UNITED
  STATES
      
  SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

FORM
  10-Q

|(Mark
        One)                                             
|---------------------------------------------------------------
|þ                                                              
|For the quarterly period ended June 30, 2006                   
|                                                               
|OR                                                             
|                                                               
|o                                                              
|For the transition period from ______________ to ______________

Commission
file number 1-32662

NEWKIRK REALTY TRUST, INC.
(Exact name
of Registrant as specified in its charter)

|Maryland                                                                   | 20-3164488                                  
|-------------------------------------------------------------------------- | --------------------------------------------
|(State or other jurisdiction
      of
      incorporation or organization) | (I.R.S. Employer
        Identification No.)

|7 Bulfinch Place, Suite 500, Boston, MA            | 02114-9507    
|-------------------------------------------------- | --------------
|(Address of principal
      executive offices)     | (Zip Code)    
|                                                   |               
|Registrants telephone number, including area code | (617) 570-4680

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

Indicate by check mark whether the Registrant is a large  accelerated  filer, an accelerated  filer, or a  non-accelerated  filer (as defined in Rule 12b-2 of the
Exchange Act).

Large
Accelerated Filer o   Accelerated filer   o  Non-accelerated
filer  þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) 
Yes o No  þ

Indicate the number of shares  outstanding  of each of the issuers  classes of common stock,  as of the latest  practical  date.  19,375,000  Common Shares as of
August 1, 2006.



---

Table of Contents

|                                      |                                                                                                                                                               | Page
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                     
|Part
        I. FINANCIAL INFORMATION
|                                      |                                                                                                                                                               |     
|                                      | Item
      1. Financial Statements                                                                                                                            |     
|                                      |                                                                                                                                                               |     
|                                      |                                                                                                                                                               |     
|                                      | Unaudited
      Consolidated Balance Sheet at June 30, 2006 and             Consolidated Balance Sheet at December 31, 2005                                   |     
|                                      |                                                                                                                                                               |     
|                                      | Unaudited
      Consolidated Statements of Operations and Comprehensive Income             for the Three and Six Months Ended June 30, 2006 and June 30, 2005 |     
|                                      |                                                                                                                                                               |     
|                                      | Unaudited
      Consolidated Statement of Stockholders Equity for the             Six Months Ended June 30, 2006                                             |     
|                                      |                                                                                                                                                               |     
|                                      | Unaudited
      Consolidated Statements of Cash Flows for the Six             Months Ended June 30, 2006 and June 30, 2005                                    |     
|                                     
|                                      | Notes
      to Unaudited Consolidated Financial Statements                                                                                                    |     
|                                      |                                                                                                                                                               |     
|                                      | Item
      2. Managements Discussion and Analysis of Financial Condition and Results
                        of Operations                                   |     
|                                      |                                                                                                                                                               |     
|                                      | Item
      3. Quantitative and Qualitative Disclosures about Market Risk                                                                                      |     
|                                      |                                                                                                                                                               |     
|                                      | Item
      4. Controls and Procedures                                                                                                                         |     
|                                      |                                                                                                                                                               |     
|Part
        II. OTHER INFORMATION   
|                                      |                                                                                                                                                               |     
|                                      | Item
      6. Exhibits                                                                                                                                        |     
|                                      |                                                                                                                                                               |     
|                                      | Signatures                                                                                                                                                    |     
|                                      |                                                                                                                                                               |     
|                                      | Exhibit
      Index                                                                                                                                           |     

2



---

PART 1 -
FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL
STATEMENTS
|------- | --------------------

NEWKIRK
REALTY TRUST, INC.  CONSOLIDATED BALANCE SHEETS

(In
thousands, except share and per-share data)

|                                                                                                           |  |  | June 30,
        2006
        (Unaudited) |           | December 31,
        2005 |  
|---------------------------------------------------------------------------------------------------------- |  |  | ----------------------------------------- | --------- | ------------------------- | -
|                                                                                                           |  |  |                                           |           |                           |  
|ASSETS                                                                                                     |  |  |                                           |           |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Real
      estate investments:                                                                             |  |  |                                           |           |                           |  
|Land                                                                                                       |  |  | $                                         | 52,194    |                           | $
|Land
      estates                                                                                         |  |  |                                           | 45,902    |                           |  
|Buildings
      and improvements                                                                           |  |  |                                           | 1,435,406 |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Total
      real estate investments                                                                        |  |  |                                           | 1,533,502 |                           |  
|Less
      accumulated depreciation and amortization                                                       |  |  |                                           | (520,585  | )                         |  
|                                                                                                           |  |  |                                           |           |                           |  
|Real
      estate investments, net                                                                         |  |  |                                           | 1,012,917 |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Real
      estate held for sale, net of accumulated depreciation of $99,018 and $44,522                    |  |  |                                           | 135,329   |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Cash
      and cash equivalents                                                                            |  |  |                                           | 48,605    |                           |  
|Restricted
      cash                                                                                      |  |  |                                           | 15,444    |                           |  
|Real
      estate securities available for sale                                                            |  |  |                                           | 10,045    |                           |  
|Receivables
      (including $1,024 and $6,078 from related parties)                                       |  |  |                                           | 51,577    |                           |  
|Deferred
      rental income receivable                                                                    |  |  |                                           | 22,463    |                           |  
|Loans
      receivable                                                                                     |  |  |                                           | 14,974    |                           |  
|Equity
      investments in limited partnerships                                                           |  |  |                                           | 8,636     |                           |  
|Equity
      investment in joint venture                                                                   |  |  |                                           | 33,952    |                           |  
|Deferred
      costs, net of accumulated amortization of $21,471 and $17,677                               |  |  |                                           | 11,826    |                           |  
|Lease
      intangibles, net                                                                               |  |  |                                           | 19,895    |                           |  
|Other
      assets (including $1,418 and $1,304 from related parties)                                      |  |  |                                           | 31,612    |                           |  
|Other
      assets of discontinued operations                                                              |  |  |                                           | 10,779    |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Total
      Assets                                                                                         |  |  | $                                         | 1,428,054 |                           | $
|                                                                                                           |  |  |                                           |           |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|LIABILITIES,
      MINORITY INTEREST AND STOCKHOLDERS EQUITY                                              |  |  |                                           |           |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Liabilities:                                                                                               |  |  |                                           |           |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Mortgage
      notes payable (including $15,880 and $15,536 to a related party)                            |  |  | $                                         | 232,868   |                           | $
|Note
      payable                                                                                         |  |  |                                           | 557,065   |                           |  
|Contract
      right mortgage notes payable                                                                |  |  |                                           | 11,667    |                           |  
|Accrued
      interest payable (including $386 and $378 to a related party)                                |  |  |                                           | 5,518     |                           |  
|Accounts
      payable and accrued expenses                                                                |  |  |                                           | 4,922     |                           |  
|Below
      market lease intangibles, net                                                                  |  |  |                                           | 13,434    |                           |  
|Dividend
      payable                                                                                     |  |  |                                           | 7,750     |                           |  
|Other
      liabilities                                                                                    |  |  |                                           | 7,298     |                           |  
|Liabilities
      of discontinued operations                                                               |  |  |                                           | 58,424    |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Total
      Liabilities                                                                                    |  |  |                                           | 898,946   |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Commitments
      and contingencies                                                                        |  |  |                                           |           |                           |  
|Minority
      interests                                                                                   |  |  |                                           | 351,954   |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Stockholders
      equity:                                                                                |  |  |                                           |           |                           |  
|Preferred
      stock; $.01 par value; 100,000,000 shares authorized; 1 issued and outstanding             |  |  |                                           |          |                           |  
|Common
      stock; $.01 par value; 400,000,000 shares authorized; 19,375,000 issued
      and outstanding |  |  |                                           | 194       |                           |  
|Additional
      paid-in capital                                                                           |  |  |                                           | 179,871   |                           |  
|Accumulated
      dividends in excess of net income                                                        |  |  |                                           | (4,756    | )                         |  
|Accumulated
      other comprehensive income (loss)                                                        |  |  |                                           | 1,845     |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Total
      Stockholders Equity                                                                           |  |  |                                           | 177,154   |                           |  
|                                                                                                           |  |  |                                           |           |                           |  
|Total
      Liabilities, Minority Interests and Stockholders Equity                                       |  |  | $                                         | 1,428,054 |                           | $
|                                                                                                           |  |  |                                           |           |                           |  

See Notes to
Consolidated Financial Statements.

3



---

NEWKIRK
REALTY TRUST, INC. (THE COMPANY)AND THE NEWKIRK MASTER LIMITED PARTNERSHIP
(THE PREDECESSOR)

CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(Unaudited)(In thousands, except per
share data)

|                                                                      |  |  | THE COMPANY                                      |         | THE
        PREDECESSOR                  |   | THE
        COMPANY                             |   | THE
        PREDECESSOR                         |        
|--------------------------------------------------------------------- |  |  | ------------------------------------------------ | ------- | ---------------------------------------- | - | ----------------------------------------------- | - | ----------------------------------------------- | -------
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|                                                                      |  |  | Three
        Months Ended
        June 30, 2006 |         | Three Months Ended
        June 30, 2005 |   | Six
        Months Ended 
        June 30, 2006 |   | Six
        Months Ended 
        June 30, 2005 |        
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Revenue:                                                              |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Rental
      income                                                   |  |  | $                                                | 55,458  |                                          | $ | 51,055                                          |   | $                                               | 108,926
|Interest
      income                                                 |  |  |                                                  | 2,868   |                                          |   | 767                                             |   |                                                 | 7,071  
|Management
      fees                                                 |  |  |                                                  | 60      |                                          |   | 78                                              |   |                                                 | 124    
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Total
      revenue                                                   |  |  |                                                  | 58,386  |                                          |   | 51,900                                          |   |                                                 | 116,121
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Expenses:                                                             |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Interest                                                              |  |  |                                                  | 13,330  |                                          |   | 17,571                                          |   |                                                 | 26,019 
|Depreciation                                                          |  |  |                                                  | 11,445  |                                          |   | 7,404                                           |   |                                                 | 22,572 
|Compensation
      expense for exclusivity rights                     |  |  |                                                  | 833     |                                          |   |                                                |   |                                                 | 1,667  
|General
      and administrative                                      |  |  |                                                  | 2,489   |                                          |   | 986                                             |   |                                                 | 5,018  
|Operating                                                             |  |  |                                                  | 1,652   |                                          |   | 236                                             |   |                                                 | 2,984  
|Impairment
      loss                                                 |  |  |                                                  |        |                                          |   | 14,754                                          |   |                                                 |       
|Amortization                                                          |  |  |                                                  | 1,545   |                                          |   | 655                                             |   |                                                 | 2,804  
|Ground
      rent                                                     |  |  |                                                  | 577     |                                          |   | 528                                             |   |                                                 | 1,166  
|State
      and local taxes                                           |  |  |                                                  | 339     |                                          |   | 807                                             |   |                                                 | 1,181  
|Minority
      interest expense of partially-owned entities           |  |  |                                                  | 5,346   |                                          |   |                                                |   |                                                 | 10,692 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Total
      expenses                                                  |  |  |                                                  | 37,556  |                                          |   | 42,941                                          |   |                                                 | 74,103 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Income
      from continuing operations before other income (expense) |  |  |                                                  | 20,830  |                                          |   | 8,959                                           |   |                                                 | 42,018 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Other
      income (expense):                                         |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Equity
      in income from investments in limited partnerships       |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|and
      joint ventures                                              |  |  |                                                  | 1,245   |                                          |   | 766                                             |   |                                                 | 1,709  
|Gain
      on sale of securities                                      |  |  |                                                  | 109     |                                          |   |                                                |   |                                                 | 88     
|Minority
      interest                                               |  |  |                                                  | (16,007 | )                                        |   | (4,660                                          | ) |                                                 | (31,639
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Income
      from continuing operations                               |  |  |                                                  | 6,177   |                                          |   | 5,065                                           |   |                                                 | 12,176 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Discontinued
      operations:                                        |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Income
      before minority interest                                 |  |  |                                                  | 4,468   |                                          |   | 5,866                                           |   |                                                 | 8,454  
|Gain
      from disposal of real estate                               |  |  |                                                  |        |                                          |   | 1                                               |   |                                                 |       
|Impairment
      loss                                                 |  |  |                                                  |        |                                          |   | (12,211                                         | ) |                                                 |       
|Minority
      interest                                               |  |  |                                                  | (3,159  | )                                        |   | 7                                               |   |                                                 | (6,004 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Income
      (loss) from discontinued operations                      |  |  |                                                  | 1,309   |                                          |   | (6,337                                          | ) |                                                 | 2,450  
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Net income
      (loss)                                               |  |  | $                                                | 7,486   |                                          | $ | (1,272                                          | ) | $                                               | 14,626 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Comprehensive
      income:                                           |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Net
      income (loss)                                               |  |  | $                                                | 7,486   |                                          | $ | (1,272                                          | ) | $                                               | 14,626 
|Unrealized
      loss on real estate securities available for sale    |  |  |                                                  | (455    | )                                        |   |                                                |   |                                                 | (96    
|Unrealized
      gain on interest rate derivative                     |  |  |                                                  | 2,917   |                                          |   |                                                |   |                                                 | 6,700  
|Minority
      interest in other comperehensive income                |  |  |                                                  | (1,696  | )                                        |   |                                                |   |                                                 | (4,617 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Comprehensive
      income (loss)                                     |  |  | $                                                | 8,252   |                                          | $ | (1,272                                          | ) | $                                               | 16,613 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Per share
      data:                                                 |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Income
      from continuing operations                               |  |  | $                                                | 0.32    |                                          |   |                                                 |   | $                                               | 0.63   
|Income
      from discontinued operations                             |  |  |                                                  | 0.07    |                                          |   |                                                 |   |                                                 | 0.13   
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Net
      income applicable to Common Stock                           |  |  | $                                                | 0.39    |                                          |   |                                                 |   | $                                               | 0.76   
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        
|Weighted
      average Common Stock                                   |  |  |                                                  | 19,375  |                                          |   |                                                 |   |                                                 | 19,375 
|                                                                      |  |  |                                                  |         |                                          |   |                                                 |   |                                                 |        

See Notes to
Consolidated Financial Statements.

4



---

NEWKIRK
REALTY TRUST, INC.

CONSOLIDATED
STATEMENT OF STOCKHOLDERS EQUITYFOR THE SIX MONTHS ENDED JUNE 30, 2006(Unaudited)
(In thousands)

|                                  |  |                         |        |                      |        | Additonal
        Paid-in Capital |        | Accumulated
        Dividends in Excess
        of Net Income |  | Accumulated
        Other Comprehensive
        Income (Loss) |  | Total |    
|--------------------------------- |  | ----------------------- | ------ | -------------------- | ------ | --------------------------------- | ------ | ------------------------------------------------------------- |  | ------------------------------------------------------------- |  | ----- | ---
|                                  |  | Preferred
        Stock |        | Common
        Stock |        |                                   |        |                                                               | 
|Shares                            |  |                         | Amount |                      | Shares |                                   | Amount |                                                               |  |                                                               |  |      
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|Balance
      December 31, 2005   |  |                         |       |                      |        | $                                 |       |                                                               |  | 19,375                                                        |  | $     | 194
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|Net income                        |  |                         |       |                      |        |                                   |       |                                                               |  |                                                              |  |       |   
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|Dividends
      paid or accrued   |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|on
      Common Stock             |  |                         |       |                      |        |                                   |       |                                                               |  |                                                              |  |       |   
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|Other
      comprehensive income  |  |                         |       |                      |        |                                   |       |                                                               |  |                                                              |  |       |   
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    
|Balance
      as of June 30, 2006 |  |                         |       |                      |        | $                                 |       |                                                               |  | 19,375                                                        |  | $     | 194
|                                  |  |                         |        |                      |        |                                   |        |                                                               |  |                                                               |  |       |    

See Notes to
Consolidated Financial Statements.

5



---

NEWKIRK
REALTY TRUST, INC. (THE COMPANY)AND THE NEWKIRK MASTER LIMITED PARTNERSHIP
(THE PREDECESSOR)CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In
thousands, except supplemental data)

|                                                                                                                                                                |  |  | THE
        COMPANY                            |          | THE
        PREDECESSOR                        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------------------------------------------- | -------- | ---------------------------------------------- | -
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  | Six
        Months Ended
        June 30, 2006 |          | Six
        Months Ended
        June 30, 2005 |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|CASH
      FLOWS FROM OPERATING ACTIVITIES:                                                                                                                     |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Net
      income                                                                                                                                                |  |  | $                                              | 14,626   |                                                | $
|Adjustments
      to reconcile net income to net cash provided by operating activities:                                                                         |  |  |                                                |          |                                                |  
|Amortization
      of deferred costs, land estates and in-place lease intangibles                                                                               |  |  |                                                | 3,879    |                                                |  
|Amortization
      of loan discounts                                                                                                                            |  |  |                                                | (10      | )                                              |  
|Depreciation
      expense                                                                                                                                      |  |  |                                                | 23,395   |                                                |  
|Gain
      from disposal of real estate securities available for sale                                                                                           |  |  |                                                | (88      | )                                              |  
|Gain
      from disposal of real estate                                                                                                                         |  |  |                                                |         |                                                |  
|Net
      loss from early extinguishment of debt                                                                                                                |  |  |                                                |         |                                                |  
|Compensation
      expense for exclusivity rights                                                                                                               |  |  |                                                | 1,667    |                                                |  
|Impairment
      loss                                                                                                                                           |  |  |                                                |         |                                                |  
|Minority
      interest expense                                                                                                                                 |  |  |                                                | 37,643   |                                                |  
|Straight-lining
      of rental income                                                                                                                          |  |  |                                                | 3,030    |                                                |  
|Interest
      earned on restricted cash                                                                                                                        |  |  |                                                | (335     | )                                              |  
|Equity
      in undistributed earnings of limited partnerships and joint venture                                                                                |  |  |                                                | (1,500   | )                                              |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Changes
      in operating assets and liabilities:                                                                                                              |  |  |                                                |          |                                                |  
|Receivables                                                                                                                                                     |  |  |                                                | (7,427   | )                                              |  
|Loans
      receivable                                                                                                                                          |  |  |                                                | 1,071    |                                                |  
|Accounts
      payable and accrued expenses                                                                                                                     |  |  |                                                | 217      |                                                |  
|Accrued
      interest-mortages and contract rights                                                                                                             |  |  |                                                | (946     | )                                              |  
|Other
      assets                                                                                                                                              |  |  |                                                | (4,170   | )                                              |  
|Other
      liabilities                                                                                                                                         |  |  |                                                | 10,692   |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Net
      cash provided by operating activities                                                                                                                 |  |  |                                                | 81,744   |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|CASH
      FLOWS FROM INVESTING ACTIVITIES:                                                                                                                     |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Land
      and building additions and improvements                                                                                                              |  |  |                                                | (127,268 | )                                              |  
|Change
      in restricted cash                                                                                                                                 |  |  |                                                | 10,124   |                                                |  
|Deposits
      for future real estate acquisitions                                                                                                              |  |  |                                                | (2,630   | )                                              |  
|Refund
      of deposits for real estate acquisitions                                                                                                           |  |  |                                                | 4,699    |                                                |  
|Investments
      in debt securities                                                                                                                            |  |  |                                                | (53,616  | )                                              |  
|Proceeds
      from disposal of real estate securities available for sale                                                                                       |  |  |                                                | 1,379    |                                                |  
|Proceeds
      from real estate available for sale                                                                                                              |  |  |                                                | 5,891    |                                                |  
|Purchase
      of real estate securities available for sale                                                                                                     |  |  |                                                | (5,980   | )                                              |  
|Collection
      of loan receivable                                                                                                                             |  |  |                                                | 32       |                                                |  
|Loan
      origination costs                                                                                                                                    |  |  |                                                | (21      | )                                              |  
|Net
      proceeds from disposal of real estate                                                                                                                 |  |  |                                                |         |                                                |  
|Leasing
      costs incurred                                                                                                                                    |  |  |                                                | (871     | )                                              |  
|Cash
      related to previously unconsolidated limited partnerships                                                                                            |  |  |                                                | 419      |                                                |  
|Investments
      in limited partnerships                                                                                                                       |  |  |                                                | (1,061   | )                                              |  
|Investment
      in joint venture                                                                                                                               |  |  |                                                | (22,116  | )                                              |  
|Return
      of capital from investment in joint venture                                                                                                        |  |  |                                                | 10,874   |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Net
      cash used in investing activities                                                                                                                     |  |  |                                                | (180,145 | )                                              |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|CASH
      FLOWS FROM FINANCING ACTIVITIES:                                                                                                                     |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Principal
      payments of mortgage notes                                                                                                                      |  |  |                                                | (25,355  | )                                              |  
|Principal
      payments of notes payable                                                                                                                       |  |  |                                                | (15,044  | )                                              |  
|Principal
      payments of contract right mortgage notes                                                                                                       |  |  |                                                |         |                                                |  
|Proceeds
      from mortgage notes                                                                                                                              |  |  |                                                | 28,755   |                                                |  
|Proceeds
      from line of credit                                                                                                                              |  |  |                                                | 32,025   |                                                |  
|Dividends
      paid to common stockholders                                                                                                                     |  |  |                                                | (12,981  | )                                              |  
|Limited
      partner buyouts                                                                                                                                   |  |  |                                                |         |                                                |  
|Distributions
      to minority interests                                                                                                                       |  |  |                                                | (33,517  | )                                              |  
|Deferred
      financing costs                                                                                                                                  |  |  |                                                | (1,693   | )                                              |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Net
      cash used in financing activities                                                                                                                     |  |  |                                                | (27,810  | )                                              |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Net decrease
      in cash and cash equivalents                                                                                                                 |  |  |                                                | (126,211 | )                                              |  
|Cash
      and Cash Equivalents at Beginning of Period                                                                                                          |  |  |                                                | 174,816  |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Cash
      and Cash Equivalents at End of Period                                                                                                                |  |  | $                                              | 48,605   |                                                | $
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Supplemental
      Disclosure of Cash Flow Information:                                                                                                         |  |  |                                                |          |                                                |  
|Cash
      paid for state and local taxes                                                                                                                       |  |  | $                                              | 1,454    |                                                | $
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Cash
      paid for interest                                                                                                                                    |  |  | $                                              | 28,555   |                                                | $
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Accrued
      dividends                                                                                                                                         |  |  | $                                              | 7,750    |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|Supplemental
      Information - Non Cash Activities                                                                                                            |  |  |                                                |          |                                                |  
|                                                                                                                                                                |  |  |                                                |          |                                                |  
|On
      March 31, 2006, the Company contributed net assets with a carrying value
      of approximately $22,000,000 to a joint venture. (See Note 4)           | 
|On
      May 5, 2006, the Company assumed a mortgage of $14,900,000 in connection
      with the purchase of perperty located in Rockaway, New Jersey.          | 
|On
      June 1, 2006, the Operating Partnership issued approximately 40,240 units
      as consideration for the acquisition of limited partnership interests. | 

See Notes to
Consolidated Financial Statements.

6



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP
FORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 1 | ORGANIZATION AND BUSINESS
|------ | -------------------------

| | Newkirk
Realty  Trust,  Inc.  (NKT) is a Maryland  corporation  that has elected to
be taxed as a real estate  investment  trust or REIT. NKT was  formed in July
2005 and completed its initial  public  offering (the IPO) on November 7,
2005.  NKT was formed to acquire an ownership  interest in,  and become the general
partner of, The Newkirk  Master  Limited  Partnership  (the  Predecessor or
the  Operating  Partnership).  The  Operating  Partnership owns commercial
properties, most of which are net leased to investment grade corporate tenants and owns
other real estate assets as well.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | NKT
holds a controlling  30.1% ownership  interest in the Operating  Partnership.  All of NKTs
assets are held through the Operating  Partnership and  its subsidiaries.  All references
to the Company refer to NKT and its consolidated subsidiaries, including the
Operating Partnership.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|------ | ------------------------------------------

| | Basis
of Presentation
| | ---------------------

| | The
accompanying  unaudited  consolidated interim financial statements have been prepared in
accordance with accounting  principles generally accepted  in the United States (GAAP)
for interim financial  statements and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X.  Accordingly,  they do not include all of the information and
footnotes required by GAAP for complete financial  statements,  although  management
believes that the  disclosures  presented herein are adequate to make the accompanying
unaudited  consolidated  interim financial  statements  presented not misleading.  The
accompanying  unaudited  consolidated  interim financial  statements should be read in
conjunction with the audited  consolidated annual financial  statements and the related
Managements  Discussion and Analysis of Financial  Condition and Results of
Operations  included in the Companys  Annual  Report on Form 10-K for the year
ended  December 31,  2005 filed with the  Securities  and  Exchange  Commission.  In
the opinion of  management,  all  adjustments (which include normal recurring
adjustments)  considered necessary for a fair presentation have been included.  The
results of operations  for the six months ended June 30, 2006 are not necessarily
indicative of the operating results for the full year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
accompanying  unaudited  consolidated  financial statements present the consolidated
financial position,  results of operations and cash flows of  the Company, its
wholly-owned  subsidiaries and certain partially-owned  entities, in which the Company
either (i) has a controlling interest, or (ii)  is the primary  beneficiary of a variable
interest  entity.  All  significant  intercompany  transactions  such as receivables and
payables have been  eliminated  in  consolidation.  Minority  interests  relate  to the
69.9%  interest  in the  Operating  Partnership.  The  Company  accounts  for its
investments  in  partnerships  and joint  ventures in which it does not have a
controlling  interest  using the equity method of  accounting.  Equity  investments are
recorded  initially at cost and subsequently  adjusted for the Companys share of
the net income or loss and cash contributions to and  distributions from these
partnerships and joint ventures.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Use
of Estimates
| | ----------------

| | The
preparation of financial  statements in conformity  with GAAP requires  management to
make estimates and  assumptions in determining the reported  amounts of assets and
liabilities and disclosure of contingent  assets and liabilities at the date of the
consolidated  interim  financial  statements  and the reported amounts of revenue and
expenses during the reporting  period.  Some of the critical  estimates made by the
Company  include,  but are  not limited to,  estimates of useful lives for  long-lived
assets,  reserves for  collection  on accounts and loans  receivable  and  provisions
for  impairment of real estate.  As a result of the nature of estimates made by the
Company, actual results could differ.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|------ | ------------------------------------------------------

| | Reclassifications
| | -----------------

| | Certain
prior year amounts have been  reclassified  to conform to the 2006  presentation  due to
the reporting of  discontinued  operations  for those  assets that have been disposed of
or classified as held for sale in accordance with SFAS No. 144.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Recently
Issued Accounting Standards and Pronouncements
| | -------------------------------------------------------

| | In
June 2005, the Financial  Accounting  Standards Board (FASB)  ratified the
consensus  reached by the Emerging Issues Task Force (EITF) on Issue  No.
04-05,  Determining Whether a General Partner, or General Partners as a Group,
Controls a Limited Partnership or Similar Entity When the Limited  Partners Have Certain
Rights (EITF  04-05).  EITF 04-05  provides a framework for
determining  whether a general  partner  controls,  and should  consolidate,  a limited
partnership  or a similar  entity.  EITF 04-05 became  effective on June 29, 2005,  for
all newly formed or modified  limited  partnership  arrangements  and January 1, 2006 for
all  existing  limited  partnership  arrangements.  The adoption of this  standard
resulted in the  consolidation of one previously unconsolidated partnership.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
impact of the adoption on the January 1, 2006 balance sheet was as follows (in thousands):
| | ----------------------------------------------------------------------------------------------

|                                               |  |  | Pre-
        Consolidation |       | Consolidated |  
|---------------------------------------------- |  |  | -------------------------- | ----- | ------------ | -
|                                               |  |  |                            |       |              |  
|Assets:                                        |  |  |                            |       |              |  
|                                               |  |  |                            |       |              |  
|Cash                                           |  |  | $                          |      |              | $
|Land                                           |  |  |                            |      |              |  
|Building,
      net                            |  |  |                            |      |              |  
|Equity
      investment in limited partnership |  |  |                            | 6,538 |              |  
|Deferred
      costs, net                      |  |  |                            |      |              |  
|                                               |  |  |                            |       |              |  
|                                               |  |  | $                          | 6,538 |              | $
|                                               |  |  |                            |       |              |  
|Liabilities:                                   |  |  |                            |       |              |  
|                                               |  |  |                            |       |              |  
|Mortgage
      loan                            |  |  | $                          |      |              | $
|                                               |  |  |                            |       |              |  
|                                               |  |  | $                          |      |              | $
|                                               |  |  |                            |       |              |  

| | There
have been no new  accounting  standards  or  interpretations  that have been  issued
that the  Company has not yet adopted and that the Company  believes will have a material
impact on the consolidated financial statements upon adoption.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 3 | REAL ESTATE ACQUISITIONS, DISPOSITIONS, FINANCINGS AND SIGNIFICANT LEASING ACTIVITIES
|------ | -------------------------------------------------------------------------------------

| | Acquisitions
| | ------------

| | On
January 18, 2006, the Company  acquired an  approximately  116,000 square foot office
building in  Bridgewater,  New Jersey for a purchase price of  approximately
$21,150,000.  The property is net leased to Biovail  Pharmaceuticals,  Inc., a company
primarily engaged in the manufacture and sale of  generic  pharmaceutical  products.  The
lease  agreement has a current term  scheduled to expire October 31, 2014 with two,
five-year  renewal terms.  Net rent during the current term is $1,397,000 per year
through October 31, 2009 and $1,686,000 thereafter.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 3 | REAL ESTATE ACQUISITIONS, DISPOSITIONS, FINANCINGS AND SIGNIFICANT LEASING ACTIVITIES
|------ | -------------------------------------------------------------------------------------

| | Acquisitions
(Continued)
| | ------------------------

| | On
January 26, 2006, the Company acquired an approximately  99,000 square foot 100% leased
office building in Lisle,  Illinois for a purchase price of  approximately  $15,250,000.
Net rent for the  property,  commencing  January  1, 2007 is  projected  to be
approximately  $1,225,000  per year.  The  property is 86% leased to National Louis
University with the balance being leased to two tenants.  The National Louis  University
lease has a primary  term  expiring  December  31, 2019 with annual base rent during the
primary term  commencing  at $943,000  through  December 31, 2006 (with a 50% rent
concession through August 31, 2006), increasing by approximately $43,000 on each January
1 thereafter.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 7, 2006, the Company  acquired two  warehouse/distribution  centers  comprising
240,000  square feet for a purchase  price of  approximately  $10,550,000.  The
properties are currently  leased on a long-term  basis to  subsidiaries  of Jacobson
Companies,  a leading third party  warehousing  company.  One lease has a primary term
expiring  December  31, 2015 with annual base rent during the primary term of $450,000.
The other lease has a  primary term expiring  December 31, 2014 with an annual base rent
of  approximately  $331,000  through  December 31, 2008 increasing to  approximately
$404,000 through December 31, 2014.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 29, 2006, the Company  acquired a 639,000 square foot property  located in
Statesville,  North Carolina for a purchase price of $20,500,000.  The property,  which
serves as a distribution facility, is currently leased to La-Z-Boy Greensboro Inc. and
guaranteed by La-Z-Boy  Incorporated.  The  lease has a primary term expiring April 30,
2010 with annual base rent during the primary term of approximately $1,649,000.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 26, 2006, the Company  acquired a 226,000 square foot office  building  located in
Rochester,  New York for a purchase price of  $26,400,000.  The property is currently
leased through 2014 to The Frontier  Corporation,  a communications  company. The annual
net rent payable at the property is  $2,567,000  through  December 31, 2007,  increasing
to $2,624,000  per annum through 2014.  Upon  expiration of the current lease term, the
tenant has  two, five-year renewal options each at an annual rental rate equal to the
greater of market value or the then current rent amount.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 5, 2006,  the  Company  acquired  an  approximately  96,000  square  foot  office
building  in  Rockaway,  New Jersey for a purchase  price of  approximately  $22,000,000.
The Company partially  satisfied the purchase price by assuming the existing  mortgage
loan of $14,900,000.  The property  is leased to BASF  Corporation,  the North American
affiliate of BASF AG. The lease  agreement has a current term  scheduled to expire
September 30,  2014 with the tenants  option to enter into either two,  five-year
renewal  terms or one,  ten-year  renewal term, in all cases at fair market rent.  Net
rent during the current term is $1,489,000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 26, 2006, the Operating  Partnership  concluded tender offers,  pursuant to which
additional limited partnership units in five  partially-owned  partnerships were
acquired, two of which were consolidated  entities.  The purchase price of these
interests aggregated $1,681,000,  $986,000 of which  was paid in cash,  and the remainder
of which was paid through the issuance of 40,239.58  Operating  Partnership  units.  The
Operating  Partnerships  ownership  in these  partnerships  ranges  between  24.50%
and  85.38%.  As a result of the  tender  offer,  an  additional  partnerships
results of  operations are now consolidated with the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 1, 2006,  the Operating  Partnership  also acquired an additional  minority
interest in a  consolidated  entity for $68,000 and an additional  limited partner
interest in an unconsolidated  entity for $8,000.  The Operating  Partnerships
ownership in these partnerships is 63.19% and 23.98%,  respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 3 | REAL ESTATE ACQUISITIONS, DISPOSITIONS, FINANCINGS AND SIGNIFICANT LEASING ACTIVITIES
|------ | -------------------------------------------------------------------------------------

| | Acquisitions
(Continued)
| | ------------------------

| | On
June 30, 2006,  the Company  acquired a 458,000 square foot office  building and
distribution  center in Glenwillow,  Ohio for a purchase price of  $23,300,000.  The
property is  currently  leased to Royal  Appliance,  a home  cleaning  products  company.
The lease  agreement  has a current term  scheduled  to expire July 31,  2015 with two,
five-year  renewal  terms.  Net rent  during the current  term is  $1,738,000  through
July 31,  2007,  $1,944,000  through  July 31, 2012,  and  $2,040,000  through the end of
the current  term.  Renewal  term option rents are 95% of fair market  value.  Pursuant
to the terms of the lease  agreement,  if  requested  by the  tenant,  the Company  has
an  obligation  to build up to a 160,000  square foot  expansion property.  The costs
that would be incurred in connection with such expansion would be recouped through rent
increases.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has entered into a contract to acquire a parcel of land in Baltimore,  Maryland
adjacent to its existing  property  leased to Legg Mason,  for $1,800,000 on which it
expects to construct a parking garage.  The Companys inspection period currently
expires on August 17, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dispositions
| | ------------

| | On
March 14, 2006, the Company entered into an agreement to sell its Toledo,  Ohio property
currently leased to  Owens-Illinois  for a purchase price  of  $33,000,000,  $1,000,000
in cash plus  assumption of the  $32,000,000  of  outstanding  debt  encumbering  the
property at September 29, 2006, the  closing date. The purchaser,  RVI Group,  is the
residual value insurer with respect to the property.  Owens-Illinois  had advised the
Company that it  would be vacating the property at the expiration of its lease term,
September 30, 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 3,  2006,  the  Company  entered  into a letter of intent to sell 50 of its  retail
properties  that are leased to  Albertsons  Inc.  to an  unaffiliated  third party
for a gross purchase price of $160,000,000.  The sale was subject to a number of
conditions  including buyers due diligence  review of the properties and the
consummation  by buyers of their  acquisition of certain assets of Albertsons  Inc.
The transaction was consummated  on July 13, 2006  See Note 11  Subsequent
Events.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2006, the Company  received notice from The Kroger Company  exercising their option
to purchase three  properties.  Two properties are located  in  Louisville,  Kentucky
and one  property is located in  Columbus,  Ohio.  The  properties  will be purchased at
the end of the primary term of the  leases in December 2006 for a negotiated fair market
value or appraised value.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Financings
| | ----------

| | On
February 10, 2006, the Company obtained a first mortgage loan from an unaffiliated  third
party, in the principal amount of $14,800,000  secured by  the Companys  property
located in Bridgewater,  New Jersey.  The loan bears interest at 5.732%,  requires
monthly payments of interest only for the  first 60 months and then  requires  monthly
payments of principal  and interest of $86,000 and is scheduled to mature on March 6,
2016, at which time  the outstanding  principal  balance is expected to be  approximately
$13,730,000.  The Company received net proceeds from this loan, after satisfying  closing
costs, of approximately $14,600,000.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 6, 2006,  NK-Marc CAA LLC, a joint  venture which is  consolidated  by the Company,
obtained a $3,500,000  loan from an  unaffiliated  third  party. The loan bears interest
at 6.5%,  requires  monthly payments of principal and interest of approximately  $24,000
for 60 months and is scheduled  to mature on March 1, 2011.  The loan is secured by a
first mortgage loan receivable owned by NK-Marc CAA LLC.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 3 | REAL ESTATE ACQUISITIONS, DISPOSITIONS, FINANCINGS AND SIGNIFICANT LEASING ACTIVITIES
|------ | -------------------------------------------------------------------------------------

| | Financings
(Continued)
| | ----------------------

| | On
May 5, 2006, the Company obtained a $10,450,000 loan from an unaffiliated  third party
lender,  which is secured by the Companys  property located  at 850-950
Warrenville  Road,  Lisle,  Illinois.  The loan bears interest at 6.5%,  requires
monthly payments of interest only during the first two  years of the loan term and
thereafter  principal  (based on a 30-year  amortization  schedule) and interest for the
balance of the term.  The loan is  scheduled to mature on June 1, 2016, at which time the
outstanding principal balance is expected to be approximately $9,463,000.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Significant
Leasing Activities
| | ------------------------------

| | During
the first quarter,  the Operating  Partnership  executed a ten-year lease  extension
with Raytheon  Company  commencing on January 1, 2009 for  approximately  345,000  square
feet of office  space and 63% of the  parking  structure  relating  thereto  located  in
El  Segundo,  California.  In  connection with the lease extension,  the tenant is
obligated to pay annual rent of $4,921,000 from January 2009 through December 2013,
increasing to  $5,267,000 for the period from January 2014 to December  2018. The
property  owner,  which is 53% owned by the Operating  Partnership,  is required to
provide the tenant with $21,500,000 in tenant improvement  allowances and rent
concessions over the next 40 months.  The tenant improvement  allowance  is a lease
incentive and is being  amortized  into rental income over the life of the lease.
Raytheon  Company  retained its renewal  option for the  remaining 37% of the space
pursuant to its original lease.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 4 | INVESTMENT IN JOINT VENTURE
|------ | ---------------------------

| | On
March 31, 2006,  the Company and WRT Realty L.P.  (Winthrop),  entered into a
joint  venture  agreement to acquire and originate  loans  secured,  directly and
indirectly,  by real estate assets  through 111 Debt  Holdings,  LLC (111 Debt
Holdings).  Winthrop is a  wholly-owned  subsidiary of  Winthrop Realty Trust
(NYSE:FUR) which owns a 6.8% interest in the Company and is managed by an affiliate of
NKT Advisors,  LLC (NKT Advisors),  the  Companys  external  advisor.
The Company and Winthrop each own 50% of the joint venture and have committed to invest
up to  $50,000,000  each in the  joint venture.  Prior to the admission of Winthrop,  111
Debt Holdings was a wholly owned subsidiary of the Company,  which,  through its wholly
owned  subsidiary, 111 Debt Acquisition, LLC, owned loan assets which had been acquired
in anticipation of the formation of the joint venture.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Upon
Winthrops  admission to 111 Debt  Holdings,  Winthrop paid the Company
approximately  $10,900,000,  which  represented  50% of the cost of the  acquired assets
plus the interest accrued thereon, less the debt encumbering such assets.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 30, 2006, 111 Debt Acquisition LLC and its  wholly-owned  subsidiary,  111 Debt
Acquisition Mezz LLC, entered into a $300,000,000  repurchase  agreement with Column
Financial Inc.  pursuant to which they expect to leverage up to 75% of the assets held.
111 Debt  Acquisition LLC had a balance  outstanding  under the Column  Financial,  Inc.
repurchase  agreement of $36,979,000  at June 30, 2006. On May 24, 2006, 111 Debt
Acquisition - Two,  LLC, a wholly owned  subsidiary of 111 Debt  Holdings,  entered into
a second  repurchase  agreement  with Bear Stearns  International  Limited (Bear
Stearns)  enabling the joint venture to obtain an additional  $200,000,000  in
leverage.  111 Debt  Acquisition  Two, LLC had a balance  outstanding  under the
Bear Stearns repurchase  agreement of $42,588,000 at June 30, 2006.  Accordingly,  it is
presently  contemplated that the joint venture will  acquire and originate up to an
aggregate of  approximately  $600,000,000  in loan  obligations  secured  directly or
indirectly by real estate assets.  Upon acquisition and origination of a sufficient level
of loan obligations, the joint venture may form one or more collateral debt obligation
pools.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 4 | INVESTMENT IN JOINT VENTURE (Continued)
|------ | ---------------------------------------

| | The
joint  venture is governed by an  investment  committee  which  consists of two members
appointed  by each of the Company and  Winthrop  with one  additional  member being
appointed by the common  management of the Company and  Winthrop.  All  decisions
requiring  the consent of the  investment  committee  require the  affirmative  vote by
three of the four  members  appointed  by the Company  and  Winthrop.  Pursuant to the
terms of the joint  venture  agreement of 111 Debt Holdings,  all material  actions to be
taken by 111 Debt  Holdings,  including  investments  in excess of  $20,000,000,
requires the consent of the investment  committee of 111 Debt Holdings,  provided,
however,  the consent of both the Company and Winthrop is required  for the merger or
consolidation  of 111 Debt Holdings,  the admission of additional  members,  the taking
of any action that, if taken directly by the  Company or Winthrop,  would  require
consent of  Winthrops  Conflicts  Committee or the Companys  independent
directors,  the entering into of any  agreement with FUR Advisors LLC or the amendment of
the joint venture agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company accounts for this investment using the equity method.
| | -----------------------------------------------------------------

| | The
investment in joint venture consists of the following (in thousands):
| | -------------------------------------------------------------------------

|Balance,
      beginning of year           |  |  | $ |        |  
|------------------------------------------ |  |  | - | ------- | -
|Investment
      in joint venture          |  |  |   | 44,077  |  
|Return
      of capital from joint venture |  |  |   | (10,874 | )
|Equity
      in income of joint venture    |  |  |   | 749     |  
|                                           |  |  |   |        
|Balance,
      June 30, 2006               |  |  | $ | 33,952  |  
|                                           |  |  |   |        

| | The
condensed balance sheet of the joint venture was as follows (in thousands):
| | -------------------------------------------------------------------------------

|                                                            |  |  | June
        30, 2006 |        
|----------------------------------------------------------- |  |  | --------------------- | -------
|                                                            |  |  |                       |        
|                                                            |  |  |                       |        
|Cash
      and restricted cash                              |  |  | $                     | 4,027  
|Investment
      in debt securities and interest receivable |  |  |                       | 142,279
|Other
      assets                                          |  |  |                       | 1,475  
|                                                            |  |  |                       |        
|Total
      assets                                          |  |  | $                     | 147,781
|                                                            |  |  |                       |        
|Accounts
      payable and other liabilities                |  |  | $                     | 505    
|Line
      of credit payable                                |  |  |                       | 79,567 
|Members
      equity                                       |  |  |                       | 67,709 
|                                                            |  |  |                       |        
|Total
      liabilities and members equity                 |  |  | $                     | 147,781
|                                                            |  |  |                       |        
|                                                            |  |  |                       |        
|On the
      Companys Consolidated Balance Sheet:          |  |  |                       |        
|Equity
      investment in joint venture                    |  |  | $                     | 33,952 
|                                                            |  |  |                       |        

12



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 4 | INVESTMENT IN JOINT VENTURE (Continued)
|------ | ---------------------------------------

| | The
condensed statement of operations of the joint venture from inception to June 30, 2006
was as follows (in thousands):
| | -------------------------------------------------------------------------------------------------------------------------

|Revenue                                                                               |  |  | $ | 2,441 |  
|------------------------------------------------------------------------------------- |  |  | - | ----- | -
|Interest
      expense                                                                |  |  |   | (624  | )
|General
      and administrative                                                      |  |  |   | (318  | )
|                                                                                      |  |  |   |      
|Net income                                                                            |  |  | $ | 1,499 |  
|                                                                                      |  |  |   |      
|                                                                                      |  |  |   |      
|On the
      Companys Consolidated Statement of Operations and Comprehensive Income: |  |  |   |       |  
|Equity
      in income from investments in limited partnerships and joint ventures    |  |  | $ | 749   |  
|                                                                                      |  |  |   |      

| | The
joint venture commenced operations on March 31, 2006.
| | ---------------------------------------------------------

|Note 5 | EQUITY INVESTMENTS IN LIMITED PARTNERSHIPS
|------ | ------------------------------------------

| | The
equity investments in limited partnerships consist of the following (in thousands):
| | ---------------------------------------------------------------------------------------

|Balance,
      beginning of year                                     |  |  | $ | 13,846 |  
|-------------------------------------------------------------------- |  |  | - | ------ | -
|Equity
      in income of limited partnerships                       |  |  |   | 959    |  
|Distributions
      from limited partnerships                        |  |  |   | (209   | )
|Investment
      in limited partnerships                             |  |  |   | 724    |  
|Consolidation
      of previously unconsolidated limited partnership |  |  |   | (6,684 | )
|                                                                     |  |  |   |       
|Balance,
      June 30, 2006                                         |  |  | $ | 8,636  |  
|                                                                     |  |  |   |       

| | The
Company has paid a premium for its allocable share of the underlying  limited
partnerships which resulted in an excess of the carrying amounts of  the Companys
investment over the underlying net assets of these limited  partnerships of approximately
$4,900,000 and $5,100,000 as of June 30, 2006  and December 31, 2005,  substantially  all
of which  relates to the  difference  between the fair values at the date of  acquisition
of the Companys  underlying  properties and historical  carrying  amounts.  Such
premium is being amortized as an adjustment to the Companys equity in earnings of
the  limited  partnerships  over the useful  lives of the  underlying  properties.  The
amortization  expense  amounted to $52,000 and $64,000 for the six  months ended June 30,
2006 and 2005 and $29,000 and $32,000 for the three months ended June 30, 2006 and 2005,
respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 5 | EQUITY INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)
|------ | ------------------------------------------------------

| | The
limited  partnerships condensed  combined  statements  of  operations  for the
three and six months  ended June 30, 2006 and 2005 and  condensed  combined balance
sheets as of June 30, 2006 and December 31, 2005 are as follows (in thousands):
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Condensed
Combined Statements of Operations:

|                                                                                       |  |  | Three
        Months Ended
        June 30, |        | Six
        Months Ended
        June 30, |  
|-------------------------------------------------------------------------------------- |  |  | ------------------------------------------- | ------ | ----------------------------------------- | -
|                                                                                       |  |  |                                             |        |                                           |  
|                                                                                       |  |  | 2006                                        |        | 2005                                      |  
|                                                                                       |  |  |                                             |        |                                           |  
|Rental
      revenue and interest income                                               |  |  | $                                           | 5,533  |                                           | $
|Interest
      expense                                                                 |  |  |                                             | (1,930 | )                                         |  
|Administrative
      expenses                                                          |  |  |                                             | (362   | )                                         |  
|Depreciation
      expense                                                             |  |  |                                             | (725   | )                                         |  
|Amortization
      expense                                                             |  |  |                                             | (66    | )                                         |  
|                                                                                       |  |  |                                             |        |                                           |  
|Net income                                                                             |  |  | $                                           | 2,450  |                                           | $
|                                                                                       |  |  |                                             |        |                                           |  
|On
      the Companys Consolidated Statements of Operations and Comprehensive Income: |  |  |                                             |        |                                           |  
|Equity
      in income from investments in limited partnerships and joint venture      |  |  | $                                           | 496    |                                           | $
|                                                                                       |  |  |                                             |        |                                           |  

Condensed
Combined Balance Sheets:

|                                                   |  |  | June
        30, 2006 |        | December
        31, 2005 |  
|-------------------------------------------------- |  |  | --------------------- | ------ | ------------------------- | -
|                                                   |  |  |                       |        |                           |  
|Cash                                               |  |  | $                     | 1,290  |                           | $
|Real
      estate, net                             |  |  |                       | 64,749 |                           |  
|Other
      assets                                 |  |  |                       | 2,386  |                           |  
|                                                   |  |  |                       |        |                           |  
|Total
      assets                                 |  |  | $                     | 68,425 |                           | $
|                                                   |  |  |                       |        |                           |  
|Accounts
      payable and other liabilities       |  |  | $                     | 1,097  |                           | $
|Mortgages
      payable                            |  |  |                       | 76,055 |                           |  
|Partners
      deficit                            |  |  |                       | (8,727 | )                         |  
|                                                   |  |  |                       |        |                           |  
|Total
      liabilities and partners deficit      |  |  | $                     | 68,425 |                           | $
|                                                   |  |  |                       |        |                           |  
|On the
      Companys Consolidated Balance Sheet: |  |  |                       |        |                           |  
|Equity
      investments in limited partnerships   |  |  | $                     | 8,636  |                           | $
|                                                   |  |  |                       |        |                           |  

14



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 6 | VARIABLE INTEREST ENTITIES
|------ | --------------------------

| | FASB
issued FASB  Interpretation No. 46R,  Consolidation of Variable Interest Entities (FIN
46), which requires a variable interest entity (VIE)  to be
consolidated by its primary  beneficiary.  The primary  beneficiary is the party that
absorbs a majority of the VIEs anticipated  losses and/or  a majority of the
expected  returns.  The Company  evaluates  its loans and  investments  to determine
whether they are variable  interests in a VIE.  This evaluation resulted in the Company
determining that its loans and joint venture interests were potential variable
interests.  For each of these  investments,  the Company has evaluated (1) the
sufficiency of the fair value of the entities equity  investments at risk to absorb
losses,  (2) that  as a group the holders of the equity  investments at risk have (a) the
direct or indirect  ability  through voting rights to make decisions  about the  entities significant
activities,  (b) the obligation to absorb the expected losses of the entity and their
obligations are not protected directly or  indirectly  and, (c) the right to receive the
expected  residual  return of the entity and their rights are not capped and, (3) the
voting  rights of  these investors are not  proportional to their  obligations to absorb
the expected losses of the entity,  their rights to receive the expected returns  of the
entity, or both, and that  substantially all of the entities activities do not
involve or are not conducted on behalf of an investor that has  disproportionately few
voting rights.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the quarter ended March 31, 2006, the Company  identified one loan which was made to a
VIE, Camfex Associates Limited  Partnership  (Camfex).  The Operating
Partnership  has loaned  approximately  $5,900,000 to Camfex as of June 30, 2006. The
Company did not consider Camfex to be a VIE prior  to 2006 as the  projected  amount at
risk was  expected to be covered by a priority  provision  under the loan  agreement.
Due to Camfex  undertaking  additional  activities that will require additional
subordinate  investment by the Company,  the Company has reconsidered whether Camfex is a
VIE and  has  determined  Camfex  to be a VIE.  The  Company  further  determined  that
it is the  primary  beneficiary  of the VIE and,  as  such,  the VIE is  consolidated in
the Companys  consolidated  financial  statements.  Camfex owns two  multi-tenanted
office buildings in California,  with a carrying  value of  approximately  $31,000,000
at June 30, 2006.  Camfex has  additional  mortgage debt of  approximately  $28,500,000
as of June 30, 2006. The  lenders of the additional  mortgage debt hold no recourse to
other Company  assets.  The Company has determined  that its other loans and  investments
are not VIEs.  As such, the Company has continued to account for these loans and
investments as a loan or equity investment, as appropriate.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 7 | MORTGAGE NOTES PAYABLE, NOTE PAYABLE AND CONTRACT RIGHT MORTGAGE NOTE PAYABLE
|------ | -----------------------------------------------------------------------------

| | Mortgage
Notes Payable
| | ----------------------

| | The
Company,  excluding  discontinued  operations,  had outstanding  mortgage notes payable
with an aggregate  principal  balance of $232,868,000  and  $166,195,000  at June 30,
2006 and December 31, 2005,  respectively.  The mortgage  notes are at fixed  interest
rates with payments of principal and  interest  generally  due either  monthly or
semi-annually.  All the mortgage  notes are  collateralized  by the  Companys  real
estate;  some of the  mortgage notes are cross-collateralized.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
mortgage  notes mature at various dates from 2006 to 2024.  Prepayment of most of the
mortgage  notes is permitted  only with a yield  maintenance  payment or  prepayment
penalty as defined in the mortgage  note  agreements.  Interest  rates on the  mortgages
ranged from 3.89% to 10.25%,  with a  weighted  average  interest rate of 6.06% at June
30, 2006.  Interest rates on the mortgages ranged from 5.0% to 9.9% with a weighted
average interest  rate of 6.1% at December 31, 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 7 | MORTGAGE NOTES PAYABLE, NOTE PAYABLE AND CONTRACT RIGHT MORTGAGE NOTE PAYABLE (Continued)
|------ | -----------------------------------------------------------------------------------------

| | Note
Payable
| | ------------

| | In
August 2005, the Operating  Partnership  refinanced its then existing loan with Bank of
America with a loan from KeyBank  National  Association and  Bank of America,  N.A. The
loan had an outstanding  principal  balance from continuing  operations of $557,065,000
and  $593,463,000 at June 30, 2006  and  December 31, 2005,  respectively,  and bears
interest at the election of the Company at a rate equal to either (i) the LIBOR Rate plus
175 basis  points or (ii) the prime rate then  charged by KeyBank  National  Association
plus 50 basis  points.  The loan is  scheduled  to mature on August 11,  2008,  subject
to two,  one-year  extensions and will require monthly payments of interest only. In
addition,  the loan requires  quarterly  principal  payments of $1,875,000 during the
term of the loan,  increasing to $2,500,000 per quarter during the extension  periods.
The Company is also required  to make principal  payments from the proceeds of property
sales,  refinancings  and other asset sales if proceeds are not reinvested  into net
leased  properties.  The required  principal  payments are based on a minimum  release
price set forth in the loan  agreement  for property  sales and 100% of  proceeds from
refinancings,  economic discontinuance,  insurance settlements and condemnations.  The
loan is secured by a lien on the Companys assets  and the assets of the  Companys
subsidiaries,  with certain  exceptions  such as direct liens on most of the real estate
owned by the Company or the  Companys  subsidiaries.  The Company can prepay the
loan in whole or in part at any time together with a premium of 1% if such  prepayment
occurs on  or before August 11, 2006 and thereafter with no premium.  The loan contains
customary financial and other covenants.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company  entered into the  following  agreements in order to limit the exposure to
interest  rate  volatility:  (i) a five year interest rate swap  agreement with KeyBank
National Association  effectively setting the LIBOR rate at 4.642% for $250,000,000 of
the loan balance;  (ii) a LIBOR rate cap  agreement at 5% with Bank of America,  N.A. for
$295,000,000  through  November 2006; and (iii) a LIBOR rate cap agreement at 6% with
SMBC Derivative  Products Limited for the period from November 2006 until August 2008 for
a notional amount of $290,000,000.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revolving
Credit Line
| | ---------------------

| | On
April 7, 2006, the Company entered into an unsecured  revolving credit agreement with
KeyBank National  Association  providing for borrowings of up  to  $50,000,000,  subject
to increase up to  $100,000,000.  The  revolving  credit  facility  matures April 7, 2009
with the option on the part of the  Company to extend the term for an additional  year.
Amounts  borrowed  under the revolving  credit line bear interest at rates based on the
Companys  leverage  ratio  ranging from LIBOR plus 1.35% to LIBOR plus 2.00%.  In
addition,  the Company is required to pay a 12.5 or 25 basis point fee on the  unused
portion of the line, depending on the amount borrowed.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
revolving  credit line requires  monthly  payments of interest only.   The  Company may prepay and reborrow  amounts
prepaid under the credit line.  There were no amounts  outstanding  under the revolving
credit line on June  30, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
revolving  credit line is fully recourse to the Operating  Partnership,  and the Company
has guaranteed  the Operating  Partnerships  obligations  under the revolving
credit line.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 7 | MORTGAGE NOTES PAYABLE, NOTE PAYABLE AND CONTRACT RIGHT MORTGAGE NOTE PAYABLE (Continued)
|------ | -----------------------------------------------------------------------------------------

| | Contract
Right Mortgage Note Payable
| | ------------------------------------

| | The
Company has one contract right mortgage note payable with a principal  balance of
$11,667,000  and  $11,128,000 at June 30, 2006 and December 31,  2005, respectively.  The
contract right mortgage note has a fixed interest rate of 9.68% and matures in January
2009.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 8 | RELATED PARTY TRANSACTIONS
|------ | --------------------------

| | Winthrop
Realty Partners L.P. (WRP) performed asset management,  investor  relations
and administrative  services for the Operating  Partnership and  its subsidiaries  and
received a fee of $482,000 and $964,000 for the three and six months ended June 30, 2005,
respectively.  Effective  November 7,  2005, NKT Advisors LLC performs the asset
management, investor relations and administrative services for the Company previously
provided by WRP.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
providing  such  services,  NKT Advisors  receives an annual base  management  fee which
is payable  quarterly in arrears in cash. The annual base  management fee is equal to the
greater of (A) $4,800,000 or (B) 1.5% per annum of equity as defined.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition,  NKT Advisors is entitled to receive incentive  management fees each fiscal
quarter,  payable  quarterly in arrears,  in an annual amount  equal to: 20% of the
amount by which  adjusted  funds from  operations  for the Company,  before  incentive
management  fees exceeds  certain  hurdle  amounts as defined in the agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | NKT
Advisors  received a base  management  fee of  $1,200,000  and  $2,400,000  for the three
and six months ended June 30,  2006,  respectively.  No  incentive management fee was
earned during the period.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
first  $4,200,000  (subject to an annual  consumer price index increase) in base
management fees per annum will be paid by NKT Advisors to WRP for  services to the
Company that NKT Advisors subcontracts to WRP.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company  provides  certain asset  management,  investor and  administrative  services to
certain  unconsolidated  partnerships in which it owns an  equity  interest and to other
affiliated  partnerships.  The Company earned  $124,000 and $159,000 of management  fees
for these services for the six  months  ended June 30, 2006 and 2005,  respectively  and
$60,000 and $78,000  for the three  months  ended June 30, 2006 and 2005,  respectively.
The  Company  had  receivables  for  management  fees of  $870,000  and  $894,000  due
from these  partnerships  at June 30, 2006 and  December  31,  2005,  respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has an ownership  interest in the three most junior  tranches of a securitized
pool of first mortgages which includes among other assets,  three first  mortgage  loans
encumbering  three  Company  properties  and one other  property  controlled by an
affiliate.  The Companys  ownership  interest,  net of discount,  amounted to
$10,716,000  and  $10,493,000 at June 30, 2006 and December 31, 2005,  respectively,  and
the Company earned  interest  income of $600,000  and  $601,000  for the six months
ended June 30, 2006 and 2005,  respectively,  and $300,000 and $301,000 for the three
months ended June 30, 2006 and 2005, respectively, related to this ownership interest.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIPFORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 8 | RELATED PARTY TRANSACTIONS (Continued)
|------ | --------------------------------------

| | An
        affiliate owns a portion of the second mortgage indebtedness of a property
        in which the Company has an interest. The second mortgage payable and
        accrued interest owned by the affiliate aggregated $16,266,000 and $15,914,000
        at June 30, 2006 and December 31, 2005, respectively. Included in interest
        expense is interest related to this second mortgage payable of $193,000
        and $185,000 for the three months ended June 30, 2006 and June 30, 2005,
        respectively and $386,000 and $369,000 for the six months ended June 30,
        2006 and 2005, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | T-Two
Partners LP is the  beneficial  owner of certain  contract  right  mortgage  loans.  On
November 7, 2005,  the Operating  Partnership  acquired  ownership of T-Two  Partners LP.
Interest  expense for the three and six months  ended June 30, 2005  includes  interest
expense of  $4,388,000  and  $8,777,000, respectively, relating to these contract right
mortgage loans.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
August 2005,  WRP loaned  $200,000 to a partnership  in which the Operating  Partnership
has an interest.  The loan accrues  interest at a rate of  prime  plus 2%. The loan was
repaid in the first  quarter of 2006.  Interest  paid on this loan  during the first
quarter of 2006 was  approximately  $9,000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 9 | COMMITMENTS AND CONTINGENCIES
|------ | -----------------------------

| | In
June 2005, the Operating  Partnership  entered into an agreement with Honeywell
International,  Inc., the tenant of four office buildings owned by  the Operating
Partnership in Morris Township,  New Jersey to restructure the lease on the properties.
Under the restructuring,  the tenant waived its  right to exercise its economic
discontinuance  option and the Operating  Partnership  granted the tenant an option to
purchase the properties in 2007  for  $41,900,000.  As a result of this  restructuring,
the Operating  Partnership  recognized a $14,754,000  impairment loss in the second
quarter of  2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has entered into an agreement with U.S. Realty  Advisors,  LLC (USRA),
whereby the Company agreed to pay to USRA the following  amounts  with respect to any
properties acquired by the Company or a subsidiary in which USRA served as the
identifying party:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. | 1.5%
of the gross purchase price
| | -- | --------------------------------

| | 2. | 25%
of net proceeds and net cash flow (as defined) after the Company receives a return of all
its invested capital plus a 12% IRR.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------

| | The
property  owned by the Company  located in  Bridgewater,  New Jersey is subject to the
USRA  agreement.  Approximately  $275,000 was paid to USRA  during the six months ended
June 30, 2006 as 1.5% due to the purchase of the  Bridgewater,  New Jersey  property.  No
other  amounts have been paid or  accrued as of June 30, 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 10 | DISCONTINUED
OPERATIONS AND SALES OF REAL ESTATE
|------- | ------------------------------------------------

| | The
Company has  classified  various  properties  which have met all of the criteria of SFAS
No. 144 as real estate held for sale in the  accompanying  consolidated  balance  sheets
and has  classified  the  operations  of the  properties  and the sold  properties  as
discontinued  operations  in the  accompanying  consolidated  statements  of  operations.
At June 30,  2006,  the  Company  determined  that 54  properties  should  be  classified
as  discontinued operations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The
office  property  located in Toledo,  Ohio is in  discontinued  operations as the Company
has an agreement to sell the property in September 2006.  See Note 3  Real Estate,
Acquisitions, Dispositions, Financings and Significant Leasing Activities  Dispositions.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Fifty
retail  properties that are leased to Albertsons  Inc. are in  discontinued
operations as the Company has an agreement to sell the properties.  The transaction was
consummated on July 13, 2006  See Note 11  Subsequent Events.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Three
properties  are in  discontinued  operations,  two of which are located in  Louisville,
Kentucky  and one  located in  Columbus,  Ohio.  These  properties  are in  discontinued
operations as The Kroger  Company,  the tenant at such  properties,  has notified the
Company that it is  exercising  its option to purchase the  properties  under its lease.
The  properties  will be purchased at the end of the primary term in  December 2006 for a
negotiated fair market value or appraised value.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Discontinued
operations for the three and six months ended June 30, 2006 and 2005 are summarized as
follows (in thousands):
| | ---------------------------------------------------------------------------------------------------------------------------

|                                  |  |  | The Company 
  Three Months Ended 
  June 30, 2006 |        | The Predecessor 
  Three Months Ended 
  June 30, 2005 |   | The Company 
  Six Months Ended 
  June 30, 2006 |   | The Predecessor 
  Six Months Ended 
  June 30, 2005 |       
|--------------------------------- |  |  | -------------------------------------------------- | ------ | ------------------------------------------------------ | - | ------------------------------------------------ | - | ---------------------------------------------------- | ------
|                                  |  |  |                                                    |        |                                                        |   |                                                  |   |                                                      |       
|Revenue                           |  |  | $                                                  | 6,112  |                                                        | $ | 10,743                                           |   | $                                                    | 12,451
|Expenses                          |  |  |                                                    | (1,644 | )                                                      |   | (4,877                                           | ) |                                                      | (3,997
|Impairment loss                   |  |  |                                                    |       |                                                        |   | (12,211                                          | ) |                                                      |      
|Gain from disposal of real estate |  |  |                                                    |       |                                                        |   | 1                                                |   |                                                      |      
|Minority interest                 |  |  |                                                    | (3,159 | )                                                      |   | 7                                                |   |                                                      | (6,004
|                                  |  |  |                                                    |        |                                                        |   |                                                  |   |                                                      |       
|Income (loss) from                |  |  |                                                    |        |                                                        |   |                                                  |   |                                                      |       
|discontinued                      |  |  |                                                    |        |                                                        |   |                                                  |   |                                                      |       
|operations                        |  |  | $                                                  | 1,309  |                                                        | $ | (6,337                                           | ) | $                                                    | 2,450 
|                                  |  |  |                                                    |        |                                                        |   |                                                  |   |                                                      |       

| | Expenses
include  interest expense to related parties of $0 and $1,176,000 for the three months
ended June 30, 2006 and 2005,  respectively and $0 and  $2,358,000 for the six months
ended June 30, 2006 and 2005, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 10 | DISCONTINUED
OPERATIONS AND SALES OF REAL ESTATE (Continued)
|------- | ------------------------------------------------------------

| | Other
assets of discontinued operations at June 30, 2006 and December 31, 2005 are summarized
as follows (in thousands):
| | ------------------------------------------------------------------------------------------------------------------------

|             |  |  | June 30, 
  2006 |        | December 31, 
  2005 |  
|------------ |  |  | ---------------- | ------ | -------------------- | -
|             |  |  |                  |        |                      |  
|Receivables  |  |  | $                | 10,105 |                      | $
|Other assets |  |  |                  | 674    |                      |  
|             |  |  |                  |        |                      |  
|             |  |  | $                | 10,779 |                      | $
|             |  |  |                  |        |                      |  

| | Liabilities
of discontinued operations at June 30, 2006 and December 31, 2005 are summarized as
follows (in thousands):
| | -----------------------------------------------------------------------------------------------------------------------

|                                             |  |  | June 30,
    2006 |        | December 
    31, 2005 |  
|-------------------------------------------- |  |  | ----------------- | ------ | ---------------------- | -
|                                             |  |  |                   |        |                        |  
|Mortgage notes  and accrued interest payable |  |  | $                 | 58,054 |                        | $
|Other liabilities                            |  |  |                   | 370    |                        |  
|                                             |  |  |                   |        |                        |  
|                                             |  |  | $                 | 58,424 |                        | $
|                                             |  |  |                   |        |                        |  

|Note 11 | SUBSEQUENT
EVENTS
|------- | -----------------

| | On
July 13,  2006,  the Company  sold 50 retail  properties  to an  unaffiliated  third
party for a gross  purchase  price of  $160,000,000.  The sold  properties were
originally  leased to  Albertsons,  Inc.,  contain an aggregate of  approximately
2,300,000  square feet and had current lease terms  expiring over the next 4.5 years.
After closing costs,  the Company received net proceeds of  approximately  $159,000,000,
$22,000,000 of which were  used to pay down the note payable.  The balance of the net
proceeds were  deposited with a Qualified  Intermediary  for use in 1031 tax free
exchanges  including  approximately  $49,000,000  which were used for reverse 1031
exchanges in connection  with the  previously  acquired  property  located in  Rochester,
New York leased to The Frontier  Corporation and the Glenwillow,  Ohio property leased to
Royal  Appliance.  The Company is in the process  of identifying  properties to complete
the 1031 tax free exchange.  It is anticipated  that the Company will recognize a gain
for financial  reporting  purposes during the third quarter of 2006 as a result of this
transaction of approximately  $62,000,000.  The results of operations of the properties
sold have been included in discontinued operations for all periods presented in
accordance with SFAS 144 as real estate held for sale.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 20, 2006, the Company  obtained first mortgage loans from an unaffiliated  third
party with respect to its Rochester,  New York;  Statesville,  North  Carolina;  and
Rockford,  Illinois  properties.  The  loans,  which  had  an  initial  aggregate
principal  amount  of  $39,800,000,  are  cross-collateralized  and  cross-defaulted.
The loans bear  interest at 6.21%,  require  monthly  payments  of  interest  only for 24
months and then  require monthly  payments of principal and interest in the aggregate of
approximately  $244,000.  The loans are scheduled to mature on August 1, 2016  at which
time the outstanding  principal balance is expected to be $35,438,000.  The Company
received net proceeds from these loans,  after satisfying  closing costs, of
approximately $39,260,000.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 23, 2006, the Company entered into a definitive  Agreement and Plan of Merger with
Lexington  Corporate  Properties Trust (LXP),  a Maryland  real estate
investment  trust,  pursuant to which the Company will merge with and into LXP. If the
merger (the Merger) is consummated,  each holder  of common stock will be
entitled to receive 0.80 common shares of LXP in exchange for each share of common stock.
Upon  effectiveness  of the Merger,  the name of the surviving entity will be changed to
Lexington Realty Trust (the Surviving Entity).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q JUNE 30, 2006

NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

|Note 11 | SUBSEQUENT
EVENTS (Continued)
|------- | -----------------------------

| | The
Merger  Agreement has been  approved by the Board of Directors  and a Special  Committee
of the Board of Directors of the Company and by the Board  of Trustees and a Special
Committee of the Board of Trustees of LXP.  The Merger is subject to the  approval of the
shareholders  of the Company and  LXP,  as well as the  effectiveness  of a  Registration
Statement  on Form S-4 to be filed by LXP.  The Merger is  intended  to qualify as a
tax-free  reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
parties have each made  customary  representations,  warranties  and covenants in the
Merger  Agreement,  including,  among  others,  covenants to  conduct their  businesses
in the usual,  regular and ordinary  course during the interim period between the
execution of the Merger  Agreement and the  consummation  of the Merger and not to engage
in various kinds of  transactions  during such period.  In addition,  prior to the
closing of the Merger  it is anticipated that LXP will make a special one-time cash
distribution of $.17 per share to its shareholders and unitholders.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Merger  Agreement  contains  certain  termination  rights for both the Company and LXP
and provides  that in certain  specified  circumstances,  a  terminating  party must pay
the other  partys  expenses up to  $5,000,000  in  connection  with the proposed
transaction.  In  addition,  the Merger  Agreement provides that in certain specified
circumstances  (generally in the event a terminating party enters into an alternative
transaction within  six months of termination),  a terminating party must also pay the
other party a break-up fee of up to $25,000,000 (less expenses,  if any, previously  paid
by the terminating party to the non-terminating party).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Following
the closing of the  transactions  contemplated  by the Merger  Agreement,  Michael L.
Ashner,  Chairman of the Board of Directors and Chief  Executive  Officer of the Company,
will enter into a new three-year  employment  agreement with LXP and Lara S. Johnson,
Executive Vice President of  the Company,  will serve as Executive  Vice  President of
Strategic  Transactions.  The  Surviving  Entitys  Board of Trustees will consist
of eleven  members, three of whom will be appointed by the Company and eight of whom will
be appointed by LXP.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
connection with the Merger,  the Company will terminate its advisory  agreement with
Newkirk  Advisors LLC for an aggregate  payment by the Company  of $12,500,000.  In
addition,  the Surviving Entity will obtain the benefit of the Companys
exclusivity  arrangement with Mr. Ashner with respect to  all business opportunities
related to net-leased properties that are offered to or generated by Mr. Ashner.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Simultaneously
with the execution of the Merger Agreement,  beneficial owners of approximately 46% of
the Companys voting  securities,  entered into  voting agreements pursuant to which
they agreed, among other things, to vote to approve the Merger.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 25, 2006, the Company  entered into a modification  of the lease with respect to a
390,000 square foot office building leased to Cummins Inc.,  located in Columbus,
Indiana.  The modification  extends the lease term for an additional ten years beyond the
current three years remaining.  Annual  rental income from the property will be increased
by 9.5% effective  August 2006,  with further  increases of 5% in base rental income every three years. In
connection with  this, the Company agreed to provide the tenant with an $11,500,000
tenant  improvement  allowance  payable on August 1, 2006. The tenant  improvement
allowance will be treated as a lease incentive and as such will be amortized into rental
income over the life of the lease.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Certain
statements  contained herein constitute  forward-looking  statements as such term is
defined in Section 27A of the Securities Act of 1933, as amended, and  Section  21E of
the  Securities  Exchange  Act of  1934,  as  amended.  Forward-looking  statements  are
not  guarantees  of  performance.  They  involve  risks,  uncertainties  and
assumptions.  Our future  results,  financial  condition  and business may differ
materially  from those  expressed in these  forward-looking  statements.  You can find
many of these  statements  by looking  for words such as  approximates, believes, expects, anticipates, intends, plans, would, may or
similar  expressions in this quarterly  report on Form 10-Q. These  forward-looking
statements are subject to numerous  assumptions,  risks and  uncertainties.  Many of the
factors  that will  determine  these items are beyond our ability to control or predict.
Factors  that may cause  actual  results to  differ materially from those contemplated by
the  forward-looking  statements  include,  but are not limited to, those set forth in
the Companys Annual Report on  Form 10-K for the year ended  December 31, 2005
under  Forward  Looking  Statements and Item 1. Business  Risk
Factors. For these  statements,  the Company  claims the  protection  of the safe
harbor for  forward-looking  statements  contained  in the Private  Securities
Litigation  Reform Act of 1995.  We  expressly  disclaim any responsibility to update
forward-looking  statements,  whether as a result of new information,  future events or
otherwise.  Accordingly,  investors  should use caution in relying on  forward-looking
statements,  which are based on results and trends at the time they are made, to
anticipate  future  results or  trends.

Managements
Discussion and Analysis of Financial  Condition and Results of Operations includes a
discussion of the Companys  unaudited  consolidated  financial  statements for the
six months ended June 30, 2006. The  preparation of financial  statements in conformity
with accounting  principles  generally  accepted in the  United States of America
requires  management to make estimates and  assumptions  that affect the reported
amounts of assets and  liabilities  and disclosure of  contingent  assets and
liabilities  at the date of the financial  statements  and the reported  amounts of
revenues and expenses  during the  reporting  periods.  Actual results could differ from
those estimates.

This item
should be read in conjunction with the financial statements, footnotes thereto and other
items contained elsewhere in the report.

Overview

Newkirk Realty
Trust,  Inc.  (NKT) is a Maryland  corporation  that has elected to be taxed
as a real estate  investment trust or REIT. NKT was formed in July  2005 and
completed  its initial  public  offering  (the IPO) on November 7, 2005.  NKT
was formed to acquire an  ownership  interest in, and become the general  partner of, The
Newkirk Master Limited  Partnership (the  Predecessor or the Operating
Partnership).  The Operating  Partnership owns commercial  properties,  most of
which are net leased to investment  grade corporate  tenants,  as well as other real
estate assets.  NKT holds a controlling  30.1% ownership  interest in  the Operating
Partnership.  All of NKTs assets are held through the Operating  Partnership and
its subsidiaries.  All references to we and the Company refer  to
NKT and its consolidated subsidiaries, including the Operating Partnership.

At July 15,
2006, our primary  assets were our interests in 166 real  properties.  Almost all of the
properties are leased to one or more tenants  pursuant to net  leases. We also hold: (i)
a 50% interest in a joint venture formed to acquire and originate loans secured,
directly and indirectly,  by real estate assets;  (ii)  subordinated  interests in a
securitized pool of notes evidencing first mortgage  indebtedness  secured by certain of
our properties as well as other  properties;  (iii) limited partnership  interests in
various  partnerships that own commercial  net-leased  properties;  (iv) an interest in a
management company that provides  services to other real estate  partnerships;  (v)
ground leases,  remainder interests or the right to acquire remainder interests in
various properties;  and (vi)  miscellaneous other assets.

22



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Overview
(Continued)

Since the IPO,
our primary  long-term  business  objectives have been to increase funds from operations,
cash flow available for distribution to our stockholders  and net asset value per share.
Because our existing  properties  currently  have  contractual  primary term rental rates
that are  signifantly  above market,  we  anticipate  that in the short term,  over the
next four years,  as the primary terms of these  existing  leases  expire,  the funds
from  operations and cash flow  attributable  to the existing  properties  will decline.
As a result,  we have been actively  managing our lease  rollover and seeking  portfolio
growth through  acquisitions.  To that end, as more fully described below,  since the IPO
we have renewed and/or leased an aggregate  2,480,000 square feet of space. In addition,
we have sold or agreed to sell  approximately  3,436,000 square feet of space. As a
result, we have  successfully  addressed during the nine months since the IPO,  through
leasing and sales activity,  5,916,000  square feet or 42% of the 14,000,000  square feet
of space that was scheduled to expire by the end of 2009. In the  same period,  we have
acquired  879,000 square feet of industrial  space for  approximately  $31,000,000,
office  properties  containing  994,000 square feet for  approximately  $108,000,000  and
have acquired or committed to acquire in our joint venture  $150,600,000  of debt assets.
Together these  investments  represent  portfolio  acquisitions of over  $289,000,000
since our initial public offering.  Further,  on July 23, 2006, we entered into a
definitive  Agreement and Plan of  Merger with Lexington  Corporate  Properties Trust (LXP),
a Maryland real estate investment  trust,  pursuant to which we will merge with and into
LXP, thereby  creating one of the largest  publicly traded single tenant focused REITs in
the United States with an enterprise  value of  approximately  $4,600,000,000.  If the
merger (the  Merger) is  consummated,  each holder of common  stock will be
entitled to receive  0.80 common  shares of LXP in exchange for each share of common
stock.

Prior to the
consummation of the Merger, we will continue to:

| | o | acquire
individual net leased properties and portfolios of net leased properties;
| | - | ---------------------------------------------------------------------------------

| | o | complete
sale/leaseback transactions, through which we acquire properties and lease the properties
back to the seller or operator under a net lease;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | o | acquire
controlling and non-controlling interests in private and public companies primarily
engaged in the business of making net lease investments;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | o | acquire
equity and debt interests in entities that own, develop, manage or advise third parties
with regard to net leased investments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | o | acquire
senior and subordinated loans secured by mortgages on net leased properties,  mezzanine
loans secured by ownership  interests in entities that  own net leased properties as well
as commercial mortgage-backed securities, B Notes and bridge loans, relating to net
leased properties;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | participate
in development projects relating to net lease properties;
| | - | ---------------------------------------------------------------------

| | o | explore
investment opportunities in non-domestic markets;
| | - | ---------------------------------------------------------

| | o | where
opportunity arises, enter into strategic alliances with entities that historically have
been leading sellers of net-lease assets; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| | o | refinance
our existing  indebtedness to the extent  strategically  viable at lower average interest
rates or on more attractive terms and increase our  access to capital to finance property
acquisitions and expansions.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

2006
Transactions

| | Property
Acquisitions and Other Investments
| | -------------------------------------------

| | o | On
January  18,  2006,  we  acquired  an  approximately  116,000  square foot  office
building  in  Bridgewater,  New Jersey for a purchase  price of  approximately
$21,150,000.  The property is net leased to Biovail  Pharmaceuticals,  Inc., a company
primarily engaged in the manufacture and sale of  generic  pharmaceutical  products.  The
lease  agreement has a current term  scheduled to expire October 31, 2014 with two,
five-year  renewal terms.  Net rent during the current term is $1,397,000 per year
through October 31, 2009 and then $1,686,000 thereafter.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
January  26,  2006,  we acquired an  approximately  99,000  square foot 100% leased
office  building in Lisle,  Illinois  for a purchase  price of  approximately
$15,250,000.  Net rent for the  property,  commencing  January  1, 2007 is  projected  to
be  approximately  $1,225,000  per year.  The  property is 86% leased to National Louis
University with the balance being leased to two tenants.  The National Louis  University
lease has a primary  term expiring  December 31, 2019 with annual lease rent commencing
at $943,000  through  December 31, 2006 (with a 50% rent concession  through August  31,
2006), increasing by $43,000 on each January 1 thereafter.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 7, 2006, we acquired two  warehouse/distribution  centers comprising  240,000
square feet for a purchase price of approximately  $10,550,000.  The properties are
currently  leased on a long-term  basis to subsidiaries  of Jacobson  Companies,  a
leading third party  warehousing  company.  One  lease has a primary term  expiring
December  31, 2015 with annual base rent during the primary  term of $450,000.  The other
lease has a primary term  expiring December 31, 2014 with an annual base rent of
approximately  $331,000 through December 31, 2008 increasing to approximately  $404,000
through  December 31, 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 29,  2006,  we  acquired a 639,000  square foot  property  located in  Statesville,
North  Carolina  for a purchase  price of  approximately  $20,500,000.  The property,
which serves as a  distribution  facility,  is currently  leased to La-Z-Boy  Greensboro
Inc. and guaranteed by La-Z-Boy  Incorporated.  The lease has a primary term expiring
April 30, 2010 with annual base rent during the primary term of approximately $1,649,000.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
April 26,  2006,  we acquired a 226,000  square foot office  building  located in
Rochester,  New York for a purchase  price of  $26,400,000.  The  property is currently
leased  through 2014 to The Frontier  Corporation,  a  communications  company.  The
annual net rent payable at the property is  $2,567,000  through  December 31, 2007,
increasing to $2,624,000  per annum through 2014.  Upon  expiration of the current lease
term, the tenant has  two, five-year renewal options each at an annual rental rate equal
to the greater of market value or the current rent amount.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
May 5, 2006,  we acquired an  approximately  96,000  square foot office  building in
Rockaway,  New Jersey for a purchase  price of  approximately  $22,000,000.  We
partially  satisfied  the  purchase  price by assuming the existing  mortgage  loan of
$14,900,000.  The property is leased to BASF  Corporation,  the North  American
affiliate of BASF AG. The lease  agreement  has a current  term  scheduled  to expire
September  30, 2014 with the  tenants option to enter into either two,  five-year
renewal terms or one,  ten-year  renewal term, in all cases at fair market rent. Net rent
during  the current term is $1,489,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
May 26, 2006, the Operating  Partnership  concluded tender offers,  pursuant to which
they acquired  additional  limited  partnership units in five  partially-owned
partnerships,  two of which were consolidated.  The purchase price of these interests
aggregated  $1,681,000,  $986,000 of which was  paid in cash,  and the  remainder of
which was paid  through the  issuance of 40,239.58  MLP units.  The  Operating
Partnerships  ownership in these  partnerships  ranges  between  24.50% and
85.38%.  As a result of the tender  offer,  an  additional  partnerships  results
of  operations  are now  consolidated.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

2006
Transactions

| | Property
Acquisitions and Other Investments (Continued)
| | -------------------------------------------------------

| | o | On
June 30,  2006,  we  acquired  a 458,000  square  foot  office  building  and
distribution  center in  Glenwillow,  Ohio for a  purchase  price of  $23,300,000.  The
property is  currently  leased to Royal  Appliance,  a home  cleaning  products  company.
The lease  agreement  has a current term  scheduled  to expire July 31,  2015 with two,
five-year  renewal  terms.  Net rent  during the current  term is  $1,738,000  through
July 31,  2007,  $1,944,000  through  July 31, 2012,  and  $2,040,000  through the end of
the current  term.  Renewal  term option rents are 95% of fair market  value.  Pursuant
to the terms of the lease  agreement,  if requested by the tenant,  we have the
obligation  to build up to a 160,000  square foot  expansion  property.  The costs that
would be incurred in connection with such expansion would be recouped through rent
increases.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | At
June 30, 2006, we owned securities in publicly traded net lease REITs and partnerships
for an aggregate cost of approximately $9,977,000.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------

| | o | We
have entered into a contract to acquire a parcel of land in Baltimore,  Maryland,  which
is adjacent to its existing property leased to Legg Mason,  for $1,800,000 on which it
expects to construct a parking garage.  Our inspection period currently expires on August
17, 2006.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Debt
Placements and Acquisitions
| | --------------------------------

| | o | On
February 13, 2006, we acquired a 10 year,  BBB rated bond secured by net leased
properties  owned by Kindercare  Real Estate LLC with a face value  of $11,700,000 and a
projected unleveraged yield to maturity of 7%.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 13, 2006, we acquired a $3,309,000  participation  interest in a $18,750,000
mezzanine  loan and a $11,691,000  participation  interest in a  $66,500,000  mezzanine
loan. The loans  underlying both  participation  interests are secured by the ownership
interests in entities owning fee title  to retail  stores net leased to Toys R Us,
bear  interest at a rate of LIBOR plus 175 basis  points and mature on August 9, 2007,
subject to three  one year extensions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 20, 2006, we acquired a  $30,750,000  B Note secured by a 757,000  square foot
office  building in Dallas,  Texas  presently net leased to JP  Morgan Chase and has an
initial interest rate of 8.67% for a purchase price of $27,732,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 30, 2006, we entered into a $300,000,000  repurchase agreement with Column
Financial Inc. and effectively  leveraged  $32,025,000 of our Toys  R Us
loans and JP Morgan B Note at that time.  At June 30, 2006, $36,979,000 was outstanding
under the repurchase agreement.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 31, 2006, we entered into a joint venture with a subsidiary of Winthrop Realty
Trust to originate and acquire loans secured directly or indirectly by real estate. The
foregoing debt assets and repurchase agreement were contributed to the joint venture. In
addition, the joint venture made the following investments during the quarter ended June
30, 2006:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a
$1,500,000  mezzanine  loan secured by the ownership  interests in entities  owning fee
title to a 130,000 square foot  industrial  facility that is  triple net leased to
Rockwell Automation.  The loan bears an interest rate of 12% and matures in 10 years.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a
$10,000,000  participation  in a mezzanine loan secured by the ownership  interests in
entities owning fee title to One Madison Avenue,  a 1,100,000  square  foot  office
building  located in New York City and 95% leased to Credit  Suisse.  The loan was
purchased  for  $8,469,030  and has an  expected unleveraged yield to maturity of 7.58%.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

2006
Transactions

| | Debt
Placements and Acquisitions (Continued)
| | --------------------------------------------

| | o | a
$20,000,000  mezzanine loan secured by the ownership  interests in entities  owning fee
title to One Pepsi Way, a 540,000 square foot Class A office  building  situated on 206
acres in  Westchester  County,  New York.  The  two-year  loan bears an interest  rate of
LIBOR plus 4.25% and is subject to  three, one-year extensions.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a
junior  participation  in a $13,000,000 B Note secured by a 638,000 square foot Class A
office building in downtown  Atlanta for a purchase price of  $10,473,000.  The B Note
has an interest rate of 6.09%, resulting in a yield of 12.43%.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a
$4,500,000  participation  in a B note secured by an office  portfolio  known as Boston
Wharf  Properties  containing a total of 439,000 square feet  located in Boston,
Massachusetts.  The two-year loan bears an interest rate of LIBOR plus 2.25% and is
subject to three, one-year extensions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a
$3,000,000 BB rated bond, BALL 2003-BBA2 Class L for a price of $2,984,063.
| | - | -----------------------------------------------------------------------------

| | o | a
$13,000,000 BB rated bond, BSCMS 2004-BA5A Class K for a price of $12,870,000.
| | - | --------------------------------------------------------------------------------

| | o | three
BBB-rated CMBS bonds: (i) BALL 2004-BBA4  $7,000,000 Class K for a price of $7,061,250;
(ii) , COMM 20005 FL11 $15,700,000  Class L for a price  of $15,431,612; and (iii) and
BSCMS 2006-BBA7 $4,785,000 Class K for a price of $$4,783,610.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Financings
| | ----------

| | o | On
February 10, 2006, we obtained a first  mortgage loan from an  unaffiliated  third party,
in the principal  amount of  $14,800,000  secured by our  property located in
Bridgewater,  New Jersey.  See Property  Acquisitions and Other Investments above.
The loan bears interest at 5.732%,  requires  monthly payments of interest only for the
first 60 months and then requires  monthly  payments of principal and interest of
approximately  $86,000 and  is scheduled to mature on March 6, 2016, at which time the
outstanding  principal  balance is expected to be  approximately  $13,730,000.  We
received  net proceeds from this loan, after satisfying closing costs, of approximately
$14,600,000.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
March 6, 2006,  NK-Marc CAA LLC, a joint venture which is consolidated  with us, obtained
a $3,500,000 loan from an unaffiliated  third party.  The  loan bears interest at 6.5%,
requires monthly  payments of principal and interest of  approximately  $24,000 for 60
months and is scheduled to mature  on March 1, 2011.  The loan is secured by a first
mortgage loan receivable owned by NK-Marc CAA LLC.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
April 7, 2006, the Operating  Partnership  entered into an unsecured  revolving credit
agreement with KeyBank  National  Association  providing for  borrowings of up to
$50,000,000,  subject to increase up to  $100,000,000.  The revolving  credit  facility
matures April 7, 2009 with the option to  extend the term for an additional  year.
Amounts  borrowed under the revolving credit line bear interest at rates based on our
leverage ratio ranging  from LIBOR plus 1.35% to LIBOR plus 2.00%.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

2006
Transactions

| | Financings
(Continued)
| | ----------------------

| | o | On May 5, 2006, we obtained a $10,450,000 loan from an unaffiliated third
      party lender, which is secured by our property located at 850-950 Warrenville
      Road, Lisle, Illinois. The loan bears interest at 6.5%, requires monthly
      payments of interest only during the first two years of the loan term and
      thereafter principal (based on a 30-year amortization schedule) and interest
      for the balance of the term. The loan is scheduled to mature on June 1,
      2016, at which time the outstanding principal balance is expected to be
      approximately $9,463,000.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
July 20, 2006, we obtained first mortgage  loans from an  unaffiliated  third party with
respect to its  Rochester,  New York;  Statesville,  North  Carolina;  and Rockford,
Illinois  properties.  The loans, which had an initial aggregate principal amount of
$39,800,000,  are  cross-collateralized  and  cross-defaulted.  The loans bear interest
at 6.21%,  require monthly payments of interest only for 24 months and then require
monthly payments of  principal  and  interest  in the  aggregate  of  approximately
$244,000.  The loans  are  scheduled  to  mature  on August 1, 2016 at which  time the
outstanding  principal  balance is expected to be  $35,438,000.  We received net
proceeds  from these  loans,  after  satisfying  closing  costs,  of  approximately
$39,260,000.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Property
Sales
| | --------------

| | o | On
March 14,  2006,  we entered into an agreement  to sell our Toledo,  Ohio  property
currently  leased to  Owens-Illinois  for a purchase  price of  $33,000,000,  $1,000,000
in cash plus  assumption of the $32,000,000 of outstanding  debt  encumbering the
property at September 29, 2006, the closing  date.  The  purchaser,  RVI Group,  is the
residual  value  insurer  with  respect to the  property.  Owens-Illinois  had advised us
that it would be  vacating the property at the expiration of its lease term, September
30, 2006.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
July 13,  2006,  we sold 50 of our  retail  properties  to an  unaffiliated  third  party
for a gross  purchase  price of  $160,000,000.  The sold  properties were originally
leased to Albertsons,  Inc.,  contain an aggregate of 2,300,000 square feet and had
current lease terms expiring over the  next 4.5 years.  After closing  costs,  we
received net proceeds of  approximately  $159,000,000,  $22,000,000 of which were used to
pay down our note  payable.  The balance of the net proceeds were  deposited  with a
Qualified  Intermediary  for use in 1031 tax free  exchanges  including  $49,000,000
which were used for reverse 1031 exchanges in connection with the previously  acquired
property located in Rochester,  New York leased to The Frontier  Corporation and the
Glenwillow,  Ohio property leased to Royal  Appliance.  We are currently in the process
of identifying  properties to complete the  1031 tax free exchange.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | In
June 2006, we received notice from The Kroger Company  exercising their option to
purchase under their leases at three  properties.  Two properties  are located in
Louisville,  Kentucky and one property is located in Columbus,  Ohio.  The properties
will be purchased at the end of the primary term  in December 2006 for a negotiated fair
market value or appraised value.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

2006
Transactions

| | Leasing
| | -------

| | o | As
of July 15, 2006, our properties were 97% leased.
| | - | ----------------------------------------------------

| | o | During
the first quarter we executed a ten-year lease extension with Raytheon Company
commencing on January 1, 2009 for approximately  345,000 square  feet of office space and
63% of the parking  structure  relating  thereto located in El Segundo,  California.  In
connection with the lease extension,  the tenant is obligated to pay annual rent of
$4,921,000  from January 2009 through  December  2013,  increasing  to  $5,267,000  for
the period from  January  2014 to  December  2018.  The  property  owner,  which is 53%
owned by the  Operating  Partnership,  is  required  to provide the tenant with
$21,500,000 in tenant  improvement  allowances and rent  concessions  over the next 40
months.  Raytheon  Company  retained its renewal option for the  remaining 37% of the
space pursuant to its original lease.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | During
the first quarter,  excluding the transaction  with Raytheon  Company  described  above,
four tenants  representing  leases at four properties  containing approximately 933,000
square feet exercised their renewal option.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | During
that same period,  excluding the property located in Toledo,  Ohio discussed under
Property Sales above, one tenant representing a lease at one  property  containing
approximately  42,000 square feet notified us that they would not exercise  their renewal
options.  We are currently  marketing  this property for lease.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | During
the first  quarter,  two properties  containing  approximately  89,000 square feet have
been fully leased,  and one property has been partially  leased to an 8,000 square foot
tenant.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | In
the second  quarter,  one property  containing  approximately  28,000  square feet was
fully leased,  and one property was  partially  leased to an  approximately 4,000 square
foot tenant.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
July 25, 2006, we entered into a modification of the lease with respect to a 390,000
square foot office  building  leased to Cummins Inc.,  located  in Columbus,  Indiana.
The modification  extends the lease term for an additional ten years beyond the current
three years  remaining.  Annual rental  income from the property will be increased by
9.5% effective  August 2006,  with further  increases of 5% every three years.  In
connection with this,  we agreed to provide the tenant with an $11,500,000 tenant
improvement allowance payable on August 1, 2006.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical
Accounting Policies and Estimates

A summary  of
our  critical  accounting  policies  is  included  in our  Annual  Report on Form 10-K
for the year  ended  December  31,  2005.  There have been no  significant changes to
those policies during 2006.

Recently
Issued Accounting Standards

In June 2005,
the Financial  Accounting  Standards  Board (FASB)  ratified the consensus
reached by the Emerging Issues Task Force (EITF) on Issue No. 04-05,  Determining
Whether a General Partner,  or General Partners as a Group,  Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain  Rights (EITF
04-05).  EITF 04-05 provides a framework for determining whether a general partner
controls,  and should  consolidate,  a limited partnership or a  similar  entity.  EITF
04-05 became  effective on June 29, 2005, for all newly formed or modified  limited
partnership  arrangements  and January 1, 2006 for all  existing limited partnership
arrangements.  The adoption of this standard resulted in the consolidation of one
previously unconsolidated partnership.

28



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Recently
Issued Accounting Standards (Continued)

The impact of
the adoption on the January 1, 2006 balance sheet was as follows (in thousands):

|                                         |  |  | Pre-
    Consolidation |       | Consolidated |  
|---------------------------------------- |  |  | ---------------------- | ----- | ------------ | -
|                                         |  |  |                        |       |              |  
|Assets:                                  |  |  |                        |       |              |  
|                                         |  |  |                        |       |              |  
|Cash                                     |  |  | $                      | -     |              | $
|Land                                     |  |  |                        |      |              |  
|Building, net                            |  |  |                        |      |              |  
|Equity investment in limited partnership |  |  |                        | 6,538 |              |  
|Deferred costs, net                      |  |  |                        |      |              |  
|                                         |  |  |                        |       |              |  
|                                         |  |  | $                      | 6,538 |              | $
|                                         |  |  |                        |       |              |  
|                                         |  |  |                        |       |              |  
|Liabilities:                             |  |  |                        |       |              |  
|                                         |  |  |                        |       |              |  
|Mortgage loan                            |  |  | $                      | -     |              | $
|                                         |  |  |                        |       |              |  
|                                         |  |  | $                      | -     |              | $
|                                         |  |  |                        |       |              |  

There have been
no other new accounting  standards or interpretations  that have been issued that we have
not yet adopted and that we believe will have a material  impact on our consolidated
financial statements upon adoption.

Results
of Operations

Comparison
of the six months ended June 30, 2006 to the six months ended June 30, 2005

For purposes of
the  following  comparison  of operating  results for the six months ended June 30, 2006
and 2005,  the results of  operations  for the six months  ended June 30, 2005 reflect
the results of  operations  of 100% of the  Operating  Partnership.  Net income for the
six months ended June 30, 2006  reflects  only  Newkirk Realty Trust, Inc.s 30.1%
interest.

Rental Income

Rental income
increased by $5,966,000 or 5.8% to $108,926,000  for the six months ended June 30, 2006
from  $102,960,000  for the six months ended June 30, 2005.  The increase was primarily
due to rental income of  approximately  $4,023,000  from new  acquisitions,
approximately  $5,080,000 of rental income from previously  unconsolidated  entities,
and a lease  termination fee of $399,000  recognized in the current  period.  The
foregoing  increases were partially  offset by: (i) a  decrease in the amount received
for rent relating to a settlement with Kmart of approximately $697,000; (ii) $823,000
relating to new vacancies;  (iii) a decrease  of  approximately  $886,000 due to lower
rental  income  resulting  from lease  renewals at rates that are lower than the primary
term rates;  and (iv) a $605,000  charge against rental income related to the net
amortization on above and below market leases and a $491,000 charge  relating to tenant
improvement  allowances.  Leased square footage at June 30, 2005 was 98.3%.  Leased
square footage increased from  approximately  96.5% at December 31, 2005 to approximately
97.1% at June  30, 2006.

Interest and
Other Income

Interest
income  increased by $5,520,000 or  approximately  355.9% to $7,071,000 for the six
months ended June 30, 2006 from  $1,551,000 for the six months ended  June 30,  2005.
The  increase  was  primarily  the result of higher cash  balances  due to the IPO.  In
addition,  we  recognized  an increase of  approximately  $2,390,000 of interest from
loans receivable.

29



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Management
Fee Income

Management  fee
income  decreased by $35,000 or  approximately  22% to $124,000 for the six months ended
June 30, 2006 from $159,000 for the six months ended June  30, 2005.  The decrease is
attributable to fewer properties under management resulting from the sale of properties
owned by unconsolidated partnerships.

Interest
Expense

Interest
expense  decreased by $8,748,000 or approximately  25.2% to $26,019,000 for the six
months ended June 30, 2006 compared to $34,767,000 for the six months  ended June 30,
2005.  The decrease was primarily  due to loan  paydowns  during the period and scheduled
principal  payments  along with a reduced  interest rate  incurred in connection with our
August 11, 2005 refinancing with KeyBank National Association.

Depreciation

Depreciation
expense  increased by $7,723,000 or  approximately  52% to $22,572,000  for the six
months ended June 30, 2006 compared to  $14,849,000  for the six  months ended June 30,
2005. The increase is primarily  attributable  to an increase of $5,659,000  resulting
from the shortening of the useful life of four of our  properties.  In June 2005, we
entered into an agreement with Honeywell  International, Inc.,  the tenant of four
office  buildings owned by us in Morris Township,  New Jersey to restructure the lease on
the properties.  Under the restructuring,  the tenant waived its right to exercise its
economic  discontinuance option (the  ability to terminate  its lease and make an offer
to purchase the  property for a fixed price) and we granted the tenant an option to
purchase the  properties  in  2007.  In light of these  circumstances,  we reduced our
carrying  value through an  impairment  charge and also  shortened  the  properties useful
lives.  The  increase was also due to the inclusion of depreciation from previously
unconsolidated entities of $913,000 and depreciation on new acquisitions of $746,000.

Compensation
Expense for Exclusivity Rights

The
compensation  expense for exclusivity  rights of $1,667,000 for the six months ended June
30, 2006,  represents the portion of shares issued by us in exchange  for certain
exclusivity rights relating to net leased business  opportunities  offered to or
generated by Michael L. Ashner, our Chief Executive Officer, that are  no longer subject
to forfeiture restrictions.

General and
Administrative Expense

General and
administrative  expense  increased by $3,188,000 to $5,018,000  for the six months ended
June 30, 2006 from  $1,830,000 for the six months ended June  30, 2005.  This increase
was primarily due to an increase in management fee expense of $1,436,000 and expenses
incurred in 2006  associated with being a publicly  traded company.

Operating
Expenses

Operating
expenses  increased to  $2,984,000  for the six months ended June 30, 2006 from  $223,000
for the six months  ended June 30, 2005.  This  increase was  primarily  the result of
the  consolidation  of non-net  leased  property and  acquisition  of new leased
properties  under which we are required to bear certain  operating costs, as well as
operating costs related to vacant properties.

Impairment
Loss

We recorded an
impairment  loss of  $16,954,000  during the six months  ended June 30,  2005,
$2,200,000  of which  related to a property  located in  Evanston,  Wyoming.  The
remaining $14,754,000 was a result of a restructuring of a tenants lease at four
properties in Morris Township, New Jersey.

30



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Results
of Operations (Continued)

Comparison
of the six months ended June 30, 2006 to the six months ended June 30, 2005 (Continued)

Amortization
Expense

Amortization
expense  increased by $1,491,000 or 113.6% to $2,804,000 for the six months ended June
30, 2006 compared to $1,313,000 for the six months ended June  30, 2005. The
consolidation  of previously  unconsolidated  entities  increased  amortization  expense
by  approximately  $500,000.  The increase was also due to  amortization of approximately
$900,000 of lease intangibles during the six months ended June 30, 2006.

Ground Rent

Ground rent
expense  increased by $123,000 or  approximately  11.8% to $1,166,000 for the six months
ended June 30, 2006 compared to $1,043,000 for the six months  ended June 30,  2005.  The
increase in ground rent expense is  primarily  the result of an increase in the ground
rental rate for a property  located in Orlando,  Florida.

State and
Local Taxes

State and local
tax expense  increased by $104,000 or  approximately  10% to $1,181,000  for the six
months ended June 30, 2006 compared to $1,077,000 for the six  months ended June 30,
2005. The increase is primarily due to a new entity level tax in the state of Kentucky.
Also,  additional  state tax obligations  have been  incurred due to our UPREIT structure.

Minority
Interest Expense of Partially-Owned Entities

Minority
Interest  Expense of  Partially-Owned  Entities for the six months ended June 30, 2006 of
$10,692,000  represents the minority  interest  expense of the  Operating  Partnership.
The minority  interest expense related to these interests is classified as minority
interest  expense in the  Consolidated  Statement of  Operations and Comprehensive Income
for the six months ended June 30, 2005.

Equity in
Income from Investments in Limited Partnerships and Joint Ventures

Equity in
income from investments in limited  partnerships and joint ventures increased by $188,000
or approximately  12.4% to $1,709,000 for the six months ended  June 30, 2006 compared to
$1,521,000  for the six months ended June 30, 2005.  The increase was due to $749,000
from our new  investment in 111 Debt Holdings LLC  and our higher  ownership  percentage
in limited  partnerships  due to the Operating  Partnerships  tender offer in the
second  quarter of 2006. The increase was  offset as a result of the consolidation of
Sunset Park West L.P. and Browen Associates.

Minority
Interest Expense

Minority
interest  expense  increased by $22,327,000  to $31,639,000  for the six months ended
June 30, 2006 compared to $9,312,000 for the six months ended June  30, 2005.  The
minority  interest  expense for the six months  ended June 30, 2006  represents  the
69.9%  minority  interest  partners  share of the  Operating  Partnership.  The
minority  interest  expense for the six months ended June 30, 2005 of  $9,312,000
represents  the  Operating  Partnerships  minority  interest  expense relating to
partnerships  which are not  wholly-owned by the Operating  Partnership.  The Operating
Partnerships  minority  interest expense for the six  months ended June 30, 2006 is
classified as Minority Interest Expense of Partially-Owned Entities in the June 30, 2006
statement of operations.

31



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NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Results
of Operations (Continued)

Comparison
of the six months ended June 30, 2006 to the six months ended June 30, 2005 (Continued)

Discontinued
Operations

Income from
discontinued  operations  amounted to $2,450,000  and  $1,035,000  for the six months
ended June 30, 2006 and 2005,  respectively.  At June 30, 2006,  there were 54 properties
in discontinued operations.

Our office
property in Toledo,  Ohio  continues  to be in  discontinued  operations  as it is to be
sold in September  2006.  Loss from  discontinued  operations  relating to this property
amounted to $914,000 and  $8,533,000  for the six months ended June 30, 2006 and 2005,
respectively.  Included in the six months ended  June 30, 2005 is an impairment loss of
$11,328,000.

On April 3,
2006, we entered into a letter of intent to sell 50 of our retail  properties  leased to
Albertson's  Inc. for a gross purchase price of $160,000,000.  These properties were sold
on July 13, 2006. Income from discontinued  operations  relating to this transaction
amounted to $8,670,000 and $6,810,000 for the six  months ended June 30, 2006 and 2005,
respectively.

In June 2006,
three retail properties in Columbus,  Ohio and Louisville,  Kentucky were identified as
held for sale as we were notified by The Kroger Company that  they were exercising  their
purchase option under their leases.  The transaction will take place in December 2006.
Income relating to these  properties  amounted  to $583,000 and $534,000 for the six
months ended June 30, 2006 and 2005, respectively, and is included in discontinued
operations.

During the six
months  ended June 30, 2005,  we sold four  properties  for a combined net sales price of
approximately  $3,100,000.  We  recognized a net gain on  disposal of these properties of
$601,000.  The loss from discontinued  operations  includes an $883,000  impairment loss
on two properties  located in Texas which  were sold during the six months ended June 30,
2005.  The six months ended June 30, 2005 income from  discontinued  operations  also
includes the  operations  of  three properties sold subsequent to June 30, 2005.

Minority
interest (expense) income from discontinued operations was ($6,004,000) and $8,000 for
the six months ended June 30, 2006 and 2005, respectively.

Comparison
of the three months ended June 30, 2006 to the three months ended June 30, 2005

For purposes of
the following  comparison of operating  results for the three months ended June 30, 2006
and 2005,  the results of operations for the three months  ended June 30, 2005 reflect
the results of  operations  of 100% of the  Operating  Partnership.  Net income for the
three months ended June 30, 2006 reflects only  Newkirk Realty Trust, Inc.s 30.1%
interest.

Rental Income

Rental  income
increased by  $4,403,000  or 7.9% to  $55,458,000  for the three months ended June 30,
2006 from  $51,055,000  for the three months ended June 30,  2005.  The increase was due
primarily to rental  income of  approximately  $3,112,000  from new  acquisitions,
approximately  $2,646,000  of rental  income from  previously  unconsolidated  entities,
and a lease termination fee of $399,000 recognized in the current period. The foregoing
increases were partially offset by:  (i)  approximately  $426,000  relating to new
vacancies;  (ii) a decrease of  approximately  $665,000 due to lower rental income
resulting from lease renewals at  rates that are lower than the primary term rates;  and
(iii) a $303,000  charge against rental income  related to the net  amortization  on
above and below market  leases and  $421,000  relating to tenant  improvement
allowances.  Leased  square  footage at June 30,  2005 was 98.3%.  Leased  square
footage  increased  from  approximately 96.5% at December 31, 2005 to approximately 97.1%
at June 30, 2006.

32



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  
FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Results
of Operations (Continued)

Comparison
of the three months ended June 30, 2006 to the three months ended June 30, 2005
(Continued)

Interest
and Other Income

Interest income
increased by $2,101,000 or  approximately  273.9% to $2,868,000 for the three months
ended June 30, 2006 from $767,000 for the three months ended  June 30,  2005.  The
increase  was  primarily  the result of higher cash  balances  due to the IPO.  In
addition,  we  recognized  an increase of  approximately  $1,020,000 of interest from
loans receivable.

Management
Fee Income

Management  fee
income  decreased  by $18,000 or  approximately  23.1% to $60,000 for the three months
ended June 30, 2006 from $78,000 for the three months ended  June 30, 2005.  The decrease
is attributable to fewer properties under management resulting from the sale of
properties owned by unconsolidated partnerships.

Interest
Expense

Interest
expense  decreased by $4,241,000 or  approximately  24.1% to $13,330,000  for the three
months ended June 30, 2006 compared to $17,571,000 for the three  months ended June 30,
2005. The decrease was primarily due to loan prepayments  during the period and scheduled
principal  payments along with a reduced interest  rate incurred in connection with our
August 11, 2005 refinancing with KeyBank National Association.

Depreciation

Depreciation
expense increased by $4,041,000 or approximately  54.6% to $11,445,000 for the three
months ended June 30, 2006 compared to $7,404,000 for the three  months ended June 30,
2005. The increase is primarily  attributable  to an increase of $2,829,000  resulting
from the shortening of the useful life of four of our  properties.  In June 2005, we
entered into an agreement with Honeywell  International, Inc.,  the tenant of four
office  buildings owned by us in Morris Township,  New Jersey to restructure the lease on
the properties.  Under the restructuring,  the tenant waived its right to exercise its
economic  discontinuance option (the  ability to terminate  its lease and make an offer
to purchase the  property for a fixed price) and we granted the tenant an option to
purchase the  properties  in  2007.  In light of these  circumstances,  we reduced our
carrying  value through an  impairment  charge and also  shortened  the  properties useful
lives.  The  increase was also due to the inclusion of depreciation from previously
unconsolidated entities of $486,000 and depreciation on new acquisitions of $567,000.

Compensation
Expense for Exclusivity Rights

The
compensation  expense for exclusivity  rights of $833,000 for the three months ended June
30, 2006,  represents the portion of shares issued by us in exchange  for certain
exclusivity rights relating to net leased business  opportunities  offered to or
generated by Michael L. Ashner, our Chief Executive Officer, that are  no longer subject
to forfeiture restrictions.

General and
Administrative Expense

General and
administrative  expense  increased by $1,503,000 or 152.4% to $2,489,000  for the three
months ended June 30, 2006 from $986,000 for the three months  ended June 30, 2005.  This
increase was primarily due to an increase in management fee expense of $718,000 and
expenses  incurred in 2006  associated with being a  publicly traded company.

33



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Results
of Operations (Continued)

Comparison
of the three months ended June 30, 2006 to the three months ended June 30, 2005
(Continued)

Operating
Expenses

Operating
expenses  increased by $1,416,000 to $1,652,000  for the three months ended June 30, 2006
from $236,000 for the three months ended June 30, 2005.  This  increase was primarily the
result of the  consolidation of a non-net leased property and acquisition of new leased
properties under which we are required to bear  certain operating costs, as well as
operating costs related to vacant properties.

Impairment
Loss

A $14,754,000
impairment loss was recorded  during the three months ended June 30, 2005 as a result of
a restructuring  of a tenants lease of four properties in  Morris Township, New
Jersey.

Amortization
Expense

Amortization
expense  increased by $890,000 or 135.9% to $1,545,000 for the three months ended June
30, 2006 compared to $655,000 for the three months ended June  30, 2005. The
consolidation  of previously  unconsolidated  entities  increased  amortization  expense
by  approximately  $240,000.  The increase was also due to  amortization of approximately
$630,000 of lease intangibles during the three months ended June 30, 2006.

Ground Rent

Ground rent
expense  increased  by $49,000 or  approximately  9.3% to $577,000 for the three months
ended June 30, 2006  compared to $528,000 for the three months  ended June 30,  2005.
The increase in ground rent expense is  primarily  the result of an increase in the
ground  rental rate for a property  located in Orlando,  Florida.

State and
Local Taxes

State and local
tax expense  decreased by $468,000 or  approximately  58% to $339,000 for the three
months ended June 30, 2006  compared to $807,000 for the three  months ended June 30,
2005.  The decrease was primarily due to a credit from the State of Tennessee.

Minority
Interest Expense of Partially-Owned Entities

Minority
Interest  Expense of  Partially-Owned  Entities for the three months ended June 30, 2006
of $5,346,000  represents the minority  interest expense of the  Operating  Partnership.
The minority  interest expense related to these interests is classified as minority
interest  expense in the  Consolidated  Statement of  Operations and Comprehensive Income
for the three months ended June 30, 2005.

Equity in
Income from Investments in Limited Partnerships

Equity in
income from  investments in limited  partnerships  increased by $479,000 or
approximately  62.5% to $1,245,000 for the three months ended June 30, 2006  compared to
$766,000 for the three months ended June 30, 2005.  The  increase  was due to $749,000
from our  investment  in 111 Debt  Holdings LLC and our higher  ownership  percentage in
limited  partnerships  due to the Operating  Partnerships  tender offer in the
second quarter of 2006. The increase was partially offset  as a result of the
consolidation of Sunset Park West L.P. and Browen Associates.

34



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Results
of Operations (Continued)

Comparison
of the three months ended June 30, 2006 to the three months ended June 30, 2005
(Continued)

Minority
Interest Expense

Minority
interest  expense  increased by $11,347,000  to  $16,007,000  for the three months ended
June 30, 2006 compared to $4,660,000 for the three months ended  June 30, 2005. The
minority  interest  expense for the three months ended June 30, 2006  represents the
69.9% minority  interest  partners share of the Operating  Partnership.  The
minority  interest  expense for the three months ended June 30, 2005 of $4,660,000
represents  the Operating  Partnerships  minority  interest  expense relating to
partnerships  which are not wholly-owned by the Operating  Partnership.  The Operating
Partnerships  minority interest expense for the three  months ended June 30, 2006
is classified as Minority Interest Expense of Partially-Owned Entities in the June 30,
2006 statement of operations.

Discontinued
Operations

Income (loss)
from discontinued  operations amounted to $1,309,000 and ($6,337,000) for the three
months ended June 30, 2006 and June 30, 2005,  respectively.  At  June 30, 2006, there
were 54 properties in discontinued operations.

Our office
property in Toledo,  Ohio  continues  to be in  discontinued  operations  as it is to be
sold in September  2006.  Loss from  discontinued  operations  relating to this  property
amounted to $436,000 and  $9,992,000  for the three months  ended June 30, 2006 and 2005,
respectively.  Included in the three months  ended June 30, 2005 is an impairment loss of
$11,328,000.

On April 3,
2006, we entered into a letter of intent to sell 50 of our retail  properties  leased to
Albertson's  Inc. for a gross purchase price of $160,000,000.  Income from  discontinued
operations  relating to this  transaction  amounted to  $4,644,000  and  $3,387,000  for
the three months ended June 30, 2006 and 2005,  respectively.

In June 2006,
three retail properties in Columbus,  Ohio and Louisville,  Kentucky were identified as
held for sale as we were notified by The Kroger Company that  they were exercising  their
purchase option under their leases.  The transaction will take place in December 2006.
Income relating to these  properties  amounted  to $258,000 and $269,000 for the three
months ended June 30, 2006 and 2005, respectively, and is included in discontinued
operations.

During the
three months ended June 30, 2005,  we sold three  properties  for a combined net sales
price of  approximately  $900,000.  We  recognized a net gain on  sale of these
properties of approximately  $1,000. The loss from discontinued  operations  includes an
$883,000 impairment loss on two properties located in Texas  which were sold during the
three  months  ended June 30,  2005.  The three  months  ended June 30, 2005 income from
discontinued  operations  also  includes  the  operations of three properties sold
subsequent to June 30, 2005.

Minority
interest (expense) income from discontinued operations was ($3,159,000) and $7,000 for
the three months ended June 30, 2006 and 2005, respectively.

35



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Liquidity
and Capital Resources

General

Liquidity is a
measurement of our ability to meet potential cash requirements,  including ongoing
commitments to repay borrowings,  fund and maintain investments,  pay dividends on our
common shares and other general  business  needs.  Historically,  our principal  sources
of funds have been  operating  cash flows,  property  sales and  borrowings.  Operating
cash flows have been,  and are  expected to continue  to be,  derived  primarily  from
rental  income  received by us from our  properties.  Pursuant to the terms of the
leases,  the tenants are responsible  for  substantially  all of the operating  expenses
with respect to the properties,  including maintenance, capital improvements, insurance
and taxes.

Accordingly,
we do not  anticipate  significant  needs for cash for these costs.  To the extent there
is a vacancy in a property,  we would be obligated  for all  operating  expenses,
including real estate taxes and insurance.  As of June 30, 2006, nine properties were not
subject to leases,  representing  approximately 3%  of our total square  footage.  We
believe that cash flows from  operations  will continue to provide  adequate  capital to
fund our  operating and  administrative  expenses,  regular debt service obligations and
all dividend payments in accordance with REIT requirements in both the short-term and
long-term.  In addition,  we  anticipate  that cash on hand,  borrowings  under our
revolving  credit line and  issuance of equity and debt,  as well as other  alternatives;
will provide the  necessary capital required for our investment activities.

Our UPREIT
structure  will  enable us to acquire  properties  for cash  and/or by  issuing  to
sellers,  as a form of  consideration,  our  limited  partnership  interests.  We intend
to utilize  this  structure to  facilitate  our ability to acquire  individual
properties  and  portfolios  of  properties  by  structuring  transactions  which will
defer tax  payable  by a seller  while  preserving  our  available  cash for other
purposes,  including  the  payment of  dividends  and  distributions.

Cash Flows

We had cash and
cash equivalents of $48,605,000 at June 30, 2006.

Our level of
liquidity  based upon cash and cash  equivalents  decreased by  approximately
$126,211,000  during the six months ended June 30, 2006.  The decrease  resulted from
$180,145,000  of cash used in our investing  activities and  $27,810,000 of cash used in
our financing  activities,  which was partially  offset by  $81,744,000 of cash provided
by our operating activities.

Cash provided
by operating  activities of $81,744,000 was comprised of: (i) net income of  $14,626,000;
(ii) adjustments  for non-cash items of $67,681,000,  and  (iii) a net negative
change in operating  assets and liabilities of $563,000.  The  adjustments  for
non-cash items were primarily  comprised of  (i) depreciation  and amortization of
$27,264,000;  (ii) minority interest of $37,643,000;  (iii) compensation expense
related to the exclusivity rights of $1,667,000; and (iv) the  effect of  straight-lining
of rental income of $3,031,000,  partially offset by:  (i) interest  earned on
restricted cash of $335,000;  (ii) gain from disposal of  real estate securities
available for sale of $88,000 and (iii) equity in net income of  partially-owned
entities of $1,500,000.  See Results of Operations above  for additional details on our
operations.

36



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Liquidity
and Capital Resources

Cash Flows
(Continued)

Cash used in
our investing  activities  consisted of: (i) $127,268,000 of new land and building
acquisitions and  improvements to our existing  properties;  (ii)  purchases of various
real estate  securities of $5,980,000;  (iii) costs to obtain new leases of $871,000;
(iv) investment in joint venture of  $22,116,000;  (v)  costs incurred to originate a
loan of $21,000;  (vi) deposits for future real estate  acquisitions  of $2,630,000;
(vii)  investments in limited  partnerships of  $1,061,000;  and (viii)  investments in
debt securities of $53,616,000 which were subsequently  contributed to a joint venture on
March 31, 2006. Cash provided by  investing  activities  consisted of: (i) a change in
restricted  cash of  $10,124,000;  (ii)  $1,379,000 in proceeds from the disposal of real
estate  securities  available for sale; (iii) deposits used in the acquisition of land
and buildings of $4,699,000;  (iv) $32,000 in collections of loans receivable;  (v)
$419,000 of  cash related to  previously  unconsolidated  entities;  (vi) proceeds from
real estate  available  for sale of  $5,891,000;  and (vii) a return of capital from an
investment in joint venture of $10,874,000.

During the six
months ended June 30, 2006 our  financing  activities  used cash  primarily  for: (i)
principal  payment on mortgage  notes of  $25,355,000,  (ii)  principal  payments on
notes payable of  $15,044,000,  (iii)  $12,981,000  of dividends  made to our
stockholders;  (iv)  distributions  to minority  interest of  $33,517,000;  and (v)
financing  costs of $1,693,000.  Cash provided by financing  activities  consisted
primarily of: (i)  $28,755,000 of proceeds from mortgage  notes and (ii) $32,025,000 of
proceeds from a line of credit.  The line of credit was contributed to a joint venture on
March 31, 2006.

Dividends

In connection
with our intention to qualify as a REIT for Federal income tax purposes,  we expect to
pay regular  dividends to  stockholders.  These dividends are  expected to be paid from
operating cash flows and/or other sources.

During the six
months ended June 30, 2006, we paid dividends of $12,981,000 ($0.67 per share).

In June 2006,
we declared a dividend of $7,750,000 ($0.40 per share) which was paid on July 14, 2006 to
the stockholders of record as of June 30, 2006.

Off-Balance
Sheet Arrangements

We do not have
any off-balance sheet arrangement as as of June 30, 2006.

Capital
Expenditures

Due to the net
lease nature of our leases,  we do not incur  significant  expenditures in the ordinary
course of business to maintain its properties.  However,  as  leases  expire,  we expect
to incur costs in extending  the  existing  tenant  lease or  re-tenanting  the
properties.  In this  regard,  we have entered into the  following agreements:

| | o | During
the first  quarter of 2006,  the Company  entered into an agreement  with  Raytheon
Company to provide the tenant with  $21,500,000  in tenant  improvement allowances over a
40-month period.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The
Company  entered into  contracts  relating to demolition,  restroom  renovation and
replacement  of ceiling  systems for the property  located in  Bedford, Texas for an
aggregate anticipated cost of $2,000,000 of which approximately $1,600,000 has been
expended as of June 30, 2006.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
July 25, 2006,  we entered into a  modification  of lease with respect to an office
building  leased to Cummins Inc. In  connection  with this, we  agreed to provide the
tenant with an $11,500,000 tenant improvement allowance payable on August 1, 2006.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

37



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  FORM 10-Q  JUNE 30,
2006

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Liquidity
and Capital Resources

Capital
Expenditures

The amounts of
future  expenditures  can vary  significantly  depending on tenant  negotiations,  market
conditions  and rental rates.  We incurred  approximately  $6,190,000  of these
expenditures  during the six months  ended June 30,  2006.  Future  expenditures  are
expected  to be funded  from  operating  cash flows or  borrowings.

Adjusted
Funds From Operations

We compute
funds from operations  (FFO) as shown in the calculation  below.  Funds from
operations is a non-GAAP  financial measure which represents "funds from
operations" as defined by NAREIT.  NAREIT defines funds from operations as net
income,  computed in accordance with generally  accepted  accounting  principles or
GAAP,  excluding gains (or losses) from debt restructuring and sales of property,  plus
depreciation and amortization on real estate assets, and after adjustments  for
unconsolidated  partnerships  and joint ventures.  We have also reported our adjusted FFO
(AFFO) as adjusted for the non-cash charge incurred in connection  with the
issuance of shares to Winthrop Realty Trust in exchange for certain  exclusivity  rights
with respect to net-lease business  opportunities  offered to or  generated by senior
management.  We consider AFFO a useful  additional  measure of performance for an equity
REIT because it facilitates an  understanding of the  operating  performance of its
properties  without giving effect to real estate  depreciation and amortization,  which
assumes that the value of real estate assets  diminishes  predictably over time. AFFO can
also facilitate a comparison of current  operating  performance among REITs. AFFO does
not represent cash generated by  operating  activities in accordance  with GAAP and
should not be considered an alternative  to net income or cash flow from  operating
activities as a measure of  financial performance or liquidity.

The  following
presents a  reconciliation  of our income  from  operations  to our  adjusted  funds from
operations  for the six months  ended June 30, 2006 (in  thousands):

|Net income                                                |  |  | $ | 14,626 | 
|--------------------------------------------------------- |  |  | - | ------ | 
|                                                          |  |  |   |       
|Real estate depreciation                                  |  |  |   | 7,287  | 
|Amortization of capitalized leasing costs                 |  |  |   | 764    | 
|Real estate depreciation of unconsolidated interests      |  |  |   | 125    | 
|                                                          |  |  |   |       
|                                                          |  |  |   |       
|Funds from operations                                     |  |  |   | 22,802 | 
|                                                          |  |  |   |       
|Add: Compensation expense incurred for exclusivity rights |  |  |   | 502    | 
|                                                          |  |  |   |       
|                                                          |  |  |   |       
|Adjusted funds from operations                            |  |  | $ | 23,304 | 
|                                                          |  |  |   |       

Adjusted  funds
from  operations  includes  $20,480,000  of adjusted  funds from  continuing  operations
and  $2,824,000 of adjusted  funds used in  discontinued  operations for the six months
ended June 30, 2006.

38



---

NEWKIRK
REALTY TRUST, INC. AND THE NEWKIRK MASTER LIMITED PARTNERSHIP  FORM 10-Q  JUNE 30,
2006

|ITEM 3. | QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

| | Among
our  liabilities  are both fixed and variable rate debt. To mitigate the effects of
fluctations  in interest rates on the variable rate portion  of this debt, we own
interest rate cap and swap  agreements.  All financial  instruments  were entered into
for purposes  other than trading.  For the  fixed rate portion of our debt,  changes in
interest rates have no impact on interest  incurred or cash flows,  however such changes
do impact the net  financial  position of the debt  instruments.  For our variable rate
debt,  changes in interest rates do not impact the net financial  position of the
instruments but do impact the interest incurred and cash flows.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
June 30, 2006, we had one loan which had a variable  interest  rate.  The loan,  which
had an  outstanding  balance from  continuing  operations of  $557,065,000  at June 30,
2006, was obtained in August 2005 and has a three-year  term.  Interest on the
outstanding  balance accrues at a rate equal  to, at our option,  either (i) LIBOR rate
(as defined)  plus 175 basis points or (ii) the banks prime rate plus 50 basis
points.  As a result of the  acquisition of interest rate swap and cap  agreements,  (i)
LIBOR on the loan is effectively  fixed at 4.642% for  $250,000,000  of this loan for
five  years and (ii) the LIBOR rate on  $295,000,000  of the loan  (decreasing  to
$290,000,000  as of  December  1,  2006) will be capped at 5.0%  through  November 2006
and 6.0% from December 2006 until August 2008.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
elected to pay the loan based on the LIBOR rate.  The  following  table  shows what the
annual  effect of a change in the LIBOR rate (5.33% at June  30, 2006) would have on
interest expense based upon the balance of the variable rate loan at June 30, 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Interest
expense effect (in thousands) of LIBOR increase (decrease):
| | --------------------------------------------------------------------

|-3% |        | -2% |   | -1%    |   | 1% |        | 2% |   | 3% 
|--- | ------ | --- | - | ------ | - | -- | ------ | -- | - | ---
|   
|$   | (8,879 | )   | $ | (5,595 | ) | $  | (2,311 | )  | $ | 334
|    |        |     |   |        |   |    |        |    |   |    

|ITEM 4. | CONTROLS
AND PROCEDURES
|------- | -----------------------

| | In
accordance with Exchange Act Rules 13a-15 and 15d-15,  we carried out an evaluation,
under the supervision and with the  participation of the Chief  Executive Officer and
Chief Financial  Officer of the Company,  as well as other key members of the Companys
management,  of the effectiveness of our  disclosure  controls and  procedures  as of the
end of the period  covered by this report.  Based on that  evaluation,  the Companys
Chief  Executive  Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective,  as of the end of the period covered by this
report,  to provide  reasonable  assurance  that  information  required to be  disclosed
in our reports  filed or  submitted  under the Exchange Act is  recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | No
change occurred in our Companys  internal  controls  concerning  financial
reporting  during the period covered by this report that has materially  affected, or is
reasonably likely to materially affect, our internal controls over financial reporting.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39



---

PART II
 OTHER INFORMATION

|ITEM 6. | EXHIBITS
|------- | --------

| | Exhibits
required by Item 601 of Regulation S-K are filed herewith or incorporated herein by
reference and are listed in the attached Exhibit  Index.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------

40



---

SIGNATURES

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

|                      | NEWKIRK REALTY TRUST, INC.
|--------------------- | --------------------------
|                      |                           
|                      |                           
|Dated: August 8, 2006 | By:                       
|                      |                           
|                      |                           
|                      |                           
|                      |                           
|Dated: August 8, 2006 | By:                       
|                      |                           
|                      |                           

41



---

EXHIBIT INDEX

|2.1   |  | Agreement and Plan of Merger dated July 23, 2006, by and among the Company and Lexington Corporate Properties
Trust                                                                                                                                                                                                  |  | (h)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|3.1   |  | Amended and Restated Articles of Incorporation of the Company                                                                                                                                                                                                                                                        |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|3.2   |  | Amended and Restated By-laws of the Company                                                                                                                                                                                                                                                                          |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|4.1   |  | Form of Certificate of Common Stock                                                                                                                                                                                                                                                                                  |  | (c)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|4.2   |  | Form of Special Voting Preferred Stock                                                                                                                                                                                                                                                                               |  | (c)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.1  |  | Advisory Agreement, dated as of November 7, 2005, by and between the Company, The Newkirk Master Limited Partnership and NKT Advisors LLC.                                                                                                                                                                           |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.2  |  | Acquisition Agreement, dated as of November 7, 2005, between the Company and First Union Real Estate Equity and Mortgage Investments ("First Union") (incorporated by reference to Exhibit 10.4 to First Union's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 10, 2005). |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.3  |  | Amended and Restated Agreement of Limited Partnership of The Newkirk Master Limited Partnership dated as of
November 7, 2005.                                                                                                                                                                                        |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.4  |  | First Amendment to Amended and Restated Agreement of Limited Partnership of The Newkirk Master Limited Partnership dated June 1, 2006                                                                                                                                                                                |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.5  |  | Registration Rights Agreement, dated as of November 7, 2005, between the Company and Vornado Realty Trust                                                                                                                                                                                                            |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.6  |  | Registration Rights Agreement dated as of November 7, 2005, between the Company and Apollo Real Estate Investment Fund III, L.P. ("Apollo")                                                                                                                                                                          |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.7  |  | Registration Rights Agreement dated as of November 7, 2005, between the Company and First Union.                                                                                                                                                                                                                     |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.8  |  | Unit Purchase Agreement between the Company and Apollo.                                                                                                                                                                                                                                                              |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.9  |  | Unit Purchase Agreement between the Company and WEM-Brynmawr Associates LLC.                                                                                                                                                                                                                                         |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.10 |  | Securities Purchase Agreement between the Registrant and First Union                                                                                                                                                                                                                                                 |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.11 |  | Exclusivity Services Agreement between the Company and Michael L. Ashner.                                                                                                                                                                                                                                            |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.12 |  | Lock-Up Agreement dated November 7, 2005 among First Union and the Underwriters named therein.                                                                                                                                                                                                                       |  | (d)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.13 |  | Registrant's 2005 Stock Incentive Plan                                                                                                                                                                                                                                                                               |  | (c)
|      |  |                                                                                                                                                                                                                                                                                                                      |  |    
|10.14 |  | Letter Agreement among the Registrant, Apollo Real Estate Investment Fund III, L.P., The Newkirk Master Limited Partnership, NKT Advisors LLC, Vornado Realty Trust, VNK Corp., Vornado Newkirk LLC, Vornado MLP GP
LLC and WEM Brynmawr Associates LLC                                                              |  | (c)

42



---

|10.15 |  | Master Loan Agreement, dated August 11, 2005, among The Newkirk Master Limited Partnership and T-Two Partners,
L.P., KeyBank National Association, Bank of America, N.A., Lasalle Bank, National Association, and KeyBanc
Capital Markets                                                      |  | (b)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.16 |  | Master Promissory Note, dated as of August 11, 2005, by The Newkirk Master Limited Partnership in favor of
KeyBank National Association                                                                                                                                                        |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.17 |  | Form of Mortgage, dated as of August 11, 2005, from The Newkirk Master Limited Partnership in favor of KeyBank
National Association                                                                                                                                                            |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.18 |  | Ownership Interest Pledge and Security Agreement, dated as of August 11, 2005, from The Newkirk Master Limited
Partnership to KeyBank National Association                                                                                                                                     |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.19 |  | Ownership Interest Pledge and Security Agreement (Subsidiaries), dated as of August 11, 2005, from The Newkirk
Master Limited Partnership to KeyBank National Association                                                                                                                      |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.20 |  | Ownership Interest Pledge and Security Agreement (Finco, GP and Capital), dated as of August 11, 2005, from
The Newkirk Master Limited Partnership to KeyBank National Association                                                                                                             |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.21 |  | Indemnity Agreement, dated as of August 11, 2005, from The Newkirk Master Limited Partnership to KeyBank
National Association                                                                                                                                                                  |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.22 |  | Guaranty, dated as of August 11, 2005, from The Newkirk Master Limited Partnership to KeyBank National
Association with respect to the T-Two Loan                                                                                                                                              |  | (b)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.23 |  | Amendment to the Letter Agreement among the Registrant, Apollo Real Estate Investment Fund III, L.P., The
Newkirk Master Limited Partnership, NKT Advisors LLC, Vornado Realty Trust, Vornado Realty L.P., VNK Corp.,
Vornado Newkirk LLC, Vornado MLP GP LLC, and WEM-Brynmawr Associates LLC |  | (c)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.24 |  | Limited Liability Company Agreement of 111 Debt Holdings LLC, dated March 31, 2006, among The Newkirk Master
Limited Partnership, WRT Realty, L.P. and FUR Holdings LLC                                                                                                                        |  | (e)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.25 |  | Master Repurchase Agreement, dated March 30, 2006, among Column Financial Inc., 111 Debt Acquisition LLC, 111
Debt Acquisition Mezz LLC and Newkirk Realty Trust, Inc.                                                                                                                         |  | (e)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.26 |  | Loan Agreement, dated as of April 7, 2006, between The Newkirk Master Limited Partnership and KeyBank,
National Association                                                                                                                                                                    |  | (f)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.27 |  | Guaranty from Newkirk Realty Trust, Inc. in favor of KeyBank, National Association                                                                                                                                                                                                             |  | (f)
|      |  |                                                                                                                                                                                                                                                                                                |  |    
|10.28 |  | Master Repurchase Agreement, dated May 24, 2006, between Bear, Stearns International Limited and 111 Debt
Acquisition-Two LLC                                                                                                                                                                  |  | (g)

43



---

|31. |  | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | *
|--- |  | ------------------------------------------------------------------------ |  | -
|    |  |                                                                          |  |  
|32. |  | Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  | *

* Filed herewith

|(a) | Incorporated
by reference to the Registrant's Registration Statement on Form S-11 (Registration No.
333-127278), filed on August 8, 2005
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(b) | Incorporated
by reference to Amendment No. 1 to the Registrant's Registration Statement on Form S-11
(Registration No. 333-127278), filed on August  8, 2005) or Form S-11 (Registration No.
333-127278) filed on September 16, 2005
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Incorporated
by reference to Amendment No. 5 to the Registrant's Registration Statement on Form S-11
(Registration No. 333-127278) filed on October  28, 2005
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Incorporated
by reference to the Company's Current Report on 8K filed November 15, 2005
|--- | ---------------------------------------------------------------------------------------

|(e) | Incorporated
by reference to the Company's Current Report on 8K filed April 5, 2006
|--- | -----------------------------------------------------------------------------------

|(f) | Incorporated
by reference to the Company's Current Report on 8K filed April 12, 2006
|--- | ------------------------------------------------------------------------------------

|(g) | Incorporated
by reference to the Company's Current Report on 8K filed May 30, 2006
|--- | ----------------------------------------------------------------------------------

|(h) | Incorporated
by reference to the Company's Current Report on 8K filed July 24, 2006
|--- | -----------------------------------------------------------------------------------

44