**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington,D.C. 20549**

**FORM 10-K**
| **[Mark One]** | ** **                                                    |
|----------------|---------------------------------------------------------------|
| **x**          | **Annual  Report Pursuant to Section 13 or 15(d) of the**     |
| ** **     | **Securities  Exchange Act of 1934**                          |
| ** **     | ** **                                                    |
|           | **For the  fiscal year ended December 31, 2006**              |
|           | ** **                                                    |
|           | **OR**                                                        |
|           |                                                          |
| **o**          | **Transition  Report Pursuant to Section 13 or 15(d) of the** |
| ** **     | **Securities  Exchange Act of 1934**                          |

 

**For thetransition period from                        to                       **

**Commission File Number: 000-51293**

**Behringer Harvard REIT I, Inc.**

(Exact name ofregistrant as specified in its charter)

| **Maryland**                                                    |   | **68-0509956**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
| ** **                                                      |   | ** **                            |
| **15601  Dallas Parkway, Suite 600, Addison, Texas**            |   | **75001**                             |
| (Address of  principal executive offices)                       |   | (Zip Code)                            |

 

**(866) 655-1605**

(Registrant’s telephone number, including areacode)

Securities registeredpursuant to section 12(b) of the Act:

**None**

Securities registeredpursuant to section 12(g) of the Act:

**Common stock, $.0001 par valueper share**

(Title of class)

Indicate by check mark if the Registrant is a well-known seasoned issuer(as defined in Rule 405 of the Securities Act).Yes o    No x

Indicate by check mark if the Registrant is not required to file reportspursuant to Section 13 or Section 15(d) of the Act.Yes o    No x

Indicate by check markwhether the Registrant:  (1) has filedall reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the Registrant was required to file such reports) and (2) has been subjectto such filing requirements for the past 90 days.  Yes x    Noo

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of Registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicateby check mark whether the Registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (check one):
| Large  accelerated filer o | Accelerated  filer o | Non-accelerated filer x |
|----------------------------|----------------------|-------------------------|

 

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

The aggregate market value ofthe Registrant’s common stock held by non-affiliates of the Registrant as ofJune 30, 2006 (the last business day of the Registrant’s most recentlycompleted second fiscal quarter) was approximately $877 million and as ofDecember 31, 2006 was approximately $1.2 billion, in each case assuming amarket value of $10.00 per share.

Asof March 15, 2007, the Registrant had 137,732,323 shares of common stockoutstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant incorporatesby reference portions of its Definitive Proxy Statement for the 2007 AnnualMeeting of Stockholders, which is expected to be filed no later than April 30,2007, into Part III of this Form 10-K to the extent stated herein.

 

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**BEHRINGERHARVARD REIT I, INC.**

**FORM10-K**

**YearEnded December 31, 2006**
|                 | ** **                                                                                            | ** ** | **Page**   |
|-----------------|-------------------------------------------------------------------------------------------------------|------------|------------|
| **PART I**      |
| ** **      | ** **                                                                                            |       | ** ** |
| ** **      | ** **                                                                                            |       | ** ** |
| **Item  1.**    | **Business.**                                                                                         |       | 3          |
| ** **      | ** **                                                                                            |       |       |
| **Item 1A.**    | **Risk Factors.**                                                                                     |       | 7          |
| ** **      | ** **                                                                                            |       |       |
| **Item 1B.**    | **Unresolved  Staff Comments.**                                                                       |       | 31         |
| ** **      | ** **                                                                                            |       |       |
| **Item 2.**     | **Properties.**                                                                                       | ** ** | 31         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 3.**     | **Legal Proceedings.**                                                                                | ** ** | 33         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 4.**     | **Submission  of Matters to a Vote of Security Holders.**                                             | ** ** | 33         |
| ** **      | ** **                                                                                            | ** ** | ** ** |
| **PART II**     |
| ** **      |                                                                                                  |       |       |
| **Item 5.**     | **Market for  Registrant’s Common Equity, Related Stockholder Matters and**                      |       |       |
| ** **      | **Issuer  Purchases of Equity Securities.**                                                           |       | 34         |
| ** **      | ** **                                                                                            |       |       |
| **Item 6.**     | **Selected  Financial Data.**                                                                         | ** ** | 36         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 7.**     | **Management’s Discussion and Analysis of Financial  Condition and Results of Operations.**      |       | 37         |
| ** **      | ** **                                                                                            |       |       |
| **Item 7A.**    | **Quantitative  and Qualitative Disclosures about Market Risk.**                                      | ** ** | 46         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 8.**     | **Financial  Statements and Supplementary Data.**                                                     | ** ** | 46         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 9.**     | **Changes in  and Disagreements With Accountants on Accounting and Financial Disclosure.**            |       | 46         |
| ** **      | ** **                                                                                            |       |       |
| **Item 9A.**    | **Controls and  Procedures.**                                                                         | ** ** | 46         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 9B.**    | **Other Information.**                                                                                | ** ** | 46         |
| ** **      | ** **                                                                                            | ** ** |       |
| **PART III**    |
| ** **      |                                                                                                  |       |       |
| **Item 10.**    | **Directors,  Executive Officers and Corporate Governance.**                                          | ** ** | 47         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 11.**    | **Executive  Compensation.**                                                                          | ** ** | 47         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 12.**    | **Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters.** | ** ** | 47         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 13.**    | **Certain  Relationships and Related Transactions and Director Independence.**                        | ** ** | 47         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 14.**    | **Principal  Accounting Fees and Services.**                                                          | ** ** | 47         |
| ** **      | ** **                                                                                            | ** ** |       |
| **PART IV**     |
| ** **      | ** **                                                                                            | ** ** |       |
| **Item 15.**    | **Exhibits and  Financial Statement Schedules.**                                                      | ** ** | 48         |
| ** **      | ** **                                                                                            | ** ** |       |
| **Signatures.** |                                                                                                  |       | 49         |

 

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### **Forward-Looking Statements**

Thisannual report contains forward-looking statements, including discussion andanalysis of the financial condition of Behringer Harvard REIT I, Inc. (whichmay be referred to herein as the “Company,” “we,” “us” or “our”) and oursubsidiaries, our anticipated capital expenditures required to completeprojects, amounts of anticipated cash distributions to our stockholders in thefuture and other matters.  Theseforward-looking statements are not historical facts but are the intent, beliefor current expectations of our management based on their knowledge andunderstanding of the business and industry. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,”“seeks,” “estimates,” “would,” “could,” “should” and variations of these wordsand similar expressions are intended to identify forward-lookingstatements.  These statements are notguarantees of future performance and are subject to risks, uncertainties andother factors, some of which are beyond our control, are difficult to predictand could cause actual results to differ materially from those expressed orforecasted in the forward-looking statements.

Forward-lookingstatements that were true at the time made may ultimately prove to be incorrector false.  We caution investors not toplace undue reliance on forward-looking statements, which reflect ourmanagement’s view only as of the date of this Annual Report on Form 10-K.  We undertake no obligation to update orrevise forward-looking statements to reflect changed assumptions, theoccurrence of unanticipated events or changes to future operating results.  The forward-looking statements should be readin light of the risk factors identified in the “Risk Factors” section of thisAnnual Report on Form 10-K.

**CautionaryNote**

Therepresentations, warranties and covenants made by us in any agreement filed asan exhibit to this Annual Report on Form 10-K are made solely for the benefitof the parties to the agreement, including, in some cases, for the purpose of allocatingrisk among the parties to the agreement, and should not be deemed to berepresentations, warranties or covenants to or with any other parties.  Moreover, these representations, warrantiesor covenants should not be relied upon as accurately describing or reflectingthe current state of our affairs.

**PART I**

**Item 1.            Business.**

**GeneralDescription of Business**

BehringerHarvard REIT I, Inc. was incorporated in June 2002 as a Maryland corporationand has elected to be taxed, and currently qualifies, as a real estateinvestment trust, or REIT, for federal income tax purposes.  As a REIT, we generally are not subject tocorporate-level income taxes.  Tomaintain our REIT status, we are required, among other requirements, todistribute annually at least 90% of our “REIT taxable income,” as defined bythe Internal Revenue Code of 1986, as amended (the “Code”), to ourstockholders.  If we fail to qualify as aREIT in any taxable year, we would be subject to federal income tax on ourtaxable income at regular corporate tax rates. As of December 31, 2006, and the date of this filing, we believe we arein compliance with all applicable REIT requirements.

Weacquire and operate institutional quality real estate.  In particular, we focus primarily onacquiring institutional quality office properties that we believe have premierbusiness addresses, desirable locations, personalized amenities, high qualityconstruction and highly creditworthy commercial tenants.  To date, all of our investments have beeninstitutional quality office properties located in metropolitan cities andsuburban markets in the United States. Our management and members of our board of directors have extensiveexperience in investing in numerous types of properties.  Thus, we also may acquire institutionalquality industrial, retail, hospitality, multi-family and other realproperties, including existing or newly constructed properties or propertiesunder development or construction, based on our view of existing marketconditions.  Further, we may invest inreal estate related securities, including securities issued by other realestate companies, either for investment or in change of control transactionscompleted on a negotiated basis or otherwise. We also may invest in collateralized mortgage-backed securities,mortgage, bridge or mezzanine loans and Section 1031 tenant-in-common (“TIC”)interests, or in entities that make investments similar to the foregoing.  We completed our first property acquisitionin October 2003 and, as of December 31, 2006, we owned interests in 36 officeproperties located in 16 states and the District of Columbia.

Weare externally managed and advised by Behringer Advisors LP (“BehringerAdvisors”), a Texas limited partnership that was formed in June 2002.  Behringer Advisors is responsible formanaging our day-to-day affairs and for identifying and making acquisitions andinvestments on our behalf.

Wecurrently own all of our investments through Behringer Harvard OperatingPartnership I LP, a Texas limited partnership formed in June 2002 (“BehringerHarvard OP”), or subsidiaries thereof. As of January 1, 2007, our wholly-owned subsidiary, BHR, Inc., aDelaware corporation, was the sole general partner of Behringer Harvard OP andowned 17 partnership units of Behringer Harvard OP for which its predecessor ininterest contributed $170.  As of January1, 2007, our wholly-owned subsidiary, BHR Business Trust, a Maryland businesstrust, was a limited partner of Behringer Harvard OP and owned approximately107.0 million partnership units of Behringer Harvard OP for which itspredecessor in interest contributed approximately $1.0 billion.  As of January 1, 2007,

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our wholly-ownedsubsidiary, BHR Partners, LLC, a Delaware limited liability company, was alimited partner of Behringer Harvard OP and owned approximately14.6 million partnership units of Behringer Harvard OP for which itspredecessor in interest contributed approximately $138.9 million.  Our ownership of real estate investmentsthrough Behringer Harvard OP is referred to as an “UPREIT.”  The UPREIT structure allows us to acquirereal estate investments in exchange for limited partnership units in BehringerHarvard OP.  In addition, this structureallows sellers of properties to transfer their properties to Behringer HarvardOP in exchange for units of Behringer Harvard OP and defer gain recognition fortax purposes on the transfer of properties.

Ouroffice is located at 15601 Dallas Parkway, Suite 600, Addison, Texas 75001, andour toll-free telephone number is (866) 655-1605.  The name Behringer Harvard is the property ofBehringer Harvard Holdings, LLC and is used by permission.

**PublicOffering of Common Stock; Use of Proceeds**

OnFebruary 19, 2003, we commenced a public offering (the “Initial Offering”) ofup to 80,000,000 shares of common stock offered at a price of $10.00 per sharepursuant to a Registration Statement on Form S-11 filed under the SecuritiesAct of 1933, as amended (the “Securities Act”). The Initial Offering also covered the registration of up to 8,000,000shares offered pursuant to our distribution reinvestment plan (“DRIP”) and upto 3,520,000 shares issuable to broker-dealers pursuant to warrants wherebyparticipating broker-dealers would have the right to purchase one share forevery 25 shares they sold pursuant to the Initial Offering.  We terminated the Initial Offering onFebruary 19, 2005.

 On February 11, 2005, we commenced a secondpublic offering (the “Second Offering”) of up to 80,000,000 shares of commonstock offered at a price of $10.00 per share pursuant to a RegistrationStatement on Form S-3 under the Securities Act. The Second Offering also covered the registration of up to 16,000,000shares offered pursuant to our DRIP.  Wesubsequently converted the Second Offering to a Registration Statement on FormS-11 and reallocated the shares of common stock in the Second Offering to offer90,000,000 shares of common stock at a price of $10.00 per share and up to5,473,684 shares pursuant to our DRIP.  In addition, we increased theaggregate amount of the Second Offering by 2,945,017 shares in a relatedregistration statement on Form S-11.  Weterminated the Second Offering on October 20, 2006 in all jurisdictions exceptthe Commonwealth of Pennsylvania and we terminated the Second Offering in theCommonwealth of Pennsylvania on February 9, 2007.

 On October 20, 2006, we commenced a thirdpublic offering (the “Current Offering” and together with the Initial Offeringand Second Offering, the “Offerings”) of up to 200,000,000 shares of commonstock offered at a price of $10.00 per share pursuant to a RegistrationStatement on Form S-11 under the Securities Act. The Current Offering alsocovers the registration of up to 50,000,000 shares offered pursuant to ourDRIP.  The Current Offering willterminate on or before October 6, 2008 unless earlier terminated, fullysubscribed or extended with respect to the shares offered under our DRIP or asotherwise permitted under applicable law.

Asof December 31, 2006, we had 121,884,470 shares of our common stock outstandingpursuant to the Offerings, including the effect of distribution reinvestments,redemptions, 22,000 shares issued to Behringer Harvard Holdings, LLC (“BehringerHarvard Holdings”) and shares issued on October 1, 2005 pursuant to a 10% stockdividend, for aggregate gross proceeds of approximately $1.2 billion.  Net proceeds after selling commissions,dealer manager fees and organization and offering expenses totaledapproximately $1.0 billion.

**2006Highlights**

During2006, we completed the following key transactions:

·                              weissued approximately 54,021,000 shares of our common stock (inclusive ofdistribution reinvestments and redemptions) resulting in gross proceeds to usof approximately $538.2 million;

·                              weacquired 15 office properties representing approximately 7.5 million squarefeet for an aggregate purchase price of approximately $1.7 billion;

·                              weincreased our ownership interests in three of our TIC properties; (1)increasing our interest in the Pratt Building from a 50.68% TIC interest to100% ownership; (2) increasing our interest in the  Minnesota Center from a 14.47% TIC interestto a 93.07% TIC interest; and (3) increasing our interest in the ColoradoBuilding from a 79.48% TIC interest to 81.49% TIC interest; and

·                              webegan the Current Offering covering 200,000,000 shares of our common stock plusan additional 50,000,000 shares of common stock available pursuant to our DRIP.

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**Investment Objectives**

Ourinvestment objectives are:

·                              topreserve, protect and return investors’ capital contributions;

·                              tomaximize cash distributions paid to investors;

·                              torealize growth in the value of our investments upon the ultimate sale of theseinvestments; and

·                              tolist our shares for trading on a national securities exchange or, if we do notlist our shares by 2017, to make an orderly disposition of our assets anddistribute the cash to our investors, unless a majority of our directors,including a majority of our independent directors, extends this date.

**Acquisitionand Investment Policies**

Weacquire and operate institutional quality real estate.  In particular, we focus primarily onacquiring institutional quality office properties that we believe have premierbusiness addresses, desirable locations, personalized amenities, high qualityconstruction and highly creditworthy commercial tenants.  To date, all of our investments have beeninstitutional quality office properties located in metropolitan cities andsuburban markets in the United States. Our management and members of our board of directors have extensiveexperience in investing in numerous types of properties.  Thus, we also may acquire institutionalquality industrial, retail, hospitality, multi-family and other realproperties, including existing or newly constructed properties or propertiesunder development or construction, based on our view of existing marketconditions.  We also may invest in realestate related securities, including securities issued by other real estatecompanies, either for investment or in change of control transactions completedon a negotiated basis or otherwise.  Wealso may invest in collateralized mortgage-backed securities, mortgage, bridgeor mezzanine loans and Section 1031 TIC interests, including those previouslyissued by programs sponsored by Behringer Harvard Holdings or its affiliates,or in entities that make investments similar to the foregoing.  Although our investments to date have beenlocated in the United States, we also may invest in real estate assets locatedoutside the United States.  Ourinvestment strategy is intended to provide investors with a geographicallydiversified portfolio of real estate assets.

We typically make our real estate investments in fee title or along-term leasehold estate through Behringer Harvard OP or indirectly throughlimited liability companies or through investments in joint ventures,partnerships, co-tenancies or other co-ownership arrangements with thedevelopers of the properties, affiliates of Behringer Advisors or otherpersons.

As of December 31, 2006, we owned interests in 36 properties in 16states and the District of Columbia.  Asof December 31, 2006, the properties in which we own an interest wereapproximately 94% leased on a combined basis.

# **Borrowing Policies**

Our board of directors has adopted a policy to generally limit ouraggregate borrowings to approximately 55% of the aggregate value of our assetsunless substantial justification exists that borrowing a greater amount is inour best interests.  For these purposes,the aggregate value of our assets is equal to our total assets plus acquiredbelow market lease intangibles, each as reflected on our balance sheet at thetime of the calculation without giving effect to any accumulated depreciationor amortization attributable to our real estate assets.  Our policy limitation, however, does notapply to individual real estate assets and will apply only when we haveinvested substantially all of our capital raised in our Offerings, at whichpoint our board of directors also may consider the unrealized appreciation ofour real estate assets, as determined by Behringer Advisors in its solediscretion, when evaluating compliance with our policy limitation.  We typically borrow, and expect to continueborrowing, more than 55% of the contract purchase price of any real estateasset we acquire to the extent our board of directors determines that borrowingthese amounts is reasonable.  In makingthis determination, our board considers relevant financial factors,particularly whether borrowing additional amounts are expected to be accretiveto returns related to the particular portfolio investment.  As of December 31, 2006, we have borrowedapproximately 60.5% of the aggregate value of our assets and, on average,approximately 70% of the contract purchase price of each acquired real estateasset.  We expect these percentageamounts to increase if we use any unencumbered real estate assets to secureadditional borrowings or borrow additional amounts on currently encumberedassets.  Our board of directors mustreview our aggregate borrowings at least quarterly.

**Distribution Policy**

In order to qualify as a REIT for federal income taxpurposes, we must distribute at least 90% of our REIT taxable income to ourstockholders on an annual basis.  Wecurrently intend, although we are not legally obligated, to make regularmonthly distributions to holders of shares of our common stock at least at thelevel required to maintain our REIT status unless our results of operations,our general financial condition, general economic conditions or other factorsinhibit us from doing so.  Distributionsare authorized at the discretion of our board of directors, which is directed,in substantial part, by its obligation to cause us to comply with the REITrequirements of the Code.

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Distributions are paid to investors who arestockholders as of the record dates selected by our board of directors.  Our board of directors currently declaresdistributions on a quarterly basis, portions of which are paid on a monthlybasis.  Monthly distributions are paidbased on daily record and distribution declaration dates so our investors willbe entitled to be paid distributions beginning on the day that they purchaseshares.  There can be no assurance thatwe will be able to achieve expected cash flows necessary to continue to paycurrently established distributions or maintain distributions at any particularlevel, or that distributions will increase over time.  Since we began operations, our board ofdirectors has declared distributions as summarized below: 
| Period             | ** ** | **Approximate Amount  (Rounded)** | ** **           | **Annualized Percentage Return  Assuming $10.00 Per share  Purchase Price*** | ** ** |
|--------------------|------------|----------------------------------------|----------------------|------------------------------------------------------------------------------------------------------------|------------|
| 4th Qtr. 2003 |       | $                                      | 0.1764376 per share  |                                                                                                       | 7          | % |
| Fiscal Year 2004   |       | $                                      | 0.6999970 per share  |                                                                                                       | 7          | % |
| Fiscal Year 2005   |       | $                                      | 0.6999970 per share  |                                                                                                       | 7          | % |
| Fiscal Year 2006   |       | $                                      | 0.6999970 per share  |                                                                                                       | 7          | % |
| 1st Qtr. 2007 |       | $                                      | 0.1726020 per share  |                                                                                                       | 7          | % |
| 2nd Qtr. 2007 |       | $                                      | 0.1745198 per  share |                                                                                                       | 7          | % |

 

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* The average weightedshare price may be lower than $10.00 per share, and the individual percentagereturn may be greater than 7%, as a result of shares purchased through ourdistribution reinvestment plan at less than $10.00 per share or acquired inconnection with our 10% stock dividend.

**Tax Status**

We elected to be taxed as a REIT for federal income tax purposes andbelieve that we have qualified since the year ended December 31, 2004.  As long as we qualify for taxation as a REIT,we generally will not be subject to federal income tax at the corporate levelto the extent we distribute at least 90% of our REIT taxable income to ourstockholders on an annual basis.  If wefail to qualify as a REIT in any taxable year, we will be subject to federalincome tax (including any applicable alternative minimum tax) on our taxableincome at regular corporate rates. Unless entitled to relief under specificstatutory provisions, we also will be disqualified for taxation as a REIT forthe four taxable years following the year in which we lose our qualification.Even if we qualify as a REIT, we may be subject to certain state and localtaxes on our income and property and to federal income and excise taxes on ourundistributed income.

**Competition**

Weare subject to significant competition in seeking real estate investments andtenants.  We compete with many third parties engaged in real estateinvestment activities including other REITs, specialty finance companies,savings and loan associations, banks, mortgage bankers, insurance companies,mutual funds, institutional investors, investment banking firms, lenders, hedgefunds, governmental bodies and other entities.  We also face competitionfrom other real estate investment programs, including other Behringer Harvardprograms, for investments that may be suitable for us.  Many of ourcompetitors have substantially greater financial and other resources than wehave and may have substantially more operating experience than either us orBehringer Advisors.  They also may enjoy significant competitiveadvantages that result from, among other things, a lower cost of capital.

**Regulations**

Ourinvestments are subject to various federal, state, local and foreign laws,ordinances and regulations, including, among other things, zoning regulations,land use controls, environmental controls relating to air and water quality,noise pollution and indirect environmental impacts such as increased motorvehicle activity.  We believe that wehave all permits and approvals necessary under current law to operate ourinvestments.

**Environmental**

Asan owner of real estate, we are subject to various environmental laws offederal, state and local governments. Compliance with existing laws has not hada material adverse effect on our financial condition or results of operations,and management does not believe it will have such an impact in the future.  However, we cannot predict the impact ofunforeseen environmental contingencies or new or changed laws or regulations onproperties in which we hold an interest, or on properties that may be acquireddirectly or indirectly in the future.

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**Employees**

Wehave no direct employees.  The employeesof Behringer Advisors and other affiliates of Behringer Harvard Holdingsperform a full range of real estate services for us, including acquisitions,property management, accounting, legal, asset management, wholesale brokerageand investor relations services.

Weare dependent on affiliates of Behringer Harvard Holdings for services that areessential to us, including the sale of shares of our common stock, assetacquisition decisions, property management and other general administrativeresponsibilities.  In the event thatthese companies were unable to provide these services to us, we would berequired to provide such services ourselves or obtain such services from othersources.

**FinancialInformation About Industry Segments**

Ourcurrent business consists of owning, managing, operating, leasing, acquiring,developing, investing in and disposing of real estate assets.  We internally evaluate all of our real estateassets as one industry segment, and, accordingly, we do not report segmentinformation.  To date, we have investedonly in office properties.

**Available Information**

Weelectronically file annual reports on Form 10-K, quarterly reports on Form10-Q, current reports on Form 8-K and all amendments to those reports with theSEC.  We also have filed with the SEC aregistration statement in connection with our Current Offering.  Copies of our filings with the SEC may beobtained from the website maintained for us and our affiliates at www.behringerharvard.comor from the SEC’s website at www.sec.gov.  Access to these filings is free of charge. Weare not incorporating our website or any information from the website into thisForm 10-K.

**Item 1A.         RiskFactors.**

****The factors described below represent our principalrisks.  Other factors may exist that wedo not consider to be significant based on information that is currentlyavailable or that we are not currently able to anticipate.  Our stockholders or potential investors maybe referred to as “you” or “your” in this Item 1A, “Risk Factors” section.****

**Risks Related to an Investment inBehringer Harvard REIT I**

***We may suffer from delays in locatingsuitable investments, which could adversely affect the return on yourinvestment.***

Ourability to achieve our investment objectives and to make distributions to ourstockholders is dependent upon the performance of Behringer Advisors, ouradvisor, in the acquisition of our investments, the selection of tenants andthe determination of any financing arrangements.  Except for the investments described in thisAnnual Report on Form 10-K, you will have no opportunity to evaluate the termsof transactions or other economic or financial data concerning ourinvestments.  You must rely entirely onthe management ability of Behringer Advisors and the oversight of our board ofdirectors.  We could suffer from delaysin locating suitable investments, particularly as a result of our reliance onour advisor at times when management of our advisor is simultaneously seekingto locate suitable investments for other Behringer Harvard sponsored programs,some of which may have investment objectives and employ investment strategiesthat are substantially similar to ours. Although our sponsor generally seeks to avoid simultaneous public offeringsof funds that have a substantially similar mix of fund characteristics,including targeted investment types, investment objectives and criteria, andanticipated fund terms, there may be periods during which one or more BehringerHarvard sponsored programs are seeking to invest in similar properties.  Delays we encounter in the selection,acquisition and development of properties could adversely affect yourreturns.  In addition, where we acquireproperties prior to the start of construction or during the early stages ofconstruction, it will typically take several months to complete constructionand rent available space.  Therefore, youcould suffer delays in the receipt of distributions attributable to those particularproperties.  In addition, if we areunable to invest our offering proceeds in income-producing real properties in atimely manner, we will hold the proceeds of this offering in aninterest-bearing account, invest the proceeds in short-term, investment-gradeinvestments or, ultimately, liquidate. Delays in selecting, acquiring and developing properties could adverselyaffect our results of operations, financial condition and ability to makedistributions to you.

***We may have to make expedited decisions onwhether to invest in certain properties, including prior to receipt of detailedinformation on the property.***

Ouradvisor and board of directors may be required to make expedited decisions inorder to effectively compete for the acquisition of properties and otherinvestments.  Additionally, we may berequired to make substantial non-refundable deposits prior to completing ouranalysis and due diligence on property acquisitions and the actual time periodduring which we will be allowed to conduct due diligence may be limited.  In these cases, the information available toour advisor and board of directors at the time of making any particularinvestment decision, including the decision to pay any non-refundable depositand the decision to consummate any particular acquisition, may be limited, andour advisor and board of directors may not have access to detailed informationregarding any particular investment property, such as physical characteristics,environmental matters, zoning regulations or other local conditions affectingthe investment property.  Therefore, noassurance can be given that our advisor and board of directors will haveknowledge of all circumstances that may adversely affect an investment.  In addition, our advisor and

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board of directors expectto rely upon independent consultants in connection with its evaluation ofproposed investment properties, and no assurance can be given as to theaccuracy or completeness of the information provided by such independentconsultants.

***If we lose or are unable to obtain keypersonnel, our ability to implement our investment strategies could be delayedor hindered.***

Oursuccess depends to a significant degree upon the continued contributions ofcertain executive officers and other key personnel, including Robert M.Behringer, who would be difficult to replace. We do not have employment agreements with our executive officers and wecannot guarantee that they will remain affiliated with us.  Although several of our executive officersand key employees, including Mr. Behringer, have entered into employmentagreements with affiliates of our advisor, including Harvard Property Trust,LLC, these agreements are terminable at will, and we cannot guarantee that suchpersons will remain affiliated with our advisor.  If any of our key personnel were to ceasetheir affiliation with us, our operating results could suffer.  Further, although Behringer Harvard Holdingshas key person insurance on the life of Mr. Behringer, we do not intend toseparately maintain key person life insurance on Mr. Behringer or any otherperson.  We believe that our futuresuccess depends, in large part, upon our advisor’s ability to hire and retainhighly skilled managerial, operational and marketing personnel.  Competition for persons with these skills isintense, and we cannot assure you that our advisor will be successful inattracting and retaining such skilled personnel.  Further, we have established, and intend inthe future to establish, strategic relationships with firms that have specialexpertise in certain services or as to real properties both nationally and incertain geographic regions.  Maintainingthese relationships is important for us to effectively compete for realproperties.  We cannot assure you that wewill be successful in retaining and attracting these relationships.  If we lose or are unable to obtain theservices of key personnel or do not maintain or establish appropriate strategicrelationships, our ability to implement our investment strategies could bedelayed or hindered.

***Our rights, and the rights of ourstockholders, to recover claims against our officers, directors and advisor arelimited.***

Ourcharter, and agreements entered into with our officers and directors statesthat we may indemnify our directors, our officers, our agents, our advisor andits affiliates for losses or liability they may suffer so long as the personseeking indemnity has determined that the course of conduct that caused theloss or liability was in our best interests, they were acting on our behalf orperforming services for us, the liability was not the result of negligence ormisconduct by our non-independent directors, our advisor and its affiliates orgross negligence or willful misconduct by our independent directors, and theindemnification is recoverable only out of our net assets or the proceeds ofinsurance and not from the stockholders. As a result, we and our stockholders may have more limited rightsagainst our directors, officers and agents, and our advisor and its affiliates,than might otherwise exist under common law.

***Your investment may be subject to additionalrisks if we make international investments.***

Wemay purchase real estate assets located outside the United States and may makeor purchase mortgage, bridge, mezzanine or other loans or participations in mortgage,bridge, mezzanine or other loans made by a borrower located outside the UnitedStates or secured by property located outside the United States.  These investments may be affected by factorspeculiar to the laws of the jurisdiction in which the borrower or the propertyis located.  These laws may expose us torisks that are different from and in addition to those commonly found in theUnited States.  Foreign investments couldbe subject to the following risks:

·                  governmentallaws, rules and policies including laws relating to the foreign ownership ofreal property or mortgages and laws relating to the ability of foreign personsor corporations to remove profits earned from activities within the country tothe person’s or corporation’s country of origin;

·                  variations incurrency exchange rates;

·                  adverse marketconditions caused by inflation or other changes in national or local economicconditions;

·                  relativeinterest rates;

·                  availability,cost and terms of mortgage funds resulting from varying national economicpolicies;

·                  real estate andother tax rates and other operating expenses in a particular country where wehave an investment;

·                  land use andzoning laws;

·                  more stringentenvironmental laws or changes in these laws;

·                  social stabilityor other political, economic or diplomatic developments in or affecting acountry where we have an investment; and

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·                  legal andlogistical barriers to enforcing our contractual rights.

Any of these risks could have an adverse effect on ourbusiness, results of operations and ability to make distributions to ourstockholders.

***We do not have substantial experience withinternational investments.***

Neitherwe nor our sponsor, Behringer Harvard Holdings, or any of its affiliates hasany substantial experience investing in real property or other investmentsoutside the United States.  Although ourreal property investments to date have been located in the United States, wealso may invest in real estate assets located outside the United States.  We do not anticipate that these internationalinvestments would comprise a substantial portion of our portfolio.  If we invest in real estate assets outside ofthe United States, we intend to invest primarily in institutional qualityoffice properties.  We are not limited asto the specific geographic regions where we may conduct our operations.  We may not have the expertise necessary tomaximize the return on our international investments.

**RisksRelated to Conflicts of Interest**

Weare subject to conflicts of interest arising out of our relationships with ouradvisor and its affiliates, including the material conflicts discussed below.

***Behringer Advisors faces conflicts ofinterest relating to the purchase and leasing of properties, that may not beresolved in our favor.***

Althoughour sponsor generally seeks to avoid simultaneous public offerings of fundsthat have a substantially similar mix of fund characteristics, includingtargeted investment types, investment objectives and criteria, and anticipatedfund terms, there may be periods during which one or more Behringer Harvardsponsored programs are seeking to invest in similar properties.  As a result, we may be buying properties atthe same time as one or more of the other Behringer Harvard sponsored programsmanaged by officers and employees of our advisor and/or its affiliates arebuying properties, and these other Behringer Harvard sponsored programs may useinvestment strategies that are substantially similar to ours.  Behringer Harvard Advisors I LP and BehringerHarvard Advisors II LP, are the advisors to other Behringer Harvard sponsoredreal estate programs.  Our executiveofficers and the executive officers of our advisor also are the executiveofficers of Behringer Harvard Advisors I LP, Behringer Harvard Advisors II LPand other REIT advisors, the general partners of limited partnerships and/orthe advisors or fiduciaries of other Behringer Harvard sponsored programs, andthese entities are and will be under common ownership.  There is a risk that our advisor will choosea property that provides lower returns to us than a property purchased byanother Behringer Harvard sponsored program. In the event these conflicts arise, we cannot assure you that our bestinterests will be met when officers and employees acting on behalf of ouradvisor and on behalf of managers of other Behringer Harvard sponsored programsdecide whether to allocate any particular property to us or to anotherBehringer Harvard sponsored program or affiliate, which may have an investmentstrategy that is substantially similar to ours. In addition, we may acquire properties in geographic areas where otherBehringer Harvard sponsored programs own properties.  If one of the other Behringer Harvardsponsored programs attracts a tenant that we are competing for, we could suffera loss of revenue due to delays in locating another suitable tenant.  You will not have the opportunity to evaluatethe manner in which these conflicts of interest are resolved before or aftermaking your investment.  Similarconflicts of interest may apply if our advisor determines to make or purchasemortgage, bridge or mezzanine loans or participations in mortgage, bridge ormezzanine loans on our behalf, since other Behringer Harvard sponsored programsmay be competing with us for such investments.

***Behringer Advisors faces conflicts ofinterest relating to joint ventures, TIC investments or other co-ownershiparrangements that could result in a disproportionate benefit to anotherBehringer Harvard sponsored program or a third-party.***

Wemay enter into joint ventures, TIC investments or other co-ownershiparrangements with third parties as well as other Behringer Harvard programshaving similar investment objectives and utilizing leverage to acquire, developor improve properties.  We also maypurchase and develop properties in joint ventures or in partnerships,co-tenancies or other co-ownership arrangements with the sellers of theproperties, affiliates of the sellers, developers or other persons.  These investments may involve risks not otherwisepresent with other methods of investing in real estate, including, for example:

·                  the possibilitythat our co-venturer, co-tenant or partner in an investment might becomebankrupt;

·                  the co-venturer,co-tenant or partner may have economic or business interests or goals that are,or that become inconsistent with, our business interests or goals;

·                  the possibilitythat we may incur liabilities as the result of the action taken by our partneror co-investor; or

·                  the co-venturer,co-tenant or partner may be in a position to take action contrary to ourinstructions or requests or contrary to our policies or objectives, includingour policy with respect to qualifying and maintaining our qualification as aREIT.

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***Actions by a co-venturer, co-tenant or partnermight have the result of subjecting the property to liabilities in excess ofthose contemplated and may have the effect of reducing your returns.***

Affiliatesof Behringer Advisors recently sponsored registered public offerings on behalfof Behringer Harvard Short-Term Fund I and Behringer Harvard Mid-Term Fund I,which offerings terminated on February 19, 2005, and are currently sponsoring aregistered public offering on behalf of Behringer Harvard Opportunity REITI.  Mr. Behringer and affiliates of BehringerAdvisors, which are managed by substantially the same personnel as BehringerAdvisors, serve as general partners to these other Behringer Harvardprograms.  Because Behringer Advisors orits affiliates have advisory and management arrangements with other BehringerHarvard programs, it is likely that they will encounter opportunities toacquire or sell properties to the benefit of one of the Behringer Harvardprograms, but not others.  BehringerAdvisors or its affiliates may make decisions to buy or sell certainproperties, which decisions might disproportionately benefit a BehringerHarvard program other than us.  In suchevent, our results of operations and ability to make distributions to ourstockholders could be adversely affected.

Ifwe enter into a joint venture, TIC investment or other co-ownership arrangementwith another Behringer Harvard program, Behringer Advisors may have a conflictof interest when determining when and whether to buy or sell a particular realestate property.  For example, BehringerHarvard Short-Term Fund I will never have an active trading market.  Therefore, if our shares become listed on anational securities exchange, we may develop more divergent goals andobjectives from the joint venturer with respect to the resale of properties inthe future.  In addition, in the event wejoint venture with a Behringer Harvard program that has a term shorter thanours, including Behringer Harvard Opportunity REIT I, the joint venture may berequired to sell its properties at the time of the other Behringer Harvardprogram’s liquidation.  We may not desireto sell the properties at such time. Although the terms of any joint venture agreement between us and anotherBehringer Harvard program would grant us a right of first refusal to buy suchproperties, we may not have sufficient funds to exercise our right of firstrefusal under these circumstances.

BecauseMr. Behringer and his affiliates have sponsored other Behringer Harvard realestate funds, agreements and transactions among us and those parties withrespect to any joint venture, TIC investment or other co-ownership arrangementbetween or among such parties will not have the benefit of arms lengthnegotiation of the type normally conducted between unrelated co-venturers.  Under these joint ventures, neitherco-venturer may have the power to control the venture, and under certaincircumstances, an impasse could be reached regarding matters pertaining to theco-ownership arrangement, which might have a negative influence on the joint ventureand decrease potential returns to you. In the event that a co-venturer has a right of first refusal to buy outthe other co-venturer, it may be unable to finance such buy-out at that time.  If our interest is subject to a buy/sellright, we may not have sufficient cash, available borrowing capacity or othercapital resources to allow us to elect to purchase an interest of a co-venturersubject to the buy/sell right, in which case we may be forced to sell ourinterest as the result of the exercise of such right when we would otherwiseprefer to keep our interest. Furthermore, we may not be able to sell our interest in a joint ventureif we desire to exit the venture for any reason or if our interest is likewisesubject to a right of first refusal of our co-venturer or partner, our abilityto sell such interest may be adversely impacted by such right.  In addition, to the extent that ourco-venturer, partner or co-tenant is an affiliate of Behringer Advisors, certainconflicts of interest will exist.

***Behringer Advisors and its officers andemployees and certain of our key personnel face competing demands for theirtime, and this may cause our investment returns to suffer.***

BehringerAdvisors and its officers and employees and certain of our key personnel andtheir respective affiliates are general partners and sponsors of other realestate programs having investment objectives and legal and financialobligations similar to ours and may have other business interests as well.  Because these persons have competinginterests on their time and resources, they may have conflicts of interest inallocating their time between our business and these other activities.  During times of intense activity in otherprograms and ventures, they may devote less time and resources to our businessthan is necessary or appropriate.  Ifthis occurs, the returns on our investments may suffer.

***Our officers face conflicts of interestrelated to the positions they hold with affiliated entities, which coulddiminish the value of the services they provide to us.***

Eachof our executive officers, including Mr. Behringer, who serves as our ChiefExecutive Officer, Chief Investment Officer and Chairman of the Board, also areofficers of our advisor, our property manager, our dealer manager and otheraffiliated entities.  As a result, theseindividuals owe fiduciary duties to these other entities, which may conflictwith the fiduciary duties that they owe to us and our stockholders.  Conflicts with our business and interests aremost likely to arise from involvement in activities related to (1) allocationof new investments and management time and services between us and the otherentities, (2) the timing and terms of the investment in or sale of an asset,(3) development of our properties by affiliates, (4) investments withaffiliates of our advisor, (5) compensation to our advisor, and (6) ourrelationship with our dealer manager and property manager.

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***Your investment will be diluted uponconversion of the convertible stock.***

BehringerAdvisors purchased 1,000 shares of our non-participating, non-voting,convertible stock for an aggregate purchase price of $1,000.  Under limited circumstances, these shares maybe converted into shares of our common stock, resulting in dilution of ourstockholders’ interest in us.  The termsof the convertible stock provide that, generally, holders of convertible stockwill receive shares of common stock with an aggregate value equal to 15% of theamount by which (1) our enterprise value, including the total amount ofdistributions paid to our stockholders, exceeds (2) the sum of the aggregatecapital invested by our stockholders plus a 9% cumulative, non-compounded,annual return on such capital.  Theshares of convertible stock will be converted into shares of common stockautomatically if:

·                  the holders ofour common stock have received distributions equal to the sum of the aggregatecapital invested by stockholders and a 9% cumulative, non-compounded, annualreturn on this capital;

·                  the shares of common stock are listed fortrading on a national securities exchange; or

·                  the advisoryagreement expires without renewal or is terminated, other than due to atermination because of a material breach by advisor, and at the time of orsubsequent to termination, the holders of our common stock have receivedaggregate distributions equal to the sum of the capital invested bystockholders and a 9% cumulative, non-compounded, annual return on the capitalcontributions through the date of conversion.

Ouradvisor and Mr. Behringer, as affiliates of our advisor and of us, caninfluence whether we terminate the advisory agreement or allow it to expirewithout renewal, or whether our common stock is listed for trading on anational securities exchange. Accordingly, our advisor can influence both the conversion of theconvertible stock issued to it and the resulting dilution of other stockholders’interests.

***Behringer Advisors faces conflicts ofinterest relating to the conversion of the convertible stock, which couldresult in actions that are not necessarily in the long-term best interests ofour stockholders.***

Theterms of our convertible stock provide for its conversion into shares of commonstock in the event we terminate our advisory agreement with Behringer Advisorsprior to listing our shares for trading on an exchange.  To avoid the conversion of our convertiblestock, our independent directors may decide against terminating the advisoryagreement prior to the listing of our shares or disposition of our investmentseven if, but for the stock conversion, termination of the advisory agreementwould be in our best interest.  Inaddition, the conversion feature of our convertible stock could cause us tomake different investment or disposition decisions than we would otherwise make,in order to avoid the stock conversion. Moreover, our advisor has the right to terminate the advisory agreementupon a change of control of our company and thereby trigger the conversion ofthe convertible stock, which could have the effect of delaying, deferring orpreventing the change of control.

***Behringer Advisors faces conflicts ofinterest relating to the incentive fee structure under our advisory agreement,which could result in actions that are not necessarily in the long-term bestinterests of our stockholders.***

Underour advisory agreement, Behringer Advisors is entitled to fees that arestructured in a manner intended to provide incentives to our advisor to performin our best interests and in the best interests of our stockholders.  However, because our advisor does notmaintain a significant equity interest in us and is entitled to receivesubstantial minimum compensation regardless of performance, our advisor’sinterests are not wholly aligned with those of our stockholders.  In that regard, our advisor could bemotivated to recommend riskier or more speculative investments in order for usto generate the specified levels of performance or sales proceeds that wouldentitle our advisor to fees.  In addition,our advisor’s entitlement to fees upon the sale of our assets and toparticipate in sale proceeds could result in our advisor recommending sales ofour investments at the earliest possible time at which sales of investmentswould produce the level of return that would entitle the advisor tocompensation relating to such sales, even if continued ownership of thoseinvestments might be in our best long-term interest.

Ouradvisory agreement also requires us to pay a performance-based termination feeto our advisor (reduced by the value of shares of common stock issued orissuable upon conversion of our convertible stock) in the event that theadvisory agreement expires without renewal or is terminated, other than becauseof a material breach by the advisor; the holders of the common stock have receiveddistributions equal to the sum of the capital invested by such stockholders anda 9% cumulative, non-compounded, annual return; or the shares of common stockare listed for trading on a national securities exchange.  To avoid paying this fee, our independentdirectors may decide against terminating the advisory agreement prior to ourlisting even if, but for the termination fee, termination of the advisoryagreement would be in our best interest. In addition, the requirement to pay a fee to our advisor at terminationcould cause us to make different investment or disposition decisions than wewould otherwise make, in order to satisfy our obligation to pay the fee to theterminated advisor.  Moreover, our advisorhas the right to terminate the advisory agreement upon a change of control ofour company and thereby trigger the payment of the performance fee, which couldhave the effect of delaying, deferring or preventing the change of control.

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***Because we rely on affiliates of BehringerHarvard Holdings to provide advisory, property management and dealer managerservices, if Behringer Harvard Holdings is unable to meet its obligations wemay be required to find alternative providers of these services, which couldresult in a disruption of our business.***

BehringerHarvard Holdings, through one or more of its subsidiaries, owns and controlsour advisor, HPT Management, our property management company, and BehringerSecurities, the dealer manager of this offering.  The operations of our advisor, HPT Managementand Behringer Securities represent a substantial majority of the business ofBehringer Harvard Holdings.  In light ofthe common ownership of these entities and their importance to BehringerHarvard Holdings, we consider the financial condition of Behringer HarvardHoldings when assessing the financial condition of our advisor, HPT Managementand Behringer Securities.  While webelieve that Behringer Harvard Holdings currently has adequate cashavailability from both funds on hand and borrowing capacity through itsexisting credit facilities in order to meet its obligations, its continuedviability may be affected by its ability to continue to successfully sponsorand operate real estate programs.  In theevent that Behringer Harvard Holdings would be unable to meet its obligationsas they become due, we might be required to find alternative service providers,which could result in disruption of our business.

**RisksRelated to Our Business in General**

***A limit on the number of shares a person mayown may discourage a takeover.***

Ourcharter, with certain exceptions, authorizes our directors to take such actionsas are necessary and desirable to preserve our qualification as a REIT.  Unless exempted by our board of directors, noperson may own more than 9.8% of our outstanding common stock.  This restriction may have the effect ofdelaying, deferring or preventing a change in control of us, including anextraordinary transaction (such as a merger, tender offer or sale of all orsubstantially all of our assets) that might provide a premium to ourstockholders.

***Our charter permits our board of directors toissue stock with terms that may subordinate the rights of the holders of ourcurrent common stock or discourage a third- party from acquiring us.***

Ourcharter permits our board of directors to issue up to 400,000,000 shares ofcapital stock.  Our board of directors,without any action by our stockholders, may (1) increase or decrease theaggregate number of shares, (2) increase or decrease the number of shares of anyclass or series we have authority to issue or (3) classify or reclassify anyunissued common stock or preferred stock and establish the preferences,conversion or other rights, voting powers, restrictions, limitations as todistributions, qualifications, or terms or conditions of redemption of any suchstock.  Thus, our board of directorscould authorize the issuance of stock with terms and conditions that couldsubordinate the rights of the holders of our current common stock or have theeffect of delaying, deferring or preventing a change in control of us,including an extraordinary transaction (such as a merger, tender offer or saleof all or substantially all of our assets) that might provide a premium pricefor our stockholders.

***Maryland law prohibits certain businesscombinations, which may make it more difficult for us to be acquired.***

UnderMaryland law, “business combinations” between a Maryland corporation and aninterested stockholder or an affiliate of an interested stockholder areprohibited for five years after the most recent date on which the interestedstockholder becomes an interested stockholder. These business combinations include a merger, consolidation, shareexchange or, in circumstances specified in the statute, an asset transfer or issuanceor reclassification of equity securities. An interested stockholder is defined as:

·                  any person whobeneficially owns 10% or more of the voting power of the corporation’s shares;or

·                  an affiliate orassociate of the corporation who, at any time within the two-year period priorto the date in question, was the beneficial owner of 10% or more of the votingpower of the then outstanding voting stock of the corporation.

Aperson is not an interested stockholder under the statute if the board ofdirectors approved in advance the transaction by which he otherwise would havebecome an interested stockholder. However, in approving a transaction, the board of directors may providethat its approval is subject to compliance, at or after the time of approval,with any terms and conditions determined by the board.

Afterthe five-year prohibition, any business combination between the Marylandcorporation and an interested stockholder generally must be recommended by theboard of directors of the corporation and approved by the affirmative vote ofat least:

·                  80% of the votesentitled to be cast by holders of outstanding shares of voting stock of thecorporation; and

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·                  two-thirds ofthe votes entitled to be cast by holders of voting stock of the corporationother than shares held by the interested stockholder with whom or with whoseaffiliate the business combination is to be effected or held by an affiliate orassociate of the interested stockholder.

Thesesuper-majority vote requirements do not apply if the corporation’s commonstockholders receive a minimum price, as defined under Maryland law, for theirshares in the form of cash or other consideration in the same form aspreviously paid by the interested stockholder for its shares.  The business combination statute maydiscourage others from trying to acquire control of us and increase thedifficulty of consummating any offer.

***Maryland law also limits the ability of athird-party to buy a large stake in us and exercise voting power in electingdirectors.***

Marylandlaw also provides that “control shares” of a Maryland corporation acquired in a“control share acquisition” have no voting rights except to the extent approvedby the corporation’s disinterested stockholders by a vote of two-thirds of thevotes entitled to be cast on the matter. Shares of stock owned by interested stockholders, that is, by theacquirer, by officers or by employees who are directors of the corporation, areexcluded from shares entitled to vote on the matter.  “Control shares” are voting shares of stockthat would entitle the acquirer to exercise voting power in electing directorswithin specified ranges of voting power. Control shares do not include shares the acquiring person is thenentitled to vote as a result of having previously obtained stockholderapproval.  A “control share acquisition”means the acquisition of control shares. The control share acquisition statute does not apply (1) to sharesacquired in a merger, consolidation or share exchange if the corporation is aparty to the transaction or (2) to acquisitions approved or exempted by thecharter or bylaws of the corporation. Our bylaws contain a provision exempting from the Maryland Control ShareAcquisition Act any and all acquisitions by any person of shares of our stock.  We can offer no assurance that this provisionwill not be amended or eliminated at any time in the future.  This statute could have the effect ofdiscouraging offers from third parties to acquire us and increasing thedifficulty of successfully completing this type of offer by anyone other thanour affiliates or any of their affiliates.

***Our investment return may be reduced if weare required to register as an investment company under the Investment CompanyAct.***

Weare not registered as an investment company under the Investment Company Act of1940, as amended, based on exclusions that we believe are available to us.  If we were obligated to register as aninvestment company, we would have to comply with a variety of substantiverequirements under the Investment Company Act imposing, among other things:

·                  limitations oncapital structure;

·                  restrictions onspecified investments;

·                  prohibitions ontransactions with affiliates; and

·                  compliance withreporting, record keeping, voting, proxy disclosure and other rules andregulations that would significantly change our operations.

Inorder to maintain our exemption from regulation under the Investment CompanyAct, we must engage primarily in the business of buying real estate assets orreal estate related assets.  Further, tomaintain compliance with the Investment Company Act exemption, we may be unableto sell assets we would otherwise want to sell and may need to sell assets wewould otherwise wish to retain.  Inaddition, we may have to acquire additional income or loss generating assetsthat we might not otherwise have acquired or may have to forgo opportunities toacquire interests in companies that we would otherwise want to acquire andwould be important to our investment strategy. To avoid regulation as an investment company, we must be engagedprimarily in a business other than that of owning, holding, trading orinvesting in securities.  We may investin assets that are determined to be securities rather than interests in, orliens upon, real estate.  If a sufficientamount of our assets were determined to be securities instead of interests in,or liens upon, real estate, we would be required to register as an investmentcompany.  If we were required to registeras an investment company but failed to do so, we would be prohibited fromengaging in our business, and criminal and civil actions could be broughtagainst us.  In addition, our contractswould be unenforceable unless a court were to require enforcement, and a courtcould appoint a receiver to take control of us and liquidate our business.  Registration as an investment company couldhave a material adverse effect on our business, results of operations,financial condition and ability to pay distributions to you.

***You are bound by the majority vote on matterson which you are entitled to vote.***

Youmay vote on certain matters at any annual or special meeting of stockholders,including the election of directors. However, you will be bound by the majority vote on matters requiringapproval of a majority of the stockholders even if you do not vote with themajority on any such matter.

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***Stockholders have limited control overchanges in our policies and operations.***

Ourboard of directors determines our major policies, including our policiesregarding financing, growth, debt capitalization, REIT qualification anddistributions.  Our board of directorsmay amend or revise these and other policies without a vote of thestockholders.  Under the Maryland GeneralCorporation Law and our charter, our stockholders have a right to vote only onthe following:

·                  the election orremoval of directors;

·                  any amendment ofour charter (including a change in our investment objectives), except that ourboard of directors may amend our charter without stockholder approval to increaseor decrease the aggregate number of our shares, to increase or decrease thenumber of our shares of any class or series that we have the authority toissue, or to classify or reclassify any unissued shares by setting or changingthe preferences, conversion or other rights, restrictions, limitations as todistributions, qualifications or terms and conditions of redemption of theseshares, and to effect certain amendments permitted under Maryland law;

·                  our liquidationor dissolution;

·                  a reorganizationas provided in our charter; and

·                  any merger,consolidation or sale or other disposition of substantially all of our assets.

All other matters are subject to the discretion of ourboard of directors.

***Our board of directors may change ourinvestment policies without stockholder approval, which could alter the natureof your investment.***

Ourcharter requires that our independent directors review our investment policiesat least annually to determine that the policies we are following are in thebest interest of the stockholders.  Thesepolicies may change over time.  Themethods of implementing our investment policies also may vary, as newinvestment techniques are developed.  Ourinvestment policies, the methods for their implementation, and our other objectives,policies and procedures may be altered by our board of directors without theapproval of our stockholders.  As aresult, the nature of your investment could change without your consent.

***You are limited in your ability to sell yourshares pursuant to the share redemption program.***

Anystockholder requesting repurchase of their shares pursuant to our shareredemption program will be required to certify to us that he or she acquiredthe shares by either (1) a purchase directly from us or (2) a transfer from theoriginal subscriber by way of a bona fide gift not for value to, or for thebenefit of, a member of the subscriber’s immediate or extended family orthrough a transfer to a custodian, trustee or other fiduciary for the accountof the subscriber or his/her immediate or extended family in connection with anestate planning transaction, including by bequest or inheritance upon death orby operation of law.  You should be awarethat our share redemption program contains certain restrictions and limitations.  Shares may be redeemed on a quarterly basis,pro rata among all stockholders requesting redemption in such quarter, with apriority given to redemptions upon the death or disability of a stockholder,next to stockholders who demonstrate, in the discretion of our board ofdirectors, another involuntary exigent circumstance, such as bankruptcy, nextto stockholders subject to a mandatory distribution requirement under suchstockholder’s IRA and, finally, to other redemption requests.  We will not redeem more than 5% of theweighted average number of shares outstanding during the twelve-month periodimmediately prior to the date of redemption. Our board of directors will determine from time to time, and at least quarterly,whether we have sufficient excess cash to repurchase shares.  Generally, the cash available for redemptionwill be limited to proceeds from our distribution reinvestment plan plus 1% ofthe operating cash flow from the previous fiscal year (to the extentpositive).  Further, our board ofdirectors reserves the right to reject any request for redemption or toterminate, suspend, or amend the share redemption program at any time.  Therefore, in making a decision to purchaseshares of our common stock, you should not assume that you will be able to sellany of your shares back to us pursuant to our share redemption program.

***If you are able to resell your shares to uspursuant to our share redemption program, you will likely receive substantiallyless than the underlying asset value for your shares.***

Otherthan redemptions following the death or disability of a stockholder, thepurchase price for shares we repurchase under our redemption program will equal(1) prior to the time we begin having appraisals performed by an independentthird party, the amount by which (a) the lesser of (i) 90% of the average pricethe original purchaser or purchasers of your shares paid to us for all of yourshares (as adjusted for any stock dividends, combinations, splits,recapitalizations and the like with respect to our common stock) or (ii) 90% ofthe offering price of shares in our most recent offering exceeds (b) theaggregate amount of net sale proceeds per share, if any, distributed toinvestors prior to the redemption date as a result of the sale of one or moreof our properties; or (2) after we begin obtaining appraisals performed by anindependent third party, the lesser of (a) 100% of the average price theoriginal purchaser or purchasers of your

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shares paid for all ofyour shares (as adjusted for any stock dividends, combinations, splits,recapitalizations and the like with respect to our common stock) or (b) 90% ofthe value per share, as determined by the most recent appraisal.  Accordingly, you would likely receive less byselling your shares back to us than you would receive if our investments weresold for their estimated values and such proceeds were distributed in ourliquidation, and even if you have your shares purchased by a subsequentthird-party purchaser, you will likely receive substantially less than theunderlying asset value of your shares.

***Your interest in Behringer Harvard REIT Iwill be diluted if we issue additional shares.***

Existingstockholders and potential investors in this offering do not have preemptiverights to any shares issued by us in the future.  Our charter currently has authorized400,000,000 shares of capital stock, of which 382,499,000 shares are designatedas common stock, 1,000 shares are designated as convertible stock and 17,500,000are designated as preferred stock.  Subject to any limitations set forth underMaryland law, our board of directors may increase the number of authorizedshares of capital stock, increase or decrease the number of shares of any classor series of stock designated, or reclassify any unissued shares without thenecessity of obtaining stockholder approval. Shares may be issued in the discretion of our board of directors.  Existing stockholders and investors purchasingshares in this offering will likely experience dilution of their equity investmentin us in the event that we (1) sell shares in this offering or sell additionalshares in the future, including those issued pursuant to the distributionreinvestment plan, (2) sell securities that are convertible into shares of ourcommon stock, (3) issue shares of our common stock in a private offering ofsecurities to institutional investors, (4) issue shares of common stock uponthe conversion of the convertible stock, (5) issue shares of our common stockupon the exercise of the options granted to our independent directors oremployees of Behringer Advisors and HPT Management, our affiliated propertymanagement company, or their affiliates, or the warrants issued in our prioroffering to participating broker-dealers or our independent directors, (6)issue shares to our advisor, its successors or assigns, in payment of anoutstanding fee obligation as set forth under our advisory agreement, or (7)issue shares of our common stock to sellers of properties acquired by us inconnection with an exchange of limited partnership interests of BehringerHarvard OP.  In addition, the partnershipagreement for Behringer Harvard OP contains provisions that would allow, undercertain circumstances, other entities, including other Behringer Harvardsponsored programs, to merge into or cause the exchange or conversion of theirinterest for interests of Behringer Harvard OP. Because the limited partnership interests of Behringer Harvard OP may beexchanged for shares of our common stock, any merger, exchange or conversionbetween Behringer Harvard OP and another entity ultimately could result in theissuance of a substantial number of shares of our common stock, therebydiluting the percentage ownership interest of other stockholders.  Because of these and other reasons describedin this “Risk Factors” section, you should not expect to be able to own asignificant percentage of our shares.

***Payment of fees to Behringer Advisors and itsaffiliates will reduce cash available for investment and payment ofdistributions.***

BehringerAdvisors and its affiliates perform services for us in connection with theoffer and sale of our shares, the selection and acquisition of our investments,and the management and leasing of our properties, the servicing of ourmortgage, bridge or mezzanine loans and the administration of our otherinvestments.  Behringer Advisors is paidsubstantial fees for these services, which reduces the amount of cash availablefor investment in properties or distributions to stockholders.

***We may be restricted in our ability toreplace our property manager under certain circumstances.***

Underthe terms of our property management agreement, we may terminate the agreementupon 30 days’ notice in the event of, and only in the event of, a showing ofwillful misconduct, gross negligence or deliberate malfeasance by the propertymanager in performing its duties.  Ourboard of directors may find the performance of our property manager to beunsatisfactory.  However, unsatisfactoryperformance by the property manager may not constitute “willful misconduct,gross negligence or deliberate malfeasance.” As a result, we may be unable to terminate the property managementagreement at the desired time, which may have an adverse effect on themanagement and profitability of our properties.

***Distributions may be paid from capital, andthere can be no assurance that we will be able to achieve expected cash flowsnecessary to continue to pay currently established distributions or maintaindistributions at any particular level, or that distributions will increase overtime.***

Thereare many factors that can affect the availability and timing of cashdistributions to stockholders. Distributions generally are based upon such factors as the amount ofcash available or anticipated to be available from real estate securities,mortgage, bridge or mezzanine loans and other investments, current andprojected cash requirements and tax considerations.  Because we may receive income from interestor rents at various times during our fiscal year, distributions paid may notreflect our income earned in that particular distribution period.  The amount of cash available fordistributions is affected by many factors, such as our ability to buyproperties as offering proceeds become available, income from those propertiesand mortgages, yields on securities of other real estate programs that weinvest in, and our operating expense levels, as well as many othervariables.  Actual cash available fordistributions may vary substantially

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from estimates.  We currently make distributions to ourstockholders at an annualized rate of 7%, assuming the shares were purchasedfor $10.00 per share, based upon our anticipated future cash flow performanceof our portfolio investments, with all or some of such distributions paid fromavailable capital resulting in a return of capital to our investors.  We can give no assurance that we will be ableto achieve such anticipated cash flow or that we will be able to maintaindistributions at the current rate or that distributions will increase overtime.  Nor can we give any assurance thatrents or other income from our investments will increase, that the investmentswe make will increase in value or provide constant or increased distributionsover time, that loans we make will be repaid or paid on-time, or that futureacquisitions of real properties, mortgage, bridge or mezzanine loans or ourinvestments in securities will increase our cash available for distributions tostockholders.

Approximately76.95% of our aggregate distributions made in 2006 constituted a return ofcapital and approximately 72% of our aggregate distributions made in 2005constituted a return of capital. Distributions constitute a return of capital when and to the extent theamount of the distributions exceed earnings and profits as determined on a taxbasis.  In fiscal year 2006 and 2005, wemade cash distributions aggregating $60.1 million and $22.4 million,respectively, to our stockholders.  Ofthese amounts, approximately 23.05%, or $13.9 million, in fiscal 2006, andapproximately 28%, or $6.3 million, in fiscal 2005 was paid using cashgenerated from our operations.  Theremaining amounts were paid from sources other than operating cash flow, suchas offering proceeds, cash advanced to us by, or reimbursements for expensesfrom, our advisor and proceeds from loans including those secured by ourassets.  We can give no assurance thatthese sources will be available in the future to fund distributions if cashgenerated from our operations is insufficient.

Ouractual results may differ significantly from the assumptions used by our boardof directors in establishing the distribution rates to stockholders.  Many of the factors that can affect theavailability and timing of cash distributions to stockholders are beyond ourcontrol, and a change in any one factor could adversely affect our ability topay future distributions.  For instance:

·                  If one or moretenants defaults or terminates its lease, there could be a decrease orcessation of rental payments, which would mean less cash available fordistributions.

·                  Any failure by aborrower under our mortgage, bridge or mezzanine loans to repay the loans orinterest on the loans will reduce our income and distributions to stockholders.

·                  Cash availablefor distributions may be reduced if we are required to spend money to correctdefects or to make improvements to properties.

·                  Cash availableto make distributions may decrease if the assets we acquire have lower yieldsthan expected.

·                  There may be adelay between the sale of the common stock and our purchase of realproperties.  During that time, we mayinvest in lower yielding short-term instruments, which could result in a loweryield on your investment.

·                  If we lend moneyto others, such funds may not be repaid in accordance with the loan terms or atall, which could reduce cash available for distributions.

·                  Federal incometax laws require REITs to distribute at least 90% of their “REIT taxable income”to stockholders on an annual basis.  Thislimits the earnings that we may retain for corporate growth, such as propertyacquisition, development or expansion and makes us more dependent uponadditional debt or equity financing than corporations that are not REITs.  If we borrow more funds in the future, moreof our operating cash will be needed to make debt payments and cash availablefor distributions may therefore decrease.

·                  In connectionwith future property acquisitions, we may issue additional shares of commonstock, operating partnership units or interests in other entities that own ourproperties.  We cannot predict the numberof shares of common stock, units or interests which we may issue, or the effectthat these additional shares might have on cash available for distributions toyou.  If we issue additional shares, theycould reduce the cash available for distributions to you.

·                  We makedistributions to our stockholders to comply with the distribution requirementsof the Code and to eliminate, or at least minimize, exposure to federal incometaxes and the nondeductible REIT excise tax. Differences in timing between the receipt of income and the payment ofexpenses, and the effect of required debt payments, could require us to borrowfunds on a short-term basis to meet the distribution requirements that are necessaryto achieve the tax benefits associated with qualifying as a REIT.

In addition, our board of directors, in its discretion, may retain anyportion of our cash on hand for working capital.  We cannot assure you that sufficient cashwill be available to make distributions to you.

Asa result of the increasing demand on the part of institutional and globalinvestors for institutional quality real estate located in major U.S. markets,the costs of acquiring institutional quality real estate have increased sincewe began accumulating our real estate portfolio.  This results in downward pressure on currentyields from such assets, which would be expected to create downward pressure onthe rate of current distributions we are able to make.  Rather than compromise

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the quality of our real estate portfolio, which couldhave a negative effect on a liquidity event, we intend to maintain ourobjective of building a portfolio of high quality institutional realestate.  Although this strategy mayresult in delays in locating suitable investments, higher acquisition costs andlower returns in the short-term, we believe our portfolio’s overall long-termperformance will be enhanced.  Our boardof directors has and will continue to evaluate our distributions on at least aquarterly basis and depending on investment trends at the time, may considerlowering our distribution rate for subsequent periods.

***Until we generate operating cash flowsufficient to make distributions to our stockholders, we may make distributionsfrom other sources in anticipation of future operating cash flow, which mayreduce the amount of capital we ultimately invest and may negatively impact thevalue of your investment.***

Untilwe generate operating cash flow sufficient to make distributions to ourstockholders, some or all of our distributions will be paid from other sources,such as offering proceeds, cash advanced to us by, or reimbursements forexpenses from, our advisor and proceeds from loans including those secured byour assets, in anticipation of future operating cash flow.  Accordingly, the amount of distributions paidat any time may not reflect current cash flow from operations.  To the extent distributions are paid fromoffering proceeds, we will have less money available to invest in properties,which may negatively impact our ability to achieve our investmentobjectives.  In such an event, the valueof your investment in us could be impaired.

***Adverse economic conditions will negativelyaffect our returns and profitability.***

Ouroperating results may be affected by many factors, which may result from acontinued or exacerbated general economic slowdown experienced by the nation asa whole or by the local economies where our properties may be located.  These factors include:

·                  poor economicconditions that result in defaults by tenants of our properties and borrowersunder our mortgage, bridge or mezzanine loans;

·                  job transfersand layoffs that cause vacancies to increase;

·                  increasingconcessions or reduced rental rates that are required to maintain occupancylevels; and

·                  increasedinsurance premiums that reduce funds available for distribution or, to theextent the increases are passed through to tenants, may lead to tenantdefaults.  Also, increased insurancepremiums may make it difficult to increase rents to tenants on turnover, whichmay adversely affect our ability to increase our returns.

The length andseverity of any economic downturn cannot be predicted.  Our operations could be negatively affectedto the extent that an economic downturn is prolonged or becomes more severe.

***We and the other public programs sponsored byBehringer Harvard Holdings have experienced losses in the past, and we mayexperience similar losses in the future.***

Historically,each of the public programs sponsored by our affiliates has experienced lossesduring the initial periods of operation. Many of these losses can be attributed to initial start-up costs andoperating costs incurred prior to purchasing properties or making otherinvestments that generate revenue.  Inaddition, the effects of depreciation and amortization substantially reduceincome.  We face similar circumstancesand thus have experienced similar losses and we may continue to do so in thefuture.  As a result, we cannot assureyou that we will be profitable or that we will realize growth in the value ofour investments.

***We are uncertain of our sources for fundingof future capital needs, which could adversely affect the value of ourinvestments.***

Substantiallyall of the gross proceeds of our offerings will be used to make investments ininstitutional quality real estate and investments in real estate relatedsecurities.  In addition, a lender mayrequire escrow of reserves in excess of our established reserves.  If these reserves are insufficient to meetour cash needs, we may have to obtain financing from either affiliated orunaffiliated sources to fund our cash requirements.  Accordingly, in the event that we develop aneed for additional capital in the future for the improvement of our propertiesor for any other reason, we have not identified any sources for such funding,and we cannot assure you that such sources of funding will be available to usfor potential capital needs in the future.

***To hedge against exchange rate and interestrate fluctuations, we may use derivative financial instruments that may becostly and ineffective and may reduce the overall returns on your investment.***

Wemay use derivative financial instruments to hedge exposures to changes inexchange rates and interest rates on loans secured by our assets andinvestments in collateralized mortgage-backed securities.  Derivative instruments may include interestrate swap contracts, interest rate cap or floor contracts, futures or forwardcontracts, options or repurchase

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agreements.  Our actual hedging decisions will bedetermined in light of the facts and circumstances existing at the time of thehedge and may differ from time to time.

Tothe extent that we use derivative financial instruments to hedge againstexchange rate and interest rate fluctuations, we will be exposed to creditrisk, basis risk and legal enforceability risks.  In this context, credit risk is the failureof the counterparty to perform under the terms of the derivative contract.  If the fair value of a derivative contract ispositive, the counterparty owes us, which creates credit risk for us.  We intend to manage credit risk by dealingonly with major financial institutions that have high credit ratings.  Basis risk occurs when the index upon whichthe contract is based is more or less variable than the index upon which thehedged asset or liability is based, thereby making the hedge lesseffective.  We intend to manage basisrisk by matching, to a reasonable extent, the contract index to the index uponwhich the hedged asset or liability is based. Finally, legal enforceability risks encompass general contractual risksincluding the risk that the counterparty will breach the terms of, or fail toperform its obligations under, the derivative contract.  We intend to manage legal enforceabilityrisks by ensuring, to the best of our ability, that we contract with reputablecounterparties and that each counterparty complies with the terms andconditions of the derivative contract. If we are unable to manage these risks effectively, our results ofoperations, financial condition and ability to pay distributions to you will beadversely affected.

***Complying with REIT requirements may limitour ability to hedge risk effectively.***

TheREIT provisions of the Code may limit our ability to hedge the risks inherentto our operations.  Under current law,income that we generate from derivatives or other transactions intended tohedge our interest rate risk may constitute income that does not qualify forpurposes of the 75% income requirement applicable to REITs, and also may betreated as nonqualifying income for purposes of the 95% income test alsoapplicable to REITs unless specified requirements are met.  In addition, any income from foreign currencyor other hedging transactions may constitute nonqualifying income for purposesof both the 75% and 95% income tests.  Asa result of these rules, we may have to limit the use of hedging techniquesthat might otherwise be advantageous, which could result in greater risksassociated with interest rate or other changes than we would otherwise incur.

***The State of Texas recently enactedlegislation that creates a new “margin tax” and decreases state propertytaxes.  This tax reform could result indecreased reimbursable expenses from tenants, and increased taxes on ouroperations, which could reduce the cash available for distribution to you.***

InMay 2006, the State of Texas enacted legislation which replaces the currentfranchise tax with a new “margin tax,” which is effective for calendar yearsbeginning after December 31, 2006.  Thenew legislation expands the number of entities covered by the current Texasfranchise tax, and specifically includes limited partnerships as subject to thenew margin tax.  The tax generally willbe 1% of an entity’s taxable margin, which is the part of an entity’s totalrevenue less applicable deductions apportioned to Texas.  In May 2006, the State of Texas also enactedlegislation that reduces the state property tax.  As a result of this new property taxlegislation, our reimbursable expenses from tenants at the property level maydecrease, due to decreased property taxes. We hold significant assets in Texas. As a consequence, the new margin tax, combined with the decrease ofreimbursable expenses due to the decreased property tax, could reduce theamount of cash we have available for distribution to you.

**GeneralRisks Related to Investments in Real Estate**

***Our operating results are affected byeconomic and regulatory changes that may have an adverse impact on the realestate market in general.  We cannotassure you that we will be profitable or that we will realize growth in thevalue of our real estate assets.***

Ouroperating results are subject to risks generally incident to the ownership ofreal estate, including:

·                  changes ingeneral economic or local conditions;

·                  changes insupply of or demand for similar or competing properties in an area;

·                  ability tocollect rent from tenants;

·                  changes ininterest rates and availability of permanent mortgage funds, which may renderthe sale of a property difficult or unattractive;

·                  the illiquidityof real estate investments generally;

·                  changes in tax,real estate, environmental and zoning laws; and

·                  periods of highinterest rates and tight money supply.

For these andother reasons, we cannot assure you that we will be profitable or that we willrealize growth in the value of our investments.

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***Properties that have significant vacanciescould be difficult to sell, which could diminish the return on your real estateproperties.***

Aproperty may incur vacancies either by the continued default of tenants undertheir leases or the expiration of tenant leases.  If vacancies continue for a long period oftime, we may suffer reduced revenues resulting in decreased distributions toour stockholders.  In addition, theresale value of the property could be diminished because the market value of aparticular property will depend principally upon the value of the leases ofsuch property.

***We depend on tenants for revenue, and leaseterminations could reduce our distributions to our stockholders.***

Thesuccess of our real property investments, particularly properties occupied by asingle tenant, will depend on the financial stability of our tenants.  Lease payment defaults by tenants could causeus to reduce the amount of distributions to stockholders.  A default by a significant tenant on itslease payments to us would cause us to lose the revenue associated with thelease and cause us to have to find an alternative source of revenue to meetmortgage payments and prevent a foreclosure if the property is subject to amortgage.  In the event of a tenantdefault, we may experience delays in enforcing our rights as landlord and mayincur substantial costs in protecting our investment and re-letting ourproperty.  If significant leases areterminated, we cannot assure you that we will be able to lease the property forthe rent previously received or sell the property without incurring a loss.

***We may be unable to secure funds for futuretenant improvements, which could adversely impact our ability to pay cashdistributions to our stockholders.***

Whentenants do not renew their leases or otherwise vacate their space, it is usualthat, in order to attract replacement tenants, we will be required to expendsubstantial funds for tenant improvements and tenant refurbishments to thevacated space.  If we have insufficientworking capital reserves, we will have to obtain financing from othersources.  In addition to any reserves weestablish, a lender may require escrow of working capital reserves in excess ofour established reserves.  If thesereserves or any reserves otherwise established are designated for other uses orinsufficient to meet our cash needs, we may have to obtain financing fromeither affiliated or unaffiliated sources to fund our cash requirements.  We cannot assure you that sufficientfinancing will be available or, if available, will be available on economicallyfeasible terms or on terms acceptable to us. Moreover, certain reserves required by lenders may be designated forspecific uses and may not be available for working capital purposes such asfuture tenant improvements.  Additionalborrowing for working capital purposes will increase our interest expense, andtherefore our financial condition and our ability to pay cash distributions toour stockholders may be adversely affected.

***We may be unable to sell a property if orwhen we decide to do so, which could adversely impact our ability to pay cashdistributions to our stockholders.***

Weintend to hold the various real properties and other investments untilBehringer Advisors determines that a sale or other disposition appears to beadvantageous to achieve our investment objectives or until it appears thatthese objectives will not be met. Otherwise, Behringer Advisors, subject to approval of our board ofdirectors, may exercise its discretion as to whether and when to sell aproperty, and we will have no obligation to sell properties at any particulartime, except upon our liquidation if we do not cause the shares to be listedfor trading on a national securities exchange by 2017, unless a majority of theboard of directors and a majority of the independent directors approveotherwise.  The real estate market isaffected, as discussed above, by many factors, such as general economicconditions, availability of financing, interest rates and other factors,including supply and demand conditions. We cannot predict whether we will be able to sell any asset for theprice or on the terms set by us, or whether any price or other terms offered bya prospective purchaser would be acceptable to us.  We cannot predict the length of time neededto find a willing purchaser and to close the sale of a property.  If we are unable to sell a property when wedetermine to do so, it could have a significant adverse effect on our cash flowand results of operations.

***Uninsured losses relating to real property orexcessively expensive premiums for insurance coverage may adversely affect yourreturns.***

BehringerAdvisors attempts to ensure that all of our properties are adequately insuredto cover casualty losses.  However, thereare types of losses, generally catastrophic in nature, such as losses due towars, acts of terrorism, earthquakes, floods, hurricanes, pollution orenvironmental matters, which are uninsurable or not economically insurable, ormay be insured subject to limitations, such as large deductibles orco-payments.  Insurance risks associatedwith potential terrorism acts could sharply increase the premiums we pay forcoverage against property and casualty claims. Mortgage lenders generally insist that specific coverage againstterrorism be purchased by commercial property owners as a condition forproviding mortgage, bridge or mezzanine loans. It is uncertain whether such insurance policies will continue to beavailable, or available at reasonable cost, which could inhibit our ability tofinance or refinance our properties.  Insuch instances, we may be required to provide other financial support, eitherthrough financial assurances or self-insurance, to cover potential losses.  We cannot assure you that we will haveadequate coverage for such losses.  Inthe event that any of our properties incurs a casualty loss that is not fullycovered by insurance, the value of our assets will be reduced by any

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such uninsured loss.  In addition, other than our working capitalreserve or other reserves we may establish, we have no source of funding torepair or reconstruct any uninsured damaged property, and we cannot assure youthat any such sources of funding will be available to us for such purposes inthe future.  Also, to the extent we mustpay unexpectedly large amounts for insurance, we could suffer reduced earningsthat would result in decreased distributions to stockholders.

***Our operating results may be negativelyaffected by potential development and construction delays and resultantincreased costs and risks.***

Wemay invest some or all of the proceeds available for investment in theacquisition and development of properties upon which we will develop andconstruct improvements.  We will besubject to risks relating to uncertainties associated with re-zoning fordevelopment and environmental concerns of governmental entities and/orcommunity groups and our builder’s ability to control construction costs or tobuild in conformity with plans, specifications and timetables.  The builder’s failure to perform maynecessitate legal action by us to rescind the purchase or the constructioncontract or to compel performance. Performance also may be affected or delayed by conditions beyond thebuilder’s control.  Delays in completionof construction also could give tenants the right to terminate preconstructionleases for space at a newly developed project. We may incur additional risks when we make periodic progress payments orother advances to such builders prior to completion of construction.  These and other such factors can result inincreased costs of a project or loss of our investment.  In addition, we will be subject to normallease-up risks relating to newly constructed projects.  Furthermore, we must rely upon projections ofrental income and expenses and estimates of the fair market value of propertyupon completion of construction when agreeing upon a price to be paid for theproperty at the time of acquisition of the property.  If our projections are inaccurate, we may paytoo much for a property, and our return on our investment could suffer.

Inaddition, we may invest in unimproved real property.  Returns from development of unimprovedproperties also are subject to risks and uncertainties associated withre-zoning the land for development and environmental concerns of governmentalentities and/or community groups. Although our intention is to limit any investment in unimproved propertyto property we intend to develop, your investment nevertheless is subject tothe risks associated with investments in unimproved real property.

***If we contract with Behringer DevelopmentCompany LP or its affiliates for newly developed property, we cannot guaranteethat our earnest money deposit made to Behringer Development Company LP will befully refunded.***

Wemay enter into one or more contracts, either directly or indirectly throughjoint ventures, TIC investments or other co-ownership arrangements withaffiliates or others, to acquire real property from Behringer DevelopmentCompany LP (“Behringer Development”), an affiliate of Behringer Advisors.  Properties acquired from BehringerDevelopment or its affiliates may be either existing income-producingproperties, properties to be developed or properties under development.  We anticipate that we will be obligated topay a substantial earnest money deposit at the time of contracting to acquiresuch properties.  In the case ofproperties to be developed by Behringer Development or its affiliates, weanticipate that we will be required to close the purchase of the property uponcompletion of the development of the property by Behringer Development or itsaffiliates.  At the time of contractingand the payment of the earnest money deposit by us, Behringer Development orits affiliates typically will not have acquired title to any realproperty.  Typically, BehringerDevelopment or its affiliates will only have a contract to acquire land, adevelopment agreement to develop a building on the land and an agreement withone or more tenants to lease all or part of the property upon itscompletion.  We may enter into such acontract with Behringer Development or its affiliates even if at the time ofcontracting we have not yet raised sufficient proceeds in our offering toenable us to close the purchase of such property.  However, we will not be required to close apurchase from Behringer Development or its affiliates, and will be entitled toa refund of our earnest money, in the following circumstances:

·                  BehringerDevelopment or its affiliates fails to develop the property;

·                  all or aspecified portion of the pre-leased tenants fail to take possession under theirleases for any reason; or

·                  we are unable toraise sufficient proceeds from our offering to pay the purchase price atclosing.

Theobligation of Behringer Development or its affiliates to refund our earnestmoney will be unsecured, and no assurance can be made that we would be able toobtain a refund of such earnest money deposit from it under these circumstancessince Behringer Development is an entity without substantial assets oroperations.  However, BehringerDevelopment or its affiliates’ obligation to refund our earnest money depositwill be guaranteed by HPT Management, our property manager, which providesproperty management and leasing services to various Behringer Harvard sponsoredprograms, including us, for substantial monthly fees.  As of the time HPT Management may be requiredto perform under any guaranty, we cannot assure that HPT Management will havesufficient assets to refund all of our earnest money deposit in a lump sumpayment.  If we were forced to collectour earnest money deposit by enforcing the guaranty of HPT Management, we willlikely be required to accept installment payments over time payable out of therevenues of HPT

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Management’soperations.  We cannot assure you that wewould be able to collect the entire amount of our earnest money deposit undersuch circumstances.

***Competition with third parties in acquiringproperties and other investments may reduce our profitability and the return onyour investment.***

Wecompete with many other entities engaged in real estate investment activities,including individuals, corporations, bank and insurance company investmentaccounts, other REITs, real estate limited partnerships and other entitiesengaged in real estate investment activities, many of which have greaterresources than we do.  Larger REITs mayenjoy significant competitive advantages that result from, among other things,a lower cost of capital and enhanced operating efficiencies.  In addition, the number of entities and theamount of funds competing for suitable investments may increase.  Any such increase would result in increaseddemand for these assets and therefore increased prices paid for them.  If we pay higher prices for properties andother investments, our profitability will be reduced and you may experience alower return on your investment.

***A concentration of our investments in any oneproperty class may leave our profitability vulnerable to a downturn in such sector.***

Atany one time, a significant portion of our investments could be in one propertyclass, such as institutional quality office properties.  As a result, we will be subject to risksinherent in investments in a single type of property.  If our investments are substantially in oneproperty class, then the potential effects on our revenues, and as a result, oncash available for distribution to our stockholders, resulting from a downturnin the businesses conducted in those types of properties could be morepronounced than if we had more fully diversified our investments.

***Acquiring or attempting toacquire multiple properties in a single transaction may adversely affect ouroperations.***

Fromtime to time, we may attempt to acquire multiple properties in a singletransaction.  Portfolio acquisitions aremore complex and expensive than single property acquisitions, and the risk thata multiple-property acquisition does not close may be greater than in asingle-property acquisition.  Portfolioacquisitions also may result in us owning investments in geographicallydispersed markets, placing additional demands on our ability to manage theproperties in the portfolio.  Inaddition, a seller may require that a group of properties be purchased as apackage even though we may not want to purchase one or more properties in theportfolio.  In these situations, if weare unable to identify another person or entity to acquire the unwantedproperties, we may be required to operate or attempt to dispose of theseproperties.  Any of the foregoing eventsmay have an adverse effect on our operations.

***Our operating results will be negativelyaffected if our investments, including investments in TIC interests promoted byour affiliates, do not meet projected distribution levels.***

BehringerHarvard Holdings and its affiliates have promoted a number of TIC real estateprojects.  Some of these projects havenot met the distribution levels anticipated in the projections produced byBehringer Harvard Holdings and its affiliates. In addition, certain other projects have not achieved the leasing andoperational thresholds projected by Behringer Harvard Holdings and itsaffiliates.  If projections related toour investments, including any TIC interests in which we invest, areinaccurate, we may pay too much for an investment and our return on ourinvestment could suffer.

Specifically,several TIC investment programs have not benefited from expected leasingimprovements.  Behringer Harvard Holdingshas provided support for some of these programs in the form of master leasesand other payments.  In addition, theBeau Terre Office Park TIC program is currently underperforming relative toprojections, which were based on seller representations that Behringer HarvardHoldings believes to be false.  Withrespect to this program, Behringer Harvard Holdings has completed a settlementwith the investors to support their returns and is pursuing a claim against theseller on behalf of the investors and itself.

***If we set aside insufficient working capitalreserves, we may be required to defer necessary property improvements.***

Ifwe do not have enough reserves for working capital to supply needed funds forcapital improvements throughout the life of the investment in a property andthere is insufficient cash available from our operations, we may be required todefer necessary improvements to the property that may cause the property tosuffer from a greater risk of obsolescence or a decline in value, or a greaterrisk of decreased cash flow as a result of fewer potential tenants beingattracted to the property.  If thishappens, we may not be able to maintain projected rental rates for effectedproperties, and our results of operations may be negatively impacted.

***The costs of compliance with environmentallaws and other governmental laws and regulations may adversely affect ourincome and the cash available for any distributions.***

Allreal property and the operations conducted on real property are subject tofederal, state, local and foreign laws and regulations relating toenvironmental protection and human health and safety.  These laws and regulations generally governwastewater discharges, air emissions, the operation and removal of undergroundand above-ground storage tanks,

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the use, storage,treatment, transportation and disposal of solid and hazardous materials, andthe remediation of contamination associated with disposals.  Some of these laws and regulations may imposejoint and several liability on tenants, owners or operators for the costs ofinvestigation or remediation of contaminated properties, regardless of fault orthe legality of the original disposal. In addition, the presence of these substances, or the failure toproperly remediate these substances, may adversely affect our ability to sellor rent such property or to use the property as collateral for futureborrowing.

Someof these laws and regulations have been amended so as to require compliancewith new or more stringent standards as of future dates.  Compliance with new or more stringent laws orregulations or stricter interpretation of existing laws may require materialexpenditures by us.  We cannot assure youthat future laws, ordinances or regulations will not impose any materialenvironmental liability, or that the current environmental condition of ourproperties will not be affected by the operations of the tenants, by theexisting condition of the land, by operations in the vicinity of theproperties, such as the presence of underground storage tanks, or by theactivities of unrelated third parties. In addition, there are various local, state and federal fire, health,life-safety and similar regulations (including those of foreign jurisdictions)that we may be required to comply with, and that may subject us to liability inthe form of fines or damages for noncompliance.

***Discovery of previously undetectedenvironmentally hazardous conditions may adversely affect our operatingresults.***

Undervarious federal, state, local and foreign environmental laws, ordinances andregulations, a current or previous owner or operator of real property may beliable for the cost of removal or remediation of hazardous or toxic substanceson, under or in such property.  The costsof removal or remediation could be substantial. These laws often impose liability whether or not the owner or operatorknew of, or was responsible for, the presence of the hazardous or toxicsubstances.  Environmental laws also mayimpose restrictions on the manner in which property may be used or businessesmay be operated, and these restrictions may require substantialexpenditures.  Environmental laws providefor sanctions in the event of noncompliance and may be enforced by governmentalagencies or, in certain circumstances, by private parties.  Certain environmental laws and common lawprinciples could be used to impose liability for release of and exposure tohazardous substances, including asbestos containing materials into the air, andthird parties may seek recovery from owners or operators of real properties forpersonal injury or property damage associated with exposure to releasedhazardous substances.  The cost ofdefending against claims of liability, of compliance with environmentalregulatory requirements, of remediating any contaminated property, or of payingpersonal injury claims could materially adversely affect our business, assetsor results of operations and, consequently, amounts available for distributionto you.

***Costs associated with complying with theAmericans with Disabilities Act may affect cash available for distributions.***

Ourproperties are generally expected to be subject to the Americans withDisabilities Act of 1990.  Under thisAct, all places of public accommodation are required to comply with federalrequirements related to access and use by disabled persons.  The Act has separate compliance requirementsfor “public accommodations” and “commercial facilities” that generally requirethat buildings and services be made accessible and available to people withdisabilities.  The Act’s requirements couldrequire removal of access barriers and could result in the imposition ofinjunctive relief, monetary penalties or, in some cases, an award ofdamages.  We attempt to acquireproperties that comply with the Act or place the burden on the seller or other third-party,such as a tenant, to ensure compliance with the Act.  However, we cannot assure you that we will beable to acquire properties or allocate responsibilities in this manner.  If we cannot, our funds used for Actcompliance may affect cash available for distributions and the amount ofdistributions to you.

***If we sell properties by providing financingto purchasers, we will bear the risk of default by the purchaser.***

Ifwe decide to sell any of our properties, we intend to use our reasonable bestefforts to sell them for cash.  However,in some instances we may sell our properties by providing financing topurchasers.  If we provide financing topurchasers, we will bear the risk of default by the purchaser and will besubject to remedies provided by law, which could negatively impact ourdistributions to stockholders.  There areno limitations or restrictions on our ability to take purchase moneyobligations.  We may, therefore, take apurchase money obligation secured by a mortgage as part payment for thepurchase price.  The terms of payment tous generally will be affected by custom in the area where the property beingsold is located and the then-prevailing economic conditions.  If we receive promissory notes or otherproperty in lieu of cash from property sales, the distribution of the proceedsof sales to our stockholders, or their reinvestment in other assets, will bedelayed until the promissory notes or other property are actually paid, sold,refinanced or otherwise disposed of.  Insome cases, we may receive initial down payments in cash and other property inthe year of sale in an amount less than the selling price and subsequentpayments will be spread over a number of years. Defaults by a purchaser under a financing arrangement with us couldnegatively impact our ability to make distributions to our stockholders.

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**RisksAssociated with Debt Financing**

***We incur mortgage indebtedness and otherborrowings, which increases our business risks.***

Weare permitted to, and typically do, acquire real properties by using eitherexisting financing or borrowing new funds. In addition, we may incur or increase our mortgage debt by obtainingloans secured by some or all of our real properties to obtain funds to acquireadditional real properties or to pay distributions to our stockholders.  We also may borrow funds if necessary tosatisfy the requirement that we distribute to stockholders at least 90% of ourannual “REIT taxable income,” or otherwise as is necessary or advisable toassure that we maintain our qualification as a REIT for federal income taxpurposes.

Thereis no limit on the amount we may invest in any single improved property orother asset or on the amount we can borrow for the purchase of any individualproperty or other investment.  Under ourcharter, the maximum amount of our indebtedness may not exceed 300% of our netassets as of the date of any borrowing. We may incur indebtedness in excess of the limit if the excess isapproved by a majority of our independent directors.

Ourboard of directors has adopted a policy to generally limit our aggregateborrowings to approximately 55% of the aggregate value of our assets unlesssubstantial justification exists that borrowing a greater amount is in our bestinterests.  Our policy limitation, however,does not apply to individual real estate assets and will apply only when wehave invested most of our capital from all of our offerings.  As a result, we typically borrow, and expectto continue borrowing, more than 55% of the contract purchase price of eachreal estate asset we acquire to the extent our board of directors determinesthat borrowing these amounts is reasonable.

Wedo not borrow money secured by a particular real property unless we believe theproperty’s projected cash flow is sufficient to service the mortgage debt.  However, if there is a shortfall in cashflow, then the amount available for distributions to stockholders may beaffected.  In addition, incurringmortgage debt increases the risk of loss since defaults on indebtedness securedby a property may result in foreclosure actions initiated by lenders and ourloss of the property securing the loan that is in default.  For tax purposes, a foreclosure is treated asa sale of the property for a purchase price equal to the outstanding balance ofthe debt secured by the mortgage.  If theoutstanding balance of the debt secured by the mortgage exceeds our tax basisin the property, we would recognize taxable income on foreclosure, but wouldnot receive any cash proceeds.  We alsomay provide full or partial guarantees to lenders of mortgage debt to theentities that own our properties.  Whenwe give a guaranty on behalf of an entity that owns one of our properties, wewill be responsible to the lender for satisfaction of the debt if it is notpaid by the entity.  If any mortgagescontain cross-collateralization or cross-default provisions, there is a riskthat more than one real property may be affected by a default.  If any of our properties are foreclosed upondue to a default, our ability to make distributions to our stockholders will beadversely affected.

***If mortgage debt is unavailable at reasonablerates, we may not be able to refinance our properties, which could reduce thenumber of properties we can acquire and the amount of cash distributions we canmake.***

Whenwe place mortgage debt on properties, we run the risk of being unable torefinance the properties when the loans come due, or of being unable torefinance on favorable terms.  Ifinterest rates are higher when the properties are refinanced, we may not beable to finance the properties and our income could be reduced.  If this occurs, it would reduce cashavailable for distribution to our stockholders, and it may prevent us fromraising capital by issuing more stock or prevent us from borrowing more money.

***Lenders may require us to enter intorestrictive covenants relating to our operations, which could limit our abilityto make distributions to our stockholders.***

Inconnection with obtaining financing, a lender could impose restrictions on usthat affect our ability to incur additional debt and our distribution andoperating policies.  In general, our loanagreements restrict our ability to encumber or otherwise transfer our interestin the respective property without the prior consent of the lender.  Loan documents we enter into may containother customary negative covenants that may limit our ability to furthermortgage the property, discontinue insurance coverage, replace Behringer Advisorsas our advisor or impose other limitations. Any such restriction or limitation may have an adverse effect on ouroperations.

***Interest only indebtedness may increase ourrisk of default and ultimately may reduce our funds available for distributionto our stockholders.***

Wemay finance our property acquisitions using interest only mortgageindebtedness.  During the interest onlyperiod, the amount of each scheduled payment will be less than that of atraditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (exceptin the case of prepayments) because there are no scheduled monthly payments ofprincipal during this period.  After theinterest only period, we will be required either to make scheduled payments ofamortized principal and interest or to make a lump-sum or “balloon” payment atmaturity.  These required principal orballoon payments will increase the amount of our scheduled payments and mayincrease our risk of default under the related mortgage loan.  If the mortgage loan has an adjustable interestrate, the amount of our 

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scheduled payments alsomay increase at a time of rising interest rates.  Increased payments and substantial principalor balloon maturity payments will reduce the funds available for distributionto our stockholders because cash otherwise available for distribution will berequired to pay principal and interest associated with these mortgage loans.

***Increases in interest rates could increasethe amount of our debt payments and adversely affect our ability to makedistributions to our stockholders.***

Wemay borrow money that bears interest at a variable rate.  In addition, from time to time we may paymortgage loans or refinance our properties in a rising interest rateenvironment.  Accordingly, increases ininterest rates could increase our interest costs, which could have a materialadverse effect on our operating cash flow and our ability to make distributionsto you.  In addition, if rising interestrates cause us to need additional capital to repay indebtedness in accordancewith its terms or otherwise, we may be required to liquidate one or more of ourinvestments in properties at times which may not permit realization of themaximum return on the investments.

***Financing arrangements involving balloonpayment obligations may adversely affect our ability to make distributions.***

Ourfixed-term financing arrangements generally require us to make “balloon”payments at maturity.  Our ability tomake a balloon payment at maturity is uncertain and may depend upon our abilityto obtain additional financing or our ability to sell the property.  At the time the balloon payment is due, wemay or may not be able to refinance the balloon payment on terms as favorableas the original loan or sell the property at a price sufficient to make theballoon payment.  The effect of arefinancing or sale could affect the rate of return to stockholders and theprojected time of disposition of our assets. In addition, payments of principal and interest made to service ourdebts may leave us with insufficient cash to pay the distributions that we arerequired to pay to maintain our qualification as a REIT.  Any of these results would have asignificant, negative impact on your investment.

***We have broad authority to incur debt, andhigh debt levels could hinder our ability to make distributions and coulddecrease the value of your investment.***

Ourboard of directors has adopted a policy that we will generally limit ouraggregate borrowings to approximately 55% of the aggregate value of our assets,but we may exceed this limit under some circumstances.  Such debt may be at a level that is higherthan other real estate investment trusts with similar investment objectives orcriteria.  High debt levels would causeus to incur higher interest charges, would result in higher debt servicepayments, and could be accompanied by restrictive covenants.  These factors could limit the amount of cashwe have available to distribute and could result in a decline in the value ofyour investment.

**RisksRelated to Investments in Real Estate Related Securities**

***Investments in real estate related securitieswill be subject to specific risks relating to the particular issuer of thesecurities and may be subject to the general risks of investing in subordinatedreal estate securities.***

Wemay invest in real estate equity securities of both publicly traded and privatereal estate companies.  Our investmentsin real estate related equity securities will involve special risks relating tothe particular issuer of the equity securities, including the financialcondition and business outlook of the issuer. Issuers of real estate related equity securities generally invest inreal estate or real estate related assets and are subject to the inherent risksassociated with real estate related investments discussed in this Annual Reporton Form 10-K, including risks relating to rising interest rates.

Realestate related equity securities are generally unsecured and also may besubordinated to other obligations of the issuer.  As a result, investments in real estaterelated equity securities are subject to risks of (1) limited liquidity inthe secondary trading market in the case of unlisted or thinly tradedsecurities, (2) substantial market price volatility resulting from changes inprevailing interest rates in the case of traded equity securities,(3) subordination to the prior claims of banks and other senior lenders tothe issuer, (4) the operation of mandatory sinking fund or call/redemptionprovisions during periods of declining interest rates that could cause theissuer to reinvest redemption proceeds in lower yielding assets, (5) thepossibility that earnings of the issuer may be insufficient to meet its debtservice and distribution obligations and (6) the declining creditworthiness andpotential for insolvency of the issuer during periods of rising interest ratesand economic downturn.  These risks mayadversely affect the value of outstanding real estate related equity securitiesand the ability of the issuers thereof to repay principal and interest or makedistribution payments.

***Investments in real estate preferred equitysecurities involve a greater risk of loss than traditional debt financing.***

Wemay invest in real estate related preferred equity securities, which mayinvolve a higher degree of risk than traditional debt financing due to avariety of factors, including that such investments are subordinate totraditional loans and are not secured by property underlying theinvestment.  Furthermore, should theissuer default on our investment, we would be able to proceed only against theentity in which we have an interest, and not the property owned by such entityand underlying our investment.  As aresult, we may not recover some or all of our investment.

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***The mezzanine loans in which we may investwould involve greater risks of loss than senior loans secured by incomeproducing real properties.***

Wemay invest in mezzanine loans that take the form of subordinated loans securedby second mortgages on the underlying real property or loans secured by apledge of the ownership interests of either the entity owning the real propertyor the entity that owns the interest in the entity owning the realproperty.  These types of investmentsinvolve a higher degree of risk than long-term senior mortgage lending securedby income producing real property because the investment may become unsecuredas a result of foreclosure by the senior lender.  In the event of a bankruptcy of the entityproviding the pledge of its ownership interests as security, we may not havefull recourse to the assets of the entity, or the assets of the entity may notbe sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan,or in the event of a borrower bankruptcy, our mezzanine loan will be satisfiedonly after the senior debt.  As a result,we may not recover some or all of our investment.

***We may make investments in non-U.S. dollardenominated securities, which will be subject to currency rates exposure andthe uncertainty of foreign laws and markets.***

Wemay purchase real property or real estate related securities denominated inforeign currencies.  A change in foreigncurrency exchange rates may have an adverse impact on returns on our non-U.S.dollar denominated investments.  Althoughwe may hedge our foreign currency risk subject to the REIT income qualificationtests, we may not be able to do so successfully and may incur losses on theseinvestments as a result of exchange rate fluctuations.

***We expect that a portion of any real estaterelated securities investments we make will be illiquid and we may not be ableto adjust our portfolio in response to changes in economic and otherconditions.***

Certainof the real estate related securities that we may purchase in connection withprivately negotiated transactions will not be registered under the relevantsecurities laws, resulting in a prohibition against their transfer, sale,pledge or other disposition except in a transaction that is exempt from theregistration requirements of, or is otherwise in accordance with, thoselaws.  As a result, our ability to varyour portfolio in response to changes in economic and other conditions may berelatively limited.  The mezzanine andbridge loans we may purchase will be particularly illiquid investments due totheir short life, their unsuitability for securitization and the greaterdifficulty of recoupment in the event of a borrower’s default.

***Interest rate and related risks may cause thevalue of our real estate related securities investments to be reduced.***

Interestrate risk is the risk that prevailing market interest rates change relative tothe current yield on fixed income securities such as preferred and debtsecurities, and to a lesser extent dividend paying common stock.  Generally, when market interest rates rise,the market value of these securities declines, and vice versa.  In addition, when interest rates fall,issuers are more likely to repurchase their existing preferred and debt securitiesto take advantage of the lower cost of financing.  As repurchases occur, principal is returnedto the holders of the securities sooner than expected, thereby lowering theeffective yield on the investment.  On theother hand, when interest rates rise, issuers are more likely to maintain theirexisting preferred and debt securities. As a result, repurchases decrease, thereby extending the averagematurity of the securities.  We intend tomanage interest rate risk by purchasing preferred and debt securities withmaturities and repurchase provisions that are designed to match our investmentobjectives.  If we are unable to managethese risks effectively, our results of operations, financial condition andability to pay distributions to you will be adversely affected.

***We have not made any investments in realestate related securities.***

Asidefrom investments in institutional quality commercial properties, we arepermitted to invest in real estate related securities, including securitiesissued by other real estate companies, collateralized mortgage-backedsecurities, mortgage, bridge or mezzanine loans and Section 1031 TICinterests.  To date, however, we havefocused on acquiring interests in office buildings and other commercialproperties.  We may not have theexpertise necessary to maximize the return on real estate related securities.

***We may acquire real estate related securitiesthrough tender offers, which may require us to spend significant amounts oftime and money that otherwise could be allocated to our operations.***

Wemay acquire real estate related securities through tender offers, negotiated orotherwise, in which we solicit a target company’s stockholders to purchasetheir securities.  The acquisition ofthese securities could require us to spend significant amounts of money thatotherwise could be allocated to our operations. Additionally, in order to acquire the securities, the employees of ouradvisor likely will need to devote a substantial portion of their time topursuing the tender offer – time that otherwise could be allocated to managingour business.  These consequences couldadversely affect our operations and reduce the cash available for distributionto our stockholders.

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**RisksAssociated with Mortgage Lending**

***We do not have substantial experienceinvesting in mortgage, bridge or mezzanine loans, which could adversely affectour return on mortgage investments.***

Neitherour advisor nor any of our affiliates has any substantial experience investingin mortgage, bridge or mezzanine loans. Although we currently do not expect to make significant investments inmortgage, bridge or mezzanine loans, we may make such investments to the extentour advisor determines that it is advantageous to us due to the state of thereal estate market or in order to diversify our investment portfolio.  If we decide to make mortgage, bridge ormezzanine loans or acquire them, we may not have the expertise necessary tomaximize the return on investments in these types of loans.

***Our mortgage, bridge or mezzanine loans maybe impacted by unfavorable real estate market conditions, which could decreasethe value of our mortgage investments.***

Ifwe make or invest in mortgage, bridge or mezzanine loans, we will be at risk ofdefaults on those mortgage, bridge or mezzanine loans caused by many conditionsbeyond our control, including local and other economic conditions affectingreal estate values and interest rate levels. We do not know whether the values of the property securing the mortgage,bridge or mezzanine loans will remain at the levels existing on the dates oforigination of the mortgage, bridge or mezzanine loans.  If the values of the underlying propertiesdrop, our risk will increase and the values of our interests may decrease.

***Our mortgage, bridge or mezzanine loans willbe subject to interest rate fluctuations, which could reduce our returns ascompared to market interest rates.***

Ifwe invest in fixed-rate, long-term mortgage, bridge or mezzanine loans andinterest rates rise, the mortgage, bridge or mezzanine loans could yield areturn lower than then-current market rates. If interest rates decrease, we will be adversely affected to the extentthat mortgage, bridge or mezzanine loans are prepaid, because we may not beable to make new loans at the previously higher interest rate.

***Delays in liquidating defaulted mortgage,bridge or mezzanine loans could reduce our investment returns.***

Ifthere are defaults under our mortgage, bridge or mezzanine loans, we may not beable to repossess and sell quickly any properties serving such loans.  The resulting time delay could reduce thevalue of our investment in the defaulted mortgage, bridge or mezzanineloans.  An action to foreclose on aproperty securing a mortgage loan is regulated by state statutes and rules and issubject to many of the delays and expenses of other lawsuits if the defendantraises defenses or counterclaims.  In theevent of default by a mortgagor, these restrictions, among other things, mayimpede our ability to foreclose on or sell the mortgaged property or to obtainproceeds sufficient to repay all amounts due to us on the mortgage loan.

***Returns on our mortgage, bridge or mezzanineloans may be limited by regulations.***

Themortgage, bridge or mezzanine loans in which we invest or that we may make, maybe subject to regulation by federal, state and local authorities (includingthose of foreign jurisdictions) and subject to various laws and judicial andadministrative decisions.  We maydetermine not to make mortgage, bridge or mezzanine loans in any jurisdictionin which we believe we have not complied in all material respects withapplicable requirements.  If we decidenot to make mortgage, bridge or mezzanine loans in several jurisdictions, itcould reduce the amount of income we would otherwise receive.

***Foreclosures create additional ownershiprisks that could adversely impact our returns on mortgage investments.***

Ifwe acquire property by foreclosure following defaults under our mortgage,bridge or mezzanine loans, we will have the economic and liability risks as theowner.

***The liquidation of our assets may be delayed,which could delay distributions to our stockholders.***

Ifour advisor determines that it is in our best interest to make or invest inmortgage, bridge or mezzanine loans, any intended liquidation of us may bedelayed beyond the time of the sale of all of our properties until allmortgage, bridge or mezzanine loans expire or are sold, because we may enterinto mortgage, bridge or mezzanine loans with terms that expire after the datewe intend to have sold all of our properties.

**RisksAssociated with Section 1031 TIC Transactions**

***We may have increased exposure to liabilitiesfrom litigation as a result of our participation in Section 1031 TICtransactions.***

Manyof our acquisitions of TIC interests were or will be structured to qualify forlike-kind exchange treatment under Section 1031 of the Code and we, through ouraffiliates, intend to continue to enter into Section 1031 TIC 

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transactions in thefuture.  Section 1031 TIC Transactionsare structured as the acquisition of real estate owned in co-tenancyarrangements with parties seeking to defer taxes under Section 1031 of theCode, including single member limited liability companies or similar entities (“BehringerHarvard Exchange Entities”).  We mayprovide accommodation in support of or otherwise be involved in such Section1031 TIC Transactions.  Although ourparticipation in Section 1031 TIC Transactions has certain benefits to ourbusiness, including enabling us to invest capital more readily and over a morediversified portfolio and allowing us to acquire interests in properties thatwe would be unable to acquire using our own capital resources, there aresignificant tax and securities disclosure risks associated with the relatedofferings of co-tenancy interests to 1031 Participants.  Changes in tax laws may negatively impact thetax benefits of like-kind exchanges or cause these transactions not to achievetheir intended value.  In certain Section1031 TIC Transactions it is anticipated that we will receive fees in connectionwith our provision of accommodation in support of the transaction and, as such,even though we do not sponsor these Section 1031 TIC Transactions, we may benamed in or otherwise required to defend against any lawsuits brought by 1031Participants because of our affiliation with sponsors of thesetransactions.  Furthermore, in the eventthat the Internal Revenue Service conducts an audit of the purchasers ofco-tenancy interests and successfully challenges the qualification of thetransaction as a like-kind exchange, purchasers of co-tenancy interests mayfile a lawsuit against the entity offering the co-tenancy interests, itssponsors, or us.  We may be involved inone or more such offerings and could therefore be named in or otherwiserequired to defend against lawsuits brought by 1031 Participants.  Any amounts we are required to expenddefending claims will reduce the amount of funds available for investment by usin properties or other investments and may reduce the amount of funds availablefor distribution to our stockholders.  Inaddition, disclosure of any litigation may adversely affect our ability toraise additional capital in the future through the sale of stock.

***We may have increased business and litigationrisks as a result of any direct sales by us of TIC interests in Section 1031TIC transactions.***

Wemay directly sell TIC interests in our properties to 1031 Participants, whichmay expose us to significant tax and securities disclosure risks.  Changes in tax laws may negatively impact thetax benefits of like-kind exchanges or result in these transactions notachieving their intended value. Furthermore, the Internal Revenue Service may determine that the sale ofTIC interests is a “prohibited transaction” under the Code, which would causeall of the gain we realize from the sale to be taxed with none of the gainavailable for distribution to our stockholders. The Internal Revenue Service also may audit the purchasers of TICinterests and successfully challenge the qualification of the transaction as alike-kind exchange.  We also may be namedin or otherwise required to defend against any lawsuits brought by stockholdersor 1031 Participants in connection with Section 1031 TIC Transactions in whichwe directly sell TIC interests.  Inaddition, as a seller of TIC interests, we will be required to comply withapplicable federal and state securities laws and to provide fair and adequatedisclosure to 1031 Participants relating to the respective Section 1031 TICTransaction.  Any alleged failure by usto comply with these requirements could expose us to risks of litigation.  Any amounts we are required to expenddefending claims brought against us will reduce the amount of funds availablefor investment by us in properties or other investments and may reduce theamount of funds available for distribution to our stockholders.  In addition, disclosure of any suchlitigation may adversely affect our ability to raise additional capital in thefuture through the sale of stock.

***We are subject to certain risks in connectionwith our arrangements with Behringer Harvard Exchange Entities.***

Weanticipate that, in connection with most of our property acquisitions, wecurrently or subsequently may become TIC owners of properties in whichBehringer Harvard Exchange Entities subsequently sell TIC interests to 1031Participants.  At the closing of certainproperties acquired by a Behringer Harvard Exchange Entity, we may enter into acontractual arrangement with such entity providing that (1) in the event thatthe Behringer Harvard Exchange Entity is unable to sell all of the co-tenancyinterests in that property to 1031 Participants, we will purchase, at theBehringer Harvard Exchange Entity’s cost, any co-tenancy interests remainingunsold; (2) we will guarantee certain bridge loans associated with the purchaseof the property in which TIC interests are to be sold; or (3) we will providesecurity for the guarantee of such bridge loans.  Accordingly, in the event that a BehringerHarvard Exchange Entity is unable to sell all co-tenancy interests in one ormore of its properties, we may be required to purchase the unsold co-tenancyinterests in such property or properties. In any event, as an owner of TIC interests in properties, we will besubject to the risks that ownership of co-tenancy interests with unrelatedthird parties entails.  Furthermore, tothe extent we guarantee certain bridge loans associated with TIC transactions,we, as well as the co-tenants, will become liable for the lender’s customarycarve-outs under the applicable mortgage loan financing documents, includingbut not limited to fraud or intentional misrepresentation by a co-tenant or aguarantor of the loan, physical waste of the property, misapplication ormisappropriation of insurance proceeds, and failure to pay taxes.

***We have acquired a substantial portion ofproperties in the form of TIC or other co-tenancy arrangements and we expect toenter into more such arrangements in the future.  Therefore, we are subject to risks associatedwith co-tenancy arrangements that otherwise may not be present innon-co-tenancy real estate investments.***

Wehave entered into TIC or other co-tenancy arrangements to acquire a substantialportion of our properties.  Whetheracquired as a planned co-tenancy or as the result of an accommodation or otherarrangement disclosed above,

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ownership of co-tenancyinterests involves risks generally not otherwise present with an investment inreal estate such as the following:

·                  the risk that aco-tenant may at any time have economic or business interests or goals that areor that become inconsistent with our business interests or goals;

·                  the risk that aco-tenant may be in a position to take action contrary to our instructions orrequests or contrary to our policies or objectives;

·                  the possibilitythat an individual co-tenant might become insolvent or bankrupt, or otherwisedefault under the applicable mortgage loan financing documents, which mayconstitute an event of default under all of the applicable mortgage loanfinancing documents or allow the bankruptcy court to reject thetenants-in-common agreement or management agreement entered into by theco-tenants owning interests in the property;

·                  the possibilitythat a co-tenant might not have adequate liquid assets to make cash advancesthat may be required in order to fund operations, maintenance and otherexpenses related to the property, which could result in the loss of a currentor prospective tenants and may otherwise adversely affect the operation andmaintenance of the property, and could cause a default under the mortgage loanfinancing documents applicable to the property and may result in late charges,penalties and interest, and may lead to the exercise of foreclosure and otherremedies by the lender;

·                  the risk that aco-tenant could breach agreements related to the property, which may cause adefault under, or result in personal liability for, the applicable mortgageloan financing documents, violate applicable securities law and otherwiseadversely affect the property and the co-tenancy arrangement; or

·                  the risk that adefault by any co-tenant would constitute a default under the applicablemortgage loan financing documents that could result in a foreclosure and theloss of all or a substantial portion of the investment made by the co-tenants.

***Actions by a co-tenant might have the resultof subjecting the property to liabilities in excess of those contemplated andmay have the effect of reducing your returns.***

Inthe event that our interests become adverse to those of the other co-tenants ina Section 1031 TIC Transaction, in certain cases we may not have thecontractual right to purchase the co-tenancy interests from the otherco-tenants.  Even if we are given theopportunity to purchase the co-tenancy interests in the future, we cannotguarantee that we will have sufficient funds available at the time to purchasethe co-tenancy interests from the 1031 Participants.

Inaddition, we may desire to sell our co-tenancy interests in a given property ata time when the other co-tenants do not desire to sell their interests.  Therefore, we may not be able to sell ourinterest in a property at the time we would like to sell.  Finally, we believe that it will be much moredifficult to find a willing buyer for our co-tenancy interests in a propertythan it would be to find a buyer for a property we owned outright.

***Our participation in Section 1031 TICTransactions may limit our ability to borrow funds in the future, which couldadversely affect the value of our investments.***

Wemay enter into Section 1031 TIC Transaction agreements that contain obligationsto acquire unsold co-tenancy interests in properties.  These agreements may be viewed byinstitutional lenders as a contingent liability against our cash or otherassets, which may limit our ability to borrow funds in the future.  Furthermore, these obligations may be viewedby our lenders in a fashion that limits our ability to borrow funds based onregulatory restrictions on lenders limiting the amount of loans they can maketo any one borrower.

**FederalIncome Tax Risks**

***Failure to qualify as a REIT would adverselyaffect our operations and our ability to make distributions.***

Weelected to be taxed as a REIT commencing with our 2004 tax year.  As a result, for the 2003 tax year, we weretaxed as a corporation.  However, we werenot required to pay any income taxes because we did not have any taxable incomefor the period.  In order for us toremain qualified as a REIT, we must satisfy certain requirements set forth inthe Code and Treasury Regulations and various factual matters and circumstancesthat are not entirely within our control. We intend to structure our activities in a manner designed to satisfyall of these requirements.  However, ifcertain of our operations were to be recharacterized by the Internal RevenueService, such recharacterization could jeopardize our ability to satisfy all ofthe requirements for qualification as a REIT and may affect our ability toqualify, or continue to qualify as a REIT. In addition, new legislation, new regulations, administrativeinterpretations or court decisions could significantly change the tax laws withrespect to qualifying as a REIT or the federal income tax consequences ofqualifying.

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Ourqualification as a REIT depends upon our ability to meet, through investments,actual operating results, distributions and satisfaction of specificstockholder rules, the various tests imposed by the Code.  We cannot assure you that we will satisfy theREIT requirements in the future.

Ifwe fail to qualify as a REIT for any taxable year, we will be subject tofederal income tax on our taxable income at corporate rates.  In addition, we would generally bedisqualified from treatment as a REIT for the four taxable years following theyear of losing our REIT status.  Losingour REIT status would reduce our net earnings available for investment ordistribution to stockholders because of the additional tax liability.  In addition, distributions to stockholderswould no longer qualify for the distributions paid deduction, and we would nolonger be required to make distributions. If this occurs, we might be required to borrow funds or liquidate someinvestments in order to pay the applicable tax.

Qualificationas a REIT is subject to the satisfaction of tax requirements and variousfactual matters and circumstances that are not entirely within ourcontrol.  New legislation, regulations,administrative interpretations or court decisions could change the tax lawswith respect to qualification as a REIT or the federal income tax consequencesof being a REIT.  Our failure to qualifyas a REIT would adversely affect the return on your investment.

***Failure to maintain an acquired entity’s REITstatus may cause us to lose our REIT status.***

Wemay, from time to time, acquire entities that own real estate including otherentities that have elected to be taxed as a REIT.  In this latter case, if we decide to maintainthe entity’s status as a REIT at the time we acquire it, but later fail tomaintain or operate the entity in accordance with the various rules governingREIT status, the entity would likely lose its status as a REIT.  Failure to maintain the acquired entity’sstatus as a REIT would also likely cause us to lose our status as a REIT, allof which could have a material adverse effect on our results of operation,financial condition and the return on your investment.

***Certain fees paid to us may affect our REITstatus.***

Incomereceived in the nature of rental subsidies or rent guarantees, in some cases,may not qualify as rental income and could be characterized by the InternalRevenue Service as non-qualifying income for purposes of satisfying the “incometests” required for REIT qualification. In addition, in connection with our Section 1031 TIC Transactions, we orone of our affiliates typically enters into a number of contractualarrangements with Behringer Harvard Exchange Entities that guarantee oreffectively guarantee the sale of the co-tenancy interests being offered by anyBehringer Harvard Exchange Entity.  Inconsideration for entering into these agreements, we are paid fees that couldbe characterized by the Internal Revenue Service as non-qualifying income.  If any of our income were, in fact, treatedas non-qualifying, and if the aggregate of such non-qualifying income in anytaxable year ever exceeded 5% of our gross revenues for such year, we couldlose our REIT status for that taxable year and the four ensuing taxableyears.  We use reasonable efforts tostructure our activities in a manner intended to satisfy the requirements forour continued qualification as a REIT. Our failure to qualify as a REIT would adversely affect the return onyour investment.

***Recharacterization of the Section 1031 TICTransactions may result in taxation of income from a prohibited transaction,which would diminish distributions to our stockholders.***

Inthe event that the Internal Revenue Service were to recharacterize the Section1031 TIC Transactions such that we, rather than the Behringer Harvard ExchangeEntity, are treated as the bona fide owner, for tax purposes, of propertiesacquired and resold by the Behringer Harvard Exchange Entity in connection withthe Section 1031 TIC Transactions, fees paid to us by the Behringer HarvardExchange Entity would be deemed income from a prohibited transaction, in whichevent the fee income paid to us in connection with the Section 1031 TICTransactions would be subject to a 100% tax. If this occurs, our ability to make distributions to our stockholderswill be adversely affected.

***You may have tax liability on distributionsyou elect to reinvest in our common stock.***

Ifyou elect to have your distributions reinvested in our common stock pursuant toour distribution reinvestment plan, you will be deemed to have received, andfor income tax purposes will be taxed on, the amount reinvested.  As a result, unless you are a tax-exemptentity, you may have to use funds from other sources to pay your tax liabilityon the value of the common stock received.

***If our operating partnership fails tomaintain its status as a partnership, its income may be subject to tax, whichwould reduce our cash available for distribution to our stockholders.***

Weintend to maintain the status of the operating partnership as a partnership forfederal income tax purposes.  However, ifthe Internal Revenue Service were to successfully challenge the status of theoperating partnership as a partnership, it would be taxable as a corporation,reducing the amount of distributions that the operating partnership could maketo us.  This also would result in ourlosing REIT status, and becoming subject to a corporate level tax on our ownincome.  This would substantially reduceour cash available to make distributions and the return on yourinvestment.  In addition, if any of thepartnerships or limited liability companies through which the operatingpartnership owns its properties, in whole or in part, loses itscharacterization as a partnership for federal income tax purposes, it would be

29

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subject to tax as acorporation, thereby reducing distributions to the operating partnership.  Such a recharacterization of an underlyingproperty owner also could threaten our ability to maintain REIT status.

***In certain circumstances, we may be subjectto federal and state taxes on income as a REIT, which would reduce our cashavailable for distribution to our stockholders.***

Evenif we maintain our status as a REIT, we may become subject to federal incometaxes and related state taxes.  Forexample, if we have net income from a “prohibited transaction,” would besubject to a 100% tax.  We may not beable to make sufficient distributions to avoid excise taxes applicable toREITs.  We also may decide to retainincome we earn from the sale or other disposition of our property and payincome tax directly on the income.  Inthat event, our stockholders would be treated as if they earned that income andpaid the tax on it directly.  However,stockholders that are tax-exempt, such as charities or qualified pension plans,would have no benefit from their deemed payment of the tax liability.  We also may be subject to state and localtaxes on our income or property, either directly or at the level of theoperating partnership or at the level of the other companies through which weindirectly own our assets.  Any federalor state taxes paid by us will reduce our cash available for distribution toour stockholders.

***Non-U.S. income or other taxes, and arequirement to withhold any non-U.S. taxes, may apply, and, if so, the amountof net cash from operations payable to you will be reduced.***

Fromtime to time, we may acquire real property located outside the U.S. and mayinvest in stock or other securities of entities owning real property locatedoutside the U.S.  As a result, we may besubject to foreign (i.e., non-U.S.) income taxes, stamp taxes, real propertyconveyance taxes, withholding taxes, and similar foreign taxes in connectionwith U.S. ownership of foreign real property or foreign securities.  The country in which the real property islocated may impose these taxes regardless of whether we are profitable and inaddition to any U.S. income tax or other U.S. taxes imposed on profits from ourinvestments in foreign real property or foreign securities.  As a result, you may be subject to taxesimposed by the foreign country, plus any U.S. federal income taxes imposed ontaxable income from any foreign real property or foreign securities.  If a foreign country imposes income taxes onprofits from our investments in foreign real property or foreign securities, youmay be eligible to claim a tax credit in the U.S. to offset the income taxespaid to the foreign country; however, there is no guarantee that tax creditswill be available or that they will fully eliminate the double taxation of agiven real property or other stock or security. The imposition of any foreign country taxes in connection with ourownership and operation of foreign real property or our investment insecurities of foreign entities will reduce the amounts distributable toyou.  Similarly, the imposition ofwithholding taxes by a foreign country will reduce the amounts distributable toyou.  We expect the organizational costsassociated with non-U.S. investments, including costs to structure theinvestments so as to minimize the impact of foreign taxes, will be higher thanthose associated with U.S. investments. Moreover, if we invest in foreign real property or in securities of anentity owning foreign real property, we may be required to file income tax orother information returns in the foreign jurisdiction to report any incomeattributable to ownership of real properties or other securities in the othercountry.  Any organizational costs andreporting requirements will increase our administrative expenses and reduce theamount of cash available for distribution to you.  You are urged to consult with your own taxadvisors with respect to the impact of applicable non-U.S. taxes and taxwithholding requirements on an investment in our common stock.

***Legislative or regulatory action couldadversely affect investors.***

Inrecent years, numerous legislative, judicial and administrative changes havebeen made in the federal income tax laws applicable to investments similar toan investment in shares of our common stock. Additional changes to the tax laws are likely to continue to occur, andwe cannot assure you that any of these changes will not adversely affect thetaxation of a stockholder.  Any suchchanges could have an adverse effect on an investment in shares or on themarket value or the resale potential of our properties.  You are urged to consult with your own taxadvisor with respect to the impact of recent legislation on your investment inshares and the status of legislative, regulatory or administrative developmentsand proposals and their potential effect on an investment in shares.

Congresspassed major federal tax legislation in 2003. One of the changes reduced the tax rate on dividends paid bycorporations to individuals to a maximum of 15%.  REIT distributions generally do not qualify forthis reduced rate.  The tax changes didnot, however, reduce the corporate tax rates. Therefore, the maximum corporate tax rate of 35% has not been affected.  Even with the reduction of the rate ondividends received by individuals, the combined maximum corporate federal taxrate is 44.75% and with the effect of state income taxes can exceed 50%.  As a REIT, we generally would not be subjectto federal or state corporate income taxes on that portion of our ordinaryincome or capital gain that we distribute currently to our stockholders.

AlthoughREITs continue to receive substantially better tax treatment than entitiestaxed as corporations, it is possible that future legislation would cause aREIT to be a less advantageous tax status for companies that invest in realestate, and it could become more advantageous for such companies to elect to betaxed for federal income tax purposes as a corporation.  As a result, our charter provides our boardof directors with the ability, under certain circumstances, to revoke orotherwise terminate our REIT election and cause us to be taxed as acorporation, without the vote of our stockholders.

30

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Our board of directors has fiduciary duties to us andto all investors and could only cause such changes in our tax treatment if itdetermines in good faith that such changes are in the best interest of ourstockholders.

Wehave acquired several of our properties by means of 1031 TIC Transactions.  Changes in tax laws may result in Section1031 TIC Transactions being no longer available, which may adversely affectSection 1031 TIC Transactions or cause such transactions not to achieve theirintended value.  Any changes in tax lawsthat result in Section 1031 Transactions being no longer available may have anegative impact on our investment strategy.

***Equity participation in mortgage, bridge ormezzanine loans may result in taxable income and gains from these propertieswhich could adversely impact our REIT status.***

Ifwe participate under a mortgage loan in any appreciation of the propertiessecuring the mortgage loan or its cash flow and the Internal Revenue Servicecharacterizes this participation as “equity,” we might have to recognizeincome, gains and other items from the property.  This could affect our ability to continue toqualify as a REIT.

**Item 1B.         Unresolved Staff Comments.**

None.

**Item 2.            Properties.**

****General****

As of December 31,2006, we owned interests in 36 office properties located 16 states and theDistrict of Columbia.  All of theseproperties consist of developed institutional quality office buildings withoffice space that is currently leased to tenants.  In the aggregate, these properties representapproximately 12.3 million rentable square feet.  As of December 31, 2006, the properties inwhich we own an interest were approximately 94% leased on a combined basis.

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The following tablepresents certain additional information about our wholly-owned properties atDecember 31, 2006:
| ** **             | ** ** | ** **        | ** ** | ** **        | ** ** | **Approximate**         | ** ** | ** **             | ** ** | ** **              | ** ** | ** **        | ** ** |
|------------------------|------------|-------------------|------------|-------------------|------------|-------------------------|------------|------------------------|------------|-------------------------|------------|-------------------|------------|
| ** **             | ** ** | ** **        | ** ** | **Date**          | ** ** | **Rentable**            | ** ** | ** **             | ** ** | **Approximate**         | ** ** | **Approximate**   | ** ** |
| **Property Name** | ** ** | **Location**      | ** ** | **acquired**      | ** ** | **Square Footage** | ** ** | **Encumbrances**       | ** ** | **Purchase Price** | ** ** | **% leased** | ** ** |
| ** **             | ** ** | ** **        | ** ** | ** **        | ** ** | ** **              | ** ** | **(in millions)** | ** ** | **(in millions)**  | ** ** | ** **        | ** ** |
| Cyprus Building        |       | Englewood,  CO    |       | 12/17/04          |       | 153,000                 |       | $                      | —     |                    | $          | 20.6              |       | 100 | % |
| Ashford  Perimeter     |       | Atlanta,  GA      |       | 01/06/05          |       | 288,000                 |       | 35.4                   |       | 54.0                    |       | 75                | %          |
| Utah Building          |       | El  Segundo, CA   |       | 04/21/05          |       | 150,000                 |       | 20.0                   |       | 29.9                    |       | 78                | %          |
| Lawson Commons         |       | St.  Paul, MN     |       | 06/10/05          |       | 436,000                 |       | 58.3                   |       | 86.6                    |       | 99                | %          |
| Downtown Plaza         |       | Long  Beach, CA   |       | 06/14/05          |       | 100,000                 |       | 12.6                   |       | 19.7                    |       | 100               | %          |
| Gateway 12             |       | Diamond  Bar, CA  |       | 07/20/05          |       | 41,000                  |       | 5.9                    |       | 9.0                     |       | 100               | %          |
| Gateway 22             |       | Diamond  Bar, CA  |       | 07/20/05          |       | 55,000                  |       | 9.7                    |       | 13.6                    |       | 100               | %          |
| Gateway 23             |       | Diamond  Bar, CA  |       | 07/20/05          |       | 72,000                  |       | 13.0                   |       | 18.5                    |       | 100               | %          |
| Southwest Center       |       | Tigard,  OR       |       | 07/20/05          |       | 88,000                  |       | 15.3                   |       | 22.3                    |       | 98                | %          |
| Waterview              |       | Richardson,  TX   |       | 07/20/05          |       | 230,000                 |       | 26.8                   |       | 39.9                    |       | 100               | %          |
| Buena Vista  Plaza     |       | Burbank,  CA      |       | 07/28/05          |       | 115,000                 |       | 22.0                   |       | 41.7                    |       | 100               | %          |
| One Financial  Plaza   |       | Minneapolis,  MN  |       | 08/02/05          |       | 394,000                 |       | 43.0                   |       | 64.2                    |       | 89                | %          |
| Riverview Tower        |       | Knoxville,  TN    |       | 10/05/05          |       | 334,000                 |       | 30.3                   |       | 42.3                    |       | 96                | %          |
| G Street Property      |       | Washington,  D.C. |       | 11/15/05          |       | 307,000                 |       | 100.0                  |       | 145.1                   |       | 84                | %          |
| Woodcrest Center       |       | Cherry  Hill, NJ  |       | 01/11/06          |       | 333,000                 |       | 50.4                   |       | 80.5                    |       | 99                | %          |
| Burnett Plaza          |       | Ft  Worth, TX     |       | 02/10/06          |       | 1,025,000               |       | 114.2                  |       | 177.5                   |       | 98                | %          |
| 10777 Clay Road        |       | Houston,  TX      |       | 03/14/06          |       | 227,000                 |       | 16.3                   |       | 26.3                    |       | 100               | %          |
| Paces West             |       | Atlanta,  GA      |       | 04/19/06          |       | 646,000                 |       | 84.0                   |       | 131.3                   |       | 100               | %          |
| Riverside Plaza        |       | Chicago,  IL      |       | 06/02/06          |       | 1,184,000               |       | 202.0                  |       | 301.5                   |       | 92                | %          |
| The Terrace            |       | Austin,  TX       |       | 06/21/06          |       | 619,000                 |       | 131.0                  |       | 172.0                   |       | 96                | %          |
| 600/619  Alexander     |       | Princeton,  NJ    |       | 06/28/06          |       | 97,000                  |       | 16.5                   |       | 23.2                    |       | 94                | %          |
| Grandview              |       | Birmingham,  AL   |       | 10/20/06          |       | 149,000                 |       | 17.0                   |       | 24.2                    |       | 92                | %          |
| Bank of America  Plaza |       | Charlotte,  NC    |       | 10/26/06          |       | 887,000                 |       | 150.0                  |       | 205.8                   |       | 99                | %          |
| Three Parkway          |       | Philadelphia,  PA |       | 10/30/06          |       | 561,000                 |       | 67.1                   |       | 94.8                    |       | 90                | %          |
| 4440 El Camino  Real   |       | Los  Altos, CA    |       | 11/02/06          |       | 97,000                  |       | 27.7                   | (1)        | 49.1                    |       | 100               | %          |
| Fifth Third  Center    |       | Cleveland,  OH    |       | 11/16/06          |       | 508,000                 |       | 49.3                   |       | 65.3                    |       | 88                | %          |
| Resurgens Plaza        |       | Atlanta,  GA      |       | 11/30/06          |       | 400,000                 |       | 82.0                   |       | 118.7                   |       | 94                | %          |
| 5 & 15  Wayside    |       | Burlington,  MA   |       | 12/08/06          |       | 270,000                 |       | —                 |       | 84.5                    |       | 100               | %          |
| Eldridge Place         |       | Houston,  TX      |       | 12/13/06          |       | 519,000                 |       | 75.0                   |       | 108.1                   |       | 93                | %          |
| Pratt Building  (2)    |       | Baltimore,  MD    |       | 12/17/04-12/31/06 |       | 368,000                 |       | 37.0                   |       | 64.1                    |       | 88                | %          |
|                   |       |              |       |              |       | 10,653,000              |       | $                      | 1,511.8    |                    | $          | 2,334.3           |       |   |   |

 

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(1)          Excludes unamortizedpremium of approximately $2.4 million.

(2)          We acquired a 50.68% TICinterest in the Pratt Building in December 2004.  During the fourth quarter of 2006, weacquired the remaining interests in the property, and as of December 31, 2006,we wholly own the Pratt Building.

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The following tablepresents certain additional information about the properties in which we ownTIC interests at December 31, 2006:
| ** **             | ** ** | ** **        | ** ** | ** **   | ** ** | **Approximate**         | ** ** | ** **                | ** ** | **Carrying**           | ** ** | ** **        | ** ** | **Our**               | ** ** |
|------------------------|------------|-------------------|------------|--------------|------------|-------------------------|------------|---------------------------|------------|------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **             | ** ** | ** **        | ** ** | **Date**     | ** ** | **Rentable**            | ** ** | ** **                | ** ** | **Value of**      | ** ** | **Approximate**   | ** ** | **TIC**               | ** ** |
| **Property Name** | ** ** | **Location**      | ** ** | **acquired** | ** ** | **Square Footage** | ** ** | **Encumbrances (1)** | ** ** | **Investment**         | ** ** | **% leased** | ** ** | **Interest (2)** | ** ** |
|                   |       |              |       |         |       |                    |       | **(in millions)**    | ** ** | **(in millions)** |       |              |       |                  |       |
| Minnesota Center       |       | Bloomington,  MN  |       | 10/15/03     |       | 276,000                 |       | $                         | 26.9       |                   | $          | 42.4              |       | 94                    | %          | 93.07 | % |
| Enclave on the  Lake   |       | Houston,  TX      |       | 04/12/04     |       | 171,000                 |       | 7.0                       |       | 9.2                    |       | 100               | %          | 36.31                 | %          |
| St. Louis Place        |       | St.  Louis, MO    |       | 06/30/04     |       | 337,000                 |       | 6.9                       |       | 11.0                   |       | 88                | %          | 35.71                 | %          |
| Colorado  Building     |       | Washington,  D.C. |       | 08/10/04     |       | 122,000                 |       | 22.8                      |       | 37.8                   |       | 99                | %          | 81.49                 | %          |
| Travis Tower           |       | Houston,  TX      |       | 10/01/04     |       | 507,000                 |       | 22.2                      |       | 32.5                   |       | 94                | %          | 60.43                 | %          |
| Alamo Plaza            |       | Denver,  CO       |       | 02/24/05     |       | 191,000                 |       | 9.6                       |       | 12.7                   |       | 96                | %          | 30.58                 | %          |
|                   |       |              |       |         |       | 1,604,000               |       | $                         | 95.4       |                   | $          | 145.6             |       |                  |       |   |   |

 

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(1)          Each of the TICinvestors, including us, is a borrower under these mortgage agreements.  This amount represents our mortgage payablefor our TIC interest only.

(2)          Our TIC interest inMinnesota Center increased from approximately 14.47% at December 31, 2005 to93.07% at December 31, 2006.  Our TICinterest in the Colorado Building increased from approximately 79.48% atDecember 31, 2005 to 81.49% at December 31, 2006.

The following informationgenerally applies to all of our properties:

·                  we believe all of our properties areadequately covered by insurance and suitable for their intended purposes;

·                  we have no plans for any materialrenovations, improvements or development of our properties, except inaccordance with planned budgets;

·                  our properties are located in markets wherewe are subject to competition in attracting new tenants and retaining currenttenants; and

·                  depreciation is provided on a straight-linebasis over the estimated useful lives of the buildings.

Pursuantto the SEC’s rules, for each subsequent property acquisition for which we arerequired to file a current report, we will file a Form 8-K containinginformation regarding the property acquired, the financial statements relatedthereto, if necessary, and other pertinent information related to suchproperty.

**Future Lease Payments Table**

Thefollowing table presents future minimum base rental payments due to us over thenext ten years at our wholly-owned properties as of December 31, 2006 (inthousands):

| 2007 |   | $       | 181,626 |   |
|------|--------|---------|---------|--------|
| 2008 |   | 176,649 |    |
| 2009 |   | 163,212 |    |
| 2010 |   | 146,920 |    |
| 2011 |   | 114,222 |    |
| 2012 |   | 96,844  |    |
| 2013 |   | 79,232  |    |
| 2014 |   | 63,526  |    |
| 2015 |   | 45,493  |    |
| 2016 |   | 33,510  |    |

**Item 3.            Legal Proceedings.**

We are not party to, andnone of our properties are subject to, any material pending legal proceedings.

**Item 4.            Submission of Matters to a Vote ofSecurity Holders.**

No matters were submittedto a vote of security holders during the fourth quarter of 2006.

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**PART II**

**Item 5.            Marketfor Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities.**

**Market Information**

There is no establishedpublic trading market for our common stock. Therefore, there is a risk that a stockholder may not be able to sellour stock at a time or price acceptable to the stockholder.  Pursuant to the Current Offering, we areselling shares of our common stock to the public at a price of $10.00 per shareand at $9.50 per share pursuant to our distribution reinvestment plan.  Unless and until our shares are listed on anational securities exchange, it is not expected that a public market for theshares will develop.

In order for NASD membersand their associated persons to participate in the offering and sale of sharesof common stock pursuant to our Current Offering, we are required pursuant toNASD Rule 2710(f)(2)(M) to disclose in each annual report distributed tostockholders a per share estimated value of the shares, the method by which itwas developed and the date of the data used to develop the estimatedvalue.  In addition, we prepare annualstatements of estimated share values to assist fiduciaries of retirement planssubject to the annual reporting requirements of ERISA in the preparation oftheir reports relating to an investment in our shares.  During our Offerings and for the first threefull fiscal years following the termination of the last public equity offeringof shares of our common stock the value of the shares is deemed the offeringprice of $10.00 per share (without regard to purchase price discounts forcertain categories of purchasers), as adjusted for any special distribution ofnet sales proceeds.  There is no publictrading market for the shares at this time, and there can be no assurance thatstockholders would receive $10.00 per share if such a market did exist and theysold their shares or that they will be able to receive such amount for theirshares in the future.  Nor does thisdeemed value reflect the distributions that stockholders would be entitled toreceive if our properties were sold and the sale proceeds were distributed uponliquidation of our company.  Such adistribution upon liquidation may be less than $10.00 per share primarily dueto the fact that the funds initially available for investment in propertieswere reduced from the gross offering proceeds in order to pay sellingcommissions and dealer manager fees, organization and offering expenses, andacquisitions and advisory fees.

We view our offeringstage as complete upon the termination of our first public equity offering thatis not followed by another public equity offering.  For purposes of this definition, we do notconsider a “public equity offering” to include offerings on behalf of sellingstockholders or offerings related to a distribution reinvestment plan, employeebenefit plan or the redemption of interests in our operating partnership,Behringer Harvard OP.

**Holders**

As of March 15, 2007, wehad approximately 138,000,000 shares of common stock outstanding held by atotal of approximately 33,600 stockholders.

**Distributions**

We made an election to qualify as a REIT for federal income taxpurposes commencing with our taxable year ending December 31, 2004.  As a REIT, we are required to distribute atleast 90% of our REIT taxable income to our stockholders annually.  Our board declares cash distributions on aquarterly basis, portions of which are paid on a monthly basis.  Monthly cash distributions are paid based ondaily record and distribution declaration dates so our investors will beentitled to be paid distributions beginning on the day that they purchaseshares.  In 2006 and 2005, approximately$0.3 million and $0.1 million of distributions, respectively, were declared andpaid related to Behringer OP limited partnership units which are recorded as a reductionto minority interest.  All otherdistributions are recorded to stockholders equity.  Until proceeds from our Offerings areinvested and generating operating cash flow sufficient to make distributions tostockholders, we have and may continue to pay all or a portion of ourdistributions from the proceeds of the Offerings or from borrowings inanticipation of future cash flow.  Of theamounts distributed by us in 2006, 76.95% represented a return of capital and23.05% were distributions from the taxable earnings of real estateoperations.  In fiscal years 2006 and2005, we made cash distributions aggregating approximately $60.1 million and$22.4 million, respectively, to our stockholders.  Of these amounts, approximately $13.9 millionand $6.3 million, in fiscal years 2006 and 2005, respectively, was paid usingcash generated from our operations.  Theremaining amounts were paid from sources other than operating cash flow, suchas offering proceeds, cash advanced to us by, or reimbursements for expensesfrom, our advisor and proceeds from loans including those secured by ourassets.  The following table shows thedistributions declared and paid for the fiscal years ended December 31, 2006and 2005 (in thousands):

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|                | ** ** | **Distributions** | ** ** | **Distributions** | ** ** |
|----------------|------------|-------------------|------------|-------------------|------------|
| **2006**       | ** ** | **Declared**      | ** ** | **Paid**          | ** ** |
| Fourth Quarter |       | $ 19,726     |       | $ 18,328     |       |
| Third Quarter  |       | 16,690            |       | 15,939            |       |
| Second Quarter |       | 14,339            |       | 13,873            |       |
| First Quarter  |       | 12,461            |       | 11,959            |       |
|           |       | $                 | 63,216     |              | $          | 60,099 |   |
|                |            |                   |            |                   |            |  |  |

 
| 2005           | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------|------------|------------|------------|------------|------------|
| Fourth Quarter |       | $          | 11,382     |       | $          | 10,160 |   |
| Third Quarter  |       | 7,210      |       | 6,104      |       |
| Second Quarter |       | 4,269      |       | 3,653      |       |
| First Quarter  |       | 2,730      |       | 2,436      |       |
|           |       | $          | 25,591     |       | $          | 22,353 |   |

 

**RecentSales of Unregistered Securities**

We sold 1,000 shares ofour convertible stock to Behringer Advisors for $1,000 on March 22, 2006.  Pursuant to its terms, the convertible stockis convertible into shares of our common stock with a value equal to 15% of theamount by which (1) our enterprise value, including the total amount ofdistributions paid to our shareholders, exceeds (2) the sum of the aggregatecapital invested by stockholders plus a 9% cumulative, non-compounded, annualreturn on such capital.  These shareswere not registered under the Securities Act of 1933, as amended, and wereissued in reliance on Rule 4(2) of the Securities Act.

**Securities Authorized for Issuance under EquityCompensation Plans**

The following tableprovides information regarding our equity compensation plans as of December 31,2006:
| Plan Category                                          | ** ** | **Number of securities to be  issued upon exercise of  outstanding options,  warrants and rights** | ** ** | **Weighted-average  exercise price of  outstanding options,  warrants and rights** | ** ** | **Number of securities remaining  available for future issuance  under equity compensation  plans** | ** ** |
|-------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity  compensation plans approved by security holders     |       | 40,500                                                                                                                                               |       | $                                                                                                           | 9.16       |                                                                                                                                        | 11,959,500 | * |
| Equity  compensation plans not approved by security holders |       | N/A                                                                                                                                                  |       | N/A                                                                                                         |       | N/A                                                                                                                                         |       |
| Total                                                       |       | 40,500                                                                                                                                               |       | $                                                                                                           | 9.16       |                                                                                                                                        | 11,959,500 | * |

 

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*  All shares authorized forissuance pursuant to options not yet granted under our 2005 Incentive AwardPlan.

**Share Redemption Program**

Our board of directorshas authorized a share redemption program for investors who hold their sharesfor more than one year.  The purchaseprices for redeemed shares are set forth in the prospectus for our CurrentOffering of common stock, as supplemented from time to time.  Our board of directors reserves the right inits sole discretion at any time, and from time to time, to (1) waive theone-year holding period in the event of the death, disability or need forlong-term care, other exigent circumstances such as bankruptcy, a mandatorydistribution requirement under a stockholder’s IRA or with respect to sharespurchased under or through our DRIP or automatic purchase plan, (2) reject anyrequest for redemption, (3) change the purchase price for redemptions, or (4)terminate, suspend or amend the share redemption program.  Under the terms of the plan, we will notredeem in excess of 5% of the weighted average number of shares outstandingduring the twelve-month period immediately prior to the date ofredemption.  In addition, our board ofdirectors will determine whether we have sufficient cash from operations torepurchase shares, and such purchases will generally be limited to

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proceeds of our DRIP plus1% of operating cash flow for the previous fiscal year (to the extentpositive).  During the quarter endedDecember 31, 2006, we redeemed shares as follows:  
|               | ** ** | ** **         | ** ** | ** **          | ** ** | ** **                             | ** ** | **Maximum**                        | ** ** |
|---------------|------------|--------------------|------------|---------------------|------------|----------------------------------------|------------|------------------------------------|------------|
| ** **    | ** ** | ** **         | ** ** | ** **          | ** ** | **Total Number of**          | ** ** | **Number of Shares**     | ** ** |
| ** **    | ** ** | **Total**          | ** ** | ** **          | ** ** | **Shares Purchased**              | ** ** | **that May Yet Be** | ** ** |
| ** **    | ** ** | **Number of** | ** ** | **Average**         | ** ** | **as Part of Publicly** | ** ** | **Purchased Under**           | ** ** |
| ** **    | ** ** | **Shares **   | ** ** | **Price Paid** | ** ** | **Announced Plans **         | ** ** | **the Plans or **   | ** ** |
| ** **    | ** ** | **Redeemed**       | ** ** | **per Share**  | ** ** | **or Programs**                   | ** ** | **Programs**                       | ** ** |
| October 2006  |       | —             |       | $                   | —     |                                   | —     |                               | (1         | ) |
| November 2006 |       | 250,319            |       | $                   | 8.75       |                                   | 250,319    |                               | (1         | ) |
| December 2006 |       | —             |       | $                   | —     |                                   | —     |                               | (1         | ) |

 

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(1)          A description of themaximum number of shares that may be purchased under our redemption program isincluded in the narrative preceding this table.

**Item 6.            Selected Financial Data.**

At December 31, 2006, we owned interests in 36 properties; at December31, 2005, we owned interests in 21 properties; and at December 31, 2004, weowned interests in seven properties.  AtDecember 31, 2003, we owned an interest in one property, and we owned noproperties during the period from inception (June 28, 2002) through December31, 2002.  Accordingly, the selectedfinancial data for each fiscal year presented below reflects significantincreases in all categories.  Thefollowing data should be read in conjunction with our audited consolidatedfinancial statements and the notes thereto and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” appearing elsewherein this Annual Report on Form 10-K. The selected financial data presented belowhas been derived from our audited consolidated financial statements (inthousands, except per share amounts).
| **As of December 31,**            | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|--------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
|                                             |       |     |       |     |       |     |       |     |       |     |       |
| Total assets                                     |       | $        | 2,694,972  |     | $          | 900,582  |       | $        | 198,888    |     | $          | 11,685 |   | $ | 197 |   |
|                                             |       |     |       |     |       |     |       |     |       |     |       |
| Long-term debt  obligations                      |       | $        | 1,609,702  |     | $          | 353,555  |       | $        | 82,354     |     | $          | 4,333 |   | $ | — |   |
| Other  liabilities                               |       | 167,756  |       | 26,224   |       | 6,613    |       | 281      |       | —   |       |
| Minority  interest(1)                            |       | 3,072    |       | 3,375    |       | —   |       | —   |       | —   |       |
| Stockholders'  equity                            |       | 914,442  |       | 517,428  |       | 109,921  |       | 7,071    |       | 197      |       |
| Total liabilities and  stockholders’ equity |       | $        | 2,694,972  |     | $          | 900,582  |       | $        | 198,888    |     | $          | 11,685 |   | $ | 197 |   |

 
| ** **                                      | ** ** | ** **                      | ** ** | ** **                      | ** ** | ** **                      | ** ** | ** **                      | ** ** | **From inception**         | ** ** |
|-------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                      | ** ** | ** **                      | ** ** | ** **                      | ** ** | ** **                      | ** ** | ** **                      | ** ** | **(June 28, 2002)**   | ** ** |
| ** **                                      | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** | **through**                     | ** ** |
| ** **                                      | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** | **December 31, 2004** | ** ** | **December 31, 2003** | ** ** | **December 31, 2002** | ** ** |
| Rental revenues                                 |       | $                               | 161,306    |                            | $          | 31,057                          |       | $                               | 130        |                            | $          | — |   | $ | — |   |
|                                            |       |                            |       |                            |       |                            |       |                            |       |                            |       |
| Net loss                                        |       | $                               | (22,432    | )                               | $          | (5,722                          | )          | $                               | (1,539     | )                               | $          | (289 | ) | $ | (3 | ) |
|                                            |       |                            |       |                            |       |                            |       |                            |       |                            |       |
| Basic and  diluted loss per share (2) |       | $                               | (0.25      | )                               | $          | (0.15                           | )          | $                               | (0.26      | )                               | $          | (1.84 | ) | $ | (0.12 | ) |
|                                            |       |                            |       |                            |       |                            |       |                            |       |                            |       |
| Distributions declared  per share (2) |       | $                               | 0.70       |                            | $          | 0.67                            |       | $                               | 0.64       |                            | $          | 0.58 |   | $ | — |   |

 

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(1)           Minority interestconsists of 432,586 units of limited partnership interests in Behringer OP.

(2)                                  Basicand diluted loss per share and distributions declared per share for each periodpresented reflects the effect of the 10% stock dividend issued October 1, 2005.

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**Item 7.****                                   Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

The following discussionand analysis should be read in conjunction with the accompanying consolidatedfinancial statements and the notes thereto.

**Critical Accounting Policies and Estimates**

Management’s discussionand analysis of financial condition and results of operations are based uponour consolidated financial statements, which have been prepared in accordancewith accounting principles generally accepted in the United States of America (“GAAP”.)  The preparation of these financial statementsrequires our management to make estimates and assumptions that affect thereported amounts of assets, liabilities, revenues and expenses, and relateddisclosure of contingent assets and liabilities.  On a regular basis, we evaluate theseestimates, including investment impairment. These estimates are based on management’s historical industry experienceand on various other assumptions that are believed to be reasonable under thecircumstances.  Actual results may differfrom these estimates.

***Principles of Consolidation and Basis of Presentation***

Our consolidatedfinancial statements include our accounts, the accounts of variable interestentities (“VIEs”) in which we are the primary beneficiary and the accounts ofother subsidiaries over which we have control. All inter-company transactions, balances and profits have beeneliminated in consolidation.  Interestsin entities acquired are evaluated for consolidation based on FinancialAccounting Standards Board Interpretation (“FIN”) 46R, which requires theconsolidation of VIEs in which we are deemed to be the primarybeneficiary.  If the interest in theentity is determined to not be a VIE under FIN 46R, then the entity isevaluated for consolidation under the American Institute of Certified PublicAccountants’ (“AICPA”) Statement of Position (“SOP”) 78-9, “Accounting forInvestments in Real Estate Ventures,” as amended by Emerging Issues Task Force(“EITF”) 04-5, “Determining Whether a General Partner, or the General Partnersas a Group, Controls a Limited Partnership or Similar Entity When the LimitedPartners Have Certain Rights.”

There are judgments andestimates involved in determining if an entity in which we have made aninvestment is a VIE and if so, if we are the primary beneficiary.  The entity is evaluated to determine if it isa VIE by, among other things, calculating the percentage of equity being riskedcompared to the total equity of the entity. FIN 46R provides some guidelines as to what the minimum equity at riskshould be, but the percentage can vary depending upon the industry and/or the typeof operations of the entity and it is up to management to determine thatminimum percentage as it relates to our business and the facts surrounding eachof our acquisitions.  In addition, evenif the entity’s equity at risk is a very low percentage, we are required by FIN46R to evaluate the equity at risk compared to the entity’s expected futurelosses to determine if there could still in fact be sufficient equity at theentity.  Determining expected futurelosses involves assumptions of various possibilities of the results of futureoperations of the entity, assigning a probability to each possibility and usinga discount rate to determine the net present value of those future losses.  A change in the judgments, assumptions andestimates outlined above could result in consolidating an entity that shouldnot be consolidated or accounting for an investment on the equity method thatshould in fact be consolidated, the effects of which could be material to ourthe financial statements.

***Real Estate***

Upon the acquisition ofreal estate properties, we allocate the purchase price of those properties tothe tangible assets acquired, consisting of land and buildings, any assumeddebt, identified intangible assets and asset retirement obligations based ontheir relative fair values in accordance with Statement of Financial AccountingStandards (“SFAS”) No. 141, “Business Combinations” and No. 142, “Goodwill andOther Intangible Assets.”  Identifiedintangible assets consist of the fair value of above-market and below-marketleases, in-place leases, in-place tenant improvements and tenantrelationships.  Initial valuations aresubject to change until our information is finalized, which is no later thantwelve months from the acquisition date.

We determine the fair valueof assumed debt by calculating the net present value of the scheduled mortgagepayments using interest rates for debt with similar terms and remainingmaturities that management believes we could obtain.  Any difference between the fair value andstated value of the assumed debt is recorded as a discount or premium andamortized over the remaining life of the loan.

The fair value of thetangible assets acquired, consisting of land and buildings, is determined byvaluing the property as if it were vacant, and the “as-if-vacant” value is thenallocated to land and buildings.  Landvalues are derived from appraisals, and building values are calculated asreplacement cost less depreciation or management’s estimates of the relativefair value of these assets using discounted cash flow analyses or similarmethods.  The value of the building isdepreciated over the estimated useful life of 25 years using the straight-linemethod.

We determine the value ofabove-market and below-market in-place leases for acquired properties based onthe present value (using an interest rate that reflects the risks associatedwith the leases acquired) of the difference between (1) the contractual amountsto be paid pursuant to the in-place leases and (2) management’s estimate of currentmarket lease

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rates for thecorresponding in-place leases, measured over a period equal to the remainingnon-cancelable terms of the respective leases. We record the fair value of above-market and below-market leases asintangible assets or intangible liabilities, respectively, and amortize them asan adjustment to rental income over the remaining non-cancelable terms of therespective leases.

The total value ofidentified real estate intangible assets acquired is further allocated toin-place lease values, in-place tenant improvements, in-place leasingcommissions and tenant relationships based on our evaluation of the specificcharacteristics of each tenant’s lease and our overall relationship with thatrespective tenant.  The aggregate valuefor tenant improvements and leasing commissions is based on estimates of thesecosts incurred at inception of the acquired leases, amortized through the dateof acquisition.  The aggregate value ofin-place leases acquired and tenant relationships is determined by applying afair value model.  The estimates of fairvalue of in-place leases includes an estimate of carrying costs during theexpected lease-up periods for the respective spaces considering current marketconditions.  In estimating the carryingcosts that would have otherwise been incurred had the leases not been in place,we include such items as real estate taxes, insurance and other operatingexpenses as well as lost rental revenue during the expected lease-up periodbased on current market conditions.  Theestimates of the fair value of tenant relationships also include costs toexecute similar leases including leasing commissions, legal and tenantimprovements as well as an estimate of the likelihood of renewal as determinedby management on a tenant-by-tenant basis.

We amortize the value ofin-place leases and in-place tenant improvements to expense over the initialterm of the respective leases.  The valueof tenant relationship intangibles are amortized to expense over the initialterm and any anticipated renewal periods, but in no event does the amortizationperiod for intangible assets exceed the remaining depreciable life of thebuilding.  Should a tenant terminate itslease, the unamortized portion of the in-place lease value and tenant relationshipintangibles would be charged to expense.

In allocating thepurchase price of each of our properties, management makes assumptions and usesvarious estimates, including, but not limited to, the estimated useful lives ofthe assets, the cost of replacing certain assets, discount rates used todetermine present values, market rental rates per square foot and the periodrequired to lease the property up to its occupancy at acquisition if it werevacant.  Many of these estimates areobtained from independent third party appraisals.  However, management is responsible for thesource and use of these estimates.  Achange in these estimates and assumptions could result in the variouscategories of our real estate assets and/or related intangibles being overstatedor understated which could result in an overstatement or understatement ofdepreciation and/or amortization expense. These variances could be material to our financial statements.

***Investments in TIC Interests***

As of December 31, 2006,the “Investments in tenant-in-common interests” on our balance sheet consistsof our undivided TIC interests in various office buildings.  Consolidation of these investments is notrequired as they do not qualify as variable interest entities as defined in FINNo. 46R and do not meet the voting interest requirements required forconsolidation under the AICPA SOP 78-9 “Accounting for Investments in RealEstate Ventures,” as amended by EITF 04-5 “Determining Whether a GeneralPartner, or the General Partners as a Group, Controls a Limited Partnership orSimilar Entity When the Limited Partners have Certain Rights.”

We account for theseinvestments using the equity method of accounting in accordance with SOP78-9.  The equity method of accountingrequires these investments to be initially recorded at cost and subsequentlyincreased (decreased) for our share of net income (loss), includingeliminations for our share of inter-company transactions and reduced whendistributions are received.

***Investment Impairments***

For real estate we whollyown, we monitor events and changes in circumstances indicating that thecarrying amounts of the real estate assets may not be recoverable.  When such events or changes in circumstancesare present, we assess potential impairment by comparing estimated futureundiscounted operating cash flows expected to be generated over the life of theasset and from its eventual disposition, to the carrying amount of theasset.  In the event that the carryingamount exceeds the estimated future undiscounted operating cash flows, werecognize an impairment loss to adjust the carrying amount of the asset toestimated fair value.

For real estate we ownthrough an investment in a joint venture, TIC interest or other similarinvestment structure, at each reporting date we will compare the estimated fairvalue of our investment to the carrying value. An impairment charge is recorded to the extent the fair value of ourinvestment is less than the carrying amount and the decline in value isdetermined to be other than a temporary decline.  No impairment charges have been taken in2006, 2005 or 2004.

In evaluating ourinvestments for impairment, management makes several estimates and assumptions,including, but not limited to, the projected date of disposition of the properties,the estimated future cash flows of the properties during our ownership and theprojected sales price of each of the properties.  A change in these estimates and assumptionscould result in understating or overstating the book value of our investmentswhich could be material to our financial statements.

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**Overview**

We were incorporated in June 2002 as a Marylandcorporation and have elected to be taxed, and currently qualify, as a realestate investment trust, or REIT, for federal income tax purposes.  We acquire and operate institutional qualityreal estate.  In particular, we focusprimarily on acquiring institutional quality office properties that we believehave premier business addresses, desirable locations, personalized amenities,high quality construction and highly creditworthy commercial tenants.  To date, all of our investments have beeninstitutional quality office properties located in metropolitan cities andsuburban markets in the United States. Our management and members of our board of directors have extensiveexperience in investing in numerous types of properties.  Thus, we also may acquire institutionalquality industrial, retail, hospitality, multi-family and other realproperties, including existing or newly constructed properties or propertiesunder development or construction, based on our view of existing marketconditions.  Further, we may invest inreal estate related securities, including securities issued by other realestate companies, either for investment or in change of control transactionscompleted on a negotiated basis or otherwise. We also may invest in collateralized mortgage-backed securities,mortgage, bridge or mezzanine loans and Section 1031 TIC interests, or inentities that make investments similar to the foregoing.

In the year ended December 31, 2006, we purchased 15real estate properties and increased our ownership interest in three of our TICproperties.  As of December 31, 2006, weowned, through 100% ownership or TIC interests, a portfolio of 36 officeproperties located in 16 states and the District of Columbia.

On February 19, 2003, we commenced the InitialOffering of up to 80,000,000 shares of common stock offered at a price of$10.00 per share pursuant to a Registration Statement on Form S-11 filed underthe Securities Act.  The Initial Offeringalso covered the registration of up to 8,000,000 shares offered pursuant to ourDRIP and up to 3,520,000 shares issuable to broker-dealers pursuant to warrantswhereby participating broker-dealers would have the right to purchase one sharefor every 25 shares they sold pursuant to the Initial Offering.  We terminated the Initial Offering onFebruary 19, 2005.

On February 11, 2005, we commenced the Second Offeringof up to 80,000,000 shares of common stock offered at a price of $10.00 pershare pursuant to a Registration Statement on Form S-3 under the SecuritiesAct.  The Second Offering also coveredthe registration of up to 16,000,000 shares offered pursuant to our DRIP.  We subsequently converted the Second Offeringto a Registration Statement on Form S-11 and reallocated the shares of commonstock in the Second Offering to offer 90,000,000 shares of common stock at aprice of $10.00 per share and up to 5,473,684 shares pursuant to ourDRIP.  In addition, we increased the aggregate amount of the SecondOffering by 2,945,017 shares in a related registration statement on FormS-11.  We terminated the Second Offeringon October 20, 2006 in all jurisdictions except the Commonwealth ofPennsylvania and we terminated the Second Offering in the Commonwealth ofPennsylvania on February 9, 2007.

On October 20, 2006, we commenced the Current Offeringof up to 200,000,000 shares of common stock offered at a price of $10.00 pershare pursuant to a Registration Statement on Form S-11 under the SecuritiesAct. The Current Offering also covers the registration of up to 50,000,000shares offered pursuant to our DRIP.  TheCurrent Offering will terminate on or before October 6, 2008 unless earlierterminated, fully subscribed or extended with respect to the shares offeredunder our DRIP or as otherwise permitted under applicable law.

### **Results of Operations**

At December 31, 2006, we owned interests in 36 officeproperties; at December 31, 2005, we owned interests in 21 office properties;and at December 31, 2004, we owned interests in seven office properties.  Accordingly, our results of operations foreach fiscal year presented reflect significant increases in most categories dueto the growth of our portfolio of properties. We revised the presentation of our 2004 Consolidated Statements ofOperations to remove the operating loss subtotal and the other income captionto conform to current presentation.  SeeNote 17 – “Revisions to Consolidated Statements of Operations and Cash Flowsfor the year ended December 31, 2004” in the Notes to the ConsolidatedFinancial Statements.

*Fiscal year ended December 31,2006 as compared to fiscal year ended December 31, 2005*

*Revenue.* Rental revenue for theyear ended December 31, 2006 was from our wholly-owned properties and wasapproximately $161.3 million as compared to approximately $31.1 million for theyear ended December 31, 2005.  Theincrease in rental revenue is primarily due to our increased number ofwholly-owned real estate properties. Management expects increases in rental revenue in the future as wepurchase additional real estate properties.

*Property Operating Expenses.*Property operating expenses for the year ended December 31, 2006 was approximately$35.7 million as compared to approximately $6.5 million for the year endedDecember 31, 2005 and was comprised of property operating expenses from ourwholly-owned properties.  The increase inproperty operating expenses is primarily due to our increased number ofwholly-owned real estate properties. Management expects increases in property operating expenses in thefuture as we purchase additional real estate properties.

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*Interest Expense. *Interest expense for the year ended December 31, 2006was approximately $50.9 million as compared to approximately $13.1 million forthe year ended December 31, 2005 and was comprised of interest expense andamortization of deferred financing fees related to our mortgages associatedwith our real estate and TIC interest investments.  The increase is primarily due to the $1.3billion increase in our mortgages payable during 2006.  Management expects increases in interestexpense in the future as we purchase and invest in additional real estateproperties.

*Rate Lock Extension Expense (Recoveries). *There was no rate lockextension expense or recoveries for the year ended December 31, 2006.  Rate lock extension recoveries for the yearended December 31, 2005 were approximately $0.5 million and represent the refundof interest rate lock extension fees from the year ended December 31,2004.  Although we continue to enter intointerest rate lock agreements, we do not expect to incur rate lock extensionfee expense in the future.

*Real Estate Taxes. *Real estate taxes for the year ended December 31, 2006were approximately $22.0 million as compared to approximately $3.8 million forthe year ended December 31, 2005 and were comprised of real estate taxes fromeach of our wholly-owned properties. The increase in real estate taxes isprimarily due to our increased number of wholly-owned real estateproperties.  Management expects increasesin real estate taxes in the future as we purchase additional real estateproperties.

*Property Management Fees.*Propertymanagement fees for the year ended December 31, 2006 were approximately $4.9million as compared to approximately $1.5 million for the year ended December31, 2005, and were comprised of property management fees related to ourwholly-owned real estate properties and TIC interest investments.   The increase in property management fees isprimarily due to our increased number of wholly-owned real estateproperties.  Management expects increasesin property management fees in the future as we invest in additional realestate properties.

*Asset Management Fees.* Assetmanagement fees for the year ended December 31, 2006 were approximately $5.1million as compared to approximately $1.9 million for the year ended December31, 2005 and were comprised of asset management fees associated with ourwholly-owned properties and TIC interest investments.  Asset management fees of approximately $2.7million were waived by Behringer Advisors for the year ended December 31, 2006.  Management expects increases in assetmanagement fees in the future as we invest in additional real estateproperties.

*General and Administrative Expense.*General and administrative expense for the year ended December 31, 2006 wasapproximately $1.6 million as compared to approximately $1.3 million for theyear ended December 31, 2005 and was comprised of corporate general andadministrative expenses including directors’ and officers’ insurance premiums,auditing fees, legal fees and other administrative expenses.

*Depreciation and Amortization Expense. *Depreciation and amortizationexpense for the year ended December 31, 2006 was approximately $73.3 million ascompared to approximately $15.0 million for the year ended December 31, 2005and was comprised of depreciation and amortization expense from each of ourwholly-owned properties.  Managementexpects increases in depreciation and amortization expense in the future as wepurchase additional real estate properties.

*Interest Income*. Interest incomefor the year ended December 31, 2006 was approximately $5.0 million as comparedto approximately $2.7 million for the year ended December 31, 2005 and wascomprised of interest income associated with funds on deposits with banks.  The increase in 2006 is primarily due tohigher cash balances on deposit with banks.

*Equity in Earnings of Investments inTenant-in-Common Interests*. Equity in earnings of investmentsin TIC interests for the year ended December 31, 2006 was approximately $4.8million as compared to $3.1 million for the year ended December 31, 2005 andwas comprised of our share of equity in the earnings of our TIC interestinvestments.  This increase is due toimproved earnings at our TIC interest properties and increases in our TICownership interest in Minnesota Center, the Colorado Building and the PrattBuilding during 2006.  During the fourthquarter of 2006, we bought the remaining TIC interest in the Pratt Building,and this property was wholly-owned at December 31, 2006.  Therefore, beginning in 2007, equity inearnings of investments in TIC interests will not include the earnings of thePratt Building.

*Fiscal year ended December 31,2005 as compared to fiscal year ended December 31, 2004*

*Revenue.* Rental revenue was fromour wholly-owned properties and was approximately $31.1 million for the fiscalyear ended December 31, 2005 as compared to approximately $130,000 for the yearended December 31, 2004.  The increase inrental revenue was primarily due to our purchase of 13 wholly-owned real estateproperties during 2005.

*Property Operating Expenses.*Property operating expenses for the year ended December 31, 2005 wasapproximately $6.5 million as compared to approximately $2,000 for the yearended December 31, 2004 and was comprised of property operating expenses fromour wholly-owned properties.  Theincrease in property operating expenses was primarily due to our purchase of 13wholly-owned real estate properties during 2005.

*Interest Expense.*Interestexpense for the year ended December 31, 2005 was approximately $13.1 millionand was comprised of interest expense and amortization of deferred financingfees related to our mortgages associated with our real estate and TIC interestinvestments.  During the year endedDecember 31, 2004, interest expense was approximately

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$1.7 million and wascomprised of interest expense and amortization of deferred financing feesrelated to our mortgages associated with our tenant–in-common interestinvestments.

*Rate Lock Extension Expense (Recoveries). *Rate lock extensionrecoveries for the year ended December 31, 2005 were $525,000 and representedthe refund of interest rate lock extension fees from 2004.  Rate lock extension expense for the yearended December 31, 2004 was $525,000.

*Real Estate Taxes. *Real estate taxes for the year ended December 31, 2005were approximately $3.8 million as compared to approximately $20,000 for theyear ended December 31, 2004 and were comprised of real estate taxes from eachof our wholly-owned properties. The increase in real estate taxes was primarilydue to our purchase of 13 wholly-owned real estate properties during 2005.

*Property Management Fees.*Propertymanagement fees for the year ended December 31, 2005 were approximately $1.5million as compared to approximately $205,000 for the year ended December 31,2004, and were comprised of property management fees related to ourwholly-owned real estate property and TIC interest investments.

*Asset Management Fees.* Assetmanagement fees for the year ended December 31, 2005 were approximately $1.9million as compared to approximately $90,000 for the year ended December 31,2004 and were comprised of asset management fees associated with ourwholly-owned properties and TIC interest investments.

*Organization Expenses. *There were no organizationexpenses for the year ended December 31, 2005. During the year ended December 31, 2004, organization expenses wereapproximately $218,000 and were comprised of reimbursements to our advisorrelated to organizational costs our advisor paid on our behalf.  As of December 31, 2004, allorganization expenses incurred by our advisor had been reimbursed by us.

*General and Administrative Expense.*General and administrative expense for the year ended December 31, 2005 wasapproximately $1.3 million as compared to approximately $712,000 for the yearended December 31, 2004 and was comprised of corporate general andadministrative expenses including directors’ and officers’ insurance premiums,auditing fees, legal fees and other administrative expenses.  The increased amount in 2005 was due to morecorporate activity in this fiscal year.

*Depreciation and Amortization Expense. *Depreciation andamortization expense for the year ended December 31, 2005 was approximately$15.0 million and was comprised of depreciation and amortization expense fromeach of our wholly-owned properties. During the year ended December 31, 2004, we did not have anydepreciation and amortization expense as we did not wholly own any real estateproperties until December 16, 2004.

*Interest Income*. Interest incomefor the year ended December 31, 2005 was approximately $2.7 million and wascomprised of interest income associated with funds on deposits with banks.  During the year ended December 31, 2004, weearned approximately $390,000 in interest income, a significantly lower amountthan in 2005 due to the lower cash balances on deposit with banks.

*Equity in Earnings of Investments inTenant-in-Common Interests*. Equity in earnings of investmentsin TIC interests for the year ended December 31, 2005 was approximately $3.1million and was comprised of our share of equity in the earnings of our sevenTIC interest investments.  During theyear ended December 31, 2004, we owned six TIC interest investments, resultingin equity in earnings of investments in TIC interests of approximately $1.4million.

**Cash FlowAnalysis**

*Fiscal year ended December 31,2006 as compared to fiscal year ended December 31, 2005*

At December 31, 2006, we owned interests in 36properties, and at December 31, 2005, we owned interests in 21 properties.  As a result, our cash flows for the yearended December 31, 2006 are not comparable to the cash flows for the year endedDecember 31, 2005.

Cash flows provided by operating activities for theyear ended December 31, 2006 were approximately $49.2 million and wereprimarily comprised of the net loss of approximately $22.4 million adjusted fordepreciation and amortization of approximately $68.1 million.  During the year ended December 31, 2005, cashflows provided by operating activities were approximately $9.0 million and wereprimarily comprised of the net loss of approximately $5.7 million adjusted fordepreciation and amortization of approximately $14.9 million.

Cash flows used in investing activities for the yearended December 31, 2006 were approximately $1.6 billion and were primarilycomprised of purchases of real estate totaling approximately $1.5 billion.  During the year ended December 31, 2005, cashflows used in investing activities were approximately $588.6 million and werecomprised primarily of the purchase of real estate investments.

Cash flows provided by financing activities for theyear ended December 31, 2006 were approximately $1.5 billion and were comprisedprimarily of proceeds from mortgages payable, net of mortgage payments, ofapproximately

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$1.1 billion and fundsreceived from the issuance of stock, net of redemptions and offering costs, ofapproximately $454.8 million.  During theyear ended December 31, 2005, cash flows provided by financing activities wereapproximately $682.3 million and were comprised primarily of funds receivedfrom the issuance of stock and proceeds from mortgages payable.

*Fiscal year ended December 31,2005 as compared to fiscal year ended December 31, 2004*

At December 31, 2005, we owned interests in 21properties, and at December 31, 2004, we owned interests in sevenproperties.  As a result, our cash flowsfor the year ended December 31, 2005 are not comparable to the cash flows forthe year ended December 31, 2004.  Certaincash flow items for fiscal year 2004 have been revised to conform to currentpresentation.  See Note 17 – “Revisionsto Consolidated Statements of Operations and Cash Flows for the year endedDecember 31, 2004” in the Notes to the Consolidated Financial Statements.

Cash flows provided by operating activities for theyear ended December 31, 2005 were approximately $9.0 million and were primarilycomprised of the net loss of approximately $5.7 million adjusted fordepreciation and amortization of approximately $14.9 million.  During the year ended December 31, 2004, cashflows used in operating activities were approximately $0.3 million.

Cash flows used in investing activities for the yearended December 31, 2005 were approximately $588.6 million and were primarilycomprised of purchases of real estate totaling approximately $564.0million.  During the year ended December31, 2004, cash flows used in investing activities were approximately $158.4million and were comprised primarily of the purchase of TIC interestinvestments.

Cash flows provided by financing activities for theyear ended December 31, 2005 were approximately $682.3 million and werecomprised primarily of funds received from the issuance of stock, net ofredemptions and offering costs of approximately $427.7 million and proceedsfrom mortgages payable, net of mortgage payments, of approximately $271.2million.  During the year ended December31, 2004, cash flows provided by financing activities were approximately $179.6million and were comprised primarily of funds received from the issuance ofstock and proceeds from mortgages payable.

**Liquidity and Capital Resources**

Our principal demands for funds will continue to befor property acquisitions, either directly or through investment interests, formortgage loan investments, for the payment of operating expenses and distributions,and for the payment of interest on our outstanding indebtedness.  Generally, cash needs for items other thanproperty acquisitions and mortgage loan investments are expected to be met fromoperations, and cash needs for property acquisitions are expected to be metfrom the net proceeds of the Offerings of our securities.  However, there may be a delay between thesale of our shares and our purchase of properties or mortgage loan investmentsand receipt of income from such purchase, which could result in a delay in thebenefits to our stockholders of returns generated from our operations.  We expect that at least 88.3% of the moneythat stockholders invest in the Current Offering will be used to make real estateinvestments and approximately 2.6% of the gross proceeds of the CurrentOffering will be used for payment of fees and expenses related to the selectionand acquisition of the investments.  Theremaining 9.1% will be used to pay selling commissions, dealer manager fees andorganization and offering expenses.  Ouradvisor evaluates potential property acquisitions and mortgage loan investmentsand engages in negotiations with sellers and borrowers on our behalf.  After a contract for the purchase of aproperty is executed, the property will not be purchased until the substantialcompletion of due diligence.  During thisperiod, we may decide to temporarily invest any unused proceeds from theCurrent Offering in investments that could yield lower returns than theproperties.  These lower returns mayaffect our ability to make distributions.

The amount of distributions to be distributed to ourstockholders will be determined by our board of directors and is dependent on anumber of factors, including funds available for payment of distributions, financialcondition, capital expenditure requirements and annual distributionrequirements needed to maintain our status as a REIT under the Code.  Until proceeds from our offerings areinvested and generating operating cash flow sufficient to make distributions tostockholders, we have and may continue to pay all or a portion of ourdistributions from the proceeds of such offerings or from borrowings inanticipation of future cash flow.  Of theamounts distributed by us in 2006, 76.95% represented a return of capital and23.05% were distributions from the taxable earnings of real estateoperations.  In fiscal year 2006, 2005and 2004, we made cash distributions aggregating approximately $60.1 million, $22.4million and $3.1 million, respectively, to our stockholders.  Of these amounts, approximately $13.9million, $6.3 million, and $278,000, in fiscal years 2006, 2005 and 2004,respectively, was paid using cash generated from our operations.  The remaining portion was paid from sourcesother than operating cash flow, such as offering proceeds, cash advanced to usby, or reimbursements for expenses from, our advisor and proceeds from loansincluding those secured by our assets. We can give no assurance that these sources will be available in thefuture to fund distributions if cash generated from our operations isinsufficient.

During 2006, ourmortgages payable increased to approximately $1.6 billion at December 31, 2006,from approximately $353.6 million at December 31, 2005, as a result of propertyacquisitions.  Each of our mortgage loansis collateriazed by the property that was acquired in association with thatloan.  Our mortgage interest rates rangefrom 5.16% to 6.223%.  Generally, ourmortgage loans mature at approximately ten years from origination and requirepayments of

42

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interest only forapproximately five years, with payments of principal and interestthereafter.  At December 31, 2006, ourmortgages payable have maturity dates that range from November 2010 to January2017.  Our loan agreements stipulate thatwe comply with certain reporting and financial covenants.  These covenants include among other things,notifying the lender of any change in management and maintaining minimum debtservice coverage ratios.  At December 31,2006, we were in compliance with each of the debt covenants under our loanagreements.

We expect to meet our future short-term operatingliquidity requirements through net cash provided by our current propertyoperations and the operations of properties to be acquired in the future.  Management also expects that our propertieswill generate sufficient cash flow to cover operating expenses plus pay amonthly distribution. Operating cash flows are expected to increase as additionalproperties are added to the portfolio. Other potential future sources of capital include proceeds from securedor unsecured financings from banks or other lenders, proceeds from the sale ofproperties and undistributed funds from operations.  If necessary, we may use financings or other sourcesof capital in the event of unforeseen significant capital expenditures.

**ContractualObligations**

The following table summarizes our contractualobligations as of December 31, 2006 (in thousands):
| **Mortgages Payable** | ** ** | **Total** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **Thereafter** | ** ** |
|----------------------------|------------|-----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|
| Principal (1)              |       | $         | 1,607,260  |     | $          | 2,105    |       | $        | 3,373      |     | $          | 4,185    |       | $              | 31,038     |   | $ | 50,042 |   | $ | 1,516,517 |   |
| Interest                   |       | 800,381   |       | 89,722   |       | 90,247   |       | 90,265   |       | 89,945   |       | 86,149   |       | 354,053        |       |
| Total                      |       | $         | 2,407,641  |     | $          | 91,827   |       | $        | 93,620     |     | $          | 94,450   |       | $              | 120,983    |   | $ | 136,191 |   | $ | 1,870,570 |   |

 

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(1) Excludesunamortized premium of approximately $2.4 million.

**Fundsfrom Operations**

Funds from operations (“FFO”)is a non-GAAP financial measure that is widely recognized as a measure of REIToperating performance.  FFO is defined bythe National Association of Real Estate Investment Trusts as net income (loss),computed in accordance with GAAP excluding extraordinary items, as defined byGAAP, and gains (or losses) from sales of property, plus depreciation andamortization on real estate assets, and after adjustments for unconsolidatedpartnerships, joint ventures and subsidiaries. We believe that FFO is helpful to investors and our management as ameasure of operating performance because it excludes depreciation andamortization, gains and losses from property dispositions, and extraordinaryitems, and as a result, when compared year to year, reflects the impact onoperations from trends in occupancy rates, rental rates, operating costs,development activities, general and administrative expenses, and interestcosts, which is not immediately apparent from net income.  Historical cost accounting for real estateassets in accordance with GAAP implicitly assumes that the value of real estatediminishes predictably over time.  Sincereal estate values have historically risen or fallen with market conditions,many industry investors and analysts have considered the presentation ofoperating results for real estate companies that use historical cost accountingalone to be insufficient.  As a result,our management believes that the use of FFO, together with the required GAAPpresentations, provide a more complete understanding of our performance.  Factors that impact FFO include start-upcosts, fixed costs, delay in buying assets, lower yields on cash held inaccounts pending investment, income from portfolio properties and otherportfolio assets, interest rates on acquisition financing and operatingexpenses.  FFO should not be consideredas an alternative to net income (loss), as an indication of our liquidity, noris it indicative of funds available to fund our cash needs, including ourability to make distributions.

Ourcalculations of FFO for the years ended December 31, 2006 and 2005 arepresented below (in thousands):

43

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |     |       |     |       |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       | $        | (22,432    | )        | $          | (5,722 | ) |
| Preferred stock  dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       | —   |       | —   |       |
| Net loss  allocable to common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       | (22,432  | )          | (5,722   | )          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |     |       |     |       |
| Real estate  depreciation (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 40,305   |       | 10,744   |       |
| Real estate  amortization (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 42,038   |       | 12,626   |       |
| Funds from  operations (FFO)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | $        | 59,911     |     | $          | 17,648 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |     |       |     |       |
| Historical  weighted average shares (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | 89,638   |       | 36,200   |       |
| 10% stock  dividend retroactive adjustment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       | —   |       | 2,020    |       |
| GAAP weighted average  shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 89,638   |       | 38,220   |       |
| (1)    This  represents the depreciation and amortization expense of the properties we  wholly own and our share of depreciation and amortization expense of the  properties in which we own TIC interests.   The expenses of the TIC interests are reflected in our equity in  earnings from these TIC investments.

(2)    On May  11, 2005, our Board of Directors declared a special 10% stock dividend for  holders on record as of September 30, 2005, with an issue date of October 1,  2005.  In accordance with SFAS No. 128,  “Earnings per Share,” we are required to reflect the effects of the stock  dividend in our weighted average shares outstanding for the periods presented  in our financial statements.  The  historical weighted average shares above are shown without the retroactive effect  of the stock dividend. |       |

 

*Non-cash Items Included in NetLoss:*

Provided below is additional information related toselected non-cash items included in net loss above, which may be helpful inassessing our operating results.

·                  Straight-linerental revenue of approximately $7.2 million and $1.8 million was recognizedfor years ended December 31, 2006 and 2005, respectively,

·                  Amortizationof intangible lease assets and liabilities was recognized as a net decrease torental revenues of approximately $4.9 million and a net increase of $47,000 forthe years ended December 31, 2006 and 2005, respectively;

·                  Baddebt expense of approximately $112,000 and $7,000 was recognized for the yearsended December 31, 2006 and 2005, respectively, and

·                  Amortizationof deferred financing costs of approximately $1.3 million and $0.5 million wasrecognized as interest expense for the years ended December 31, 2006 and2005, respectively.

Straight-line rental revenue, amortization ofintangible lease assets and liabilities and bad debt expense of the TICinterests are reflected in our equity in earnings from these TIC investmentsand are included in the amounts presented above.

In addition, cash flowsgenerated from FFO may be used to fund all or a portion of certaincapitalizable items that are excluded from FFO, such as capital expendituresand payments of principal on debt, each of which may impact theamount of cash available for distribution to our stockholders.

During the years ended December 31, 2006 and 2005, wedeclared and paid distributions in excess of FFO and expect to continue to doso.  Some or all of our distributionshave been paid from sources other than operating cash flow, such as offeringproceeds, cash advanced to us by, or reimbursements for expenses from, ouradvisor and proceeds from loans including those secured by our assets. Giventhe uncertainty arising from numerous factors, including both the raising andplacing of capital in the current real estate environment, ultimate FFOperformance cannot be predicted with certainty. For example, if we are not able to timely invest net proceeds of ouroffering at favorable yields, future distributions declared and paid maycontinue to exceed FFO.

**NetOperating Income**

Net operating income (“NOI”) is defined as net income,computed in accordance with GAAP, generated from properties before interestexpense, asset management fees, interest income, general and administrativeexpenses, depreciation, amortization, equity in earnings of investments in TICinterests, and the sale of assets.  Webelieve that NOI provides an accurate measure of our operating performancebecause NOI reflects the operating performance of our

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propertiesand excludes certain items that are not associated with management of theproperties.  To facilitate understandingof this financial measure, a reconciliation of net operating income to netincome has been provided in accordance with GAAP.  Our calculations of NOI for the years endedDecember 31, 2006 and 2005 are presented below (in thousands):
| ** **                                                  | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------------------------------|------------|----------|------------|----------|------------|
| Rental revenue                                              |       | $        | 161,306    |     | $          | 31,057 |   |
|                                                        |       |     |       |     |       |
| Operating  expenses:                                        |       |     |       |     |       |
| Property operating expenses                                 |       | 35,694   |       | 6,463    |       |
| Real estate taxes                                           |       | 21,999   |       | 3,838    |       |
| Property management fees                                    |       | 4,947    |       | 1,502    |       |
| Total operating  expenses                                   |       | 62,640   |       | 11,803   |       |
|                                                        |       |     |       |     |       |
| Net operating  income                                       |       | $        | 98,666     |     | $          | 19,254 |   |
|                                                        |       |     |       |     |       |
| Reconciliation  to Net loss                                 |       |     |       |     |       |
| Net operating  income                                       |       | $        | 98,666     |     | $          | 19,254 |   |
|                                                        |       |     |       |     |       |
| Less:    Depreciation  and amortization |       | (73,275  | )          | (15,033  | )          |
| General and administrative expense                          |       | (1,614   | )          | (1,254   | )          |
| Interest expense and rate lock extension recoveries         |       | (50,877  | )          | (12,612  | )          |
| Asset management fees                                       |       | (5,099   | )          | (1,857   | )          |
| Add:    Interest  income                |       | 4,963    |       | 2,665    |       |
| Equity in earnings of investments of TIC interests          |       | 4,804    |       | 3,115    |       |
|                                                        |       |     |       |     |       |
| Net loss                                                    |       | $        | (22,432    | )        | $          | (5,722 | ) |

 

**Off-BalanceSheet Arrangements**

We have no off-balance sheet arrangements that arereasonably likely to have a current or future material effect on our financialcondition, changes in financial condition, revenues or expenses, results ofoperations, liquidity, capital expenditures or capital resources.

**NewAccounting Pronouncements**

In July 2006, the FASB issued FIN 48, “Accounting forUncertainty in Income Taxes, an interpretation of FASB Statement No. 109,”which clarifies the relevant criteria and approach for the recognition andmeasurement of uncertain tax positions. FIN 48 was effective beginning January 1, 2007 and the adoption of FIN48 did not have a material effect on our financial condition, results of operations,or liquidity.

In September 2006, the FASB issued SFAS No. 157, “FairValue Measurements” which establishes a single authoritative definition of fairvalue, sets out a framework for measuring fair value, and requires additionaldisclosures about fair value measurements. SFAS No. 157 applies only to fairvalue measurements that are already required or permitted by other accountingstandards. SFAS No. 157 is effective for fiscal years beginning after November15, 2007. We are currently evaluating the impact that adopting SFAS No. 157will have on our financial statements.

In February 2007, the FASB issued SFAS No. 159, “TheFair Value Option for Financial Assets and Financial Liabilities -Including an Amendment of FASB Statement No. 115”.  The fair value option established bySFAS No. 159 permits all entities to choose to measure eligible items atfair value at specified election dates. A business entity will report unrealized gains and losses on items forwhich the fair value option has been elected in earnings (or anotherperformance indicator if the business entity does not report earnings) at eachsubsequent reporting date.  SFAS No. 159is effective as of the beginning of fiscal years beginning afterNovember 15, 2007.  We are currentlyevaluating the impact that adopting SFAS No. 159 will have on our financialstatements.

**Inflation**

The real estate market has not been affectedsignificantly by inflation in the past several years due to the relatively lowinflation rate.  The majority of ourleases contain inflation protection provisions applicable to reimbursementbillings for common area maintenance charges, real estate tax and insurancereimbursements on a per square foot basis, or in some cases, annualreimbursement of operating expenses above a certain per square foot allowance.

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**Item 7A.         Quantitativeand Qualitative Disclosures About Market Risk.**

We are exposed to interest rate changes primarily as aresult of long-term debt used to acquire properties.  Our interest rate risk management objectivesare to limit the impact of interest rate changes on earnings and cash flows andto lower overall borrowing costs. To achieve these objectives, we borrowprimarily at fixed rates or variable rates with the lowest margins availableand in some cases, the ability to convert variable rates to fixed rates. Withregard to variable rate financing, we will assess interest rate cash flow riskby continually identifying and monitoring changes in interest rate exposuresthat may adversely impact expected future cash flows and by evaluating hedgingopportunities.  At December 31, 2006, allof our borrowings were at fixed interest rates.

We do not have any foreign operations and thus we arenot exposed to foreign currency fluctuations.

**Item 8.         FinancialStatements and Supplementary Data.**

The information required by this Item 8 is herebyincorporated by reference to our Consolidated Financial Statements beginning onpage F-1 of this Annual Report on Form 10-K.

**Item 9.         Changesin and Disagreements With Accountants on Accounting and Financial Disclosure.**

On September 2, 2005, we retained the services of Deloitte & Touche LLP as our independent registered public accounting firm to replace our former independent registered public accounting firm, PricewaterhouseCoopers LLP. This engagement and replacement was approved by our Audit Committee. We reported this information in a Current Report on Form 8-K dated September 2, 2005.  During the fiscal year, and any subsequent interim period prior to September 2, 2005, we did not consult with Deloitte & Touche LLP regarding any matters noted in Items 304(a) of Regulation S-K.

There have been no “disagreements” within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or any events of the type listed in Item 304(a)(1)(v)(A) through (D) of Regulation S-K, involving PricewaterhouseCoopers LLP that occurred within the fiscal year and the interim period prior to September 2, 2005.  PricewaterhouseCoopers LLP’s report on our financial statements for the fiscal year ended December 31, 2004 did not contain any adverse opinions or disclaimers of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

We provided PricewaterhouseCoopers LLP with a copy of the disclosures made pursuant to the Form 8-K (which disclosures are consistent with the disclosures noted above), and PricewaterhouseCoopers LLP furnished us with a letter addressed to the SEC stating that it agrees with the statements made by us in the Form 8-K, a copy of which was filed as an exhibit to the Current Report on Form 8-K.

**Item 9A.         Controlsand Procedures.**

As required byRule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Actof 1934 (the “Exchange Act”), our management, including our Chief ExecutiveOfficer and Chief Financial Officer, evaluated as of December 31, 2006, theeffectiveness of our disclosure controls and procedures as defined in ExchangeAct Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, ourChief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures, as of December 31, 2006, were effective forthe purpose of ensuring that information required to be disclosed by us in thisreport is recorded, processed, summarized and reported within the time periodsspecified by the rules and forms of the Exchange Act and is accumulated andcommunicated to management, including the Chief Executive Officer and ChiefFinancial Officer, as appropriate to allow timely decisions regarding requireddisclosures.

We believe, however, thata controls system, no matter how well designed and operated, cannot provideabsolute assurance that the objectives of the controls systems are met, and noevaluation of controls can provide absolute assurance that all control issuesand instances of fraud or error, if any, within a company have been detected.

 There has been nochange in internal controls over financial reporting that occurred during thequarter ended December 31, 2006 that has materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting.

In the first quarter of2006, we implemented a new accounting and property management system throughoutour operations.  This software changeaffected all aspects of our accounting and financial systems and resulted in asignificant change to our internal controls. While we believe these changes improved and strengthened our overallsystem of internal control, there are inherent risks associated with implementingsoftware changes.  We modified our systemof internal control over financial reporting in order to address the impact ofthese software changes, and provide that our controls, as modified, continue tobe designed appropriately and operate effectively.

**Item 9B.         OtherInformation.**

None.

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**PART III**

**Item 10.                 Directors,Executive Officers and Corporate Governance.**

The information required by this Item will bepresented in our definitive proxy statement for the annual meeting ofstockholders to be held on June 20, 2007, which is expected to be filed withthe Securities and Exchange Commission on or about April 30, 2007, and isincorporated herein by reference.

**Item 11.                 ExecutiveCompensation.**

The information required by this Item will bepresented in our definitive proxy statement for the annual meeting ofstockholders to be held on June 20, 2007, which is expected to be filed withthe Securities and Exchange Commission on or about April 30, 2007, and isincorporated herein by reference.

**Item 12.****                                                    SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters.**

The information required by this Item will bepresented in our definitive proxy statement for the annual meeting ofstockholders to be held on June 20, 2007, which is expected to be filed withthe Securities and Exchange Commission on or about April 30, 2007, and isincorporated herein by reference.

**Item 13.                 CertainRelationships and Related Transactions and Director Independence.**

The information required by this Item will bepresented in our definitive proxy statement for the annual meeting ofstockholders to be held on June 20, 2007, which is expected to be filed withthe Securities and Exchange Commission on or about April 30, 2007, and isincorporated herein by reference.

**Item 14.                 PrincipalAccounting Fees and Services.**

The information required by this Item will bepresented in our definitive proxy statement for the annual meeting ofstockholders to be held on June 20, 2007, which is expected to be filed withthe Securities and Exchange Commission on or about April 30, 2007, and isincorporated herein by reference.

47

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**PART IV**

**Item 15.                 Exhibitsand Financial Statement Schedules.**

(a)                                  *List of Documents Filed.*

1.                                       *Financial Statements*

The list of thefinancial statements filed as part of this Annual Report on Form 10-K is setforth on page F-1 herein.

2.                                       *Financial Statement Schedules*

Report of Independent Registered Public Accounting Firm

Schedule III Real Estate and Accumulated Depreciation

3.                                       *Exhibits*

The list ofexhibits filed as part of this Annual Report on Form 10-K is submitted in theExhibit Index following the financial statements in response to Item 601 ofRegulation S-K.

(b)           *Exhibits.*

The exhibits filed inresponse to Item 601 of Regulation S-K are listed on the Exhibit Index attachedhereto.

(c)           *Financial StatementSchedules.*

We are required to filethe following separate financial statements of our unconsolidated subsidiarywhich is filed as part of this report:

The Colorado Building

All financial statementschedules, except for Schedule III (see (a) 2. above), have been omittedbecause the required information of such schedules is not present, is notpresent in amounts sufficient to require a schedule or is included in thefinancial statements.

48

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
|                                              | **Behringer Harvard REIT I, Inc.** |
|----------------------------------------------|------------------------------------|
|                                         |                               |   |   |
|                                         |                               |   |   |
| Dated:    March 30, 2007 | By:                                |   | /s/ Robert M. Behringer |   |
|                                         |                               |   | Robert M. Behringer |
|                                         |                               |   | Chief Executive Officer and |
|                                         |                               |   | Chairman of the Board of Directors |

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the datesindicated.
|           |   |   |                                |   |
|----------------|--------|--------|-------------------------------------|--------|
| March 30, 2007 |   |   | /s/ Robert M. Behringer             |   |
|           |   |   | Robert M.  Behringer                |
|           |   |   | Chief Executive  Officer and        |
|           |   |   | Chairman of the Board  of Directors |
|           |   |   | (Principal  Executive Officer)      |

 
| March 30, 2007 |   |   | /s/ Robert S. Aisner                             |   |
|----------------|--------|--------|--------------------------------------------------|--------|
|           |   |   | Robert S. Aisner                                 |
|           |   |   | President, Chief  Operating Officer and Director |

 
| March 30, 2007 |   |   | /s/ Gary S. Bresky             |   |
|----------------|--------|--------|--------------------------------|--------|
|           |   |   | Gary S. Bresky                 |
|           |   |   | Chief Financial  Officer       |
|           |   |   | (Principal  Financial Officer) |

 
| March 30, 2007 |   |   | /s/ Kimberly Arianpour          |   |
|----------------|--------|--------|---------------------------------|--------|
|           |   |   | Kimberly  Arianpour             |
|           |   |   | Chief Accounting  Officer       |
|           |   |   | (Principal  Accounting Officer) |

 
| March  30, 2007 |   |   | /s/ Charles G. Dannis |   |
|-----------------|--------|--------|-----------------------|--------|
|            |   |   | Charles G.  Dannis    |
|            |   |   | Director              |

 
| March 30, 2007 |   |   | /s/ Steven W. Partridge |   |
|----------------|--------|--------|-------------------------|--------|
|           |   |   | Steven W.  Partridge    |
|           |   |   | Director                |

 
| March 30, 2007 |   |   | /s/ G. Ronald Witten |   |
|----------------|--------|--------|----------------------|--------|
|           |   |   | G. Ronald Witten     |
|           |   |   | Director             |

 

49

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**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**
|                                                                                                                                                                                                            | ** ** | **Page** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|
| **Financial Statements**                                                                                                                                                                                   |       |     |
| ** **                                                                                                                                                                                                 |       |     |
| Report of  Independent Registered Public Accounting Firm–Deloitte & Touche LLP                                                                                                                    |       | F-2      |
|                                                                                                                                                                                                       |       |     |
| Report of  Independent Registered Public Accounting Firm-PricewaterhouseCoopers LLP                                                                                                                        |       | F-3      |
|                                                                                                                                                                                                       |       |     |
| Consolidated Balance  Sheets as of December 31, 2006 and 2005                                                                                                                                              |       | F-4      |
|                                                                                                                                                                                                       |       |     |
| Consolidated  Statements of Operations for the Years ended  December 31, 2006, 2005 and 2004                                                                                                               |       | F-5      |
|                                                                                                                                                                                                       |       |     |
| Consolidated  Statements of Stockholders’ Equity for the Years ended  December 31, 2006, 2005 and 2004                                                                                                |       | F-6      |
|                                                                                                                                                                                                       |       |     |
| Consolidated Statements of Cash Flows for the Years  ended  December 31, 2006, 2005 and 2004                                                                                                               |       | F-7      |
|                                                                                                                                                                                                       |       |     |
| Notes to  Consolidated Financial Statements                                                                                                                                                                |       | F-8      |
|                                                                                                                                                                                                       |       |     |
| **Financial Statements of the Colorado Building**                                                                                                                                                          |       |     |
| ** **                                                                                                                                                                                                 |       |     |
| Report of Independent Auditors on Financial Statements  of the Colorado Building                                                                                                                           |       | F-23     |
|                                                                                                                                                                                                       |       |     |
| The  Colorado Building Combined Balance Sheets as of December 31, 2006 and 2005                                                                                                                            |       | F-24     |
|                                                                                                                                                                                                       |       |     |
| The Colorado  Building Combined Statements of Operations for the years ended December 31,  2006, 2005 and the period from August 10, 2004 (date of acquisition) through  December 31, 2004                 |       | F-25     |
|                                                                                                                                                                                                       |       |     |
| The Colorado  Building Combined Statements of Tenant-in-Common Interests for the years  ended December 31, 2006, 2005 and the period from August 10, 2004 (date of  acquisition) through December 31, 2004 |       | F-26     |
|                                                                                                                                                                                                       |       |     |
| The Colorado  Building Statements of Combined Cash Flows for the years ended December 31,  2006, 2005 and the period from August 10, 2004 (date of acquisition) through  December 31, 2004                 |       | F-27     |
|                                                                                                                                                                                                       |       |     |
| Notes to  Combined Financial Statements                                                                                                                                                                    |       | F-28     |
|                                                                                                                                                                                                       |       |     |
| **Financial Statement Schedule**                                                                                                                                                                           |       |     |
| ** **                                                                                                                                                                                                 |       |     |
| Report of  Independent Registered Public Accounting Firm                                                                                                                                                   |       | F-34     |
|                                                                                                                                                                                                       |       |     |
| Schedule  III – Real Estate and Accumulated Depreciation                                                                                                                                              |       | F-35     |

 

F-1

----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directorsand Stockholders of

BehringerHarvard REIT I, Inc.:

Wehave audited the accompanying consolidated balance sheets of Behringer HarvardREIT I, Inc. and subsidiaries (the “Company”) as of December 31, 2006 and 2005and the related consolidated statements of operations, stockholders’ equity andcash flows for the years then ended. These financial statements are theresponsibility of the Company’s management.  Our responsibility is toexpress an opinion on these financial statements based on our audits.

Weconducted our audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States).  Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement.  The Company isnot required to have, nor were we engaged to perform, an audit of its internalcontrol over financial reporting.  Our audits included consideration ofinternal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the Company’s internal controlover financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation.  We believe thatour audits provide a reasonable basis for our opinion.

Inour opinion, such consolidated financial statements present fairly, in allmaterial respects, the financial position of the Company at December 31, 2006and 2005, and the results of their operations and their cash flows for theyears then ended, in conformity with accounting principles generally acceptedin the United States of America.
| /s/ Deloitte & Touche LLP | * * |
|-------------------------------|----------|
| * *                      |
| Dallas, Texas                 |
| March 26, 2007                |

 

F-2

----

### **Reportof Independent Registered Public Accounting Firm**

To the Board of Directorsand Stockholders of

BehringerHarvard REIT I, Inc.:

In ouropinion, the accompanying consolidated statements of operations, stockholders’equity and cash flows present fairly, in all material respects, the results ofoperations and cash flow of Behringer Harvard REIT I, Inc. and its subsidiaries(the “Company for the year ended December 31, 2004 in conformity withaccounting principles generally accepted in the United States of America.  In addition, in our opinion, the summary ofactivity in real estate facilities set forth in the financial statementschedule for the year ended December 31, 2004 presents fairly, in all materialrespects, the information set forth therein when read in conjunction with therelated consolidated financial statements. These financial statements are the responsibility of the Company’smanagement.  Our responsibility is toexpress an opinion on these financial statements based on our audit.  We conducted our audit of these statements inaccordance with the standards of the Public Company Accounting Oversight Board(United States).  Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement.  An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation.  We believe that our audit provides areasonable basis for our opinion.
| /s/ PricewaterhouseCoopers  LLP | * * |
|---------------------------------|----------|

 

Dallas, Texas

March31, 2005, except for footnote 15, as to which the date is October 1, 2005 andfootnote 17, as to which the date is March 28, 2006

F-3

----

**BehringerHarvard REIT I, Inc.Consolidated Balance SheetsAs of December 31, 2006 and 2005**

**(in thousands, except share and pershare amounts)**
| ** **                                                                                                                                                                                   | ** ** | **2006**  | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------|------------|----------|------------|
| **Assets**                                                                                                                                                                                   |       |      |       |     |       |
| **Real estate**                                                                                                                                                                              |       |      |       |     |       |
| Land                                                                                                                                                                                         |       | $         | 269,968    |     | $          | 139,235 |   |
| Buildings, net                                                                                                                                                                               |       | 1,637,738 |       | 370,196  |       |
| **Total real estate**                                                                                                                                                                        |       | 1,907,706 |       | 509,431  |       |
|                                                                                                                                                                                         |       |      |       |     |       |
| Cash and cash equivalents                                                                                                                                                                    |       | 124,948   |       | 128,742  |       |
| Restricted cash                                                                                                                                                                              |       | 103,343   |       | 24,964   |       |
| Accounts receivable, net                                                                                                                                                                     |       | 21,205    |       | 3,736    |       |
| Prepaid expenses and other assets                                                                                                                                                            |       | 2,434     |       | 658      |       |
| Loan deposits                                                                                                                                                                                |       | 1,580     |       | 4,156    |       |
| Escrow deposits                                                                                                                                                                              |       | 125       |       | 3,015    |       |
| Investments in tenant-in-common interests                                                                                                                                                    |       | 145,621   |       | 141,405  |       |
| Deferred financing fees, net                                                                                                                                                                 |       | 17,912    |       | 4,645    |       |
| Note receivable                                                                                                                                                                              |       | 3,013     |       | —   |       |
| Lease intangibles, net                                                                                                                                                                       |       | 367,014   |       | 79,830   |       |
| Receivables from affiliates                                                                                                                                                                  |       | 71        |       | —   |       |
| **Total  assets**                                                                                                                                                                            |       | $         | 2,694,972  |     | $          | 900,582 |   |
|                                                                                                                                                                                         |       |      |       |     |       |
| **Liabilities  and stockholders’ equity**                                                                                                                                               |       |      |       |     |       |
| **Liabilities**                                                                                                                                                                              |       |      |       |     |       |
| Mortgages payable                                                                                                                                                                            |       | $         | 1,609,702  |     | $          | 353,555 |   |
| Accounts payable                                                                                                                                                                             |       | 2,390     |       | 896      |       |
| Payables to affiliates                                                                                                                                                                       |       | 2,080     |       | 618      |       |
| Acquired below-market leases, net                                                                                                                                                            |       | 98,812    |       | 11,072   |       |
| Dividends payable                                                                                                                                                                            |       | 7,096     |       | 3,979    |       |
| Accrued liabilities                                                                                                                                                                          |       | 53,683    |       | 8,605    |       |
| Subscriptions for common stock                                                                                                                                                               |       | 3,216     |       | 1,054    |       |
| Other liabilities                                                                                                                                                                            |       | 479       |       | —   |       |
| **Total  liabilities**                                                                                                                                                                       |       | 1,777,458 |       | 379,779  |       |
| ** **                                                                                                                                                                                   |       |      |       |     |       |
| **Commitments  and contingencies**                                                                                                                                                           |       |      |       |     |       |
| ** **                                                                                                                                                                                   |       |      |       |     |       |
| **Minority  interest**                                                                                                                                                                       |       | 3,072     |       | 3,375    |       |
|                                                                                                                                                                                         |       |      |       |     |       |
| **Stockholders’  equity**                                                                                                                                                               |       |      |       |     |       |
| Preferred stock, $.0001 par value per share; 17,500,000  shares authorized, none outstanding                                                                                                 |       | —    |       | —   |       |
| Convertible stock, $.0001 par value per share; 1,000  shares authorized, 1,000 shares issued and outstanding                                                                                 |       | —    |       | —   |       |
| Common stock, $.0001 par value per share; 382,499,000  shares authorized, 121,884,470 and 67,863,168 shares issued and outstanding  at December 31, 2006 and December 31, 2005, respectively |       | 12        |       | 7        |       |
| Additional paid-in capital                                                                                                                                                                   |       | 1,085,806 |       | 603,452  |       |
| Cumulative distributions and net loss                                                                                                                                                        |       | (171,376  | )          | (86,031  | )          |
| **Total  stockholders’ equity**                                                                                                                                                         |       | 914,442   |       | 517,428  |       |
| **Total  liabilities and stockholders’ equity**                                                                                                                                         |       | $         | 2,694,972  |     | $          | 900,582 |   |

 

*See Notes to Consolidated FinancialStatements.*

F-4

----

**Behringer Harvard REIT I, Inc.**

**ConsolidatedStatements of OperationsFor the Years ended December 31, 2006, 2005 and 2004**

**(inthousands except share and per share amounts)**
| ** **                                                       | ** ** | **2006**   | ** ** | **2005**   | ** ** | **2004**  | ** ** |
|------------------------------------------------------------------|------------|------------|------------|------------|------------|-----------|------------|
|                                                             |       |       |       |       |       |      |       |
| **Rental  revenue**                                              |       | $          | 161,306    |       | $          | 31,057    |       | $ | 130 |   |
|                                                             |       |       |       |       |       |      |       |
| **Expenses**                                                     |       |       |       |       |       |      |       |
| Property operating expenses                                      |       | 35,694     |       | 6,463      |       | 2         |       |
| Interest expense                                                 |       | 50,877     |       | 13,137     |       | 1,690     |       |
| Rate lock extension (recoveries)                                 |       | —     |       | (525       | )          | 525       |       |
| Real estate taxes                                                |       | 21,999     |       | 3,838      |       | 20        |       |
| Property management fees                                         |       | 4,947      |       | 1,502      |       | 205       |       |
| Asset management fees                                            |       | 5,099      |       | 1,857      |       | 90        |       |
| Organization expenses                                            |       | —     |       | —     |       | 218       |       |
| General and administrative                                       |       | 1,614      |       | 1,254      |       | 712       |       |
| Depreciation and amortization                                    |       | 73,275     |       | 15,033     |       | —    |       |
| **Total  expenses**                                              |       | 193,505    |       | 42,559     |       | 3,462     |       |
|                                                             |       |       |       |       |       |      |       |
| Interest income                                                  |       | 4,963      |       | 2,665      |       | 390       |       |
|                                                             |       |       |       |       |       |      |       |
| Equity in  earnings of investments in tenant-in-common interests |       | 4,804      |       | 3,115      |       | 1,403     |       |
|                                                             |       |       |       |       |       |      |       |
| **Net  loss**                                                    |       | $          | (22,432    | )          | $          | (5,722    | )          | (1,539 | ) |
|                                                             |       |       |       |       |       |      |       |
| **Basic  and diluted weighted average shares outstanding**       |       | 89,637,553 |       | 38,220,101 |       | 5,894,567 |       |
|                                                             |       |       |       |       |       |      |       |
| **Basic  and diluted loss per share**                            |       | $          | (0.25      | )          | $          | (0.15     | )          | $ | (0.26 | ) |

 

*See Notes to Consolidated Financial Statements.*

F-5

----

**Behringer Harvard REIT I, Inc.**

**ConsolidatedStatements of Stockholders' EquityFor the Years ended December 31, 2006, 2005 and 2004**

**(inthousands)**
| ** **                                                | ** ** | **Convertible Stock** | ** ** | **Common Stock** | ** ** | **Additional**     | ** ** | **Cumulative  Distributions** | ** ** | **Total**   | ** ** |
|-----------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|--------------------|------------|-------------------------------|------------|-------------|------------|
| ** **                                                | ** ** | **Number**                 | ** ** | **Par**               | ** ** | **Number**         | ** ** | **Par**                       | ** ** | **Paid-in** | ** ** | **and** | ** ** | **Stockholders’** | ** ** |
| ** **                                                | ** ** | **of Shares**         | ** ** | **Value**             | ** ** | **of Shares** | ** ** | **Value**                     | ** ** | **Capital** | ** ** | **Net Loss** | ** ** | **Equity** | ** ** |
| Balance at  January 1, 2004                               |       | —                     |       | $                     | —     |               | 844        |                          | $          | —      |       | $ | 7,455 |   | $ | (383 | ) | $ | 7,072 |   |
|                                                      |       |                       |       |                  |       |               |       |                          |       |        |       |   |   |   |   |
| Issuance of  common stock, net                            |       | —                     |       | —                |       | 12,166             |       | 1                             |       | 107,182     |       | — |   | 107,183 |   |
| Redemption of  common stock                               |       | —                     |       | —                |       | (33                | )          | —                        |       | (332        | )          | — |   | (332 | ) |
| Distributions  declared on common stock                   |       | —                     |       | —                |       | —             |       | —                        |       | —      |       | (3,784 | ) | (3,784 | ) |
| Shares issued  pursuant to Distribution Reinvestment Plan |       | —                     |       | —                |       | 132                |       | —                        |       | 1,321       |       | — |   | 1,321 |   |
| Net loss                                                  |       |                       |       |                  |       |               |       |                          |       |        |       | (1,539 | ) | (1,539 | ) |
|                                                      |       |                       |       |                  |       |               |       |                          |       |        |       |   |   |   |   |
| Balance at  December 31, 2004                             |       | —                     |       | —                |       | 13,109             |       | 1                             |       | 115,626     |       | (5,706 | ) | 109,921 |   |
|                                                      |       |                       |       |                  |       |               |       |                          |       |        |       |   |   |   |   |
| Issuance of  common stock, net                            |       | —                     |       | —                |       | 48,231             |       | 4                             |       | 429,054     |       | — |   | 429,058 |   |
| Redemption of  common stock                               |       | —                     |       | —                |       | (150               | )          | —                        |       | (1,370      | )          | — |   | (1,370 | ) |
| Stock  dividend-10%                                       |       | —                     |       | —                |       | 5,521              |       | 1                             |       | 49,136      |       | (49,137 | ) | — |   |
| Distributions  declared on common stock                   |       | —                     |       | —                |       | —             |       | —                        |       | —      |       | (25,466 | ) | (25,466 | ) |
| Shares issued  pursuant to Distribution Reinvestment Plan |       | —                     |       | —                |       | 1,152              |       | 1                             |       | 11,006      |       | — |   | 11,007 |   |
| Net loss                                                  |       |                       |       |                  |       |               |       |                          |       |        |       | (5,722 | ) | (5,722 | ) |
|                                                      |       |                       |       |                  |       |               |       |                          |       |        |       |   |   |   |   |
| Balance at  December 31, 2005                             |       | —                     |       | —                |       | 67,863             |       | 7                             |       | 603,452     |       | (86,031 | ) | 517,428 |   |
| * *                                                  | * *   | * *                   | * *   | * *              | * *   | * *           | * *   | * *                      | * *   | * *    | * *   | * * | * * | * * | * * |
| Issuance of  common stock, net                            |       | —                     |       | —                |       | 51,569             |       | 5                             |       | 458,288     |       | — |   | 458,293 |   |
| Redemption of  common stock                               |       | —                     |       | —                |       | (680               | )          | —                        |       | (5,913      | )          | — |   | (5,913 | ) |
| Issuance of  convertible stock, net                       |       | 1                          |       | —                |       | —             |       | —                        |       | 1           |       | — |   | 1 |   |
| Distributions  declared on common stock                   |       | —                     |       | —                |       | —             |       | —                        |       | —      |       | (62,913 | ) | (62,913 | ) |
| Shares issued  pursuant to Distribution Reinvestment Plan |       | —                     |       | —                |       | 3,132              |       | —                        |       | 29,978      |       | — |   | 29,978 |   |
| Net loss                                                  |       |                       |       |                  |       | —             |       |                          |       |        |       | (22,432 | ) | (22,432 | ) |
|                                                      |       |                       |       |                  |       |               |       |                          |       |        |       |   |   |   |   |
| Balance at  December 31, 2006                             |       | 1                          |       | $                     | —     |               | 121,884    |                          | $          | 12          |       | $ | 1,085,806 |   | $ | (171,376 | ) | $ | 914,442 |   |

 

*SeeNotes to Consolidated Financial Statements.*

F-6

----

**BehringerHarvard REIT I, Inc.**

**Consolidated Statements of Cash FlowsFor the Years ended December 31, 2006, 2005 and 2004**

**(in thousands)**
| ** **                                                                                        | ** ** | **2006**   | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| **Cash flows from operating  activities**                                                         |       |       |       |     |       |     |       |
| Net loss                                                                                          |       | $          | (22,432    | )        | $          | (5,722   | )          | $ | (1,539 | ) |
| Adjustments to  reconcile net loss to net cash flows provided by (used in) operating  activities: |       |       |       |     |       |     |       |
| Depreciation and  amortization                                                                    |       | 68,143     |       | 14,928   |       | —   |       |
| Amortization of  deferred financing fees                                                          |       | 1,327      |       | 522      |       | 52       |       |
| Equity in  earnings of investments in tenant-in-common interests                                  |       | (4,804     | )          | (3,115   | )          | (1,403   | )          |
| Distributions  from investments in tenant-in-common interests                                     |       | 4,804      |       | 3,115    |       | 1,403    |       |
| Change in  accounts receivable                                                                    |       | (16,914    | )          | (3,491   | )          | —   |       |
| Change in  prepaid expenses and other assets                                                      |       | 5,373      |       | 449      |       | 122      |       |
| Change in lease  intangibles                                                                      |       | (2,838     | )          | (459     | )          | —   |       |
| Change in  accounts payable                                                                       |       | 1,282      |       | 15       |       | 863      |       |
| Change in  accrued liabilities                                                                    |       | 14,395     |       | 2,598    |       | 370      |       |
| Net change in  receivables or payables to affiliates                                              |       | 842        |       | 200      |       | (200     | )          |
| **Cash provided by (used in)  operating activities**                                              |       | 49,178     |       | 9,040    |       | (332     | )          |
|                                                                                              |       |       |       |     |       |     |       |
| **Cash flows from investing  activities**                                                         |       |       |       |     |       |     |       |
| Purchases of  tenant-in-common interests                                                          |       | (19,565    | )          | (14,958  | )          | (128,976 | )          |
| Return of  investments in tenant-in-common interests                                              |       | 6,226      |       | 7,256    |       | 1,634    |       |
| Purchases of  real estate                                                                         |       | (1,480,037 | )          | (564,025 | )          | (20,645  | )          |
| Escrow deposits  on real estate to be acquired                                                    |       | 2,890      |       | 4,879    |       | (7,894   | )          |
| Additions of  property and equipment                                                              |       | (8,059     | )          | (380     | )          | —   |       |
| Investment in  note receivable                                                                    |       | (3,013     | )          | —   |       | —   |       |
| Change in  restricted cash                                                                        |       | (76,217    | )          | (21,409  | )          | (2,500   | )          |
| **Cash used in investing  activities**                                                            |       | (1,577,775 | )          | (588,637 | )          | (158,381 | )          |
|                                                                                              |       |       |       |     |       |     |       |
| **Cash flows from financing  activities**                                                         |       |       |       |     |       |     |       |
| Financing costs                                                                                   |       | (14,594    | )          | (3,533   | )          | (1,597   | )          |
| Proceeds from  mortgages payable                                                                  |       | 1,112,449  |       | 271,734  |       | 78,065   |       |
| Payments on  mortgages payable                                                                    |       | (701       | )          | (533     | )          | (44      | )          |
| Loan deposits on  real estate to be acquired                                                      |       | 2,576      |       | (2,356   | )          | (1,800   | )          |
| Issuance of  convertible stock                                                                    |       | 1          |       | —   |       | —   |       |
| Issuance of  common stock                                                                         |       | 514,003    |       | 481,621  |       | 121,385  |       |
| Redemptions of  common stock                                                                      |       | (3,648     | )          | (1,370   | )          | (332     | )          |
| Offering costs                                                                                    |       | (55,518    | )          | (52,563  | )          | (14,202  | )          |
| Distributions                                                                                     |       | (30,010    | )          | (11,246  | )          | (1,765   | )          |
| Distributions to  minority interest holders                                                       |       | (303       | )          | (100     | )          | —   |       |
| Change in  subscriptions for common stock                                                         |       | 2,162      |       | (1,892   | )          | 2,936    |       |
| Change in  subscription cash received                                                             |       | (2,162     | )          | 1,892    |       | (2,936   | )          |
| Net change in  receivables or payables to affiliates                                              |       | 548        |       | 618      |       | (77      | )          |
| **Cash provided by financing  activities**                                                        |       | 1,524,803  |       | 682,272  |       | 179,633  |       |
|                                                                                              |       |       |       |     |       |     |       |
| Net change in  cash and cash equivalents                                                          |       | (3,794     | )          | 102,675  |       | 20,920   |       |
| Cash and cash  equivalents at beginning of year                                                   |       | 128,742    |       | 26,067   |       | 5,147    |       |
| Cash and cash equivalents  at end of year                                                         |       | $          | 124,948    |     | $          | 128,742  |       | $ | 26,067 |   |

 

*See Notes to Consolidated FinancialStatements.*

F-7

----

Behringer HarvardREIT I, Inc.

Notes toConsolidated Financial Statements

**1.             Business and Organization**

***Business***

BehringerHarvard REIT I, Inc. was incorporated in June 2002 as a Maryland corporationand has elected to be taxed, and currently qualifies, as a real estateinvestment trust, or REIT, for federal income tax purposes.  We acquire and operate institutional qualityreal estate.  In particular, we focus onacquiring institutional quality office properties that we believe have premierbusiness addresses, desirable locations, personalized amenities, high qualityconstruction and highly creditworthy commercial tenants.  To date, all of our investments have beeninstitutional quality office properties located in metropolitan cities andsuburban markets in the United States. Our management and members of our board of directors have extensiveexperience in investing in numerous types of properties.  Thus, we also may acquire institutionalquality industrial, retail, hospitality, multi-family and other real properties,including existing or newly constructed properties or properties underdevelopment or construction, based on our view of market conditions.  Further, we may invest in real estate relatedsecurities, including securities issued by other real estate companies, eitherfor investment or in change of control transactions completed on a negotiatedbasis or otherwise.  We also may investin collateralized mortgage-backed securities, mortgage, bridge or mezzanine loansand Section 1031 TIC interests, or in entities that make investments similar tothe foregoing.

Substantiallyall of our business is conducted through Behringer Harvard OperatingPartnership I LP, a Texas limited partnership organized in 2002 (“Behringer OP”).  As of January 1, 2007, our wholly-ownedsubsidiary, BHR, Inc., a Delaware corporation, was the sole general partner ofBehringer Harvard OP and owned 17 partnership units of Behringer Harvard OP forwhich its predecessor in interest contributed $170.  As of January 1, 2007, our wholly-ownedsubsidiary, BHR Business Trust, a Maryland business trust, was a limitedpartner of Behringer Harvard OP and owned approximately 107.0 millionpartnership units of Behringer Harvard OP for which its predecessor in interestcontributed approximately $1.0 billion. As of January 1, 2007, our wholly-owned subsidiary, BHR Partners, LLC, aDelaware limited liability company, was a limited partner of Behringer HarvardOP and owned approximately 14.6 million partnership units of BehringerHarvard OP for which its predecessor in interest contributed approximately$138.9 million.

Weare externally managed and advised by Behringer Advisors LP, a Texas limitedpartnership that was formed in June 2002 (“Behringer Advisors”).  Behringer Advisors is responsible formanaging our day-to-day affairs and for identifying and making acquisitions andinvestments on our behalf.

***Organization***

OnFebruary 19, 2003, we commenced a public offering (the “Initial Offering”) ofup to 80,000,000 shares of common stock offered at a price of $10.00 per sharepursuant to a Registration Statement on Form S-11 filed under the SecuritiesAct of 1933, as amended (the “Securities Act”). The Initial Offering also covered the registration of up to 8,000,000shares offered pursuant to our distribution reinvestment plan (“DRIP”) and upto 3,520,000 shares issuable to broker-dealers pursuant to warrants wherebyparticipating broker-dealers would have the right to purchase one share forevery 25 shares they sold pursuant to the Initial Offering.  We terminated the Initial Offering onFebruary 19, 2005.

 On February 11, 2005, we commenced a secondpublic offering (the “Second Offering”) of up to 80,000,000 shares of commonstock offered at a price of $10.00 per share pursuant to a Registration Statementon Form S-3 under the Securities Act. The Second Offering also covered the registration of up to 16,000,000shares offered pursuant to our DRIP.  Wesubsequently converted the Second Offering to a Registration Statement on FormS-11 and reallocated the shares of common stock in the Second Offering to offer90,000,000 shares of common stock at a price of $10.00 per share and up to5,473,684 shares pursuant to our DRIP.  In addition, we increased theaggregate amount of the Second Offering by 2,945,017 shares in a relatedregistration statement on Form S-11.  Weterminated the Second Offering on October 20, 2006 in all jurisdictions exceptthe Commonwealth of Pennsylvania and we terminated the Second Offering in theCommonwealth of Pennsylvania on February 9, 2007.

 On October 20, 2006, we commenced a thirdpublic offering (the “Current Offering” and together with the Initial Offeringand Second Offering, the “Offerings”) of up to 200,000,000 shares of commonstock offered at a price of $10.00 per share pursuant to a RegistrationStatement on Form S-11 under the Securities Act. The Current Offering alsocovers the registration of up to 50,000,000 shares offered pursuant to ourDRIP.  The Current Offering will terminateon or before October 6, 2008 unless earlier terminated, fully subscribed orextended with respect to the shares offered under our DRIP or as otherwisepermitted under applicable law.

Asof December 31, 2006, we had 121,884,470 shares of our common stockoutstanding, which includes the effect of a 10% stock dividend issued onOctober 1, 2005 and 22,000 shares owned by Behringer Harvard Holdings, LLC (“BehringerHarvard Holdings”.)  As of December 31,2006, we had no shares of preferred stock issued and outstanding, and we hadoptions to purchase 40,500 shares of common stock outstanding at a weightedaverage exercise price of $9.16

F-8

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and warrants topurchase 750,937 shares of common stock from the Initial Offering issued forthe benefit of participating individual broker-dealers, each adjusted for the10% stock dividend if issued prior to September 30, 2005.  At December 31, 2006, Behringer OP had432,586 units of limited partnership interest outstanding to third parties,after giving effect to the 10% stock dividend we issued October 1, 2005.  These units of limited partnership interestare convertible into an equal number of shares of our common stock.  We sold 1,000 shares of ournon-participating, non-voting convertible stock to Behringer Advisors for $1,000on March 22, 2006.  Pursuant to itsterms, the convertible stock is convertible into shares of our common stockwith a value equal to 15% of the amount by which (1) our enterprise value,including the total amount of distributions paid to our stockholders, exceeds(2) the sum of the aggregate capital invested by stockholders plus a 9%cumulative, non-compounded, annual return on such capital.  The weighted average number of shares andearnings per share data for each reported period throughout this report reflectthe effects of the stock dividend.

Weadmit new stockholders pursuant to the Offerings at least monthly.  All subscription proceeds are held in aseparate account until the subscribing investors are admitted as stockholders.  Upon admission of new stockholders,subscription proceeds are transferred to operating cash and may be utilized asconsideration for investments and the payment or reimbursement of dealermanager fees, selling commissions, offering expenses and operatingexpenses.  Until required for suchpurposes, net offering proceeds are held in short-term, liquid investments.

Ourcommon stock is not currently listed on a national exchange.  However, management anticipates by 2017either listing the common stock on a national exchange or liquidating ourassets.  Depending upon then prevailingmarket conditions, it is the intention of our management to consider beginningthe process of listing (or liquidating) prior to 2013.  In the event we do not obtain listing priorto 2017, our charter requires us to begin selling our properties andliquidating our assets, unless a majority of the board of directors and amajority of the independent directors extend such date.

**2.             Summary of Significant AccountingPolicies**

***Use of Estimates in thePreparation of Financial Statements***

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America (“GAAP”) requires managementto make estimates and assumptions that affect the reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the reporting period.  Theseestimates include such items as the purchase price allocation for real estateacquisitions, impairment of long-lived assets, depreciation and amortizationand allowance for doubtful accounts. Actual results could differ from those estimates.

***Principles of Consolidation andBasis of Presentation***

Ourconsolidated financial statements include our accounts, the accounts ofvariable interest entities in which we are the primary beneficiary and theaccounts of other subsidiaries over which we have control.  All inter-company transactions, balances andprofits have been eliminated in consolidation. Interests in entities acquired are evaluated based on FinancialAccounting Standards Board Interpretation (“FIN”) 46R “Consolidation ofVariable Interest Entities,” which requires the consolidation of variableinterest entities in which we are deemed to be the primary beneficiary.  If the interest in the entity is determinedto not be a variable interest entity under FIN 46R, then the entities areevaluated for consolidation under the American Institute of Certified PublicAccountants’ (“AICPA”) Statement of Position (“SOP”) 78-9, “Accounting forInvestments in Real Estate Ventures,” as amended by Emerging Issues Task Force (“EITF”)04-5, “Determining Whether a General Partner, or the General Partners as aGroup, Controls a Limited Partnership or Similar Entity When the LimitedPartners Have Certain Rights.”

***Real Estate***

Uponthe acquisition of real estate properties, we allocate the purchase price ofthose properties to the tangible assets acquired, consisting of land, inclusiveof associated rights, and buildings, any assumed debt, identified intangibleassets and asset retirement obligations based on their relative fair values inaccordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “BusinessCombinations” and No. 142, “Goodwill and Other Intangible Assets.”  Identified intangible assets consist of thefair value of above-market and below-market leases, in-place leases, in-placetenant improvements and tenant relationships. Initial valuations are subject to change until our information isfinalized, which is no later than 12 months from the acquisition date.

Wedetermine the fair value of assumed debt by calculating the net present valueof the scheduled mortgage payments using interest rates for debt with similarterms and remaining maturities that management believes we could obtain.  Any difference between the fair value andstated value of the assumed debt is recorded as a discount or premium andamortized over the remaining life of the loan.

Thefair value of the tangible assets acquired, consisting of land and buildings,is determined by valuing the property as if it were vacant, and the “as-if-vacant”value is then allocated to land and buildings. Land values are derived

F-9

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from appraisals,and building values are calculated as replacement cost less depreciation ormanagement’s estimates of the relative fair value of these assets usingdiscounted cash flow analyses or similar methods.  The value of the building is depreciated overthe estimated useful life of 25 years using the straight-line method.

Wedetermine the value of above-market and below-market in-place leases foracquired properties based on the present value (using an interest rate thatreflects the risks associated with the leases acquired) of the differencebetween (1) the contractual amounts to be paid pursuant to the in-place leasesand (2) management’s estimate of current market lease rates for thecorresponding in-place leases, measured over a period equal to the remainingnon-cancelable terms of the respective leases.  We record the fair value of above-market andbelow-market leases as intangible assets or intangible liabilities,respectively, and amortize them as an adjustment to rental income over theremaining non-cancelable terms of the respective leases.

Thetotal value of identified real estate intangible assets acquired is furtherallocated to in-place lease values and tenant relationships based on ourevaluation of the specific characteristics of each tenant’s lease and ouroverall relationship with that respective tenant.  The aggregate value of in-place leasesacquired and tenant relationships is determined by applying a fair valuemodel.  The estimates of fair value ofin-place leases includes an estimate of carrying costs during the expectedlease-up periods for the respective spaces considering current marketconditions.  In estimating fair value ofin-place leases, we consider items such as real estate taxes, insurance andother operating expenses as well as lost rental revenue during the expectedlease-up period and carrying costs that would have otherwise been incurred hadthe leases not been in place, including tenant improvements andcommissions.  The estimates of the fairvalue of tenant relationships also include costs to execute similar leasesincluding leasing commissions, legal and tenant improvements as well as anestimate of the likelihood of renewal as determined by management on atenant-by-tenant basis.

Weamortize the value of in-place leases to expense over the term of therespective leases.  The value of tenantrelationship intangibles is amortized to expense over the initial term and anyanticipated renewal periods, but in no event does the amortization period forintangible assets exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, theunamortized portion of the in-place lease value and tenant relationshipintangibles would be charged to expense. The estimated remaining useful lives for acquired lease intangibles rangefrom 1.6 years to 12.0 years.

Anticipatedamortization associated with the acquired lease intangibles for each of thefollowing five years ended December 31 is as follows (in thousands):
|            | ** ** | **Lease**       | ** ** |
|------------|------------|-----------------|------------|
| ** ** | ** ** | **Intangibles** | ** ** |
| 2007       |       | $               | 53,428     |   |
| 2008       |       | 51,585          |       |
| 2009       |       | 37,885          |       |
| 2010       |       | 35,666          |       |
| 2011       |       | 24,206          |       |
|            |            |                 |            |  |

 

Asof December 31, 2006 and 2005, accumulated depreciation and amortizationrelated to our wholly-owned investments in real estate assets and related leaseintangibles were as follows (in thousands):
| ** **                           | ** ** | ** **             | ** ** | ** **   | ** ** | **Acquired**     | ** ** | **Acquired**     | ** ** |
|--------------------------------------|------------|------------------------|------------|--------------|------------|------------------|------------|------------------|------------|
| ** **                           | ** ** | **Buildings and** | ** ** | **In-Place** | ** ** | **Above-Market** | ** ** | **Below-Market** | ** ** |
| **2006**                             | ** ** | **Improvements**       | ** ** | **Leases**   | ** ** | **Leases**       | ** ** | **Leases**       | ** ** |
| Cost                                 |       | $                      | 1,680,077  |         | $          | 376,705          |       | $                | 36,889     |   | $ | (107,840 | ) |
| Less:  depreciation and amortization |       | (42,339                | )          | (42,048      | )          | (4,532           | )          | 9,028            |       |
| Net                                  |       | $                      | 1,637,738  |         | $          | 334,657          |       | $                | 32,357     |   | $ | (98,812 | ) |

 
| ** **                           | ** ** | ** **             | ** ** | ** **   | ** ** | **Acquired**     | ** ** | **Acquired**     | ** ** |
|--------------------------------------|------------|------------------------|------------|--------------|------------|------------------|------------|------------------|------------|
| ** **                           | ** ** | **Buildings and** | ** ** | **In-Place** | ** ** | **Above-Market** | ** ** | **Below-Market** | ** ** |
| **2005**                             | ** ** | **Improvements**       | ** ** | **Leases**   | ** ** | **Leases**       | ** ** | **Leases**       | ** ** |
| Cost                                 |       | $                      | 377,004    |         | $          | 84,300           |       | $                | 4,681      |   | $ | (12,104 | ) |
| Less:  depreciation and amortization |       | (6,808                 | )          | (8,223       | )          | (928             | )          | 1,032            |       |
| Net                                  |       | $                      | 370,196    |         | $          | 76,077           |       | $                | 3,753      |   | $ | (11,072 | ) |

 

F-10

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***Cash and Cash Equivalents***

Weconsider investments in highly-liquid money market funds with originalmaturities of three months or less to be cash equivalents.  The carrying amount of cash and cashequivalents reported on the balance sheet approximates fair value.

***Restricted Cash***

Restrictedcash includes subscription proceeds that are held in a separate account untilthe subscribing investors are admitted as stockholders.  We admit new stockholders at leastmonthly.  Upon acceptance ofstockholders, shares of stock are issued, and we receive the subscriptionproceeds.  Restricted cash as of December31, 2006 and 2005 also included approximately $100.1 million and $21.4 million,respectively, held in restricted money market accounts, as required by ourlenders, for anticipated tenant expansions and improvements, property taxes andinsurance for our wholly-owned properties.

***Accounts Receivable***

Accountsreceivable primarily consist of receivables from tenants of our wholly-ownedproperties.  Our allowance for doubtfulaccounts was approximately $96,000, $42,000, and $1,000 as of December 31,2006, 2005 and 2004, respectively.

***Prepaid Expenses and Other Assets***

Prepaidexpenses and other assets include prepaid directors’ and officers’ insurance,as well as prepaid insurance and real estate taxes of our wholly-ownedproperties.

***Loan Deposits***

Loandeposits include interest rate lock deposits for future borrowings to makefuture acquisitions.

***Escrow Deposits***

Escrowdeposits include deposits for the purchase of properties that we havecontracted to acquire.

***Investments in Tenant-in-CommonInterests***

Investmentsin tenant-in–common interests consists of our undivided TIC interests invarious office buildings located in Colorado, Minnesota, Missouri, Texas andthe District of Columbia.  Consolidationof these investments is not required as they do not qualify as variableinterest entities as defined in FIN No. 46R and do not meet the controlrequirement required for consolidation under SOP 78-9, as amended by EITF 04-5.

Weaccount for these investments using the equity method of accounting inaccordance with SOP 78-9, as amended by EITF 04-5.  The equity method of accounting requiresthese investments to be initially recorded at cost and subsequently increased(decreased) for our share of net income (loss), including eliminations for ourshare of inter-company transactions and reduced when distributions arereceived.  We use the equity method ofaccounting because the shared decision-making involved in a TIC interestinvestment creates an opportunity for us to have some influence on theoperating and financial decisions of these investments and thereby creates someresponsibility by us for a return on our investment.  Therefore, it is appropriate to include ourproportionate share of the results of operations of these investments in ourearnings or losses.

***Investment Impairments***

Forour wholly-owned properties, management monitors events and changes in circumstancesindicating that the carrying amounts of the real estate assets may not berecoverable.  When such events or changesin circumstances are present, we assess potential impairment by comparingestimated future undiscounted operating cash flows expected to be generatedover the life of the asset including its eventual disposition, to the carryingamount of the asset.  In the event thatthe carrying amount exceeds the estimated future undiscounted operating cashflows, we recognize an impairment loss to adjust the carrying amount of theasset to estimated fair value.

Forreal estate we own through an investment in a joint venture, TIC interest orother similar investment structure, at each reporting date management willcompare the estimated fair value of our investment to the carrying value.  An impairment charge is recorded to theextent the fair value of our investment is less than the carrying amount andthe decline in value is determined to be other than a temporary decline.  There were no impairment charges during theyears ended December 31, 2006, 2005 or 2004.

F-11

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***Deferred Financing Fees***

Deferredfinancing fees are recorded at cost and are amortized using a straight-linemethod that approximates the effective interest method over the life of the relateddebt.  Accumulated amortization ofdeferred financing fees was approximately $1.8 million and $0.6 million as ofDecember 31, 2006 and 2005, respectively.

***Note Receivable***

Thenote receivable represents a mortgage loan we made related to raw land held bythird parties for future development of additional office buildings at theTerrace in Austin, Texas.  We have theexclusive right of first offer to participate in the future development of theraw land.  The annual interest rate underthe loan is fixed at 7.75% through the maturity date of June 21, 2013.  Initial monthly payments of interest only ata rate of 6.50% per annum are required through the maturity date.  The difference between the annual interestrate and 6.50% will be accrued and added to the principal amount annually onthe anniversary date of the note.  Wepurchased the developed portion of the Terrace, an office park that currentlyincludes four buildings, in June 2006 from parties related to the borrower ofthis mortgage loan.

***Asset Retirement Obligations***

Werecord the fair value of any conditional asset retirement obligations inaccordance with FIN No. 47, “Accounting for Conditional Asset RetirementObligations,” if they can be reasonably estimated.  As part of the anticipated renovation ofacquired properties, we will incur future costs for the abatement of regulatedmaterials, primarily asbestos-containing materials, as required underenvironmental regulations.  Our estimateof the fair value of the liabilities is based on future anticipated costs to beincurred for the legal removal or remediation of the regulated materials.  As of December 31, 2006, the balance of ourasset retirement obligation is approximately $0.5 million and is included in otherliabilities.

***Revenue Recognition***

Werecognize rental income generated from all leases on real estate assets that weconsolidate on a straight-line basis over the terms of the respective leases,including the effect of rent holidays, if any. The total net increase to rental revenues due to straight-line rentadjustments for the years ended December 31, 2006 and 2005 was approximately$6.8 million and $1.2 million, respectively. There were no straight-line rent adjustments for the year ended December31, 2004.  As discussed above, our rentalrevenue also includes amortization of above- and below-market leases.  Revenues relating to lease termination feesare recognized at the time that a tenant’s right to occupy the leased space isterminated and we have satisfied all obligations under the agreement.

***Offering Costs***

Ouradvisor funds certain organization and offering costs on our behalf.  We are required to reimburse our advisor forsuch organization and offering costs up to 1.5% of the cumulative capitalraised in the Current Offering. Our advisor received up to 2.5% and 2.0% ofgross offering proceeds for reimbursement of organization and offering expensesincurred in connection with the Initial Offering and the Second Offering,respectively.  Organization and offeringcosts include items such as legal and accounting fees, marketing, promotionaland printing costs.  All offering costsare recorded as an offset to additional paid-in capital, and all organizationcosts are recorded as an expense at the time we become liable for the paymentof these amounts.

***Income Taxes***

Wehave elected to be taxed as a REIT under Sections 856 through 860 of theInternal Revenue Code of 1986, as amended (the “Code”), and we have qualifiedsince the year ended December 31, 2004. To qualify as a REIT, we must meet a number of organizational andoperational requirements, including a requirement that we distribute at least90% of our REIT taxable income to our stockholders.  As a REIT, we generally will not be subjectto federal income tax at the corporate level. We are organized and operate in such a manner as to qualify for taxationas a REIT under the Code, and we intend to continue to operate in such amanner, but no assurance can be given that we will operate in a manner so as toqualify or remain qualified as a REIT.

***Stock Based Compensation***

Wehave a stock-based incentive award plan for our directors and consultants andfor employees, directors and consultants of our affiliates.  We account for this plan under the modifiedprospective method of Financial Accounting Standards Board (“FASB”) SFAS No.123R, “Share-Based Payment.” In the modified prospective method, compensationcost is recognized for all share-based payments granted after the effectivedate and for all unvested awards granted prior to the effective date. Inaccordance with SFAS No. 123R, prior period amounts were not restated.SFAS No. 123R also requires the tax benefits associated with theseshare-based payments to be classified as financing activities in the

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ConsolidatedStatements of Cash Flows, rather than as operating cash flows as required underprevious regulations. For the year ended December 31, 2006, we had nosignificant compensation cost related to these stock options.

***Concentration of Credit Risk***

AtDecember 31, 2006, we had cash and cash equivalents and restricted cashdeposited in certain financial institutions in excess of federally insuredlevels.  We regularly monitor thefinancial stability of these financial institutions and believe that we are notexposed to any significant credit risk in cash and cash equivalents orrestricted cash.

***Minority Interest***

Minorityinterest consists of units of limited partnership interests issued by BehringerOP to third parties.  In conjunction withthe July 28, 2005 acquisition of Buena Vista Plaza, 393,260 units of limitedpartnership interests in Behringer OP were issued at $8.90 per unit.  At December 31, 2006 and 2005, Behringer OPhad 432,586 units of limited partnership interest outstanding with third parties,after giving effect to the 10% stock dividend issued October 1, 2005.  These units of limited partnership interestare convertible into an equal number of shares of our common stock.

***Earnings per Share***

Earningsper share is calculated based on the weighted average number of common sharesoutstanding during each period.  As ofDecember 31, 2006, we had options to purchase 40,500 shares of common stockoutstanding at a weighted average exercise price of $9.16 and warrants topurchase 750,937 shares of common stock outstanding from the Initial Offeringat $10.91 per share which were issued for the benefit of participatingindividual broker-dealers, each adjusted for the 10% stock dividend issuedOctober 1, 2005 if issued prior to September 30, 2005.  At December 31, 2006, Behringer OP had432,586 units of limited partnership interest outstanding with third parties,after giving effect to the 10% stock dividend issued October 1, 2005.  These units of limited partnership interestare convertible into an equal number of shares of our common stock.  The weighted average shares and earnings pershare for all periods presented in this report reflect the effects of the stockdividend.  These options, warrants andunits of limited partnership interest are excluded from the calculation ofearnings per share for all periods presented in this report because the effectwould be anti-dilutive.

***Reportable Segments***

SFASNo. 131, “Disclosures about Segmentsof an Enterprise and Related Information,” establishes standards forreporting financial and descriptive information about an enterprise’sreportable segments.  Our current business consists of owning, managing,operating, leasing, acquiring, developing, investing in and disposing of realestate assets.  All of our consolidatedrevenues are from our wholly-owned real estate properties.  Management evaluates operating performance onan individual property level.  However,as each of our properties has similar economic characteristics, our propertieshave been aggregated into one reportable segment.

**3.             New Accounting Pronouncements**

InJuly 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes,an interpretation of FASB Statement No. 109,” which clarifies the relevantcriteria and approach for the recognition and measurement of uncertain taxpositions.  FIN 48 was effectivebeginning January 1, 2007 and the adoption of FIN 48 did not have a material effecton our financial condition, results of operations, or liquidity.

F-13

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InSeptember 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”  SFAS No. 157 establishes a singleauthoritative definition of fair value, sets out a framework for measuring fairvalue, and requires additional disclosures about fair value measurements. SFASNo. 157 applies only to fair value measurements that are already required orpermitted by other accounting standards. SFAS No. 157 is effective for fiscalyears beginning after November 15, 2007. We are currently evaluating the impactthat adopting SFAS No. 157 will have on our financial statements.

InFebruary 2007, the FASB issued SFAS No. 159, “The Fair Value Option forFinancial Assets and Financial Liabilities - Including an Amendment ofFASB Statement No. 115.”  The fairvalue option established by SFAS No. 159 permits all entities to choose tomeasure eligible items at fair value at specified election dates.  A business entity will report unrealizedgains and losses on items for which the fair value option has been elected inearnings (or another performance indicator if the business entity does notreport earnings) at each subsequent reporting date.  SFAS No. 159 is effective as of thebeginning of fiscal years beginning after November 15, 2007.  We are currently evaluating the impact thatadopting SFAS No. 159 will have on our financial statements.

**4.****                                      Acquisitions**

Thefollowing table provides a summary of the properties we acquired during thefiscal year ended December 31, 2006:
| ** **              | ** ** | ** **        | ** ** | ** **   | ** ** | **Approximate**         | ** ** | ** **             | ** ** | **Approximate**                         | ** ** |
|-------------------------|------------|-------------------|------------|--------------|------------|-------------------------|------------|------------------------|------------|-----------------------------------------|------------|
| ** **              | ** ** | ** **        | ** ** | ** **   | ** ** | **Rentable**            | ** ** | ** **             | ** ** | **Purchase Price**                 | ** ** |
| ** **              | ** ** | ** **        | ** ** | **Date**     | ** ** | **Square Footage** | ** ** | **Encumbrances**       | ** ** | **(including closing costs)** | ** ** |
| **Property Name**  | ** ** | **Location**      | ** ** | **acquired** | ** ** | **(unaudited)**         | ** ** | **(in millions)** | ** ** | **(in millions)**                  | ** ** |
| Woodcrest Center        |       | Cherry  Hill, NJ  |       | 01/11/06     |       | 333,000                 |       | $                      | 50.4       |                                    | $          | 80.5 |   |
| Burnett Plaza           |       | Fort  Worth, TX   |       | 02/10/06     |       | 1,025,000               |       | 114.2                  |       | 177.5                                   |       |
| 10777 Clay Road         |       | Houston,  TX      |       | 03/14/06     |       | 227,000                 |       | 16.3                   |       | 26.3                                    |       |
| Paces West              |       | Atlanta,  GA      |       | 04/19/06     |       | 646,000                 |       | 84.0                   |       | 131.3                                   |       |
| Riverside Plaza         |       | Chicago,  IL      |       | 06/02/06     |       | 1,184,000               |       | 202.0                  |       | 301.5                                   |       |
| The Terrace             |       | Austin,  TX       |       | 06/21/06     |       | 619,000                 |       | 131.0                  |       | 172.0                                   |       |
| 600/619  Alexander Road |       | Princeton,  NJ    |       | 06/28/06     |       | 97,000                  |       | 16.5                   |       | 23.2                                    |       |
| Grandview               |       | Birmingham,  AL   |       | 10/20/06     |       | 149,000                 |       | 17.0                   |       | 24.2                                    |       |
| Bank of America  Plaza  |       | Charlotte,  NC    |       | 10/26/06     |       | 887,000                 |       | 150.0                  |       | 205.8                                   |       |
| Three Parkway           |       | Philadelphia,  PA |       | 10/30/06     |       | 561,000                 |       | 67.1                   |       | 94.8                                    |       |
| 4440 El Camino  Real    |       | Los  Altos, CA    |       | 11/02/06     |       | 97,000                  |       | 27.7                   | (1)        | 49.1                                    |       |
| Fifth Third  Center     |       | Cleveland,  OH    |       | 11/16/06     |       | 508,000                 |       | 49.3                   |       | 65.3                                    |       |
| Resurgens Plaza         |       | Atlanta,  GA      |       | 11/30/06     |       | 400,000                 |       | 82.0                   |       | 118.7                                   |       |
| 5 & 15  Wayside     |       | Burlington,  MA   |       | 12/08/06     |       | 270,000                 |       | —                 |       | 84.5                                    |       |
| Eldridge Place          |       | Houston,  TX      |       | 12/13/06     |       | 519,000                 |       | 75.0                   |       | 108.1                                   |       |
|                    |       |              |       |         |       | 7,522,000               |       | $                      | 1,082.5    |                                    | $          | 1,662.8 |   |

 

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(1)  4440 El Camino’s encumbrance excludesunamortized premium of approximately $2.4 million.

Inaddition to the acquisitions of wholly-owned properties listed above, during2006 we increased our ownership interests in three of our TIC properties.  We increased our interest in (1) the PrattBuilding from a 50.68% TIC interest to 100% ownership; (2) the Minnesota Centerfrom a 14.47% TIC interest to a 93.07% TIC interest; and (3) the ColoradoBuilding from a 79.48% TIC interest to a 81.49% TIC interest.

F-14

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**5.****                                      Investmentsin TIC Interests**

Thefollowing is a summary of our TIC interest investments as of December 31, 2006and 2005 (in thousands):
| ** **             | ** ** | **2006**     | ** ** | **2005**     | ** ** | **2006**                | ** ** | **2005**             | ** ** |
|------------------------|------------|--------------|------------|--------------|------------|-------------------------|------------|----------------------|------------|
| ** **             | ** ** | **TIC**      | ** ** | **TIC**      | ** ** | **Carrying Value** | ** ** | **Mortgages**        | ** ** | **Carrying Value** | ** ** | **Mortgages** | ** ** |
| **Property Name** | ** ** | **Interest** | ** ** | **Interest** | ** ** | **of Investment**  | ** ** | **Payable (2)** | ** ** | **of Investment** | ** ** | **Payable (2)** | ** ** |
| Minnesota Center       |       | 93.07        | %          | 14.47        | %          | $                       | 42,405     |                 | $          | 26,901 |   | $ | 5,616 |   | $ | 4,237 |   |
| Enclave on the  Lake   |       | 36.31        | %          | 36.31        | %          | 9,196                   |       | 6,999                |       | 9,767 |   | 7,107 |   |
| St. Louis Place        |       | 35.71        | %          | 35.71        | %          | 10,984                  |       | 6,940                |       | 11,491 |   | 7,028 |   |
| Colorado  Building     |       | 81.49        | %          | 79.48        | %          | 37,831                  |       | 22,817               |       | 37,936 |   | 22,253 |   |
| Travis Tower           |       | 60.43        | %          | 60.43        | %          | 32,510                  |       | 22,154               |       | 33,562 |   | 22,444 |   |
| Alamo Plaza            |       | 30.58        | %          | 30.58        | %          | 12,695                  |       | 9,634                |       | 13,488 |   | 9,634 |   |
| Pratt Building  (1)    |       | —       |       | 50.68        | %          | —                  |       | —               |       | 29,545 |   | 18,752 |   |
| Total                  |       |         |       |         |       | $                       | 145,621    |                 | $          | 95,445 |   | $ | 141,405 |   | $ | 91,455 |   |

 

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(1)          We acquired a 50.68% TICinterest in the Pratt Building in December 2004.  During the fourth quarter of 2006, weacquired the remaining interests in the property and, as of December 31, 2006,we wholly own the Pratt Building.

(2)          Eachof the TIC investors, including us, is a borrower under these mortgageagreements.  This amount represents ourmortgage payable for our investment interest only.

Our undivided TIC interest investments as of December 31, 2006 and 2005consisted of our proportionate share of the combined assets and liabilities ofour TIC properties as follows (in thousands):
|                                               | ** ** | **2006** | ** ** | **2005** | ** ** |
|-----------------------------------------------|------------|----------|------------|----------|------------|
| Land                                          |       | $        | 33,380     |     | $          | 40,079 |   |
| Buildings, net                                |       | 166,589  |       | 203,487  |       |
| Lease  intangibles, net                       |       | 27,498   |       | 42,562   |       |
| Cash and cash  equivalents                    |       | 3,783    |       | 2,007    |       |
| Restricted cash                               |       | 15,286   |       | 22,810   |       |
| Accounts  receivable and other assets         |       | 3,825    |       | 3,558    |       |
| Total assets                                  |       | $        | 250,361    |     | $          | 314,503 |   |
|                                          |       |     |       |     |       |
| Acquired below  market lease intangibles, net |       | $        | 2,983      |     | $          | 4,260 |   |
| Other liabilities                             |       | 5,668    |       | 6,680    |       |
| Total  liabilities                            |       | 8,651    |       | 10,940   |       |
|                                          |       |     |       |     |       |
| Equity                                        |       | 241,710  |       | 303,563  |       |
|                                          |       |     |       |     |       |
| Total liabilities and  equity                 |       | $        | 250,361    |     | $          | 314,503 |   |

 

In 2006, we recorded approximately $4.8 million of equity in earningsand approximately $11.0 million of distributions from our undivided TICinterest investments.  In 2005, werecorded approximately $3.1 million of equity in earnings and approximately$10.4 million of distributions from our undivided TIC interest investments.  In 2004, we recorded approximately $1.4million of equity in earnings and approximately $3.0 million of distributionsfrom our undivided TIC interest investments. During 2006, we increased our TICinterest in two of our TIC properties and we acquired all of the remaining TICinterests in the Pratt Building, and at December 31, 2006, the Pratt Buildingwas our wholly-owned property.  Ourequity in earnings from these TIC investments is our proportionate share of thecombined earnings of our TIC interest properties for the years ended December31, 2006, 2005 and 2004 as follows (in thousands):

F-15

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|                                             | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Revenue                                     |       | $        | 46,941     |     | $          | 42,584   |       | $ | 16,812 |   |
|                                        |       |     |       |     |       |     |       |
| Operating  expenses:                        |       |     |       |     |       |     |       |
| Operating  expenses                         |       | 13,227   |       | 11,867   |       | 4,536    |       |
| Property taxes                              |       | 5,870    |       | 5,249    |       | 2,327    |       |
| Total operating  expenses                   |       | 19,097   |       | 17,116   |       | 6,863    |       |
|                                        |       |     |       |     |       |     |       |
| Operating income                            |       | 27,844   |       | 25,468   |       | 9,949    |       |
|                                        |       |     |       |     |       |     |       |
| Non-operating  (income) expenses:           |       |     |       |     |       |     |       |
| Depreciation and  amortization              |       | 18,486   |       | 18,823   |       | 6,190    |       |
| (Interest  income)/bank fees, net           |       | (368     | )          | (156     | )          | 7        |       |
| Total  non-operating (income) expenses      |       | 18,118   |       | 18,667   |       | 6,197    |       |
|                                        |       |     |       |     |       |     |       |
| Net income                                  |       | $        | 9,726      |     | $          | 6,801    |       | $ | 3,752 |   |
|                                        |       |     |       |     |       |     |       |
| Company's share  of TIC net income          |       | $        | 4,804      |     | $          | 3,115    |       | $ | 1,403 |   |
|                                        |       |     |       |     |       |     |       |
| Company's share of  total TIC distributions |       | $        | 11,030     |     | $          | 10,371   |       | $ | 3,037 |   |

 

**6.**                                      **Pro Forma (unaudited)**

The year ended December 31, 2004, was our first year of substantialoperations.  Therefore, the followingsummary presents the results of operations (in thousands) for the year endedDecember 31, 2004 on an unaudited basis, as if the acquisition of the CyprusBuilding, acquired December 16, 2004, had occurred on January 1, 2004.  The pro forma results are for illustrativepurposes only and do not purport to be indicative of the actual results thatwould have occurred had the transaction occurred on January 1, 2004, nor arethey indicative of results of operations that may occur in the future.

| Total revenues                                         |   | $      | 3,226  |   |
|--------------------------------------------------------|--------|--------|--------|--------|
| Total expenses                                         |   | 5,922  |   |
| Interest income                                        |   | 390    |   |
| Equity in  investments                                 |   | 1,403  |   |
| Net loss                                               |   | $      | (903   | )      |
|                                                   |   |   |   |
| Basic and  diluted weighted average shares outstanding |   | 11,003 |   |
| Basic and diluted loss  per share                      |   | $      | (0.08  | )      |

 

**7.****                                      LeasingActivity**

Future minimum base rental payments due to us under non-cancelableleases in effect as of December 31, 2006, for our wholly-owned properties areas follows (in thousands):
| 2007       |   |   | $       | 181,626   |   |
|------------|--------|--------|---------|-----------|--------|
| 2008       |   |   | 176,649 |      |
| 2009       |   |   | 163,212 |      |
| 2010       |   |   | 146,920 |      |
| 2011       |   |   | 114,222 |      |
| Thereafter |   |   | 391,453 |      |
| Total      |   |   | $       | 1,174,082 |   |

 

**8.****                                      MortgagesPayable**

Our mortgages payable has increased to approximately $1.6 billion atDecember 31, 2006 from approximately $353.6 million at December 31, 2005 as aresult of borrowings related to our property acquisitions.  Each of our mortgage loans is collateriazed bythe property that was acquired in association with that loan.  Our mortgages payable are all fixed ratemortgages with interest rates ranging from 5.16% to 6.223%.  Generally, our mortgage loans mature atapproximately

F-16

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ten years from origination and require payments ofinterest only for approximately five years, with payments of principal andinterest thereafter.  At December 31,2006, our mortgages payable have maturity dates that range from November 2010to January 2017.  Our loan agreementsstipulate that we comply with certain reporting and financial covenants.  These covenants include among other things,notifying the lender of any change in management and maintaining minimum debtservice coverage ratios.  At December 31,2006 and 2005, we were in compliance with each of the debt covenants under ourloan agreements.

Thefollowing table summarizes our mortgages payable as of December 31, 2006 (inthousands):
| Principal payments due in: | ** ** | ** ** | ** ** |
|-------------------------------------------|------------|------------|------------|
| 2007                                      |       |       | $          | 2,105 |   |
| 2008                                      |       |       | 3,373      |   |
| 2009                                      |       |       | 4,185      |   |
| 2010                                      |       |       | 31,038     |   |
| 2011                                      |       |       | 50,042     |   |
| Thereafter                                |       |       | 1,516,517  |   |
| unamortized premium                       |       |       | 2,442      |   |
| Total                                     |       |       | $          | 1,609,702 |   |

 

**9.             Stockholders’ Equity**

***Capitalization***

Asof December 31, 2006, we had 121,884,470 shares of our common stockoutstanding, including 22,000 shares owned by Behringer Harvard Holdings andthe 10% stock dividend issued in 2005. On May 11, 2005, our Board of Directors declared a special 10% stockdividend for holders on record as of September 30, 2005 to be issued on October1, 2005.  The weighted average shares andearnings per share for each period presented in this report reflect the effectsof the stock dividend. As of December 31, 2005, we had 67,863,168 shares of ourcommon stock outstanding, including 22,000 shares owned by Behringer HarvardHoldings.  As of December 31, 2006 and2005, we had no shares of preferred stock issued and outstanding.  As of December 31, 2006, options to purchase40,500 shares of common stock were outstanding and none had been exercised. Asof December 31, 2005, options to purchase 24,000 shares of common stock wereoutstanding.  As of December 31, 2006 and2005, warrants to purchase 750,937 shares from the Initial Offering had beenissued for the benefit of participating individual broker-dealers.  In conjunction with the July 28, 2005acquisition of Buena Vista Plaza, 393,260 units of limited partnershipinterests in Behringer OP were issued at $8.90 per unit.  As of December 31, 2006, 432,586 units oflimited partnership interests in Behringer OP had been issued, which includesthe 10% stock dividend issued October 1, 2005. These limited partnership interests are convertible into an equal numberof shares of our common stock.  We sold1,000 shares of our convertible stock to Behringer Advisors for $1,000 on March22, 2006.  Pursuant to its terms, theconvertible stock is convertible into shares of our common stock with a valueequal to 15% of the amount by which (1) our enterprise value, including thetotal amount of distributions paid to our shareholders, exceeds (2) the sum ofthe aggregate capital invested by stockholders plus a 9% cumulative,non-compounded, annual return on such capital. These shares were not registered under the Securities Act of 1933, asamended, and were issued in reliance on Rule 4(2) of the Securities Act.

## ***Distributions***

We initiated the payment of monthly distributions in November 2003 inthe amount of a 7% annualized rate of return, based on an investment in ourcommon stock of $10.00 per share and calculated on a daily record basis of$0.0019178 per share.  We have adistribution reinvestment plan (“DRIP”) whereby stockholders may elect toreinvest any cash distribution in additional shares of common stock.  We record all distributions when declared,except that the stock issued through the DRIP is recorded when the shares areactually issued.  In 2006 and 2005,approximately $0.3 million and $0.1 million, respectively, of distributionsdeclared in connection with our limited partnership units are recorded as areduction to minority interest.  Of theamounts distributed by us in 2006, 76.95% represented a return of capital and23.05% were distributions from the taxable earnings of real estateoperations.  The following are thedistributions declared during the years ended December 31, 2006 and 2005 (inthousands):

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| 2006        | ** ** | **Total** | ** ** | **Cash** | ** ** | **DRIP** | ** ** |
|-------------|------------|-----------|------------|----------|------------|----------|------------|
| 4th Quarter |       |      | $          | 19,726   |       | $        | 9,989      |   | $ | 9,737 |   |
| 3rd Quarter |       |      | 16,690     |     | 8,409      |     | 8,281      |   |
| 2nd Quarter |       |      | 14,339     |     | 7,143      |     | 7,196      |   |
| 1st Quarter |       |      | 12,461     |     | 6,201      |     | 6,260      |   |
|        |       |      | $          | 63,216   |       | $        | 31,742     |   | $ | 31,474 |   |

 
| 2005        | ** ** | **Total** | ** ** | **Cash** | ** ** | **DRIP** | ** ** |
|-------------|------------|-----------|------------|----------|------------|----------|------------|
| 4th Quarter |       |      | $          | 11,382   |       | $        | 5,579      |   | $ | 5,803 |   |
| 3rd Quarter |       |      | 7,210      |     | 3,621      |     | 3,589      |   |
| 2nd Quarter |       |      | 4,269      |     | 2,227      |     | 2,042      |   |
| 1st Quarter |       |      | 2,730      |     | 1,472      |     | 1,258      |   |
|        |       |      | $          | 25,591   |       | $        | 12,899     |   | $ | 12,692 |   |

 

***Share Redemption Program***

Our board of directors has authorized a share redemption program forinvestors who hold their shares for more than one year.  The purchase price for the redeemed shares isset forth in the prospectus for our Current Offering of common stock assupplemented from time to time.  Ourboard of directors reserves the right in its sole discretion at any time, andfrom time to time, to (1) waive the one-year holding period in the event of thedeath, disability or bankruptcy of a stockholder or other exigentcircumstances, (2) reject any request for redemption, (3) change the purchaseprice for redemptions, or (4) terminate, suspend or amend the share redemptionprogram.  Under the terms of the plan,during any calendar year, we will not redeem in excess of 5% of the weightedaverage number of shares outstanding during the twelve-month period immediatelyprior to the date of redemption.  Inaddition, our board of directors will determine whether we have sufficient cashfrom operations to repurchase shares, and such purchases will generally belimited to proceeds of our distribution reinvestment plan plus 1% of operatingcash flow for the previous fiscal year. We redeemed approximately 680,000 shares for approximately $5.9 millionin the year ended December 31, 2006; we redeemed approximately 150,000 sharesfor approximately $1.4 million in the year ended December 31, 2005; and weredeemed approximately 33,000 shares for approximately $332,000 in the yearended December 31, 2004.

**10.          Stock Plans**

Our shareholders have approved and adopted the 2005 Incentive AwardPlan, which allows for equity-based incentive awards to be granted to ourdirectors and consultants and employees, directors and consultants of ouraffiliates.  The 2005 Incentive AwardPlan replaced the Non-Employee Director Stock Option Plan, the Non-EmployeeDirector Warrant Plan and the 2002 Employee Stock Option Plan, each of whichwas terminated upon the approval of the 2005 Incentive Award Plan.  As of December 31, 2006, we had options to purchase40,500 shares of common stock outstanding at a weighted average exercise priceof $9.16.  These options vest over oneyear from the date granted and have a maximum term of ten years.  All of these options were anti-dilutive forthe years ended December 31, 2006, 2005 and 2004.

**11.          Related Party Transactions**

Ouradvisor and certain of its affiliates received fees and compensation inconnection with our Offerings, and in connection with the acquisition,management and sale of our assets.

BehringerSecurities LP (“Behringer Securities”), an affiliate of our advisor, serves asthe dealer manager for the Offerings and receives commissions of up to 7% ofgross offering proceeds (1% for sales under our DRIP) before reallowance ofcommissions earned by participating broker-dealers.  In connection with the Current Offering, upto 2.5% of gross proceeds before reallowance to participating broker-dealersare paid to Behringer Securities as a dealer manager fee; except that no dealermanager fee is paid on purchases made pursuant to our DRIP.  In connection with the Initial Offering andthe Second Offering, up to 2.5% and 2.0%, respectively, of gross proceedsbefore reallowance to participating broker-dealers were paid to BehringerSecurities as a dealer manager fee; except that no dealer manager fee was paidon purchases made pursuant to our DRIP. In the Current Offering, Behringer Securities reallows all of itscommissions to participating broker-dealers and reallows a portion of itsdealer manager fee of up to 2.0% of the gross offering proceeds to be paid tosuch participating broker-dealers; provided, however, that Behringer Securitiesmay reallow, in the aggregate, no more than 1.5% of gross offering proceeds formarketing fees and expenses, bona fide training and educational meetings andnon-

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itemized, non-invoiced due diligence efforts, and nomore than 0.5% of gross offering proceeds for bona fide, separately invoiceddue diligence expenses incurred as fees, costs and other expenses from thirdparties.  In the year ended December 31,2006, Behringer Securities’ commissions and dealer manager fees totaledapproximately $34.8 million and approximately $10.9 million, respectively, andwere recorded as a reduction of additional paid-in capital.  In the year ended December 31, 2005,Behringer Securities’ commissions and dealer manager fees totaled approximately$33.1 million and approximately $9.9 million, respectively, and were recordedas a reduction of additional paid-in capital.

Ouradvisor, Behringer Advisors, or its affiliates, receives up to 1.5% of grossoffering proceeds for reimbursement of offering expenses incurred in connectionwith the Current Offering; except that no offering expenses are reimbursed withrespect to purchases made pursuant to our DRIP. Reimbursement of offering expenses incurred in connection with theInitial Offering and Second Offering were made at the rate of 2.5% and 2% ofgross offering proceeds, respectively; except that no offering expenses werereimbursed with respect to purchases made pursuant to our DRIP.  For the year ended December 31, 2006,approximately $9.5 million of offering expenses were reimbursable by us andwere recorded as a reduction of additional paid-in capital.  Of the approximately $9.5 million,  approximately $8.8 million had beenreimbursed by us and approximately $0.7 million had been accrued.  Reimbursements by us as of December 31, 2006exceeded payments made by Behringer Advisors by approximately $0.2 million.  For the year ended December 31, 2005, approximately$9.8 million of offering expenses were reimbursed by us, and were recorded as areduction of additional paid-in capital. For the year ended December 31, 2004, approximately $3.0 million ofoffering expenses were reimbursed by us, of which approximately $2.8 millionwas recorded as a reduction of additional paid-in capital and $0.2 million wasexpensed as organizational costs. Behringer Advisors or its affiliates determines the amount of offeringexpenses owed based on specific invoice identification as well as an allocationof costs to us and other Behringer Harvard programs, based on respective equityoffering results of those entities in offering.

Inconnection with the Initial Offering and for acquisitions made prior toFebruary 11, 2005, Behringer Advisors or its affiliates also receivedacquisition and advisory fees of up to 3% of the contract purchase price ofeach asset for the acquisition, development or construction of real propertyor, with respect to any mortgage loan, up to 3% of the funds advanced for thepurchase or making of a mortgage loan. In connection with the Second Offering and Current Offering, BehringerAdvisors or its affiliates receive acquisition and advisory fees of up to 2.5%of (1) the purchase price of real estate investments acquired directly by us,including any debt attributable to these investments, or (2) when we make aninvestment indirectly through another entity, our pro rata share of the grossasset value of real estate investments held by that entity.  Behringer Advisors or its affiliates alsoreceive up to 0.5% of the contract purchase price of the real estate assets weacquired or, with respect to the making or purchase of a mortgage loan up to0.5% of the funds advanced, for reimbursement of expenses related to makinginvestments.  Behringer Advisors earnedapproximately $46.6 million and $16.8 million in acquisition and advisory feesfor the investments we acquired for the years ended December 31, 2006 and 2005,respectively.  We capitalize these feesas part of our real estate or investments in TIC interests.

Wehave paid and expect to pay in the future HPT Management Services LP (“HPTManagement”), an affiliate of our advisor and our property manager, fees forthe management and leasing of our properties, which may be subcontracted tounaffiliated third parties.  We expectthese fees to equal 3% of gross revenues of the respective property, plusleasing commissions based upon the customary leasing commission applicable tothe geographic location of the respective property.  In the event that we contract directly with anon-affiliated third party property manager in respect of a property, we willpay HPT Management an oversight fee equal to 1% of gross revenues of the propertymanaged.  In no event will we pay both aproperty management fee and an oversight fee to HPT Management with respect toany particular property.  We incurred andexpensed fees of approximately $4.3 million, $1.5 million and $0.2 million inthe years ended December 31, 2006, 2005, and 2004 respectively, for theservices provided by HPT Management in connection with our real estate and TICinvestments.

Inconnection with the Initial Offering, we have paid Behringer Advisors an annualasset management fee of 0.5% of aggregate asset value for periods prior toMarch 2005.  Any portion of the assetmanagement fee may be deferred and paid in a subsequent year.  In connection with the Second Offering andthe Current Offering, depending on the nature of the asset at the time the feeis incurred, we pay Behringer Advisors an annual asset management fee of either(1) 0.6% of aggregate asset value for operating assets or (2) 0.6% of totalcontract purchase price plus budget improvement costs for development orredevelopment assets (each fee payable monthly in an amount equal toone-twelfth of 0.6% of such total amount as of the date it isdeterminable).  For the year endedDecember 31, 2006, we incurred and expensed approximately $5.1 million of assetmanagement fees.  Asset management feesof approximately $2.7 million were waived for the year ended December 31,2006.  In the years ended December 31,2005 and 2004, we incurred and expensed approximately $1.9 million and $0.1million of asset management fees, respectively.

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Wepay Behringer Advisors or its affiliates a debt financing fee equal to 1% ofthe amount available under any debt made available to us.  We incurred approximately $11.1 million and$2.7 million of such debt financing fees for the years ended December 31, 2006and 2005, respectively.

Behringer Advisors or itsaffiliates is also paid fees if the advisor provides a substantial amount ofservices, as determined by our independent directors, in connection with thesale of one or more properties.  In suchevent, we will pay the advisor an amount not exceeding the lesser of: (A)one-half of the aggregate brokerage commission paid (including the subordinateddisposition fee) or if none is paid, the amount that customarily would be paid,or (B) (1) 3% of the sales price of each property sold, or (2) in the case ofthe sale of any asset other than real property, 3% of the sales price of suchassets.  This fee will not be earned orpaid unless and until the investors have received total distributions (excludingthe 10% stock dividend) in an amount equal to or greater than the sum of theaggregate capital contributions by investors plus a 9% annual, cumulative,non-compounded, return on such capital contributions.  Subordinated disposition fees that are not payableat the date of sale, because investors have not yet received their requiredminimum distributions, will be deferred and paid at such time as thesesubordination conditions have been satisfied. In addition, after investors have received a return of their capitalcontributions and a 9% annual, cumulative, non-compounded return, thenBehringer Advisors is entitled to 15% of remaining net sales proceeds.  Subordinated participation in net salesproceeds that are not payable at the date of sale, because investors have notyet received their required minimum distribution, will be deferred and paid atsuch time as the subordination conditions have been satisfied.  The subordinated participation in net salesproceeds will be reduced or eliminated upon the determination of the number ofshares of common stock issuable upon conversion of our convertible stock.

Uponlisting of our common stock on a national securities exchange, a listing feewill be paid to Behringer Advisors equal to 15% of the amount by which themarket value of our outstanding stock plus distributions we paid prior tolisting exceeds the sum of (1) the total amount of capital raised frominvestors and (2) a 9% annual, cumulative, non-compounded return to investorson their capital contributions.  Thesubordinated listing fee will be reduced or eliminated upon the determinationof the number of shares of common stock issuable upon conversion of ourconvertible stock.  Upon termination ofthe Advisory Agreement with Behringer Advisors, a performance fee will be paidto Behringer Advisors of 15% of the amount by which our appraised asset valueat the time of such termination exceeds the aggregate capital contributionscontributed by investors plus payment to investors of a 9% annual, cumulative,non-compounded return on the capital contributed by investors.  Persons independent of us and independent ofour advisor will perform such appraisal of our asset value.  No performance fee will be paid if we havealready paid or become obligated to pay Behringer Advisors a listing fee.  The subordinated performance fee will bereduced or eliminated upon the determination of the number of shares of commonstock issuable upon conversion of our convertible stock.

Wewill reimburse Behringer Advisors for all expenses it pays or incurs inconnection with the services it provides to us, subject to the limitation thatwe will not reimburse for any amount by which the advisor’s operating expenses(including the asset management fee) at the end of the four fiscal quartersimmediately preceding the date reimbursement is sought exceeds the greater of:(1) 2% of our average invested assets, or (2) 25% of our net income for thatfour quarter period other than any additions to reserves for depreciation, baddebts or other similar non-cash reserves and any gain from the sale of ourassets for that period.

AtDecember 31, 2006, we had a payable to affiliates of approximately $2.1million.  This balance consists primarilyof management fees payable to HPT Management and commissions payable toBehringer Securities.

We aredependent on Behringer Advisors, Behringer Securities and HPT Management forcertain services that are essential to us, including the sale of shares of ourcommon stock, asset acquisition and disposition decisions, property managementand leasing services and other general administrative responsibilities.  In the event that these companies were unableto provide us with the respective services, we would be required to obtain suchservices from other sources.

**12.          Commitments and Contingencies**

On May5, 2006, we entered into an Extended Rate Lock Agreement with Bear StearnsCommercial Mortgage, Inc. to lock a base interest rate of 5.6285% forapproximately $40 million in future borrowings (“Stearns Rate Lock No. 5”).  As of December 31, 2006, deposits underStearns Rate Lock No. 5 were approximately $0.8 million and are recorded asLoan deposits on our balance sheet.  Asof December 31, 2006, approximately $39 million in future borrowings are stillavailable under the Stearns Rate Lock No. 5.

OnDecember 1, 2006, we entered into an Extended Rate Lock Agreement with BearStearns Commercial Mortgage, Inc. to lock a base interest rate of 4.90% forapproximately $40 million in future borrowings (“Stearns Rate Lock No. 7”).  As of December 31, 2006, deposits underStearns Rate Lock No. 7 were approximately $0.8 million and are recorded asLoan deposits on our balance sheet.  Asof December 31, 2006, no loans have been closed under Stearns Rate Lock No. 7.

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AtDecember 31, 2006, the available estimated base market interest rate wasapproximately 5.168%, based on 10-year treasury rates and the 10-year swapspread as of that date.

Asof December 31, 2006, we had commitments of approximately $50.3 million forfuture tenant improvements and lease incentives.

**13.          Fair Value Disclosure of FinancialInstruments**

Wedetermined the following disclosure of estimated fair values using availablemarket information and appropriate valuation methodologies.  However, considerable judgment is necessaryto interpret market data and develop the related estimates of fair value.Accordingly, the estimates presented herein are not necessarily indicative ofthe amounts that could be realized upon disposition of the financialinstruments.  The use of different marketassumptions and/or estimation methodologies may have a material effect on theestimated fair value amounts.

Asof December 31, 2006 and 2005, management estimated the carrying value ofcash and cash equivalents, restricted cash, accounts receivable, accountspayable, accrued expenses and other liabilities and distributions payable wereat amounts that reasonably approximated their fair value based on theirhighly-liquid nature and/or short-term maturities. The carrying value of ournote receivable reasonably approximates fair value based on expected interestrates for notes to similar borrowers with similar terms and remainingmaturities.

Themortgages payable totaling approximately $1.6 billion as of December 31, 2006have a fair value of approximately an equal amount based upon interest ratesfor mortgages with similar terms and remaining maturities that managementbelieves we could obtain.  The mortgagespayable totaling approximately $353.6 million as of December 31, 2005 had afair value of approximately $359.1 million based upon interest rates formortgages with similar terms and remaining maturities that management believescould have been obtained as of that date.

Thefair value estimate presented herein is based on information available to ourmanagement as of December 31, 2006 and 2005. Although our management is notaware of any factors that would significantly affect the estimated fair valueamount, such amount has not been comprehensively revalued for purposes of theseconsolidated financial statements since that date, and current estimates offair value may differ significantly from the amounts presented herein.

**14.          Supplemental Cash Flow Information**

Supplemental cashflow information is summarized below for the years ended December 31, 2006,2005 and 2004:
|                                                              | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Interest  paid**                                           |       | $        | 44,163     |     | $          | 11,998   |       | $ | 2,163 |   |
|                                                         |       |     |       |     |       |     |       |
| **Non-cash  investing activities:**                          |       |     |       |     |       |     |       |
| Property and equipment additions in accrued  liabilities     |       | $        | 3,075      |     | $          | 700      |       | $ | — |   |
|                                                         |       |     |       |     |       |     |       |
| **Non-cash  financing activities:**                          | * *   | * * | * *   | * * | * *   | * * | * *   |
| Common stock issued in distribution reinvestment  plan       |       | $        | 29,786     |     | $          | 11,007   |       | $ | 1,321 |   |
| Stock dividend                                               |       | —   |       | 49,137   |       | —   |       |
| Limited partnership units issued in purchase of real  estate |       | —   |       | 3,500    |       | —   |       |
| Stock dividend to minority interest holders                  |       | —   |       | 350      |       | —   |       |
| Mortgage note  assumed in property acquisition               |       | 144,400  |       | —   |       | —   |       |

 

**15.          Stock Dividend**

OnMay 11, 2005, our Board of Directors declared a special 10% stock dividend forholders of record as of September 30, 2005, with an issue date of October 1,2005.  In accordance with SFAS No. 128, “Earningsper Share,” we are required to reflect the effects of the stock dividend in ourweighted average shares outstanding for each of the periods presented in ourfinancial statements.  Therefore, theearnings per share for each period presented reflects the effects of the stockdividend.

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**16.****                               QuarterlyResults (Unaudited)**

Presentedbelow is a summary of the unaudited quarterly financial information for theyears ended December 31, 2006 and 2005 (in thousands except per share data):
| **2006 Quarters Ended**    | ** ** | **March 31** | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** |
|--------------------------------------|------------|-------------------|------------|------------------|------------|-----------------------|------------|----------------------|------------|
|                                 |       |              |       |             |       |                  |       |                 |       |
| Revenues                             |       | $                 | 22,560     |             | $          | 31,892                |       | $                    | 47,856     |   | $ | 58,998 |   |
| Net loss                             |       | (585              | )          | (3,039           | )          | (8,375                | )          | (10,433              | )          |
|                                 |       |              |       |             |       |                  |       |                 |       |
| Weighted average  shares outstanding |       | 71,707            |       | 81,585           |       | 93,959                |       | 110,818              |       |
| Basic and  diluted loss per share    |       | $                 | (0.01      | )                | $          | (0.04                 | )          | $                    | (0.09      | ) | $ | (0.09 | ) |
|                                 |       |              |       |             |       |                  |       |                 |       |

 
| **2005 Quarters Ended**        | ** ** | **March 31** | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** |
|------------------------------------------|------------|-------------------|------------|------------------|------------|-----------------------|------------|----------------------|------------|
|                                     |       |              |       |             |       |                  |       |                 |       |
| Revenues                                 |       | $                 | 2,053      |             | $          | 3,687                 |       | $                    | 10,729     |   | $ | 14,588 |   |
| Net loss                                 |       | (1,884            | )          | (810             | )          | (640                  | )          | (2,388               | )          |
|                                     |       |              |       |             |       |                  |       |                 |       |
| Weighted average  shares outstanding (1) |       | 17,328            |       | 26,736           |       | 44,267                |       | 64,007               |       |
| Basic and diluted loss  per share        |       | $                 | (0.11      | )                | $          | (0.03                 | )          | $                    | (0.01      | ) | $ | (0.04 | ) |

 

----

(1) On May 11, 2005, ourBoard of Directors declared a special 10% stock dividend for holders on recordas of September 30, 2005 issued October 1, 2005.  The weighted average shares for each periodpresented reflects this adjustment.

**17.          Revisions to Consolidated Statementsof Operations and Cash Flows for the year ended December 31, 2004**

Certain financial information for previous fiscal years has beenrevised to conform to the current year presentation.  We revised the presentation of ourConsolidated Statements of Operations to remove the operating loss subtotal andthe other income caption and related subtotal. In addition, we revised our Consolidated Statements of Cash flows forthe year ended December 31, 2004 to appropriately classify approximately$183,000 of distributions that represented a return of investment from our TICinterests accounted for using the equity method as “Cash flows from investingactivities,” rather than “Cash flows from operating activities.”   We also revised the presentation of ourConsolidated Statement of Cash Flows for the year ended December 31, 2004 toappropriately classify approximately $1.5 million of distributions from our TICinterests as “Return of investments in tenant-in-common interests” rather thanas “Purchase of tenant-in-common interests,” both of which are included in “Cashflows from investing activities.”  Wealso revised the presentation of our Consolidated Statement of Cash Flows forthe year ended December 31, 2004 to appropriately classify the use ofapproximately $1.8 million related to loan deposits as “Cash flows fromfinancing activities” rather than “Cash flows from investing activities,” andto appropriately classify the use of approximately $2.5 million related torestricted cash as “Cash used in investing activities” rather than “Cash used in financing activities.”  These revisions to the historicalpresentation do not reflect a material change to the information presented inthe Consolidated Statements of Operations or the Statements of Cash Flows asoriginally filed.

*****

F-22

----

**Report of Independent Auditors**

To the Board of Directorsand Stockholders of   Behringer Harvard REIT I, Inc.:

Inour opinion, the accompanying related combined statements of operations, oftenant-in-common interests and of cash flows present fairly, in all materialrespects, the results of operations and cash flows of the tenant-in-commoninterest holders of the Colorado Building for the period from August 10, 2004(date of acquisition) through December 31, 2004 in conformity with accountingprinciples generally accepted in the United States of America.  These combined financial statements are theresponsibility of the tenant-in-common interest holders’ management.  Our responsibility is to express an opinionon these combined financial statements based on our audit.  We conducted our audit of these statements inaccordance with auditing standards generally accepted in the United States ofAmerica.  Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the combinedfinancial statements are free of material misstatement.  An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the combined financialstatements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall combined financial statementpresentation.  We believe that our auditprovides a reasonable basis for our opinion.
| /s/ PricewaterhouseCoopers LLP |   |
|--------------------------------|--------|
| March 31, 2005                 |
| Dallas, Texas                  |

 

F-23

----

**The Colorado Building,Tenant-in-Common InterestsCombined Balance Sheets(in thousands)**
| ** **                                        | ** ** | **as of December 31,** | ** ** | **as of December 31,** | ** ** |
|---------------------------------------------------|------------|---------------------------------------|------------|---------------------------------------|------------|
| ** **                                        | ** ** | **2006**                              | ** ** | **2005**                              | ** ** |
| ** **                                        | ** ** | **(unaudited)**                       | ** ** | **(unaudited)**                       | ** ** |
| **Assets**                                        |       |                                  |       |                                  |       |
| **Real  estate**                                  |       |                                  |       |                                  |       |
| Land                                              |       | $                                     | 13,328     |                                  | $          | 13,328 |   |
| Building, net                                     |       | 28,363                                |       | 29,025                                |       |
| Total real  estate                                |       | 41,691                                |       | 42,353                                |       |
|                                              |       |                                  |       |                                  |       |
| Acquired lease  intangibles, net                  |       | 4,503                                 |       | 5,027                                 |       |
| Cash and cash  equivalents                        |       | 310                                   |       | —                                |       |
| Restricted cash                                   |       | 1,496                                 |       | 3,082                                 |       |
| Accounts  receivable, net                         |       | 1,032                                 |       | 373                                   |       |
| Prepaid expenses                                  |       | 25                                    |       | 22                                    |       |
|                                              |       |                                  |       |                                  |       |
| Total assets                                      |       | $                                     | 49,057     |                                  | $          | 50,857 |   |
| ** **                                        |       |                                  |       |                                  |       |
| **Liabilities and  tenant-in-common interests**   |       |                                  |       |                                  |       |
| Accounts payable and  accrued expenses            |       | $                                     | 153        |                                  | $          | 292 |   |
| Accrued property tax                              |       | 239                                   |       | 157                                   |       |
| Acquired below market  lease intangibles, net     |       | 1,074                                 |       | 1,409                                 |       |
| Tenant security  deposits                         |       | 203                                   |       | 203                                   |       |
| Prepaid rent                                      |       | 39                                    |       | 44                                    |       |
|                                              |       |                                  |       |                                  |       |
| Total  liabilities                                |       | 1,708                                 |       | 2,105                                 |       |
|                                              |       |                                  |       |                                  |       |
| Tenant-in-common  interests                       |       | 47,349                                |       | 48,752                                |       |
|                                              |       |                                  |       |                                  |       |
| Total liabilities and  tenant-in-common interests |       | $                                     | 49,057     |                                  | $          | 50,857 |   |

 

*See Notes to CombinedFinancial Statements.*

F-24

----

**The Colorado Building,Tenant-in-Common InterestsCombined Statements of Operations(in thousands)**
| ** **                          | ** ** | ** **                      | ** ** | ** **                      | ** ** | **Date of acquisition** | ** ** |
|-------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|-----------------------------------|------------|
| ** **                          | ** ** | ** **                      | ** ** | ** **                      | ** ** | **(August 10, 2004)**   | ** ** |
| ** **                          | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** | **through**                       | ** ** |
| ** **                          | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** | **December 31, 2004**   | ** ** |
| ** **                          | ** ** | **(unaudited)**                 | ** ** | **(unaudited)**                 | ** ** | ** **                        | ** ** |
| Rental revenue                      |       | $                               | 5,650      |                            | $          | 4,778                             |       | $ | 1,649 |   |
|                                |       |                            |       |                            |       |                              |       |
| Operating costs and  expenses:      |       |                            |       |                            |       |                              |       |
| General and  operating expenses     |       | 775                             |       | 765                             |       | 322                               |       |
| Utilities                           |       | 414                             |       | 348                             |       | 134                               |       |
| Real estate  taxes                  |       | 935                             |       | 669                             |       | 247                               |       |
| Depreciation and  amortization      |       | 2,128                           |       | 1,998                           |       | 670                               |       |
| Total operating  costs and expenses |       | 4,252                           |       | 3,780                           |       | 1,373                             |       |
|                                |       |                            |       |                            |       |                              |       |
| Net income                          |       | $                               | 1,398      |                            | $          | 998                               |       | $ | 276 |   |

 

*See Notes to Combined FinancialStatements.*

F-25

----

**The Colorado Building,Tenant-in-Common InterestsCombined Statements of Tenant-in-Common Interests**(in thousands)
| Initial acquisition of  tenant-in-common interests on August 10, 2004 |   | $      | 50,994 |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|
| Distributions to  tenant-in-common interests                          |   | (512   | )      |
| Net income allocated to  tenant-in-common interests                   |   | 276    |   |
|                                                                  |   |   |   |
| Combined  tenant-in-common interests at December 31, 2004             |   | $      | 50,758 |   |
|                                                                  |   |   |   |
| Distributions to  tenant-in-common interests (unaudited)              |   | (3,004 | )      |
| Net income allocated to  tenant-in-common interests (unaudited)       |   | 998    |   |
|                                                                  |   |   |   |
| Combined  tenant-in-common interests at December 31, 2005 (unaudited) |   | $      | 48,752 |   |
|                                                                  |   |   |   |
| Distributions to  tenant-in-common interests (unaudited)              |   | (2,801 | )      |
| Net income allocated to  tenant-in-common interests (unaudited)       |   | 1,398  |   |
|                                                                  |   |   |   |
| Combined tenant-in-common interests at December 31, 2006 (unaudited)  |   | $      | 47,349 |   |

 

*See Notes to CombinedFinancial Statements.*

F-26

----

**The Colorado Building,Tenant-in-Common InterestsCombined Statements of Cash Flows(in thousands)**
| ** **                                                                         | ** ** | ** **                      | ** ** | ** **                      | ** ** | **Date of acquisition** | ** ** |
|------------------------------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|-----------------------------------|------------|
| ** **                                                                         | ** ** | ** **                      | ** ** | ** **                      | ** ** | **(August 10, 2004)**   | ** ** |
| ** **                                                                         | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** | **through**                       | ** ** |
| ** **                                                                         | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** | **December 31, 2004**   | ** ** |
| ** **                                                                         | ** ** | **(unaudited)**                 | ** ** | **(unaudited)**                 | ** ** | ** **                        | ** ** |
| Cash flows from  operating activities:                                             |       |                            |       |                            |       |                              |       |
| Net income                                                                         |       | $                               | 1,398      |                            | $          | 998                               |       | $ | 276 |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |       |                            |       |                            |       |                              |       |
| Depreciation and  amortization                                                     |       | 1,944                           |       | 1,813                           |       | 582                               |       |
| Bad debt expense  (recovery)                                                       |       | 1                               |       | (17                             | )          | 17                                |       |
| Changes in  assets and liabilities:                                                |       |                            |       |                            |       |                              |       |
| Accounts  receivable                                                               |       | (660                            | )          | (66                             | )          | (306                              | )          |
| Prepaid expenses                                                                   |       | (3                              | )          | 10                              |       | 137                               |       |
| Addition of  lease intangibles                                                     |       | (464                            | )          | (104                            | )          | —                            |       |
| Accounts payable  and accrued liabilities                                          |       | (62                             | )          | (100                            | )          | (301                              | )          |
|                                                                               |       |                            |       |                            |       |                              |       |
| Net cash  provided by operating activities                                         |       | 2,154                           |       | 2,534                           |       | 405                               |       |
|                                                                               |       |                            |       |                            |       |                              |       |
| Cash flows from  investing activities:                                             |       |                            |       |                            |       |                              |       |
| Purchase of  Colorado tenant-in-common interests                                   |       | —                          |       | —                          |       | (50,994                           | )          |
| Additions to  real estate                                                          |       | (629                            | )          | (137                            | )          | (99                               | )          |
| Change in  restricted cash                                                         |       | 1,586                           |       | 547                             |       | 266                               |       |
|                                                                               |       |                            |       |                            |       |                              |       |
| Net cash  provided by (used in) investing activities                               |       | 957                             |       | 410                             |       | (50,827                           | )          |
|                                                                               |       |                            |       |                            |       |                              |       |
| Cash flows from  financing activities:                                             |       |                            |       |                            |       |                              |       |
| Contributions  from tenants-in-common                                              |       | —                          |       | —                          |       | 50,994                            |       |
| Distributions to  tenants-in-common                                                |       | (2,801                          | )          | (3,004                          | )          | (512                              | )          |
|                                                                               |       |                            |       |                            |       |                              |       |
| Net cash  provided by (used in) financing activities                               |       | (2,801                          | )          | (3,004                          | )          | 50,482                            |       |
|                                                                               |       |                            |       |                            |       |                              |       |
| Net change in  cash and cash equivalents                                           |       | 310                             |       | (60                             | )          | 60                                |       |
| Cash and cash  equivalents, beginning of period                                    |       | —                          |       | 60                              |       | —                            |       |
|                                                                               |       |                            |       |                            |       |                              |       |
| Cash and cash equivalents, end of period                                           |       | $                               | 310        |                            | $          | —                            |       | $ | 60 |   |

 

*See Notes to CombinedFinancial Statements.*

F-27

----

**The Colorado Building,Tenant-in-Common InterestsNotes to Combined Financial Statements**

**1.****                          Organization**

On August 10, 2004, several unrelated parties acquiredan undivided 100% tenant-in-common interest (“TIC”) in an office building inWashington D.C. (the “Colorado Building”). Behringer Harvard REIT I, Inc. (the “REIT”) acquired a 79.4752% TICinterest and the remaining 20.5248% TIC interest was acquired by severalunaffiliated persons.  During 2006, theREIT increased their TIC interest to 81.491329%.  These combined financial statements represent100% of the combined TIC interests in the Colorado Building and are beingpresented to satisfy certain of reporting requirements of the REIT.

TheTIC interest holders acquired the Colorado Building at a cost of approximately$51.0 million which was funded by approximately $23.0 million in cash and $28.0million in borrowings by the individual TIC interest holders.  The purchase price was allocated to assetsand liabilities acquired as follows (in thousands):
| Land                                        |   | $      | 13,328 |   |
|---------------------------------------------|--------|--------|--------|--------|
| Building                                    |   | 30,459 |   |
| Lease  intangibles, net                     |   | 4,303  |   |
| Cash and  restricted cash                   |   | 3,896  |   |
| Miscellaneous  other assets and liabilities |   | (992   | )      |
|                                        |   |   |   |
| Real estate, net                            |   | $      | 50,994 |   |

 

TheTIC interest holders have entered into a tenant-in-common agreement (the “ColoradoBuilding TIC Agreement”) under which each of the TIC interest holders are eachobligated to pay their pro-rata share of any future cash contributions requiredin connection with the ownership, operation, management and maintenance of theColorado Building.  Additionally, all TICinterest holders must approve certain major decisions relating to the ColoradoBuilding including the sale, exchange, lease, release, any loans or modificationsof any loans collateralized by the Colorado Building, the approval of theproperty management agreement and any extension, renewal or modificationthereof.  Each TIC interest holder maysell, transfer, convey, pledge, encumber or hypothecate its undivided interestin the Colorado Building or any part thereof, provided that any transfereeshall take such interest subject to the Colorado Building TIC Agreement.  Under the Colorado Building TIC Agreement allincome, expenses, losses, liabilities and cash flows from the Colorado Buildingare allocated to the TIC interest holders in proportion to their undividedinterests in the property.

TheTIC interest holders have also individually entered into a property asset andmanagement agreement (the “Management Agreement”) with an affiliate of the REIT’sadvisor.

Thesecombined financial statements exclude the $28 million of borrowings withGreenwich Capital Financial Products, Inc., which was used to partially fundthe cost of the Colorado Building, and the related interest expense, which isthe obligation of the individual TIC interest holders.  These combined financial statements alsoexclude property and asset management fees expense as the Management Agreementis the responsibility of the individual TIC interest holders and not of thecombined TIC interests.

**2.****                          Summaryof Significant Accounting Policies**

***RealEstate***

Uponthe acquisition of the Colorado Building, the purchase price was allocated tothe tangible assets acquired, consisting of land and building, and identifiedintangible assets.  Identified intangibleassets consisted of the fair value of above-market and below-market leases,in-place leases, in-place tenant improvements and tenant relationships.

Thefair value of the tangible assets acquired, consisting of land and building,was determined by valuing the property as if it were vacant, and the “as-if-vacant”value was then allocated to land and building. The land value was derived from appraisals, and the building value wascalculated as replacement cost less depreciation or management’s estimates ofthe relative fair value of this asset using discounted cash flow analyses orsimilar methods.  The value of thebuilding is depreciated over the estimated useful life of 25 years using thestraight-line method.

F-28

----

Thevalue of above-market and below-market in-place leases for the property wasdetermined based on the present value (using an interest rate which reflectsthe risks associated with the leases acquired) of the difference between (1)the contractual amounts to be paid pursuant to the in-place leases and (2)management’s estimate of current market lease rates for the correspondingin-place leases, measured over a period equal to the remaining non-cancelableterms of the respective leases.  The fairvalues of above-market and below-market leases were recorded as intangibleassets or intangible liabilities, respectively, and are amortized as anadjustment to rental income over the remaining non-cancelable terms of therespective leases.

Thetotal value of identified real estate intangible assets acquired were furtherallocated to in-place lease values, in-place tenant improvements, in-placeleasing commissions and tenant relationships based on an evaluation of thespecific characteristics of the tenants’ leases and the overall relationshipwith the tenants.  The aggregate valuefor tenant improvements and leasing commissions were based on estimates ofthese costs incurred at acquisition of the acquired leases, amortized throughthe date of acquisition.  The aggregatevalue of the in-place leases acquired and tenant relationships were determinedby applying a fair value model.  Theestimates of fair value of the in-place leases included an estimate of carryingcosts during the expected lease-up periods for the respective spacesconsidering current market conditions. In estimating the carrying costs that would have otherwise been incurredhad the leases not been in place, the Colorado Building included such items asreal estate taxes, insurance and other operating expenses as well as lost rentalrevenue during the expected lease-up periods based on current marketconditions.  The estimates of fair valueof the tenant relationships also included costs to execute similar leasesincluding leasing commissions, legal fees and tenant improvements, as well asan estimate of the likelihood of renewal as determined by the management on atenant-by-tenant basis.

Thevalue of the in-place leases and in-place tenant improvements are amortized toexpense over the initial terms of the respective leases.  The value of tenant relationship intangiblesis amortized to expense over the initial term and any anticipated renewalperiods, but in no event does the amortization period for intangible assetsexceed the remaining depreciable life of the building.  Should a tenant terminate its lease, theunamortized portion of the related lease intangibles would be charged toexpense.

Realestate is stated at the lower of depreciated cost or net realizable value.  In accordance with Statement of FinancialAccounting Standards No. 144, *Accounting for theImpairment and Disposal of Long-Lived Assets,* impairment losses onlong-lived assets used in operations will be recorded when events andcircumstances indicate that the assets might be impaired and the estimatedundiscounted cash flows, without interest charges to be generated by thoseassets are less than the carrying amounts of those assets.  The property is reviewed periodically todetermine if its carrying costs will be recovered from future operating cashflows.  In cases where the carrying costsare not expected to be recovered, an impairment loss will be recognized.

Maintenanceand repairs are charged to operations as incurred; major renewals andbetterments are capitalized.  Upon thesale or disposition of a fixed asset, the asset and the related accumulateddepreciation will be removed from the accounts and the gain or loss will bereflected in net income.

***Cash and Cash Equivalents***

For purposes of reporting cash flows, cash and cashequivalents consist of cash on hand and investments with maturities of threemonths or less when purchased.

***Concentration of Credit Risk***

Atvarious times throughout the year, cash and cash equivalents are maintained inaccounts with various financial institutions in excess of the amount insured bythe Federal Deposit Insurance Corporation. The financial stability of these financial institutions is regularlymonitored and management does not believe there is a significant credit riskassociated with deposits in excess of federally insured amounts.

***Restricted Cash***

Cash held in escrow includes deposits held for futurebuilding improvements and deposits for real estate taxes.

F-29

----

***Allowance for Doubtful Accounts***

Accounts receivable are reduced by an allowance foramounts estimated to be uncollectible. Accounts receivable consists primarily of accrued rental rate increasesto be received over the life of in-place leases as well as rents and operatingcost recoveries due from tenants.  Theadequacy of the allowance for doubtful accounts is regularly evaluated,considering factors such as the credit quality of tenants, delinquency ofpayments, historical trends and current economic conditions.

***Rental Revenue***

Rental income is recognized on a straight-line basisover the term of the leases as earned. Tenant reimbursement income represents operating costs passed through totenants and is recorded as earned. Accruable rental income represents rental income earned in excess ofrent payments received pursuant to the terms of the lease agreements.  The aggregate net rental revenue increaseresulting from straight-line adjustments was approximately $329,000 (unaudited)and $93,000 (unaudited) for the years ended December 31, 2006 and 2005,respectively and approximately $76,000 for the period from August 10, 2004(date of acquisition) through December 31, 2004.

***Income Taxes***

No provision for income taxes is necessary in thesefinancial statements because, as a tenant-in-common interest, the tax effect ofits activities accrues to the individual tenant-in-common interest holders.

***Use of Estimates***

The preparation of combined financial statements inconformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the combined financial statements and thereported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

***Commitments and Contingencies***

From time to time, the TIC interest may be exposed tolitigation arising from operations of business in the ordinary course ofbusiness.  Management does not believethat resolution of these matters will have a material adverse impact on thecombined financial condition, results of operations or cash flows.

***Risks and Uncertainties***

The TIC interest holders are exposed to the impact inthe creditworthiness of our tenants. These risks are managed by regularly evaluating the risk exposure, andtaking the appropriate measures to mitigate the risks.

F-30

----

**3.****                                      Depreciationand Amortization**

The following table provides information related tothe accumulated depreciation and amortization of the Colorado Building (inthousands).
|                                      | ** ** | ** **             | ** ** | **Acquired**          | ** ** | ** **       | ** ** |
|--------------------------------------|------------|------------------------|------------|-----------------------|------------|------------------|------------|
| ** **                           | ** ** | ** **             | ** ** | **Above-Market**      | ** ** | **Acquired**     | ** ** |
| ** **                           | ** ** | **Buildings and** | ** ** | **and In-Place** | ** ** | **Below-Market** | ** ** |
| **2006**                             | ** ** | **Improvements**       | ** ** | **Leases**            | ** ** | **Leases**       | ** ** |
| ** **                           | ** ** | **(unaudited)**        | ** ** | **(unaudited)**       | ** ** | **(unaudited)**  | ** ** |
| Cost                                 |       | $                      | 31,268     |                  | $          | 6,720            |       | $ | (1,857 | ) |
| Less:  depreciation and amortization |       | (2,905                 | )          | (2,217                | )          | 783              |       |
| Net                                  |       | $                      | 28,363     |                  | $          | 4,503            |       | $ | (1,074 | ) |

 
|                                      | ** ** | ** **             | ** ** | **Acquired**          | ** ** | ** **       | ** ** |
|--------------------------------------|------------|------------------------|------------|-----------------------|------------|------------------|------------|
| ** **                           | ** ** | ** **             | ** ** | **Above-Market**      | ** ** | **Acquired**     | ** ** |
| ** **                           | ** ** | **Buildings and** | ** ** | **and In-Place** | ** ** | **Below-Market** | ** ** |
| **2005**                             | ** ** | **Improvements**       | ** ** | **Leases**            | ** ** | **Leases**       | ** ** |
| ** **                           | ** ** | **(unaudited)**        | ** ** | **(unaudited)**       | ** ** | **(unaudited)**  | ** ** |
| Cost                                 |       | $                      | 30,657     |                  | $          | 6,264            |       | $ | (1,857 | ) |
| Less:  depreciation and amortization |       | (1,632                 | )          | (1,237                | )          | 448              |       |
| Net                                  |       | $                      | 29,025     |                  | $          | 5,027            |       | $ | (1,409 | ) |

 

Depreciation expense for the years ended December 31,2006 and 2005 was approximately $1.3 million (unaudited) and $1.2 million(unaudited), respectively.  Depreciationexpense for the period from August 10, 2004 (date of acquisition) throughDecember 31, 2004 was approximately $0.4 million.  Amortization (accretion) of intangibles ofapproximately $837,000 (unaudited) and ($184,000) (unaudited) is included indepreciation and amortization and rental income, respectively, on theaccompanying combined statement of operations for the year ended December 31,2006.  Amortization (accretion) ofintangibles of approximately $771,000 (unaudited) and ($184,000) (unaudited) isincluded in depreciation and amortization and rental income, respectively, onthe accompanying combined statement of operations for the year ended December31, 2005.  Amortization (accretion) ofintangibles of approximately $256,000 and ($61,000) is included in depreciationand amortization and rental income, respectively, on the accompanying combinedstatement of operations for the period from August 10, 2004 (date ofacquisition) through December 31, 2004.

Anticipated amortization for each of the followingfive years ended December 31 is as follows (in thousands):

|            | ** ** | **Lease**       | ** ** |
|------------|------------|-----------------|------------|
| ** ** | ** ** | **Intangibles** | ** ** |
| ** ** | ** ** | **(unaudited)** | ** ** |
| 2007       |       | $               | 587        |   |
| 2008       |       | 587             |       |
| 2009       |       | 587             |       |
| 2010       |       | 587             |       |
| 2011       |       | 124             |       |
|            |            |                 |            |  |

 

F-31

----

**4.****                                      AccountsReceivable**

Accounts receivable are comprised of the following (inthousands):
|                                  | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|----------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                       | ** ** | **(unaudited)**                 | ** ** | **(unaudited)**                 | ** ** |
| Rents and  services receivable   |       | $                               | 534        |                            | $          | 203 |   |
| Accruable rental  income         |       | 499                             |       | 170                             |       |
|                             |       |                            |       |                            |       |
|                             |       | 1,033                           |       | 373                             |       |
| Allowance for  doubtful accounts |       | (1                              | )          | —                          |       |
|                             |       |                            |       |                            |       |
| Accounts receivable,  net        |       | $                               | 1,032      |                            | $          | 373 |   |

 

Bad debt expense (recovery) was approximately $1,000(unaudited), ($17,000) (unaudited) and $17,000 for the years ended December 31,2006, 2005 and the period from August 10, 2004 (date of acquisition) throughDecember 31, 2004, respectively, and each is included in general and operatingexpenses on the accompanying statement of operations.

**5.****                                      LeasingActivities**

The Colorado Building leases the building to tenantsunder operating leases with termination dates extending through the year2018.  Minimum future rentals for each ofthe following five years on non-cancelable leases for tenants occupying spaceat December 31, 2006, excluding tenant reimbursements for increases inoperating expenses, are as follows (in thousands) (unaudited):
| 2007 |   | $     | 4,817  |   |
|------|--------|-------|--------|--------|
| 2008 |   | 4,582 |   |
| 2009 |   | 3,840 |   |
| 2010 |   | 2,465 |   |
| 2011 |   | 2,512 |   |

 

**6.****                                      Itemsnot reflected in combined financial statements**

In connectionwith the acquisition of the Colorado Building, each TIC interest holder isparty to a $28 million mortgage loan that is collateralized by each TICinterest holder’s undivided interest in the Colorado Building.  The mortgage loan bears interest at an annualrate of 6.075% and requires monthly interest-only payments until October 2009,at which time monthly payments of principal and interest in the amount ofapproximately $72,000 are required.  Theloan matures in 2014 and is subject to certain debt service coverage ratiorequirements, with which the Colorado Building is compliant as of December 31,2006 (unaudited) and 2005 (unaudited). Interest expense on this mortgage loan was approximately $1.7 million (unaudited)for the years ended December 31, 2006 and 2005 and approximately $664,000 forthe period ending December 31, 2004.  Themortgage loan and related interest expense is not reflected in these combinedfinancial statements as the debt is jointly and severally liable to each TICinterest holder and is not the responsibility of the combined TIC interestholders.

Aggregateprincipal payments on the mortgage loan at December 31, 2006 are due as follows(in thousands) (unaudited):
| Year ending December 31, |   |   |   |
|--------------------------|--------|--------|--------|
| 2007                     |   | $      | — |   |
| 2008                     |   | — |   |
| 2009                     |   | 78     |   |
| 2010                     |   | 320    |   |
| 2011                     |   | 340    |   |
| Thereafter               |   | 27,262 |   |
|                     |   |   |   |
|                     |   | $      | 28,000 |   |

 

F-32

----

BehringerHarvard TIC Management Services LP (the “Property Manager”), an affiliate ofthe REIT’s advisor, has the sole and exclusive right to manage, operate, lease,and supervise the overall maintenance of the Colorado Building.  Under the terms of the Management Agreement,the Property Manager receives a property management fee equal to 3.0% of themonthly gross revenues of the Colorado Building.  The Management Agreement with the PropertyManager shall terminate on the earlier of (1) the sale of the ColoradoBuilding, (2) failure by the tenants in common to renew the ManagementAgreement beyond December 31, 2004 and each anniversary of such date thereafteror (3) December 31, 2025.  Totalmanagement fees earned by the Property Manager for the years ended December 31,2006 and 2005 were approximately $155,000 (unaudited) and $131,000 (unaudited),respectively.  Total management feesearned by the Property Manager from August 10, 2004 through December 31, 2004were approximately $41,000.  These feesare not reflected in the accompanying combined financial statements as the feesare the responsibility of the individual TIC interest holders.

The ColoradoBuilding also pays Behringer Advisors, the REIT’s advisor, an annual advisorasset management fee of 0.5% of the aggregate value of the assets of theColorado Building.  Total assetmanagement fees earned by the Property Manager for the year ended December 31,2006 and 2005 were approximately $12,000 each year (unaudited).  Total asset management fees earned byBehringer Advisors during the period from August 10, 2004 through December 31,2004 were approximately $5,000.  Thesefees are not reflected in the accompanying combined financial statements as thefees are the responsibility of the individual TIC interest holders.

*****

F-33

----

Report of Independent****RegisteredPublic Accounting Firm

To the Board of Directorsand Stockholders ofBehringer Harvard REIT I, Inc.:

We have audited the consolidated financial statements of BehringerHarvard REIT I, Inc. and subsidiaries (the “Company”) as of December 31, 2006and for the year then ended, and have issued our report thereon dated March 26,2007; such report is included elsewhere in this Form 10-K.  Our audit also included the consolidatedfinancial statement schedule of the Company listed in Item 15(a)2.  The financial statement schedule is theresponsibility of the Company’s management. Our responsibility is to express an opinion, based on our audit.  In our opinion, such consolidated financialstatement schedule, when considered in relation to the basic consolidatedfinancial statements taken as a whole, presents fairly, in all materialrespects, the information set forth therein.

 
| /s/**Deloitte  & Touche LLP | * * |
|---------------------------------|----------|
|                            |
| Dallas, Texas                   |
| March 26, 2007                  |

 

F-34

----

**BehringerHarvard  REIT I, Inc.**

**RealEstate and Accumulated Depreciation**

**Schedule III**

**December31, 2006**

**(in thousands)**
| ** **             | ** ** | ** **        | ** ** | ** **       | ** ** | ** **            | ** ** | ** **     | ** ** | **Cost capitalized** | ** ** | **Gross amount**                  | ** ** | ** **       | ** ** | ** **       | ** **          | ** **      | ** ** | ** ** | ** ** |
|------------------------|------------|-------------------|------------|------------------|------------|-----------------------|------------|----------------|------------|---------------------------|------------|----------------------------------------|------------|------------------|------------|------------------|---------------------|-----------------|------------|------------|------------|
| ** **             | ** ** | ** **        | ** ** | ** **       | ** ** | **Initial cost** | ** ** | **subsequent** | ** ** | **carried at**       | ** ** | **Accumulated**                        | ** ** | **Year of** | ** ** | **Date**         | ** **          | **Depreciable** | ** ** |
| **Property Name** | ** ** | **Location**      | ** ** | **Encumbrances** | ** ** | **Land**              | ** ** | **Building**   | ** ** | **to acquisition**   | ** ** | **close of period (1)** | ** ** | **depreciation** | ** ** | **construction** | ** **          | **acquired**    | ** ** | **life**   | ** ** |
| Cyprus Building        |       | Englewood,  CO    |       | $                | —     |                  | $          | 2,056          |       | $                         | 15,500     |                                   | $          | 46               |       | $                | 17,602              |            | $          | 1,244      |       | 1988 |   | 12/16/2004 |   | 25  years |   |
| Ashford Perimter       |       | Atlanta,  GA      |       | 35,400           |       | 8,555                 |       | 31,662         |       | 1,075                     |       | 41,292                                 |       | 2,742            |       | 1982             |                | 1/6/2005        |       | 25  years  |       |
| Utah Avenue Building   |       | El  Segundo, CA   |       | 20,000           |       | 13,727                |       | 9,990          |       | 76                        |       | 23,793                                 |       | 669              |       | 1968             |                | 4/21/2005       |       | 25  years  |       |
| Lawson Commons         |       | St.  Paul, MN     |       | 58,300           |       | 2,021                 |       | 75,881         |       | 120                       |       | 78,022                                 |       | 4,559            |       | 1999             |                | 6/10/2005       |       | 25  years  |       |
| Downtown Plaza         |       | Long  Beach, CA   |       | 12,650           |       | 4,127                 |       | 11,874         |       | 446                       |       | 16,447                                 |       | 806              |       | 1982             |                | 6/14/2005       |       | 25  years  |       |
| Gateway 12             |       | Diamond  Bar, CA  |       | 5,875            |       | 1,600                 |       | 6,319          |       | 10                        |       | 7,929                                  |       | 358              |       | 1999             |                | 7/20/2005       |       | 25  years  |       |
| Gateway 22             |       | Diamond  Bar, CA  |       | 9,750            |       | 3,862                 |       | 7,691          |       | 17                        |       | 11,570                                 |       | 437              |       | 1999             |                | 7/20/2005       |       | 25  years  |       |
| Gateway 23             |       | Diamond  Bar, CA  |       | 13,000           |       | 5,295                 |       | 10,864         |       | 23                        |       | 16,182                                 |       | 618              |       | 1999             |                | 7/20/2005       |       | 25  years  |       |
| Southwest Center       |       | Tigard,  OR       |       | 15,375           |       | 2,106                 |       | 16,317         |       | 385                       |       | 18,808                                 |       | 947              |       | 2001             |                | 7/20/2005       |       | 25  years  |       |
| Waterview              |       | Richardson,  TX   |       | 26,750           |       | 2,932                 |       | 28,876         |       | 26                        |       | 31,834                                 |       | 1,637            |       | 1998             |                | 7/20/2005       |       | 25  years  |       |
| Buena Vista Plaza      |       | Burbank,  CA      |       | 22,000           |       | 3,806                 |       | 28,368         |       | 20                        |       | 32,194                                 |       | 1,609            |       | 1991             |                | 7/28/2005       |       | 25  years  |       |
| One Financial Plaza    |       | Minneapolis,  MN  |       | 43,000           |       | 10,689                |       | 39,482         |       | 297                       |       | 50,468                                 |       | 2,264            |       | 1960             |                | 8/2/2005        |       | 25  years  |       |
| Riverview Tower        |       | Knoxville,  TN    |       | 30,250           |       | 2,740                 |       | 35,181         |       | 190                       |       | 38,111                                 |       | 1,775            |       | 1985             |                | 10/5/2005       |       | 25  years  |       |
| G Street Property      |       | Washington,  D.C. |       | 100,000          |       | 71,384                |       | 60,681         |       | 143                       |       | 132,208                                |       | 2,638            |       | 1969             |                | 11/15/2005      |       | 25  years  |       |
| Woodcrest Center       |       | Cherry  Hill, NJ  |       | 50,400           |       | 5,927                 |       | 49,977         |       | 181                       |       | 56,085                                 |       | 1,850            |       | 1960             |                | 01/11/06        |       | 25  years  |       |
| Burnett Plaza          |       | Ft  Worth, TX     |       | 114,200          |       | 3,376                 |       | 157,171        |       | 68                        |       | 160,615                                |       | 5,238            |       | 1983             |                | 02/10/06        |       | 25  years  |       |
| 10777 Clay Road        |       | Houston,  TX      |       | 16,300           |       | 2,550                 |       | 23,338         |       | 33                        |       | 25,921                                 |       | 701              |       | 1999/2003        |                | 03/14/06        |       | 25  years  |       |
| Paces West             |       | Atlanta,  GA      |       | 84,000           |       | 8,838                 |       | 88,172         |       | 528                       |       | 97,538                                 |       | 2,357            |       | 1987/89          |                | 04/19/06        |       | 25  years  |       |
| Riverside Plaza        |       | Chicago,  IL      |       | 202,000          |       | 29,787                |       | 190,111        |       | 2,171                     |       | 222,069                                |       | 4,521            |       | 1971             |                | 06/02/06        |       | 25  years  |       |
| The Terrace            |       | Austin,  TX       |       | 131,000          |       | 17,330                |       | 124,551        |       | 95                        |       | 141,976                                |       | 2,493            |       | 1997-2002        |                | 06/21/06        |       | 25  years  |       |
| 600/619 Alexander      |       | Princeton,  NJ    |       | 16,500           |       | 3,000                 |       | 16,700         |       | 259                       |       | 19,959                                 |       | 334              |       | 1983/85          |                | 06/28/06        |       | 25  years  |       |
| Grandview              |       | Birmingham,  AL   |       | 17,000           |       | 1,625                 |       | 19,274         |       | 88                        |       | 20,987                                 |       | 129              |       | 1998             |                | 10/20/06        |       | 25  years  |       |
| Bank of America Plaza  |       | Charlotte,  NC    |       | 150,000          |       | 26,672                |       | 185,215        |       | 49                        |       | 211,936                                |       | 1,249            |       | 1974             |                | 10/26/06        |       | 25  years  |       |
| Three Parkway          |       | Philadelphia,  PA |       | 67,125           |       | 7,905                 |       | 69,033         |       | 35                        |       | 76,973                                 |       | 463              |       | 1970             |                | 10/30/06        |       | 25  years  |       |
| 4440 El Camino Real    |       | Los  Altos, CA    |       | 27,689           | (2)        | 4,412                 |       | 30,794         |       | 7                         |       | 35,213                                 |       | 206              |       | 2000             |                | 11/02/06        |       | 25  years  |       |
| Fifth Third Center     |       | Cleveland,  OH    |       | 49,250           |       | 1,424                 |       | 52,075         |       | 224                       |       | 53,723                                 |       | 174              |       | 1991             |                | 11/16/06        |       | 25  years  |       |
| Resurgens Plaza        |       | Atlanta,  GA      |       | 82,000           |       | —                |       | 92,980         |       | 200                       |       | 93,180                                 |       | 321              |       | 1988             |                | 11/30/06        |       | 25  years  |       |
| 5 & 15 Wayside     |       | Burlington,  MA   |       | —           |       | 8,917                 |       | 61,709         |       | —                    |       | 70,626                                 |       | —           |       | 1999/2001        |                | 12/08/06        |       | 25  years  |       |
| Eldridge Place         |       | Houston,  TX      |       | 75,000           |       | 6,605                 |       | 89,506         |       | —                    |       | 96,111                                 |       | —           |       | 1984/86          |                | 12/13/06        |       | 25  years  |       |
| Pratt Building         |       | Baltimore,  MD    |       | 37,000           |       | 6,700                 |       | 39,861         |       | 4,112                     |       | 50,673                                 |       | —           |       | 1986             | 12/17/2004-12/31/06 | 25  years       |       |
| Totals                 |       |              |       | $                | 1,511,814  |                  | $          | 269,968        |       | $                         | 1,669,153  |                                   | $          | 10,924           |       | $                | 1,950,045           |            | $          | 42,339     |       |   |   |   |   |   |   |

 

----

(1) The aggregatecost for federal income tax purposes is equal to the gross amount carried atthe close of the period.

(2) Excludesunamortized premium of approximately $2.4 million.

F-35

----

A summary ofactivity for real estate and accumulated depreciation for the years endedDecember 31, 2006, 2005 and 2004 is as follows (in thousands):

|                                 | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** | **Year ended**             | ** ** |
|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                      | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** | **December 31, 2004** | ** ** |
| Real Estate:                    |       |                            |       |                            |       |                            |       |
| Balance at beginning of  period |       | $                               | 516,239    |                            | $          | 17,556                          |       | $ | — |   |
| Additions                       |       | 1,433,806                       |       | 498,683                         |       | 17,556                          |       |
| Balance at end of the  period   |       | $                               | 1,950,045  |                            | $          | 516,239                         |       | $ | 17,556 |   |
|                            |       |                            |       |                            |       |                            |       |
| Accumulated depreciation:       |       |                            |       |                            |       |                            |       |
| Balance at beginning of  period |       | $                               | 6,808      |                            | $          | —                          |       | $ | — |   |
| Depreciation expense            |       | 35,531                          |       | 6,808                           |       | —                          |       |
| Balance at end of the period    |       | $                               | 42,339     |                            | $          | 6,808                           |       | $ | — |   |

 

*****

F-36

----

**EXHIBITINDEX**
| Exhibit   Number | ** ** | **Description**                                                                                                                                                                                                                                                                                      |
|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                 |
| 3.1.1            |       | Sixth Articles of Amendment and Restatement  (previously filed in and incorporated by reference to Post-Effective  Amendment No. 3 to Registrant’s Registration Statement on Form S-11,  Commission File No. 333-91532 filed on October 20, 2003)                                          |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 3.1.2            |       | Certificate of Correction to Sixth Articles of  Amendment and Restatement (previously filed and incorporated by reference to  Form 8-K filed on December 15, 2005)                                                                                                                                   |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 3.1.3            |       | Articles Supplementary to Sixth Articles of  Amendment and Restatement (previously filed and incorporated by reference to  Form 8-K filed on March 24, 2006)                                                                                                                                         |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 3.2              |       | Amended and Restated Bylaws (previously filed and  incorporated by reference to Amendment No. 4 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on February 11,  2003)                                                                               |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 3.2.1            |       | Amendment to the Amended and Restated Bylaws  (previously filed and incorporated by reference to Form 8-K filed on February  22, 2006)                                                                                                                                                               |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 4.1              |       | Form of Subscription Agreement and Subscription  Agreement Signature Page (previously filed and incorporated by reference to  Exhibit 4.1 to the Registrant’s Registration Statement on Form S-11 filed on  October 4, 2006)                                                                    |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 4.2              |       | Distribution Reinvestment Plan of the Registrant,  effective as of October 23, 2006 (previously filed and incorporated by  reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form  S-11 filed on October 4, 2006)                                                          |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 4.3              |       | Automatic Purchase Plan of the Registrant, effective  as of October 23, 2006 (previously filed and incorporated by reference to  Exhibit 4.3 to Registrant’s Registration Statement on Form S-11 filed on  October 4, 2006)                                                                     |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.1             |       | Second Amended and Restated Agreement of Limited  Partnership of Behringer Harvard Operating Partnership I LP (previously  filed and incorporated by reference to Form 8-K filed on January 5, 2007)                                                                                            |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.2             |       | Fifth Amended and Restated Advisory Agreement  between the Registrant and Behringer Advisors LP (previously filed and incorporated  by reference to Form 8-K filed on January 5, 2007)                                                                                                               |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.3             |       | Fourth Amended and Restated Property Management and  Leasing Agreement among Registrant, Behringer Harvard Operating Partnership I  LP and HPT Management Services, Inc. (previously filed and incorporated by  reference to Form 8-K filed on January 5, 2007)                                      |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.4             |       | Reserved.                                                                                                                                                                                                                                                                                            |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.5             |       | Behringer Harvard REIT I, Inc. Non-Employee Director  Stock Option Plan (previously filed and incorporated by reference to  Amendment No. 1 to Registrant’s Registration Statement on Form S-11,  Commission File No.  333-91532, filed on September 3, 2002)                                   |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.6             |       | Form of Option Agreement under Non-Employee Director  Stock Option Plan (previously filed and incorporated by reference to  Amendment No. 2 to Registrant’s Registration Statement on Form S-11,  Commission File No.  333-91532, filed on November 1, 2002)                                    |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.7             |       | Behringer Harvard REIT I, Inc. 2005 Incentive Award  Plan (previously filed and incorporated by reference to Annex A of the  Registrant’s Definitive Proxy Statement on Schedule 14A, filed on April 15,  2005)                                                                                 |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.8             |       | Form of Behringer Harvard REIT I, Inc. 2005  Incentive Award Stock Option Agreement (previously filed and incorporated by  reference to Registrant’s Post-Effective Amendment No. 1 to Form S-3  Registration Statement on Form S-11, Commission File No. 333-119945, filed on  March 29, 2006) |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.9             |       | Reserved.                                                                                                                                                                                                                                                                                            |
|             |       |                                                                                                                                                                                                                                                                                                 |
| 10.10            |       | Loan Agreement with Greenwich Capital Financial  Products, Inc. regarding the Minnesota Center (previously filed and incorporated  by reference to Post-Effective Amendment No. 3 to Registrant’s                                                                                               |

 

----

 
|        |   | Registration Statement on Form S-11, Commission File  No. 333-91532, filed on October 20, 2003)                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.11  |   | Tenants in Common Agreement regarding the Minnesota  Center (previously filed and incorporated by reference to Post-Effective  Amendment No. 3 to Registrant’s Registration Statement on Form S-11, Commission  File No.  333-91532, filed on October 20, 2003)                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.12  |   | Property and Asset Management Agreement regarding  the Minnesota Center (previously filed and incorporated by reference to  Post-Effective Amendment No. 3 to Registrant’s Registration Statement on Form  S-11, Commission File No. 333-91532, filed on October 20, 2003)                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.13  |   | Tenants in Common Agreement regarding Enclave on the  Lake (previously filed and incorporated by reference to Post-Effective  Amendment No. 6 to Registrant’s Registration Statement on Form S-11,  Commission File No.  333-91532, filed on June 29, 2004)                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.14  |   | Deed of Trust and Security Agreement by Behringer  Harvard Enclave S LP and Behringer Harvard Enclave H LP for the benefit of  State Farm Life Insurance Company (previously filed and incorporated by  reference to Post-Effective Amendment No. 6 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on June 29,  2004)                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.15  |   | Promissory Note made by Behringer Harvard Enclave S  LP and Behringer Harvard Enclave H LP payable to State Farm Life Insurance  Company (previously filed and incorporated by reference to Post-Effective  Amendment No. 6 to Registrant’s Registration Statement on Form S-11,  Commission File No. 333-91532, filed on June 29, 2004)                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.16  |   | Form of Assumption Agreement among State Farm Life  Insurance Company, Behringer Harvard Enclave S LP, Behringer Harvard Enclave  H LP, and Behringer Harvard Holdings, LLC (previously filed and incorporated  by reference to Post-Effective Amendment No. 6 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on June 29,  2004)                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.17  |   | Limited Guaranty made by Robert M. Behringer  regarding Enclave on the Lake (previously filed and incorporated by reference  to Post-Effective Amendment No. 6 to Registrant’s Registration Statement on Form  S-11, Commission File No. 333-91532, filed on June 29, 2004)                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.18  |   | Limited Guaranty made by Behringer Harvard Holdings,  LLC regarding Enclave on the Lake (previously filed and incorporated by  reference to Post-Effective Amendment No. 6 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on June 29,  2004)                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.19  |   | Property and Asset Management Agreement regarding  Enclave on the Lake (previously filed and incorporated by reference to  Post-Effective Amendment No. 6 to Registrant’s Registration Statement on Form  S-11, Commission File No. 333-91532, filed on June 29, 2004)                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.20  |   | Sale Agreement between Trizec Holdings, Inc. and  Behringer Harvard Operating Partnership I LP regarding  the St. Louis Place Property (previously  filed and incorporated by reference to Post-Effective Amendment No. 7 to  Registrant’s Registration Statement on Form S-11, Commission File No.  333-91532, filed on September 29, 2004)                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.21  |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement by Behringer Harvard St. Louis Place H, LLC and  Behringer Harvard St. Louis Place S, LLC, for the benefit of Greenwich  Capital Financial Products, Inc. regarding the St. Louis Place Property (previously filed and incorporated by reference  to Post-Effective Amendment No. 7 to Registrant’s Registration Statement on  Form S-11, Commission File No. 333-91532, filed on September 29, 2004) |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.22  |   | Consent and Subordination of Manager by and among  Behringer Harvard St. Louis Place H, LLC, Behringer Harvard St. Louis Place  S, LLC and Behringer Harvard TIC Management Services LP regarding the St.  Louis Place Property (previously  filed and incorporated by reference to Post-Effective Amendment No. 7 to  Registrant’s Registration Statement on Form S-11, Commission File No.  333-91532, filed on September 29, 2004)                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.23  |   | Loan Agreement by and among Behringer Harvard St.  Louis Place H, LLC, Behringer Harvard St. Louis Place S, LLC and Greenwich  Capital Financial Products, Inc. regarding the St. Louis Place Property (previously filed and incorporated by  reference to Post-Effective Amendment No. 7 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on September 29,  2004)                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.24  |   | Promissory Note made by Behringer Harvard St. Louis  Place H, LLC and Behringer Harvard St. Louis Place S, LLC, payable to  Greenwich Capital Financial Products, Inc. regarding the St. Louis Place  Property (previously filed and  incorporated by reference to Post-Effective Amendment No. 7                                                                                                                                                                                          |

 

----

 
|        |   | to Registrant’s  Registration Statement on Form S-11, Commission File No. 333-91532,  filed on September 29, 2004)                                                                                                                                                                                                                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.25  |   | Loan Assumption and Ratification Agreement by and  among Behringer Harvard St. Louis Place S, LLC and Greenwich Capital  Financial Products, Inc. regarding the St. Louis Place Property (previously filed and incorporated by  reference to Post-Effective Amendment No. 7 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on September 29,  2004)      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.26  |   | Guaranty of Recourse Obligations made by Behringer  Harvard Holdings, LLC and Robert Behringer in favor of Greenwich Capital  Financial Products, Inc. regarding the St. Louis Place Property (previously filed and incorporated by  reference to Post-Effective Amendment No. 7 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-91532, filed on September 29,  2004) |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.27  |   | Purchase and Sale Agreement by and between Hippo  Properties LLC and Harvard Property Trust, LLC regarding the Colorado  Property (previously filed and incorporated by reference to Form 10-Q for the  period ended June 30, 2004, filed on August 16, 2004)                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.28  |   | First Amendment to Purchase and Sale Agreement  between Hippo Properties LLC and Harvard Property Trust, LLC regarding the  Colorado Property (previously filed and incorporated by reference to Form  10-Q for the period ended June 30, 2004, filed on August 16, 2004)                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.29  |   | Second Amendment to Purchase and Sale Agreement  between Hippo Properties LLC and Harvard Property Trust, LLC regarding the  Colorado Property (previously filed and incorporated by reference to Form  10-Q for the period ended June 30, 2004, filed on August 16, 2004)                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.30  |   | Third Amendment to Purchase and Sale Agreement  between Hippo Properties LLC and Harvard Property Trust, LLC regarding the  Colorado Property (previously filed and incorporated by reference to Form  10-Q for the period ended June 30, 2004, filed on August 16, 2004)                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.31  |   | Tenants in Common  Agreement regarding the Colorado Property (previously filed and incorporated  by reference to Form 10-Q for the period ended June 30, 2004, filed on August  16, 2004)                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.32  |   | Loan Agreement with Greenwich Capital Financial  Products, Inc. regarding the Colorado Property (previously filed and  incorporated by reference to Form 10-Q for the period ended June 30, 2004,  filed on August 16, 2004)                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.33  |   | Guaranty of Recourse Obligations by Behringer  Harvard Holdings, LLC and Robert Behringer regarding the Colorado Property  (previously filed and incorporated by reference to Form 10-Q for the period  ended June 30, 2004, filed on August 16, 2004)                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.34  |   | Property and Asset  Management Agreement regarding the Colorado Property (previously filed and incorporated  by reference to Form 10-Q for the period ended June 30, 2004, filed on August  16, 2004)                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.35  |   | Amended and Restated Accommodation Agreement between  Behringer Harvard REIT I, Inc. and Behringer Harvard Holdings, LLC  (previously filed and incorporated by reference to Form 10-Q for the  period ended June 30, 2004, filed on August 16, 2004)                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.36  |   | Real Estate Purchase and Sale Agreement between  AEW/McCord, L.P. and Harvard Property Trust, LLC regarding the Travis Tower  (previously filed and incorporated by reference to Form 8-K filed on October  7, 2004)                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.37  |   | First Amendment to Purchase and Sale Agreement  between AEW/McCord, L.P. and Harvard Property Trust, LLC regarding the Travis  Tower (previously filed and incorporated by reference to Form 8-K filed on  October 7, 2004)                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.38  |   | Loan Agreement between Bear Stearns Commercial  Mortgage, Inc., Behringer Harvard Travis Tower S LP and Behringer Harvard  Travis Tower H LP regarding the Travis Tower (previously filed and  incorporated by reference to Form 8-K filed on October 7, 2004)                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.39  |   | Promissory Note made by Behringer Harvard Travis  Tower S LP and Behringer Harvard Travis Tower H LP to Bear Stearns Commercial  Mortgage, Inc. regarding the Travis Tower (previously filed and incorporated  by reference to Form 8-K filed on October 7, 2004)                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.40  |   | Deed of Trust and Security Agreement by Behringer  Harvard Travis Tower S LP and Behringer Harvard Travis Tower H LP, as  grantor, to Reno Hartfiel, as trustee for the benefit of Bear Stearns                                                                                                                                                                                                               |

 

----

 
|        |   | Commercial Mortgage, Inc. regarding the Travis Tower  (previously filed and incorporated by reference to Form 8-K filed on October  7, 2004)                                                                                                                                                                                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.41  |   | Assignment of Leases and Rents by Behringer Harvard  Travis Tower S LP and Behringer Harvard Travis Tower H LP to Bear Stearns  Commercial Mortgage, Inc. regarding the Travis Tower (previously filed and  incorporated by reference to Form 8-K filed on October 7, 2004)                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.42  |   | Loan Agreement between First American Bank, SSB and  Behringer Harvard Holdings, LLC regarding the Travis Tower (previously filed  and incorporated by reference to Form 8-K filed on October 7, 2004)                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.43  |   | Promissory Note made by Behringer Harvard Holdings,  LLC to First American Bank, SSB regarding the Travis Tower (previously filed  and incorporated by reference to Form 8-K filed on October 7, 2004)                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.44  |   | Guaranty Agreement made by Behringer Harvard REIT I,  Inc. for the benefit of First American Bank, SSB regarding the Travis Tower  (previously filed and incorporated by reference to Form 8-K filed on October  7, 2004)                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.45  |   | Security Agreement granted by Behringer Harvard REIT  I, Inc. for the benefit of First American Bank, SSB regarding the Travis  Tower (previously filed and incorporated by reference to Form 8-K filed on  October 7, 2004)                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.46  |   | Purchase and Sale Agreement by and between MG-Alamo,  LLC and Harvard Property Trust, LLC dated October 18, 2004, as assigned by  Harvard Property Trust to Behringer Harvard REIT I, Inc. on November 4, 2004 regarding  Alamo Plaza (previously filed and incorporated by reference to Form 10-Q for  the period ended September 30, 2004, filed on November 10, 2004)                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.47  |   | Agreement of Sale and Purchase by and between HSOV  Ashford Perimeter, LLC and Harvard Property Trust, LLC dated November 4,  2004, as assigned by Harvard Property Trust to Behringer Harvard REIT I, Inc.  on November 4, 2004 regarding Ashford Perimeter (previously filed and  incorporated by reference to Form 10-Q for the period ended September 30, 2004,  filed on November 10, 2004) |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.48  |   | Purchase and Sale Agreement by and between PERA  Mineral, Inc. and Harvard Property Trust, LLC dated November 9, 2004, as  assigned by Harvard Property Trust, LLC to Behringer Harvard REIT I on  November 12, 2004 regarding the Cyprus Building (previously filed and  incorporated by reference to Form 8-K filed on November 18, 2004)                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.49  |   | Loan Agreement between Citigroup Global Markets  Realty Corp. and Behringer Harvard Pratt H, LLC and the initial TIC borrowers  regarding the Pratt Building (previously filed and incorporated by reference  to Form 8-K filed on December 22, 2004)                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.50  |   | Promissory Note made between Behringer Harvard Pratt  H, LLC and the initial TIC borrowers and Citigroup Global Markets Realty Corp.  regarding the Pratt Building (previously filed and incorporated by reference  to Form 8-K filed on December 22, 2004)                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.51  |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement by Behringer Harvard Pratt H, LLC and the initial TIC borrower,  as grantor, to Christopher F. Naughten as trustee for the benefit of  Citigroup Global Markets Realty Corp. regarding the Pratt Building  (previously filed and incorporated by reference to Form 8-K filed on December  22, 2004)                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.52  |   | Assignment of Leases and Rents by Behringer Harvard  Pratt H, LLC and the initial TIC borrowers to Citigroup Global Markets Realty  Corp. regarding the Pratt Building (previously filed and incorporated by  reference to Form 8-K filed on December 22, 2004)                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.53  |   | Guaranty of Recourse Obligation made among Behringer  Harvard Holdings, LLC, Behringer Harvard REIT I, Inc. and Robert Behringer  for the benefit of Citigroup Global Markets Realty Corp. regarding the Pratt  Building (previously filed and incorporated by reference to Form 8-K filed on  December 22, 2004)                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.54  |   | Tenants in Common Agreement regarding the Pratt  Building (previously filed and incorporated by reference to Form 8-K filed on  December 22, 2004)                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.55  |   | Property and Asset Management Agreement regarding  the Pratt Building (previously filed and incorporated by reference to Form  8-K filed on December 22, 2004)                                                                                                                                                                                                                                   |

 

----

 
| 10.56  |   | Sale Agreement between Trizec 250 W. Pratt, LLC and  Behringer Harvard Operating Partnership I LP regarding the Pratt Building  (previously filed and incorporated by reference to Form 8-K filed on December  22, 2004)                                                                                                                                                                             |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.57  |   | Credit Agreement among Bank of America, N.A. and  Behringer Harvard REIT I, Inc., Behringer Harvard Operating Partnership I LP  and Behringer Harvard Cyprus, LLC regarding the Cyprus Building (previously  filed and incorporated by reference to Form 8-K filed on January 5, 2005)                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.58  |   | Promissory Note made between Behringer Harvard REIT  I, Inc. and Bank of America, N.A. regarding the Cyprus Building (previously  filed and incorporated by reference to Form 8-K filed on January 5, 2005)                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.59  |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement by Behringer Harvard Cyprus, LLC, as grantor, to the  Public Trustee of Arapahoe County, Colorado as trustee for the benefit of  Bank of America, N.A. regarding the Cyprus Building (previously filed and  incorporated by reference to Form 8-K filed on January 5, 2005)                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.60  |   | Assignment of Leases and Rents and Other Income by  Behringer Harvard Cyprus, LLC to Bank of America, N.A. regarding the Cyprus  Building (previously filed and incorporated by reference to Form 8-K filed on  January 5, 2005)                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.61  |   | Guaranty Agreement made between Behringer Harvard  Operating Partnership I LP in favor of Bank of America, N.A. regarding the  Cyprus Building (previously filed and incorporated by reference to Form 8-K  filed on January 5, 2005)                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.62  |   | Guaranty Agreement made between Behringer Harvard  Cyprus, LLC in favor of Bank of America, N.A. regarding the Cyprus Building  (previously filed and incorporated by reference to Form 8-K filed on January  5, 2005)                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.63  |   | Loan Agreement between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Ashford Perimeter H, LLC regarding  Ashford Perimeter (previously filed and incorporated by reference to Form 8-K  filed on January 12, 2005)                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.64  |   | Deed to Secure Debt, Assignment of Leases and Rents  and Security Agreement between Bear Stearns Commercial Mortgage, Inc. and  Behringer Harvard Ashford Perimeter H, LLC regarding Ashford Perimeter  (previously filed and incorporated by reference to Form 8-K filed on January  12, 2005)                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.65  |   | Promissory Note between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Ashford Perimeter H, LLC regarding  Ashford Perimeter (previously filed and incorporated by reference to Form 8-K  filed on January 12, 2005)                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.66  |   | Assignment of Leases and Rents between Bear Stearns  Commercial Mortgage, Inc. and Behringer Harvard Ashford Perimeter H, LLC regarding  Ashford Perimeter (previously filed and incorporated by reference to Form 8-K  filed on January 12, 2005)                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.67  |   | Indemnity Agreement by Behringer Harvard Ashford  Perimeter H, LLC and Behringer Harvard REIT I, Inc. in favor of Bear Stearns  Commercial Mortgage, Inc. regarding Ashford Perimeter (previously filed and  incorporated by reference to Form 8-K filed on January 12, 2005)                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.68  |   | Purchase and Sale Agreement by and between LBA-VIF  Utah, LLC and Harvard Property Trust, LLC dated February 15, 2005 regarding  the Utah Building (previously filed and incorporated by reference to Form 8-K  filed on February 28, 2005)                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.69  |   | Assignment of Purchase and Sale Agreement by Harvard  Property Trust, LLC to Behringer Harvard Operating Partnership I LP dated  February 22, 2005 regarding the Utah Building (previously filed and  incorporated by reference to Form 8-K filed on February 28, 2005)                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.70  |   | Loan Agreement between Citigroup Global Markets  Realty Corp. and Behringer Harvard Alamo Plaza H, LLC and Behringer Harvard  Alamo Plaza S, LLC regarding Alamo Plaza (previously filed and incorporated  by reference to Form 8-K filed on March 2, 2005)                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.71  |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement between Behringer Harvard Alamo Plaza H, LLC and Behringer  Harvard Alamo Plaza S, LLC and the Public Trustee of the City and County of  Denver, Colorado for the benefit of Citigroup Global Markets Realty Corp.  regarding Alamo Plaza (previously filed and incorporated by reference to Form  8-K filed on March 2, 2005) |

 

----

 
| 10.72  |   | Promissory Note between Citigroup Global Markets  Realty Corp. and Behringer Harvard Alamo Plaza H, LLC and Behringer Harvard  Alamo Plaza S, LLC regarding Alamo Plaza (previously filed and incorporated  by reference to Form 8-K filed on March 2, 2005)                                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.73  |   | Guaranty of Recourse Obligation made by Behringer  Harvard Holdings, LLC and Robert Behringer as guarantors in favor of  Citigroup Global Markets Realty Corp regarding Alamo Plaza (previously filed  and incorporated by reference to Form 8-K filed on March 2, 2005)                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.74  |   | Assignment of Leases and Rents between Citigroup  Commercial Mortgage, Inc. and Behringer Harvard Alamo Plaza H, LLC regarding  Alamo Plaza (previously filed and incorporated by reference to Form 8-K filed  on March 2, 2005)                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.75  |   | Purchase and Sale Agreement by and between Pacifica  BP Investors I and Harvard Property Trust, LLC dated April 4, 2005 regarding  Downtown Plaza (previously filed and incorporated by reference to Form 8-K  filed on April 12, 2005)                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.76  |   | Assignment of Purchase and Sale Agreement by Harvard  Property Trust, LLC to Behringer Harvard Operating Partnership I LP dated  April 6, 2005 regarding Downtown Plaza (previously filed and incorporated by  reference to Form 8-K filed on April 12, 2005)                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.77  |   | Loan Agreement between Greenwich Capital Financial  Products, Inc. and Behringer Harvard Utah Avenue LP regarding the Utah Avenue  Building (previously filed and incorporated by reference to Form 8-K filed on  April 27, 2005)                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.78  |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement between Behringer Harvard Utah Avenue LP and Fidelity  National Title Insurance Company, as trustee, for the benefit of Greenwich  Capital Financial Products, Inc. regarding the Utah Avenue Building  (previously filed and incorporated by reference to Form 8-K filed on April  27, 2005)                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.79  |   | Promissory Note between Greenwich Capital Financial  Products, Inc. and Behringer Harvard Utah Avenue LP regarding the Utah Avenue  Building (previously filed and incorporated by reference to Form 8-K filed on  April 27, 2005)                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.80  |   | Guaranty of Recourse Obligations made by the  Registrant as guarantor in favor of Greenwich Capital Financial Products,  Inc. regarding the Utah Avenue Building (previously filed and incorporated by  reference to Form 8-K filed on April 27, 2005)                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.81  |   | Assignment of Leases and Rents between Greenwich  Capital Financial Products, Inc. and Behringer Harvard Utah Avenue LP  regarding the Utah Avenue Building (previously filed and incorporated by  reference to Form 8-K filed on April 27, 2005)                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.82  |   | Purchase/Contribution Agreement by and between  Ryanco Partners Ltd. No. X and Behringer Harvard Operating Partnership I LP  regarding Buena Vista Plaza (previously filed and incorporated by reference  to Form 8-K filed on May 12, 2005)                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.83  |   | Purchase and Sale Agreement by and between Rice Park  Associates, LLC and Harvard Property Trust, LLC dated May 23, 2005 regarding  Lawson Commons (previously filed and incorporated by reference to Form 8-K  filed on May 27, 2005)                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.84  |   | Purchase and Sale Agreement by and between Aptus  Office Investments, LLC and Harvard Property Trust, LLC regarding the Western  Office Portfolio (previously filed and incorporated by reference to Form 8-K  filed on June 17, 2005)                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.85  |   | Loan Agreement between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Downtown Plaza LP regarding Downtown  Plaza (previously filed and incorporated by reference to Form 8-K filed on  June 20, 2005)                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.86  |   | Promissory Note made between Behringer Harvard  Downtown Plaza LP and Bear Stearns Commercial Mortgage, Inc. regarding  Downtown Plaza (previously filed and incorporated by reference to Form 8-K  filed on June 20, 2005)                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.87  |   | Deed of Trust and Security Agreement by Behringer  Harvard Downtown Plaza LP, as grantor, to Ticor Title Company of California,  as trustee, for the benefit of Mortgage Electronic Registration Systems, Inc.  as nominee of Bear Stearns Commercial Mortgage, Inc. regarding Downtown Plaza  (previously filed and incorporated by reference to Form 8-K filed on June 20,  2005) |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.88  |   | Assignment of Leases and Rents by Behringer Harvard  Downtown Plaza LP to Mortgage Electronic Registration Systems, Inc. as  nominee of Bear Stearns Commercial Mortgage, Inc. regarding                                                                                                                                                                                            |

 

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|        |   | Downtown Plaza (previously filed and incorporated by  reference to Form 8-K filed on June 20, 2005)                                                                                                                                                                                                                                                                                      |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.89  |   | Indemnity Agreement by Behringer Harvard Downtown  Plaza LP and the Registrant in favor of Bear Stearns Commercial Mortgage,  Inc. regarding Downtown Plaza (previously filed and incorporated by reference  to Form 8-K filed on June 20, 2005)                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.90  |   | Purchase and Sale Agreement by and between Zeller  Holdings Corporation, as trustee for Zeller-OFP Trust and Harvard Property  Trust, LLC regarding One Financial Plaza (previously filed and incorporated  by reference to Form 8-K filed on July 18, 2005)                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.91  |   | Loan Agreement between JPMorgan Chase Bank, N.A. and  Behringer Harvard Western Portfolio LP regarding the Western Office Portfolio  (previously filed and incorporated by reference to Form 8-K filed on July 26,  2005)                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.92  |   | Promissory Note made between Behringer Harvard  Western Portfolio LP and JPMorgan Chase Bank, N.A. regarding the Western  Office Portfolio (previously filed and incorporated by reference to Form 8-K  filed on July 26, 2005)                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.93  |   | California Deed of Trust and Security Agreement by  Behringer Harvard Western Portfolio LP, as grantor, to Fidelity National  Title Insurance Company, as trustee, for the benefit of JPMorgan Chase Bank,  N.A. regarding the Western Office Portfolio (previously filed and  incorporated by reference to Form 8-K filed on July 26, 2005)                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.94  |   | Texas Deed of Trust and Security Agreement by  Behringer Harvard Western Portfolio LP, as grantor, to Steve Hughes, as  trustee, for the benefit of JPMorgan Chase Bank, N.A. regarding the Western  Office Portfolio (previously filed and incorporated by reference to Form 8-K  filed on July 26, 2005)                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.95  |   | Oregon Deed of Trust and Security Agreement by  Behringer Harvard Western Portfolio LP, as grantor, to Fidelity National  Title Insurance Company of Oregon, as trustee, for the benefit of JPMorgan  Chase Bank, N.A. regarding the Western Office Portfolio (previously filed and  incorporated by reference to Form 8-K filed on July 26, 2005)                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.96  |   | Texas Assignment of Leases and Rents by Behringer  Harvard Western Portfolio LP to JPMorgan Chase Bank, N.A. regarding the Western  Office Portfolio (previously filed and incorporated by reference to Form 8-K  filed on July 26, 2005)                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.97  |   | California Assignment of Leases and Rents by  Behringer Harvard Western Portfolio LP to JPMorgan Chase Bank, N.A. regarding  the Western Office Portfolio (previously filed and incorporated by reference  to Form 8-K filed on July 26, 2005)                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.98  |   | Oregon Assignment of Leases and Rents by Behringer  Harvard Western Portfolio LP to JPMorgan Chase Bank, N.A. regarding the  Western Office Portfolio (previously filed and incorporated by reference to  Form 8-K filed on July 26, 2005)                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.99  |   | Guaranty Agreement by the Registrant for the benefit  of JPMorgan Chase Bank, N.A. regarding the Western Office Portfolio  (previously filed and incorporated by reference to Form 8-K filed on July 26,  2005)                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.100 |   | Loan Agreement between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Buena Vista Plaza LP regarding Buena  Vista Plaza (previously filed and incorporated by reference to Form 8-K filed  on August 2, 2005)                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.101 |   | Promissory Note made between Behringer Harvard Buena  Vista Plaza LP and Bear Stearns Commercial Mortgage, Inc. regarding Buena  Vista Plaza (previously filed and incorporated by reference to Form 8-K filed  on August 2, 2005)                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.102 |   | Deed of Trust and Security Agreement by Behringer  Harvard Buena Vista Plaza LP, as grantor to Ticor Title Company of  California, as trustee for the benefit of Mortgage Electronic Registration  Systems, Inc. as nominee of Bear Stearns Commercial Mortgage, Inc. regarding  Buena Vista Plaza (previously filed and incorporated by reference to Form 8-K  filed on August 2, 2005) |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.103 |   | Assignment of Leases and Rents by Behringer Harvard  Buena Vista Plaza LP to Mortgage Electronic Registration Systems, Inc. as  nominee of Bear Stearns Commercial Mortgage, Inc. regarding Buena Vista Plaza  (previously filed and incorporated by reference to Form 8-K filed on August  2, 2005)                                                                                     |

 

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| 10.104 |   | Indemnity Agreement by Behringer Harvard Buena Vista  Plaza LP and the Registrant in favor of Bear Stearns Commercial Mortgage,  Inc. regarding Buena Vista Plaza (previously filed and incorporated by  reference to Form 8-K filed on August 2, 2005)                                                                         |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.105 |   | Loan Agreement between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Lawson Commons, LLC regarding Lawson  Commons (previously filed and incorporated by reference to Form 8-K filed on  August 2, 2005)                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.106 |   | Promissory Note made between Behringer Harvard  Lawson Commons, LLC and Bear Stearns Commercial Mortgage, Inc. regarding  Lawson Commons (previously filed and incorporated by reference to Form 8-K  filed on August 2, 2005)                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.107 |   | Mortgage and Security Agreement by Behringer Harvard  Lawson Commons, LLC, as borrower, for the benefit of Mortgage Electronic  Registration Systems, Inc. as nominee of Bear Stearns Commercial Mortgage,  Inc. regarding Lawson Commons (previously filed and incorporated by reference  to Form 8-K filed on August 2, 2005) |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.108 |   | Assignment of Leases and Rents by Behringer Harvard  Lawson Commons, LLC to Mortgage Electronic Registration Systems, Inc. as  nominee of Bear Stearns Commercial Mortgage, Inc. regarding Lawson Commons  (previously filed and incorporated by reference to Form 8-K filed on August  2, 2005)                                |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.109 |   | Indemnity Agreement by Behringer Harvard Lawson  Commons, LLC and the Registrant in favor of Bear Stearns Commercial Mortgage,  Inc. regarding Lawson Commons (previously filed and incorporated by reference  to Form 8-K filed on August 2, 2005)                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.110 |   | Loan Agreement between Citigroup Global Markets Realty Corp. and  Behringer Harvard One Financial, LLC regarding One Financial Plaza  (previously filed and incorporated by reference to Form 8-K filed on August  8, 2005)                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.111 |   | Promissory Note made between Behringer Harvard One Financial, LLC and  Citigroup Global Markets Realty Corp. regarding One Financial Plaza  (previously filed and incorporated by reference to Form 8-K filed on August  8, 2005)                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.112 |   | Mortgage, Assignment of Leases and Rents and Security Agreement by  Behringer Harvard One Financial, LLC, as borrower in favor of Citigroup  Global Markets Realty Corp. regarding One Financial Plaza (previously filed  and incorporated by reference to Form 8-K filed on August 8, 2005)                                    |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.113 |   | Assignment of Leases and Rents by Behringer Harvard One Financial,  LLC in favor of Citigroup Global Markets Realty Corp. regarding One Financial  Plaza (previously filed and incorporated by reference to Form 8-K filed on  August 8, 2005)                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.114 |   | Guaranty of Recourse Obligations made by the Registrant as guarantor  in favor of Citigroup Global Markets Realty Corp. regarding One Financial  Plaza (previously filed and incorporated by reference to Form 8-K filed on  August 8, 2005)                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.115 |   | Purchase and Sale Agreement by and between HPW Family Partnership,  LLC, Lawler Family Partnership, LLC and Riverview Partners, LLC and Harvard  Property Trust, LLC regarding Riverview Tower (previously filed and  incorporated by reference to Form 8-K filed on September 9, 2005)                                         |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.116 |   | First Master Modification of Credit Agreement and Other Loan  Documents, dated September 13, 2005, between Bank of America, N.A. and the  Registrant, Behringer Harvard Cyprus, LLC and Behringer Harvard Operating  Partnership I LP (previously filed and incorporated by reference to Form 8-K  filed on September 19, 2005) |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.117 |   | Purchase and Sale Agreement by and between 1325 G Street Fee LLC and  Harvard Property Trust, LLC (previously filed and incorporated by reference  to Form 8-K filed on October 28, 2005)                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.118 |   | Office Lease between Behringer Harvard TIC Management Services LP and  Behringer Harvard Holdings LLC regarding the Colorado  Building (previously filed and incorporated by reference to Form 10-Q  for the period ended September 30, 2005, filed on November 14, 2005)                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                            |
| 10.119 |   | Form of Office Lease between Behringer Harvard TIC Management  Services LP and Behringer Harvard Exchange Concepts LP regarding the Travis  Tower (previously filed and incorporated by reference to Form 10-Q for  the period ended September 30, 2005 filed on November 14, 2005)                                        |

 

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| 10.120 |   | Form of Office Lease between Behringer Harvard TIC Management  Services LP and Behringer Harvard Exchange Concepts LP regarding Alamo Plaza   (previously filed and incorporated by reference to Form 10-Q for the  period ended September 30, 2005 filed on November 14, 2005)                                                                                                 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.121 |   | Agreement of Sale among Woodcrest Road Associates, L.P., Woodcrest  Road Urban Renewal, LLC and Owners and Harvard Property Trust, LLC d/b/a  Behringer Harvard Funds (previously filed and incorporated by reference to  Form 8-K filed on December 28, 2005)                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.122 |   | Assignment of Agreement of Sale by Harvard Property Trust, LLC and  Behringer Harvard Operating Partnership I LP (previously filed and  incorporated by reference to Form 8-K filed on December 28, 2005)                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.123 |   | Loan Agreement between Citigroup Global Markets Realty Corp. and  Woodcrest Road Associates, L.P. and Woodcrest Road Urban Renewal, LLC (previously  filed and incorporated by reference to Form 8-K filed on January 17, 2006)                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.124 |   | Promissory Note made between Woodcrest Road Associates, L.P. and  Woodcrest Road Urban Renewal, LLC and Citigroup Global Markets Realty Corp.  (previously filed and incorporated by reference to Form 8-K filed on January  17, 2006)                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.125 |   | Mortgage, Assignment of Leases and Rents and Security Agreement by  Woodcrest Road Associates, L.P. and Woodcrest Road Urban Renewal, LLC, as  borrower in favor of Citigroup Global Markets Realty Corp. (previously filed  and incorporated by reference to Form 8-K filed on January 17, 2006)                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.126 |   | Assignment of Leases and Rents by Woodcrest Road Associates, L.P. and  Woodcrest Road Urban Renewal, LLC to Citigroup Global Markets Realty Corp.  (previously filed and incorporated by reference to Form 8-K filed on January  17, 2006)                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.127 |   | Guaranty of Recourse Obligations made by Behringer  Harvard REIT I, Inc., as guarantor in favor of Citigroup Global Markets  Realty Corp. (previously filed and incorporated by reference to Form 8-K/A  filed on January 31, 2006)                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.128 |   | Loan Agreement between Citigroup Global Markets  Realty Corp. and Behringer Harvard Riverview, LLC (previously filed and  incorporated by reference to Form 8-K filed on January 30, 2006)                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.129 |   | Promissory Note made between Behringer Harvard  Riverview, LLC and Citigroup Global Markets Realty Corp. (previously filed  and incorporated by reference to Form 8-K filed on January 30, 2006)                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.130 |   | Deed of Trust, Financing Statement, Absolute  Assignment of Leases and Rents, Security Agreement and Fixture Filing by  Behringer Harvard Riverview, LLC, as grantor to Robert N. Buchanan III, as  trustee for the benefit of Citigroup Global Markets Realty Corp. (previously filed  and incorporated by reference to Form 8-K filed on January 30, 2006)                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.131 |   | Assignment of Leases and Rents by Behringer Harvard  Riverview, LLC, as borrower in favor of Citigroup Global Markets Realty Corp.  (previously filed and incorporated by reference to Form 8-K filed on January  30, 2006)                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.132 |   | Guaranty of Recourse Obligations made by Behringer  Harvard REIT I, Inc., as guarantor in favor of Citigroup Global Markets  Realty Corp. (previously filed and incorporated by reference to Form 8-K filed  on January 30, 2006)                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.133 |   | Loan Agreement between Bank of America, N.A. and  Burnett Plaza Associates, L.P., dated March 22, 2005 (previously filed and  incorporated by reference to Form 8-K filed on February 16, 2006)                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.134 |   | Promissory Note made between Bank of America, N.A.  and Burnett Plaza Associates L.P., dated March 22, 2005 (previously filed and  incorporated by reference to Form 8-K filed on February 16, 2006)                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.135 |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement by Burnett Plaza Associates L.P., as borrower in favor of  Bank of America, N.A, dated March 22, 2005 (previously filed and incorporated  by reference to Form 8-K filed on February 16, 2006)                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.136 |   | Loan Assumption and Substitution Agreement between  Behringer Harvard Burnett Plaza LP, Behringer Harvard REIT I, Inc., Burnett  Plaza Associates, L.P., in favor of LaSalle Bank National Association, as  Trustee, and REMIC Administrator for Banc of America Commercial Mortgage,  Inc. and Brandywine Acquisition Partners, L.P. (previously filed and  incorporated by reference to |

 

----

 
|        |   | Form 8-K filed on February 16, 2006)                                                                                                                                                                                                                                                                                                         |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.137 |   | Purchase and Sale Agreement between Burnett Plaza  Associates, L.P. and Harvard Property Trust, LLC (previously filed and  incorporated by reference to Form 8-K filed on February 16, 2006)                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.138 |   | Loan Agreement between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Paces West, LLC (previously filed and  incorporated by reference to Form 8-K filed on April 25, 2006)                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.139 |   | Promissory Note made between Bear Stearns Commercial  Mortgage, Inc. and Behringer Harvard Paces West, LLC (previously filed and  incorporated by reference to Form 8-K filed on April 25, 2006)                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.140 |   | Deed to Secure Debt, Assignment of Leases and Rents  and Security Agreement by Behringer Harvard Paces West, LLC, as borrower for  the benefit of Mortgage Electronic Registration Systems, Inc. as nominee of  Bear Stearns Commercial Mortgage, Inc. (previously filed and incorporated by  reference to Form 8-K filed on April 25, 2006) |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.141 |   | Indemnity Agreement made by Behringer Harvard Paces  West, LLC and Behringer Harvard REIT I, Inc., in favor of Bear Stearns  Commercial Mortgage, Inc. (previously filed and incorporated by reference to  Form 8-K filed on April 25, 2006)                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.142 |   | Assignment of Leases and Rents by Behringer Harvard  Paces West, LLC, as borrower to Mortgage Electronic Registration Systems,  Inc. as nominee of Bear Stearns Commercial Mortgage, Inc. (previously filed  and incorporated by reference to Form 8-K filed on April 25, 2006)                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.143 |   | Loan Agreement between Greenwich Capital Financial  Products, Inc. and Behringer Harvard South Riverside, LLC (previously  filed and incorporated by reference to Form 8-K filed on June 8, 2006)                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.144 |   | Promissory Note made between Greenwich Capital  Financial Products, Inc. and Behringer Harvard South Riverside, LLC  (previously filed and incorporated by reference to Form 8-K filed on June 8,  2006)                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.145 |   | Mortgage, Assignment of Leases and Rents and  Security Agreement and Fixture Filing by Behringer Harvard South Riverside,  LLC, as borrower in favor of Greenwich Capital Financial Products, Inc.  (previously filed and incorporated by reference to Form 8-K filed on June 8,  2006)                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.146 |   | Guaranty Agreement made by Behringer Harvard REIT  I, Inc., in favor of Greenwich Capital Financial Products, Inc.  (previously filed and incorporated by reference to Form 8-K filed on June 8,  2006)                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.147 |   | Assignment of Leases and Rents by Behringer Harvard  South Riverside, LLC, as borrower in favor of Greenwich Capital Financial  Products, Inc. (previously filed and incorporated by reference to Form  8-K filed on June 8, 2006)                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.148 |   | Stock Purchase and Sale Agreement between Beacon  Capital Strategic Partners III, L.P. and Behringer Harvard Operating  Partnership I, LP (previously filed and incorporated by reference to Form 8-K  filed on June 8, 2006)                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.149 |   | Development Option Agreement between W&G  Partnership, Ltd., Desta Three Partnership, Ltd., Desta Six Partnership, Ltd.  and Behringer Harvard Holdings, LLC (previously filed and incorporated by  reference to Form 8-K filed on June 27, 2006)                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.150 |   | Agreement Concerning Development Rights between  Behringer Harvard Operating Partnership I LP and Behringer Harvard Holdings,  LLC (previously filed and incorporated by reference to Form 8-K filed on June  27, 2006)                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.151 |   | Purchase and Sale Agreement between Desta One  Partnership, LTD, Desta Two Partnership, LTD, Desta Five Partnership, LTD and  Harvard Property Trust, LLC (previously filed and incorporated by reference  to Form 8-K filed on June 27, 2006)                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.152 |   | Amended and Restated First Amendment to Purchase and  Sale Agreement between Desta One Partnership, LTD, Desta Two Partnership,  LTD, Desta Five Partnership, LTD and Harvard Property Trust, LLC (previously  filed and incorporated by reference to Form 8-K filed on June 27, 2006)                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.153 |   | Loan Agreement between Lehman Brothers Bank, FSB and  Behringer Harvard Terrace LP (previously filed and incorporated by reference  to Form 8-K filed on June 27, 2006)                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.154 |   | Promissory Note made between Lehman Brothers Bank,  FSB and Behringer Harvard Terrace LP                                                                                                                                                                                                                                                     |

 

----

 
|        |   | (previously filed and incorporated by reference to  Form 8-K filed on June 27, 2006)                                                                                                                                                                                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.155 |   | Deed of Trust and Security Assignment by Behringer  Harvard Terrace LP, as borrower to Barnet B. Skelton, Jr. as trustee for  the benefit of Lehman Brothers Bank, FSB (previously filed and incorporated  by reference to Form 8-K filed on June 27, 2006)                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.156 |   | Guaranty made by Behringer Harvard REIT  I, Inc., in favor of Lehman Brothers Bank, FSB (previously filed and  incorporated by reference to Form 8-K filed on June 27, 2006)                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.157 |   | Assignment of Leases and Rents by Behringer Harvard  Terrace LP, as borrower to Lehman Brothers Bank, FSB (previously filed and  incorporated by reference to Form 8-K filed on June 27, 2006)                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.158 |   | Promissory Note made between W&G Partnership,  Ltd. and Behringer Harvard Operating Partnership I LP (previously filed and  incorporated by reference to Form 8-K filed on June 27, 2006)                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.159 |   | Deed of Trust by W&G Partnership, Ltd, as  borrower, to Randall S. Osbourne as trustee for the benefit of Behringer  Harvard Operating Partnership I LP (previously filed and incorporated by  reference to Form 8-K filed on June 27, 2006)                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.160 |   | Purchase and Sale Agreement between GA-Paces West,  LLC and Harvard Property Trust, LLC (previously filed and incorporated by  reference to Form 10-Q for the period ended June 30, 2006, filed on August  14, 2006)                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.161 |   | Letter Agreement, dated May 2, 2006, between  Behringer Advisors LP and Behringer Harvard REIT I, Inc. regarding waiver of  asset management fees (previously filed and incorporated by reference to Form  10-Q for the period ended June 30, 2006, filed on August 14, 2006)                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.162 |   | Letter Agreement, dated August 9, 2006, between  Behringer Advisors LP and Behringer Harvard REIT I, Inc. regarding waiver of  asset management fees (previously filed and incorporated by reference to Form  10-Q for the period ended June 30, 2006, filed on August 14, 2006)                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.163 |   | Assignment Agreement by and between BRE/TZ  Acquisitions, L.L.C. and Harvard Property Trust, LLC dated September 11, 2006  regarding Bank of America Plaza (previously filed and incorporated by  reference to Form S-11/A filed on October 4, 2006)                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.164 |   | Assignment of Assignment Agreement by Harvard  Property Trust, LLC to Behringer Harvard Operating Partnership I LP dated  September 20, 2006 regarding Bank of America Plaza (previously filed and  incorporated by reference to Form S-11/A filed on October 4, 2006)                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.165 |   | Reinstatement and First Amendment to Assignment  Agreement by and between BRE/TZ Acquisitions, L.L.C. and Behringer Harvard  Operating Partnership I LP dated September 20, 2006 regarding Bank of America  Plaza (previously filed and incorporated by reference to Form S-11/A filed on  October 4, 2006)                              |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.166 |   | Purchase and Sale Agreement by and between BRE/TZ  Acquisitions, L.L.C. and Trizec Holdings, LLC dated September 21, 2006  regarding Bank of America Plaza (previously filed and incorporated by  reference to Form S-11/A filed on October 4, 2006)                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.167 |   | Purchase and Sale Agreement between AGL Investments  No. 2 Limited Partnership L.L.L.P. and Harvard Property Trust, LLC dated  September 22, 2006 regarding Three Parkway (previously filed and incorporated  by reference to Form S-11/A filed on October 4, 2006)                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.168 |   | Purchase and Sale Agreement between North Atlanta  Realty Acquisitions Company, Inc. and Harvard Property Trust, LLC dated  September 29, 2006 regarding Resurgens Plaza (previously filed and  incorporated by reference to Form S-11/A filed on October 4, 2006)                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.169 |   | Loan Agreement between Citigroup Global Markets  Realty Corp. and Behringer Harvard 101 South Tryon LP (previously filed and  incorporated by reference to Form 8-K filed on November 1, 2006)                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.170 |   | Promissory Note made between Citigroup Global  Markets Realty Corp. and Behringer Harvard 101 South Tryon LP (previously  filed and incorporated by reference to Form 8-K filed on November 1, 2006)                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
| 10.171 |   | Deed of Trust, Assignment of Leases and Rents and  Security Agreement and Fixture Filing by Behringer Harvard 101 South Tryon  LP, as borrower, to Donald F. Simone, Esq., as trustee, for the benefit of  Citigroup Global Markets Realty Corp. (previously filed and incorporated by  reference to Form 8-K filed on November 1, 2006) |

 

----

 
| 10.172 |   | Assignment of Leases and Rents by Behringer Harvard  101 South Tryon LP, as borrower to Citigroup Global Markets Realty Corp.  (previously filed and incorporated by reference to Form 8-K filed on November  1, 2006)                                                                    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.173 |   | Guaranty of Recourse Obligations made by Behringer  Harvard REIT I, Inc., in favor of Citigroup Global Markets Realty Corp.  (previously filed and incorporated by reference to Form 8-K filed on November  1, 2006)                                                                      |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.174 |   | Loan Agreement  between JP Morgan Chase Bank, N.A. and Behringer Harvard Three Parkway, LLC  (previously filed and incorporated by reference to Form 8-K filed on November  3, 2006)                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.175 |   | Promissory Note made between JP Morgan Chase Bank,  N.A. and Behringer Harvard Three Parkway, LLC (previously filed and  incorporated by reference to Form 8-K filed on November 3, 2006)                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.176 |   | Open-End Mortgage, Assignment of Leases and Rents  and Security Agreement and Fixture Filing by Behringer Harvard Three Parkway,  LLC, as borrower, for the benefit of JP Morgan Chase Bank, N.A. (previously  filed and incorporated by reference to Form 8-K filed on November 3, 2006) |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.177 |   | Assignment of Leases and Rents by Behringer Harvard  Three Parkway, LLC, as borrower to JP Morgan Chase Bank, N.A. (previously  filed and incorporated by reference to Form 8-K filed on November 3, 2006)                                                                                |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.178 |   | Guaranty Agreement made by Behringer Harvard REIT I,  Inc., in favor of JP Morgan Chase Bank N.A. (previously filed and  incorporated by reference to Form 8-K filed on November 3, 2006)                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.179 |   | Sale, Purchase and Escrow Agreement between North  Atlanta Realty Acquisition Company, Inc. and Harvard Property Trust, LLC  (previously filed and incorporated by reference to Form 8-K filed on November  30, 2006)                                                                     |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.180 |   | Loan Agreement between Keybank National Association  and Behringer Harvard 945 East Paces Ferry Road, LLC (previously filed and  incorporated by reference to Form 8-K filed on November 30, 2006)                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.181 |   | Promissory Note made between Keybank National  Association and Behringer Harvard 945 East Paces Ferry Road, LLC (previously  filed and incorporated by reference to Form 8-K filed on November 30, 2006)                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.182 |   | Fee and Leasehold Deed to Secure Debt and Security  Agreement by Behringer Harvard 945 East Paces Ferry Road, LLC, as borrower  for the benefit of Keybank National Association (previously filed and  incorporated by reference to Form 8-K filed on November 30, 2006)                  |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.183 |   | Assignment of Leases and Rents by Behringer Harvard  945 East Paces Ferry Road, LLC, as borrower to Keybank National Association  (previously filed and incorporated by reference to Form 8-K filed on November  30, 2006)                                                                |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.184 |   | Guaranty Agreement made by Behringer Harvard 945  East Paces Ferry Road, LLC and Behringer Harvard REIT I, Inc., in favor of  Keybank National Association (previously filed and incorporated by reference  to Form 8-K filed on November 30, 2006)                                       |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.185 |   | Reinstatement of and First Amendment to Sale,  Purchase and Escrow Agreement between North Atlanta Realty Acquisition  Company, Inc. and Harvard Property Trust, LLC (previously filed and  incorporated by reference to Form 8-K filed on November 30, 2006)                             |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.186 |   | Reinstatement of and Second Amendment to Sale,  Purchase and Escrow Agreement between North Atlanta Realty Acquisition  Company, Inc. and Harvard Property Trust, LLC (previously filed and  incorporated by reference to Form 8-K filed on November 30, 2006)                            |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.187 |   | Purchase Agreement between TR Eldridge Place Corp.  and Harvard Property Trust, LLC Loan Agreement between Wachovia Bank,  National Association and Behringer Harvard Eldridge Place LP (previously  filed and incorporated by reference to Form 8-K filed on December 19, 2006)          |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.188 |   | Loan Agreement between Wachovia Bank, National  Association and Behringer Harvard Eldridge Place LP (previously filed and  incorporated by reference to Form 8-K filed on December 19, 2006)                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                      |
| 10.189 |   | Promissory Note made between Wachovia Bank, National  Association and Behringer Harvard Eldridge Place LP (previously filed and  incorporated by reference to Form 8-K filed on December 19, 2006)                                                                                        |

 

----

 
| 10.190 |   | Deed of Trust, Assignment of Leases and Rents,  Security Agreement and Fixture Filing by Behringer Harvard Eldridge Place LP,  as borrower to William D. Cleveland, Esq., as trustee, for the benefit of  Wachovia Bank, National Association (previously filed and incorporated by  reference to Form 8-K filed on December 19, 2006) |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.191 |   | Assignment of Leases and Rents by Behringer Harvard  Eldridge Place LP, as borrower to Wachovia Bank, National Association  (previously filed and incorporated by reference to Form 8-K filed on December  19, 2006)                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.192 |   | Guaranty Agreement made by Behringer Harvard REIT I,  Inc., in favor of Wachovia Bank, National Association (previously filed and  incorporated by reference to Form 8-K filed on December 19, 2006)                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.193 |   | Form of Agreement made by Behringer Harvard REIT I,  Inc. and its Directors (previously filed and incorporated by reference to  Form 8-K filed on February 15, 2007)                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.194 |   | Form of Agreement made by Behringer Harvard REIT I,  Inc. and its Officers (previously filed and incorporated by reference to Form  8-K filed on February 15, 2007)                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 21.1   |   | List of Subsidiaries *                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 31.1   |   | Rule 13a-14(a) or Rule 15d-14(a) Certification *                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 31.2   |   | Rule 13a-14(a) or Rule 15d-14(a) Certification *                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 32.1   |   | Section 1350 Certifications *                                                                                                                                                                                                                                                                                                          |

 

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*filed herewith

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