| State of Maryland                                             |   | 52-2258674                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |
|                                                          |   |                                |
| 2401 Fountain View, Suite 510Houston, 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 |

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|    |                                                                                                                        | Page No. |
|---------|-----------------------------------------------------------------------------------------------------------------------------|----------|
| PART I  | FINANCIAL INFORMATION                                                                                                       |     |
|    |                                                                                                                        |     |
| Item 1  | Financial Statements                                                                                                        | 3        |
|    | Consolidated Condensed Balance Sheets at September 30, 2010 (unaudited) and December 31, 2009                               | 3        |
|    | Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2010 and 2009 (unaudited) | 4        |
|    | Consolidated Statement of Equity (Deficit) for the nine months ended September 30, 2010 (unaudited)                         | 5        |
|    | Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (unaudited)           | 6        |
|    | Notes to Consolidated Condensed Financial Statements                                                                        | 7        |
| Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                 | 24       |
| Item 4T | Controls and Procedures                                                                                                     | 32       |
|    |                                                                                                                        |     |
| PART II | OTHER INFORMATION                                                                                                           |     |
|    |                                                                                                                        |     |
| Item 1  | Legal Proceedings                                                                                                           | 33       |
| Item 5  | Exhibits                                                                                                                    | 33       |

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|                                                                                                                                                                        |   | September 30,2010(Restated) |      |   | December 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-----------|--------|-----------------------|--------|
|                                                                                                                                                                        |   | (Unaudited)                      |      |   | (Audited)             |   |
| ASSETS                                                                                                                                                                      |   |                             |      |   |                  |   |
| Real estate held for investment (includes $338,323 from consolidated VIE’s at Sept 30, 2010)                                                                          |   | $                                | 618,504   |   |                  | $      | 251,336 |   |
| Accumulated depreciation (includes $4,068 from consolidated VIE’s at Sept 30, 2010)                                                                                   |   |                             | (86,428   | )      |                  |   | (72,404 | ) |
| Real estate held for investment, net (includes $334,255 from consolidated VIE’s at Sept 30, 2010)                                                                     |   |                             | 532,076   |   |                  |   | 178,932 |   |
|                                                                                                                                                                        |   |                             |      |   |                  |   |   |   |
| Real estate held for sale                                                                                                                                                   |   |                             | -         |   |                  |   | 6,364 |   |
| Cash and cash equivalents                                                                                                                                                   |   |                             | 1,013     |   |                  |   | 462 |   |
| Restricted cash (includes $2,908 from consolidated VIE’s at Sept 30, 2010)                                                                                            |   |                             | 3,900     |   |                  |   | 992 |   |
| Tenant and other receivables, net of allowance for doubtful accounts of $881 and $701, respectively (includes $515 from consolidated VIE’s at Sept 30, 2010)          |   |                             | 1,738     |   |                  |   | 891 |   |
| Deferred rents receivable                                                                                                                                                   |   |                             | 2,138     |   |                  |   | 1,883 |   |
| Deferred tax asset                                                                                                                                                          |   |                             | 12,163    |   |                  |   | 8,813 |   |
| Purchased intangibles subject to amortization                                                                                                                               |   |                             | 12,725    |   |                  |   | - |   |
| Goodwill                                                                                                                                                                    |   |                             | 4,003     |   |                  |   | - |   |
| Investment in management company                                                                                                                                            |   |                             | 4,000     |   |                  |   | 4,000 |   |
| Investments in unconsolidated real estate assets from related parties                                                                                                       |   |                             | 271       |   |                  |   | - |   |
| Notes receivable from related parties                                                                                                                                       |   |                             | 2,400     |   |                  |   | - |   |
| Interest receivable from related parties                                                                                                                                    |   |                             | 267       |   |                  |   | - |   |
| Accounts receivable from related parties                                                                                                                                    |   |                             | 754       |   |                  |   | - |   |
| Account receivable from Evergreen                                                                                                                                           |   |                             | 414       |   |                  |   | - |   |
| Prepaid and other assets, net (includes $5,860 from consolidated VIE’s at Sept 30, 2010)                                                                              |   |                             | 18,681    |   |                  |   | 12,749 |   |
| Total Assets                                                                                                                                                                |   | $                                | 596,543   |   |                  | $      | 215,086 |   |
|                                                                                                                                                                        |   |                             |      |   |                  |   |   |   |
| LIABILITIES                                                                                                                                                                 |   |                             |      |   |                  |   |   |   |
| Notes payable (includes $240,509 from consolidated VIE’s at Sept 30, 2010)                                                                                            |   | $                                | 461,696   |   |                  | $      | 193,920 |   |
| Liabilities related to real estate held for sale                                                                                                                            |   |                             | -         |   |                  |   | 6,091 |   |
| Accounts payable (includes $4,315 from consolidated VIE’s at Sept 30, 2010)                                                                                           |   |                             | 12,723    |   |                  |   | 5,070 |   |
| Accounts payable to related parties                                                                                                                                         |   |                             | 372       |   |                  |   | - |   |
| Liabilities related to insurance claims                                                                                                                                     |   |                             | 1,323     |   |                  |   | 1,474 |   |
| Accrued and other liabilities (includes $1,168 from consolidated VIE’s at Sept 30, 2010)                                                                              |   |                             | 12,176    |   |                  |   | 9,520 |   |
| Total Liabilities                                                                                                                                                           |   |                             | 488,290   |   |                  |   | 216,075 |   |
|                                                                                                                                                                        |   |                             |      |   |                  |   |   |   |
| Commitments and Contingencies (Note 13):                                                                                                                                    |   |                             |      |   |                  |   |   |   |
|                                                                                                                                                                        |   |                             |      |   |                  |   |   |   |
| Non-controlling interest classified as temporary equity                                                                                                                     |   |                             | -         |   |                  |   | 3,962 |   |
|                                                                                                                                                                        |   |                             |      |   |                  |   |   |   |
| EQUITY (DEFICIT)                                                                                                                                                            |   |                             |      |   |                  |   |   |   |
| American Spectrum Realty, Inc. stockholders’ (deficit) equity:                                                                                                        |   |                             |      |   |                  |   |   |   |
| Preferred stock, $.01 par value; authorized, 25,000,000 shares;issued and outstanding, 55,172 and 55,172 shares, respectively                                               |   |                             | 1         |   |                  |   | 1 |   |
| Common stock, $.01 par value; authorized, 100,000,000 shares;issued, 3,405,706 and 3,291,310 shares, respectively; outstanding,2,934,294 and 2,819,898 shares, respectively |   |                             |   34 |   |                  |   |   33 |   |
| Additional paid-in capital                                                                                                                                                  |   |                             | 49,028    |   |                  |   | 48,546 |   |
| Accumulated deficit                                                                                                                                                         |   |                             | (56,500   | )      |                  |   | (52,472 | ) |
| Treasury stock, at cost, 471,412 shares, respectively                                                                                                                       |   |                             | (3,095    | )      |                  |   | (3,095 | ) |
| Total American Spectrum Realty, Inc. stockholders’ (deficit) equity                                                                                                   |   |                             | (10,532   | )      |                  |   | (6,987 | ) |
| Non-controlling interests                                                                                                                                                   |   |                             | 118,785   |   |                  |   | 2,036 |   |
| Total Equity (Deficit)                                                                                                                                                      |   |                             | 108,253   |   |                  |   | (4,951 | ) |
| Total Liabilities and Equity (Deficit)                                                                                                                                      |   | $                                | 596,543   |   |                  | $      | 215,086 |   |

----

|                                                                                                   |   | Three Months EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |   |
|--------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|--------|-----------------------------------------------|--------|
|                                                                                                   |   | 2010                                           |      |   | 2009                                          |   |   | 2010 |   |   | 2009 |   |
| REVENUES:                                                                                              |   |                                           |      |   |                                          |   |   |   |   |   |   |   |
| Rental revenue                                                                                         |   | $                                              | 16,731    |   |                                          | $      | 8,016 |   |   | $ | 33,006 |   |   | $ | 24,451 |   |
| Third party management and leasing revenue                                                             |   |                                           | 684       |   |                                          |   | 71 |   |   |   | 2,900 |   |   |   | 112 |   |
| Interest and other income                                                                              |   |                                           | 140       |   |                                          |   | 10 |   |   |   | 167 |   |   |   | 37 |   |
| Total revenues                                                                                         |   |                                           | 17,555    |   |                                          |   | 8,097 |   |   |   | 36,073 |   |   |   | 24,600 |   |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES:                                                                                              |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Property operating expense                                                                             |   |                                           | 6,839     |   |                                          |   | 4,158 |   |   |   | 14,374 |   |   |   | 12,030 |   |
| Corporate general and administrative                                                                   |   |                                           | 2,557     |   |                                          |   | 1,002 |   |   |   | 6,695 |   |   |   | 2,896 |   |
| Depreciation and amortization                                                                          |   |                                           | 7,754     |   |                                          |   | 3,656 |   |   |   | 15,590 |   |   |   | 10,951 |   |
| Interest expense                                                                                       |   |                                           | 6,812     |   |                                          |   | 3,393 |   |   |   | 13,950 |   |   |   | 10,000 |   |
| Total expenses                                                                                         |   |                                           | 23,962    |   |                                          |   | 12,209 |   |   |   | 50,609 |   |   |   | 35,877 |   |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations before deferred income tax benefit                                     |   |                                           | (6,407    | )      |                                          |   | (4,112 | ) |   |   | (14,536 | ) |   |   | (11,277 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Deferred income tax benefit                                                                            |   |                                           | 1,802     |   |                                          |   | 1,458 |   |   |   | 4,873 |   |   |   | 3,996 |   |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                                                        |   |                                           | (4,605    | )      |                                          |   | (2,654 | ) |   |   | (9,663 | ) |   |   | (7,281 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued operations:                                                                               |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                                                                                 |   |                                           | -         |   |                                          |   | 29 |   |   |   | 173 |   |   |   | 172 |   |
| Gain on sale of discontinued operations                                                                |   |                                           | -         |   |                                          |   | - |   |   |   | 4,315 |   |   |   | - |   |
| Income tax expense                                                                                     |   |                                           | -         |   |                                          |   | (11 | ) |   |   | (1,641 | ) |   |   | (63 | ) |
| Income from discontinued operations                                                                    |   |                                           | -         |   |                                          |   | 18 |   |   |   | 2,847 |   |   |   | 109 |   |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Net loss, including noncontrolling interests                                                           |   | $                                              | (4,605    | )      |                                          | $      | (2,636 | ) |   | $ | (6,816 | ) |   | $ | (7,172 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Plus: Net loss attributable to noncontrolling interests                                                |   |                                           | 2,333     |   |                                          |   | 314 |   |   |   | 2,788 |   |   |   | 856 |   |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to American Spectrum Realty, Inc.                                                |   |                                           | (2,272    | )      |                                          |   | (2,322 | ) |   |   | (4,028 | ) |   |   | (6,316 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock dividends                                                                              |   |                                           | (60       | )      |                                          |   | (60 | ) |   |   | (180 | ) |   |   | (180 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to American Spectrum Realty, Inc. common stockholders                            |   | $                                              | (2,332    | )      |                                          | $      | (2,382 | ) |   | $ | (4,208 | ) |   | $ | (6,496 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted per share data:                                                                      |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders     |   | $                                              | (0.77     | )      |                                          | $      | (0.83 | ) |   | $ | (2.05 | ) |   | $ | (2.28 | ) |
| Income from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders |   |                                           | -         |   |                                          |   | 0.01 |   |   |   | 0.69 |   |   |   | 0.03 |   |
| Net loss attributable to American Spectrum Realty, Inc. common stockholders                            |   | $                                              | (0.77     | )      |                                          | $      | (0.82 | ) |   | $ | (1.36 | ) |   | $ | (2.25 | ) |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average shares used                                                         |   |                                           | 2,934,294 |   |                                          |   | 2,818,898 |   |   |   | 2,906,317 |   |   |   | 2,812,048 |   |
|                                                                                                   |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Amounts attributable to American Spectrum Realty, Inc. common stockholders:                            |   |                                           |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                                                        |   | $                                              | (2,272    | )      |                                          | $      | (2,338 | ) |   | $ | (6,039 | ) |   | $ | (6,413 | ) |
| Income from discontinuing operations                                                                   |   | $                                              | -         |   |                                          | $      | 55 |   |   | $ | 2,011 |   |   | $ | 97 |   |
| Net loss                                                                                               |   | $                                              | (2,332    | )      |                                          | $      | (2,382 | ) |   | $ | (3,372 | ) |   | $ | (6,496 | ) |

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|                                                                  |   | PreferredShares |   |   | Common Shares |   |      | Non-controllingInterests |   |   | Pre-ferredStock |   |   | CommonStock |   |   | AdditionalPaid-In Capital |   |   | Accum-ulatedDeficit |   |   | TreasuryStock |   |   | TotalEquity(Deficit) |    |
|----------------------------------------------------------------------------|--------|-----------------|--------|--------|--------------------|--------|-----------|--------------------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|--------------------------------|--------|--------|---------------------|--------|--------|---------------|--------|--------|----------------------|---------|
| Balance, December 31, 2009 (audited)                                       |   |            | 55,172 |   |               |   | 1,645,655 |                     |   | $      | 2,036           |   |   | $           | 1      |   |                           | $      | 16     |                |   | $      | 48,563        |   |   | $                    | (52,472 | ) |   | $ | (3,095 | ) |   | $ | (4,951 | ) |
| Issuance of one-for-one stock split                                        |   |            |   |   |               |   | 1,645,655 |                     |   |   |            |   |   |        |   |   |                           |   | 18     |                |   |   | (18           | )      |   |                 | -       |   |   |   | - |   |   |   | - |   |
| Issuance of common stock                                                   |   |            |   |   |               |   | 11,500    |                     |   |   | -               |   |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | - |   |
| Conversion of operating partnership units to common stock                  |   |            |   |   |               |   | 102,896   |                     |   |   | (211            | )      |   |        | -      |   |                           |   | -      |                |   |   | 211           |   |   |                 | -       |   |   |   | - |   |   |   | - |   |
| Consolidation of VIE’s                                               |   |            |   |   |               |   |      |                     |   |   | 100,303         |   |   |        |   |   |                           |   |   |                |   |   |          |   |   |                 |    |   |   |   |   |   |   |   | 100,303 |   |
| Issuance of operating partnership units                                    |   |            |   |   |               |   | -         |                     |   |   | 13,645          |   |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | 13,645 |   |
| Non-controlling interests in acquired properties                           |   |            |   |   |               |   |      |                     |   |   | 6,232           |   |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | 6,232 |   |
| Acquisition of non- controlling interest in the operating partnership      |   |            |   |   |               |   |      |                     |   |   | (20             | )      |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | (20 | ) |
| Reclassification of non-controlling interest from Temporary equity         |   |            |   |   |               |   |      |                     |   |   | 3,962           |   |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | 3,962 |   |
| Reclassification of non-controlling interest to additional paid-in capital |   |            |   |   |               |   |      |                     |   |   | (370            | )      |   |        | -      |   |                           |   | -      |                |   |   | 370           |   |   |                 | -       |   |   |   | - |   |   |   | - |   |
| Repurchase of non-controlling interest in consolidated partnership         |   |            |   |   |               |   |      |                     |   |   | (1,785          | )      |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | (1,785 | ) |
| Distributions to non-controlling interests                                 |   |            |   |   |               |   |      |                     |   |   | (2,219          | )      |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | (2,219 | ) |
| Non-controlling interests share of loss                                    |   |            |   |   |               |   |      |                     |   |   | (2,788          | )      |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | -       |   |   |   | - |   |   |   | (2,788 | ) |
| Preferred stock dividends                                                  |   |            |   |   |               |   |      |                     |   |   | -               |   |   |        | -      |   |                           |   | -      |                |   |   | (180          | )      |   |                 | -       |   |   |   | - |   |   |   | (180 | ) |
| Stock-based compensation                                                   |   |            |   |   |               |   |      |                     |   |   | -               |   |   |        | -      |   |                           |   | -      |                |   |   | 82            |   |   |                 | -       |   |   |   | - |   |   |   | 82 |   |
| Net loss                                                                   |   |            |   |   |               |   |      |                     |   |   | -               |   |   |        | -      |   |                           |   | -      |                |   |   | -             |   |   |                 | (4,028  | ) |   |   | - |   |   |   | (4,028 | ) |
| Balance, September 30, 2010 (unaudited)                                    |   |            | 55,172 |   |               |   | 3,405,706 |                     |   | $      | 118,785         |   |   | $           | 1      |   |                           | $      | 34     |                |   | $      | 49,028        |   |   | $                    | (56,500 | ) |   | $ | (3,095 | ) |   | $ | 108,253 |   |

----

|                                                                                                           |   | Nine Months Ended September 30, |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                                                           |   | 2010                            |   |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                          |   |                            |   |   |   |   |
| Net loss                                                                                                       |   | $                               | (6,816 | ) |   | $ | (7,172 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                      |   |                            |   |   |   |   |   |   |
| Depreciation and amortization                                                                                  |   |                            | 15,590 |   |   |   | 11,292 |   |
| Gain on sale of real estate asset                                                                              |   |                            | (4,315 | ) |   |   | - |   |
| Income tax benefit                                                                                             |   |                            | (3,232 | ) |   |   | (3,933 | ) |
| Deferred rental income                                                                                         |   |                            | (253   | ) |   |   | (330 | ) |
| Stock-based compensation expense                                                                               |   |                            | 82     |   |   |   | 69 |   |
| Amortization of note payable premium, included in interest expense                                             |   |                            | -      |   |   |   | (19 | ) |
| Changes in operating assets and liabilities:                                                                   |   |                            |   |   |   |   |   |   |
| Increase in tenant and other receivables                                                                       |   |                            | (208   | ) |   |   | (132 | ) |
| Increase in related party receivables                                                                          |   |                            | (556   | ) |   |   | - |   |
| Increase in accounts payable                                                                                   |   |                            | 3,824  |   |   |   | 1,611 |   |
| Increase in accounts payable to related parties                                                                |   |                            | 372    |   |   |   | - |   |
| Decrease in prepaid and other assets                                                                           |   |                            | (650   | ) |   |   | (516 | ) |
| Increase (decrease) in accrued and other liabilities                                                           |   |                            | (373   | ) |   |   | (1,448 | ) |
| Change in restricted cash                                                                                      |   |                            | 406    |   |   |   | - |   |
| Net cash provided by (used in) operating activities:                                                           |   |                            | 3,871  |   |   |   | (578 | ) |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                          |   |                            |   |   |   |   |   |   |
| Proceeds received from sale of real estate asset                                                               |   |                            | 10,166 |   |   |   | - |   |
| Capital improvements to real estate assets                                                                     |   |                            | (3,281 | ) |   |   | (1,785 | ) |
| Real estate acquisitions                                                                                       |   |                            | (317   | ) |   |   | - |   |
| Investments in unconsolidated real estate assets                                                               |   |                            | (82    | ) |   |   | - |   |
| Proceeds received related to insurance claims                                                                  |   |                            | -      |   |   |   | 2,700 |   |
| Payments for damages related to insurance claims                                                               |   |                            | (151   | ) |   |   | (1,741 | ) |
| Net cash provided by (used in) investing activities:                                                           |   |                            | 6,335  |   |   |   | (826 | ) |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                          |   |                            |   |   |   |   |   |   |
| Net proceeds from borrowings                                                                                   |   |                            | 5,180  |   |   |   | 3,105 |   |
| Repayment of borrowings – property sales                                                                 |   |                            | (5,067 | ) |   |   | - |   |
| Repayment of borrowings – refinances                                                                     |   |                            | -      |   |   |   | (1,474 | ) |
| Repayment of borrowings – other                                                                          |   |                            | (1,260 | ) |   |   | (2,050 | ) |
| Repayment of borrowings – scheduled payments                                                             |   |                            | (4,268 | ) |   |   | (2,215 | ) |
| Repurchase of preferred partnership interest                                                                   |   |                            | (1,785 | ) |   |   | - |   |
| Proceeds from partial sale of consolidated partnership interests                                               |   |                            | -      |   |   |   | 4,000 |   |
| Acquisition of non-controlling interests in the operating partnership                                          |   |                            | (20    | ) |   |   | - |   |
| Dividend payments to preferred stockholders                                                                    |   |                            | (225   | ) |   |   | (80 | ) |
| Distributions to non-controlling interests                                                                     |   |                            | (2,210 | ) |   |   | - |   |
| Net cash (used in) provided by financing activities:                                                           |   |                            | (9,655 | ) |   |   | 1,286 |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                                                               |   |                            | 551    |   |   |   | (118 | ) |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                                                 |   |                            | 462    |   |   |   | 2,092 |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                                       |   | $                               | 1,013  |   |   | $ | 1,974 |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                                        |   |                            |   |   |   |   |   |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Conversion of operating partnership units to common stock                                                      |   | $                               | 211    |   |   | $ | 314 |   |
| Issuance of operating partnership units in connection with Evergreen acquisition                               |   |                            | 8,000  |   |   |   | - |   |
| Issuance of operating partnership units in connection with notes receivable and account receivable acquisition |   |                            | 3,081  |   |   |   | - |   |
| Issuance of operating partnership units in connection with real estate acquisitions                            |   |                            | 2,586  |   |   |   | - |   |
| Issuance of operating partnership units in connection with investment in unconsolidated real estate asset      |   |                            | 28     |   |   |   | - |   |
| Debt assumed in connection with real estate acquisition                                                        |   |                            | 6,297  |   |   |   | - |   |
| Conversion of accounts payable to notes payable                                                                |   |                            | 498    |   |   |   | - |   |
| Financing in connection with investment in unconsolidated real estate asset                                    |   |                            | 33     |   |   |   | - |   |
| Financing in connection with Evergreen acquisition                                                             |   |                            | 9,500  |   |   |   | - |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                             |   |                            |   |   |   |   |   |   |
| Cash paid for interest                                                                                         |   | $                               | 12,705 |   |   | $ | 6,797 |   |
| Cash paid for income taxes                                                                                     |   |                            | 279    |   |   |   | 60 |   |

----

----

----

|   | · | 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 derecognized; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                    |   | Remaining        |   |   | Fair           |   |
|-----------------------------------------|--------|------------------|--------|--------|----------------|--------|
| Asset Class                        |   | Useful Life |   |   | Value          |   |
|                                    |   |             |   |   | (in thousands) |   |
| Tangible Assets:                        |   |             |   |   |           |   |
| Fractional Real Estate Interests        |   | Various          |   |   | $              | 375    |   |
| Furniture, fixtures and equipment       |   | Various          |   |   |           | 148    |   |
| Total tangible assets acquired          |   |             |   |   |           | 523    |   |
|                                    |   |             |   |   |           |   |   |
| Intangible Assests:                     |   |             |   |   |           |   |   |
| Property management contracts           |   | 12               |   |   |           | 13,474 |   |
| Goodwill, including assembled workforce |   | -                |   |   |           | 4,003  |   |
| Total intangible assets acquired        |   |             |   |   |           | 17,477 |   |
|                                    |   |             |   |   |           |   |   |
| Total purchase price                    |   |             |   |   | $              | 18,000 |   |

----

|                                                |   | Fair           |   |
|-----------------------------------------------------|--------|----------------|--------|
| Consideration                                       |   | Value          |   |
|                                                |   | (in thousands) |   |
| Promissory Note                                     |   | $              | 9,500  |   |
| Issuance of 1.6 million operating partnership units |   |           | 8,000  |   |
| Assumption of debt                                  |   |           | 500    |   |
| Total consideration                                 |   | $              | 18,000 |   |

|                                                 |   | Three Months Ended |    |   | Nine Months Ended |   |
|------------------------------------------------------|--------|------------------------------|---------|--------|-----------------------------|--------|
|                                                 |   | Sept 30, 2010      |    |   | Sept 30, 2010     |   |
|                                                 |   |                         |    |   |                        |   |
| Total Revenue                                        |   | $                            | 17,555  |   |                        | $      | 44,634 |   |
| Total Expenses                                       |   |                         | (23,962 | )      |                        |   | (60,455 | ) |
|                                                 |   |                         |    |   |                        |   |   |   |
| Net Income before Non-controlling Interest & Tax |   |                         | (6,407  | )      |                        |   | (15,821 | ) |
|                                                 |   |                         |    |   |                        |   |   |   |
| Discontinued Operations                              |   |                         | -       |   |                        |   | 2,847 |   |
| Deferred Tax Benefit                                 |   |                         | 1,802   |   |                        |   | 4,913 |   |
| Non-Controlling Interest                             |   |                         | 2,333   |   |                        |   | 3,933 |   |
| Proforma net income                                  |   | $                            | (2,272  | )      |                        | $      | (4,128 | ) |

----

|                                              |   | Three Months Ended |    |   | Nine Months Ended |   |
|---------------------------------------------------|--------|------------------------------|---------|--------|-----------------------------|--------|
|                                              |   | Sept 30, 2010      |    |   | Sept 30, 2010     |   |
|                                              |   |                         |    |   |                        |   |
| Total Revenue                                     |   | $                            | 9,297   |   |                        | $      | 11,661 |   |
| Total Expenses                                    |   |                         | (10,935 | )      |                        |   | (13,950 | ) |
|                                              |   |                         |    |   |                        |   |   |   |
| Net Loss before Noncontrolling Interest & Tax |   |                         | (1,638  | )      |                        |   | (2,289 | ) |
|                                              |   |                         |    |   |                        |   |   |   |
| Deferred Tax Benefit                              |   |                         | 281     |   |                        |   | 537 |   |
| Non-Controlling Interest                          |   |                         | 1,047   |   |                        |   | 1,145 |   |
| Evergreen component of net loss                   |   | $                            | (310    | )      |                        | $      | (607 | ) |

----

|  VIE Amounts            |   | September 30, 2010(unaudited) |    |
|-----------------------------------|--------|-----------------------------------------|---------|
| Assets                            |   |                                    |    |
| Restricted Cash                   |   | $                                       | 2,908   |   |
| Receivables                       |   |                                    | 515     |   |
| Fixed Assets, net of depreciation |   |                                    | 334,255 |   |
| Other Assets                      |   |                                    | 5,860   |   |
| Total assets                      |   | $                                       | 343,538 |   |
|                              |   |                                    |    |   |
| Liabilities                       |   |                                    |    |   |
| Accounts Payable                  |   | $                                       | 4,315   |   |
| Notes Payable                     |   |                                    | 240,509 |   |
| Other Liabilities                 |   |                                    | 1,168   |   |
| Total Liabilities                 |   | $                                       | 245,992 |   |
|                              |   |                                    |    |   |
| VIE net carrying value            |   | $                                       | 97,546  |   |

----

|  Condensed Consolidated Balance Sheet |   | December 31, 2009(audited) |   |
|-----------------------------------------------------------|--------|--------------------------------------|--------|
| Real estate                                               |   | $                                    | 5,847  |   |
| Other                                                     |   |                                 | 517    |   |
| Real estate assets held for sale                          |   | $                                    | 6,364  |   |
|                                                      |   |                                 |   |   |
| Note payable                                              |   | $                                    | 5,090  |   |
| Accounts payable                                          |   |                                 | 515    |   |
| Accrued and other liabilities                             |   |                                 | 486    |   |
| Liabilities related to real estate held for sale          |   | $                                    | 6,091  |   |

----

| Condensed Statements of Operations                              |   | Three Months Ended September 30, (unaudited) |   |   | Nine Months Ended September30, (unaudited) |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|--------|----------------------------------------------------------------|--------|
|                                                                           |   | 2010                                                                  |   |   | 2009                                                           |   |   | 2010 |   |   | 2009 |   |
| Rental revenue                                                                 |   | $                                                                     | -      |   |                                                           | $      | 482 |   |   | $ | 482 |   |   | $ | 1,429 |   |
| Total expenses (1)                                                             |   |                                                                  | -      |   |                                                           |   | (453 | ) |   |   | (309 | ) |   |   | (1,257 | ) |
| Income from discontinued operations before gain on sale and income tax expense |   |                                                                  | -      |   |                                                           |   | 29 |   |   |   | 173 |   |   |   | 172 |   |
| Gain on sale of discontinued operations                                        |   |                                                                  | -      |   |                                                           |   | - |   |   |   | 4,315 |   |   |   | - |   |
| Income tax expense                                                             |   |                                                                  | -      |   |                                                           |   | (11 | ) |   |   | (1,641 | ) |   |   | (63 | ) |
| Income from discontinued operations                                            |   | $                                                                     | -      |   |                                                           | $      | 18 |   |   | $ | 2,847 |   |   | $ | 109 |   |

|                                                   |   |         |   | September 30, 2010 |    |   | December 31, 2009 |   |
|--------------------------------------------------------|--------|--------------|--------|------------------------------|---------|--------|-----------------------------|--------|
|  Property (unless otherwise noted) |   | MaturityDate |   | PrincipalBalance             |    |   | InterestRate                |   |   | PrincipalBalance |   |   | InterestRate |   |
| Fixed Rate                                             |   |         |   |                         |    |   |                        |   |   |   |   |   |   |   |
| Pacific Spectrum (1)                                   |   | 6/10/2010    |   |                         | 5,192   |   |                        |   | 8.02 | % |   |   | 5,248 |   |   |   | 8.02 | % |
| Northwest Spectrum                                     |   | 12/3/2010    |   |                         | 750     |   |                        |   | 8.75 | % |   |   | 750 |   |   |   | 8.75 | % |
| Corporate-Unsecured (2)                                |   | 2/19/2011    |   |                         | 1,134   |   |                        |   | 3.40 | % |   |   | - |   |   |   | - |   |
| Fountain View Place (3)                                |   | 4/29/2011    |   |                         | 1,065   |   |                        |   | 10.00 | % |   |   | 1,423 |   |   |   | 10.00 | % |
| Corporate-Secured (4)                                  |   | 5/12/2011    |   |                         | 950     |   |                        |   | 8.75 | % |   |   | - |   |   |   | - |   |
| Sabo Road (5)                                          |   | 7/31/2011    |   |                         | 1,989   |   |                        |   | 7.42 | % |   |   | - |   |   |   | - |   |
| Bristol Bay                                            |   | 8/1/2011     |   |                         | 6,820   |   |                        |   | 7.58 | % |   |   | 6,899 |   |   |   | 7.58 | % |
| Technology                                             |   | 8/1/2011     |   |                         | 7,091   |   |                        |   | 7.44 | % |   |   | 7,131 |   |   |   | 7.44 | % |
| Corporate – Secured (6)                          |   | 9/21/2011    |   |                         | 890     |   |                        |   | 8.75 | % |   |   | 890 |   |   |   | 8.75 | % |
| Creekside                                              |   | 12/1/2011    |   |                         | 5,744   |   |                        |   | 7.17 | % |   |   | 5,814 |   |   |   | 7.17 | % |
| Corporate-Unsecured (7)                                |   | 5/1/2012     |   |                         | 48      |   |                        |   | 4.00 | % |   |   | - |   |   |   | - |   |
| 16350 Park Ten Place                                   |   | 5/11/2012    |   |                         | 4,419   |   |                        |   | 7.45 | % |   |   | 4,466 |   |   |   | 7.45 | % |
| 16360 Park Ten Place                                   |   | 5/11/2012    |   |                         | 3,463   |   |                        |   | 7.45 | % |   |   | 3,499 |   |   |   | 7.45 | % |
| 2855 Mangum                                            |   | 5/11/2012    |   |                         | 2,551   |   |                        |   | 7.45 | % |   |   | 2,575 |   |   |   | 7.45 | % |
| 2855 Mangum                                            |   | 5/11/2012    |   |                         | 1,390   |   |                        |   | 6.00 | % |   |   | 1,422 |   |   |   | 6.00 | % |
| 6430 Richmond Atrium                                   |   | 5/11/2012    |   |                         | 2,141   |   |                        |   | 7.45 | % |   |   | 2,161 |   |   |   | 7.45 | % |
| Corporate-Unsecured (8)                                |   | 5/31/2012    |   |                         | 1,000   |   |                        |   | 9.50 | % |   |   | 500 |   |   |   | 11.00 | % |
| Southwest Pointe                                       |   | 6/1/2012     |   |                         | 2,685   |   |                        |   | 7.33 | % |   |   | 2,710 |   |   |   | 7.33 | % |
| Corporate-Secured (9)                                  |   | 6/15/2012    |   |                         | 992     |   |                        |   | 4.50 | % |   |   | 992 |   |   |   | 4.50 | % |
| Corporate-Unsecured (7)                                |   | 6/30/2012    |   |                         | 60      |   |                        |   | 0.00 | % |   |   | - |   |   |   | - |   |
| 16350 Park Ten Place                                   |   | 8/11/2012    |   |                         | 486     |   |                        |   | 7.45 | % |   |   | 492 |   |   |   | 7.45 | % |
| 16360 Park Ten Place                                   |   | 8/11/2012    |   |                         | 381     |   |                        |   | 7.45 | % |   |   | 386 |   |   |   | 7.45 | % |
| Corporate – Secured (10)                         |   | 2/1/2013     |   |                         | 1,746   |   |                        |   | 5.50 | % |   |   | 1,950 |   |   |   | 7.50 | % |
| Corporate-Secured (4)                                  |   | 3/5/2013     |   |                         | 905     |   |                        |   | 8.75 | % |   |   | - |   |   |   | - |   |
| 11500 Northwest Freeway                                |   | 6/1/2014     |   |                         | 4,025   |   |                        |   | 5.93 | % |   |   | 4,079 |   |   |   | 5.93 | % |
| 11500 Northwest Freeway                                |   | 6/1/2014     |   |                         | 291     |   |                        |   | 5.93 | % |   |   | 295 |   |   |   | 5.93 | % |
| Morenci                                                |   | 7/1/2014     |   |                         | 1,640   |   |                        |   | 7.25 | % |   |   | 1,689 |   |   |   | 7.25 | % |
| Northwest Corporate Center                             |   | 8/1/2014     |   |                         | 5,312   |   |                        |   | 6.26 | % |   |   | 5,370 |   |   |   | 6.26 | % |
| 14741 Yorktown                                         |   | 9/1/2014     |   |                         | 8,573   |   |                        |   | 5.32 | % |   |   | 8,600 |   |   |   | 5.32 | % |
| 8100 Washington                                        |   | 2/22/2015    |   |                         | 2,171   |   |                        |   | 5.59 | % |   |   | 2,196 |   |   |   | 5.59 | % |
| 8300 Bissonnet                                         |   | 5/1/2015     |   |                         | 4,484   |   |                        |   | 5.51 | % |   |   | 4,527 |   |   |   | 5.51 | % |
| Corporate-Unsecured (7)                                |   | 6/1/2015     |   |                         | 292     |   |                        |   | 5.00 | % |   |   | - |   |   |   | - |   |
| Corporate-Unsecured (7)                                |   | 6/1/2015     |   |                         | 55      |   |                        |   | 5.00 | % |   |   | - |   |   |   | - |   |
| 1501 Mockingbird                                       |   | 7/1/2015     |   |                         | 3,206   |   |                        |   | 5.28 | % |   |   | 3,239 |   |   |   | 5.28 | % |
| 2620-2630 Fountain View (11)                           |   | 7/31/2015    |   |                         | 5,350   |   |                        |   | 7.00 | % |   |   | - |   |   |   | - |   |
| 5450 Northwest Central                                 |   | 9/1/2015     |   |                         | 2,597   |   |                        |   | 5.38 | % |   |   | 2,631 |   |   |   | 5.38 | % |
| 800/888 Sam Houston Parkway                            |   | 12/29/2015   |   |                         | 4,552   |   |                        |   | 6.25 | % |   |   | 4,638 |   |   |   | 6.25 | % |
| 2401 Fountain View                                     |   | 3/1/2016     |   |                         | 11,999  |   |                        |   | 5.82 | % |   |   | 12,139 |   |   |   | 5.82 | % |
| Campus Court (5)                                       |   | 4/25/2016    |   |                         | 4,765   |   |                        |   | 5.78 | % |   |   | - |   |   |   | - |   |
| 12000 Westheimer/2470 Gray Falls                       |   | 1/1/2017     |   |                         | 7,301   |   |                        |   | 5.70 | % |   |   | 7,350 |   |   |   | 5.70 | % |
| 6420 Richmond Atrium                                   |   | 6/5/2017     |   |                         | 6,311   |   |                        |   | 5.87 | % |   |   | 6,364 |   |   |   | 5.87 | % |
| 7700 Irvine Center                                     |   | 8/1/2017     |   |                         | 45,000  |   |                        |   | 5.99 | % |   |   | 45,000 |   |   |   | 5.99 | % |
| Loop 1604 (5)                                          |   | 9/11/2017    |   |                         | 4,357   |   |                        |   | 6.70 | % |   |   | - |   |   |   | - |   |
| Fountain View Place                                    |   | 4/29/2018    |   |                         | 12,403  |   |                        |   | 6.50 | % |   |   | 12,521 |   |   |   | 6.50 | % |
| Corporate-Secured (12)                                 |   | 12/31/2019   |   |                         | 9,440   |   |                        |   | 5.00 | % |   |   | - |   |   |   | - |   |
|                                                   |   | Subtotal     |   | $                            | 198,016 |   |                        |   |   |   |   | $ | 169,946 |   |   |   |   |   |
| Variable Rate                                          |   |         |   |                         |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Beltway Industrial (1)                                 |   | 5/9/2010     |   |                         | 17,170  |   |                        |   | 7.00 | % |   |   | 17,170 |   |   |   | 7.00 | % |
| Corporate – Unsecured (8)                        |   |         |   |                         | -       |   |                        |   | - |   |   |   | 500 |   |   |   | 6.00 | % |
| Northwest Spectrum                                     |   | 4/19/2012    |   |                         | 2,856   |   |                        |   | 2.90 | % |   |   | 3,013 |   |   |   | 2.90 | % |
| Windrose Plaza                                         |   | 4/19/2012    |   |                         | 2,645   |   |                        |   | 2.90 | % |   |   | 2,791 |   |   |   | 2.90 | % |
| Corporate – Unsecured                            |   | 12/12/2013   |   |                         | 500     |   |                        |   | 6.00 | % |   |   | 500 |   |   |   | 6.00 | % |
|                                                   |   | Subtotal     |   | $                            | 23,171  |   |                        |   |   |   |   | $ | 23,974 |   |   |   |   |   |
| ASR Notes Payable                                      |   | Total        |   | $                            | 221,187 |   |                        |   |   |   |   | $ | 193,920 |   |   |   |   |   |
| VIE Notes Payable – See Note 4                   |   |         |   |                         | 240,509 |   |                        |   |   |   |   |   | - |   |   |   |   |   |
| Balance Sheet Notes Payable                            |   | Total        |   | $                            | 461,696 |   |                        |   |   |   |   | $ | 193,920 |   |   |   |   |   |

----

| (1) | The Company is currently negotiating extension terms with the lender. |
|-----|-----------------------------------------------------------------------|

| (2) | In May 2010, the Company obtained financing for insurance premiums on its owned and managed properties. |
|-----|---------------------------------------------------------------------------------------------------------|

| (3) | In April 2010, the Company made a principal payment of $240,000 on the note and the lender extended the maturity date of the note to April 29, 2011. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Represents bank loans of $950,000 obtained in May 2010 and $1,000,000 obtained in March 2010. |
|-----|-----------------------------------------------------------------------------------------------|

| (5) | Represents mortgage debt on properties in which the Company acquired partial ownership interests in 2010. The Company holds a 55% interest in Sabo Road, an 38.4% interest in Loop 1604 and an 11.2% interest in Campus Court. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | In September 2010, maturity of the loan was extended to September 21, 2011. |
|-----|-----------------------------------------------------------------------------|

| (7) | Represents the conversion of accounts payables to promissory notes during the second quarter of 2010. |
|-----|-------------------------------------------------------------------------------------------------------|

| (8) | In May 2010, the Company refinanced two $500,000 notes which were due to mature on May 31, 2010 with a new loan in the amount of $1,000,000 with the same lender. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | In October 2010, maturity of the loan was extended to June 15, 2012. |
|-----|----------------------------------------------------------------------|

| (10) | In August 2010, the Company made a principal pay-down of $195,000 on the note and the lender extendedthe maturity date to February 1, 2013. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Represents mortgage debt the Company assumed from the seller in connection with the property acquisition.  The Company holds a 51% ownership interest in the property. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (12) | Represents promissory note issued by the Company in January 2010 in connection with the Evergreen acquisition. |
|------|----------------------------------------------------------------------------------------------------------------|

----

----

----

|                                                                                                                                                              |   | Three MonthsEnded Sept 30, 2010 |    |   | Nine Months EndedSept 30, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|--------|----------------------------------------------------|--------|
| Net loss attributable to the Company                                                                                                                              |   | $                                                   | (2,153  | )      |                                               | $      | (3,699 | ) |
| Transfers from noncontrolling interests                                                                                                                           |   |                                                |    |   |                                               |   |   |   |
| 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 equity sale of consolidated partnership interests |   | $                                                   |  - |   |                                               |   |    370 |   |
| Net transfers from noncontrolling interests                                                                                                                       |   | $                                                   | -       |   |                                               | $      | 581 |   |
| Change from net loss attributable to the Company related to non-controlling interest transactions                                                                 |   | $                                                   | (2,153  | )      |                                               | $      | (3,118 | ) |

|                                                                                                  |   | Three Months Ended September 30, 2009 |   |   | Nine Months EndedSeptember 30, 2009 |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
| Net loss attributable to the Company                                                                  |   | $                                     | (2,322 | )      |                                | $      | (6,316 | ) |
| Transfers from noncontrolling interests                                                               |   |                                  |   |   |                                |   |   |   |
| Increase in the Company’s paid-in capital on exchangeof OP Units for shares of Common Stock     |   |                                  | -      |   |                                |   | 314 |   |
| Increase in the Company’s paid-in capital on partial sale of consolidated partnership interests |   | $                                     | 1,971  |   |                                | $      | 1,971 |   |
| Net transfers from noncontrolling interests                                                           |   | $                                     | 1,971  |   |                                | $      | 2,285 |   |
| Change from net loss attributable to the Company related to non-controlling interest transactions     |   | $                                     | (351   | )      |                                | $      | (4,031 | )   |

----

|                                            |   | SharesUnder Option |   |   | Weighted AverageExercise Price |   |   | AggregateIntrinsic Value |   |
|-------------------------------------------------|--------|-------------------------|--------|--------|------------------------------------------|--------|--------|-------------------------------|--------|
| Outstanding on January 1, 2010                  |   |                    | 58,750 |   |                                     | $      | 11.97  |                          |   |   |   |
| Granted                                         |   |                    | -      |   |                                     |   | -      |                          |   |   |   |
| Forfeited                                       |   |                    | -      |   |                                     |   | -      |                          |   |   |   |
| Exercised                                       |   |                    | -      |   |                                     |   | -      |                          |   |   |   |
| Outstanding on September 30, 2010               |   |                    | 58,750 |   |                                     | $      | 11.97  |                          |   | $ | 248,538 |   |
|                                            |   |                    |   |   |                                     |   |   |                          |   |   |   |   |
| Exercisable as of  September 30, 2010 |   |                    | 58,750 |   |                                     | $      | 11.97  |                          |   | $ | 248,538 |   |

| Range ofExercisePrice |   | NumberExercisable |   | Weighted AverageRemainingContractualLife |      | WeightedAverageExercisePrice |   |
|----------------------------|--------|-------------------|--------|-----------------------------------------------|-----------|------------------------------|--------|
| $4.05 - $6.10              |   |              | 25,000 |                                          | 3.8 years |                         | $      | 5.33 |   |
| $9.13 - $13.58             |   |              | 22,500 |                                          | 4.1 years |                         | $      | 10.32 |   |
| $30.00 - $30.00            |   |              | 11,250 |                                          | 1.3 years |                         | $      | 30.00 |   |

| Restricted Stock Awards |   | Number ofShares |   |   | Weighted Average GrantDate Fair Value |   |
|-----------------------------------|--------|----------------------|--------|--------|-----------------------------------------------------------|--------|
| Nonvested at January 1, 2010      |   |                 | 20,012 |   |                                                      | $      | 10.72 |   |
| Granted                           |   |                 | 11,500 |   |                                                      | $      | 11.55 |   |
| Vested                            |   |                 | (9,500 | )      |                                                      | $      | 11.03 |   |
| Forfeited                         |   |                 | -      |   |                                                      |   | - |   |
| Nonvested at September 30, 2010   |   |                 | 22,012 |   |                                                      | $      | 11.02 |   |

----

----

----

|                                                                                                    |   | As PreviouslyReported |    |   | Adjustment |   |    | Restated |   |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|--------|------------|--------|---------|----------|--------|
| Statement of Operations for the Three Months Ended Sept 30, 2010                                        |   |                       |    |   |       |   |    |     |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |
| Rental revenue                                                                                          |   | $                          | 8,307   |   |       | $      | 8,424   |     |   | $ | 16,731 |   |
| Third party management and transaction revenue                                                          |   |                       | 973     |   |       |   | (289    | )        |   |   | 684 |   |
| Interest and other income                                                                               |   |                       | 140     |   |       |   | -       |     |   |   | 140 |   |
| Total revenues                                                                                          |   |                       | 9,420   |   |       |   | 8,135   |     |   |   | 17,555 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Property operating expense                                                                              |   |                       | 4,703   |   |       |   | 2,136   |     |   |   | 6,839 |   |
| Corporate general and administrative                                                                    |   |                       | 2,557   |   |       |   | -       |     |   |   | 2,557 |   |
| Depreciation and amortization                                                                           |   |                       | 3,608   |   |       |   | 4,146   |     |   |   | 7,754 |   |
| Interest expense                                                                                        |   |                       | 3,494   |   |       |   | 3,318   |     |   |   | 6,812 |   |
| Total expenses                                                                                          |   |                       | 14,362  |   |       |   | 9,600   |     |   |   | 23,962 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Loss before deferred income tax benefit                                                                 |   |                       | (4,942  | )      |       |   | (1,465  | )        |   |   | (6,407 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Deferred income tax benefit                                                                             |   |                       | 1,697   |   |       |   | 105     |     |   |   | 1,802 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss, including non-controlling interests                                                           |   |                       | (3,245  | )      |       |   | (1,360  | )        |   |   | (4,605 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss attributable to non-controlling interests                                                      |   |                       | 1,092   |   |       |   | 1,241   |     |   |   | 2,333 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss attributable to American Spectrum Realty, Inc.                                                 |   |                       | (2,153  | )      |       |   | (119    | )        |   |   | (2,272 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Preferred stock dividend                                                                                |   |                       | (60     | )      |       |   | -       |     |   |   | (60 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss attributable to American Spectrum Realty, Inc. common Stockholders                             |   |                       | (2,213  | )      |       |   | (119    | )        |   |   | (2,332 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Basic and diluted earnings per share attributable to American Spectrum Realty, Inc. common stockholders |   | $                          | (0.73   | )      |       |   | (.04    | )        |   | $ | (0.77 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Statement of Operations for the Nine Months Ended Sept 30, 2010                                         |   |                       |    |   |       |   |    |     |   |   |   |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Rental revenue                                                                                          |   | $                          | 24,093  |   |       | $      | 8,913   |     |   | $ | 33,006 |   |
| Third party management and transaction revenue                                                          |   |                       | 3,208   |   |       |   | (308    | )        |   |   | 2,900 |   |
| Interest and other income                                                                               |   |                       | 167     |   |       |   | -       |     |   |   | 167 |   |
| Total revenues                                                                                          |   |                       | 27,468  |   |       |   | 8,605   |     |   |   | 36,073 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Property operating expense                                                                              |   |                       | 12,241  |   |       |   | 2,133   |     |   |   | 14,374 |   |
| Corporate general and administrative                                                                    |   |                       | 6,695   |   |       |   | -       |     |   |   | 6,695 |   |
| Depreciation and amortization                                                                           |   |                       | 10,757  |   |       |   | 4,833   |     |   |   | 15,590 |   |
| Interest expense                                                                                        |   |                       | 10,418  |   |       |   | 3,532   |     |   |   | 13,950 |   |
| Total expenses                                                                                          |   |                       | 40,111  |   |       |   | 10,498  |     |   |   | 50,609 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Loss from continuing operations before deferred tax benefit                                             |   |                       | (12,643 | )      |       |   | (1,893  | )        |   |   | (14,536 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Deferred income tax benefit                                                                             |   |                       | 4,593   |   |       |   | 280     |     |   |   | 4,873 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Loss from continuing operations                                                                         |   |                       | (8,050  | )      |       |   | (1,613  | )        |   |   | (9,663 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Income from discontinued operations                                                                     |   |                       | 2,847   |   |       |   | -       |     |   |   | 2,847 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss, including non-controlling interests                                                           |   |                       | (5,203  | )      |       |   | (1,613  | )        |   |   | (6,816 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss attributable to non-controlling interests                                                      |   |                       | 1,504   |   |       |   | 1,284   |     |   |   | 2,788 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss attributable to American Spectrum Realty, Inc.                                                 |   |                       | (3,699  | )      |       |   | (329    | )        |   |   | (4,028 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Preferred stock dividend                                                                                |   |                       | (180    | )      |       |   | -       |     |   |   | (180 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Net loss attributable to American Spectrum Realty, Inc. common Stockholders                             |   |                       | (3,879  | )      |       |   | (329    | )        |   |   | (4,208 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Basic and diluted per share data:                                                                       |   |                       |    |   |       |   |    |     |   |   |   |   |
| Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders      |   |                       | (1.96   | )      |       |   | (0.09   | )        |   |   | (2.05 | ) |
| Income from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders  |   |                       | .69     |   |       |   | -       |     |   |   | .69 |   |
| Net loss attributable to American Spectrum Realty, Inc. common stockholders                             |   | $                          | (1.27   | )      |       |   | (.09    | )        |   | $ | (1.36 | ) |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Balance Sheet as of September 30, 2010                                                                  |   |                       |    |   |       |   |    |     |   |   |   |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Real estate held for investment                                                                         |   | $                          | 280,033 |   |       | $      | 338,471 |     |   | $ | 618,504 |   |
| Accumulated depreciation                                                                                |   |                       | (82,344 | )      |       |   | (4,084  | )        |   |   | (86,428 | ) |
| Cash and cash equivalents                                                                               |   |                       | 1,013   |   |       |   | -       |     |   |   | 1,013 |   |
| Restricted cash                                                                                         |   |                       | 992     |   |       |   | 2,908   |     |   |   | 3,900 |   |
| Tenant and other receivables, net of allowance for doubtful accounts                                    |   |                       | 1,223   |   |       |   | 515     |     |   |   | 1,738 |   |
| Deferred rents receivable                                                                               |   |                       | 2,138   |   |       |   | -       |     |   |   | 2,138 |   |
| Deferred tax asset                                                                                      |   |                       | 11,883  |   |       |   | 280     |     |   |   | 12,163 |   |
| Investment in management company                                                                        |   |                       | 4,000   |   |       |   | -       |     |   |   | 4,000 |   |
| Investments in unconsolidated real estate assets from related parties                                   |   |                       | 142     |   |       |   | 129     |     |   |   | 271 |   |
| Purchased intangibles subject to amortization                                                           |   |                       | 18,000  |   |       |   | (5,275  | )        |   |   | 12,725 |   |
| Goodwill                                                                                                |   |                       | -       |   |       |   | 4,003   |     |   |   | 4,003 |   |
| Notes receivable from related party                                                                     |   |                       | 2,400   |   |       |   | -       |     |   |   | 2,400 |   |
| Interest receivable from related parties                                                                |   |                       | 267     |   |       |   | -       |     |   |   | 267 |   |
| Accounts receivable from related parties                                                                |   |                       | 754     |   |       |   | -       |     |   |   | 754 |   |
| Accounts receivable from Evergreen                                                                      |   |                       | 414     |   |       |   | -       |     |   |   | 414 |   |
| Prepaid and other assets, net                                                                           |   |                       | 12,821  |   |       |   | 5,860   |     |   |   | 18,681 |   |
| Total Assets                                                                                            |   |                       | 253,736 |   |       |   | 342,807 |     |   |   | 596,543 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Notes payable                                                                                           |   |                       | 221,187 |   |       |   | 240,509 |     |   |   | 461,696 |   |
| Accounts payable                                                                                        |   |                       | 8,408   |   |       |   | 4,315   |     |   |   | 12,723 |   |
| Accounts payable to related parties                                                                     |   |                       | 372     |   |       |   | -       |     |   |   | 372 |   |
| Liabilities related to insurance claims                                                                 |   |                       | 1,323   |   |       |   | -       |     |   |   | 1,323 |   |
| Accrued and other liabilities                                                                           |   |                       | 11,008  |   |       |   | 1,168   |     |   |   | 12,176 |   |
| Total Liabilities                                                                                       |   |                       | 242,298 |   |       |   | 245,992 |     |   |   | 488,290 |   |
|                                                                                                    |   |                       |    |   |       |   |    |     |   |   |   |   |
| Equity:                                                                                                 |   |                       |    |   |       |   |    |     |   |   |   |   |
| Preferred stock                                                                                         |   |                       | 1       |   |       |   | -       |     |   |   | 1 |   |
| Common stock                                                                                            |   |                       | 34      |   |       |   | -       |     |   |   | 34 |   |
| Additional paid-in capital                                                                              |   |                       | 49,028  |   |       |   | -       |     |   |   | 49,028 |   |
| Accumulated deficit                                                                                     |   |                       | (56,171 | )      |       |   | (329    | )        |   |   | (56,500 | ) |
| Treasury stock                                                                                          |   |                       | (3,095  | )      |       |   | -       |     |   |   | (3,095 | ) |
| American Spectrum Realty, Inc. stockholders’ equity (deficit)                                     |   |                       | (10,203 | )      |       |   | (329    | )        |   |   | (10,532 | ) |
| Non-controlling interests                                                                               |   |                       | 21,641  |   |       |   | 97,144  |     |   |   | 118,785 |   |
| Total Equity                                                                                            |   |                       | 11,438  |   |       |   | 96,815  |     |   |   | 108,253 |   |
| Total Liabilities and Equity                                                                            |   | $                          | 253,736 |   |       |   | 342,807 |     |   | $ | 596,543 |   |

----

----

----

|   | · | 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 derecognized; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                       |   | September 30, |       |   | September 30, |   |      | Variance |   |
|--------------------------------------------|--------|--------------------|------------|--------|--------------------|--------|-----------|----------|--------|
|                                       |   | 2010               |       |   | 2009               |   |      | $        |   |   | % |   |
|                                       |   | (restated)         |       |   |               |   |      |     |   |   |   |   |
| Rental revenue                             |   | $                  | 16,731,000 |   |               | $      | 8,016,000 |     |   | $ | 8,715,000 |   |   |   | 108.7 | % |
| Third party management and leasing revenue |   |               | 684,000    |   |               |   | 71,000    |     |   |   | 613,000 |   |   |   | 863.4 | % |
| Operating expenses:                        |   |               |       |   |               |   |      |     |   |   |   |   |   |   |   |   |
| Property operating expenses                |   |               | 6,839,000  |   |               |   | 4,158,000 |     |   |   | 2,681,000 |   |   |   | 64.5 | % |
| General and administrative                 |   |               | 2,557,000  |   |               |   | 1,002,000 |     |   |   | 1,555,000 |   |   |   | 155.2 | % |
| Depreciation and amortization              |   |               | 7,754,000  |   |               |   | 3,656,000 |     |   |   | 4,098,000 |   |   |   | 112.1 | % |
| Interest expense                           |   |               | 6,812,000  |   |               |   | 3,393,000 |     |   |   | 3,419,000 |   |   |   | 100.8 | % |

----

|                                       |   | September 30, |       |   | September 30, |   |       | Variance |   |
|--------------------------------------------|--------|--------------------|------------|--------|--------------------|--------|------------|----------|--------|
|                                       |   | 2010               |       |   | 2009               |   |       | $        |   |   | % |   |
|                                       |   | (restated)         |       |   |               |   |       |     |   |   |   |   |
| Rental revenue                             |   | $                  | 33,006,000 |   |               | $      | 24,451,000 |     |   | $ | 8,555,000 |   |   |   | 35.0 | % |
| Third party management and leasing Revenue |   |               | 2,900,000  |   |               |   | 112,000    |     |   |   | 2,788,000 |   |   |   | 2,489.3 | % |
| Operating expenses:                        |   |               |       |   |               |   |       |     |   |   |   |   |   |   |   |   |
| Property operating expenses                |   |               | 14,374,000 |   |               |   | 12,030,000 |     |   |   | 2,344,000 |   |   |   | 19.5 | % |
| General and administrative                 |   |               | 6,695,000  |   |               |   | 2,896,000  |     |   |   | 3,799,000 |   |   |   | 131.2 | % |
| Depreciation and amortization              |   |               | 15,590,000 |   |               |   | 10,951,000 |     |   |   | 4,639,000 |   |   |   | 42.4 | % |
| Interest expense                           |   |               | 13,950,000 |   |               |   | 10,000,000 |     |   |   | 3,950,000 |   |   |   | 39.5 | % |

----

----

----

----

|                                                                               |   | Nine Months EndedSeptember 30, 2010 |   |   | Nine Months EndedSeptember 30, 2009 |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|
|                                                                               |   | (restated)                                              |   |   |                                                    |   |
| Net loss attributable to the Company                                               |   | $                                                       | (4,028 | )      |                                                    | $      | (6,316 | ) |
| Depreciation and amortization from discontinued operations                         |   |                                                    | 8      |   |                                                    |   | 341 |   |
| Gain from sale of discontinued operations                                          |   |                                                    | (4,315 | )      |                                                    |   | - |   |
| Deferred income tax benefit                                                        |   |                                                    | (3,232 | )      |                                                    |   | (3,933 | ) |
| Depreciation and amortization attributable to the Company’s owned properties |   |                                                    | 11,522 |   |                                                    |   | 10,951 |   |
| FFO                                                                                |   | $                                                       | (45    | )      |                                                    | $      | 1,043 |   |

----

| Date: May 23, 2011 | By:   | /s/ William J. Carden                                 |
|--------------------|-----------------|-------------------------------------------------------|
|               |            | William J. Carden                                     |
|               |            | Chairman of the Board, President and,                 |
|               |            | Chief Executive Officer                               |
|               |            | (Principal Executive Officer)                         |
|               |            |                                                  |
| Date: May 23, 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 |

----