
|                                                |                  |  |              
|All Directors and Executive Officers as a Group |                  |  |              
|(consisting of 6 persons)(2)                    | -                |  | 0%           



|Preferred Stock                                 | Number of Shares |  | Percentage of    
|----------------------------------------------- | ---------------- |  | -----------------
|                                                | Beneficially     |  | Outstanding      
|Name of Holder                                  | Owned            |  | Preferred   Stock
|                                                |                  |  |                  
|Franklin Street Properties Corp. (1)            | 965.75           |  | 43.7%            
|                                                |                  |  |                  
|George J. Carter(2)                             | -                |  | 0%               
|                                                |                  |  |                  
|Barbara J. Fournier(2)                          | .50              |  | .02%             
|                                                |                  |  |                  
|R. Scott MacPhee(2)                             | -                |  | 0%               
|                                                |                  |  |                  
|William W. Gribbell(2)                          | -                |  | 0%               
|                                                |                  |  |                  
|Jeffrey B. Carter(2)                            | -                |  | 0%               
|                                                |                  |  |                  
|Janet P. Notopoulos(2)                          | -                |  | 0%               
|                                                |                  |  |                  
|All Directors and Executive Officers as a Group |                  |  |                  
|(consisting of 6 persons)                       | .50              |  | .02%             



(1)	The
address of Franklin Street Properties Corp. is401 Edgewater Place, Wakefield, Massachusetts 01880.

(2)	Each of the executive
officers is employed by FSP Investments LLC, a subsidiary of Franklin Street Properties Corp. Franklin Street Properties Corp.
owns 100% of the issued and outstanding Common Stock of the Company.





Equity Compensation Plan Information

The Company does not have any equity
compensation plans.

19







|Item 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------



Certain Relationships and Related Transactions



George J. Carter, Barbara
J. Fournier, R. Scott MacPhee, William W. Gribbell and Janet P. Notopoulos, each of whom is an executive officer of the Company,
are executive officers of Franklin Street and, except for R. Scott MacPhee and William W. Gribbell, are directors of Franklin Street.
None of such persons received any remuneration from the Company for their services.



We have in the past engaged
in and currently engage in transactions with a related party, Franklin Street and its subsidiaries FSP Investments LLC and FSP
Property Management LLC, which we collectively refer to as FSP.  We expect to continue to have related party transactions
with FSP in the form of management fees paid to FSP to manage the Company on behalf of our stockholders.  FSP Property
Management LLC currently provides us with asset management and financial reporting services.  The asset management agreement
between us and FSP Property Management LLC requires us to pay FSP Property Management LLC a monthly fee equal to one-half of one
percent (0.5%) of the gross revenues of the Property.  The asset management agreement between us and FSP Property Management
LLC may be terminated by either party without cause at any time, upon at least thirty (30) days’ written notice.  For
the years ended December 31, 2010 and 2009, management fees paid were $101,000 and $107,000, respectively.



On December 27, 2007, Franklin
Street purchased 965.75 shares of Preferred Stock (or approximately 43.7%), for consideration totaling $82,813,000.  Prior
to purchasing any shares of the Preferred Stock, Franklin Street agreed to vote any shares held by it on any matter presented to
the holders of the Preferred Stock in a manner that approximates as closely as possible the votes cast in favor of and opposed
to such matter by the holders of the Preferred Stock other than Franklin Street and its affiliates.  For purposes of
determining how Franklin Street votes its shares of the Preferred Stock, abstentions and non-votes by stockholders other than Franklin
Street are not considered. Franklin Street is entitled to distributions that are declared on the Preferred Stock.



Franklin Street is the
sole holder of the Company’s one share of Common Stock that is issued and outstanding.  Subsequent to the completion
of the private placement of the Preferred Stock in December 2007, Franklin Street has not been entitled to share in any earnings
or any dividend as a result of its ownership of the Common Stock of the Company.



Director Independence



Our securities are not listed on a national
securities exchange or in an inter-dealer quotation system. None of our directors qualifies as “independent” under
the standards of the NYSE Amex, where Franklin Street is listed.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------



Independent Auditor Fees and Other
Matters

The following tables summarize
the aggregate fees billed by the Company’s independent registered public accounting firm, Braver PC, for audit services for
each of the last two fiscal years and for other services rendered to the Company in each of the last two fiscal years.



|Fee Category           |  | 2010 |        | 2009
|---------------------- |  | ---- | ------ | ----
|Audit Fees (1)         |  | $    | 64,050 |     
|Audit-Related Fees (2) |  |      |        |     
|Tax Fees (3)           |  |      | 5,250  |     
|All Other Fees (4)     |  |      |        |     
|Total Fees             |  | $    | 69,300 |     



(1)	Audit
fees consist of fees for the audit of our financial statements, the review of the interim financial statements included in our
quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or
engagements.

20





(2)	Audit-related
fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the review
of our financial statements and which are not reported under “Audit Fees”.

(3)	Tax
fees consist of fees for tax compliance, tax advice and tax planning services. Tax compliance services, which relate to the preparation
of tax returns, claims for refunds and tax payment-planning services, accounted for $5,250 of the total tax fees incurred in 2010
and 2009.

(4)	The
Company was not billed by its independent registered public accounting firm in 2010 or 2009 for any other fees.



Pre-Approval Policy and Procedures



The Company has not adopted policies and
procedures relating to the pre-approval of audit and non-audit services that are to be performed by the Company’s independent
registered public accounting firm.



21





PART IV



|Item 15. | Exhibits, Financial Statement Schedules
|-------- | ---------------------------------------



(a)	The
following documents are filed as part of this report.



1.Financial
Statements: The Financial Statements listed in the accompanying Index to Consolidated Financial Statements are filed as part of
this Annual Report on Form 10-K.



2.Financial
Statement Schedule: The Financial Statement Schedule listed on the accompanying Index to Consolidated Financial Statements is filed
as part of this Annual Report on Form 10-K.



3.Exhibits:
The Exhibits listed in the Exhibit Index are filed as part of this Annual Report on Form 10-K.





22





SIGNATURES

Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf as of
March 11, 2011 by the undersigned, thereunto duly authorized.

FSP 303 East Wacker Drive Corp.

By:  /s/ George J. Carter

George J. Carter

President



Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.



|Signature               |  | Title                                                                                                                                                             |  | Date          
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|                        |  |                                                                                                                                                                   |  |               
|/s/ George J. Carter    |  | President and Director
        (Principal Executive Officer)                                                                                                      |  | March 11, 2011
|George J. Carter        |  |                                                                                                                                                                  
|                        |  |                                                                                                                                                                   |  |               
|/s/ Barbara J. Fournier |  | Vice President, Chief Operating Officer,
        Treasurer, Secretary and Director
        (Principal Financial Officer and
        Principal Accounting Officer) |  | March 11, 2011
|Barbara J. Fournier    
|                        |  |                                                                                                                                                                   |  |               
|/s/ R. Scott MacPhee    |  | Director, Executive Vice President                                                                                                                                |  | March 11, 2011
|R. Scott MacPhee        |  |                                                                                                                                                                  
|                        |  |                                                                                                                                                                   |  |               
|/s/ William W. Gribbell |  | Director, Executive Vice President                                                                                                                                |  | March 11, 2011
|William W. Gribbell     |  |                                                                                                                                                                  
|                        |  |                                                                                                                                                                   |  |               
|/s/ Janet P. Notopoulos |  | Director, Vice President                                                                                                                                          |  | March 11, 2011
|Janet P. Notopoulos     |  |                                                                                                                                                                  
|                        |  |                                                                                                                                                                   |  |               
|/s/ Jeffrey B. Carter   |  | Director, Vice President                                                                                                                                          |  | March 11, 2011
|Jeffrey B. Carter       |  |                                                                                                                                                                   |  |               



23





EXHIBIT INDEX



|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         | Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.2         | By-Laws, incorporated herein by reference to Exhibit 3.2 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1        | Office Lease, dated August 1997, between Metropolitan Life Insurance Company and KPMG Peat Marwick LLP, as amended by that certain First Amendment, dated December 4, 1997, between Metropolitan Life Insurance Company and KPMG Peat Marwick LLP, as further amended by that certain Second Amendment to Lease, dated December 4, 1997, between Metropolitan Life Insurance Company and KPMG Peat Marwick LLP, as further amended by that certain Third Amendment to Lease, dated March 4, 2004, between 303 Wacker Realty L.L.C. and KPMG LLP, as further amended by that certain Fourth Amendment to Lease, dated January 8, 2009, between FSP 303 East Wacker Drive LLC and KPMG LLP, incorporated herein by reference to Exhibit 10.1 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.2        | Office Lease, dated January 1, 1996, between Metropolitan Life Insurance Company and Consoer Townsend Environdyne Engineers, Inc., as amended by that certain First Amendment to Lease, dated October 1, 1999, between 303 Wacker Realty L.L.C. and Consoer Townsend Environdyne Engineers, Inc., as further amended by that certain Second Amendment to Lease, dated January 22, 2001, between 303 Wacker Realty L.L.C. and Consoer Townsend Environdyne Engineers, Inc., as further amended by that certain Third Amendment to Lease, dated March 1, 2004, between 303 Wacker Realty L.L.C. and Consoer Townsend Environdyne Engineers, Inc., incorporated herein by reference to Exhibit 10.2 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.3        | Asset Management Agreement, dated January 5, 2007, between FSP 303 East Wacker Drive LLC and FSP Property Management LLC, as amended by that certain First Amendment to Asset Management Agreement, dated August 23, 2007, between FSP 303 East Wacker Drive LLC and FSP Property Management LLC, incorporated herein by reference to Exhibit 10.3 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)                                                                                                                                                                                                                                                                                                                                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.4        | Voting Agreement, dated January 1, 2007, among FSP 303 East Wacker Drive Corp., George J. Carter and Franklin Street Properties Corp., incorporated herein by reference to Exhibit 10.4 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.5        | License Agreement, dated November 24, 2010 by and between FSP 303 East Wacker Drive LLC and Groupon Inc., as amended by First Amendment to License Agreement dated January 7, 2011 by and between FSP 303 East Wacker Drive LLC and Groupon Inc., as further amended by Second Amendment to License Agreement dated February 15, 2011 by and between FSP 303 East Wacker Drive LLC and Groupon Inc., incorporated herein by reference to Exhibit 10.1 to FSP 303 East Wacker Drive Corp.’s Current Report on Form 8-K filed on February 22, 2011 (File No. 000-53165)                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|21.1        | Subsidiaries of FSP 303 East Wacker Drive Corp., incorporated herein by reference to Exhibit 21.1 to FSP 303 East Wacker Drive Corp.’s Registration Statement on Form 10, as amended (File No. 000-53165)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

24







|31.1 | Certification of FSP 303 East Wacker Drive
        Corp.'s principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                       
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.2 | Certification of FSP 303 East Wacker Drive
        Corp.'s principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                       
|32.1 | Certification of FSP 303 East Wacker Drive
        Corp.'s principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002
|32.2 | Certification of FSP 303 East Wacker Drive Corp.'s principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                

25





FSP 303 East Wacker Drive Corp.

Index to Consolidated Financial Statements



Table of Contents



|                                                                                                          |  | Page
|--------------------------------------------------------------------------------------------------------- |  | ----
|Consolidated Financial Statements                                                                         |  |     
|                                                                                                          |  |     
|Report of Independent Registered Public Accounting Firm                                                   |  | F-2 
|                                                                                                          |  |     
|Consolidated Balance Sheets as of December 31, 2010 and 2009                                              |  | F-3 
|                                                                                                          |  |     
|Consolidated Statements of Operations for the years ended December 31, 2010 and 2009                      |  | F-4 
|                                                                                                          |  |     
|Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2009 and 2010 |  | F-5 
|                                                                                                          |  |     
|Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009                      |  | F-6 
|                                                                                                          |  |     
|Notes to Consolidated Financial Statements                                                                |  | F-7 
|                                                                                                          |  |     
|Financial Statement Schedule – Schedule III                                                               |  | F-15



F-1





[LETTERHEAD OF BRAVER PC]





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM





To the Stockholders

FSP 303 East Wacker Drive Corp.

Wakefield, Massachusetts







We have audited the accompanying consolidated
balance sheets of FSP 303 East Wacker Drive Corp. as of December 31, 2010 and 2009, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the years then ended. Our audits also included the financial statement
schedule listed in the Index at Item 15(a)(2). These consolidated financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based
on our audits.



We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of FSP 303 East Wacker Drive Corp.
as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.





/s/ Braver PC

Newton, Massachusetts

March 11, 2011

F-2





FSP 303 East Wacker Drive Corp.

Consolidated Balance Sheets



|                                                                                                                             |  | December 31,
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------
|(in thousands, except share and par value amounts)                                                                           |  | 2010        
|                                                                                                                             |  |             
|Assets:                                                                                                                      |  |             
|                                                                                                                             |  |             
|Real estate investments, at cost:                                                                                            |  |             
|Land                                                                                                                         |  | $           
|Buildings and improvements                                                                                                   |  |             
|Furniture and Equipment                                                                                                      |  |             
|                                                                                                                             |  |             
|                                                                                                                             |  |             
|Less accumulated depreciation                                                                                                |  |             
|                                                                                                                             |  |             
|Real estate investments, net                                                                                                 |  |             
|                                                                                                                             |  |             
|Acquired real estate leases, net of accumulated amortization        of $4,837 and $4,360, respectively                       |  |             
|Acquired favorable real estate leases, net of accumulated        amortization of $2,647 and $2,755, respectively             |  |             
|Cash and cash equivalents                                                                                                    |  |             
|Tenant rent receivable, less allowance for doubtful        accounts of $84 and $0, respectively                              |  |             
|Step rent receivable                                                                                                         |  |             
|Deferred leasing costs, net of accumulated        amortization of $428 and $241, respectively                                |  |             
|Prepaid expenses and other assets                                                                                            |  |             
|                                                                                                                             |  |             
|Total assets                                                                                                                 |  | $           
|                                                                                                                             |  |             
|Liabilities and Stockholders’ Equity:                                                                                        |  |             
|                                                                                                                             |  |             
|Liabilities:                                                                                                                 |  |             
|Accounts payable and accrued expenses                                                                                        |  | $           
|Tenant security deposits                                                                                                     |  |             
|Acquired unfavorable real estate leases, net of accumulated        amortization of $70 and $255, respectively                |  |             
|                                                                                                                             |  |             
|Total liabilities                                                                                                            |  |             
|                                                                                                                             |  |             
|Commitments and Contingencies:                                                                                               |  |             
|                                                                                                                             |  |             
|Stockholders’ Equity:                                                                                                        |  |             
|Preferred Stock, $.01 par value, 2,210 shares authorized, issued and outstanding,  aggregate liquidation preference $221,000 |  |             
|                                                                                                                             |  |             
|Common Stock, $.01 par value, 1 share authorized, issued and outstanding                                                     |  |             
|Additional paid-in capital                                                                                                   |  |             
|Retained earnings and distributions in excess of earnings                                                                    |  |             
|                                                                                                                             |  |             
|Total Stockholders’ Equity                                                                                                   |  |             
|                                                                                                                             |  |             
|Total Liabilities and Stockholders’ Equity                                                                                   |  | $           
|See accompanying notes to consolidated financial statements.                                                                



F-3







FSP 303 East Wacker Drive Corp.

Consolidated Statements of Operations



|                                                                           |  | For the Year Ended December 31,
|-------------------------------------------------------------------------- |  | -------------------------------
|(in thousands, except share and per share amounts)                         |  | 2010                           
|                                                                           |  |                                
|Revenues:                                                                  |  |                                
|Rental                                                                     |  | $                              
|                                                                           |  |                                
|Total revenue                                                              |  |                                
|                                                                           |  |                                
|Expenses:                                                                  |  |                                
|                                                                           |  |                                
|Rental operating expenses                                                  |  |                                
|Real estate taxes and insurance                                            |  |                                
|Depreciation and amortization                                              |  |                                
|                                                                           |  |                                
|Total expenses                                                             |  |                                
|                                                                           |  |                                
|Net income before interest income                                          |  |                                
|                                                                           |  |                                
|Interest income                                                            |  |                                
|                                                                           |  |                                
|Net income attributable to preferred stockholders                          |  | $                              
|                                                                           |  |                                
|Weighted average number of preferred shares outstanding, basic and diluted |  |                                
|                                                                           |  |                                
|Net income per preferred share, basic and diluted                          |  | $                              
|See accompanying notes to consolidated financial statements.              



F-4







FSP 303 East Wacker Drive Corp.

Consolidated Statements of Changes in Stockholders’
Equity

For the Years Ended December 31, 2009 and
2010



|(in thousands, except per share amounts)                             |  | Preferred  Stock |   | Common  Stock |  | Additional  Paid-in Capital |   | Retained Earnings (Deficit) and Distributions in Excess of Earnings |  | Total  Stockholders' Equity
|-------------------------------------------------------------------- |  | ---------------- | - | ------------- |  | --------------------------- | - | ------------------------------------------------------------------- |  | ---------------------------
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|Balance, January 1, 2009                                             |  | $                | — |               |  | $                           | — |                                                                     |  | $                          
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|Distributions - preferred stockholders or $4,826 per preferred share |  |                  | — |               |  |                             | — |                                                                     |  |                            
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|Net income                                                           |  |                  | — |               |  |                             | — |                                                                     |  |                            
|Balance, December 31, 2009                                           |  |                  | — |               |  |                             | — |                                                                     |  |                            
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|Distributions - preferred stockholders or $3,836 per preferred share |  |                  | — |               |  |                             | — |                                                                     |  |                            
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|Net income                                                           |  |                  | — |               |  |                             | — |                                                                     |  |                            
|Balance, December 31, 2010                                           |  | $                | — |               |  | $                           | — |                                                                     |  | $                          
|                                                                     |  |                  |   |               |  |                             |   |                                                                     |  |                            
|See accompanying notes to consolidated financial statements          | 



F-5







FSP 303 East Wacker Drive Corp.

Consolidated Statements of Cash Flows



|                                                            |  | For the Year Ended December 31,
|----------------------------------------------------------- |  | -------------------------------
|(in thousands)                                              |  | 2010                           
|Cash flows from operating activities:                       |  |                                
|Net income                                                  |  | $                              
|Adjustments to reconcile net income to net cash             |  |                                
|provided by operating activities:                           |  |                                
|Depreciation and amortization                               |  |                                
|Amortization of favorable real estate leases                |  |                                
|Amortization of unfavorable real estate leases              |  |                                
|Increase in bad debt reserve                                |  |                                
|Changes in operating assets and liabilities:                |  |                                
|Tenant rent receivable                                      |  |                                
|Step rent receivable                                        |  |                                
|Prepaid expenses and other assets                           |  |                                
|Accounts payable and accrued expenses                       |  |                                
|Tenant security deposits                                    |  |                                
|Payment of deferred leasing costs                           |  |                                
|                                                            |  |                                
|Net cash provided by operating activities                   |  |                                
|                                                            |  |                                
|Cash flows from investing activities:                       |  |                                
|Purchase of real estate assets                              |  |                                
|                                                            |  |                                
|Net cash used for investing activities                      |  |                                
|                                                            |  |                                
|Cash flows from financing activities:                       |  |                                
|Distributions to stockholders                               |  |                                
|                                                            |  |                                
|Net cash used for financing activities                      |  |                                
|                                                            |  |                                
|Net decrease in cash and cash equivalents                   |  |                                
|                                                            |  |                                
|Cash and cash equivalents, beginning of year                |  |                                
|                                                            |  |                                
|Cash and cash equivalents, end of year                      |  | $                              
|                                                            |  |                                
|Supplemental disclosure of cash flow information:           |  |                                
|                                                            |  |                                
|Disclosure of non-cash investing activities:                |  |                                
|Accrued costs for purchase of real estate assets            |  | $                              
|                                                            |  |                                
|See accompanying notes to consolidated financial statements | 





F-6





FSP 303 East Wacker Drive Corp.

Notes to Consolidated Financial Statements



1.     Organization



FSP 303 East Wacker Drive
Corp. (the “Company”) was organized on December 13, 2006 as a corporation under the laws of the State of Delaware to
purchase, own, and operate a twenty-eight story Class “A” multi-tenant office tower containing approximately 859,187
rentable square feet of space located in downtown Chicago, Illinois (the “Property”). The Company acquired the Property
and commenced operations on January 5, 2007. Franklin Street Properties Corp. (“Franklin Street”) (NYSE Amex: FSP)
holds the sole share of the Company’s common stock, $.01 par value per share (the “Common Stock”). Between February
2007 and December 2007, FSP Investments LLC (member, FINRA and SIPC), a wholly-owned subsidiary of Franklin Street, completed the
sale on a best efforts basis of 2,210 shares of the Company’s preferred stock, $.01 par value per share (the “Preferred
Stock”). FSP Investments LLC sold the Preferred Stock in a private placement offering to “accredited investors”
within the meaning of Regulation D under the Securities Act of 1933.



All references to the Company
refer to FSP 303 East Wacker Drive Corp. and its consolidated subsidiary, collectively, unless the context otherwise requires.



2.     Summary
of Significant Accounting Policies



BASIS OF PRESENTATION



The accompanying
consolidated financial statements include all of the accounts of the Company and its wholly-ownedsubsidiary.
All significant intercompany accounts and transactions have been eliminated in consolidation.



ESTIMATES AND ASSUMPTIONS



The Company prepares its consolidated financial
statements and related notes in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could differ from those estimates.



REAL ESTATE AND DEPRECIATION



Real estate assets are stated at the lower
of cost or fair value, as appropriate, less accumulated depreciation.



Costs related to property acquisition and improvements
are capitalized. Typical capital items include new roofs, site improvements, various exterior building improvements and major interior
renovations. Funding for capital improvements typically is provided by cash set aside at the time the Property was purchased.



Routine replacements and ordinary maintenance
and repairs that do not extend the life of the asset are expensed as incurred. Funding for repairs and maintenance items typically
is provided by cash flows from operating activities.



Depreciation is computed using the straight-line
method over the assets' estimated useful lives as follows:



| | Category              |  | Years
| | --------------------- |  | -----
| | Building - Commercial |  | 39   
| | Building Improvements |  | 15-39
| | Furniture & Equipment |  | 5-7  



The Company reviews the Property to
determine if the carrying amount will be recovered from future cash flows if certain indicators of impairment are identified at
the Property. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future
occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. When indicators
of impairment are present and the sum of the undiscounted future cash flows is less than the carrying value of such asset, an impairment
loss is recorded equal to the difference between the asset’s current carrying value and its fair value based on discounting
its estimated future cash flows. At December 31, 2010 and 2009, no impairment charges were recorded.



F-7







FSP 303 East Wacker Drive Corp.

Notes to Consolidated Financial Statements



2.
Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)



Depreciation expense of $3,852,000 and $3,729,000
is included in Depreciation and Amortization in the Company’s Consolidated Statements of Operations for the years ended December
31, 2010 and 2009, respectively.



ACQUIRED REAL ESTATE LEASES



Acquired real estate leases costs represent
the estimated value of legal and leasing costs related to acquired leases that were included in the purchase price when the Company
acquired the Property. The Company segregates these costs from its investment in real estate. The Company subsequently amortizes
these costs on a straight-line basis over the remaining lives of the related leases. Amortization expense of $1,402,000 and $1,830,000
is included in Depreciation and Amortization in the Company’s Consolidated Statements of Operations for the years ended December
31, 2010 and 2009, respectively.



Acquired real estate lease costs included in
the purchase price of the Property were $11,222,000. Detail of the acquired real estate leases is as follows:



|(in thousands)           |  | December 31,
|------------------------ |  | ------------
|                         |  | 2010        
|Cost                     |  | $           
|Accumulated amortization |  |             
|Book value               |  | $           



The estimated annual amortization expense for
the five years succeeding December 31, 2010 is as follows:



|(in thousands) |                
|-------------- | ---------------
|2011           | $        1,205 
|2012           | $           996
|2013           | $           581
|2014           | $           449
|2015           | $           132



ACQUIRED FAVORABLE REAL ESTATE LEASES



Acquired favorable real estate leases represent
the value related to the leases when the lease payments due under a tenant’s lease exceed the market rate of the lease at
the date the Property was acquired. The Company reports this value separately from its investment in real estate. The Company subsequently
amortizes this amount on a straight-line basis over the remaining life of the tenant’s lease. Amortization of $741,000 and
$1,314,000 is shown as a reduction of rental income in the Company’s Consolidated Statements of Operations for the years
ended December 31, 2010 and 2009, respectively.



The acquired favorable real estate leases included
in the purchase price of the property were $8,034,000. Detail of the acquired favorable real estate leases is as follows:



|(in thousands)           |  | December 31,
|------------------------ |  | ------------
|                         |  | 2010        
|Cost                     |  | $           
|Accumulated amortization |  |             
|Book value               |  | $           





F-8





FSP 303 East Wacker Drive Corp.

Notes to Consolidated Financial Statements



2.
Summary of Significant Accounting Policies (continued)



ACQUIRED FAVORABLE REAL ESTATE LEASES (continued)



The estimated annual amortization for the five
years succeeding December 31, 2010 is as follows:



|(in thousands) |                
|-------------- | ---------------
|2011           | $           662
|2012           | $           637
|2013           | $           587
|2014           | $           478
|2015           | $           123



ACQUIRED UNFAVORABLE REAL ESTATE LEASES



Acquired unfavorable real estate leases represent
the value relating to leases with rents below the market rate at the time the Property was acquired. Amortization is computed using
the straight-line method over the lives of the leases assumed. Amortization of $187,000 and $86,000 is included with rental revenue
in the Company’s Consolidated Statements of Operations for the years ended December 31, 2010 and 2009, respectively.



The acquired unfavorable real estate leases
included in the purchase price of the property were $613,000. Details of the acquired unfavorable real estate leases are as follows:



|(in thousands)           |  | December 31,
|------------------------ |  | ------------
|                         |  | 2010        
|Cost                     |  | $           
|Accumulated amortization |  |             
|Book value               |  | $           



The estimated annual amortization for the five
years succeeding December 31, 2010 is as follows:



|(in thousands) |                 
|-------------- | ----------------
|2011           | $             17
|2012           | $             17
|2013           | $             17
|2014           | $             17
|2015           | $             16



CASH AND CASH EQUIVALENTS



The Company considers all
highly liquid debt instruments with an initial maturity of three months or less to be cash equivalents. The Company has set aside
funded reserves of $12,790,000 and $14,269,500 at December 31, 2010 and 2009, respectively, in anticipation of future capital needs
of the Property. These funds typically are used for the payment of real estate assets and deferred leasing commissions; however,
there is no legal restriction on their use and they may be used for any Company purpose.



F-9





FSP 303 East Wacker Drive Corp.

Notes to Consolidated Financial Statements



2.	Summary of Significant
Accounting Policies (continued)



CONCENTRATION OF CREDIT RISKS



Cash, cash equivalents and short-term investments
are financial instruments that potentially subject the Company to a concentration of credit risk. The Company maintains its cash
balances and short-term investments principally in banks which the Company believes to be creditworthy. The Company periodically
assesses the financial condition of the banks and believes that the risk of loss is minimal. Cash balances held with various financial
institutions frequently exceed the insurance limit of $250,000 provided by the Federal Deposit Insurance Corporation.



For the years ended December 31, 2010 and 2009,
rental income was derived from various tenants. As such, future receipts are dependent upon the financial strength of the lessees
and their ability to perform under the lease agreements.



The following tenants represent greater than
10% of rental revenue as of December 31, 2010 and 2009:



|                | 2010  | 2009 
|--------------- | ----- | -----
|KPMG LLP        | 35.1% | 36.6%
|AECOM USA, Inc. | 17.9% | 18.6%
|Groupon Inc     | 11.5% | 0.0% 



FINANCIAL INSTRUMENTS



The Company estimates that the carrying value
of cash and cash equivalents approximate their fair values based on their short-term maturity and prevailing interest rates.



STEP RENT RECEIVABLE



Certain leases provide
for fixed rental increases over the life of the lease. Rental revenue is recognized on the straight-line basis over the related
lease term; however, billings by the Company are based on required minimum rentals in accordance with the lease agreements. Step
rent receivable, which is the cumulative revenue recognized in excess of amounts billed by the Company, is $2,409,000 and $2,334,000
at December 31, 2010 and 2009, respectively.



TENANT RENT RECEIVABLE



Tenant rent receivable is reported at the amount
the Company expects to collect on balances outstanding at year-end. The Company provides an allowance
for doubtful accounts based on its estimate of a tenant’s ability to make future rent payments. The computation of this allowance
is based in part on the tenants’ payment history and current credit status.Management monitors outstanding balances
and tenant relationships and concluded that an allowance of $84,000 and $0 as of December 31, 2010 and 2009, respectively, is sufficient.



DEFERRED LEASING COSTS



Deferred leasing
commissions represent direct and incremental external leasing costs incurred in the leasing of commercial space. These costs are
capitalized and are amortizedon a straight-line basis over the terms of the related lease agreements. Amortization
expense was $247,000 and $149,000 for the years ended December 31, 2010 and 2009, respectively.



REVENUE RECOGNITION



The Company has retained substantially all
of the risks and benefits of ownership of the Company's commercial property and accounts for its leases as operating leases. Rental
income from leases, which may include rent concession (including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis. The Company does not have any percentage rent arrangements
with its commercial property tenants. Reimbursable costs are included in rental income in the year earned.



F-10





FSP 303 East Wacker Drive Corp.

Notes to Consolidated Financial Statements



2.     Summary
of Significant Accounting Policies (continued)



REVENUE RECOGNITION (continued)



A schedule showing the components of rental
revenue is shown below.



|                                   |  | Year Ended   |        | Year Ended  
|---------------------------------- |  | ------------ | ------ | ------------
|                                   |  | December 31, |        | December 31,
|(in thousands)                     |  | 2010         |        | 2009        
|Income from leases                 |  | $            | 10,073 |             
|Straight-line rent adjustment      |  |              | 32     |             
|Reimbursable expenses and parking  |  |              | 9,046  |             
|Amortization of favorable leases   |  |              | (741   | )           
|Amortization of unfavorable leases |  |              | 187    |             
|                                   |  |              |        |             
|Total                              |  | $            | 18,597 |             



INTEREST INCOME



Interest income is recognized when the earnings
process is complete.



INCOME TAXES



The Company has elected to be taxed as a Real
Estate Investment Trust (“REIT”) under the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally
is entitled to a tax deduction for dividends paid to its stockholders, thereby effectively subjecting the distributed net income
of the Company to taxation at the stockholder level only. The Company must comply with a variety of restrictions to maintain its
status as a REIT. These restrictions include the type of income it can earn, the type of assets it can hold, the number of stockholders
it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed
annually.



NET INCOME PER SHARE



Basic net income per share of Preferred Stock
is computed by dividing net income by the weighted average number of shares of Preferred Stock outstanding during the period. Diluted
net income per share of Preferred Stock reflects the potential dilution that could occur if securities or other contracts to issue
shares were exercised or converted into shares. There were no potential dilutive shares outstanding at December 31, 2010 and 2009.
Subsequent to the completion of the offering shares of Preferred Stock, the holder of Common Stock is not entitled to share in
any income nor in any related dividend.



SUBSEQUENT EVENTS



In preparing these consolidated financial statements the Company
evaluated events that occurred through the date of issuance of these financial statements for potential recognition
or disclosure.



3.     Income Taxes



The Company files as a REIT under Sections
856-860 of the Internal Revenue Code of 1986, as amended. In order to qualify as a REIT, the Company is required to distribute
at least 90% of its taxable income to stockholders and to meet certain asset and income tests as well as certain other requirements.
The Company will generally not be liable for federal income taxes, provided it satisfies these requirements. Even as a qualified
REIT, the Company is subject to certain state and local taxes on its income and property.



F-11





FSP 303
East Wacker Drive Corp.

Notes to Consolidated Financial Statements



3.     Income Taxes
(continued)



The Company adopted an accounting pronouncement
related to uncertainty in income taxes effective January 1, 2007, which did not result in recording a liability, nor was any accrued
interest and penalties recognized with the adoption. Accrued interest and penalties will be recorded as income tax expense, if
the Company records a liability in the future. The Company’s effective tax rate was not affected by the adoption. The Company
files income tax returns in the U.S. federal jurisdiction and the State of Illinois jurisdiction. The statute of limitations for
the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to
examination would be primarily from 2007 and thereafter.



For the periods ended December 31, 2007 and
2006, the Company incurred a net operating loss for income tax purposes of approximately $5,866,000 and $10,000, respectively that
can be carried forward until it expires in the year 2027 and 2026, respectively.



At December 31, 2010, the Company’s net
tax basis of its real estate assets was $163,362,000.



The following schedule reconciles net income to taxable
income subject to dividend requirements:



|                                               |  | Year Ended   |        | Year Ended  
|---------------------------------------------- |  | ------------ | ------ | ------------
|                                               |  | December 31, |        | December 31,
|(in thousands)                                 |  | 2010         |        | 2009        
|                                               |  |              |        |             
|Net income                                     |  | $            | 3,032  |             
|                                               |  |              |        |             
|Add:   Book depreciation and amortization      |  |              | 5,501  |             
|Amortization of favorable real estate leases   |  |              | 741    |             
|Deferred rent                                  |  |              | 99     |             
|Other adjustment                               |  |              | 84     |             
|Less:   Tax depreciation and amortization      |  |              | (4,176 | )           
|Amortization of unfavorable real estate leases |  |              | (187   | )           
|Straight-line rent adjustment                  |  |              | (32    | )           
|Taxable income                                 |  | $            | 5,062  |             



The following schedule summarizes the tax components
of the distributions paid for the years ended December 31:



|(in thousands)    |  | 2010      |       | 2009
|----------------- |  | --------- | ----- | ----
|                  |  | Preferred |       | %   
|Ordinary income   |  | $         | 5,172 |     
|Return of Capital |  |           | 3,305 |     
|Total             |  | $         | 8,477 |     



4.     Capital Stock



PREFERRED STOCK



Generally, each holder of shares of Preferred
Stock is entitled to receive ratably all dividends, if any, declared by the Board of Directors out of funds legally available.
The right to receive dividends is non-cumulative, and no right to dividends shall accrue by reason of the fact that no dividend
has been declared in any prior year. Each holder of shares of Preferred Stock will be entitled to receive, to the extent that funds
are available therefore, $100,000 per share of Preferred Stock, before any payment to the holder of Common Stock, out of distributions
to stockholders upon liquidation, dissolution or the winding up of the Company; the balance of any such funds available for distribution
will be distributed among the holders of shares of Preferred Stock and the holder of Common Stock, pro rata based on the number
of shares held by each; provided, however, that for these purposes, one share of Common Stock will be deemed to equal one-tenth
of a share of Preferred Stock.



F-12





FSP 303
East Wacker Drive Corp.

Notes to Consolidated Financial Statements



4.     Capital Stock (continued)



PREFERRED STOCK (continued)



In addition to certain rights to remove and
replace directors with or without cause, the holders of a majority of the then outstanding shares of Preferred Stock shall have
the further right to approve or disapprove a proposed sale of the Property, the merger of the Company with any other entity and
amendments to the corporate charter. A vote of the holders of not less than 66.67% of the then outstanding shares of Preferred
Stock is required for the issuance of any additional shares of capital stock. Holders of shares of Preferred Stock have no redemption
or conversion rights.



COMMON STOCK



Franklin Street is the sole holder of the Company’s
Common Stock. Franklin Street has the right to vote to elect the directors of the Company and to vote on all matters, subject to
the voting rights of the Preferred Stock set forth above. Subsequent to the completion of the offering of the shares of Preferred
Stock in December 2007, Franklin Street, as the holder of Common Stock, was not, and is not entitled to share in any earnings or
any related dividend with respect to the Common Stock.



5.     Related
Party Transactions

The Company has in the past engaged in and
currently engages in transactions with a related party, Franklin Street and its subsidiaries, FSP Investments LLC and FSP Property
Management LLC (collectively, “FSP”). The Company expects to continue to have related party transactions with FSP in
the form of management fees paid to FSP to manage the Company on behalf of its stockholders. FSP Property Management LLC currently
provides the Company with asset management and financial reporting services. The asset management agreement between the Company
and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one-half of one
percent (0.5%) of the gross revenues of the Property for the corresponding month. The asset management agreement between the Company
and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days’
written notice. For the years ended December 31, 2010 and 2009, management fees paid were $101,000 and $107,000, respectively.



On December 27, 2007, Franklin Street purchased
965.75 shares of the Preferred Stock (or approximately 43.7%), of the Company for consideration totaling $82,813,000. Prior to
purchasing any shares of the Preferred Stock, Franklin Street agreed to vote any shares held by it on any matter presented to the
holders of the Preferred Stock in a manner that approximates as closely as possible the votes cast in favor of and opposed to such
matter by the holders of the Preferred Stock other than Franklin Street and its affiliates. For purposes of determining how Franklin
Street votes its shares of the Preferred Stock, abstentions and non-votes by stockholders other than Franklin Street are not considered.
Franklin Street is entitled to distributions that are declared on the Preferred Stock.



Franklin Street is the sole holder of the Company’s
one share of Common Stock that is issued and outstanding. Subsequent to the completion of the private placement of the Preferred
Stock in December 2007, Franklin Street has not been entitled to share in any earnings or any dividend as a result of its ownership
of the Common Stock of the Company.



6.     Commitments
and Contingencies



The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:



|               |  | Year Ending  |  |                
|-------------- |  | ------------ |  | ---------------
|(in thousands) |  | December 31, |  | Amount         
|               |  | 2011         |  | $        10,998
|               |  | 2012         |  | 8,434          
|               |  | 2013         |  | 5,907          
|               |  | 2014         |  | 5,275          
|               |  | 2015         |  | 3,176          
|               |  | Thereafter   |  | 10,539         
|               |  |              |  |                
|               |  |              |  | $        44,329



In addition, the lessees are liable for real
estate taxes and certain operating expenses of the Property pursuant to lease agreements.



F-13





FSP 303
East Wacker Drive Corp.

Notes to Consolidated Financial Statements



7.     Segment
Reporting



The Company operates in one industry segment,
which is real estate ownership of commercial property. At December 31, 2010 and 2009, the Company owned and operated the Property
in that one segment.



8.     Accounts
Payable and Accrued Expenses



Accounts payable and accrued expenses consist
of the components shown below:



|                                            |  | December 31,
|------------------------------------------- |  | ------------
|(in thousands)                              |  | 2010        
|                                            |  |             
|Accrued property tax                        |  | $           
|Deferred rental income                      |  |             
|Accrued capital expenditures                |  |             
|Accounts payable and other accrued expenses |  |             
|Due to tenant - real estate taxes           |  |             
|Due to tenant - tenant improvements         |  |             
|                                            |  |             
|Total                                       |  | $           



9.     Subsequent
Event



On January 26, 2011, the Board of Directors
of the Company declared a cash distribution of $2,298,400 payable on or before March 1, 2011 to stockholders of record on February
9, 2011.





F-14







SCHEDULE III



FSP 303 East Wacker Drive Corp.

Real Estate and Accumulated Depreciation

December 31, 2010



(in thousands)



|                                    |                | Initial Cost |        | Historical Costs                      |  |                                                            |         |      | 
|----------------------------------- | -------------- | ------------ | ------ | ------------------------------------- |  | ---------------------------------------------------------- | ------- | ---- | 
|Description                         |                | Land         |        | Buildings  Improvements and Equipment |  | Costs  Capitalized  (Disposals)  Subsequent to Acquisition |         | Land | 
|                                    | (in thousands) |              |        |                                       |  |                                                           
|303 East Wacker,  Chicago, Illinois |                | $            | 26,200 |                                       |  | $                                                          | 128,502 |      | 



(1)	There are no encumbrances on
this property.

(2)	The aggregate cost for Federal
Income Tax purposes is $178,614.



F-15





FSP 303 East Wacker Drive Corp.



The following table summarizes the changes in the Company’s
real estate investments and accumulated depreciation:



|                                  | December 31,          | December 31,          
|--------------------------------- | --------------------- | ----------------------
|(in thousands)                    | 2010                  | 2009                  
|                                  |                       |                       
|Real estate investments, at cost: |                       |                       
|Balance, beginning of year        | $            159,155  | $            157,741  
|Improvements                      | 815                   | 1,414                 
|                                  |                       |                       
|Balance, end of year              | $            159,970  | $            159,155  
|                                  |                       |                       
|Accumulated depreciation:         |                       |                       
|Balance, beginning of year        | $              10,599 | $                6,870
|Depreciation                      | 3,852                 | 3,729                 
|                                  |                       |                       
|Balance, end of year              | $              14,451 | $              10,599 





F-16