----

----

| (Mark One) |                                                                                          |
|------------|-----------------------------------------------------------------------------------------------|
| R          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|       | For the quarterly period ended September 30, 2010                                             |
| or         |
| £     | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|       | For the transition period from to                                                             |

| Maryland                                                       | 20-0138854                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
|                                                           |                                 |
| 2800 Post Oak Boulevard                                        |                                 |
| Suite 5000                                                |                                 |
| Houston, Texas                                                 | 77056-6118                           |
| (Address of principal executive offices)                       | (Zip code)                           |

|  Large accelerated filer   o |   | Accelerated Filer   o |   |
|---------------------------------------------|--------|---------------------------------|--------|

| Non-accelerated filer   x (Do not check if smaller reporting company) | Smaller Reporting Company   o |
|---------------------------------------------------------------------------------|-----------------------------------------|

----

----

| PART I – FINANCIAL INFORMATION               |                                                                                        |   |   |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------|--------|
|                                                         |                                                                                        |   |   |
| Item 1.                                                 | Condensed Consolidated Financial Statements (Unaudited):                                    |   |   |   |
|                                                         | Condensed Consolidated Balance Sheets                                                       |   |   |   2 |   |
|                                                         | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)             |   |   |  3 |   |
|                                                         | Condensed Consolidated Statements of Equity                                                 |   |   |  4 |   |
|                                                         | Condensed Consolidated Statements of Cash Flows                                             |   |   |  5 |   |
|                                                         | Notes to the Condensed Consolidated Financial Statements                                    |   |   |  6 |   |
| Item 2.                                                 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   |   |  27 |   |
| Item 3.                                                 | Quantitative and Qualitative Disclosures About Market Risk                                  |   |   |  40 |   |
| Item 4.                                                 | Controls and Procedures                                                                     |   |   |  40 |   |
|                                                         |                                                                                        |   |   |   |
| PART II – OTHER INFORMATION                  |                                                                                        |   |   |   |
|                                                         |                                                                                        |   |   |   |
| Item 1.                                                      | Legal Proceedings                                                                           |   |   | 41 |   |
| Item 1A.                                                     | Risk Factors                                                                                |   |   | 41 |   |
| Item 2.                                                      | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |   |  41 |   |
| Item 3.                                                      | Defaults Upon Senior Securities                                                             |   |   | 42 |   |
| Item 4.                                                      | Removed and Reserved                                                                        |   |   | 42 |   |
| Item 5.                                                      | Other Information                                                                           |   |   | 42 |   |
| Item 6.                                            | Exhibits                                                                                    |   |   |  42 |   |
|                                                         |                                                                                        |   |   |   |
| SIGNATURES                                                   |                                                                                        |   |   |   |
| Certification                                                |                                                                                        |   |   |   |
| Certification                                                |                                                                                        |   |   |   |
| Certification of CEO & CFO pursuant to Section 906  |                                                                                        |   |   |   |

----

| PART I - FINANCIAL INFORMATION                                                                                                                                                                                                           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item 1. Condensed Consolidated Financial Statements.                                                                                                                                                                                     |
|                                                                                                                                                                                                                                     |
| HINES REAL ESTATE INVESTMENT TRUST, INC.                                                                                                                                                                                                 |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                    |
| (UNAUDITED)                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                     |   |  September 30, 2010  |   | December 31, 2009  |
|                                                                                                                                                                                                                                     |   | (in thousands, except per share amounts) |
| ASSETS                                                                                                                                                                                                                                   |
| Investment property, net                                                                                                                                                                                                                 | $ | 2,217,793  |   | $ | 2,355,872  |
| Investments in unconsolidated entities                                                                                                                                                                                                   |   | 378,232  |   |   | 379,057  |
| Assets of property held for sale                                                                                                                                                                                                         |   | -  |   |   | 42,499  |
| Cash and cash equivalents                                                                                                                                                                                                                |   | 71,785  |   |   | 41,577  |
| Restricted cash                                                                                                                                                                                                                          |   | 3,427  |   |   | 6,610  |
| Distributions receivable                                                                                                                                                                                                                 |   | 2,214  |   |   | 2,208  |
| Tenant and other receivables                                                                                                                                                                                                             |   | 52,430  |   |   | 48,208  |
| Intangible lease assets, net                                                                                                                                                                                                             |   | 235,824  |   |   | 293,053  |
| Deferred leasing costs, net                                                                                                                                                                                                              |   | 93,956  |   |   | 53,925  |
| Deferred financing costs, net                                                                                                                                                                                                            |   | 8,039  |   |   | 8,197  |
| Other assets                                                                                                                                                                                                                             |   | 109,341  |   |   | 108,574  |
| TOTAL ASSETS                                                                                                                                                                                                                             | $ | 3,173,041  |   | $ | 3,339,780  |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                                                                                                                                                                                                   |   |   |   |   |   |
| Liabilities:                                                                                                                                                                                                                             |   |   |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                                    | $ | 81,791  |   | $ | 62,506  |
| Liabilities of property held for sale                                                                                                                                                                                                    |   | -  |   |   | 355  |
| Due to affiliates                                                                                                                                                                                                                        |   | 5,917  |   |   | 10,304  |
| Intangible lease liabilities, net                                                                                                                                                                                                        |   | 77,411  |   |   | 92,471  |
| Other liabilities                                                                                                                                                                                                                        |   | 15,883  |   |   | 18,602  |
| Interest rate swap contracts                                                                                                                                                                                                             |   | 112,445  |   |   | 66,776  |
| Participation interest liability                                                                                                                                                                                                         |   | 68,763  |   |   | 57,843  |
| Distributions payable                                                                                                                                                                                                                    |   | 29,225  |   |   | 33,892  |
| Notes payable                                                                                                                                                                                                                            |   | 1,516,464  |   |   | 1,588,103  |
| Total liabilities                                                                                                                                                                                                                        |   | 1,907,899  |   |   | 1,930,852  |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |
| Commitments and contingencies (Note 12)                                                                                                                                                                                                  |   |   |   |   |   |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |
| Equity:                                                                                                                                                                                                                                  |   |   |   |   |   |
| Preferred shares, $.001 par value; 500,000 preferred shares authorized, none issued or outstanding as of September 30, 2010 and December 31, 2009                                                                                        |   | -  |   |   | -  |
| Common shares, $.001 par value; 1,500,000 common shares authorized as of September 30, 2010 and December 31, 2009; 221,649 and 217,237 common shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively |   | 221  |   |   | 217  |
| Additional paid-in capital                                                                                                                                                                                                               |   | 1,608,547  |   |   | 1,661,006  |
| Retained deficit                                                                                                                                                                                                                         |   | (353,761) |   |   | (300,703) |
| Accumulated other comprehensive income                                                                                                                                                                                                   |   | 10,135  |   |   | 48,408  |
| Shareholders' equity                                                                                                                                                                                                                     |   | 1,265,142  |   |   | 1,408,928  |
| Noncontrolling interests                                                                                                                                                                                                                 |   | -  |   |   | -  |
| Total equity                                                                                                                                                                                                                             |   | 1,265,142  |   |   | 1,408,928  |
| TOTAL LIABILITIES AND EQUITY                                                                                                                                                                                                             | $ | 3,173,041  |   | $ | 3,339,780  |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |
| See notes to the condensed consolidated financial statements.                                                                                                                                                                            |

----

| HINES REAL ESTATE INVESTMENT TRUST, INC.                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)                                                                              |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                                                                              |
| (UNAUDITED)                                                                                                                                                  |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                         |   |   |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |
|                                                                                                                                                         |   |   |   |  2010 |   |  2009 |   |  2010 |   |  2009 |   |
|                                                                                                                                                         |   |   |   | (In thousands, except per share amounts) |
| Revenues:                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental revenue                                                                                                                                               |   | $ | 78,249  |   | $ | 82,351  |   | $ | 229,146  |   | $ | 244,516  |   |
| Other revenue                                                                                                                                                |   |   | 7,904  |   |   | 7,591  |   |   | 21,992  |   |   | 20,811  |   |
|                                                                                                                                                         | Total revenues |   |   | 86,153  |   |   | 89,942  |   |   | 251,138  |   |   | 265,327  |   |
| Expenses:                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property operating expenses                                                                                                                                  |   |   | 23,095  |   |   | 23,863  |   |   | 68,764  |   |   | 68,979  |   |
| Real property taxes                                                                                                                                          |   |   | 11,517  |   |   | 12,229  |   |   | 31,718  |   |   | 34,327  |   |
| Property management fees                                                                                                                                     |   |   | 1,890  |   |   | 1,992  |   |   | 5,638  |   |   | 5,836  |   |
| Depreciation and amortization                                                                                                                                |   |   | 28,380  |   |   | 30,185  |   |   | 83,504  |   |   | 90,104  |   |
| Asset management and acquisition fees                                                                                                                        |   |   | 6,938  |   |   | 7,354  |   |   | 22,215  |   |   | 20,466  |   |
| General and administrative                                                                                                                                   |   |   | 1,417  |   |   | 1,247  |   |   | 5,206  |   |   | 4,330  |   |
| Other losses, net                                                                                                                                            |   |   | 811  |   |   | 3,415  |   |   | 811  |   |   | 3,425  |   |
|                                                                                                                                                         | Total expenses |   |   | 74,048  |   |   | 80,285  |   |   | 217,856  |   |   | 227,467  |   |
| Income from continuing operations before other income (expenses), provision for income taxes and equity in earnings (losses) of unconsolidated entities, net |   |   | 12,105  |   |   | 9,657  |   |   | 33,282  |   |   | 37,860  |   |
| Other income (expenses):                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain (loss) on derivative instruments, net                                                                                                                   |   |   | (15,441) |   |   | (11,701) |   |   | (45,669) |   |   | 35,090  |   |
| Interest expense                                                                                                                                             |   |   | (22,794) |   |   | (22,883) |   |   | (68,318) |   |   | (68,475) |   |
| Interest income                                                                                                                                              |   |   | 72  |   |   | 38  |   |   | 225  |   |   | 385  |   |
| Income (loss) from continuing operations before provision for income taxes and equity in losses of unconsolidated entities, net                              |   |   | (26,058) |   |   | (24,889) |   |   | (80,480) |   |   | 4,860  |   |
| Provision for income taxes                                                                                                                                   |   |   | (61) |   |   | (63) |   |   | (218) |   |   | (569) |   |
| Equity in earnings (losses) of unconsolidated entities, net                                                                                                  |   |   | (2,157) |   |   | (2,277) |   |   | 7,422  |   |   | (6,474) |   |
|  Loss  from continuing operations                                                                                                             |   |   | (28,276) |   |   | (27,229) |   |   | (73,276) |   |   | (2,183) |   |
| Income (loss) from discontinued operations, net of taxes                                                                                                     |   |   | (26) |   |   | 1,440  |   |   | 23,619  |   |   | 3,748  |   |
| Net income (loss)                                                                                                                                            |   |   | (28,302) |   |   | (25,789) |   |   | (49,657) |   |   | 1,565  |   |
| Less: Net income attributable to noncontrolling interests                                                                                                    |   |   | (1,067) |   |   | (1,028) |   |   | (3,401) |   |   | (2,975) |   |
| Net loss attributable to common shareholders                                                                                                                 |   | $ | (29,369) |   | $ | (26,817) |   | $ | (53,058) |   | $ | (1,410) |   |
| Basic and diluted loss per common share:                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss per common share                                                                                                                                        |   | $ | (0.13) |   | $ | (0.13) |   | $ | (0.24) |   | $ | (0.01) |   |
| Weighted average number of common shares outstanding                                                                                                         |   |   | 221,649  |   |   | 210,298  |   |   | 219,548  |   |   | 205,325  |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net comprehensive income (loss):                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                                                                            |   | $ | (28,302) |   | $ | (25,789) |   | $ | (49,657) |   | $ | 1,565  |   |
| Other comprehensive income:                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                         | Foreign currency translation adjustment |   |   | 2,799  |   |   | 19,097  |   |   | (38,273) |   |   | 49,590  |   |
| Net comprehensive income (loss)                                                                                                                              |   |   | (25,503) |   |   | (6,692) |   |   | (87,930) |   |   | 51,155  |   |
|                                                                                                                                                         | Net comprehensive income attributable to noncontrolling interests |   |   | (1,067) |   |   | (1,028) |   |   | (3,401) |   |   | (2,975) |   |
| Net comprehensive income (loss) attributable to common shareholders                                                                                          |   | $ | (26,570) |   | $ | (7,720) |   | $ | (91,331) |   | $ | 48,180  |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See notes to the condensed consolidated financial statements.                                                                                                |

----

| HINES REAL ESTATE INVESTMENT TRUST, INC.                  |
|-----------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF EQUITY               |
| For the Nine Months Ended September 30, 2010 and 2009     |
| (UNAUDITED)                                               |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |   | Hines Real Estate Investment Trust, Inc. |   |   |   |   |
|                                                      |   |   | Common Shares |   | Amount |   | Additional Paid-in Capital |   | Accumulated Deficit |   | Accumulated Other Comprehensive Income (Loss) |   | Total |   | NoncontrollingInterests |
|                                                      |   |   | (In thousands) |
| BALANCE,January 1, 2010                                   |   |  217,237  | $ |  217  | $ |  1,661,006  | $ |  (300,703) | $ |  48,408  | $ |  1,408,928  | $ |  -  |
| Issuance ofcommon shares                                  |   |  5,236  |   |  5  |   |  50,199  |   |  -  |   |  -  |   |  50,204  |   |  -  |
| Redemption ofcommon shares                                |   |  (824) |   |  (1) |   |  (8,366) |   |  -  |   |  -  |   |  (8,367) |   |  -  |
| Distributions declared                                    |   |  -  |   |  -  |   |  (94,045) |   |  -  |   |  -  |   |  (94,045) |   |  (3,401) |
| Selling commissionsand dealer manager fees                |   |  -  |   |  -  |   |  (118) |   |  -  |   |  -  |   |  (118) |   |  -  |
| Other offering costs, net                                 |   |  -  |   |  -  |   |  (129) |   |  -  |   |  -  |   |  (129) |   |  -  |
| Net income (loss)                                         |   |  -  |   |  -  |   |  -  |   |  (53,058) |   |  -  |   |  (53,058) |   |  3,401  |
| Foreign currencytranslation adjustment                    |   |  -  |   |  -  |   |  -  |   |  -  |   |  (1,121) |   |  (1,121) |   |  -  |
| Foreign currencytranslation adjustment included in income |   |  -  |   |  -  |   |  -  |   |  -  |   |  (37,152) |   |  (37,152) |   |  -  |
| BALANCE                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| September 30, 2010                                        |   |  221,649  | $ |  221  | $ |  1,608,547  | $ |  (353,761) | $ |  10,135  | $ |  1,265,142  | $ |  -  |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |   | Common Shares |   | Amount |   | Additional Paid-in Capital |   | Accumulated Deficit |   | Accumulated Other Comprehensive Income (Loss) |   | Total |   | NoncontrollingInterests |
| BALANCE,January 1, 2009                                   |   |  201,743  | $ |  202  | $ |  1,629,033  | $ |  (303,323) | $ |  (6,693) | $ |  1,319,219  | $ |  -  |
| Issuance ofcommon shares                                  |   |  25,424  |   |  25  |   |  254,196  |   |  -  |   |  -  |   |  254,221  |   |  -  |
| Redemption ofcommon shares                                |   |  (14,629) |   |  (14) |   |  (134,407) |   |  -  |   |  -  |   |  (134,421) |   |  -  |
| Distributions declared                                    |   |  -  |   |  -  |   |  (96,401) |   |  -  |   |  -  |   |  (96,401) |   |  (2,975) |
| Selling commissionsand dealer manager fees                |   |  -  |   |  -  |   |  (17,350) |   |  -  |   |  -  |   |  (17,350) |   |  -  |
| Net income (loss)                                         |   |  -  |   |  -  |   |  -  |   |  (1,410) |   |  -  |   |  (1,410) |   |  2,975  |
| Foreign currencytranslation adjustment                    |   |  -  |   |  -  |   |  -  |   |  -  |   |  49,590  |   |  49,590  |   |  -  |
| BALANCE                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| September 30, 2009                                        |   |  212,538  | $ |  213  | $ |  1,635,071  | $ |  (304,733) | $ |  42,897  | $ |  1,373,448  | $ |  -  |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      | See notes to the condensed consolidated financial statements. |

----

| HINES REAL ESTATE INVESTMENT TRUST, INC.                                             |
|--------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                      |
| For the Nine Months Ended September 30, 2010 and 2009                                |
| (UNAUDITED)                                                                          |
|                                                                                 |
|                                                                                 |   |   |   |   |   |   |   |
|                                                                                 |   |   |   | 2010  |   |   | 2009  |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                |   |   | (In thousands) |
| Net income (loss)                                                                    |   | $ |  (49,657) |   | $ |  1,565  |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: |   |   |   |   |   |   |
|                                                                                 | Depreciation and amortization |   |   |  82,825  |   |   |  90,130  |
|                                                                                 | Gain on sale of investment property |   |   |  (22,537) |   |   |  -  |
|                                                                                 | Equity in (income) losses of unconsolidated entities, net |   |   |  (7,422) |   |   |  6,474  |
|                                                                                 | Distributions received from unconsolidated entities |   |   |  1,410  |   |   |  1,699  |
|                                                                                 | Other losses, net |   |   |  811  |   |   |  3,487  |
|                                                                                 | (Gain) loss on derivative instruments, net |   |   |  45,669  |   |   |  (35,090) |
|                                                                                 | Net change in operating accounts |   |   |  (32,906) |   |   |  (27,206) |
| Net cash provided by operating activities                                            |   |   |  18,193  |   |   |  41,059  |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                |   |   |   |   |   |   |
|                                                                                 | Investments in unconsolidated entities |   |   |  -  |   |   |  (23,073) |
|                                                                                 | Distributions received from unconsolidated entities in excess of equity in earnings |   |   |  7,688  |   |   |  11,079  |
|                                                                                 | Additions to investment property |   |   |  (4,178) |   |   |  (5,876) |
|                                                                                 | Proceeds from sale of investment property |   |   |  141,896  |   |   |  -  |
|                                                                                 | Master lease rent receipts |   |   |  -  |   |   |  1,200  |
|                                                                                 | Deposit proceeds from pending land sale |   |   |  -  |   |   |  803  |
|                                                                                 | Decrease in restricted cash |   |   |  3,183  |   |   |  10,699  |
| Net cash provided by (used in) investing activities                                  |   |   |  148,589  |   |   |  (5,168) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                |   |   |   |   |   |   |
|                                                                                 | Increase (decrease) in other liabilities |   |   |  (267) |   |   |  285  |
|                                                                                 | Proceeds from issuance of common stock |   |   |  1,569  |   |   |  201,710  |
|                                                                                 | Redemption of common shares |   |   |  (7,542) |   |   |  (136,200) |
|                                                                                 | Payments of selling commissions and dealer manager fees |   |   |  (166) |   |   |  (17,162) |
|                                                                                 | Distributions paid to shareholders and noncontrolling interests |   |   |  (53,239) |   |   |  (48,003) |
|                                                                                 | Proceeds from notes payable |   |   |  94,000  |   |   |  274,000  |
|                                                                                 | Payments on notes payable |   |   |  (169,757) |   |   |  (195,353) |
|                                                                                 | Additions to deferred financing costs |   |   |  (2,002) |   |   |  (2,668) |
| Net cash provided by (used in) financing activities                                  |   |   |  (137,404) |   |   |  76,609  |
| Effect of exchange rate changes on cash                                              |   |   |  830  |   |   |  1,092  |
| Net change in cash and cash equivalents                                              |   |   |  30,208  |   |   |  113,592  |
| Cash and cash equivalents, beginning of period                                       |   |   |  41,577  |   |   |  39,927  |
| Cash and cash equivalents, end of period                                             |   | $ |  71,785  |   | $ |  153,519  |
|                                                                                 |   |   |   |   |   |   |   |
| See notes to the condensed consolidated financial statements.                        |

----

----

----

----

|                                      |   |   | September 30, 2010  |   |   | December 31, 2009   |   |
|-------------------------------------------|--------|--------|---------------------|--------|--------|---------------------|--------|
| Prepaid insurance                         |   | $      |  1,581    |   | $      |  1,131    |   |
| Prepaid/deferred taxes                    |   |   | 961            |   |   |  -        |   |
| Cash collateral for HSH mortgage facility |   |   | 106,211        | (1)    |   |  106,061  | (1)    |
| Other                                     |   |   | 588            |   |   |  1,382    |   |
| Total                                     |   | $      |  109,341  |   | $      |  108,574  |   |

| (1)   | During the fourth quarter of 2009, the Company made collateral payments totaling $106.1 million to HSH Nordbank in order to rebalance the collateral for the properties under the Company’s pooled mortgage facility. The increased cash collateral as of September 30, 2010 is due to interest earned on these payments, which accrue to the Company and is reflected as an increase in the balance. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Property                            |   | City                       |   | Date Acquired |   | Leasable Square Feet   |   | Percent Leased |   | Our Effective Ownership (1) |
|-------------------------------------|--------|----------------------------|--------|---------------|--------|------------------------|--------|----------------|--------|-----------------------------|
| Directly-owned Properties           |   |                       |   |          |   |                   |   |           |
| 321 North Clark                     |   | Chicago, Illinois          |   | 04/2006       |   |  888,837     |   | 82%            |   | 100%                        |
| Citymark                            |   | Dallas, Texas              |   | 08/2005       |   |  218,722     |   | 95%            |   | 100%                        |
| 4050/4055 Corporate Drive           |   | Dallas, Texas              |   | 05/2008       |   |  643,429     |   | 100%           |   | 100%                        |
| JPMorgan Chase Tower                |   | Dallas, Texas              |   | 11/2007       |   |  1,246,652   |   | 90%            |   | 100%                        |
| 345 Inverness Drive                 |   | Denver, Colorado           |   | 12/2008       |   |  175,287     |   | 78%            |   | 100%                        |
| Arapahoe Business Park              |   | Denver, Colorado           |   | 12/2008       |   |  309,450     |   | 88%            |   | 100%                        |
| Raytheon/DIRECTV Buildings          |   | El Segundo, California     |   | 03/2008       |   |  550,579     |   | 100%           |   | 100%                        |
| Watergate Tower IV                  |   | Emeryville, California     |   | 12/2006       |   |  344,433     |   | 100%           |   | 100%                        |
| Williams Tower                      |   | Houston, Texas             |   | 05/2008       |   |  1,479,683   |   | 87%            |   | 100%                        |
| 2555 Grand                          |   | Kansas City, Missouri      |   | 02/2008       |   |  595,607     |   | 100%           |   | 100%                        |
| One Wilshire                        |   | Los Angeles, California    |   | 08/2007       |   |  661,553     |   | 96%            |   | 100%                        |
| 3 Huntington Quadrangle             |   | Melville, New York         |   | 07/2007       |   |  407,731     |   | 73%            |   | 100%                        |
| Airport Corporate Center            |   | Miami, Florida             |   | 01/2006       |   |  1,018,428   |   | 83%            |   | 100%                        |
| Minneapolis Office/Flex Portfolio   |   | Minneapolis, Minnesota     |   | 09/2007       |   |  767,700     |   | 83%            |   | 100%                        |
| 3400 Data Drive                     |   | Rancho Cordova, California |   | 11/2006       |   |  149,703     |   | 100%           |   | 100%                        |
| Daytona Buildings                   |   | Redmond, Washington        |   | 12/2006       |   |  251,313     |   | 100%           |   | 100%                        |
| Laguna Buildings                    |   | Redmond, Washington        |   | 01/2007       |   |  460,661     |   | 78%            |   | 100%                        |
| 1515 S Street                       |   | Sacramento, California     |   | 11/2005       |   |  351,745     |   | 98%            |   | 100%                        |
| 1900 and 2000 Alameda               |   | San Mateo, California      |   | 06/2005       |   |  253,187     |   | 94%            |   | 100%                        |
| Seattle Design Center               |   | Seattle, Washington        |   | 06/2007       |   |  390,684     |   | 75%            |   | 100%                        |
| 5th and Bell                        |   | Seattle, Washington        |   | 06/2007       |   |  197,135     |   | 98%            |   | 100%                        |
| Atrium on Bay                       |   | Toronto, Ontario           |   | 02/2007       |   |  1,077,496   |   | 98%            |   | 100%                        |
| Total for Directly-Owned Properties |   |                       |   |          |   |  12,440,015  |   | 90%            |   |                        |
|                                |   |                       |   |          |   |                   |   |           |   |                        |
| Indirectly-owned Properties         |   |                       |   |          |   |                   |   |           |
|                                |   |                       |   |          |   |                   |   |           |   |                        |
| Core Fund Properties                |   |                       |   |          |   |                   |   |           |
| One Atlantic Center                 |   | Atlanta, Georgia           |   | 07/2006       |   |  1,100,312   |   | 78%            |   | 23%                         |
| The Carillon Building               |   | Charlotte, North Carolina  |   | 07/2007       |   |  472,644     |   | 88%            |   | 23%                         |
| Charlotte Plaza                     |   | Charlotte, North Carolina  |   | 06/2007       |   |  625,026     |   | 90%            |   | 23%                         |
| One North Wacker                    |   | Chicago, Illinois          |   | 03/2008       |   |  1,373,754   |   | 94%            |   | 23%                         |
| Three First National Plaza          |   | Chicago, Illinois          |   | 03/2005       |   |  1,423,515   |   | 91%            |   | 18%                         |
| 333 West Wacker                     |   | Chicago, Illinois          |   | 04/2006       |   |  854,873     |   | 72%            |   | 18%                         |
| One Shell Plaza                     |   | Houston, Texas             |   | 05/2004       |   |  1,230,395   |   | 100%           |   | 11%                         |
| Two Shell Plaza                     |   | Houston, Texas             |   | 05/2004       |   |  565,573     |   | 95%            |   | 11%                         |
| 425 Lexington Avenue                |   | New York, New York         |   | 08/2003       |   |  700,034     |   | 100%           |   | 11%                         |
| 499 Park Avenue                     |   | New York, New York         |   | 08/2003       |   |  291,515     |   | 92%            |   | 11%                         |
| Renaissance Square                  |   | Phoenix, Arizona           |   | 12/2007       |   |  965,508     |   | 88%            |   | 23%                         |
| Riverfront Plaza                    |   | Richmond, Virginia         |   | 11/2006       |   |  951,616     |   | 95%            |   | 23%                         |
| Johnson Ranch Corporate Centre      |   | Roseville, California      |   | 05/2007       |   |  179,990     |   | 41%            |   | 18%                         |
| Roseville Corporate Center          |   | Roseville, California      |   | 05/2007       |   |  111,418     |   | 51%            |   | 18%                         |
| Summit at Douglas Ridge             |   | Roseville, California      |   | 05/2007       |   |  185,128     |   | 68%            |   | 18%                         |
| Olympus Corporate Centre            |   | Roseville, California      |   | 05/2007       |   |  191,494     |   | 52%            |   | 18%                         |
| Douglas Corporate Center            |   | Roseville, California      |   | 05/2007       |   |  214,606     |   | 84%            |   | 18%                         |
| Wells Fargo Center                  |   | Sacramento, California     |   | 05/2007       |   |  502,365     |   | 93%            |   | 18%                         |
| 525 B Street                        |   | San Diego, California      |   | 08/2005       |   |  449,181     |   | 94%            |   | 23%                         |
| The KPMG Building                   |   | San Francisco, California  |   | 09/2004       |   |  379,328     |   | 88%            |   | 23%                         |

----

| Property                             |   | City                        |   | Date Acquired          |   | Leasable Square Feet |   | Percent Leased |   | Our Effective Ownership (1) |
|--------------------------------------|--------|-----------------------------|--------|------------------------|--------|----------------------|--------|----------------|--------|-----------------------------|
| Indirectly-owned Properties          |   |                        |   |                   |   |                 |   |           |
|                                 |   |                        |   |                   |   |                 |   |           |   |                        |
| Core Fund Properties                 |   |                        |   |                   |   |                 |   |           |
| 101 Second Street                    |   | San Francisco, California   |   | 09/2004                |   |  388,370   |   | 87%            |   | 23%                         |
| 720 Olive Way                        |   | Seattle, Washington         |   | 01/2006                |   |  300,710   |   | 76%            |   | 18%                         |
| 1200 19th Street                     |   | Washington, D.C.            |   | 08/2003                |   |  337,250   |   | 55%            |   | 11%                         |
| Warner Center                        |   | Woodland Hills, California  |   | 10/2006                |   |  808,274   |   | 91%            |   | 18%                         |
| Total for Core Fund Properties       |   |                        |   |  14,602,879  |   | 87%                  |   |           |
|                                 |   |                        |   |                   |   |                 |   |           |   |                        |
| Grocery-Anchored Portfolio           |   |                        |   |                   |   |                 |   |           |
| Cherokee Plaza                       |   | Atlanta, Georgia            |   | 11/2008                |   |  99,749    |   | 100%           |   | 70%                         |
| Bellaire Boulevard Center            |   | Bellaire, Texas             |   | 11/2008                |   |  35,081    |   | 100%           |   | 70%                         |
| Thompson Bridge Commons              |   | Gainesville, Georgia        |   | 03/2009                |   |  92,587    |   | 96%            |   | 70%                         |
| Champions Village                    |   | Houston, Texas              |   | 11/2008                |   |  384,581   |   | 90%            |   | 70%                         |
| King's Crossing                      |   | Kingwood, Texas             |   | 11/2008                |   |  126,397   |   | 100%           |   | 70%                         |
| Sandy Plains Exchange                |   | Marietta, Georgia           |   | 02/2009                |   |  72,784    |   | 95%            |   | 70%                         |
| Commons at Dexter Lakes              |   | Memphis, Tennessee          |   | 11/2008                |   |  228,496   |   | 93%            |   | 70%                         |
| Mendenhall Commons                   |   | Memphis, Tennessee          |   | 11/2008                |   |  79,871    |   | 100%           |   | 70%                         |
| University Palms Shopping Center     |   | Oviedo, Florida             |   | 11/2008                |   |  99,172    |   | 93%            |   | 70%                         |
| Shoppes at Parkland                  |   | Parkland, Florida           |   | 03/2009                |   |  145,652   |   | 95%            |   | 70%                         |
| Oak Park Village                     |   | San Antonio, Texas          |   | 11/2008                |   |  64,287    |   | 100%           |   | 70%                         |
| Heritage Station                     |   | Wake Forest, North Carolina |   | 01/2009                |   |  68,641    |   | 96%            |   | 70%                         |
| Total for Grocery-Anchored Portfolio |   |                        |   |  1,497,298   |   | 95%                  |   |           |
|                                 |   |                        |   |                   |   |                 |   |           |   |                        |
| Other                                |   |                        |   |                   |   |                 |   |           |
| Distribution Park Rio                |   | Rio de Janeiro, Brazil      |   | 07/2007                |   |  693,115   |   | 100%           |   | 50%                         |
| Total for All Properties             |   |                        |   |  29,233,307  |   | 89%                  | (2)    |           |

| (1)    | This percentage shows the effective ownership of the Operating Partnership in the properties listed. On September 30, 2010, Hines REIT owned a 96.3% interest in the Operating Partnership as its sole general partner. Affiliates of Hines owned the remaining 3.7% interest in the Operating Partnership. In addition, the Company owned an approximate 27.7% non-managing general partner interest in the Core Fund as of September 30, 2010. The Core Fund does not own 100% of these properties; its ownership interest in its properties ranges from 40.6% to 81.4%. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (2)    | This amount represents the percentage leased assuming the Company owns a 100% interest in each of these properties.  The percentage leased based on the Company’s effective ownership interest in each property is 90%.                                                                                                                                                                                                                                                                                                                                    |

|                            |   | September 30, 2010 |      |   | December 31, 2009 |   |
|---------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
| Buildings and improvements      |   | $                  | 1,946,821 |   |              | $      | 2,017,040 |   |
| Less: accumulated depreciation  |   |               | (163,270  | )      |              |   | (127,905 | ) |
| Buildings and improvements, net |   |               | 1,783,551 |   |              |   | 1,889,135 |   |
| Land                            |   |               | 434,242   |   |              |   | 466,737 |   |
| Investment property, net        |   | $                  | 2,217,793 |   |              | $      | 2,355,872 |   |

----

|          Lease Intangibles                                                                                                                     |              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
|                                                                                                                                                                                   |              |   |   |   |   |   |   |   |   |
|         As of September 30, 2010, the cost basis and accumulated amortization related to lease intangibles was as follows (in thousands): |              |
|                                                                                                                                                                                   |              |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                   | Lease Intangibles |   |
|                                                                                                                                                                                   | In-Place Leases   |   | Out-of-Market Lease Assets |   | Out-of-MarketLease Liabilities |   |
| Cost                                                                                                                                                                                   |              | $ | 370,095 |   |   | $ | 59,549 |   |   | $ | 131,148 |   |
| Less: accumulated amortization                                                                                                                                                         |              |   | (169,249 | ) |   |   | (24,571 | ) |   |   | (53,737 | ) |
| Net                                                                                                                                                                                    |              | $ | 200,846 |   |   | $ | 34,978 |   |   | $ | 77,411 |   |

|                           | Lease Intangibles |     |
|--------------------------------|-------------------|----------|
|                           | In-Place Leases   |     |   | Out-of-Market Lease Assets |   |   | Out-of-Market Lease Liabilities |   |
| Cost                           | $                 | 394,871  |   |   | $ |  60,111 |   |   | $ |  134,551 |   |
| Less: accumulated amortization |              | (141,553 | ) |   |   | (20,376 | ) |   |   | (42,080 | ) |
| Net                            | $                 | 253,318  |   |   | $ | 39,735 |   |   | $ | 92,471 |   |

|                                |   | In-Place Leases |   |   | Out-of-Market Leases, Net |   |
|-------------------------------------|--------|-----------------|--------|--------|---------------------------|--------|
| October 1 through December 31, 2010 |   | $               | 13,005 |   |                      | $      | (3,235 | ) |
| 2011                           |   |            | 45,130 |   |                      |   | (11,244 | ) |
| 2012                           |   |            | 34,711 |   |                      |   | (9,343 | ) |
| 2013                           |   |            | 27,854 |   |                      |   | (8,591 | ) |
| 2014                           |   |            | 19,819 |   |                      |   | (4,675 | ) |

|                                |   | Fixed Future Minimum Rentals |      |
|-------------------------------------|--------|------------------------------|-----------|
| October 1 through December 31, 2010 |   | $                            | 53,933    |   |
| 2011                           |   |                         | 213,028   |   |
| 2012                           |   |                         | 190,735   |   |
| 2013                           |   |                         | 156,686   |   |
| 2014                           |   |                         | 126,408   |   |
| Thereafter                          |   |                         | 522,248   |   |
| Total                               |   | $                            | 1,263,038 |   |

----

----

|                                                                                                                                                                       | Three Months Ended September 30,         |   | Nine Months Ended September 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------|---------------------------------|--------|
|                                                                                                                                                                       | 2010                                     |   | 2009                            |   | 2010 |   | 2009 |   |
|                                                                                                                                                                       | (In thousands, except per share amounts) |   |
| Revenues:                                                                                                                                                                  |                                     |   |                            |   |   |   |   |   |   |   |   |   |
| Rental revenue                                                                                                                                                             |                                     | $      | -                               |   |   | $ | 3,880 |   |   | $ | 3,740 |   |   | $ | 10,433 |   |
| Other revenue                                                                                                                                                              |                                     |   | -                               |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total revenues                                                                                                                                                             |                                     |   | -                               |   |   |   | 3,880 |   |   |   | 3,740 |   |   |   | 10,433 |   |
| Expenses:                                                                                                                                                                  |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property operating expenses                                                                                                                                                |                                     |   | 31                              |   |   |   | 46 |   |   |   | 444 |   |   |   | 204 |   |
| Real property taxes                                                                                                                                                        |                                     |   | -                               |   |   |   | 578 |   |   |   | 646 |   |   |   | 1,537 |   |
| Property management fees                                                                                                                                                   |                                     |   | -                               |   |   |   | 158 |   |   |   | 39 |   |   |   | 444 |   |
| Depreciation and amortization                                                                                                                                              |                                     |   | -                               |   |   |   | 1,674 |   |   |   | 1,123 |   |   |   | 4,544 |   |
| Total expenses                                                                                                                                                             |                                     |   | 31                              |   |   |   | 2,456 |   |   |   | 2,252 |   |   |   | 6,729 |   |
| Income (loss) from discontinued operations before interest income, taxes and gain on sale                                                                                  |                                     |   | (31                             | )      |   |   | 1,424 |   |   |   | 1,488 |   |   |   | 3,704 |   |
| Interest income                                                                                                                                                            |                                     |   | 7                               |   |   |   | 16 |   |   |   | 89 |   |   |   | 44 |   |
| Income taxes                                                                                                                                                               |                                     |   | (2                              | )      |   |   | - |   |   |   | (495 | ) |   |   | - |   |
| Income (loss) from discontinued operations before gain on sale                                                                                                             |                                     |   | (26                             | )      |   |   | 1,440 |   |   |   | 1,082 |   |   |   | 3,748 |   |
| Gain on sale of properties (1)                                                                                                                                             |                                     |   | -                               |   |   |   | - |   |   |   | 22,537 |   |   |   | - |   |
| Income from discontinued operations                                                                                                                                        |                                     | $      | (26                             | )      |   | $ | 1,440 |   |   | $ | 23,619 |   |   | $ | 3,748 |   |
|                                                                                                                                                                       |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The tables below show income (loss) and earnings (loss) per share attributable to common shareholders allocated between continuing operations and discontinued operations: |                                     |
|                                                                                                                                                                       |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations attributable                                                                                                                               |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to common shareholders                                                                                                                                                     |                                     | $      | (29,343                         | )      |   | $ | (28,215 | ) |   | $ | (75,856 | ) |   | $ | (5,047 | ) |
| Income from discontinued operations attributable                                                                                                                           |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to common shareholders                                                                                                                                                     |                                     |   | (26                             | )      |   |   | 1,398 |   |   |   | 22,798 |   |   |   | 3,637 |   |
| Net loss attributable to common shareholders                                                                                                                               |                                     | $      | (29,369                         | )      |   | $ | (26,817 | ) |   | $ | (53,058 | ) |   | $ | (1,410 | ) |
|                                                                                                                                                                       |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted earnings (loss) per share attributable                                                                                                                   |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to common shareholders                                                                                                                                                     |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                                                                                                                            |                                     | $      | (0.13                           | )      |   | $ | (0.13 | ) |   | $ | (0.35 | ) |   | $ | (0.02 | ) |
| Income from discontinued operations                                                                                                                                        |                                     | $      | -                               |   |   | $ | 0.01 |   |   | $ | 0.10 |   |   | $ | 0.02 |   |
|                                                                                                                                                                       |                                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Amount includes $37.2 million that was removed from accumulated other comprehensive income related to the cumulative foreign currency translation adjustment.          |                                     |

|                        |   |                             |    |   |                            |   |    |   |   |   |    |   |
|-----------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|---------|--------|--------|--------|---------|--------|
|                        |   | Three Months Ended September 30, |    |   | Nine Months Ended September 30, |   |
|                        |   | 2010                             |    |   | 2009                            |   |    | 2010   |   |   | 2009    |   |
| Beginning balance           |   | $                                | 381,214 |   |                            | $      | 385,739 |   |   | $      | 379,057 |   |   | $ | 364,374 |   |
| Contributions               |   |                             | -       |   |                            |   | 4       |   |   |   | -       |   |   |   | 27,957 |   |
| Distributions declared      |   |                             | (2,732  | )      |                            |   | (2,797  | )      |   |   | (9,103  | )      |   |   | (9,714 | ) |
| Equity in earnings (losses) |   |                             | (2,157  | )      |                            |   | (2,277  | )      |   |   | 7,422   |   |   |   | (6,474 | ) |
| Effect of exchange rate     |   |                             | 1,907   |   |                            |   | 2,672   |   |   |   | 856     |   |   |   | 7,198 |   |
| Ending balance              |   | $                                | 378,232 |   |                            | $      | 383,341 |   |   | $      | 378,232 |   |   | $ | 383,341 |   |

----

| Period             |   | Investment in Grocery-Anchored Portfolio (1) |   | Maximum Risk of Loss |
|--------------------|--------|----------------------------------------------|--------|----------------------|
| September 30, 2010 |   | $                                       | 67,648 |                 | $  | 67,648 |
| December 31, 2009  |   | $                                       | 72,046 |                 | $  | 72,046 |

| (1)   | Represents the carrying amount of the investment in the Grocery-Anchored Portfolio, which includes the net effect of contributions made, distributions received and the Company’s share of equity in earnings. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |   | September 30, 2010 |      |   | December 31, 2009 |
|-------------------------------------|--------|--------------------|-----------|--------|-------------------|
|                                |   | (In thousands)     |
| ASSETS                              |   |               |      |   |              |
| Cash                                |   | $                  | 240,473   |   |              | $ | 98,447 |
| Investment property, net            |   |               | 3,280,088 |   |              |   | 3,395,135 |
| Other assets                        |   |               | 732,293   |   |              |   | 751,507 |
| Total Assets                        |   | $                  | 4,252,854 |   |              | $ | 4,245,089 |
|                                |   |               |      |   |              |   |   |
| LIABILITIES AND EQUITY              |   |               |      |   |              |   |   |
| Debt                                |   | $                  | 2,600,864 |   |              | $ | 2,618,600 |
| Other liabilities                   |   |               | 266,134   |   |              |   | 267,661 |
| Redeemable noncontrolling interests |   |               | 458,870   |   |              |   | 469,203 |
| Partners' equity                    |   |               | 926,986   |   |              |   | 889,625 |
| Total Liabilities and Equity        |   | $                  | 4,252,854 |   |              | $ | 4,245,089 |

|                                                           |   | Three Months Ended September 30, |    |   | Nine Months Ended September 30, |   |
|----------------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
|                                                           |   | 2010                             |    |   | 2009                            |   |   | 2010 |   |   | 2009 |   |
|                                                           |   | (In thousands)                   |    |
| Revenues, other income and interest income                     |   | $                                | 118,121 |   |                            | $      | 123,805 |   |   | $ | 356,709 |   |   | $ | 381,975 |   |
| Property operating expenses                                    |   |                             | (55,404 | )      |                            |   | (59,362 | ) |   |   | (158,847 | ) |   |   | (174,553 | ) |
| Interest expense                                               |   |                             | (35,319 | )      |                            |   | (34,086 | ) |   |   | (104,599 | ) |   |   | (102,171 | ) |
| Depreciation and amortization                                  |   |                             | (39,075 | )      |                            |   | (42,326 | ) |   |   | (121,461 | ) |   |   | (134,463 | ) |
| Income tax expense                                             |   |                             | (107    | )      |                            |   | (96 | ) |   |   | (303 | ) |   |   | (309 | ) |
| Income (loss) from discontinued operations                     |   |                             | (9      | )      |                            |   | 581 |   |   |   | 108,828 |   |   |   | 2,073 |   |
| (Income) loss allocated to redeemable noncontrolling interests |   |                             | 1,622   |   |                            |   | 1,592 |   |   |   | (61,211 | ) |   |   | 104 |   |
| Net income (loss)                                              |   | $                                | (10,171 | )      |                            | $      | (9,892 | ) |   | $ | 19,116 |   |   | $ | (27,344 | ) |

----

|                                         |   | September 30, 2010 |   |   | December 31, 2009 |
|----------------------------------------------|--------|--------------------|--------|--------|-------------------|
|                                         |   | (In thousands)     |
| ASSETS                                       |   |               |   |   |              |
| Cash                                         |   | $                  | 330    |   |              | $ | 359 |
| Investment property, net                     |   |               | 62,962 |   |              |   | 60,511 |
| Other assets                                 |   |               | 1,604  |   |              |   | 1,455 |
| Total Assets                                 |   | $                  | 64,896 |   |              | $ | 62,325 |
|                                         |   |               |   |   |              |   |   |
| LIABILITIES AND EQUITY                       |   |               |   |   |              |   |   |
| Total liabilities                            |   | $             | 679    |   |              | $  | 914 |
| Partners' equity                             |   |               | 64,217 |   |              |   | 61,411 |
| Total Liabilities and Partners’ Equity |   | $                  | 64,896 |   |              | $ | 62,325 |

|                               | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|------------------------------------|----------------------------------|--------|---------------------------------|--------|
|                               | 2010                             |   | 2009                            |   | 2010 |   | 2009 |   |
|                               | (In thousands)                   |   |
| Total revenues and interest income |                             | $      | 2,040                           |   |   | $ | 2,019 |   |   | $ | 6,472 |   |   | $ | 5,577 |   |
| Total expenses                     |                             |   | (879                            | )      |   |   | (865 | ) |   |   | (2,847 | ) |   |   | (2,386 | ) |
| Net income                         |                             | $      | 1,161                           |   |   | $ | 1,154 |   |   | $ | 3,625 |   |   | $ | 3,191 |   |

----

|                         |   | September 30, 2010 |    |   | December 31, 2009 |
|------------------------------|--------|--------------------|---------|--------|-------------------|
|                         |   | (In thousands)     |
| ASSETS                       |   |               |    |   |              |
| Cash                         |   | $                  | 3,405   |   |              | $ | 4,865 |
| Investment property, net     |   |               | 168,705 |   |              |   | 171,369 |
| Other assets                 |   |               | 28,009  |   |              |   | 31,788 |
| Total Assets                 |   | $                  | 200,119 |   |              | $ | 208,022 |
|                         |   |               |    |   |              |   |   |
| LIABILITIES AND EQUITY       |   |               |    |   |              |   |   |
| Debt                         |   | $                  | 127,373 |   |              | $ | 127,916 |
| Other liabilities            |   |               | 7,180   |   |              |   | 7,980 |
| Members' equity              |   |               | 65,566  |   |              |   | 72,126 |
| Total Liabilities and Equity |   | $                  | 200,119 |   |              | $ | 208,022 |

|                               | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|------------------------------------|----------------------------------|--------|---------------------------------|--------|
|                               | 2010                             |   | 2009                            |   | 2010 |   | 2009 |   |
|                               | (In thousands)                   |   |
| Total revenues and interest income |                             | $      | 6,100                           |   |   | $ | 6,385 |   |   | $ | 18,368 |   |   | $ | 17,785 |   |
| Total expenses                     |                             |   | (5,271                          | )      |   |   | (5,705 | ) |   |   | (16,468 | ) |   |   | (16,030 | ) |
| Net income                         |                             | $      | 829                             |   |   | $ | 680 |   |   | $ | 1, 900 |   |   | $ | 1,755 |   |

----

| Description                                                                  | Origination orAssumption Date |  Maturity Date | Interest Rate  |    |   | Principal Outstanding at September 30, 2010 |            | Principal Outstanding at December 31, 2009 |
|------------------------------------------------------------------------------|-------------------------------|---------------------|----------------|---------|--------|--------------------------------------------------|-----------------|-------------------------------------------------|
| SECURED MORTGAGE DEBT                                                        |                          |                |           |    |   |                                             |            |                                            |
| Wells Fargo Bank, N.A. — Airport Corporate Center                      | 1/31/2006                     | 3/11/2012           | Variable       |    |   | $                                                |  64,620    | (1)                                             | $ | 77,900 |
| Metropolitan Life Insurance Company — 1515 S. Street    | 4/18/2006                     | 5/1/2011            | 5.680          | %       |   |                                             | 45,000          | (2)                                             |   | 45,000 |
| Capmark Finance, Inc. — Atrium on Bay                             | 2/26/2007                     | 2/26/2017           | 5.330          | %       |   |                                             |  184,661   | (3)                                             |   | 181,108 |
| The Prudential Insurance Company of America — One Wilshire        | 10/25/2007                    | 11/1/2012           | 5.980          | %       |   |                                             | 159,500         | (4)                                        |   | 159,500 |
| IXIS Real Estate Capital Inc. – Raytheon/ DIRECTV Buildings            | 3/13/2008                     | 12/5/2016           | 5.675          | %       |   |                                             |  51,412    | (5)                                             |   | 51,900 |
| New York State Teachers’ Retirement System – 2555 Grand          | 4/24/2008                     | 5/1/2013            | 5.375          | %       |   |                                             | 86,000          | (6)                                             |   | 86,000 |
| New York State Teachers’ Retirement System – Williams Tower      | 5/29/2008                     | 6/1/2013            | 5.500          | %       |   |                                             | 165,000         | (7)                                             |   | 165,000 |
| Artesia Mortgage Capital Corporation –  345 Inverness Drive  | 12/30/2008                    | 12/11/2016          | 5.850          | %       |   |                                             |  14,032    | (8)                                             |   | 14,005 |
| Artesia Mortgage Capital Corporation – Arapahoe Business Park I        | 12/30/2008                    | 6/11/2015           | 5.330          | %       |   |                                             |  8,937     | (9)                                             |   | 8,843 |
| Artesia Mortgage Capital Corporation – Arapahoe Business Park II       | 12/30/2008                    | 11/11/2015          | 5.530          | %       |   |                                             |  9,448     | (10)                                            |   | 9,435 |
| HSH POOLED MORTGAGE FACILITY                                            |                          |                |           |    |   |                                             |            |                                            |   |   |
| HSH Nordbank — Citymark, 321 North Clark, 1900 and 2000 Alameda   | 8/1/2006                      | 8/1/2016            | 5.8575         | %  | (11)   |  185,000                                    |            |                                            | 185,000 |
| HSH Nordbank — 3400 Data Drive, Watergate Tower IV                | 1/23/2007                     | 1/12/2017           |  5.2505   | %  | (11)   |  98,000                                     |            |                                            |  98,000 |
| HSH Nordbank — Daytona and Laguna Buildings                       | 5/2/2007                      |  5/2/2017      |  5.3550   | %  | (11)   |  119,000                                    |            |                                            |  119,000 |
| HSH Nordbank — 3 Huntington Quadrangle                            | 7/19/2007                     |  7/19/2017     |  5.9800   | %  | (11)   |  48,000                                     |            |                                            |  48,000 |
| HSH Nordbank — Seattle Design Center/5th and Bell                 | 8/14/2007                     | 8/14/2017           |  6.0300   | %  | (11)   |  70,000                                     |            |                                            |  70,000 |
| MET LIFE SECURED MORTGAGE FACILITY                                           |                          |                |           |    |   |                                             |            |                                            |   |   |
| Met Life — JPMorgan Chase Tower/Minneapolis Office/Flex Portfolio | 12/20/2007                    | 1/1/2013            |  5.70     | %  |   |                                             |  205,000   | (12)                                       |   |  205,000 |
| OTHER NOTES PAYABLE                                                     |                          |                |           |    |   |                                             |            |                                            |   |   |
| KeyBank Revolving Credit Facility (12)                                       | 9/9/2005                      | 10/31/2010          |  Variable |    |   |                                             |  -         |                                            |   |  61,500 |
| Atrium Note Payable                                                          | 9/1/2004                      |  10/1/2011     |  7.390    | %  |   |                                             |  2,854     | (13)                                            |   |  2,912 |
|                                                                         |                          |                |           |    |   | $                                                |  1,516,464 |                                            | $ |  1,588,103 |

| (1)    | This property had an interest-only loan with an original principal amount of $91.0 million which was assumed by the Company in connection with its acquisition of Airport Corporate Center. The original mortgage matured on March 11, 2009 and was extended to March 11, 2010 with the option for an additional 6-month extension subject to certain conditions.  Concurrently, the Company made a principal payment of $13.1 million to reduce the outstanding principal balance to $77.9 million. On March 11, 2010, the Company refinanced this mortgage with Westdeutsche Immobilienbank AG. The new mortgage loan is a $65.0 million, two-year, amortizing loan with a variable rate equal to LIBOR plus 5.50%. In connection with this mortgage, the Company paid its Advisor a debt financing fee of approximately $650,000. This mortgage was entered into by a subsidiary of the Operating Partnership, but is guaranteed by Hines REIT. The interest rate on this mortgage as of September 30, 2010 was 6.5%. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (2)    | The Company entered into mortgage financing in connection with its acquisition of 1515 S. Street. The mortgage agreement provided for an interest only loan with a principal amount of $45.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

| (3)    | The Company entered into mortgage financing in connection with its acquisition of Atrium on Bay. The mortgage agreement provided for an interest only loan with a principal amount of 190.0 million Canadian dollars. This amount was translated from Canadian dollars to U.S. dollars at a rate of $0.9719 and $0.9532 as of September 30, 2010 and December 31, 2009, respectively.                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4)    | The Company entered into mortgage financing in connection with its acquisition of One Wilshire. The mortgage agreement provided for an interest only loan with a principal amount of $159.5 million.                                                                                                                                                                                                       |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (5)    | The Company assumed a mortgage note for an amortizing loan in the principal amount of $54.2 million in connection with its acquisition of the Raytheon/DirecTV Buildings. At the time of acquisition, the fair value of this mortgage was estimated to be $52.9 million, resulting in a discount of $1.3 million. The discount is being amortized over the term of the mortgage.                                |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (6)    | The Company entered into an interest-only loan with the New York State Teachers’ Retirement System (“NYSTRS”) in the principal amount of $86.0 million secured by its interest in 2555 Grand.                                                                                                                                                                                                 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (7)    | The Company entered into an interest-only loan with NYSTRS in the principal amount of $165.0 million secured by its interest in Williams Tower.                                                                                                                                                                                                                                                            |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (8)    | The Company assumed a $15.5 million note in connection with its acquisition of 345 Inverness Drive. The note was interest-only until June 11, 2010, at which time the principal began amortizing. At the time of acquisition, the fair value of this note was estimated to be $13.8 million, resulting in a discount of $1.7 million. The discount is being amortized over the term of the note. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (9)    | The Company assumed a $9.8 million note in connection with its acquisition of Arapahoe Business Park I. The note was interest-only until June 11, 2010, at which time the principal began amortizing. At the time of acquisition, the fair value of this note was estimated to be $8.7 million, resulting in a discount of $1.1 million. The discount is being amortized over the term of the note.   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (10)   | The Company assumed an amortizing $10.5 million note in connection with its acquisition of Arapahoe Business Park II. At the time of acquisition, the fair value of this note was estimated to be $9.4 million, resulting in a discount of $1.1 million. The discount is being amortized over the term of the note.                                                                                   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (11)   | The Company entered into an interest rate swap agreement which effectively fixed the interest rate of this borrowing at the specified rate. See Note 7 below for additional information regarding the Company’s derivatives.                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (12)   | Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 for a complete discussion of the terms related to this facility. This facility expired on October 31, 2010 and the Company did not exercise its option to extend the facility.                                                                                                                           |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| (13)   | This is a note payable with Citicorp Vendor Finance Ltd. related to installation of certain equipment at Atrium on Bay. This amount was translated to U.S. dollars at a rate of $0.9719 and $0.9532 as of September 30, 2010 and December 31, 2009, respectively.                                                                                                                                               |   |

----

|                                                     |   | Liability Derivatives Fair Value |      |
|----------------------------------------------------------|--------|----------------------------------|-----------|
|  Derivatives not designated as hedging instruments: |   | September 30, 2010               |      |   | December 31, 2009 |
| Interest rate swap contracts                             |   | $                                | (112,445) |   |   | $ | (66,776) |   |
| Total derivatives                                        |   | $                                | (112,445) |   |   | $ | (66,776) |   |

|                                  | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|---------------------------------------|----------------------------------|--------|---------------------------------|--------|
|                                  | 2010                             |   | 2009                            |   | 2010 |   | 2009 |   |
| Gain (loss) on interest rate swap (1) |                             | $      | (15,441                         | )      |   | $ | (11,701 | ) |   | $ | (45,669 | ) |   | $ | 35,090 |   |
| Loss on foreign currency swap (2)     |                             |   | —                         |   |   |   | — |   |   |   | (110 | ) |   |   | — |   |
| Total                                 |                             | $      | (15,441                         | )      |   | $ | (11,701 | ) |   | $ | (45,779 | ) |   | $ | 35,090 |   |

| (1)    | Amounts represent the gain (loss) on interest rate swaps due to changes in fair value and are recorded in gain (loss) on derivative instruments, net in the condensed consolidated statements of operations.                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                          |
| (2)    | Amount represents the loss on the Company’s foreign currency swap described above. This amount is recorded in Income from discontinued operations, net of taxes in the condensed consolidated statements of operations. |

|                                     |   | Shareholders       |   |   |                     |   |
|------------------------------------------|--------|--------------------|--------|--------|--------------------------|--------|
| Distributions for the Three Months Ended |   | Cash Distributions |   |   | Distributions Reinvested |   |   | Total Declared |   |   | Noncontrolling Interests Total Declared |   |
|                                     |   |               |   |   |                     |   |   |   |   |   |   |   |
| 2010                                     |   |               |   |   |                     |   |   |   |   |   |   |   |
| September 30, 2010                       |   | $                  | 14,986 |   |                     | $      | 13,172 |   |   | $ | 28,158 |   |   | $ | 1,067 |   |
| June 30, 2010                            |   | $                  | 17,226 |   |                     | $      | 16,011 |   |   | $ | 33,237 |   |   | $ | 1,205 |   |
| March 31, 2010                           |   | $                  | 16,480 |   |                     | $      | 16,170 |   |   | $ | 32,650 |   |   | $ | 1,129 |   |
| Total                                    |   | $                  | 48,692 |   |                     | $      | 45,353 |   |   | $ | 94,045 |   |   | $ | 3,401 |   |
|                                     |   |               |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                     |   |               |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                        |   | $                  | 16,111 |   |                     | $      | 16,692 |   |   | $ | 32,803 |   |   | $ | 1,089 |   |
| September 30, 2009                       |   | $                  | 15,644 |   |                     | $      | 16,414 |   |   | $ | 32,058 |   |   | $ | 1,028 |   |
| June 30, 2009                            |   | $                  | 15,627 |   |                     | $      | 16,931 |   |   | $ | 32,558 |   |   | $ | 1,012 |   |
| March 31, 2009                           |   | $                  | 14,983 |   |                     | $      | 16,801 |   |   | $ | 31,784 |   |   | $ | 936 |   |
| Total                                    |   | $                  | 62,365 |   |                     | $      | 66,838 |   |   | $ | 129,203 |   |   | $ | 4,065 |   |

----

|                                                                                                                                                                                                                                                 |   |                             | Incurred    |                            |   | Incurred      |   | Unpaid (Receivable) as of |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-------------|---------------------------------|--------|---------------|--------|---------------------------|
|                                                                                                                                                                                                                                                 |   | Three Months Ended September 30, |        | Nine Months Ended September 30, |   | September 30, |   | December 31,              |
|  Type and Recipient                                                                                                                                                                                                                             |   | 2010                        |        | 2009                       |   | 2010     |   | 2009                 |   | 2010  |   | 2009  |
| Participation Interest in the Operating Partnership – HALP Associates Limited Partnership                                                                                                                                                      |   | $                                | 3,179  |                            | $      | 3,708    |   | $                         | 10,920  |   | $ | 8,630  |   | $ | 68,763  |   | $ | 57,843  |
|                                                                                                                                                                                                                                                 |   |                             |        |                            |   |          |   |                      |   |   |   |   |   |   |   |   |   |   |
| Due to Affiliates                                                                                                                                                                                                                                    |   |                             |        |                            |   |          |   |                      |   |   |   |   |   |   |   |   |   |   |
| Selling Commissions – the Dealer Manager                                                                                                                                                                                                       |   | $                                | -      |                            | $      | 4,549    |   | $                         | 89  |   | $ | 13,130  |   | $ | -  |   | $ | 82  |
| Dealer Manager Fee – the Dealer Manager                                                                                                                                                                                                        |   |                             | -      |                            |   | 1,441    |   |                      | 29  |   |   | 4,220  |   |   | -  |   |   | (34) |
| Issuer Costs -  the Advisor                                                                                                                                                                                                                |   |                             | 129    |                            |   | -        |   |                      | 129  |   |   | -  |   |   | 129  |   |   | 268  |
| Acquisition Fee – the Advisor                                                                                                                                                                                                                  |   |                             | -      |                            |   | -        |   |                      | -  |   |   | 1,160  |   |   | -  |   |   | -  |
| Asset Management Fee – the Advisor                                                                                                                                                                                                             |   |                             | 3,759  |                            |   | 3,646    |   |                      | 11,295  |   |   | 10,676  |   |   | 3,759  |   |   | 7,370  |
| Disposition Fee – the Advisor                                                                                                                                                                                                                  |   |                             | -      |                            |   | -        |   |                      | 1,410  |   |   | -  |   |   | -  |   |   | -  |
| Debt Financing Fee – the Advisor                                                                                                                                                                                                               |   |                             | -      |                            |   | -        |   |                      | 650  |   |   | 242  |   |   | -  |   |   | -  |
| Other - The Advisor (1)                                                                                                                                                                                                                              |   |                             | 1,101  |                            |   | 78       |   |                      | 2,800  |   |   | 1,217  |   |   | 402  |   |   | 1,442  |
| Property Management Fee – Hines                                                                                                                                                                                                                |   |                             | 1,776  |                            |   | 2,006    |   |                      | 5,496  |   |   | 5,866  |   |   | 233  |   |   | 5  |
| Leasing Fee – Hines                                                                                                                                                                                                                            |   |                             | 1,188  |                            |   | 449      |   |                      | 2,037  |   |   | 859  |   |   | 1,030  |   |   | 488  |
| Tenant Construction Management Fees – Hines                                                                                                                                                                                                    |   |                             | 1      |                            |   | -        |   |                      | 2  |   |   | 25  |   |   | 25  |   |   | 32  |
| Re-development Construction Management Fees – Hines                                                                                                                                                                                            |   |                             | -      |                            |   | -        |   |                      | -  |   |   | 11  |   |   | -  |   |   | (5) |
| Expense Reimbursements – Hines (with respect to management and operation of the Company’s properties)                                                                                                                                    |   |                             | 4,190  |                            |   | 4,215    |   |                      | 12,959  |   |   | 12,535  |   |   | 339  |   |   | 656  |
| Due to Affiliates                                                                                                                                                                                                                                    |   |                             |        |                            |   |          |   |                      |   |   |   |   |   | $ | 5,917 |   | $ | 10,304 |
|                                                                                                                                                                                                                                                 |   |                             |        |                            |   |          |   |                      |   |   |   |   |   |   |   |   |   |   |
| (1)   Includes amounts the Advisor paid on behalf of the Company such as general and administrative expenses. These amounts are generally reimbursed to the Advisor during the month following the period in which they are incurred. |

| 10. Changes in Assets and Liabilities                                                                                                                                                                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                |
|      The effect of the changes in asset and liability accounts on cash flows from operating activities for the nine months ended September 30, 2010 and 2009 is as follows (in thousands): |

|                                                         |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                         |   |   |    |   |   |   |
| Increase in other assets                                     |   | $      | (1,059  | )      |   | $      | (858 | ) |
| Increase in tenant and other receivables                     |   |   | (4,644  | )      |   |   | (5,451 | ) |
| Additions to deferred leasing costs                          |   |   | (48,829 | )      |   |   | (13,816 | ) |
| Increase (decrease) in accounts payable and accrued expenses |   |   | 18,373  |   |   |   | (7,982 | ) |
| Increase in participation interest liability                 |   |   | 10,920  |   |   |   | 8,630 |   |
| Decrease in other liabilities                                |   |   | (2,482  | )      |   |   | (4,397 | ) |
| Decrease in due to affiliates                                |   |   | (5,185  | )      |   |   | (3,332 | ) |
| Changes in assets and liabilities                            |   | $      | (32,906 | )      |   | $      | (27,206 | ) |

----

| 11. Supplemental Cash Flow Disclosures                                                                                                                |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                  |   |   |   |   |   |   |
|      Supplemental cash flow disclosures for the nine months ended September 30, 2010 and 2009 are as follows (in thousands): |

|                                              |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Supplemental Disclosure of Cash Flow Information  |   |   |   |   |   |   |
| Cash paid for interest                            |   | $      | 63,790 |   |   | $      | 65,791 |   |
| Cash paid for income taxes                        |   | $      | 1,725  |   |   | $      | 2,053 |   |
| Supplemental Schedule of Non-Cash Activities      |   |   |   |   |   |   |   |   |
| Unpaid selling commission and dealer manager fees |   | $      | -      |   |   | $      | 230 |   |
| Distributions declared and unpaid                 |   | $      | 29,225 |   |   | $      | 33,086 |   |
| Distributions receivable                          |   | $      | 2,214  |   |   | $      | 2,208 |   |
| Distributions reinvested                          |   | $      | 48,874 |   |   | $      | 51,278 |   |
| Shares tendered for redemption                    |   | $      | 2,126  |   |   | $      | 16,295 |   |
| Stock subscription                                |   | $      | -      |   |   | $      | 1,173 |   |
| Accrued additions to investment property          |   | $      | 242    |   |   | $      | 266 |   |

----

|               |   |                      |     |    | Basis of Fair Value Measurements                           |                                                |    |
|--------------------|--------|---------------------------|----------|---------|------------------------------------------------------------|-----------------------------------------------------|---------|
| Period             |   | Fair Value of Liabilities |     |    | Quoted Prices InActive Markets forIdentical Items(Level 1) |   Significant Other Observable Inputs(Level 2) |    | SignificantUnobservable Inputs(Level 3) |   |   |   |   |
| September 30, 2010 |   | $                         | (112,445 | )       |                                                       | $                                                   | — |   |   | $ | (112,445 | ) |   | $ | — |   |
| December 31, 2009  |   | $                         | (66,776  | )  |                                                       | $                                                   | — |   |   | $ | (66,776 | )  |   | $ | — |   |

|        |  Basis of Fair Value Measurements as of September 30, 2010 |            |
|-------------|-----------------------------------------------------------------|-----------------|
|        |                                                            | Quoted Prices   | Significant |   |   |
|        |                                                            | In Active       | Other | Significant |   |
|        | Fair Value                                                      | Markets for     | Observable | Unobservable | Impairment |
|        | of Assets                                                       | Identical Items | Inputs | Inputs | Loss as of |
| Description | (Liabilities)                                                   | (Level 1)       | (Level 2) | (Level 3) | September 30, 2010 |
| Land parcel | $ —                                                       | $ —       | $ — | $ — | $811 |

|        |  Basis of Fair Value Measurements as of December 31, 2009 |            |
|-------------|----------------------------------------------------------------|-----------------|
|        |                                                           | Quoted Prices   | Significant |   |   |
|        |                                                           | In Active       | Other | Significant |   |
|        | Fair Value                                                     | Markets for     | Observable | Unobservable | Impairment |
|        | of Assets                                                      | Identical Items | Inputs | Inputs | Loss as of |
| Description | (Liabilities)                                                  | (Level 1)       | (Level 2) | (Level 3) | September 30, 2009 |
| Land parcel | $ 12,770                                                       | $ —       | $ 12,770 | $ — | $3,415 |

----

|                                                         |                                                                        |         | Three Months Ended September 30, |         | Nine Months Ended September 30, |
|--------------------------------------------------------------|-----------------------------------------------------------------------------|--------------|----------------------------------|--------------|---------------------------------|
|                                                         |                                                                        |         | 2010                        |         | 2009                       |   | 2010  |   | 2009  |
| Total Revenue                                                |                                                                        |         |                             |         |                            |   |   |   |   |   |   |   |
|                                                         |   Office properties                                               |         | $                                | 85,027  |                            | $ | 88,822  |   | $ | 247,816  |   | $ | 261,963  |
|                                                         |    Domestic industrial property                              |         |                             | 1,126   |                            |   | 1,120  |   |   | 3,322  |   |   | 3,364  |
| Total Revenue                                                |                                                                        | $            | 86,153                      |         | $                               | 89,942  |   | $ | 251,138  |   | $ | 265,327  |
|                                                         |                                                                        |         |                             |         |                            |   |   |   |   |   |   |   |   |
| Net Operating Income (1)                                     |                                                                        |         |                             |         |                            |   |   |   |   |   |   |
|                                                         |   Office properties (1)                                           |         | $                                | 48,776  |                            | $ | 51,016  |   | $ | 142,405  |   | $ | 153,565  |
|                                                         |    Domestic industrial property (1)                          |         |                             | 875     |                            |   | 842  |   |   | 2,613  |   |   | 2,620  |
| Total Segment Net Operating Income                           | $                                                                           | 49,651  |                             | $            | 51,858                     |   | $ | 145,018  |   | $ | 156,185  |
|                                                         |                                                                        |         |                             |         |                            |   |   |   |   |   |   |   |   |
| Equity in Earnings (Losses) of Unconsolidated Entities       |                                                                        |         |                             |         |                            |   |   |   |   |   |   |
|                                                         |    Equity in earnings (losses) of domestic office properties |         | $                                | (2,964)      |                            | $ | (2,947) |   | $ | 5,236  |   | $ | (8,171) |
|                                                         |    Equity in earnings of domestic retail properties          |         |                             | 215     |                            |   | 107  |   |   | 246  |   |   | 138  |
|                                                         |    Equity in earnings of international industrial property   |         |                             | 592     |                            |   | 563  |   |   | 1,940  |   |   | 1,559  |
| Total Equity in Earnings (Losses) of Unconsolidated Entities |                                                                        | $            | (2,157)                          |         | $                               | (2,277) |   | $ | 7,422  |   | $ | (6,474) |

----

| Total Assets                        |                                                                                                     |   |                             |         | September 30, 2010              |   | December 31, 2009 |
|-------------------------------------|----------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------------|---------------------------------|--------|-------------------|
|                                |   Office properties                                                                            |   |                             |         |                            |   |              |   | $ | 2,599,712  |   | $ | 2,654,859  |
|                                |    Domestic industrial property                                                           |   |                             |         |                            |   |              |   |   | 41,543  |   |   | 42,886  |
|                                |    International industrial property                                                      |   |                             |         |                            |   |              |   |   | -  |   |   | 106,942  |
|                                |    Assets held for sale                                                                   |   |                             |         |                            |   |              |   |   | -  |   |   | 42,499  |
|                                |    Investment in unconsolidated entities -                                                |   |                             |         |                            |   |              |   |   |   |   |   |   |
|                                |       Office properties                                                    |   |                             |         |                            |   |              |   |   | 278,573  |   |   | 276,445  |
|                                |       Domestic retail properties                                           |   |                             |         |                            |   |              |   |   | 67,648  |   |   | 72,046  |
|                                |       International industrial property                                    |   |                             |         |                            |   |              |   |   | 32,011  |   |   | 30,566  |
|                                |    Corporate-level accounts                                                               |   |                             |         |                            |   |              |   |   | 153,554  |   |   | 113,537  |
|                                | Total Assets                                                                                             |   |                             |         |                            |   |              |   | $ | 3,173,041  |   | $ | 3,339,780  |
|                                |                                                                                                     |   |                             |         |                            |   |              |   |   |   |   |   |   |
|                                |                                                                                                     |   | Three Months Ended September 30, |         | Nine Months Ended September 30, |
|                                |                                                                                                     |   | 2010                        |         | 2009                       |   | 2010         |   | 2009  |
| Reconciliation to net income (loss) |                                                                                                     |   |                             |         |                            |   |              |   |   |   |   |   |
|                                | Total segment net operating income                                                                       |   | $                                | 49,651  |                            | $      | 51,858       |   | $ | 145,018  |   | $ | 156,185  |
|                                | Asset management and acquisition fees                                                                    |   |                             | (6,938)      |                            |   | (7,354)           |   |   | (22,215) |   |   | (20,466) |
|                                | General and administrative                                                                               |   |                             | (1,417)      |                            |   | (1,247)           |   |   | (5,206) |   |   | (4,330) |
|                                | Depreciation and amortization                                                                            |   |                             | (28,380)     |                            |   | (30,185)          |   |   | (83,504) |   |   | (90,104) |
|                                | Other losses                                                                                             |   |                             | (811)        |                            |   | (3,415)           |   |   | (811) |   |   | (3,425) |
|                                | Gain (loss) on derivative instruments, net                                                               |   |                             | (15,441)     |                            |   | (11,701)          |   |   | (45,669) |   |   | 35,090  |
|                                | Interest expense                                                                                         |   |                             | (22,794)     |                            |   | (22,883)          |   |   | (68,318) |   |   | (68,475) |
|                                | Interest income                                                                                          |   |                             | 72      |                            |   | 38           |   |   | 225  |   |   | 385  |
|                                | Provision for income taxes                                                                               |   |                             | (61)         |                            |   | (63)              |   |   | (218) |   |   | (569) |
|                                | Equity in earnings (losses) of unconsolidated entities                                                   |   |                             | (2,157)      |                            |   | (2,277)           |   |   | 7,422  |   |   | (6,474) |
|                                | Income from discontinued operations, net of tax                                                          |   |                             | (26)         |                            |   | 1,440        |   |   | 23,619  |   |   | 3,748  |
|                                | Net income (loss)                                                                                        |   | $                                | (28,302)     |                            | $      | (25,789)          |   | $ | (49,657) |   | $ | 1,565  |
|                                |                                                                                                     |   |                             |         |                            |   |              |   |   |   |   |   |   |
| (1)                                 |   Revenues less property operating expenses, real property taxes and property management fees. |

----

|   | • | Whether we will have the opportunity to invest dividend reinvestment plan proceeds to acquire properties or other investments or whether such proceeds will be needed to redeem shares or for other purposes; and if proceeds are available for investment, our ability to make such investments in a timely manner and at appropriate amounts that provide acceptable returns; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The potential need to fund tenant improvements, lease-up costs or other capital expenditures, as well as increases in property operating expenses and costs of compliance with environmental matters or discovery of previously undetected environmentally hazardous or other undetected adverse conditions at our properties; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                           |
|   | • | Our ability to raise significant additional capital;                                                                                                                                                                                                                                                                           |
|   |    |                                                                                                                                                                                                                                                                                                                           |
|   | • | Risks associated with debt;                                                                                                                                                                                                                                                                                                    |

|   | • | Competition for tenants and real estate investment opportunities, including competition with affiliates of Hines Interests Limited Partnership (“Hines”); |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Risks associated with adverse changes in general economic or local market conditions, including terrorist attacks and other acts of violence, which may affect the markets in which we and our tenants operate; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Catastrophic events, such as hurricanes, earthquakes and terrorist attacks; and our ability to secure adequate insurance at reasonable and appropriate rates; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                          |
|   | • | Risks associated with the currency exchange rate related to our international investments;                                                                    |

|   | • | International investment risks, including the burden of complying with a wide variety of foreign laws and the uncertainty of such laws, the tax treatment of transaction structures, political and economic instability, foreign currency fluctuations, and inflation and governmental measures to curb inflation may adversely affect our operations and our ability to make distributions; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Changes in governmental, tax, real estate and zoning laws and regulations and the related costs of compliance and increases in our administrative operating expenses, including expenses associated with operating as a public company; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Risks relating to our investment in Hines US Core Office Fund LP (the “Core Fund”), such as its reliance on Hines for its operations and investments, and our potential liability for Core Fund obligations;                                            |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                     |
|   | • | The lack of liquidity associated with our assets;                                                                                                                                                                                                                        |
|   |    |                                                                                                                                                                                                                                                                     |
|   | • | Our reliance on our Advisor, Hines and affiliates of Hines for our day-to-day operations and the selection of real estate investments, and our Advisor’s ability to attract and retain high-quality personnel who can provide service at a level acceptable to us; |
|   | • | Risks associated with conflicts of interests that result from our relationship with our Advisor and Hines, as well as conflicts of interests certain of our officers and directors face relating to the positions they hold with other entities; and                |
|   |    |                                                                                                                                                                                                                                                                     |
|   | • | Our ability to continue to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.                                                                                                                                               |

----

----

|   | • | proceeds from our public offerings, including our dividend reinvestment plan; |
|--------|---------|-------------------------------------------------------------------------------|
|   | • | debt financings, including secured or unsecured facilities;                   |
|   | • | proceeds from the sale of our properties; and                                 |
|   | • | cash flow generated by our real estate investments and operations.            |

----

|                                                                      | Nine Months Ended September 30, 2010 |   |
|---------------------------------------------------------------------------|--------------------------------------|--------|
|                                                                      | Core Fund                            |   | Grocery-AnchoredPortfolio |   | DistributionPark Rio |   | Total |   |
| Distributions included in cash flows  from operating activities |                                 | $      | - |   |   | $ | 59 |   |   | $ | 1,351 |   |   | $ | 1,410 |   |
| Distribution included in cash flows  from investing activities  |                                 | $      | 3,103 |   |   | $ | 4,585 |   |   | $ | - |   |   | $ | 7,688 |   |
|                                                                      |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      | Nine Months Ended September 30, 2009 |   |
|                                                                      | Core Fund                            |   | Grocery-AnchoredPortfolio |   | DistributionPark Rio |   | Total |   |
| Investments in unconsolidated entities                                    |                                 | $      | - |   |   | $ | 23,073 |   |   | $ | - |   |   | $ | 23,073 |   |
| Distributions included in cash flows  from operating activities |                                 | $      | - |   |   | $ | 138 |   |   | $ | 1,561 |   |   | $ | 1,699 |   |
| Distribution included in cash flows  from investing activities  |                                 | $      | 6,022 |   |   | $ | 4,773 |   |   | $ | 284 |   |   | $ | 11,079 |   |

----

|                                     |   | Shareholders       |   |   |                     |   |
|------------------------------------------|--------|--------------------|--------|--------|--------------------------|--------|
| Distributions for the Three Months Ended |   | Cash Distributions |   |   | Distributions Reinvested |   |   | Total Declared |   |   | Noncontrolling Interests Total Declared |   |
|                                     |   |               |   |   |                     |   |   |   |   |   |   |   |
| 2010                                     |   |               |   |   |                     |   |   |   |   |   |   |   |
| September 30, 2010                       |   | $                  | 14,986 |   |                     | $      | 13,172 |   |   | $ | 28,158 |   |   | $ | 1,067 |   |
| June 30, 2010                            |   | $                  | 17,226 |   |                     | $      | 16,011 |   |   | $ | 33,237 |   |   | $ | 1,205 |   |
| March 31, 2010                           |   | $                  | 16,480 |   |                     | $      | 16,170 |   |   | $ | 32,650 |   |   | $ | 1,129 |   |
| Total                                    |   | $                  | 48,692 |   |                     | $      | 45,353 |   |   | $ | 94,045 |   |   | $ | 3,401 |   |
|                                     |   |               |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                     |   |               |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                        |   | $                  | 16,111 |   |                     | $      | 16,692 |   |   | $ | 32,803 |   |   | $ | 1,089 |   |
| September 30, 2009                       |   | $                  | 15,644 |   |                     | $      | 16,414 |   |   | $ | 32,058 |   |   | $ | 1,028 |   |
| June 30, 2009                            |   | $                  | 15,627 |   |                     | $      | 16,931 |   |   | $ | 32,558 |   |   | $ | 1,012 |   |
| March 31, 2009                           |   | $                  | 14,983 |   |                     | $      | 16,801 |   |   | $ | 31,784 |   |   | $ | 936 |   |
| Total                                    |   | $                  | 62,365 |   |                     | $      | 66,838 |   |   | $ | 129,203 |   |   | $ | 4,065 |   |

----

|   | RESULTS OF OUR DIRECTLY-OWNED PROPERTIES |
|--------|------------------------------------------|

|                                          |   | Three Months Ended September 30, |         | Change     |   |
|-----------------------------------------------|--------|----------------------------------|--------------|------------|--------|
|                                          |   | 2010                        |         | 2009  |   | $ |   | % |   |
|                                          |   |                             |         |       |   |   |   |   |   |   |
| Property revenues                             |   | $                                | 86,153  |       | $      | 89,942  |   | $ | (3,789) |   |   | (4.2) | % |
| Less: Property expenses (1)                   |   |                             | 36,563  |       |   | 38,147  |   |   | (1,584) |   |   | (4.2) | % |
| Total property revenues in excess of expenses |   | $                                | 49,590  |       | $      | 51,795  |   | $ | (2,205) |   |   | (4.3) | % |
|                                          |   |                             |         |       |   |   |   |   |   |   |   |   |   |
| Interest and Depreciation/Amortization        |   |                             |         |       |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                 |   | $                                | 28,380  |       | $      | 30,185  |   | $ | (1,805) |   |   | (6.0) | % |
| Interest expense                              |   | $                                | 22,794  |       | $      | 22,883  |   | $ | (89) |   |   | (0.4) | % |
| Interest income                               |   | $                                | 72      |       | $      | 38  |   | $ | 34  |   |   | 89.5  | % |

----

|                                          |   |                            |          |       |   |          |   |   |     |   |   |   |   |
|-----------------------------------------------|--------|---------------------------------|---------------|------------|--------|---------------|--------|--------|----------|--------|--------|--------|--------|
|                                          |   | Nine Months Ended September 30, |          | Change     |   |
|                                          |   | 2010                       |          | 2009  |   | $             |   | %      |     |
|                                          |   |                            |          |       |   |          |   |   |     |   |
| Property revenues                             |   | $                               | 251,138  |       | $      | 265,327  |   | $      | (14,189) |   |   | (5.3)  | %      |
| Less: Property expenses (1)                   |   |                            | 106,338  |       |   | 109,711  |   |   | (3,373)  |   |   | (3.1)  | %      |
| Total property revenues in excess of expenses |   | $                               | 144,800  |       | $      | 155,616  |   | $      | (10,816) |   |   | (7.0)  | %      |
|                                          |   |                            |          |       |   |          |   |   |     |   |   |   |   |
| Interest and Depreciation/Amortization        |   |                            |          |       |   |          |   |   |     |   |   |   |   |
| Depreciation and amortization                 |   | $                               | 83,504   |       | $      | 90,104   |   | $      | (6,600)  |   |   | (7.3)  | %      |
| Interest expense                              |   | $                               | 68,318   |       | $      | 68,475   |   | $      | (157)    |   |   | (0.2)  | %      |
| Interest income                               |   | $                               | 225      |       | $      | 385      |   | $      | (160)    |   |   | (41.6) | %      |

| (1)   | Property expenses include property operating expenses, real property taxes, property management fees and income taxes. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

|                                                                                      |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
|                                                                                      |   | 2010                             |   |   | 2009                            |   |   | 2010 |   |   | 2009 |   |
|                                                                                      |   | (In thousands)                   |   |
| Revenues:                                                                                 |   |                             |   |   |                            |   |   |   |   |   |   |   |
| Rental revenue                                                                            |   | $                                | -      |   |                            | $      | 3,880 |   |   | $ | 3,740 |   |   | $ | 10,433 |   |
| Other revenue                                                                             |   |                             | -      |   |                            |   | - |   |   |   | - |   |   |   | - |   |
| Total revenues                                                                            |   |                             | -      |   |                            |   | 3,880 |   |   |   | 3,740 |   |   |   | 10,433 |   |
| Expenses:                                                                                 |   |                             |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Property operating expenses                                                               |   |                             | 31     |   |                            |   | 46 |   |   |   | 444 |   |   |   | 204 |   |
| Real property taxes                                                                       |   |                             | -      |   |                            |   | 578 |   |   |   | 646 |   |   |   | 1,537 |   |
| Property management fees                                                                  |   |                             | -      |   |                            |   | 158 |   |   |   | 39 |   |   |   | 444 |   |
| Depreciation and amortization                                                             |   |                             | -      |   |                            |   | 1,674 |   |   |   | 1,123 |   |   |   | 4,544 |   |
| Total expenses                                                                            |   |                             | 31     |   |                            |   | 2,456 |   |   |   | 2,252 |   |   |   | 6,729 |   |
| Income (loss) from discontinued operations before interest income, taxes and gain on sale |   |                             | (31    | )      |                            |   | 1,424 |   |   |   | 1,488 |   |   |   | 3,704 |   |
| Interest income                                                                           |   |                             | 7      |   |                            |   | 16 |   |   |   | 89 |   |   |   | 44 |   |
| Income taxes                                                                              |   |                             | (2     | )      |                            |   | - |   |   |   | (495 | ) |   |   | - |   |
| Income (loss) from discontinued operations before gain on sale                            |   |                             | (26    | )      |                            |   | 1,440 |   |   |   | 1,082 |   |   |   | 3,748 |   |
| Gain on sale of properties                                                                |   |                             | -      |   |                            |   | - |   |   |   | 22,537 |   |   |   | - |   |
| Income from discontinued operations                                                       |   | $                                | (26    | )      |                            | $      | 1,440 |   |   | $ | 23,619 |   |   | $ | 3,748 |   |

----

|   | RESULTS FOR OUR INDIRECTLY-OWNED PROPERTIES |
|--------|---------------------------------------------|

| Other Corporate-level Activities                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      The tables below provide detail relating to our asset management and acquisition fees and general and administrative expenses for the three and nine months ended September 30, 2010 and 2009.  All amounts in thousands, except percentages: |

|                                  |   | Three Months Ended September 30, |        | Change     |   |
|---------------------------------------|--------|----------------------------------|-------------|------------|--------|
|                                  |   | 2010                        |        | 2009  |   | $ |   | % |   |
|                                  |   |                             |        |       |   |   |   |   |   |
| Asset management and acquisition fees |   | $                                | 6,938  |       | $      | 7,354  |   | $ | (416) |   |   | (5.7) | % |
| General and administrative expenses   |   | $                                | 1,417  |       | $      | 1,247  |   | $ | 170  |   |   | 13.6  | % |

----

|                                  |   | Nine Months Ended September 30, |         | Change     |   |
|---------------------------------------|--------|---------------------------------|--------------|------------|--------|
|                                  |   | 2010                       |         | 2009  |   | $ |   | % |   |
|                                  |   |                            |         |       |   |   |   |   |   |
| Asset management and acquisition fees |   | $                               | 22,215  |       | $      | 20,466  |   | $ | 1,749  |   |   | 8.5  | % |
| General and administrative expenses   |   | $                               | 5,206   |       | $      | 4,330  |   | $ | 876  |   |   | 20.2  | % |

----

|                                                                                               |   | Three Months Ended September 30, |               | Nine Months Ended September 30, |
|----------------------------------------------------------------------------------------------------|--------|----------------------------------|--------------------|---------------------------------|
| 2010                                                                                          |   | 2009                        | 2010          |                            | 2009  |
| Net income (loss)                                                                                  |   | $                                |  (28,302)     |                            | $ |  (25,789) |   | $ |  (49,657) |   | $ |  1,565  |
| Adjustments:                                                                                       |   |                             |               |                            |   |   |   |   |   |   |   |   |
|      Depreciation and amortization (1)                                    |   |                             |  28,380  |                            |   |  31,859  |   |   |  84,627  |   |   |  94,647  |
|      (Gain) loss on derivative instruments (2)                            |   |                             |  15,441  |                            |   |  11,701  |   |   |  45,669  |   |   |  (35,090) |
|      Participation interest expense (3)                                   |   |                             |  3,179   |                            |   |  3,708  |   |   |  10,920  |   |   |  8,630  |
|      Impairment on land parcel (4)                                        |   |                             |  811     |                            |   |  3,415  |   |   |  811  |   |   |  3,415  |
|      Other components of revenues and expenses (5)                        |   |                             |  (3,947)      |                            |   |  (4,133) |   |   |  (7,354) |   |   |  (12,251) |
|      Master lease rents (6)                                               |   |                             |  -       |                            |   |  -  |   |   |  -  |   |   |  1,200  |
|      Gain on sale of investment property (7)                              |   |                             |  -       |                            |   |  -  |   |   |  (22,537) |   |   |  -  |
|      Acquisition fees (8)                                                 |   |                             |  -       |                            |   |  -  |   |   |  -  |   |   |  1,160  |
|     Adjustments to equity in losses from unconsolidated entities, net (9) |   |                             |  9,560   |                            |   |  10,264  |   |   |  18,368  |   |   |  32,202  |
|      Adjustments for noncontrolling interests (10)                        |   |                             |  (917)        |                            |   |  (964) |   |   |  (2,822) |   |   |  (2,856) |
| Modified Funds from OperationsAttributable to Common Shareholders                                  |   | $                                |  24,205  |                            | $ |  30,061  |   | $ |  78,025  |   | $  |  92,622  |
|                                                                                               |   |                             |               |                            |   |   |   |   |   |   |   |   |
| Modified Funds from Operations Per Common Share                                               |   | $                                | 0.11          |                            | $ | 0.14  |   | $ | 0.36  |   | $ | 0.45  |
| Weighted Average Shares Outstanding                                                                |   |                             | 221,649       |                            |   | 210,298  |   |   | 219,548  |   |   | 205,325  |

| 1 | )  | Represents the depreciation and amortization of various real estate assets.  Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that such depreciation and amortization may be of limited relevance in evaluating current operating performance and, as such, these items are excluded from our determination of MFFO. This amount includes $1.7 million of depreciation and amortization related to discontinued operations for the three months ended September 30, 2009. This amount includes $1.1 million and $4.5 million of depreciation and amortization related to discontinued operations for the nine months ended September 30, 2010 and 2009, respectively. |
|---|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | )  | Represents components of net income (loss) related to the estimated changes in the values of our interest rate swap derivatives.  We have excluded these changes in value from our evaluation of the operating performance of the Company and MFFO because we expect to hold the underlying instruments to their maturity and accordingly the interim gains or losses will remain unrealized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 3 | )  | Represents the portion of the acquisition and asset management fees that are paid in equity, which we expect will be settled in the future using proceeds from the sale of properties or other non-operating sources, and which we therefore do not consider in evaluating the operating performance of the Company and determining MFFO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 4 | )       | Represents an impairment charge recorded in the third quarter of 2009 in accordance with the Property, Plant and Equipment topic of the FASB Accounting Standards Codification. Although such charges are included in the calculation of net income (loss), we have excluded them from MFFO because we believe doing so more appropriately presents the operating performance of our real estate investments on a comparative basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 5 | )       | Includes the following components of revenues and expenses that we do not consider in evaluating the operating performance of the Company and determining MFFO for the three and nine months ended September 30, 2010 and 2009 (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                         |   | Three Months Ended September 30, |        | Nine Months Ended September 30, |
|----------------------------------------------|--------|----------------------------------|-------------|---------------------------------|
| 2010                                    |   | 2009                        | 2010   |                            | 2009  |
| Straight-line rent adjustment (a)            |   | $                                | (2,934)     |                            | $ | (2,633) |   | $ | (5,635) |   | $ | (7,884) |
| Amortization of lease incentives (b)         |   |                             | 2,237  |                            |   | 1,302  |   |   | 5,983  |   |   | 3,837  |
| Amortization of out-of-market leases (b)     |   |                             | (4,164)     |                            |   | (3,789) |   |   | (10,516) |   |   | (11,042) |
| Amortization of deferred financing costs (b) |   |                             | 701    |                            |   | 772  |   |   | 2,173  |   |   | 2,032  |
| Other                                        |   |                             | 213    |                            |   | 215  |   |   | 641  |   |   | 806  |
|                                         |   | $                                | (3,947)     |                            | $ | (4,133) |   | $ | (7,354) |   | $ | (12,251) |

|   |   | a | )  | Represents the adjustments to rental revenue as required by GAAP to recognize minimum lease payments on a straight-line basis over the respective lease terms.  We have excluded these adjustments from our evaluation of the operating performance of the Company and in determining MFFO because we believe that the rent that is billable during the current period is a more relevant measure of the Company’s operating performance for such period. |
|--------|--------|---|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|         |   | b             | )                                                                                                                                                                                                                                                                                                                                                 | Represents the amortization of lease incentives, out-of-market leases and deferred financing costs.  As stated in Note 1 above, historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that such amortization may be of limited relevance in evaluating current operating performance and, as such, these items are excluded from our determination of MFFO. |
|--------------|--------|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | 6      | )             | Includes master lease rents related to master leases entered into in conjunction with certain asset acquisitions. In accordance with GAAP, these rents are not included in rental revenue; however, we consider this rent in evaluating the operating performance of the Company and determining MFFO.                                                 |
|    | 7      | )   | Represents the gain on disposition of our real estate investments. Although this gain is included in the calculation of net income (loss), we have excluded it from MFFO because we believe doing so more appropriately presents the operating performance of our real estate investments on a comparative basis.   |
|         | 8      | )   | Represents acquisition fees paid to our Advisor that are expensed in our condensed consolidated statements of operations. We fund such costs with proceeds from our offering and acquisition-related indebtedness, and therefore do not consider these expenses in evaluating the operating performance of the Company and determining MFFO. |
|         | 9      | )        | Includes adjustments to equity in losses of unconsolidated entities, net, similar to those described in Notes 1, 4, 5 and 7 above for our unconsolidated entities, which are necessary to convert the Company's share of income (loss) from unconsolidated entities to MFFO.                                                                      |
|         | 10     | )             | Includes income attributable to noncontrolling interests and all adjustments to eliminate the noncontrolling interests’ share of the adjustments to convert the Company’s net income (loss) to MFFO.                                                                                                                                       |

| ·   | Pursuant to the terms of the Grocery Anchored Portfolio joint venture agreement, for the three months ended September 30, 2010 and 2009, we received distributions of approximately $279,000 and $428,000 in excess of our pro-rata share of the joint venture’s MFFO, respectively. For the nine months ended September 30, 2010 and 2009, we received distributions of $1.2 million and $1.1 million in excess of our pro-rata share of the joint venture’s MFFO, respectively. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 22, 2010, we sold Distribution Park Araucaria, an industrial property located in Curitiba, Brazil, which we acquired in December 2008 for $33.0 million. Net proceeds from the sale after deducting transaction costs, fees and taxes were $34.6 million. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 22, 2010, we sold Distributions Park Elouveira and Vinhedo, two industrial properties located in Sao Paulo, Brazil, which we acquired in December 2008 for $83.1 million. Net proceeds from the sale after deducting transaction costs, fees and taxes were $93.3 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On May 22, 2010, the Core Fund sold 600 Lexington, an office property located in New York, New York, which it acquired in February 2004.  The Core Fund’s total cost basis in 600 Lexington was approximately $103.8 million and the net proceeds from the sale after deducting transaction costs, taxes and fees were approximately $185.9 million.  Our effective ownership in this asset on the date of sale was 11.67%. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On September 14, 2010, we sold a land parcel located in Houston, Texas, which we acquired in connection with our purchase of Williams Tower. The sales price of the land parcel was $12.8 million. Proceeds received after closing costs and fees were $11.8 million. We recorded an impairment charge upon sale of approximately $811,000 which is included in other losses in the accompanying condensed consolidated statement of operations but has been excluded from MFFO. See Note 4 above. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       |    |         |          |        |   |            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------------|----------|--------|------------|---------|--------------|---------------|-------------|--------|-----------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       |    | Total        |          |        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       |    | Number of    |          | Maximum     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       |    | Shares       |          | Number of   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       |    | Purchased as |          | Shares that |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       | Part of |         | May Yet be    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Total        |          | Average  |   | Publicly   |    | Purchased    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Number of    |          | Price    |   | Announced  |    | Under the    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  Shares |          | Paid per |   | Plans or   |    | Plans or     |
| Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Purchased    |          | Share    |   | Programs   |    | Programs (2) |
| July 1, 2010 to September 30, 2010 (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |         | 444,528  |     | $      |  9.15 |    |         | 444,528  |        |   | 1,671,297  |
|     Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |         | 444,528  |     |   |       |    |         | 444,528  |        |   |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |          |     |   |       |    |         |          |        |   |            |
| (1) All shares were redeemed on July 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (2) Our share redemption program is currently limited to requests made in connection with the death or disability of a stockholder. If we determine to redeem shares, we redeem shares on a quarterly basis and such redemptions will be limited to the lesser of the amount required to redeem 10% of the shares outstanding as of the same date in the prior calendar year or the amount of proceeds received from our dividend reinvestment plan in the quarter prior to the quarter in which the redemption request was received. This amount represents the number of shares available for redemption on October 1, 2010. For more information regarding our share redemption program, please see Item 5 of our 2009 Annual Report on Form 10-K. |

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|              |   | HINES REAL ESTATE INVESTMENT TRUST, INC. |
|-------------------|--------|------------------------------------------|
|              |   |                                     |   |   |
| November 12, 2010 |   | By:                                      | /s/ CHARLES N. HAZEN |   |
|              |   |                                     | Charles N. Hazen |   |
|              |   |                                     | President and Chief Executive Officer |   |
|              |   |                                     |   |   |
|              |   |                                     |   |   |
| November 12, 2010 |   | By:                                      | s/ SHERRI W. SCHUGART |   |
|              |   |                                     | Sherri W. Schugart |   |
|              |   |                                     | Chief Financial Officer |   |
|              |   |                                     |   |   |
|              |   |                                     |   |   |

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| Exhibit No. |   |   |   |   | Description |
|-------------|--------|--------|--------|--------|-------------|
|        | 3.1    |   |   |   | —     |   | Second Amended and Restated Articles of Incorporation of Hines Real Estate Investment Trust, Inc. (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K on July 13, 2007 and incorporated by reference herein). |
|        | 3.2    |   |   |   | —     |   | Second Amended and Restated Bylaws of Hines Real Estate Investment Trust, Inc. (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K on August 3, 2006 and incorporated by reference herein). |
|        | 10.82  |   |   |   |        |   | Advisory Agreement among Hines REIT Properties, L.P., Hines Advisors Limited Partnership and Hines Real Estate Investment Trust, Inc., dated July 1, 2010 (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K on July 8, 2010 and incorporated by reference herein). |
|        | 31.1   | *      |   |   | —     |   | Certification. |
|        | 31.2   | *      |   |   | —     |   | Certification. |
|        | 32.1   | *      |   |   | —     |   | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit is furnished to the SEC and shall not be deemed to be “filed.” |

| * | Filed herewith |
|---|----------------|

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