UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER 001-16785
 American Spectrum Realty, Inc.
  State of Maryland
    
    52-2258674(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)2401 Fountain View, Suite 510Houston, Texas 77057
    
    77057(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



TABLE OF CONTENTS
 Page No.PART I FINANCIAL INFORMATIONItem 1 Financial Statements
    
    
    3Consolidated Condensed Balance Sheets at June 30, 2009 (unaudited) and December 31, 2008
    
    
    3Consolidated Condensed Statements of Operations for the three and six months ended June 30, 2009 and 2008 (unaudited)
    
    
    4Consolidated Condensed Statements of Cash Flows for the three and six months ended June 30, 2009 and 2008 (unaudited)
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 4T Controls and Procedures
    
    
    21PART II OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    22Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 4 Submission of Matters to a Vote of Security Holders
    
    
    22Item 6 Exhibits and Reports on Form 8-K
    
    
    22
  2




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##### 



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SPECTRUM REALTY, INC.
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
 June 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSReal estate held for investment
    
    $
    259,281
    
    
    $
    257,786Accumulated depreciation
    
    
    (68,127
    )
    
    
    (61,283
    )Real estate held for investment, net
    
    
    191,154
    
    
    
    196,503Cash and cash equivalents
    
    
    640
    
    
    
    2,092Tenant and other receivables, net of allowance for doubtful accounts of
$453 and $371, respectively
    
    
    1,184
    
    
    
    805Deferred rents receivable
    
    
    1,900
    
    
    
    1,869Deferred tax asset
    
    
    5,693
    
    
    
    3,123Insurance claims receivable
    
    
    
    
    
    
    2,700Investment in management company
    
    
    4,000
    
    
    
    4,000Prepaid and other assets, net
    
    
    12,660
    
    
    
    13,899Total Assets
    
    $
    217,231
    
    
    $
    224,991LIABILITIESLiabilities:Notes payable, including premium of $0 and $19, respectively
    
    $
    201,303
    
    
    $
    202,194Accounts payable
    
    
    4,542
    
    
    
    3,970Liabilities related to insurance claims
    
    
    1,814
    
    
    
    3,200Accrued and other liabilities
    
    
    9,527
    
    
    
    10,970Total Liabilities
    
    
    217,186
    
    
    
    220,334Commitments and Contingencies (Notes 9 and 10):Equity:American Spectrum Realty, Inc. stockholders equity:Preferred stock, $.01 par value; authorized, 25,000,000 shares;
issued and outstanding, 55,172 and 55,172 shares, respectively
    
    
    1
    
    
    
    1Common stock, $.01 par value; authorized, 100,000,000 shares;
issued, 1,644,155 and 1,620,304 shares, respectively; outstanding,
1,408,449 and 1,384,598 shares, respectively
    
    
    16
    
    
    
    16Additional paid-in capital
    
    
    48,631
    
    
    
    48,393Accumulated deficit
    
    
    (48,194
    )
    
    
    (44,200
    )Treasury stock, at cost, 235,706 and 235,706 shares, respectively
    
    
    (3,095
    )
    
    
    (3,095
    )Total American Spectrum Realty, Inc. stockholders (deficit) equity
    
    
    (2,641
    )
    
    
    1,115Noncontrolling interest
    
    
    2,686
    
    
    
    3,542Total Equity
    
    
    45
    
    
    
    4,657Total Liabilities and Equity
    
    $
    217,231
    
    
    $
    224,991
  3




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##### 



AMERICAN SPECTRUM REALTY, INC.
 
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008REVENUES:Rental revenue
    
    $
    8,491
    
    
    $
    8,778
    
    
    $
    17,382
    
    
    $
    17,042Third party management and leasing revenue
    
    
    24
    
    
    
    3
    
    
    
    41
    
    
    
    16Interest and other income
    
    
    19
    
    
    
    37
    
    
    
    27
    
    
    
    114Total revenues
    
    
    8,534
    
    
    
    8,818
    
    
    
    17,450
    
    
    
    17,172EXPENSES:Property operating expense
    
    
    4,192
    
    
    
    4,216
    
    
    
    8,300
    
    
    
    7,744Corporate general and administrative
    
    
    1,024
    
    
    
    1,025
    
    
    
    1,894
    
    
    
    1,881Depreciation and amortization
    
    
    3,807
    
    
    
    3,550
    
    
    
    7,519
    
    
    
    6,788Interest expense
    
    
    3,388
    
    
    
    3,362
    
    
    
    6,759
    
    
    
    6,467Total expenses
    
    
    12,411
    
    
    
    12,153
    
    
    
    24,472
    
    
    
    22,880Loss from continuing operations before deferred income tax benefit
    
    
    (3,877
    )
    
    
    (3,335
    )
    
    
    (7,022
    )
    
    
    (5,708
    )Deferred income tax benefit
    
    
    1,392
    
    
    
    1,165
    
    
    
    2,486
    
    
    
    2,013Loss from continuing operations
    
    
    (2,485
    )
    
    
    (2,170
    )
    
    
    (4,536
    )
    
    
    (3,695
    )Discontinued operations:Gain from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Gain on sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,141Deferred income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (421
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    725Net loss, including noncontrolling interest
    
    $
    (2,485
    )
    
    $
    (2,170
    )
    
    $
    (4,536
    )
    
    $
    (2,970
    )Plus: Net loss attributable to noncontrolling interest
    
    
    292
    
    
    
    280
    
    
    
    542
    
    
    
    383Net loss attributable to American Spectrum Realty, Inc.
    
    
    (2,193
    )
    
    
    (1,890
    )
    
    
    (3,994
    )
    
    
    (2,587
    )Preferred stock dividend
    
    
    (60
    )
    
    
    
    
    
    
    (120
    )
    
    
    Net loss attributable to American Spectrum Realty, Inc.
common stockholders
    
    $
    (2,253
    )
    
    $
    (1,890
    )
    
    $
    (4,114
    )
    
    $
    (2,587
    )Basic and diluted per share data:Loss from continuing operations attributable to American
Spectrum Realty, Inc. common stockholders
    
    $
    (1.60
    )
    
    $
    (1.37
    )
    
    $
    (2.93
    )
    
    $
    (2.34
    )Income from discontinued operations attributable to American
Spectrum Realty, Inc. common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.46Net loss attributable to American Spectrum Realty, Inc.
common stockholders
    
    $
    (1.60
    )
    
    $
    (1.37
    )
    
    $
    (2.93
    )
    
    $
    (1.88
    )Basic weighted average shares used
    
    
    1,407,032
    
    
    
    1,376,098
    
    
    
    1,402,349
    
    
    
    1,375,864Amounts attributable to American Spectrum Realty, Inc. common
stockholders:Loss from continuing operations
    
    $
    (2,253
    )
    
    $
    (1.37
    )
    
    $
    (4,114
    )
    
    $
    (3,218
    )Income from discontinuing operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    631Net loss
    
    $
    (2,253
    )
    
    $
    (1.37
    )
    
    $
    (4,114
    )
    
    $
    (2,587
    )
  4




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##### 



AMERICAN SPECTRUM REALTY, INC
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 Six Months Ended June 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss applicable to American Spectrum Realty, Inc.
    
    $
    (3,994
    )
    
    $
    (2,587
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    7,519
    
    
    
    6,810Deferred rental income
    
    
    (31
    )
    
    
    (260
    )Noncontrolling interest
    
    
    (542
    )
    
    
    (383
    )Net gain on sale of real estate asset
    
    
    
    
    
    
    (1,141
    )Stock-based compensation expense
    
    
    44
    
    
    
    30Deferred income tax benefit
    
    
    (2,486
    )
    
    
    (1,592
    )Amortization of note payable premium, included in interest expense
    
    
    (19
    )
    
    
    (23
    )Changes in operating assets and liabilities:Increase in tenant and other receivables
    
    
    (379
    )
    
    
    (72
    )Decrease (increase) in prepaid and other assets
    
    
    569
    
    
    
    (1,737
    )Increase (decrease) in accounts payable
    
    
    572
    
    
    
    (375
    )(Decrease) increase in accrued and other liabilities
    
    
    (1,606
    )
    
    
    999Net cash used in operating activities
    
    
    (353
    )
    
    
    (331
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds received from sale of real estate asset
    
    
    
    
    
    
    3,014Real estate acquisitions
    
    
    
    
    
    
    (17,250
    )Capital improvements to real estate assets
    
    
    (1,500
    )
    
    
    (1,862
    )Proceeds received related to insurance claims
    
    
    2,700
    
    
    
    Payments for damages related to insurance claims
    
    
    (1,386
    )
    
    
    Net cash used in investing activities:
    
    
    (186
    )
    
    
    (16,098
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    2,215
    
    
    
    300Proceeds from borrowings  property acquisitions
    
    
    
    
    
    
    16,950Repayment of borrowings  property sales
    
    
    
    
    
    
    (2,218
    )Repayment of borrowings  refinances
    
    
    (1,474
    )
    
    
    (150
    )Repayment of borrowings  scheduled payments
    
    
    (1,614
    )
    
    
    (829
    )Dividend payments to preferred stockholders
    
    
    (40
    )
    
    
    Repurchase of common stock
    
    
    
    
    
    
    (9
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    31Release of restricted cash
    
    
    
    
    
    
    3,565Net cash (used in) provided by financing activities:
    
    
    (913
    )
    
    
    17,640(Decrease) increase in cash and cash equivalents
    
    
    (1,452
    )
    
    
    1,211Cash and cash equivalents, beginning of period
    
    
    2,092
    
    
    
    847Cash and cash equivalents, end of period
    
    $
    640
    
    
    
    2,058SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Conversion of operating partnership units to common stock
    
    $
    314
    
    
    
    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    6,797
    
    
    $
    6,207Cash paid for income taxes
    
    
    60
    
    
    
    151
  5




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##### 



AMERICAN SPECTRUM REALTY, INC.
 
 Notes to Consolidated Condensed Financial Statements
 NOTE 1. DESCRIPTION OF BUSINESS
       6




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##### 



NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 BASIS OF PRESENTATION
 S-X
   RECLASSIFICATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets Noncontrolling Interests in Consolidated Financial Statementsan amendment of Accounting Research
Bulletin No. 51.
 SEGMENT REPORTING
  NEW ACCOUNTING PRONOUNCEMENTS
 Subsequent
Events
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities Earnings Per Share
 7




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##### 



Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Business Combinations Business Combinations
 Fair Value Measurement
 STOCK-BASED COMPENSATION
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to
Employees
 8




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##### 



NONCONTROLLING INTEREST
  NET LOSS PER SHARE
 Earnings Per Share,
 INCOME TAXES
    9




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##### 



NOTE 3. REAL ESTATE
 ACQUISITIONS
 2009
  2008
  DISPOSITIONS
 2009
  2008
  NOTE 4. DISCONTINUED OPERATIONS
  Six Months Ended June 30,Consolidated Condensed Statements of Operations
    
    2009
    
    2008Rental revenue
    
    $
    
    
    
    $
    73Total expenses
    
    
    
    
    
    
    68Income from discontinued operations before gain on
sale and income tax expense
    
    
    
    
    
    
    5Gain on sale of discontinued operations
    
    
    
    
    
    
    1,141Income tax expense
    
    
    
    
    
    
    (421
    )Income from discontinued operations
    
    $
    
    
    
    $
    725
 NOTE 5. NOTES PAYABLE, NET OF PREMIUM
  June 30, 2009
    
    
    December 31, 2008Collateral (property unless
    
    Maturity
    
    
    Principal
    
    
    Interest
    
    
    Principal
    
    
    Interestotherwise noted)
    
    Date
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateFixed Rate1501 Mockingbird (1)
    
    
    9/30/2009
    
    
    
    298
    
    
    
    6.00
    %
    
    
    300
    
    
    
    6.00
    %6430 Richmond Atrium (1)
    
    
    9/30/2009
    
    
    
    709
    
    
    
    5.50
    %
    
    
    715
    
    
    
    5.50
    %Corporate  Secured
    
    
    2/7/2010
    
    
    
    1,950
    
    
    
    7.50
    %
    
    
    1,950
    
    
    
    7.50
    %Fountain View Place (2)
    
    
    4/29/2010
    
    
    
    1,515
    
    
    
    10.00
    %
    
    
    1,700
    
    
    
    10.00
    %Corporate  Unsecured (3)
    
    
    5/31/2010
    
    
    
    500
    
    
    
    11.00
    %
    
    
    
    
    
    
    Pacific Spectrum (4)
    
    
    6/10/2010
    
    
    
    5,294
    
    
    
    8.02
    %
    
    
    5,341
    
    
    
    8.02
    %Fountain View Place (5)
    
    
    10/29/2010
    
    
    
    2,100
    
    
    
    18.00
    %
    
    
    2,500
    
    
    
    18.00
    %Bristol Bay
    
    
    8/1/2011
    
    
    
    6,952
    
    
    
    7.58
    %
    
    
    7,005
    
    
    
    7.58
    %Technology
    
    
    8/1/2011
    
    
    
    7,188
    
    
    
    7.44
    %
    
    
    7,243
    
    
    
    7.44
    %Creekside
    
    
    12/1/2011
    
    
    
    5,861
    
    
    
    7.17
    %
    
    
    5,907
    
    
    
    7.17
    %16350 Park Ten Place
    
    
    5/11/2012
    
    
    
    4,494
    
    
    
    7.45
    %
    
    
    4,526
    
    
    
    7.45
    %
 10




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##### 



June 30, 2009
    
    
    December 31, 2008Collateral (property unless
    
    Maturity
    
    
    Principal
    
    
    Interest
    
    
    Principal
    
    
    Interestotherwise noted)
    
    Date
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate16360 Park Ten Place
    
    
    5/11/2012
    
    
    
    3,521
    
    
    
    7.45
    %
    
    
    3,546
    
    
    
    7.45
    %2855 Mangum
    
    
    5/11/2012
    
    
    
    2,594
    
    
    
    7.45
    %
    
    
    2,613
    
    
    
    7.45
    %2855 Mangum
    
    
    5/11/2012
    
    
    
    1,445
    
    
    
    6.00
    %
    
    
    1,472
    
    
    
    6.00
    %6430 Richmond Atrium
    
    
    5/11/2012
    
    
    
    2,177
    
    
    
    7.45
    %
    
    
    2,193
    
    
    
    7.45
    %Southwest Pointe
    
    
    6/1/2012
    
    
    
    2,730
    
    
    
    7.33
    %
    
    
    2,751
    
    
    
    7.33
    %16350 Park Ten Place
    
    
    8/11/2012
    
    
    
    496
    
    
    
    7.45
    %
    
    
    500
    
    
    
    7.45
    %16360 Park Ten Place
    
    
    8/11/2012
    
    
    
    389
    
    
    
    7.45
    %
    
    
    391
    
    
    
    7.45
    %11500 Northwest Freeway
    
    
    6/1/2014
    
    
    
    4,112
    
    
    
    5.93
    %
    
    
    4,145
    
    
    
    5.93
    %11500 Northwest Freeway
    
    
    6/1/2014
    
    
    
    297
    
    
    
    5.93
    %
    
    
    300
    
    
    
    5.93
    %Morenci
    
    
    7/1/2014
    
    
    
    1,707
    
    
    
    7.25
    %
    
    
    1,524
    
    
    
    6.60
    %5850 San Felipe
    
    
    8/1/2014
    
    
    
    5,134
    
    
    
    5.65
    %
    
    
    5,177
    
    
    
    5.65
    %Northwest Corporate Center
    
    
    8/1/2014
    
    
    
    5,411
    
    
    
    6.26
    %
    
    
    5,451
    
    
    
    6.26
    %14741 Yorktown
    
    
    9/1/2014
    
    
    
    8,600
    
    
    
    5.32
    %
    
    
    8,600
    
    
    
    5.32
    %8100 Washington
    
    
    2/22/2015
    
    
    
    2,214
    
    
    
    5.59
    %
    
    
    2,232
    
    
    
    5.59
    %8300 Bissonnet
    
    
    5/1/2015
    
    
    
    4,562
    
    
    
    5.51
    %
    
    
    4,597
    
    
    
    5.51
    %1501 Mockingbird
    
    
    7/1/2015
    
    
    
    3,263
    
    
    
    5.28
    %
    
    
    3,287
    
    
    
    5.28
    %5450 Northwest Central
    
    
    9/1/2015
    
    
    
    2,652
    
    
    
    5.38
    %
    
    
    2,674
    
    
    
    5.38
    %800 Sam Houston Parkway
    
    
    12/29/2015
    
    
    
    2,346
    
    
    
    6.25
    %
    
    
    2,372
    
    
    
    6.25
    %888 Sam Houston Parkway
    
    
    12/29/2015
    
    
    
    2,346
    
    
    
    6.25
    %
    
    
    2,372
    
    
    
    6.25
    %2401 Fountain View
    
    
    3/1/2016
    
    
    
    12,228
    
    
    
    5.82
    %
    
    
    12,316
    
    
    
    5.82
    %12000 Westheimer
    
    
    1/1/2017
    
    
    
    4,250
    
    
    
    5.70
    %
    
    
    4,250
    
    
    
    5.70
    %2470 Gray Falls
    
    
    1/1/2017
    
    
    
    3,100
    
    
    
    5.70
    %
    
    
    3,100
    
    
    
    5.70
    %6420 Richmond Atrium
    
    
    6/5/2017
    
    
    
    6,400
    
    
    
    5.87
    %
    
    
    6,400
    
    
    
    5.87
    %7700 Irvine Center
    
    
    8/1/2017
    
    
    
    45,000
    
    
    
    5.99
    %
    
    
    45,000
    
    
    
    5.99
    %Fountain View Place
    
    
    4/29/2018
    
    
    
    12,595
    
    
    
    6.50
    %
    
    
    12,670
    
    
    
    6.50
    %Subtotal
    
    
    $
    176,430
    
    
    
    
    
    
    $
    177,120Variable RateCorporate  Unsecured
    
    
    1/12/2010
    
    
    
    1,200
    
    
    
    6.00
    %
    
    
    1,200
    
    
    
    6.00
    %Beltway Industrial (6)
    
    
    5/9/2010
    
    
    
    17,170
    
    
    
    7.00
    %
    
    
    17,170
    
    
    
    7.00
    %Corporate  Unsecured
    
    
    5/31/2010
    
    
    
    500
    
    
    
    6.00
    %
    
    
    500
    
    
    
    6.00
    %Northwest Spectrum
    
    
    4/19/2012
    
    
    
    3,116
    
    
    
    2.90
    %
    
    
    3,210
    
    
    
    4.30
    %Windrose Plaza
    
    
    4/19/2012
    
    
    
    2,887
    
    
    
    2.90
    %
    
    
    2,975
    
    
    
    4.30
    %Subtotal
    
    
    $
    24,870
    
    
    
    
    
    
    $
    25,055Loan Premium
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Total
    
    
    $
    201,303
    
    
    
    
    
    
    $
    202,194
 
 (1)
    
    In June 2009, the lender extended the maturity date of the notes from June 30, 2009 to
September 30, 2009(2)
    
    In April 2009, the Company made a principal payment of $170,000 on the note and the lender
extended the maturity date of the note to April 29, 2010(3)
    
    In May 2009, the Company obtained an unsecured loan in the amount of $500,000. The note
matures in May 2010.(4)
    
    In June 2009, the lender extended the maturity date of the note from June 10, 2009 to June
10, 2010.(5)
    
    In April 2009, the Company made a principal payment of $250,000 on the note and exercised an
option to extend the maturity to October 29, 2009. The loan contains a second option to extend
maturity to April 29, 2010.(6)
    
    The loan contains two one-year extension options. The extension options are contingent upon
satisfaction of certain terms and conditions required by the lender.   11




---



##### 



NOTE 6. NONCONTROLLING INTEREST
     Six Months Ended June 30,2009
    
    2008Net loss attributable to the Company
    
    $
    (3,994
    )
    
    $
    (2,587
    )Increase in the Companys paid-in capital on exchange
of OP Units for shares of Common Stock
    
    $
    314
    
    
    $
    Change from net loss attributable to the Company and
exchange of OP Units for shares of Common Stock
    
    $
    (3,680
    )
    
    $
    (2,587
    )
  NOTE 7. REPURCHASE OF COMMON STOCK
  NOTE 8. STOCK-BASED COMPENSATION
    12




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##### 



Stock Options
   Shares
    
    Weighted Average
    
    AggregateUnder Option
    
    Exercise Price
    
    Intrinsic ValueOutstanding on January 1, 2009
    
    
    29,375
    
    
    $
    23.93Granted
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Outstanding on June 30, 2009
    
    
    29,375
    
    
    $
    23.93
    
    
    $
    97,713Exercisable as of June 30, 2009
    
    
    29,375
    
    
    $
    23.93
    
    
    $
    97,713
  Weighted Average
    
    WeightedRange of
    
    
    
    
    
    Remaining
    
    AverageExercise
    
    Number
    
    Contractual
    
    ExercisePrice
    
    Exercisable
    
    Life
    
    Price$8.10  $12.20
    
    
    12,500
    
    
    4.8 years
    
    $
    10.66$18.25  $27.16
    
    
    11,250
    
    
    5.2 years
    
    $
    20.65$60.00  $60.00
    
    
    5,625
    
    
    2.3 years
    
    $
    60.00
  Weighted AverageGrant DateNonvested Stock Options
    
    Number
    
    Fair ValueNonvested at January 1, 2009
    
    
    1,562
    
    
    $
    10.00Granted
    
    
    
    
    
    
    Vested
    
    
    (1,562
    )
    
    $
    10.00Forfeited
    
    
    
    
    
    
    Nonvested at June 30, 2009
    
    
    
    
    
    $
    
  Restricted Stock
   13




---



##### 



Weighted AverageNumber of
    
    Grant DateRestricted Stock Awards
    
    Shares
    
    Fair ValueNonvested at January 1, 2009
    
    
    7,087
    
    
    $
    24.10Granted
    
    
    4,250
    
    
    $
    21.23Vested
    
    
    (2,831
    )
    
    $
    23.88Forfeited
    
    
    
    
    
    
    Nonvested at March 31, 2009
    
    
    8,506
    
    
    $
    22.74
  NOTE 9. RELATED PARTY TRANSACTIONS
      14




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##### 



NOTE 10. COMMITMENTS AND CONTINGENCIES
    NOTE 11. PREFERRED STOCK
    
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
   15




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##### 



CRITICAL ACCOUNTING POLICIES
   Investment in Real Estate Assets
   Building and Improvements
    
    5 to 40 yearsTenant Improvements
    
    Term of the related leaseFurniture and Equipment
    
    3 to 5 years
 16




---



##### 



Allocation of Purchase Price of Acquired Assets
 Business Combinations
  Sales of Real Estate Assets
 Accounting for Sales of Real Estate
 RESULTS OF OPERATIONS
 Discussion of the three months ended June 30, 2009 and 2008.
  June 30,
    
    June 30,
    
    Variance2009
    
    2008
    
    $
    
    %Rental revenue
    
    $
    8,491,000
    
    
    $
    8,778,000
    
    
    $
    (287,000
    )
    
    
    (3.3
    %)Operating expenses:Property operating expenses
    
    
    4,192,000
    
    
    
    4,216,000
    
    
    
    (24,000
    )
    
    
    (0.6
    %)General and administrative
    
    
    1,024,000
    
    
    
    1,025,000
    
    
    
    (1,000
    )
    
    
    (0.1
    %)Depreciation and amortization
    
    
    3,807,000
    
    
    
    3,550,000
    
    
    
    257,000
    
    
    
    7.2
    %Interest expense
    
    
    3,388,000
    
    
    
    3,362,000
    
    
    
    26,000
    
    
    
    0.8
    %
 Rental revenue
 Property operating expenses
 17




---



##### 



General and administrative
 Depreciation and amortization
 Interest expense
 Income taxes.
 Noncontrolling interest.
 Discussion of the six months ended June 30, 2009 and 2008.
  June 30,
    
    June 30,
    
    Variance2009
    
    2008
    
    $
    
    %Rental revenue
    
    $
    17,382,000
    
    
    $
    17,042,000
    
    
    $
    340,000
    
    
    
    2.0
    %Operating expenses:Property operating expenses
    
    
    8,300,000
    
    
    
    7,744,000
    
    
    
    556,000
    
    
    
    7.2
    %General and administrative
    
    
    1,894,000
    
    
    
    1,881,000
    
    
    
    13,000
    
    
    
    0.7
    %Depreciation and amortization
    
    
    7,519,000
    
    
    
    6,788,000
    
    
    
    731,000
    
    
    
    10.8
    %Interest expense
    
    
    6,759,000
    
    
    
    6,467,000
    
    
    
    292,000
    
    
    
    4.5
    %
 Rental revenue
 Property operating expenses
 18




---



##### 



General and administrative
 Depreciation and amortization
 Interest expense
 Income taxes.
 Noncontrolling interest.
 Discontinued operations
 LIQUIDITY AND CAPITAL RESOURCES
   Six Months Ended      June 30,2009
    
    2008Non-Cash Items:Depreciation and amortization expense
    
    $
    7,519
    
    
    $
    6,810Income tax benefit
    
    
    (2,486
    )
    
    
    (1,592
    )Deferred rental income
    
    
    (31
    )
    
    
    (260
    )Noncontrolling interest
    
    
    (542
    )
    
    
    (383
    )Stock-based compensation expense
    
    
    44
    
    
    
    30Amortization of loan premium
    
    
    (19
    )
    
    
    (23
    )
 19




---



##### 



20




---



##### 



INFLATION
  FORWARD-LOOKING STATEMENTS
  
 ITEM 4T. CONTROLS AND PROCEDURES
   21




---



##### 



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Name of
    
    Number of
    
    Number ofNominee
    
    Votes For
    
    Votes WithheldTimothy R. Brown
    
    
    1,098,113
    
    
    
    3,555William J. Carden
    
    
    1,098,170
    
    
    
    3,498John N. Galardi
    
    
    1,097,310
    
    
    
    4,358William W. Geary, Jr.
    
    
    1,098,186
    
    
    
    3,482Presley E. Werlein, III
    
    
    1,097,987
    
    
    
    3,681
  Number of
    
    Number of
    
    Number ofVotes For
    
    Votes Against
    
    Votes Abstaining1,098,654
    
    
    487
    
    
    
    2,527
 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
       22




---



##### 



SIGNATURES
  AMERICAN SPECTRUM REALTY, INC.Date: August 13, 2009
    By:
    /s/ William J. CardenWilliam J. CardenChairman of the Board, President and,
Chief Executive Officer
(Principal Executive Officer)Date: August 13, 2009
    By:
    /s/ G. Anthony EppolitoG. Anthony EppolitoVice President, Chief Financial Officer,
(Principal Financial Officer and Accounting Officer),
Treasurer and Secretary 
 EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Title31.1
    
    Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 200232.2
    
    Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 23