| State of Maryland                        |   | 52-2258674          |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction of          |   | (I.R.S. Employer    |
| Incorporation or organization)           |   | Identification No.) |
|                                     |   |                |
| 2401 Fountain View, Suite 510            |   |                |
| Houston, Texas 77057                     |   | 77057               |
| (Address of principal executive offices) |   | (Zip Code)          |

| (713) 706-6200                                             |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

|                                                                         |
|-----------------------------------------------------------------------------------|
| (Former name, former address and former fiscal year, if changed since last report |

| Large accelerated filer  ̈ | Accelerated filer  ̈ | Non-accelerated filer  ̈ | Smaller reporting company þ |
|-------------------------------------|-------------------------------|-----------------------------------|---------------------------------------|

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|    |                                                                                                           | Page No. |
|---------|----------------------------------------------------------------------------------------------------------------|----------|
| PART I  | FINANCIAL INFORMATION                                                                                          |     |
|    |                                                                                                           |     |
| Item 1  | Financial Statements                                                                                           | 3        |
|    | Consolidated Condensed Balance Sheets at March 31, 2011 (unaudited) and December 31, 2010                      | 3        |
|    | Consolidated Condensed Statements of Operations for the three months ended March 31, 2011 and 2010 (unaudited) | 4        |
|    | Consolidated Statement of Equity for the three months ended March 31, 2011 (unaudited)                         | 5        |
|    | Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (unaudited) | 6        |
|    | Notes to Consolidated Condensed Financial Statements                                                           | 7        |
| Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                    | 19       |
| Item 4  | Controls and Procedures                                                                                        | 26       |
|    |                                                                                                           |     |
| PART II | OTHER INFORMATION                                                                                              |     |
|    |                                                                                                           |     |
| Item 1  | Legal Proceedings                                                                                              | 26       |
| Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds                                                    | 26       |
| Item 5  | Exhibits                                                                                                       | 26       |

----

|                                                                                                                                                                         |   | March 31, 2011 |    |   | December 31, 2010 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|-----------------------------|--------|
| ASSETS                                                                                                                                                                       |   |                     |    |   |                        |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |
| Real estate held for investment (includes $407,851 and $381,354 from consolidated Variable Interest Entities (“VIE’s”), respectively)                      |   | $                        | 617,141 |   |                        | $      | 646,255 |   |
| Accumulated depreciation (includes $12,879 and $8,446 from consolidated VIE’s, respectively)                                                                           |   |                     | (75,155 | )      |                        |   | (94,090 | ) |
| Real estate held for investment, net (includes $394,972 and $372,908 from consolidated VIE’s, respectively)                                                            |   |                     | 541,986 |   |                        |   | 552,165 |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |   |   |
| Real estate held for sale                                                                                                                                                    |   |                     | 30,588  |   |                        |   | - |   |
| Cash and cash equivalents                                                                                                                                                    |   |                     | 1,003   |   |                        |   | 2,003 |   |
| Restricted cash (includes $4,739 and $4,016 from consolidated VIE’s, respectively)                                                                                     |   |                     | 5,731   |   |                        |   | 5,008 |   |
| Tenant and other receivables, net of allowance for doubtful accounts of $401 and $421, respectively (includes $2,514 and $1,515 from consolidated VIE’s, respectively) |   |                     | 3,545   |   |                        |   | 2,403 |   |
| Deferred rents receivable                                                                                                                                                    |   |                     | 2,457   |   |                        |   | 2,331 |   |
| Purchased intangibles subject to amortization                                                                                                                                |   |                     | 8,701   |   |                        |   | 9,060 |   |
| Deferred tax asset                                                                                                                                                           |   |                     | 15,247  |   |                        |   | 14,083 |   |
| Goodwill                                                                                                                                                                     |   |                     | 4,003   |   |                        |   | 4,003 |   |
| Investment in management company                                                                                                                                             |   |                     | 4,000   |   |                        |   | 4,000 |   |
| Investments in unconsolidated real estate assets from related parties                                                                                                        |   |                     | 173     |   |                        |   | 194 |   |
| Notes receivable from related parties                                                                                                                                        |   |                     | 2,000   |   |                        |   | 2,000 |   |
| Interest receivable from related parties                                                                                                                                     |   |                     | 272     |   |                        |   | 272 |   |
| Accounts receivable from related parties                                                                                                                                     |   |                     | 262     |   |                        |   | 262 |   |
| Accounts receivable from Evergreen                                                                                                                                           |   |                     | 414     |   |                        |   | 414 |   |
| Prepaid and other assets, net (includes $6,195 and $8,858 from consolidated VIE’s, respectively)                                                                       |   |                     | 17,400  |   |                        |   | 20,164 |   |
| Total Assets                                                                                                                                                                 |   | $                        | 637,782 |   |                        | $      | 618,362 |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |   |   |
| LIABILITIES AND EQUITY                                                                                                                                                       |   |                     |    |   |                        |   |   |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |   |   |
| Liabilities:                                                                                                                                                                 |   |                     |    |   |                        |   |   |   |
| Notes payable (includes $286,628 and $268,776 from consolidated VIE’s, respectively)                                                                                   |   | $                        | 455,405 |   |                        | $      | 482,819 |   |
| Liabilities related to real estate held for sale                                                                                                                             |   |                     | 48,914  |   |                        |   | - |   |
| Accounts payable (includes $4,287 and $5,734 from consolidated VIE’s, respectively)                                                                                    |   |                     | 13,414  |   |                        |   | 16,292 |   |
| Accounts payable to related parties                                                                                                                                          |   |                     | 286     |   |                        |   | 286 |   |
| Accrued and other liabilities (includes $2,344 and $1,809 from consolidated VIE’s, respectively)                                                                       |   |                     | 10,945  |   |                        |   | 12,154 |   |
| Total Liabilities                                                                                                                                                            |   |                     | 528,964 |   |                        |   | 511,551 |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |   |   |
| Commitments and Contingencies (Note10):                                                                                                                                      |   |                     |    |   |                        |   |   |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |   |   |
| Equity:                                                                                                                                                                      |   |                     |    |   |                        |   |   |   |
| American Spectrum Realty, Inc. stockholders’ deficit:                                                                                                                  |   |                     |    |   |                        |   |   |   |
| Preferred stock                                                                                                                                                              |   |                     | 1       |   |                        |   | 1 |   |
| Common stock                                                                                                                                                                 |   |                     | 34      |   |                        |   | 34 |   |
| Additional paid-in capital                                                                                                                                                   |   |                     | 49,260  |   |                        |   | 49,067 |   |
| Accumulated deficit                                                                                                                                                          |   |                     | (62,548 | )      |                        |   | (60,509 | ) |
| Treasury stock, at cost                                                                                                                                                      |   |                     | (3,095  | )      |                        |   | (3,095 | ) |
| Total American Spectrum Realty, Inc. stockholders’ deficit                                                                                                             |   |                     | (16,348 | )      |                        |   | (14,502 | ) |
| Non-controlling interests                                                                                                                                                    |   |                     | 125,166 |   |                        |   | 121,313 |   |
| Total Equity                                                                                                                                                                 |   |                     | 108,818 |   |                        |   | 106,811 |   |
|                                                                                                                                                                         |   |                     |    |   |                        |   |   |   |
| Total Liabilities and Equity                                                                                                                                                 |   | $                        | 637,782 |   |                        | $      | 618,362 |   |

----

|                                                                                                          |   | Three Months Ended March 31, |      |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                                                                          |   | 2011                                             |      |   | 2010 (Restated) |   |
| REVENUES:                                                                                                     |   |                                             |      |   |   |   |
| Rental revenue                                                                                                |   | $                                                | 17,741    |   |   | $ | 6,538 |   |
| Third party management and leasing revenue                                                                    |   |                                             | 1,036     |   |   |   | 964 |   |
| Interest and other income                                                                                     |   |                                             | 139       |   |   |   | 64 |   |
| Total revenues                                                                                                |   |                                             | 18,916    |   |   |   | 7,566 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| EXPENSES:                                                                                                     |   |                                             |      |   |   |   |   |   |
| Property operating expense                                                                                    |   |                                             | 6,558     |   |   |   | 3,153 |   |
| Corporate general and administrative                                                                          |   |                                             | 2,517     |   |   |   | 1,622 |   |
| Depreciation and amortization                                                                                 |   |                                             | 7,512     |   |   |   | 2,930 |   |
| Interest expense                                                                                              |   |                                             | 8,050     |   |   |   | 2,731 |   |
| Impairment expense                                                                                            |   |                                             | 150       |   |   |   | - |   |
| Total expenses                                                                                                |   |                                             | 24,787    |   |   |   | 10,436 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Loss from continuing operations before deferred income tax benefit                                            |   |                                             | (5,871    | ) |   |   | (2,870 | ) |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Deferred income tax benefit                                                                                   |   |                                             | 939       |   |   |   | 1,084 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Loss from continuing operations                                                                               |   |                                             | (4,932    | ) |   |   | (1,786 | ) |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Discontinued operations:                                                                                      |   |                                             |      |   |   |   |   |   |
| Loss from operations                                                                                          |   |                                             | (787      | ) |   |   | (153 | ) |
| Gain on sale of discontinued operations                                                                       |   |                                             | -         |   |   |   | 4,315 |   |
| Income tax benefit (expense)                                                                                  |   |                                             | 188       |   |   |   | (1,522 | ) |
| (Loss) income from discontinued operations                                                                    |   |                                             | (599      | ) |   |   | 2,640 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Net (loss) income, including non-controlling interests                                                        |   | $                                                | (5,531    | ) |   | $ | 854 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Plus:  Net income (loss) attributable to non-controlling interests                                  |   |                                             | 3,492     |   |   |   | (434 | ) |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Net (loss) income attributable to American Spectrum Realty, Inc.                                              |   |                                             | (2,039    | ) |   |   | 420 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Preferred stock dividend                                                                                      |   |                                             | (60       | ) |   |   | (60 | ) |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders                          |   | $                                                | (2,099    | ) |   | $ | 360 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Basic and diluted per share data:                                                                             |   |                                             |      |   |   |   |   |   |
| Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders            |   | $                                                | (0.58     | ) |   | $ | (0.51 | ) |
| (Loss) income from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders |   |                                             | (0.11     | ) |   |   | 0.66 |   |
| Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders                          |   | $                                                | (0.69     | ) |   | $ | 0.15 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Basic and diluted weighted average shares used                                                                |   |                                             | 2,961,294 |   |   |   | 2,854,196 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Amounts attributable to American Spectrum Realty, Inc. common stockholders:                                   |   |                                             |      |   |   |   |   |   |
| Loss from continuing operations                                                                               |   | $                                                | (1,773    | ) |   | $ | (1,530 | ) |
| (Loss) income from discontinuing operations                                                                   |   | $                                                | (326      | ) |   | $ | 1,890 |   |
| Net (loss) income                                                                                             |   | $                                                | (2,099    | ) |   | $ | 360 |   |

----

|                                          |   | PreferredShares |   |   | Common Shares |   |      | Non-controllingInterests |   |   | Pre-ferredStock |   |   | CommonStock |   |   | Additional Paid-In Capital |   |   | Accum-ulatedDeficit |   |   | TreasuryStock |   |   | TotalEquity |    |
|-----------------------------------------------|--------|-----------------|--------|--------|--------------------|--------|-----------|--------------------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|--------------------------------------|--------|--------|---------------------|--------|--------|---------------|--------|--------|-------------|---------|
|                                          |   |            |   |   |               |   |      |                     |   |   |            |   |   |        |   |   |                                 |   |   |                |   |   |          |   |   |        |    |
| Balance, December 31, 2010 (unaudited)        |   |            | 55,172 |   |               |   | 3,422,706 |                     |   | $      | 121,313         |   |   | $           | 1      |   |                                 | $      | 34     |                |   | $      | 49,067        |   |   |        | (60,509 | ) |   | $ | (3,095 | ) |   | $ | 106,811 |   |
| Consolidation of VIE’s                  |   |            |   |   |               |   |      |                     |   |   | 9,241           |   |   |        |   |   |                                 |   |   |                |   |   |          |   |   |        |    |   |   |   |   |   |   |   | 9,241 |   |
| De-consolidation of VIE                       |   |            |   |   |               |   |      |                     |   |   | (145            | )      |   |        |   |   |                                 |   |   |                |   |   |          |   |   |        |    |   |   |   |   |   |   |   | (145 | ) |
| Distributions to non-controlling interests    |   |            |   |   |               |   |      |                     |   |   | (1,797          | )      |   |        | -      |   |                                 |   | -      |                |   |   | -             |   |   |        | -       |   |   |   | - |   |   |   | (1,797 | ) |
| Contributions from non- controlling interests |   |            |   |   |               |   |      |                     |   |   | 46              |   |   |        | -      |   |                                 |   | -      |                |   |   | -             |   |   |        | -       |   |   |   | - |   |   |   | 46 |   |
| Non-controlling interests share of loss       |   |            |   |   |               |   |      |                     |   |   | (3,492          | )      |   |        | -      |   |                                 |   | -      |                |   |   | -             |   |   |        | -       |   |   |   | - |   |   |   | (3,492 | ) |
| Preferred stock dividends                     |   |            |   |   |               |   |      |                     |   |   | -               |   |   |        | -      |   |                                 |   | -      |                |   |   | (60           | )      |   |        | -       |   |   |   | - |   |   |   | (60 | ) |
| Stock-based compensation                      |   |            |   |   |               |   | 15,000    |                     |   |   | -               |   |   |        | -      |   |                                 |   | -      |                |   |   | 253           |   |   |        | -       |   |   |   | - |   |   |   | 253 |   |
| Net loss                                      |   |            |   |   |               |   |      |                     |   |   | -               |   |   |        | -      |   |                                 |   | -      |                |   |   | -             |   |   |        | (2,039  | ) |   |   | - |   |   |   | (2,039 | ) |
| Balance, March 31, 2011 (unaudited)           |   |            | 55,172 |   |               |   | 3,437,706 |                     |   | $      | 125,166         |   |   | $           | 1      |   |                                 | $      | 34     |                |   | $      | 49,260        |   |   | $           | (62,548 | ) |   | $ | (3,095 | ) |   | $ | 108,818 |   |

----

|                                                                                     |   | Three Months Ended March 31, |   |
|------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                     |   | 2011                                             |   |   | 2010 (Restated) |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                                             |   |   |   |   |
| Net (loss) income                                                                        |   | $                                                | (5,531 | ) |   | $ | 854 |   |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: |   |                                             |   |   |   |   |   |   |
| Depreciation and amortization                                                            |   |                                             | 8,225  |   |   |   | 3,769 |   |
| Impairment expense                                                                       |   |                                             | 150    |   |   |   | - |   |
| Gain on sale of real estate asset                                                        |   |                                             | -      |   |   |   | (4,315 | ) |
| Income tax (benefit) expense                                                             |   |                                             | (1,127 | ) |   |   | 437 |   |
| Deferred rental income                                                                   |   |                                             | (131   | ) |   |   | (107 | ) |
| Stock-based compensation expense                                                         |   |                                             | 253    |   |   |   | 26 |   |
| Changes in operating assets and liabilities:                                             |   |                                             |   |   |   |   |   |   |
| Increase in tenant and other receivables                                                 |   |                                             | (937   | ) |   |   | (798 | ) |
| Increase (decrease) in accounts payable                                                  |   |                                             | 292    |   |   |   | 761 |   |
| Decrease in prepaid and other assets                                                     |   |                                             | 1,932  |   |   |   | 1,683 |   |
| Increase (decrease) in accrued and other liabilities                                     |   |                                             | 17     |   |   |   | (1,801 | ) |
| Change in restricted cash                                                                |   |                                             | (518   | ) |   |   | - |   |
| Net cash provided by operating activities:                                               |   |                                             | 2,625  |   |   |   | 509 |   |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                                             |   |   |   |   |   |   |
| Proceeds received from sales of real estate assets                                       |   |                                             | -      |   |   |   | 10,166 |   |
| Capital improvements to real estate assets                                               |   |                                             | (486   | ) |   |   | (1,044 | ) |
| Advance to third party                                                                   |   |                                             | -      |   |   |   | (200 | ) |
| Net cash (used in) provided by investing activities:                                     |   |                                             | (486   | ) |   |   | 8,922 |   |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                                             |   |   |   |   |   |   |
| Proceeds from borrowings                                                                 |   |                                             | 3,300  |   |   |   | 1,250 |   |
| Repayment of borrowings – property sales                                           |   |                                             | -      |   |   |   | (5,317 | ) |
| Repayment of borrowings – scheduled payments                                       |   |                                             | (1,309 | ) |   |   | (580 | ) |
| Repayment of borrowings – other                                                    |   |                                             | (3,467 | ) |   |   | - |   |
| Acquisition of non-controlling interest in the operating partnership                     |   |                                             | -      |   |   |   | (10 | ) |
| Dividend payments to preferred stockholders                                              |   |                                             | (17    | ) |   |   | (43 | ) |
| Contributions from non-controlling interests                                             |   |                                             | 46     |   |   |   | - |   |
| Distributions to non-controlling interests                                               |   |                                             | (1,692 | ) |   |   | (135 | ) |
| Net cash used in financing activities:                                                   |   |                                             | (3,139 | ) |   |   | (4,835 | ) |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| (Decrease) increase in cash and cash equivalents                                         |   |                                             | (1,000 | ) |   |   | 4,596 |   |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                           |   |                                             | 2,003  |   |   |   | 462 |   |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                 |   | $                                                | 1,003  |   |   | $ | 5,058 |   |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                  |   |                                             |   |   |   |   |   |   |
| Conversion of operating partnership units to common stock                                |   | $                                                | -      |   |   | $ | 211 |   |
| Issuance of operating partnership units in connection with Evergreen acquisition         |   |                                             | -      |   |   |   | 8,000 |   |
| Financing in connection with Evergreen acquisition                                       |   |                                             | -      |   |   |   | 9,500 |   |
| Conversion of accounts payable to notes payable                                          |   |                                             | 842    |   |   |   | - |   |
|                                                                                     |   |                                             |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                       |   |                                             |   |   |   |   |   |   |
| Cash paid for interest                                                                   |   | $                                                | 8,223  |   |   | $ | 3,931 |   |
| Cash paid for income taxes                                                               |   |                                             | 2      |   |   |   | 40 |   |

----

|   | — | An opportunistic yet disciplined acquisition strategy that focuses on mid-tier multi-tenant real estate in locations that allow us to capitalize on our existing management infrastructure currently servicing our own properties and that of our third party clients; coupled with, |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | — | Organic (internally developed opportunities) and in-organic (acquisition generated opportunities) growth of our third party property management contracts. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | the amount of any gain or loss recognized as the result of removal of the VIE’s assets, liabilities, and equity from our balance sheet; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the portion of any gain or loss related to the re-measurement to fair value of any retained investment in the VIE being de-consolidated; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the financial statement line item where the gain or loss relating to de-consolidation of the VIE is recognized; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | the nature of our continued involvement (if any) with the former VIE or the entity acquiring the VIE after de-consolidation, and; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | whether the de-consolidation transaction occurs with a related party or if the transaction will cause the VIE to be a related party after de-consolidation. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   | March 31,      |   |
|--------------------------------------------------|--------|---------------------|--------|
|                                             |   | 2011                |   |
|                                             |   | (In thousands) |   |
|                                             |   | (Unaudited)         |   |
| Real Estate                                      |   | $                   | 29,391 |   |
| Other                                            |   |                | 1,197  |   |
| Real estate held for sale                        |   | $                   | 30,588 |   |
|                                             |   |                |   |   |
| Note Payable                                     |   | $                   | 45,000 |   |
| Accounts payable                                 |   |                | 2,663  |   |
| Accrued and other liabilities                    |   |                | 1,251  |   |
| Liabilities related to real estate held for sale |   | $                   | 48,914 |   |

|                                                                                   |   | Quarter Ended  |   |
|----------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                   |   | March 31,      |   |
|                                                                                   |   | 2011                |   |   | 2010 |   |
|                                                                                   |   | (In thousands) |   |
|                                                                                   |   | (unaudited)         |   |
| Rental Revenue                                                                         |   | $                   | 976    |   |   | $ | 2,127 |   |
| Expenses (1)                                                                           |   |                | (1,763 | ) |   |   | (2,280 | ) |
| Loss from discontinued operations before gain on sale and income tax benefit (expense) |   |                | (787   | ) |   |   | (153 | ) |
| Gain on sale of discontinued operations                                                |   |                | -      |   |   |   | 4,315 |   |
| Income tax benefit (expense)                                                           |   |                | 188    |   |   |   | (1,522 | ) |
| (Loss) income from discontinued operations                                             |   | $                   | (599   | ) |   | $ | 2,640 |   |

|   | (1) | Includes interest expense of approximately $0.7 million and $0.8 million for the three months ended March 31, 2011 and March 31, 2010, respectively.  Mortgage debt related to the property included in discontinued operations was individually secured.  As such, interest expense was based on the property’s respective debt. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Total revenue                                             |   | $      | 8,441   |   |
|-----------------------------------------------------------|--------|--------|---------|--------|
| Total expenses                                            |   |   | (11,523 | )      |
|                                                      |   |   |    |   |
| Net loss before non-controlling interest and deferred tax |   |   | (3,082  | )      |
|                                                      |   |   |    |   |
| Deferred tax benefit                                      |   |   | 1,084   |   |
|                                                      |   |   |    |   |
| Income from discontinued operations                       |   |   | 2,640   |   |
|                                                      |   |   |    |   |
| Non-controlling interest                                  |   |   | (222    | )      |
|                                                      |   |   |    |   |
| Net income                                                |   | $      | 420     |   |

| Total revenue                                               |   | $      | 532    |   |
|-------------------------------------------------------------|--------|--------|--------|--------|
| Total expenses                                              |   |   | (526   | )      |
|                                                        |   |   |   |   |
| Net income before non-controlling interest and deferred tax |   |   | 6      |   |
|                                                        |   |   |   |   |
| Deferred tax benefit                                        |   |   | 0      |   |
|                                                        |   |   |   |   |
| Non-controlling interest                                    |   |   | (6     | )      |
|                                                        |   |   |   |   |
| Net income                                                  |   |   | 0      |   |

----

|                                            |   | March 31, |    |   |              |   |
|-------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| Variable interest entity amounts |   | 2011           |    |   | December 31, |   |
|                                            |   | (unaudited)    |    |   |  2010        |   |
| Assets                                          |   |           |    |
| Restricted Cash                                 |   | $              | 4,739   |   |              | $      | 4,016 |   |
| Receivables                                     |   |           | 2,514   |   |              |   | 1,515 |   |
| Fixed Assets Net of depreciation                |   |           | 394,972 |   |              |   | 372,908 |   |
| Other Assets                                    |   |           | 6,195   |   |              |   | 8,858 |   |
| Total Assets                                    |   | $              | 408,420 |   |              | $      | 387,297 |   |
|                                            |   |           |    |   |              |   |   |   |
| Liabilities                                     |   |           |    |   |              |   |   |   |
| Accounts payable                                |   |           | 4,287   |   |              |   | 5,734 |   |
| Notes payable                                   |   |           | 286,628 |   |              |   | 268,776 |   |
| Other liabilities                               |   |           | 2,344   |   |              |   | 1,809 |   |
| Total liabilities                               |   | $              | 293,259 |   |              | $      | 276,319 |   |
|                                            |   |           |    |   |              |   |   |   |
| Variable interest entity net carrying amount    |   | $              | 115,161 |   |              | $      | 110,978 |   |

----

----

|                                                   |   |                                   |   | March 31, 2011 |    |   | December 31, 2010 |   |
|--------------------------------------------------------|--------|----------------------------------------|--------|--------------------------|---------|--------|-----------------------------|--------|
|  Property (unless otherwise noted) |   | MaturityDate                           |   | Principal Balance   |    |   | Interest Rate          |   |   | Principal Balance |   |   | Interest Rate |   |
| Fixed Rate                                             |   |                                   |   |                     |    |   |                        |   |   |   |   |   |   |   |
| Pacific Spectrum (1)                                   |   | 6/10/2010                              |   |                     | 5,191   |   |                        |   | 8.02 | % |   |   | 5,191 |   |   |   | 8.02 | % |
| Corporate – Unsecured (2)                        |   | 2/19/2011                              |   |                     | 56      |   |                        |   | 3.40 | % |   |   | 447 |   |   |   | 3.40 | % |
| Fountain View Place                                    |   | 4/29/2011                              |   |                     | 997     |   |                        |   | 10.00 | % |   |   | 1,031 |   |   |   | 10.00 | % |
| Corporate – Secured                              |   | 5/12/2011                              |   |                     | 950     |   |                        |   | 5.50 | % |   |   | 950 |   |   |   | 8.75 | % |
| Sabo Road Self Storage                                 |   | 7/31/2011                              |   |                     | 1,961   |   |                        |   | 7.42 | % |   |   | 1,974 |   |   |   | 7.42 | % |
| Bristol Bay                                            |   | 8/1/2011                               |   |                     | 6,749   |   |                        |   | 7.58 | % |   |   | 6,792 |   |   |   | 7.58 | % |
| Technology (1)                                         |   | 8/1/2011                               |   |                     | 7,091   |   |                        |   | 7.44 | % |   |   | 7,091 |   |   |   | 7.44 | % |
| Corporate – Unsecured (3)                        |   | 9/1/11                                 |   |                     | 8       |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Corporate – Secured                              |   | 9/18/2011                              |   |                     | 890     |   |                        |   | 5.50 | % |   |   | 890 |   |   |   | 8.75 | % |
| Corporate – Unsecured (3)                        |   | 9/20/11                                |   |                     | 55      |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Creekside (1)                                          |   |    12/1/2011            |   |                     | 5,747   |   |                        |   | 7.17 | % |   |   | 5,747 |   |   |   | 7.17 | % |
| Northwest Spectrum (4)                                 |   | 12/3/2011                              |   |                     | 500     |   |                        |   | 5.50 | % |   |   | 750 |   |   |   | 8.75 | % |
| Corporate – Unsecured (3)                        |   | 12/15/11                               |   |                     | 13      |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Corporate – Unsecured (5)                        |   | 1/15/2012                              |   |                     | 200     |   |                        |   | 3.20 | % |   |   | - |   |   |   | - |   |
| Corporate – Unsecured (3)                        |   | 2/15/12                                |   |                     | 47      |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Corporate – Unsecured (3)                        |   | 5/1/2012                               |   |                     | 34      |   |                        |   | 4.00 | % |   |   | 40 |   |   |   | 4.00 | % |
| Corporate – Unsecured (3)                        |   | 5/1/2012                               |   |                     | 27      |   |                        |   | - |   |   |   | 31 |   |   |   | - |   |
| 16350 Park Ten Place                                   |   | 5/11/2012                              |   |                     | 4,379   |   |                        |   | 7.45 | % |   |   | 4,402 |   |   |   | 7.45 | % |
| 16360 Park Ten Place                                   |   | 5/11/2012                              |   |                     | 3,431   |   |                        |   | 7.45 | % |   |   | 3,449 |   |   |   | 7.45 | % |
| 2855 Mangum                                            |   | 5/11/2012                              |   |                     | 2,512   |   |                        |   | 7.45 | % |   |   | 2,535 |   |   |   | 7.45 | % |
| 2855 Mangum                                            |   | 5/11/2012                              |   |                     | 1,380   |   |                        |   | 6.00 | % |   |   | 1,380 |   |   |   | 6.00 | % |
| 6430 Richmond Atrium                                   |   | 5/11/2012                              |   |                     | 2,118   |   |                        |   | 7.45 | % |   |   | 2,127 |   |   |   | 7.45 | % |
| Corporate – Unsecured                            |   | 5/31/2012                              |   |                     | 1,000   |   |                        |   | 9.50 | % |   |   | 1,000 |   |   |   | 9.50 | % |
| Southwest Pointe                                       |   | 6/1/2012                               |   |                     | 2,661   |   |                        |   | 7.33 | % |   |   | 2,671 |   |   |   | 7.33 | % |
| Corporate-Secured                                      |   | 6/15/2012                              |   |                     | 992     |   |                        |   | 4.50 | % |   |   | 992 |   |   |   | 4.50 | % |
| Corporate – Unsecured (3)                        |   | 6/30/2012                              |   |                     | 45      |   |                        |   | - |   |   |   | 51 |   |   |   | - |   |
| 16350 Park Ten Place                                   |   |    8/11/2012            |   |                     | 484     |   |                        |   | 7.45 | % |   |   | 484 |   |   |   | 7.45 | % |
| 16360 Park Ten Place                                   |   | 8/11/2012                              |   |                     | 380     |   |                        |   | 7.45 | % |   |   | 380 |   |   |   | 7.45 | % |
| Corporate – Secured                              |   | 2/1/2013                               |   |                     | 1,734   |   |                        |   | 5.50 | % |   |   | 1,736 |   |   |   | 5.50 | % |
| Corporate – Secured                              |   | 3/8/2013                               |   |                     | 820     |   |                        |   | 5.50 | % |   |   | 863 |   |   |   | 8.75 | % |
| Corporate – Unsecured (3)                        |   | 4/4/13                                 |   |                     | 66      |   |                        |   | - |   |   |   | - |   |   |   | - |   |
| Corporate – Unsecured (3)                        |   | 12/15/13                               |   |                     | 663     |   |                        |   | 9.00 | % |   |   | - |   |   |   | - |   |
| 11500 Northwest Freeway                                |   | 6/1/2014                               |   |                     | 3,987   |   |                        |   | 5.93 | % |   |   | 4,008 |   |   |   | 5.93 | % |
| 11500 Northwest Freeway                                |   |      6/1/2014 |   |                     | 290     |   |                        |   | 5.93 | % |   |   | 290 |   |   |   | 5.93 | % |
| Morenci                                                |   | 7/1/2014                               |   |                     | 1,616   |   |                        |   | 7.25 | % |   |   | 1,632 |   |   |   | 7.25 | % |
| Northwest Corporate Center (1)                         |   | 8/1/2014                               |   |                     | 5,312   |   |                        |   | 6.26 | % |   |   | 5,312 |   |   |   | 6.26 | % |
| 14741 Yorktown                                         |   | 9/1/2014                               |   |                     | 8,515   |   |                        |   | 5.32 | % |   |   | 8,545 |   |   |   | 5.32 | % |
| Corporate – Unsecured (3)                        |   | 10/1/2014                              |   |                     | 213     |   |                        |   | 7.28 | % |   |   | 220 |   |   |   | 7.28 | % |
| 8100 Washington                                        |   | 2/22/2015                              |   |                     | 2,146   |   |                        |   | 5.59 | % |   |   | 2,156 |   |   |   | 5.59 | % |
| 8300 Bissonnet (1)                                     |   | 5/1/2015                               |   |                     | 4,484   |   |                        |   | 5.51 | % |   |   | 4,484 |   |   |   | 5.51 | % |
| Corporate – Unsecured (3)                        |   | 6/1/2015                               |   |                     | 279     |   |                        |   | 5.00 | % |   |   | 282 |   |   |   | 5.00 | % |
| Corporate – Unsecured (3)                        |   | 6/1/2015                               |   |                     | 49      |   |                        |   | 5.00 | % |   |   | 52 |   |   |   | 5.00 | % |
| 2620-2630 Fountain View                                |   | 6/30/2015                              |   |                     | 5,350   |   |                        |   | 7.00 | % |   |   | 5,350 |   |   |   | 7.00 | % |
| 1501 Mockingbird                                       |   | 7/1/2015                               |   |                     | 3,175   |   |                        |   | 5.28 | % |   |   | 3,189 |   |   |   | 5.28 | % |
| 5450 Northwest Central                                 |   | 9/1/2015                               |   |                     | 2,572   |   |                        |   | 5.38 | % |   |   | 2,585 |   |   |   | 5.38 | % |
| Corporate – Unsecured (3)                        |   | 10/1/2015                              |   |                     | 25      |   |                        |   | 5.00 | % |   |   | 25 |   |   |   | 5.00 | % |
| Corporate – Unsecured (3)                        |   | 10/1/2015                              |   |                     | 88      |   |                        |   | 17.52 | % |   |   | 88 |   |   |   | 17.52 | % |
| Corporate – Secured                              |   | 12/22/2015                             |   |                     | 2,900   |   |                        |   | 5.00 | % |   |   | 2,900 |   |   |   | 5.00 | % |
| 800/888 Sam Houston Parkway                            |   | 12/29/2015                             |   |                     | 4,497   |   |                        |   | 6.25 | % |   |   | 4,528 |   |   |   | 6.25 | % |
| 2401 Fountain View                                     |   | 3/1/2016                               |   |                     | 11,899  |   |                        |   | 5.82 | % |   |   | 11,967 |   |   |   | 5.82 | % |
| 12000 Westheimer/2470 Gray Falls                       |   | 1/1/2017                               |   |                     | 7,243   |   |                        |   | 5.70 | % |   |   | 7,267 |   |   |   | 5.70 | % |
| 6420 Richmond Atrium                                   |   | 6/5/2017                               |   |                     | 6,323   |   |                        |   | 5.87 | % |   |   | 6,286 |   |   |   | 5.87 | % |
| Fountain View Place                                    |   | 4/29/2018                              |   |                     | 12,317  |   |                        |   | 6.50 | % |   |   | 12,361 |   |   |   | 6.50 | % |
| Corporate – Secured                              |   | 12/31/2019                             |   |                     | 9,380   |   |                        |   | 5.00 | % |   |   | 9,410 |   |   |   | 5.00 | % |
|                                                   |   | Subtotal                               |   | $                        | 145,841 |   |                        |   |   |   |   | $ | 145,941 |   |   |   |   |   |
| Variable Rate                                          |   |                                   |   |                     |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Beltway Industrial (6)                                 |   | 5/9/2010                               |   |                     | 17,170  |   |                        |   | 7.00 | % |   |   | 17,170 |   |   |   | 7.00 | % |
| Northwest Spectrum                                     |   | 4/19/2012                              |   |                     | 2,787   |   |                        |   | 2.90 | % |   |   | 2,820 |   |   |   | 2.90 | % |
| Windrose Plaza                                         |   | 4/19/2012                              |   |                     | 2,579   |   |                        |   | 2.90 | % |   |   | 2,612 |   |   |   | 2.90 | % |
| Corporate – Unsecured                            |   | 12/12/2013                             |   |                     | 400     |   |                        |   | 6.00 | % |   |   | 500 |   |   |   | 6.00 | % |
|                                                   |   | Subtotal                               |   | $                        | 22,936  |   |                        |   |   |   |   | $ | 23,102 |   |   |   |   |   |
| ASR Notes Payable                                      |   | Total                                  |   | $                        | 168,777 |   |                        |   |   |   |   | $ | 169,043 |   |   |   |   |   |
| Discontinued Operations – See Note 3             |   |                                   |   |                     | -       |   |                        |   |   |   |   | $ | 45,000 |   |   |   |   |   |
| VIE Notes Payable - See Note 4                         |   |                                   |   | $                        | 286,628 |   |                        |   |   |   |   |   | 268,776 |   |   |   |   |   |
| Balance sheet Notes Payable                            |   | Total                                  |   | $                        | 455,405 |   |                        |   |   |   |   | $ | 482,819 |   |   |   |   |   |

----

|                             |   | Balance at |   |
|----------------------------------|--------|-----------------|--------|
|                             |   | March 31,  |   |
| Property securing debt |   | 2011            |   |
| Spectrum                         |   | $               | 5,191  |   |
| Technology                       |   | $               | 7,091  |   |
| Creekside                        |   | $               | 5,747  |   |
| Northw est Corporate Center      |   | $               | 5,312  |   |
| Bissonnet                        |   | $               | 4,484  |   |
|                             |   | $               | 27,825 |   |

----

| Beginning balance December 31, 2010     |   |   | 9,109  |   |   |   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Issuances                               |   |   | 30     |   |   |   |   |
| Balance March 31, 2011                  |   |   | 9,139  |   |   |   |   |
|                                    |   |   |   |   |   |   |   |
| Ownership of OP Units at March 31, 2011 |   |   |   |   |   |   |   |
|                                    |   |   |   |   |   |   |   |
| ASR                                     |   |   | 5,966  |   |   |   | 65     | % |
| Others (non-controlling interests)      |   |   | 3,173  |   |   |   | 35     | % |
|                                    |   |   | 9,139  |   |   |   | 100    | % |

|                                                                                                      |   | March 31,             |   |
|-----------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|
|                                                                                                      |   | 2010                       |   |
|                                                                                                      |   | (unaudited, restated) |   |
| Net income attributable to the Company                                                                    |   | $                          | 420    |   |
| Increase in the Company’s paid-in capital on exchange of OP Units for shares of Common Stock        |   |                       | 211    |   |
| Increase in the Company's paid-in-capital on reclassification of preferred interest from temporary equity |   |                       | 370    |   |
| Change from net income attributable to the Company related to non-controlling interest transactions       |   | $                          | 1,001  |   |

----

|                                                                                                          |   | Three Months Ended March 31, |      |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                                                                          |   | 2011                                             |      |   | 2010 |   |
| Loss from continuing operations                                                                               |   | $                                                | (4,932    | ) |   | $ | (1,786 | ) |
| Net loss attributable to non-controlling interests                                                            |   |                                             | 3,219     |   |   |   | 315 |   |
| Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders            |   |                                             | (1,713    | ) |   |   | (1,471 | ) |
| Discontinued operations:                                                                                      |   |                                             |      |   |   |   |   |   |
| Loss from discontinued operations                                                                             |   |                                             | (787      | ) |   |   | (153 | ) |
| Gain on sale of discontinued operations                                                                       |   |                                             | -         |   |   |   | 4,315 |   |
| Income tax benefit (expense)                                                                                  |   |                                             | 188       |   |   |   | (1,522 | ) |
| Net loss (income) attributable to non-controlling interests                                                   |   |                                             | 273       |   |   |   | (749 | ) |
| (Loss) income from discontinued operations                                                                    |   |                                             | (326      | ) |   |   | 1,891 |   |
| Preferred stock dividend                                                                                      |   |                                             | (60       | ) |   |   | (60 | ) |
| Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders                          |   | $                                                | (2,099    | ) |   | $ | 360 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Basic and diluted per share data:                                                                             |   |                                             |      |   |   |   |   |   |
| Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders            |   | $                                                | (0.58     | ) |   | $ | (0.51 | ) |
| (Loss) income from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders |   |                                             | (0.11     | ) |   |   | 0.66 |   |
| Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders                          |   | $                                                | (0.69     | ) |   | $ | 0.15 |   |
|                                                                                                          |   |                                             |      |   |   |   |   |   |
| Basic weighted average shares used                                                                            |   |                                             | 2,961,294 |   |   |   | 2,854,196 |   |

|             |   | Three Months Ended March 31, |      |
|------------------|--------|--------------------------------------------------|-----------|
|             |   | 2011                                             |      |   | 2010 |   |
|             |   | (unaudited)                                      |      |
| Preferred shares |   |                                             | 55,172    |   |   |   | 55,172 |   |
| Stock options    |   |                                             | 58,750    |   |   |   | 58,750 |   |
| OP Units         |   |                                             | 3,172,675 |   |   |   | 2,136,760 |   |
| Total            |   |                                             | 3,286,597 |   |   |   | 2,250,682 |   |

| Three Months Ended March 31, |
|------------------------------|
| 2011                         |   |   | 2010 |   |
|  (in thousands)         |
|                         | 253 |   |   |   | 26 |   |
| $                            | 253 |   |   | $ | 26 |   |

----

|                            |   |           |   |   |                |   |   |           |   |   | Weighted        |   |
|---------------------------------|--------|----------------|--------|--------|---------------------|--------|--------|----------------|--------|--------|-----------------|--------|
|                            |   |           |   |   | Weighted            |   |   |           |   |   | Average         |   |
|                            |   | Number of |   |   | Average             |   |   |           |   |   | Grant date |   |
|                            |   | Options        |   |   | Exercise Price |   |   | Number of |   |   | Fair Value |   |
|                            |   | Outstanding    |   |   | per Share      |   |   | RSAs           |   |   | per Share  |   |
| Balances at December 31, 2010   |   |           | 58,750 |   |                | $      | 11.97  |           |   |   | 39,012          |   |   | $ | 12.86 |   |
|                            |   |           |   |   |                |   |   |           |   |   |            |   |   |   |   |   |
| Granted                         |   |           | -      |   |                | $      | -      |           |   |   | -               |   |   |   |   |   |
| Options Exercised               |   |           | -      |   |                | $      | -      |           |   |   |            |   |   |   |   |   |
| Restricted Stock Award Releases |   |           |   |   |                |   |   |           |   |   | (4,000          | )      |   | $ | 15.25 |   |
| Forfeited/Expired               |   |           | -      |   |                | $      | -      |           |   |   |            |   |   |   |   |   |
| Terminated/cancelled            |   |           | -      |   |                |   |   |           |   |   | -               |   |   |   |   |   |
| Balances at March 31, 2011      |   |           | 58,750 |   |                | $      | 11.97  |           |   |   | 35,012          |   |   | $ | 12.59 |   |

----

----

|                         |   | ASR owned |   |   | Consolidated VIE's |   |      | Third party |   |   | Total   |   |
|------------------------------|--------|----------------|--------|--------|-------------------------|--------|-----------|------------------|--------|--------|---------|--------|
|                         |   |           |   |   | Square                  |   |      |             |   |   | Square  |   |   |   |   |   | Square |   |   |   |   |   | Square |   |
| Property Type           |   | Number         |   |   | footage                 |   |      | Number           |   |   | footage |   |   | Number |   |   | footage |   |   | Number |   |   | footage |   |
| Commercial/Industrial/Retail |   |           | 29     |   |                    |   | 2,694,684 |             |   |   | 10      |   |   |   | 4,924,133 |   |   |   | 17 |   |   |   | 834,306 |   |   |   | 56 |   |   |   | 8,453,123 |   |
| Self-Storage                 |   |           | 1      |   |                    |   | 54,975    |             |   |   | 14      |   |   |   | 1,037,934 |   |   |   | 7 |   |   |   | 583,600 |   |   |   | 22 |   |   |   | 1,676,509 |   |
| Multi-family                 |   |           | -      |   |                    |   | -         |             |   |   | 3       |   |   |   | 566,198 |   |   |   | 12 |   |   |   | 1,656,353 |   |   |   | 15 |   |   |   | 2,222,551 |   |
| Student housing              |   |           | -      |   |                    |   | -         |             |   |   | 5       |   |   |   | 1,089,960 |   |   |   | 1 |   |   |   | 226,604 |   |   |   | 6 |   |   |   | 1,316,564 |   |
| Senior housing               |   |           | -      |   |                    |   | -         |             |   |   | -       |   |   |   | - |   |   |   | 4 |   |   |   | 191,405 |   |   |   | 4 |   |   |   | 191,405 |   |
| Land                         |   |           | 1      |   |                    |   | N/A       |             |   |   | -       |   |   |   | - |   |   |   | - |   |   | NA |   |   |   | 1 |   |   |   | - |   |
| Total                        |   |           | 31     |   |                    |   | 2,749,659 |             |   |   | 32      |   |   |   | 7,618,225 |   |   |   | 41 |   |   |   | 3,492,268 |   |   |   | 104 |   |   |   | 13,860,152 |   |

|   | — | An opportunistic yet disciplined acquisition strategy that focuses on mid-tier multi-tenant real estate in locations that allow us to capitalize on our existing management infrastructure currently servicing our own properties and that of our third party clients; coupled with, |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | — | Organic (internally developed opportunities) and in-organic (acquisition generated opportunities) growth of our third party property management contracts. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | the amount of any gain or loss recognized as the result of removal of the VIE’s assets, liabilities, and equity from our balance sheet; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the portion of any gain or loss related to the re-measurement to fair value of any retained investment in the VIE being de-consolidated; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the financial statement line item where the gain or loss relating to de-consolidation of the VIE is recognized; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | the nature of our continued involvement (if any) with the former VIE or the entity acquiring the VIE after de-consolidation, and; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | whether the de-consolidation transaction occurs with a related party or if the transaction will cause the VIE to be a related party after de-consolidation. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | Three months ended |   |   |       |   |   |         |   |
|--------------------------------------------|--------|------------------------------|--------|--------|------------|--------|--------|--------------|--------|
|                                       |   | March 31,               |   |   |       |   |   |         |   |
|                                       |   |                         |   |   | 2010       |   |   |  Dollar |   |   |   |   |
|                                       |   |  2011                   |   |   | (restated) |   |   |  Change |   |   |  % Change |   |
| Rental Revenue                             |   | $                            | 17,741 |   |       | $      | 6,538  |         |   | $ | 11,203 |   |   |   | 171 | % |
| Third party management and leasing revenue |   | $                            | 1,036  |   |       | $      | 964    |         |   | $ | 72 |   |   |   | 7 | % |

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|   | • | Rental revenue for the period increased by $11.2 million, or 171%, in comparison to the prior period. The increase in rental revenue was primarily due to the consolidation of VIE’s, which resulted in additional rental revenues of approximately $11.1 million.  Rental revenue for owned properties increased by $0.1 million.  This increase in rental revenue for owned properties was due to the acquisition of two properties in the second quarter of 2010, which accounted for an increase in rental revenue of $0.4 million.  This increase was partially offset by a decrease in rental revenue for properties owned at March 31, 2011 and March 31, 2010 of $0.3 million, primarily attributable to an increase in rent concessions. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The increased third party management and leasing revenue was directly related to our acquisition of property management and asset management contracts. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   | Three months ended March 31, |   |   |       |   |
|--------------------------------------|--------|--------------------------------------------------|--------|--------|------------|--------|
|                                 |   |                                             |   |   | 2010       |   |   | Dollar |   |   |   |   |
|                                 |   | 2011                                             |   |   | (restated) |   |   | Change |   |   | % Change |   |
| Property operating expenses          |   | $                                                | 6,558  |   |       | $      | 3,153 |   |   | $ | 3,405 |   |   |   | 108 | % |
| Corporate general and administrative |   |                                             | 2,517  |   |       |   | 1,622 |   |   |   | 895 |   |   |   | 55 | % |
| Depreciation and amortization        |   |                                             | 7,512  |   |       |   | 2,930 |   |   |   | 4,582 |   |   |   | 156 | % |
| Interest expense                     |   |                                             | 8,050  |   |       |   | 2,731 |   |   |   | 5,319 |   |   |   | 195 | % |
| Impairment expense                   |   |                                             | 150    |   |       |   | - |   |   |   | 150 |   |   |   | N/A |   |

|   | • | Property operating expenses increased by approximately $3.4 million.  This increase was primarily due to the consolidation of VIE’s which amounted to $3.6 million.  Property operating expenses for the Company’s owned properties decreased by $0.2 million.  This decrease was attributable to lower operating expenses for properties owned at March 31, 2011 and March 31, 2010 of approximately $0.4 million in large part due to cost cutting measures implemented by management, partially offset by an increase of $0.2 million related to the acquisition of two properties in the second quarter of 2010. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | General and administrative expenses increased by approximately $0.9 million.  The increase was in large part due to a full quarter of operating expenses associated with the property management and asset management contracts acquired from Evergreen in January 2010.  The increase was also due to higher accounting, consulting and professional fees attributable to the consolidation of VIE’s and due to an engagement for business advisory services. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Depreciation and amortization expense increased by approximately $4.6 million, primarily as a result of our VIE’s which accounted for approximately $4.3 million of this increase.  The increase also due to an increase in depreciation expense related to capitalized improvements and amortization related to acquired intangible assets. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Interest expense increased by approximately $5.3 million.  The increase was primarily due the consolidation of VIE’s, which accounted for $4.8 million of this increase.  The increase was also attributable to an increase in debt attributable to two properties acquired in the second quarter of 2010 and certain other debt. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Impairment expense increased by approximately $0.2 million.  The impairment expense relates to two management contracts with properties that were terminated during the first quarter of 2011.  No impairment expense was incurred during the first quarter of 2010. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                        |   | March 31, |   |   |       |   |   |   |   |
|-----------------------------|--------|----------------|--------|--------|------------|--------|--------|--------|--------|
|                        |   |           |   |   | 2010       |   |   | Dollar |   |   |   |   |
|                        |   | 2011           |   |   | (restated) |   |   | Change |   |   | % Change |   |
| Interest and other income   |   | $              | 139    |   |       | $      | 64     |   |   | $ | 75 |   |   |   | 117 | % |
| Deferred income tax benefit |   |           | 939    |   |       |   | 1,084  |   |   |   | (145 | ) |   |   | -13 | % |
| Discontinued operations     |   |           | (599   | )      |       |   | 2,640  |   |   |   | (3,239 | ) |   |   | -123 | % |
| Non-controlling interests   |   |           | 3,492  |   |       |   | (434   | )      |   |   | 3,926 |   |   |   | -905 | % |

|   | • | Discontinued operations in 2010 reflects the sale of our property at 5850 San Felipe and in 2011 reflects our 7700 Irvine property that is currently available for sale. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Non-controlling interests consist of: |
|--------|---------|---------------------------------------|

|   | 1. | Operating partnership unit holders other than the company and, |
|--------|----|----------------------------------------------------------------|

|   | 2. | The non-controlling interests held in our VIE’s and held by others |
|--------|----|--------------------------------------------------------------------------|

|   | · | rent payments |
|--------|--------|---------------|

|   | · | management fees |
|--------|--------|-----------------|

|   | · | transaction fees |
|--------|--------|------------------|

|   | · | personnel costs |
|--------|--------|-----------------|

|   | · | building maintenance costs |
|--------|--------|----------------------------|

|   | · | property taxes |
|--------|--------|----------------|

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|   | · | proceeds from the sale of assets |
|--------|--------|----------------------------------|

|   | · | property improvements |
|--------|--------|-----------------------|

|   | · | cash needed to acquire assets |
|--------|--------|-------------------------------|

|   | · | proceeds from borrowing money |
|--------|--------|-------------------------------|

|   | · | proceeds from equity placements |
|--------|--------|---------------------------------|

|   | · | debt service payments |
|--------|--------|-----------------------|

|   | · | cash needed to acquire partnership interests |
|--------|--------|----------------------------------------------|

----

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|                                                                             |   | Three Months EndedMarch 31, 2011 |   |   | Three Months EndedMarch 31, 2010 |   |
|----------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
| Net (loss) income attributable to the Company                                    |   | $                                                    | (2,039 | )      |                                                 | $      | 420 |   |
| Depreciation and amortization from discontinued operations                       |   |                                                 | 712    |   |                                                 |   | 839 |   |
| Gain from sale of discontinued operations                                        |   |                                                 | -      |   |                                                 |   | (4,315 | ) |
| Impairment expense                                                               |   |                                                 | 150    |   |                                                 |   | - |   |
| Deferred income tax (benefit) expense                                            |   |                                                 | (1,127 | )      |                                                 |   | 438 |   |
| Depreciation and amortization attributable from Company’s owned properties |   |                                                 | 3,031  |   |                                                 |   | 2,930 |   |
| FFO                                                                              |   | $                                                    | 727    |   |                                                 | $      | 312 |   |

----

----

| Date: May 16, 2011 |      |
|--------------------|-----------|
|               | By:       | /s/ William J. Carden |
|               |      | William J. Carden |
|               |      | Chairman of the Board, President and, |
|               |      | Chief Executive Officer |
|               |      | (Principal Executive Officer) |
|               |      |
| Date: May 16, 2011 |      |
|               |  By: |  /s/ G. Anthony Eppolito |
|               |      | G. Anthony Eppolito |
|               |      | Vice President, Chief Financial Officer, |
|               |      | (Principal Financial Officer and Accounting Officer), |
|               |      | Treasurer and Secretary |

| Exhibit No. | Exhibit Title |
|-------------|---------------|

| 31.1 | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|--------------------------------------------------------------------------------|

| 31.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|--------------------------------------------------------------------------------|

| 32.1 | Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|------|------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|------|------------------------------------------------------------------------------------------------------------------------------|

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