UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K


(Mark One)


☒
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the fiscal year ended December 31, 2008





☐
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the transition period from __________ to __________.




Commission
File No. 000-52551




FSP
50 South Tenth Street Corp.


(Exact
name of registrant as specified in its charter)





Delaware
            20-5530367(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)401 Edgewater Place,
      Suite 200, Wakefield, Massachusetts
            01880-6210(Address
      of principal executive offices)
            (Zip
      Code)







Registrant’s telephone number,
including area code:(781) 557-1300




Securities registered pursuant to
Section 12(b) of the Act:None




Securities
registered pursuant to Section 12(g) of the Act:




Preferred
Stock, $.01 par value per share




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ☐  No ☒.




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes ☐  No ☒.




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




Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this
chapter) is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.☒




Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange
Act.




Large accelerated
      filer  ☐
            Accelerated filer  ☐Non-accelerated
      filer    ☐(Do not
      check if a smaller reporting company)
            Smaller reporting company  ☒





Indicate by check mark whether the
registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes☐No☒.




As of June 30, 2008, the aggregate fair
market value of Common Stock held by non-affiliates of the registrant was
$0.




The number of shares of Common Stock
outstanding was 1 and the number of shares of Preferred Stock outstanding was
700, each as of February 28, 2009.




Documents incorporated by reference:
None.





TABLE
OF CONTENTS





PART
      I
            
            1Item
      1.
            Business.
            1Item
      1A.
            Risk
      Factors.
            5Item
      1B.
            Unresolved
      Staff Comments.
            5Item
      2.
            Properties.
            5Item
      3.
            Legal
      Proceedings.
            7Item
      4.
            Submission
      of Matters to a Vote of Security Holders.
            7PART
      II
            
            8Item
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities...
            8Item
      6.
            Selected
      Financial Data.
            8Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
            9Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market Risk.
            14Item
      8.
            Financial
      Statements and Supplementary Data.
            14Item
      9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.
            14Item
      9A.
            Controls
      and Procedures.
            14Item
      9A(T).
            Controls
      and Procedures.
            14Item
      9B.
            Other
      information.
            15PART
      III
            
            16Item
      10.
            Directors,
      Executive Officers and Corporate Governance
            16Item
      11.
            Executive
      Compensation.
            17Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
            17Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence.
            19Item
      14.
            Principal
      Accountant Fees and Services.
            20PART
      IV
            
            21Item
      15.
            Exhibits
      and Financial Statement Schedules.
            21SIGNATURES
            22








Item 1.
            Business





History





Our company, FSP 50 South Tenth Street
Corp., which individually or together with its subsidiary, we refer to as the
Company, is a Delaware corporation formed to purchase, own and operate a
twelve-story multi-tenant office and retail building containing approximately
485,648 square feet of rentable space located in downtown Minneapolis,
Minnesota, which we refer to as the Property.  The Company operates in
a manner intended to qualify as a real estate investment trust, or REIT, for
federal income tax purposes.





The Company was organized initially in
September 2006 by FSP Investments LLC (member,FINRAand SIPC), a wholly-owned subsidiary of
Franklin Street Properties Corp., which we refer to asFranklin Street(NYSE AlternextUS: FSP).  FSP Investments LLC
acted as a real estate investment firm and broker/dealer with respect to (a) the
organization of the Company, (b) the acquisition of Property by the Company and
(c) the sale of equity interests in the Company.





The Company purchased the Property from
an unaffiliated third party for $127,000,000 onNovember 8, 2006.  The purchase price, which
was determined by arm’s-length negotiations, was financed entirely by a loan
fromFranklin
Streetcollateralized by a
first mortgage, which we refer to as the Acquisition Mortgage
Loan.





Franklin Streetholds the sole share of the Company’s
common stock, $.01 par value per share, which we refer to as the Common
Stock.  Between November 2006 and January 2007, FSP Investments LLC
completed the sale of equity interests in the Company through the offering on a
best efforts basis of 700 shares of preferred stock, $.01 par value per share,
which we refer to as the Preferred Stock.  We sold the Preferred Stock
for an aggregate consideration of $70,000,000 in a private placement offering to
627 “accredited investors” within the meaning of Regulation D under the
Securities Act of 1933.  BetweenNovember 13, 2006andJanuary 9, 2007, the Company held six investor
closings, at each of which shares of Preferred Stock were sold and funds were
received.  Funds from each individual closing were used to repay a
portion of the Acquisition Mortgage Loan fromFranklin Streetand associated fees as well as other
expenses payable toFranklin Street’s wholly-owned subsidiary, FSP
Investments LLC.  OnDecember 21, 2006, the Company obtained a permanent first
mortgage loan in the original principal amount of $76,200,000 from Bank of
America, N.A., which we refer to as the Permanent Mortgage Loan.  The
Acquisition Mortgage Loan was repaid in its entirety onDecember 26, 2006from the proceeds of the sale of equity
interests in the Company and from the proceeds of the Permanent Mortgage
Loan.  Total interest and loan fees incurred on the Acquisition
Mortgage Loan payable toFranklin Streetwere approximately $4,961,000 in
2006.  The use of proceeds received from the offering of Preferred
Stock and the Permanent Mortgage Loan and affiliates receiving payments
therefrom are set forth in the table below:





Type
                      Affiliate
      paid
                      
                      AmountOperating/Capital
      Reserve (1)
                      
                      
                      $
                      8,209,000Organizational,
      Offering andOther
      Expenditures for the Company(2)(6)
                      FSP
      Investments LLC
                      
                      
                      725,000Selling
      Commissions(3)
                      FSP
      Investments LLC
                      
                      
                      5,600,000Equity
      Portion of the Purchase Priceof
      the Property(4)
                      Franklin
      Street Properties Corp.
                      
                      
                      50,800,000Loan
      Fee Paid to Franklin Street (5)
                      Franklin
      Street Properties Corp.
                      
                      
                      4,025,000Acquisition
      Fee(6)
                      FSP
      Investments LLC
                      
                      
                      350,000Permanent
      Mortgage Loan fee & expenses
                      
                      
                      
                      291,000Total
      Uses of Proceeds
                      
                      
                      
                      70,000,000Permanent
      Mortgage Loan
                      
                      
                      
                      76,200,000$
                      146,200,000





(1)
            The Operating/Capital Reserve
      proceeds were retained by the Company for operating and capital
      uses.


(2)
            Organizational, Offering and Other
      Expenditures were paid for various expenses, including legal, accounting,
      appraisal, engineering and organizational expenses allocable to the
      offering, incurred in connection with the organization and syndication of
      the Company.


(3)
            Selling Commissions were paid to
      FSP Investments LLC, as Selling
Agent.


(4)
            The Purchase Price of the Property
      was $127,000,000 and was financed by the Acquisition Mortgage Loan, which
      was repaid from proceeds of the offering and the Permanent Mortgage
      Loan.


1


(5)
            The Loan Fee Paid to Franklin
      Street was a fee (or points) of $4,025,000 paid to Franklin Street to
      obtain the Acquisition Mortgage Loan to purchase the
      Property.  The Acquisition Mortgage Loan
    was


in the original principal amount equal
to the purchase price of the Property, had a term of two years, and was
prepayable at any time without premium or penalty and carried an interest rate
equal to the rate payable by Franklin Street on borrowings under its line of
credit with its bank.


(6)
            The Acquisition Fee was paid for
      services in connection with identifying and acquiring the
      Property.





Transactions between the Company andFranklin Streetand/or its affiliates were entered into
without the benefit of arm’s-length bargaining and involved conflicts of
interest.Although Franklin Street sponsors the
syndication of other REITs similar to the Company and has in the past acquired
some of those REITs, Franklin Street is under no obligation to acquire or to
offer to acquire the Company or the outstanding shares of Preferred Stock, and
any acquisition transaction would need to be approved by the Company’s
stockholders and the boards of directors of Franklin Street and the
Company.Please
see “PartIII, Item 13. Certain Relationships and
Related Transactions, and DirectorIndependence”.





Our
Business





Our sole business is to own and operate
the Propertyand we do not intend to invest in or
purchase any additional properties.  We derive rental revenue from
income paid to us by the tenants of the Property.  Property management
services are provided by a third party.





FSP 50 South Tenth Street LLC, a
wholly-owned subsidiary of the Company, leases a portion of the Property from
the Companyand is the lessor for tenants occupying
the portion of the Property controlled by this master lease.  This
arrangement has no economic effect on the Company's operations and exists only
because the Company acquired the Property with a master lease in
place.





The Property was completed in 2001 and
is leased to a diverse group of office and retail tenants with staggered lease
expirations.  The Property is located directly across the street from
the designated world headquarters of Target Corporation (NYSE:TGT), which we refer to as Target, and is
connected to a corporately-ownedtwo-levelTarget retail store and sits above an
approximately 850-stall, three-level parking garage that is owned and managed by
the City of Minneapolis.





The Property also has lower level retail
space and is part ofalarger area that we refer
to as the Project that covers a full city block inMinneapolis,Minnesota.  The Project is comprised of
our Property, the Target retail store and the parking garage.  The
three owners of the Project, our Company, Target and the City of Minneapolis,
share expenses and responsibilities for maintenance of the Project under the
terms of a Reciprocal Easement and Operation Agreement (REOA), which is
administered by Ryan Companies US, Inc., which we refer to as
Ryan.  The three owners of the Project also share certain common areas
and access to four skyway bridges that connect the Project to other buildings,
including Target’s world headquarters across the street, and the greaterMinneapolisskyway system.  Ryan also
serves as our property manager and is a tenant of ours at the
Property. For the year
ended December 31, 2008, total expenses allocable to the three
owners pursuant to the REOA was $0.7million, of which $315,000, or 47.3% was allocated to us as
common area expenses.  For theperiodended December 31,
2007, total expenses allocable to the three
owners pursuant to the REOA was $0.8million, of  which
$397,000, or 47.3% was allocated to us as
common area expenses, and istypicallyrecovered through tenant
leases.





The Property has office and retail
space, which collectively is approximately99% occupied.  There is
approximately 453,902 square feet of rentable office space, which is 100%
occupied, and approximately 31,746 square feet of rentable retail space, which
is82.4% occupied.  Target and Ryan
currently occupy 10% or more of theProperty’s space.  Oracle
USA, Inc., which we refer to as OracleUSA, leases approximately 242,107 square
feet of space (approximately 50% of the Property’s rentable space) through March
2014.  OracleUSAsubleases its space to Target
(approximately 215,838 square feet) and the balance (approximately 26,269 square
feet) to another tenant.  OracleUSAis a subsidiary of Oracle Corporation
(NASDAQ:ORCL), which we refer to as
Oracle.  Ryan leases approximately 86,381 square feet through July
2015.  Target directly leases approximately 43,506 square feet through
June 2015 and approximately 1,024 square feet through October
2011.  Including subleased space, Target occupies approximately
54% of the Property's rentable
space.Ryan
occupies approximately 18% of the Property’s rentable space.





For leases with 10% or more of the
rentable square feet of the property, the table below shows the estimated annual
rental and average effective annual rental per square foot, including estimated
expense reimbursement for each lessee and the percentage of gross annual rental
income for the Property.  Renewal options for each of these leases are
further discussed in“Part
I,Item2. Properties” below.Except for OracleUSAand Ryan, none of the Property’s additional office
and retail tenantswith
direct leasescurrently
occupies 10% or more of the Property’s space.


2





Annual
                
                % ofRental
                
                GrossAnnual
                
                per Square
                
                AnnualTenant
                Rental
                
                Foot
                
                RentalOracle USA
                $  8,168,130
                
                $       33.74
                
                51%Ryan
                $  2,828,526
                
                $       32.74
                
                18%





Tenant leases at the Property are
generally structured so that each tenant pays a base rent amount for its
premises and also pays a portion of the Property’s operating costs as additional
rent.  The tenant’s portion of the Property’s operating costs is
calculated by taking the square footage of the tenant’s premises and dividing it
by the total square footage of the Property.  Operating costs include,
but are not limited to, costs associated with maintenance, repairs, real estate
taxes, insurance, utilities and management fees.  In our capacity as
thelandlord, we are
generally obligated, at our expense, to maintain and replace, if necessary,
major building systems and structural components of the Property, including
exterior walls, roof and slab.





FSP Property Management LLC, a
wholly-owned subsidiary of Franklin Street, provides the Company with asset
management and financial reporting services, which include but are not limited
to, selecting and supervising a local property management company and local
leasing brokers, approving lease transactions, managing debt compliance,
evaluating performance of the asset, and recommending appropriate
stockholderdistributions
to the Board of Directors of the Company.  The asset management
agreement between the Company and FSP Property Management LLC requires the
Company to pay FSP Property Management LLC a monthly fee equal to one percent
(1%) of the gross revenues of the Property.  The asset management
agreement between the Company and FSP Property Management LLC may be terminated
by the Company without cause at any time, upon at least thirty (30) days written
notice.





Ryan provides the Company with local,
on-site property management and building maintenance servicesandperiodic financial, operating and budget
reports relating to the operation of the Property for review by FSP Property
Management LLC.  Ryan is a third-party service provider that is not
related to oraffiliated
withFranklin
Street.  The
management agreement between the Company and Ryan requires the Company to pay
Ryan a monthly fee equal to three percent (3%) of the net operating receipts
collected in the preceding month.  The management agreement between
the Company and Ryan has an initial term that expires onDecember 31, 2012and, unless terminated at that time,
automatically renews month-to-month thereafter.  The management
agreement may be terminated for cause at any time.





Investment
Objectives





The Company’s objectives are to (i)
obtain cash available to pay dividends through rental receipts from operations
of the Property, (ii) have that cash increase over time as a result of rental
rate step increases in existing leases, (iii)have our rental revenue potentially
increase over time if rental rates increase for new leases,subject to the qualification that
approximately 50% and 27% of the currently leased rentable space at the Property
expires in 2014 and 2015, respectively, which limitsthe amount of space for which new leases
could be executed until thattime, (iv) provide increased equity in the
Property as a result of appreciation in market value, and (v) preserve and
protect the capital invested by the holders ofour Preferred Stock.  We
cannot be sure of meeting our objectives.





Our policy is not to make loans to other
persons, not to invest in the securities of other issuers for the purpose of
exercising control, not to underwrite the securities of other issuers, not to
offer securities in exchange for property and not to purchase or otherwise
reacquire our securities.  These policies may be changed by our
directors without a vote of the holders of our Preferred
Stock.





We have issued 700 shares of Preferred
Stock in the offering described above.  The Company’s Amended and
Restated Certificate of Incorporation, or charter, authorizes the Company to
issue up to 1,540 shares of Preferred Stock.  In the event that the
Company elects, in its sole and absolute discretion, to reduce the principal
amount of the Permanent Mortgage Loan, the Company will have the right, without
the consent of any holder of shares of our Preferred Stock, to issue up to 840
additional shares of Preferred Stock.  We expect that any such
issuance would be in an offering exempt from registration under the Securities
Act. No additional shares of Preferred Stock are authorized by our charter, and
authorization of any increase in the number of authorized shares or the creation
of any new series or class of stock would require the affirmative vote of the
holders of 66.67% of the outstanding shares of Preferred Stock.




3


We intend to dispose of the Property at
a timedetermined by our
directors, which we currently expect to be withinapproximately threetoeightyears.  We do not intend to
reinvest the proceeds and woulddistribute cash proceedsto shareholders following such
disposition.  We also do not intend to list our shares of Preferred
Stock on an exchange and therefore do not expect any trading market to develop
in such shares.





Except for the Permanent Mortgage Loan,
which maturesJanuary 1,
2012, we do not intend to
borrow any money but have the right to obtain a line of creditas described below.  There can be no assurance
that the Company will be able to sell or refinance the Property upon the
maturity of the Permanent Mortgage Loan or that the proceeds received from such
sale or refinancing, or cash raised from the issuance of up to an additional 840
shares of Preferred Stock or the use of our line of credit will be sufficient to
repay the Permanent Mortgage Loan at that time.  The Board of Directors of
the Company has not yet determined whether it will refinance or sell the
Property in connection with the maturity of the Permanent Mortgage Loan, and,
because we cannot predict the state of the capital markets in 2012, we cannot
predict how we will retire the Permanent Mortgage Loan.





Permanent
Mortgage Loan





The Property is subject to the Permanent
Mortgage Loan with Bank of America, N.A.  The Permanent Mortgage Loan
closed onDecember 21,
2006and is secured by,
among other items, a first mortgage lien on the Property.  The
principal amount of the Permanent Mortgage Loan is $76,200,000 and interest is
fixed at 5.287%per
annum.  The
Permanent Mortgage Loan matures onJanuary 1, 2012.  TheCompany is obligated to make monthly
payments of interest only until the maturity date, at which time the principal
amount of the Permanent Mortgage Loan, together with any accrued but unpaid
interest, is due and payable in full.The Company may prepay (in full but not
in part) the Permanent Mortgage Loan upon payment of an amount equal to the
greater of 1% of the principal balance outstanding or the product of a yield
maintenance calculation.  The yield maintenance formula represents the
difference between the interest rate on the Permanent Mortgage Loanandthat of a comparable U.S. Treasury
Security of similar maturity.  Additionally, the Company
may prepay (in full but not in part) the Permanent Mortgage Loan without penalty
at any time during the final six months of the Permanent Mortgage
Loan.  The Permanent Mortgage Loan is nonrecourse to the
Company.





The documentation evidencing and
securing the Permanent Mortgage Loan, which we refer to as the Loan Agreement,
includes restrictions on property liens and requires compliance with various
financial covenants.  Financial covenants include the requirement that
the Company deposit all rents or other revenue from the Property to a lockbox
account with the lender, which so long as there is no default, is immediately
available to us, and to provide the lender with periodic reporting. The Loan
Agreement also includes restrictions on the Company’s ability to incur
additional debt without consent of the lender.  The Company was in
compliance with the Permanent Mortgage Loan covenants as ofDecember 31, 2008and2007.





Revolving
Line of Credit





While a line of credit is not expected
to be needed, the Company may, without the consent of any holder of shares of
our Preferred Stock, obtain arevolving line of credit of up to
$76,200,000 on commercially reasonable terms to be used for capital
improvements, operating expenses, working capital requirements or to refinance
the Company’s debt and fund other Company purposes, if
needed.  However, pursuant to the Permanent Mortgage Loan,we need the consent of Bank of America,
N.A. to use the line of credit.The Company has neither sought nor
obtained a revolving line of credit.





Competition





The economy in the United States is
currently experiencing unprecedented disruptions, including increased levels of
unemployment, the failure and near failure of a number of large financial
institutions, reduced liquidity and increased credit risk premiums for a number
of market participants.  Economic conditions may be affected by
numerous factors, including but not limited to, inflation and employment levels,
energy prices, recessionary concerns, changes in currency exchange rates, the
availability of debt and interest rate fluctuations.  The current
disruptions in the U.S. economy have affected real estate values, occupancy
levels and property income levels and may continue or worsen in the
future.  At this time, we cannot predict the extent or duration of any
negative impact that the current disruptions in the U.S. economy will have on
our business.





4


The Property is located in the downtown
area ofMinneapolis,Minnesota.  The Property may encounter
substantial competition from the other office buildings which are or may become
available in the general area in which the Property is located and which may be
priced at rental levels lower than those for space in the Property or which may
otherwise be more attractive to tenants.  In order to maintain or
increase rental revenues following the expiration of our leases, the Property
must be competitive, in regard to cost and amenities, with other buildings of
similar use near our location.  Some of our competitors may have
significantly more resources than we do and may be able to offer more attractive
rental rates or services.  On the other hand, some of our competitors
may be smaller or have lower fixed overhead costs, less cash or other resources
that make them willing or able to accept lower rents in order to maintain a
certain occupancy level.  If there is not currently significant
existing property competition, our competitors may decide to enter the market
and build new buildings to compete with our Property.Our competition is not only with other
developers, but also with property users who choose to own their building or a
portion of the building in the form of an office condominium, larger market
forces (including the current disruptions in the U.S. economy described above,
changes in interest rates and tax treatment) that increase competition among
landlords for quality tenants and individual decisions beyond our
control.  Subject
to possible extension options, approximately 50% of the rentable space at the
Property expires in 2014 and approximately27%of the rentable space at the Property
expires in 2015.  We cannot predict which competitive factors will be
relevant to prospective tenants or our Property’s competitive position in the
marketplace at this time.





Employees





We had no employees as ofDecember 31, 2008.





Available
Information





Wearesubject to the informationalrequirements of the Securities Exchange
Act of 1934, and, in accordance therewith, we file reports and other information
with the Securities and Exchange Commission (SEC).   This Annual Report
on Form 10-K and other reports and other information we file can be inspected
and copied at theSECPublic Reference Room at 100 F Street,
N.E., Washington, D.C. 20549, on official business days during the hours of 10
a.m. and 3 p.m.  Such reports and other information may also be
obtained from the web site that theSECmaintains at
http://www.sec.gov.  Further information about the operation of the
Public Reference Room may be obtained by calling theSECat 1-800-SEC-0330.





We will make available and voluntarily
provide, free of charge upon written request at the address on the cover of this
Annual Report on Form 10-K, a copy of our Annual Report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon
as reasonably practicable after we electronically file such material with, or
furnish such material to, theSEC.We do not maintain a
website.





Item 1A.
            Risk
      Factors





Not applicable.





Item
      1B.
            Unresolved Staff
      Comments





Not applicable.





Item
      2.
            Properties





Set
forth below is information regarding the Property as of December 31,
2008:




PercentDate
      of
              Approx.
              Leased
      as
              NumberProperty
      Location
              Purchase
              Square
      Feet
              of
      12/31/08
              of
      Tenants
              Name of Major Tenants
      (1)50
      South Tenth Street
              11/08/06
              485,648
              99%
              30
              Oracle
      USA (2)Minneapolis,
      MN 55403
              
              
              
              
              Ryan
      Companies US, Inc.





1.
            Excludes
      subtenants.


2.
            Oracle
      USA leases approximately 242,107 square feet of space (approximately 50%
      of the Property’s rentable space) through March 2014.  Oracle
      USA subleases its space to Target (approximately 215,838 square feet) and
      the balance (approximately 26,269 square feet) to another
      tenant.





5


The Property was completed in 2001 and
is leased to a diverse group of office and retail tenants with staggered lease
expirations.  The Property is located directly across the street from
the world headquarters of Target, is connected to a corporately-ownedtwo-levelTargetretailstore and sits above an approximately
850-stall, three-level underground parking garage that is owned and managed by
the City of Minneapolis.The Property also has lower
level retail space and is part of a larger development that we refer to as the
Project that covers a full city block in Minneapolis, Minnesota.  The
Project is comprised of our Property, the Target retail store and the parking
garage.  The three owners of the Project, our Company, Target and the
City of Minneapolis, share expenses and responsibilities for maintenance of the
Project under the terms of a Reciprocal Easement and Operation Agreement (REOA),
which is administered by Ryan.  The three owners of the Project also
share certain common areas and access to four skyway bridges that connect the
Project to other buildings, including Target’s world headquarters across the
street, and the greater Minneapolis skyway system.





We acquired the Property onNovember 8, 2006.  In the opinion of our
management, the Property is adequately covered by insurance.  The
Property is currently encumbered by the Permanent Mortgage Loandescribed above in “Item 1. Business– History.”Other than normal tenant improvements or
replacements of equipment in the ordinary course of ongoing operations, there
are no present plans for the improvement or development of any portion of the
Property.  Below is certain information with respect to the Property’s
significant tenants and leases.





Tenants





The Property has office and retail
space, which collectively is approximately99% occupied.  Thereis approximately 453,902
square feet of rentable office space, which is 100% occupied, and approximately
31,746 square feet of rentable retail space, which is82.4% occupied.  Target and Ryan
currentlyoccupy 10% or
more of the Property’s space.  Oracle USA, Inc., which we refer to as
OracleUSA, leases approximately 242,107 square
feet of space (approximately 50% of the Property’s rentable space) through March
2014.  OracleUSAsubleasesmost ofits space to Target (approximately
215,838 square feet) and the balance (approximately 26,269 square feet) to
another tenant.  OracleUSAis a subsidiary of Oracle Corporation
(NASDAQ:ORCL), which we refer to as
Oracle.  Ryan leases approximately 86,381 square feet through July
2015.  Target directly leases approximately 43,506 square feet through
June 2015 and approximately 1,024 square feet through October
2011.  Including subleased space, Target occupies approximately
54% of the Property's rentable
space.Ryan
occupies approximately 18% of the Property’s rentable
space.Except
for Oracle USA and Ryan, none of the Property’s additional office
and retail tenantswith
direct leasescurrently
occupies 10% or more of the Property’s space.





Leases





Tenant leases at the Property are
generally structured so that each tenant pays a base rent amount for its
premises and also pays a portion of the Property’s operating costs as additional
rent.  The tenant’s portion of the Property’s operating costs is
calculated by taking the square footage of the tenant’s premises and dividing it
by the total square footage of the Property.  Operating costs include,
but are not limited to, costs associated with maintenance, repairs, real estate
taxes, insurance, utilities and management fees.  In our capacity as
the landlord, we are generally obligated, at our expense, to maintain and
replace, if necessary, major building systems and structural components of the
Property, including exterior walls, roof and slab.   Abstract of
material leases are noted below:





OracleUSA




OracleUSAleases approximately 242,107 square
feet of rentable space (approximately 50% of the Property’s
space).  The lease expires onMarch 31, 2014and contains two five-year extension
options with base rent equal to the greater of (i) $18.50 per rentable square
foot or (ii) the market rent for such extension term.  In order to
exercise either extension option, OracleUSAmust provide the Company with not less
than nine months prior written notice.  The lease with OracleUSAalso contains a continuing right of
first refusal in favor of OracleUSAon all other rental space at the
Property.   OracleUSA’s lease does not contain any other
rights of first offer, purchase, expansion or termination at the
Property.





Ryan




Ryan leases a total of approximately
86,381 rentable square feet (approximately 18% of the Property's space) pursuant
to a lease that expires onJuly 31, 2015. The lease contains an expansion option
in favor of Ryan that permits Ryan to expand into approximately 7,075 square
feet of rentable space on the fourth floor of the Property with base rent equal
to market rent. In order to exercise the expansion option, Ryan must notify the
Company in writing on or beforeJune 30, 2009. The lease also contains a termination
right in favor of Ryan that permits Ryan to terminate the lease effective either
(i) as ofDecember 31,
2011or (ii) on the last
day of any month afterDecember 31, 2011. In order to exercise the termination
right, Ryan must provide the Company with written notice of its intention to
terminate not less than three months prior to the intended termination date.
Ryan's lease does not contain any other rights of first offer, purchase,
expansion or termination at the Property.





6


Additional Operating
Data





Additionalinformationregarding the amount of the Property’s
annual realty taxes and insurance can be found in the Statements of Operations
that are included with this Form 10-K.  Additional information
regarding the Property’s Federal tax basis, rate, method and life claimed for
purposes of depreciation can be found in the Notes to Consolidated Financial
Statements that are included with this Annual Report on Form
10-K.





Item 3.
            Legal
      Proceedings





There are no material legal proceedings
to which the Company is a party. The Company from time to time may be involved
in lawsuits including, but not limited to, lawsuits relating to the real
property it owns for liability for slips and falls, damage to automobiles in the
parking garage, minor theft or similar matters.   The Company
expects that most of these suits will be covered by insurance, subject to
customary deductions. In addition, in the ordinary course of business, the
Company may become involved in litigation to collect rents or other income due
to it from tenants.





Item 4.
            Submission
      of Matters to a Vote of Security
Holders





No
matters were submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.







7


PART II





Item 5.
            Market
      For Registrant’s Common Equity,  Related Stockholder Matters and
      Issuer Purchases of Equity Securities





There is no established public trading
market for the Company’s Common Stock or Preferred Stock.





As ofMarch 4, 2009,Franklin Streetwas the sole holder of record of the
Common Stock and therewere634 holdersof record of the Preferred
Stock.  This computation is based upon the number of record holders
reflected in our corporate records.The final sale of Preferred Stock
occurred on January 9, 2007 and following that date no further distributions
have been or will be declared on the Common Stock.  The last Common
Stock distribution was declared onDecember 27, 2006and was paid in December
2006.





Set forth below are the distributions
made to Preferred Stockholders in respect of each quarterfrom the last two fiscal
years.  Distributions are
determined based on the Company’s Board of Directors’ review of cash available
for distribution and distribution requirements necessary for the Company to
continue to qualify as a real estate investment trust.  Although we
cannot guarantee the future payment of dividends or the amount of any such
dividends, assuming that there are no material changes in operating conditions,
we expect to continue to pay dividends comparable in amount to those paid during
the year ended December 31, 2008.  Seethe Notes to Consolidated Financial
Statements that are included with this Annual Report on Form 10-Kfor additional
information.





Distributionspaid toQuarter
                    
                    PreferredEnded
                    
                    StockholdersMarch 31,
    2007
                    
                    370,000June 30,
    2007
                    
                    1,225,700September 30,
      2007
                    
                    1,226,400December 31,
      2007
                    
                    1,229,900March 31,
    2008
                    
                    1,234,800June 30,
    2008
                    
                    1,299,900September 30,
      2008
                    
                    1,225,000December 31,
      2008
                    
                    1,225,000





The following schedule summarizes tax
components of the distributions paid for the year ended December
31:





(dollars in
      thousands)
                                  
                                  2008
                                  
                                  
                                  2007Preferred
                                  
                                  
                                  %
                                  
                                  
                                  Preferred
                                  
                                  
                                  %Ordinary
    income
                                  
                                  $
                                  1,354
                                  
                                  
                                  
                                  27
                                  %
                                  
                                  $
                                  1,277
                                  
                                  
                                  
                                  32
                                  %Return of
      Capital
                                  
                                  
                                  3,630
                                  
                                  
                                  
                                  73
                                  %
                                  
                                  
                                  2,775
                                  
                                  
                                  
                                  68
                                  %Total
                                  
                                  $
                                  4,984
                                  
                                  
                                  
                                  100
                                  %
                                  
                                  $
                                  4,052
                                  
                                  
                                  
                                  100
                                  %





The Company does not have an equity
compensation plan or any outstanding stock options or other securities
convertible into the Company’s Common Stock.





Item 6.
            Selected
      Financial Data





Not applicable.


8




Item 7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations


The
following discussion should be read in conjunction with the financial statements
and notes thereto appearing elsewhere in this report.  Historical
results and percentage relationships set forth in the financial statements,
including trends which might appear, should not be taken as necessarily
indicative of future operations.  The following discussion and other
parts of this Annual Report on Form 10-K may also contain forward-looking
statements based on current judgments and current knowledge of management, which
are subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those indicated in such forward looking
statements.  Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements.  Investors are cautioned that
our forward-looking statements involve risks and uncertainty, including without
limitation, economic conditions in United States and in the market where we own
the Property, continued disruptions in the debt markets, risks of a lessening of
demand for the type of real estate owned by us, changes in government
regulations, and expenditures that cannot be anticipated such as utility rate
and usage increases, unanticipated repairs, additional staffing, insurance
increases and real estate tax valuation reassessments.  Although we
believe the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements.  We may not update any of the forward-looking
statements after the date this Annual Report on Form 10-K is filed to conform
them to actual results or to changes in our expectations that occur after such
date, other than as required by law.





Overview





We
operate in one business segment, which is real estate operations, and own a
single property.  Our real estate operations involve real estate
rental operations, leasing services and property management
services.  The main factor that affects our real estate operations is
the broad economic market conditions in the United States and, more
specifically, the economic conditions in Minneapolis,
Minnesota.  These market conditions affect the occupancy levels and
the rent levels on both a national and local level.  We have no
influence on national or local market conditions.





Trends and
Uncertainties





Economic
Conditions





The economy in the United States is
currently experiencing unprecedented disruptions, including increased levels of
unemployment, the failure and near failure of a number of large financial
institutions, reduced liquidity and increased credit risk premiums for a number
of market participants.  Economic conditions may be affected by
numerous factors, including but not limited to, inflation and employment levels,
energy prices, recessionary concerns, changes in currency exchange rates, the
availability of debt and interest rate fluctuations.  The current
disruptions in the U.S. economy have affected real estate values, occupancy
levels and property income levels and may continue or worsen in the
future.  At this time, we cannot predict the extent or duration of any
negative impact that the current disruptions in the U.S. economy will have on
our business.





Real Estate Operations





We
own and operate a twelve-story multi-tenant office and retail building
containing approximately 485,648 of rentable square feet located in downtown
Minneapolis, Minnesota.  The Property was completed in 2001 and is
leased to a diverse group of office and retail tenants with staggered lease
expirations.  The Property is located directly across the street from
the designated world headquarters of Target Corporation (NYSE:TGT), which we
refer to as Target, and is connected to a corporately-owned two-level Target
retail store and sits above an approximately 850-stall, three-level parking
garage that is owned and managed by the City of Minneapolis.  The
Property also has lower level retail space and is part of a larger development
that we refer to as the Project that covers a full city block in Minneapolis,
Minnesota.  The Project is comprised of our Property, the Target
retail store and the parking garage.  The three owners of the Project,
our Company, Target and the City of Minneapolis, share expenses and
responsibilities for maintenance of the Project under the terms of a Reciprocal
Easement and Operation Agreement (REOA), which is administered by
Ryan.  The three owners of the Project also share certain common areas
and access to four skyway bridges that connect the Project to other buildings,
including Target’s world headquarters across the street, and the greater
Minneapolis skyway system.





9


The Property has office and retail
space, which collectively is approximately 99% occupied.  Thereis approximately 453,902
square feet of rentable office space, which is 100% occupied, and approximately
31,746 square feet of rentable retail space, which is 82.4% occupied.  Target and Ryan
currentlyoccupy 10% or
more of the Property’s space.  Oracle USA, Inc., which we refer to as
OracleUSA, leases approximately 242,107 square
feet of space (approximately 50% of the Property’s rentable space) through March
2014.  OracleUSAsubleases its space to Target
(approximately 215,838 square feet) and the balance (approximately 26,269 square
feet) to another tenant.  OracleUSAis a subsidiary of Oracle Corporation
(NASDAQ:ORCL), which we refer to as
Oracle.  Ryan leases approximately 86,381 square feet through July
2015.  Target directly leases approximately 43,506 square feet through
June 2015 and approximately 1,024 square feet through October
2011.  Including subleased space, Target occupies approximately
54% of the Property's rentable
space.Ryan
occupies approximately 18% of the Property’s rentable
space.Except
for Oracle USA and Ryan, none of the Property’s additional office
and retail tenantswith
direct leasescurrently
occupies 10% or more of the Property’s space.





Given
the current economic downturn, the potential for any of our tenants to default
on its lease or to seek the protection of bankruptcy laws has
increased.  If any of our tenants defaults on its lease, we may
experience delays in enforcing our rights as a landlord and may incur
substantial costs in protecting our investment.  In addition, at any
time, a tenant may seek the protection of bankruptcy laws, which could result in
the rejection and termination of such tenant’s lease and thereby cause a
reduction in cash available for distribution to our
stockholders.  Bankruptcy or a material adverse change in the
financial condition of a material tenant would likely have a material adverse
effect on our results of operations.





It is difficult for management to
predict what will happen to occupancy or rents after the expirationor earlier terminationof existingleases at our Property because the need
for space and the price tenants are willing to pay are tied to both the local
economy and to the larger trends in the national economy, such as job growth,
interest rates,the
availability of creditand
corporate earnings, which
in turn are tied to even larger macroeconomic and political factors, such asrecessionary concerns,volatility in energy
pricing and the risk of terrorism.  In addition to the difficulty of
predicting macroeconomic factors, it is difficult to predict how our local market
or tenants will suffer or benefit from changes in the larger
economy.  In addition, because the Property is in a single
geographical market, these macroeconomic trends may have a different effect on
the Property andon its tenants, many of which operate
on a national level.Although we cannot predict how long it
would take to lease vacant spaceat the Propertyor what the terms and conditions of any
new leases wouldbe, wewouldexpect to sign new leases at currentmarket rates which may be
below the expiring rates.





Critical
Accounting Policies and Estimates





We
have certain critical accounting policies that are subject to judgments and
estimates by our management and uncertainties of outcome that affect the
application of these policies.  We base our estimates on historical
experience and on various other assumptions we believe to be reasonable under
the circumstances.  On an ongoing basis, we evaluate our
estimates.  In the event estimates or assumptions prove to be
different from actual results, adjustments are made in subsequent periods to
reflect more current information.  The accounting policies that we
believe are most critical to the understanding of our financial position and
results of operations, and that require significant management estimates and
judgments, are discussed below.





Critical
accounting policies are those that have the most impact on the reporting of our
financial condition and results of operations and those requiring significant
judgments and estimates.  We believe that our judgments and estimates
are consistently applied and produce financial information that fairly presents
our results of operations.  These policies affect our:





·
            our
      recognition of rental income and depreciation and amortization expense;
      and


·
            assessment
      of the carrying values and impairments of long-lived
    assets.





Depreciation
and Amortization





We
compute depreciation expense using the straight-line method over estimated
useful lives of up to 39 years for the building and improvements, and up to 15
years for personal property.  The allocated cost of land is not
depreciated.  The value of above or below-market leases are amortized
over the remaining non-cancelable periods of the lease as an adjustment to
rental income.  The value of in-place leases, exclusive of the value
of above-market and below-market in-place leases, is also amortized over the
remaining non-cancelable periods of the respective leases.  If a lease
is terminated prior to its stated expiration, all unamortized amounts relating
to that lease would be written off.  Inappropriate allocation of
acquisition costs, or incorrect estimates of useful lives, could result in
depreciation and amortization expenses which do not appropriately reflect the
allocation of our capital expenditures over future periods, as is required by
generally accepted accounting principles.


10


Impairment





We
periodically evaluate the Property for impairment indicators.  These
indicators may include declining tenant occupancy, weak or declining tenant
profitability, cash flow or liquidity, our decision to dispose of an asset
before the end of its estimated useful life or legislative, economic or market
changes that permanently reduce the value of our investment.  If
indicators of impairment are present, we evaluate the carrying value of the
Property by comparing it to its expected future undiscounted cash
flows.  If the sum of these expected future cash flows is less than
the carrying value, we reduce the net carrying value of the Property to the
present value of these expected future cash flows. This analysis requires us to
judge whether indicators of impairment exist and to estimate likely future cash
flows.  If we misjudge or estimate incorrectly or if future tenant
profitability, market or industry factors differ from our expectations, we may
record an impairment charge which is inappropriate or fail to record a charge
when we should have done so, or the amount of such charges may be
inaccurate.





Lease
Classification





Each
time we enter a new lease or materially modify an existing lease we evaluate
whether it is appropriately classified as a capital lease or as an operating
lease.  The classification of a lease as capital or operating affects
the carrying value of a property, as well as our recognition of rental payments
as revenue.  These evaluations require us to make estimates of, among
other things, the remaining useful life and market value of a property, discount
rates and future cash flows.  Incorrect assumptions or estimates may
result in misclassification of our leases.





Recent
Accounting Standards





In September 2006, the Financial
Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value
Measurements”, and in February 2008 amended SFAS No. 157 with FASB Staff
Position SFAS 157-1 (“FSP FAS 157-1”), “Application of FASB Statement No. 157 to
FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement
under Statement 13” and was amended later with FASB Staff Position
SFAS 157-2, “ Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). SFAS
157 defines fair value, establishes a framework for measuring fair value in GAAP
and provides for expanded disclosure about fair value measurements. SFAS 157 is
applied prospectively, including to all other accounting pronouncements that
require or permit fair value measurements. FSP FAS 157-1 amends SFAS 157 to
exclude from the scope of SFAS 157 certain leasing transactions accounted for
under Statement of Financial Accounting Standards No. 13, “Accounting for
Leases” for purposes of measurements and classifications. SFAS No. 157 and FSP
FAS 157-1 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years.  The adoption of SFAS No. 157 and FSP FAS 157-1 did not have a
material impact on the Company’s financial position, operations or cash
flows.  FSP FAS 157-2 amends SFAS 157 to defer the effective date of
SFAS 157 for all non-financial assets and non-financial liabilities except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis to fiscal years beginning after November 15,
2008.  The Company is currently assessing the potential impact that
the adoption of FSP FAS 157-2 will have on our financial position, results of
operations or cash flows.





In February 2007, the FASB issued SFAS
No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities —
Including an amendment of FASB Statement No. 115”, which permits entities to
choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value and
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The adoption of this standard did not have an impact on the Company’s financial
position, results of operations or cash flows.





In May 2008, the FASB issued SFAS No.
162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS No.
162).  SFAS No. 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles (GAAP) in the United
States (the GAAP hierarchy).  SFAS No. 162 is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
(PCAOB) amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.  The Company
is currently evaluating the impact of SFAS No. 162 on the Company’s consolidated
financial statements.





11


Results of
Operations





Comparison
of the year ended December 31, 2008 to the year ended December 31,
2007





Revenue





Total revenue increased $0.7million to $16.0million for theyear ended December31, 2008, as compared to $15.3million for theyearendedDecember 31, 2007.This increase was
primarily due to an increase in recovery of expenses of approximately $0.7
million.  The majority of the operating expenses, real estate taxes
and insurance expenses represent amounts recoverable by the
Company.





Expenses





Total expenses increased approximately
$0.3million to $14.9million for the year ended December 31, 2008,as compared to $14.6million for theyearended December 31, 2007.The increase was primarily attributable
to a $0.3 million increase in real estate taxes.





Liquidity and Capital
Resources





Cash and cash equivalentsdecreased$0.2millionto$9.9millionat December 31, 2008compared to$10.1million atDecember31, 2007.The $0.2milliondecreaseisprimarilyattributableto $4.8million provided by operating
activities offset byapproximately$5.0million usedforfinancingactivities.





Management believes that existing cash
and cash equivalents as of December 31, 2008 of $9.9million and cash anticipated to be
generated internally by operations will be sufficient to meet working capital
requirements, distributions and anticipated capital expenditures for at
least the next 12 months.





Operating Activities





The cash provided byoperating activities of $4.8million for theyear ended December31, 2008was primarily attributable to net
income of approximately $1.3million plusnon-cash items of$3.9million,consisting primarilyof depreciation and
amortization,andwas partially offset by uses arising
from other current accountsof $0.4million.





Investing Activities





The cash used for investing activities
for theyearendedDecember31, 2008of approximately $47,000was attributable to the purchase of
real estate assets.





Financing Activities





The cash usedforfinancing activitiesofapproximately$5.0million for theyearendedDecember31, 2008was primarily attributableto distributions to
stockholders.





Sources and Uses of
Funds





Ourprincipal demands onliquidity are cash for operations,
interest on debt payments and distributions to equity holders.  As ofDecember31, 2008, we had approximately $1.4millionin accrued liabilitiesand $76.2 million in long-term
debt.  In the near term, liquidity is generated by cash from
operations.





Cash held in escrow




We also have cash held in escrow of
$1.0millionas ofDecember31, 2008.  We are required under our
loan documentsto make
monthly deposits into a pledge account for real estate taxes, whichisused to make periodic payments of thosetaxes.  Increases and decreases to
the cash held in escrow are a result of the timing of monthly deposits and
payment of periodic real estate tax
assessments.





12


Secured
Debt





We havea loan agreement, which we refer to as theLoan,outstanding withBank of America, N.A.in the amount of
$76,200,000.Loan payments are interest-only until
the Loan matures andbear
interest at the fixed rate of 5.287% per annum.The Loan is secured by the
Property.The
Loan was entered into onDecember 21, 2006and matures onJanuary 1, 2012, with the entire principal balance due
on that date.Interest expense for the years ended
December 31, 2008 and 2007 was $4,096,000 and $4,083,000,
respectively.





The Loanagreement includes restrictions on
property liens and requires compliance with various financial
covenants.  Financial covenants include the requirementthat wedeposit all rents or other revenue from
theProperty to alockboxaccount with thelenderand provide periodic
reporting.  The
Loan agreement has certain restrictions on our ability to incur
debt.  We werein
compliancewith theloan covenants as ofDecember 31, 2008 and2007.





Contingencies





We may be subject to various legal
proceedings and claims that arise in the ordinary course of our
business.  Although occasional adverse decisions or settlements may
occur, we believe that the final disposition of such matters will not have a
material adverse effect on
our financial position or results of operations.





Related Party
Transactions





We have in the past engaged in and
currently engage in transactions with a related party,Franklin Streetand its subsidiaries FSP Investments
LLC and FSPProperty
Management LLC, which wecollectivelyrefer to asFSP.  We expect to continue to
have related party transactions with FSP in the form of management fees paid to
FSP to manage the Company on behalf of our stockholders.  FSP Property
Management LLCcurrently
provides the Company with asset management and financial reporting
services.  The asset management agreement between the Company and FSP
Property Management LLC requires the Company to pay FSP Property Management LLC
a monthly fee equal to onepercent (1%) of the gross revenues of the
Property.  The asset management agreement between the Company and FSP
Property Management LLC may be terminated by either party without cause at any
time, upon at least thirty (30) days written notice, effective atthe end of the notice
period.For theyearsendedDecember31, 2008and2007,management fees paid were $161,000and$154,000, respectively.





Franklin Streetis the sole holder of the
Company’s one share of Common Stock that is
issued and outstanding.Subsequent to the completion of theprivateplacement of the Preferred Stock in
January 2007,Franklin
Streethas notbeenentitled to share inanyearnings or any dividendrelated to the Common Stock of the
Company.





The related party transactions described
below are not expected to significantly affect the results of operations,
financial position, or liquidity for fiscal year 2009 or future
periods.





·
            Wepaid acquisition fees
      of$125to FSPfor theyear ended December31, 2007.Such fees were included in the cost of the real
      estate.  Subsequent to the completion of the final closing of
      the sale of shares of Preferred Stock, which occurred onJanuary 9, 2007, no acquisition feeshave beenpaid to
  FSP.




·
            Wepaid syndication fees of$2,000to FSPfortheyear endedDecember31, 2007for services related to
      syndication of the Preferred Stock, which were for its efforts to
      identify potential accredited investors and subsequently complete the sale
      of Preferred Stock to them.Subsequent to the
      completionof the
      final closing of the sale of shares of Preferred Stock, which occurred onJanuary 9,
      2007, no syndication
      fees will be paid to FSPunless the Company issues some of
      its 840 additional authorized shares of Preferred Stock.




·
            Wepaid commitment fees
      of$2,000to FSPforthe year ended December 31,
      2007for obtaining theAcquisition Mortgage Loanon the
      Property.Thisamountisincludedas aninterest expense in the financial
      statements.Subsequent to the completion of
      the final closing of
      the sale of shares of Preferred Stock, which occurred onJanuary 9, 2007,no commitment feeshave beenpaid to FSP.







13


Rental
Income Commitments





Our
commercial real estate operations consist of the leasing of the
Property.  Approximate future minimum rental income under
non-cancelable operating leases as of December 31, 2008 is as
follows:





Year Ending
                  
                  AmountDecember
31,
                  
                  (in
    thousands)2009
                  
                  $
                  8,7332010
                  
                  
                  8,2542011
                  
                  
                  7,6562012
                  
                  
                  7,3392013
                  
                  
                  7,274Thereafter
                  
                  
                  5,135$
                  44,391





Off-Balance Sheet
Arrangements





The Company is not party to any
off-balance sheet arrangements other than property management
commitments.  The Company is a party to a management agreement with
Ryan, an unaffiliated third party management company that is a tenant of the
Property, to provide property management services, and is party to an asset
management agreement with an affiliate, FSP
Property Management LLC, to provide asset management and financial reporting
services.  The management agreement between the Company and Ryan
requires the Company to pay Ryan a monthly fee equal to three percent (3%)of the net operating receipts collected
in the preceding month.  The management agreement between the Company
and Ryan has an initial term that expires on December 31, 2012 and, unless
terminated at that time, automatically renews month-to-month
thereafter.The management agreement
with Ryan may be terminated by the Company for cause at any time.  The
agreement with FSP Property Management LLC may be terminated by either party
without cause at any time, upon at least thirty (30) days written
notice.  The asset management agreement between the
Company and FSP Property Management LLC requires the Company to pay FSP Property
Management LLC a monthly fee equal to one percent (1%) of the gross revenues of
the Property.





Item
      7A.
            Quantitative and
      Qualitative Disclosure About Market
Risk





Not applicable.





Item 8.
            Financial
      Statements and Supplementary
Data




The
information required by this item is included elsewhere herein and incorporated
herein by reference.  Reference is made to the Index to Consolidated
Financial Statements in Item 15 of Part IV.




Item 9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure




Not applicable.




Item 9A.
            Controls
      and Procedures





Not applicable.





14


Item 9A(T).
            Controls
      and Procedures





Disclosure
Controls and Procedures





Our management, with the participation
of our principal executive officer and principal financial officer, evaluated
the effectiveness of our disclosure controls and procedures as of December 31,
2008. The term “disclosure controls and procedures,” as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the
Exchange Act, means controls and other procedures of a company that are designed
to ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by a company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the company’s management,
including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required
disclosure.  Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures.  Based on the evaluation of our disclosure controls and
procedures as of December 31, 2008, our principal executive officer and
principal financial officer concluded that, as of such date, our disclosure
controls and procedures were effective at the reasonable assurance level.





Management’s Annual Report on Internal
Control Over Financial Reporting





The management of the Company is
responsible for establishing and maintaining adequate internal control over
financial reporting.  Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the Company’s
principal executive and principal financial officer and effected by the
Company’s board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:





•           Pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;





•           Provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company;
and





•           Provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial
statements.





Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements.  Projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.





The Company’s management assessed the
effectiveness of the Company’s internal control over financial reporting as of
December 31, 2008.  In making this assessment, the Company’s
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework.





Based on our assessment, management
concluded that, as of December 31, 2008, the Company’s internal control over
financial reporting is effective based on those criteria.





This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report. This report shall not be deemed to be filed for the
purposes of Section 18 of the Exchange Act or otherwise subject to the
liabilities of that section.





Changes
in Internal Control Over Financial Reporting





No
change in our internal control over financial reporting occurred during the
quarter ended December 31, 2008 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.





Item 9B.
            Other
      Information





Not applicable.









15


PART
III




Item 10.
            Directors,
      Executive Officers and Corporate
  Governance





Directors
and Executive Officers




Information regarding the executive
officers and directors of the Company as ofMarch 10, 2009is set forth below:





George J. Carter, age 60, is President
and a director of the Company.  Since 1996 he has also been President
and Chief Executive Officer and a director of Franklin Street and is responsible
for all aspects of the business of Franklin Street and its affiliates, with
special emphasis on the evaluation, acquisition and structuring of real estate
investments.  From 1992 through 1996 he was President of Boston
Financial Securities, Inc. (“Boston Financial”).  Prior to joining
Boston Financial, Mr. Carter was owner and developer of Gloucester Dry Dock, a
commercial shipyard inGloucester,Massachusetts.  From 1979 to 1988, Mr.
Carter served as Managing Director in charge of marketing of First Winthrop
Corporation, a national real estate and investment banking firm headquartered inBoston,Massachusetts.  Prior to that, he held a
number of positions in the brokerage industry including those with Merrill Lynch
& Co. and Loeb Rhodes & Co.  Mr. Carter is a graduate of the
University of Miami (B.S.).  Mr. Carter is a FINRA General Securities
Principal (Series 24) and holds a FINRA Series 7 general securities
license.





Barbara J. Fournier,age 53,is the Vice President, Chief Operating
Officer, Treasurer and Secretary and a director of the Company.  Since
1996, she has also been Chief Operating Officer, Treasurer and Secretary and a
director ofFranklin
Street.  In 2008,
Ms. Fournier became an Executive Vice President ofFranklin Street.  Ms. Fournier has as her
primary responsibility, together with Mr. Carter, the management of all
operating business affairs ofFranklin Streetand its affiliates.  From
1993 through 1996, she was Director of Operations for the private placement
division of Boston Financial.  Prior to joining Boston Financial, Ms.
Fournier served as Director of Operations for Schuparra Securities Corp. and as
the SalesAdministratorfor Weston Financial
Group.  From 1979 through 1986, Ms. Fournier worked at First Winthrop
Corporation in administrative and management capacities, including Office
Manager, Securities Operations and Partnership Administration.  Ms.
Fournier attendedNortheasternUniversityand the New York Institute of
Finance.  Ms. Fournier is a FINRA General Securities Principal (Series
24).  She also holds other FINRA supervisory licenses including Series
4 and Series 53, and a FINRA Series 7 general securities
license.





William W. Gribbell,age 49, is anExecutive Vice President and a director
of the Company.  Since 1996, he has been an Executive Vice President
ofFranklin
Streetand has as his
primary responsibility the direct equity placement of Franklin Street-sponsored
investment programs.  From 1993 through 1996 he was an executive
officer of Boston Financial.  From 1989 to 1993, Mr. Gribbell worked
at Winthrop Financial Associates.  Mr. Gribbell is a graduate of
Boston University (B.A.).  Mr. Gribbell holds a FINRA Series 7 general
securities license.





R.Scott MacPhee,age51, is an ExecutiveVice President and a director of the
Company.  Since 1996, he has been an Executive Vice President ofFranklin Streetand has as his primary responsibility
the direct equity placement of Franklin Street-sponsored investment
programs.  From 1993 through 1996 he was an executive officer of
Boston Financial.  From 1985 to 1993, Mr. MacPhee worked at Winthrop
Financial Associates.  Mr. MacPhee attendedAmericanInternationalCollege.  Mr. MacPhee holds a FINRA
Series 7 general securities license.





Janet Prier Notopoulos, age
61,is a Vice President and a director of
the Company.  In addition, she is President of FSP Property Management
LLC and an Executive Vice President and a director ofFranklin Streetand has as her primary responsibility
the oversight of the management of the real estate assets ofFranklin Streetand its affiliates.  Prior to
joiningFranklin
Streetin 1997, Ms.
Notopoulos was a real estate and marketing consultant for various
clients.  From 1975 to 1983, she was Vice President of North Coast
Properties, Inc., aBostonreal estate investment
company.  Between 1969 and 1973, she was a real estate paralegal at
Goodwin, Procter & Hoar.  Ms. Notopoulos is a graduate of
Wellesley College (B.A.) and the Harvard School of Business Administration
(M.B.A).





Jeffrey B. Carter, age 37, is a Vice
President and a director of the Company, and is George J. Carter's son. In
addition, he is a Senior Vice President and the Director of Acquisitions for
Franklin Street.  Prior to joining Franklin Street in 1998, Mr. Carter
worked in Trust Administration for Northern Trust Bank in Miami, Florida. Mr.
Carter is a graduate of Arizona State University (B.A.) and The George
Washington University (M.A.).  Mr. Carter holds a FINRA Series 7
general securities license.





16


Each of our directors holds office from
the time of his or her election until the next annual meeting and until a
successor is elected and qualified, or until such director’s earlier death,
resignation or removal.  Each of the above persons has been associated
with us since our inception in 2006.  Each of them is an employee of
FSP Investments LLC, a wholly-owned subsidiary ofFranklin Street, which is the sole owner of the Common
Stock.  Each of our officers serves in that capacity at the request ofFranklin Street.





George
J. Carter, Barbara J. Fournier, R. Scott MacPhee, William W. Gribbell and Janet
P. Notopoulos also serve as directors of FSP Galleria North Corp., FSP Phoenix
Tower Corp. and FSP 303 East Wacker Drive Corp., which are public reporting
companies sponsored by Franklin Street.  Jeffrey B. Carter also serves
as a director of FSP 303 East Wacker Drive Corp.  In their capacities
as directors of FSP Galleria North Corp., FSP 50 Phoenix Tower Corp. and FSP 303
East Wacker Drive Corp., George J. Carter, Barbara J. Fournier, R. Scott
MacPhee, William W. Gribbell, Janet P. Notopoulos and Jeffrey B. Carter, as
applicable, each holds office from the time of his or her election until the
next annual meeting and until a successor is elected and qualified, or until
such director's earlier death, resignation or removal.





Sections
16(a) Beneficial Ownership Reporting Compliance




Based
solely on its review of copies of reports filed by the directors and executive
officers of the Company pursuant to Section 16(a) of the Exchange Act, the
Company believes that during 2008 all filings required to be made by its
reporting persons were timely made in accordance with the requirements of the
Exchange Act.




Corporate
Governance




Our
board of directors does not have standing compensation, nominating and corporate
governance or audit committees. Our officers are compensated by Franklin Street
in connection with their employment by Franklin Street and serve as our
executive officers at Franklin Street’s request.  Our directors are
officers of Franklin Street and we do not consider it necessary to establish a
nominating committee or a policy for reviewing nominees recommended by
stockholders.  We do not have a director who qualifies as an “audit
committee financial expert” under the regulations of the SEC.  We have
not adopted a code of business conduct or code of ethics for our executive
officers because all of our officers are officers of Franklin Street and are
governed by Franklin Street’s code of business conduct and ethics.





Item 11.
            Executive
      Compensation





Each of the executive officers of the
Company is compensated byFranklin Streetin connection with his or her
employment byFranklin
Streetand serves as an
executive officer of the Company atFranklin Street’s request without
compensation.Franklin Streetis subject to the informational
requirements of the Exchange Act, and, in accordance therewith, files reports
and other information with the Securities and Exchange Commission
(SEC).Franklin
Street’s common stock is
traded on the NYSE AlternextUSunder the symbol
“FSP”.





Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters





The following tables set forth the
beneficial ownership of the Company’s Common Stock and Preferred Stock as of
February 28, 2009 by each holder who beneficially owns more than five percent of
the Company’s Common Stock or Preferred Stock, by each director, by each of the
Company’s executive officers and by all current directors and executive officers
as a group.  To the Company’s knowledge, no person or group, other
than as set forth below, beneficially owns more than five percent of the
Company’s Common Stock or Preferred Stock.








17





Common Stock
                  Number of
      Shares
                  
                  Percentage ofBeneficially
                  
                  OutstandingName of Holder
                  Owned
                  
                  Common StockFranklin Street Properties Corp.
      (1)
                  1
                  
                  100%George J.
      Carter(2)
                  -
                  
                  0%Barbara J.
      Fournier(2)
                  -
                  
                  0%R. Scott
      MacPhee(2)
                  -
                  
                  0%William W.
      Gribbell(2)
                  -
                  
                  0%Janet P.
      Notopoulos(2)
                  -
                  
                  0%Jeffrey B. Carter(2)
                  -
                  
                  0%All Directors and Executive
      Officers as a Group(consisting of6persons)(2)
                  -
                  
                  0%







Preferred
Stock
                Number of
      Shares
                
                Percentage ofBeneficially
                
                OutstandingName of
    Holder
                Owned
                
                Preferred  StockGeorge J.
      Carter(2)
                -
                
                0%Barbara J.
      Fournier(2)
                -
                
                0%R. Scott
      MacPhee(2)
                -
                
                0%William W.
      Gribbell(2)
                -
                
                0%Janet P.
      Notopoulos(2)
                -
                
                0%Jeffery B.
      Carter(2)
                -
                
                0%All Directors and Executive
      Officers as a Group(consisting of 6 persons)
      (2)
                -
                
                0%







(1)
            The address of Franklin Street
      Properties Corp. is401 Edgewater Place, Suite 200, Wakefield,
      Massachusetts 01880-6210.




(2)
            Each of the Executive Officers is
      employed by FSP Investments LLC, a subsidiary of Franklin Street
      Properties Corp.  Franklin Street Properties Corp. owns 100% of
      the issued and outstanding Common Stock of the
    Company.






Equity Compensation Plan
Information




The
Company does not have any equity compensation plans.







18


Item 13.
            Certain
      Relationships and Related Transactions,and
      DirectorIndependence





Certain Relationships and Related
Transactions





Messrs. George J. Carter, R. Scott
MacPhee and William W. Gribbell and Mses. Barbara J. Fournier and Janet P.
Notopoulos, each of whom is an executive officer and a director of the Company,
are executive officers ofFranklin Streetand, except for Messrs. R. Scott
MacPhee and William W. Gribbell, are directors ofFranklin Street.  In addition, Jeffrey B.
Carter, a vice president and a director of the Company, is a senior vice
president and Director of Acquisitions of Franklin Street but not a director ofFranklin Street.  Jeffrey B. Carter is George
J. Carter’s son.  None of such persons received any remuneration from
the Company for their services.





We havein the past engaged in and currently
engage in transactions with a related party, Franklin Street and its
subsidiaries FSP Investments LLC and FSP Property Management LLC, which we refer
to collectively as FSP.  We expect to continue to have related
partytransactions with FSP in the form of
management fees paid to FSP to manage the Company on behalf of our
stockholders.  FSP Property Management LLC currently provides the
Company with asset management and financial reporting services.  The
asset managementagreement between the Company and FSP
Property Management LLC requires the Company to pay FSP Property Management LLC
a monthly fee equal to one percent (1%) of the gross revenues of the
Property.  The asset management agreement between the Company and
FSP Property Management LLC may be
terminated by either party without cause at any time, upon at least thirty (30)
days written notice, effective at the end of the notice
period.For the
yearsended December 31, 2008and 2007, management fees paid were
$161,000and $154,000, respectively.





Franklin Streetis the sole holder of the
Company’s one share of Common Stock that is
issued and outstanding.  Subsequent to the completion of theprivateplacement of the Preferred Stock in
January 2007,Franklin
Streethas notbeenentitled to share in any earnings or
any dividendrelated to the
Common Stockof the
Company.





The related party transactions described
below are not expected to significantly affect the results of operations,
financial position, or liquidity for fiscal year 2009 or future
periods.





·
            Wepaid acquisition fees
      of$125 to FSP for
      the year ended December 31, 2007.Such fees were included in the
      cost of the real estate.  Subsequent to the completion of the
      final closing of the sale of shares ofPreferred Stock, which occurred
      onJanuary 9,
      2007, no acquisition
      feeshave beenpaid to
      FSP.




·
            Wepaid syndication fees of$2,000to FSPfor the year endedDecember 31, 2007for services related to
      syndication of the Preferred Stock, which were forits efforts to identify potential
      accredited investors and subsequently complete the sale of Preferred Stock
      to them.Subsequent to the completion of
      the final closing of the sale of shares of Preferred Stock, which occurred
      onJanuary 9,
      2007, no
      syndication fees will
      be paid to FSPunless the Company issues some of
      its 840 additional authorized shares of Preferred Stock.




·
            Wepaid commitment fees
      of$2,000to FSPfor the year ended December 31,
      2007for obtaining
      theAcquisition
      Mortgage Loanon the
      Property.Thisamountisincludedas aninterest expense in the financial
      statements.Subsequent to the completion of
      the final closing of
      the sale of shares of Preferred Stock, which occurred onJanuary 9, 2007,no commitment feeshave beenpaid to FSP.







DirectorIndependence





Our securities are not listed on a
national securities exchange or in an inter-dealer quotation
system.  None of our directors qualifies as “independent” under the
standards of the NYSE AlternextUS, whereFranklin Streetis listed.





19


Item 14.
            Principal
      Accountant Fees and Services





Independent
Auditor Fees and Other Matters




The following tables summarize the
aggregate fees billed by the Company’s independent registered public accounting
firm, Braver PC, for audit services for each of the last two fiscal years and
for other services rendered to the Company in each of the last two fiscal
years.




Fee
      Category
                          
                          2008
                          
                          
                          2007Audit Fees
    (1)
                          
                          $
                          61,000
                          
                          
                          $
                          61,000Audit-Related Fees
      (2)Tax fees
(3)
                          
                          $
                          5,000
                          
                          
                          $
                          3,000All Other Fees
      (4)Total
      Fees
                          
                          $
                          66,000
                          
                          
                          $
                          64,000







(1)
            Audit fees consist of fees for the
      audit of our financial statements, the review of the interim financial
      statements included in our quarterly reports on Form 10-Q, and other
      professional services provided in connection with statutory and regulatory
      filings or engagements.




(2)
            Audit-related fees consist of fees
      for assurance and related services that are reasonably related to the
      performance of the audit and the review of our financial statements and
      which are not reported under “Audit
  Fees”.




(3)
            Tax fees consist of fees for tax
      compliance, tax advice and tax planning services.   Tax
      compliance services, which relate to the preparation of tax returns,
      claims for refunds and tax payment-planning services, accounted for $5,000
      of the total tax fees incurred in 2008, and accounted for$3,000 of the total tax fees
      incurred in 2007.




(4)
            The Company was not billed by its
      independent registered public accounting firm in 2008 or 2007 for any
      other fees.





Pre-Approval
Policy and Procedures





The
Company has not adopted policies and procedures relating to the pre-approval of
audit and non-audit services that are to be performed by the Company’s
independent registered public accounting firm.







20


PART IV





Item 15.
            Exhibits and Financial
      Statement Schedules





(a)
            The following documents are filed
      as part of this report.





1.
            Financial Statements: The
      Financial Statements listed in the accompanying Index toConsolidatedFinancial Statements are filed as
      part of this Annual Report on Form
10-K.





2.
            Financial Statement Schedule: The
      Financial Statement Schedule listed on the accompanying Index toConsolidatedFinancial Statements
      is filed as part of this Annual Report on Form
  10-K.





3.
            Exhibits: The Exhibits listed in
      the Exhibit Index are filed as part of this Annual Report on Form
      10-K.








21


SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf as
of March 11, 2009 by the undersigned, thereunto duly authorized.






FSP
      50 South Tenth Street Corp.By:     
      /s/ George J.
      CarterGeorge
      J. Carter

                  President




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.




Signature
            Title
            Date/s/ George J.
      Carter
              George
      J. Carter
            President
      and Director
              (Principal
      Executive Officer)
            March
      11, 2009/s/ Barbara J.
      Fournier
              Barbara
      J. Fournier
            Vice
      President, Chief Operating Officer,
              Treasurer,
      Secretary and Director
              (Principal
      Financial Officer and
              Principal
      Accounting Officer)
            March
      11, 2009/s/ R. Scott
      MacPhee
              R.
      Scott MacPhee
            Director,
      Executive Vice President
            March
      11, 2009/s/ William W.
      Gribbell
              William
      W. Gribbell
            Director,
      Executive Vice President
            March
      11, 2009/s/ Janet P.
      Notopoulos
              Janet
      P. Notopoulos
            Director,
      Vice President
            March
      11, 2009/s/ Jeffrey B.
      Carter
            Director,
      Vice PresidentJeffrey
      B. Carter
            
            March
      11, 2009







22


EXHIBIT
INDEX




Exhibit
      No.
            Description3.1
            Amended
      and Restated Certificate of Incorporation, incorporated herein by
      reference to Exhibit 3.1 to FSP 50 South Tenth Street Corp.’s Registration
      Statement on Form 10, as amended (File No. 000-52551)3.2
            By-Laws,
      incorporated herein by reference to Exhibit 3.2 to FSP 50 South Tenth
      Street Corp.’s  Registration Statement on Form 10, as amended
      (File No. 000-52551)4.1
            Loan
      Agreement, incorporated herein by reference to Exhibit 4.1 to FSP 50 South
      Tenth Street Corp.’s  Registration Statement on Form 10, as
      amended (File No. 000-52551)4.2
            Mortgage,
      Assignment of Leases and Rents, Security Agreement and Fixture Filing,
      incorporated herein by reference to Exhibit 4.2 to FSP 50 South Tenth
      Street Corp.’s  Registration Statement on Form 10, as amended
      (File No. 000-52551)4.3
            Promissory
      Note, incorporated herein by reference to Exhibit 4.3 to FSP 50 South
      Tenth Street Corp.’s  Registration Statement on Form 10, as
      amended (File No. 000-52551)10.1
            Ryan
      Lease, as amended, incorporated herein by reference to Exhibit 10.1 to FSP
      50 South Tenth Street Corp.’s Registration Statement on Form 10, as
      amended (File No. 000-52551)10.2
            Oracle
      USA Lease, as amended, incorporated herein by reference to Exhibit 10.2 to
      FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as
      amended (File No. 000-52551)10.3
            Asset
      Management Agreement, incorporated herein by reference to Exhibit 10.3 to
      FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as
      amended (File No. 000-52551)10.4
            Management
      Agreement, incorporated herein by reference to Exhibit 10.4 to FSP 50
      South Tenth Street Corp.’s Registration Statement on Form 10, as amended
      (File No. 000-52551)10.5
            Voting
      Agreement, incorporated herein by reference to Exhibit 10.5 to FSP 50
      South Tenth Street Corp.’s Registration Statement on Form 10, as amended
      (File No. 000-52551)21.1
            Subsidiaries
      of the Registrant, incorporated herein by reference to Exhibit 21.1 to FSP
      50 South Tenth Street Corp.’s Registration Statement on Form 10, as
      amended (File No. 000-52551)31.1
            Certification
      of FSP 50 South Tenth Street Corp.'s principal executive officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
      of FSP 50 South Tenth Street Corp.'s principal financial officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 200232.1
            Certification
      of FSP 50 South Tenth Street Corp.'s principal executive officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
            Certification
      of FSP 50 South Tenth Street Corp.'s principal financial officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002







23
  FSP
50 South Tenth Street Corp.
 Index
to Consolidated Financial Statements
 
 Table
of Contents
 
 PageConsolidatedFinancial
      StatementsReport
      of Independent Registered Public Accounting Firm
              F-2ConsolidatedBalance
      Sheets as of December 31, 2008 and 2007
              F-3ConsolidatedStatements
      of Operations for the years ended December 31, 2008 and
    2007
              F-4ConsolidatedStatements
      of Changes in Stockholders’ Equity for the years ended December 31, 2007
      and 2008
              F-5Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and
      2007
              F-6Notes
      to Consolidated Financial Statements
              F-7Financial
      Statement Schedule – Schedule III
              F-16
 
  F-1
  [LETTERHEAD
OF BRAVER PC]
 
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
the Stockholders
 FSP
50 South Tenth Street Corp.
 Wakefield,
Massachusetts
 
 
 We
have audited the accompanying consolidated balance sheets of FSP 50 South Tenth
Street Corp. as of December 31, 2008 and 2007, and the related consolidated
statements of operations, changes in stockholders’ equity and cash flows for the
years then ended. Our audits also included the financial statement schedule
listed in the Index at Item 15(a)(2).  These consolidated financial
statements and schedule are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement.   The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
 
 In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FSP 50 South Tenth
Street Corp. as of December 31, 2008 and 2007, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.  Also,
in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth
therein.
 
 
 /s/
Braver PC
 Newton,
Massachusetts
 March
11, 2009
  F-2
  FSP 50 South Tenth Street Corp.
 Consolidated
Balance Sheets
 
 December
      31,(in
      thousands, except share and par value amounts)
                      
                      2008
                      
                      
                      2007Assets:Real
      estate investments, at cost:Land
                      
                      $
                      21,974
                      
                      
                      $
                      21,974Buildings
      and improvements
                      
                      
                      97,400
                      
                      
                      
                      97,353119,374
                      
                      
                      
                      119,327Less
      accumulated depreciation
                      
                      
                      5,422
                      
                      
                      
                      2,916Real
      estate investments, net
                      
                      
                      113,952
                      
                      
                      
                      116,411Acquired
      real estate leases, net of accumulated amortization of $2,110 and
      $1,223
                      
                      
                      4,155
                      
                      
                      
                      5,188Acquired
      favorable real estate leases, net of accumulated amortization of $1,002
      and $569
                      
                      
                      2,111
                      
                      
                      
                      2,598Cash
      and cash equivalents
                      
                      
                      9,874
                      
                      
                      
                      10,062Cash
      - held in escrow
                      
                      
                      977
                      
                      
                      
                      860Tenant
      rent receivable
                      
                      
                      109
                      
                      
                      
                      50Step
      rent receivable
                      
                      
                      506
                      
                      
                      
                      368Deferred
      leasing costs, net of accumulated amortization of $5 and
$2
                      
                      
                      37
                      
                      
                      
                      11Deferred
      financing costs, net of accumulated amortization of $118 and
      $59
                      
                      
                      178
                      
                      
                      
                      237Prepaid
      expenses and other assets
                      
                      
                      19
                      
                      
                      
                      33Total
      assets
                      
                      $
                      131,918
                      
                      
                      $
                      135,818Liabilities
      and Stockholders’ Equity:Liabilities:Accounts
      payable and accrued expenses
                      
                      $
                      1,382
                      
                      
                      $
                      1,433Tenant
      security deposits
                      
                      
                      36
                      
                      
                      
                      37Loan
      payable
                      
                      
                      76,200
                      
                      
                      
                      76,200Acquired
      unfavorable real estate leases, net of accumulated amortization of $429
      and $231
                      
                      
                      1,050
                      
                      
                      
                      1,248Total
      liabilities
                      
                      
                      78,668
                      
                      
                      
                      78,918Commitments
      and Contingencies:
                      
                      
                      -
                      
                      
                      
                      -Stockholders’
      Equity:Preferred
      Stock, $.01 par value, 1,540 shares authorized, 700 issued and outstanding
      at December 31, 2008 and 2007, aggregate liquidation preference
      $70,000
                      
                      
                      -
                      
                      
                      
                      -Common
      Stock, $.01 par value, 1 share authorized, issued and
      outstanding
                      
                      
                      -
                      
                      
                      
                      -Additional
      paid-in capital
                      
                      
                      64,224
                      
                      
                      
                      64,224Retained
      deficit and distributions in excess of earnings
                      
                      
                      (10,974
                      )
                      
                      
                      (7,324
                      )Total
      Stockholders’ Equity
                      
                      
                      53,250
                      
                      
                      
                      56,900Total
      Liabilities and Stockholders’ Equity
                      
                      $
                      131,918
                      
                      
                      $
                      135,818See
      accompanying notes to financial statements.
 
  F-3
  FSP
50 South Tenth Street Corp.
 Consolidated
Statements of Operations
 
 For
      the Year Ended December 31,(in
      thousands, except share and per share amounts)
                        
                        2008
                        
                        
                        2007Revenues:Rental
                        
                        $
                        15,978
                        
                        
                        $
                        15,345Total
      revenue
                        
                        
                        15,978
                        
                        
                        
                        15,345Expenses:Rental
      operating expenses
                        
                        
                        4,267
                        
                        
                        
                        4,319Real
      estate taxes and insurance
                        
                        
                        2,904
                        
                        
                        
                        2,597Depreciation
      and amortization
                        
                        
                        3,542
                        
                        
                        
                        3,548Interest
      expense
                        
                        
                        4,155
                        
                        
                        
                        4,144Total
      expenses
                        
                        
                        14,868
                        
                        
                        
                        14,608Income
      before interest income
                        
                        
                        1,110
                        
                        
                        
                        737Interest
      income
                        
                        
                        224
                        
                        
                        
                        470Net
      income attributable to preferred stockholders
                        
                        $
                        1,334
                        
                        
                        $
                        1,207Weighted
      average number of preferred shares outstanding, basic and
      diluted
                        
                        
                        700
                        
                        
                        
                        700Net
      income per preferred share, basic and diluted
                        
                        $
                        1,906
                        
                        
                        $
                        1,724See
      accompanying notes to financial statements.
 
 
  F-4
  
 FSP
50 South Tenth Street Corp.
 Consolidated
Statements of Changes in Stockholders' Equity
 For
the Years Ended December 31, 2007 and 2008
 
 (in
      thousands, except per share
                            and
      share amounts)
                          
                          Preferred
                            Stock
                          
                          
                          Common
                            Stock
                          
                          
                          Additional
                            Paid-in
                            Capital
                          
                          
                          Retained
      Deficit
                            and Distributions
                            in
      Excess of
                            Earnings
                          
                          
                          Total
                            Stockholders'
                            EquityBalance,
      January 1, 2007
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          64,201
                          
                          
                          $
                          (4,849
                          )
                          
                          $
                          59,352Private
      offering of .25 shares, net
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          23
                          
                          
                          
                          -
                          
                          
                          
                          23Distributions
      - preferred stockholdersor
      $5,260 per preferred share
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (3,682
                          )
                          
                          
                          (3,682
                          )Net
      income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,207
                          
                          
                          
                          1,207Balance,
      December 31, 2007
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          64,224
                          
                          
                          
                          (7,324
                          )
                          
                          
                          56,900Distributions
      - preferred stockholdersor
      $7,120 per preferred share
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (4,984
                          )
                          
                          
                          (4,984
                          )Net
      income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,334
                          
                          
                          
                          1,334Balance,
      December 31, 2008
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          64,224
                          
                          
                          $
                          (10,974
                          )
                          
                          $
                          53,250See
      accompanying notes to financial statements.
 
 
  F-5
  FSP
50 South Tenth Street Corp.
 Consolidated
Statements of Cash Flows
 
 For
      the Year Ended December 31,(in
      thousands)
                          
                          2008
                          
                          
                          2007Cash
      flows from operating activities:Net
      Income
                          
                          $
                          1,334
                          
                          
                          $
                          1,207Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                          
                          
                          3,601
                          
                          
                          
                          3,607Amortization
      of favorable real estate leases
                          
                          
                          487
                          
                          
                          
                          491Amortization
      of unfavorable real estate leases
                          
                          
                          (198
                          )
                          
                          
                          (200
                          )Changes
      in operating assets and liabilities:Cash
      - held in escrow
                          
                          
                          (117
                          )
                          
                          
                          (139
                          )Tenant
      rent receivable
                          
                          
                          (59
                          )
                          
                          
                          (22
                          )Step
      rent receivable
                          
                          
                          (138
                          )
                          
                          
                          (253
                          )Prepaid
      expenses and other assets
                          
                          
                          14
                          
                          
                          
                          47Accounts
      payable and accrued expenses
                          
                          
                          (51
                          )
                          
                          
                          1,034Tenant
      security deposits
                          
                          
                          (1
                          )
                          
                          
                          9Payment
      of deferred leasing costs
                          
                          
                          (29
                          )
                          
                          
                          (13
                          )Net
      cash provided by operating activities
                          
                          
                          4,843
                          
                          
                          
                          5,768Cash
      flows from investing activities:Purchase
      of real estate assets
                          
                          
                          (47
                          )
                          
                          
                          (32
                          )Net cash used for investing activities
                          
                          
                          (47
                          )
                          
                          
                          (32
                          )Cash
      flows from financing activities:Proceeds
      from sale of company stock
                          
                          
                          -
                          
                          
                          
                          25Syndication
      costs
                          
                          
                          -
                          
                          
                          
                          (2
                          )Distributions
      to stockholders
                          
                          
                          (4,984
                          )
                          
                          
                          (4,052
                          )Net cash used for financing activities
                          
                          
                          (4,984
                          )
                          
                          
                          (4,029
                          )Net
      increase (decrease) in cash and cash equivalents
                          
                          
                          (188
                          )
                          
                          
                          1,707Cash
      and cash equivalents, beginning of year
                          
                          
                          10,062
                          
                          
                          
                          8,355Cash
      and cash equivalents, end of year
                          
                          $
                          9,874
                          
                          
                          $
                          10,062Supplemental disclosure of cash
      flow information:Cash
      paid for interest
                          
                          $
                          4,096
                          
                          
                          $
                          4,085See
      accompanying notes to financial statements.
 
 
  F-6
  FSP
50 South Tenth Street Corp.
 Notes
to Consolidated Financial Statements
 
 1.
              Organization
 
 FSP 50 South Tenth Street Corp. (the
“Company”) was organized onSeptember 12, 2006as a corporation under the laws of the
State of Delaware to purchase, own and operate a twelve-story office tower
containing approximately 485,648 rentable square feet of space located in
downtown Minneapolis, Minnesota (the “Property”).  The Company
acquired the Property onNovember 8, 2006.
 
 All
references to the Company refer to FSP 50 South Tenth Street Corp. and its
consolidated subsidiary, collectively, unless the context otherwise
requires.
 
 2.
              Summary
      of Significant Accounting Policies
 
 BASIS OF
PRESENTATION
  The accompanying consolidated financial
statements include all of the accounts of the Company and its wholly-ownedsubsidiary.  All
significant intercompany accounts and transactions have been eliminated in
consolidation.
  ESTIMATES
AND ASSUMPTIONS
  The
Company prepares its consolidated financial statements and related notes in
conformity with accounting principles generally accepted in the United States of
America (“GAAP”).  These principles require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period.  Actual results could differ from those
estimates.
  REAL ESTATE AND
DEPRECIATION
  Real estate assets are stated at the
lower of cost or fair value, as appropriate, less accumulated
depreciation.
  Costs related to property acquisition
and improvements are capitalized.  Typical capital items include new
roofs, site improvements, various exterior building improvements and major
interior renovations.  Funding for capital improvements typically is
provided by cash set aside at the time the Property was
purchased.
  Routine replacements and ordinary
maintenance and repairs that do not extend the life of the asset are expensed as
incurred.  Funding for repairs and maintenance items typically is
provided by cash flows from operating activities.
  Depreciation is computed using the
straight-line method over the assets' estimated useful lives as
follows:
 
 Category
                    YearsBuilding -
      Commercial
                    39Building
      Improvements
                    15-39Furniture &
      Equipment
                    5-7
 
 The Company reviews the Property to
determine if the carrying amount will be recovered from future cash flows if
certain indicators of impairment are identified at the Property.  The
evaluation of anticipated cash flows is highly subjective and is based in part
on assumptions regarding future occupancy, rental rates and capital requirements
that could differ materially from actual results in future
periods.  When indicators of impairment are present and the sum of the
undiscounted future cash flows is less than the carrying value of such asset, an
impairment loss is recorded equal to the difference between the asset’s current
carrying value and its fair value based on discounting its estimated future cash
flows.  At December 31, 2008, no such indicators of impairment were
identified.
 
 Depreciation expense of $2,506,000 and
$2,500,000 is included in Depreciation and Amortization in the Company’s
Consolidated Statements of Operations for the years ended December 31, 2008 and
2007, respectively.
  F-7
  FSP 50 South Tenth Street
Corp.
 Notes
to Consolidated Financial Statements
 
 2.
              Summary of Significant Accounting
      Policies (continued)
 
 ACQUIRED
REAL ESTATE LEASES
 
 Acquired
real estate leases represent the estimated value of legal and leasing costs
related to acquired leases that were included in the purchase price when the
Company acquired the Property.  Under Statement of Financial
Accounting Standards (“SFAS”) No. 141 “Business Combinations”, which was
approved by the Financial Accounting Standards Board (“FASB”) in June 2001, the
Company is required to segregate these costs from its investment in real
estate.  The Company subsequently amortizes these costs on a
straight-line basis over the remaining life of the related
leases.  Amortization expense of $1,033,000 and $1,046,000 is included
in Depreciation and Amortization in the Company’s Consolidated Statements of
Operations for the years ended December 31, 2008 and 2007,
respectively.
 
 Acquired
real estate lease costs included in the purchase price of the Property were
$6,447,000 and the weighted average amortization period is six years in respect
of the leases assumed.  Detail of the acquired real estate leases are
as follows:
 
 December
      31,(in
      thousands)
                  
                  2008
                  
                  
                  2007Cost
                  
                  $
                  6,265
                  
                  
                  $
                  6,411Accumulated
      amortization
                  
                  
                  (2,110
                  )
                  
                  
                  (1,223
                  )Book
      value
                  
                  $
                  4,155
                  
                  
                  $
                  5,188
 
 
 The
estimated annual amortization expense for the five years succeeding December 31,
2008 is as follows:
 
 (in
      thousands)2009
                $          9582010
                $          7852011
                $          7072012
                $          6412013
                $          640
 
 ACQUIRED
FAVORABLE REAL ESTATE LEASES
 
 Acquired
favorable real estate leases represent the value related to the leases when the
lease payments due under a tenant’s lease exceed the market rate of the lease at
the date the Property was acquired.  Under SFAS 141 the Company is
required to report this value separately from its investment in real
estate.  The Company subsequently amortizes this amount on a
straight-line basis over the remaining life of the tenant’s
lease.  Amortization of $487,000 and $491,000 is shown as a reduction
of rental income in the Company’s Consolidated Statements of Operations for the
years ended December 31, 2008 and 2007, respectively.
  
 The
acquired favorable real estate leases included in the purchase price of the
property were $3,198,000 and the weighted average amortization period is six
years in respect of the leases assumed.  Detail of the acquired
favorable real estate leases are as follows:
 
 December
31,(in
      thousands)
                  
                  2008
                  
                  
                  2007Cost
                  
                  $
                  3,113
                  
                  
                  $
                  3,167Accumulated
      amortization
                  
                  
                  (1,002
                  )
                  
                  
                  (569
                  )Book value
                  
                  $
                  2,111
                  
                  
                  $
                  2,598
 
 
  F-8
  FSP 50 South Tenth Street
Corp.
 Notes
to Consolidated Financial Statements
 
 2.
              Summary of Significant Accounting
      Policies (continued)
 
 ACQUIRED
FAVORABLE REAL ESTATE LEASES (continued)
 
 The
estimated annual amortization expense for the five years succeeding December 31,
2008 is as follows:
 
 (in
      thousands)2009
                  $          4622010
                  $          4242011
                  $          4012012
                  $          3462013
                  $          346
 
 ACQUIRED
UNFAVORABLE REAL ESTATE LEASES
 
 The
Company accounts for leases acquired via direct purchase of real estate assets
under the provisions of SFAS No. 141 “Business
Combinations”.  Acquired unfavorable real estate leases represent the
value relating to leases with rents below the market
rate.  Amortization is computed using the straight-line method over
the lives of the leases assumed. Amortization of $198,000 and $200,000 is
included with rental revenue in the Company’s Consolidated Statements of
Operations for the years ended December 31, 2008 and 2007,
respectively.
 
 The
acquired unfavorable real estate leases included in the purchase price of the
property were $1,482,000 and the weighted average amortization period is seven
years in respect of the leases assumed.  Detail of the acquired
unfavorable real estate leases are as follows:
 
 December
31,(in
      thousands)
                  
                  2008
                  
                  
                  2007Cost
                  
                  $
                  1,479
                  
                  
                  $
                  1,479Accumulated
      amortization
                  
                  
                  (429
                  )
                  
                  
                  (231
                  )Book value
                  
                  $
                  1,050
                  
                  
                  $
                  1,248
 
 The
estimated annual amortization expense for the five years succeeding December 31,
2008 is as follows:
 
 (in
      thousands)2009
                $          1972010
                $          1872011
                $          1752012
                $          1402013
                $          140
 
 CASHANDCASHEQUIVALENTS
 
 The Company considers all highly liquid
debt instruments with an initial maturity of three months or less to be cash
equivalents. The Company has set aside funded reserves of $8,068,000 and
$8,144,000 at December 31, 2008 and 2007, respectively, in anticipation of
future capital needs of the Property.  These funds typically are used
for the payment of real estate assets and deferred leasing commissions; however,
there is no legal restriction on their use and they may be used for any Company
purpose.
 
 CASH
- HELD IN ESCROW
 
 The
Company is required under its loan documents to make monthly deposits into a
pledge account for real estate taxes.  The amount held in escrow for
real estate taxes was approximately $977,000 and $860,000 as of December 31,
2008 and 2007, respectively.
 
  F-9
  FSP
50 South Tenth Street Corp.
 Notes
to Consolidated Financial Statements
 
 2.
              Summary
      of Significant Accounting Policies
(continued)
 
 CONCENTRATION
OF CREDIT RISKS
 
 Cash, cash equivalents and short-term
investments are financial instruments that potentially subject the Company to a
concentration of credit risk.   The Company maintains its cash
balances and short-term investments principally in bankswhich the Company believes to be
creditworthy.  The Company periodically assesses the financial
condition of the bank and believes that the risk of loss is
minimal.  Cash balances held with various financial institutions
frequently exceed the insurance limit of $250,000 provided by the Federal Deposit
Insurance Corporation.
 
 For
the years ended December 31, 2008 and 2007, rental income was derived from
various tenants.  As such, future receipts are dependent upon the
financial strength of the lessees and their ability to perform under the lease
agreements.
 
 The following tenants represent greater
than 10% of rental revenueas of December 31:
 
 2008
                2007Oracle
                51%
                51%Ryan
    Companies
                17%
                18%
 
 FINANCIAL
INSTRUMENTS
 
 The Company estimates that the carrying
value of cash and cash equivalents and cash-held in escrow approximate their
fair values based on their short-term maturity and prevailing interest
rates.
 
 STEPRENTRECEIVABLE
 
 Certain leases provide for fixed rental
increases over the life of the lease. Rental revenue is recognized on the
straight-line basis over the related lease term; however, billings by the
Company are based on required minimum rentals in accordance with the lease
agreements.  Step rent receivable, which is the cumulative revenue
recognized in excess of amounts billed by the Company, is $506,000 and $368,000
at December 31, 2008 and 2007, respectively.
 
 TENANT
RENT RECEIVABLE
 
 Tenant
rent receivable is reported at the amount the Company expects to collect on
balances outstanding at year-end.  Management monitors outstanding
balances and tenant relationships and concluded that any realization losses
would be immaterial.
 
 DEFERRED LEASING
COSTS
 
 Deferred leasing commissions represent
direct and incremental external leasing costs incurred in the leasing of
commercial space.  These costs are capitalized and are amortizedon a straight-line basis over a weighted average period of five years in
respect of the terms of the related lease agreements.  Deferred
leasing costs of $29,000 and $6,000 were incurred during the years ended
December 31, 2008 and 2007, respectively.  Amortization expense was $3,000 and
$2,000 forthe years ended December 31, 2008 and 2007, respectively.Detail of the deferred leasing costs is
as follows:
 
 December 31,
                    
                    
                    December 31,(in
      thousands)
                    
                    2008
                    
                    
                    2007Cost
                    
                    $
                    42
                    
                    
                    $
                    13Accumulated
      amortization
                    
                    
                    (5
                    )
                    
                    
                    (2
                    )Book value
                    
                    $
                    37
                    
                    
                    $
                    11
 
 
  F-10
  FSP
50 South Tenth Street Corp.
 Notes
to Consolidated Financial Statements
 
 2.
              Summary
      of Significant Accounting Policies
(continued)
 
 DEFERRED LEASING COSTS
(continued)
 
 The estimated annual amortization
expense for the five years succeeding December 31, 2008 is as
follows:
 
 (in
      thousands)2009
                $            32010
                $            72011
                $            72012
                $            52013
                $            5
 
 SYNDICATION FEES
 
 Syndication fees are selling commissions
and other costs associated with the initial offering of shares of the Company’s
Preferred Stock.  Such costs, in the amount of $5,786,000 have been
reported as a reduction in Stockholders’ Equity in the Company’s consolidated
balance sheets.
 
 REVENUE
RECOGNITION
 
 The Company has retained substantially
all of the risks and benefits of ownership of the Company's commercial property
and accounts for its leases as operating leases. Rental income from the leases,
which may include rent concession (including free rent) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
Any lease incentives are recorded as deferred rent and amortized as reductions
to rental income over the lease term on a straight-line basis.  The
Company does not have any percentage rent arrangements with its commercial
property tenants. Reimbursable costs are included in rental income in the period
earned.  A schedule showing the components of rental revenue is shown
below.
 
 Year Ended December
      31,(in
    thousands)
                    
                    2008
                    
                    
                    2007Income from
      leases
                    
                    $
                    9,148
                    
                    
                    $
                    9,050Straight-line rent
      adjustment
                    
                    
                    138
                    
                    
                    
                    253Reimbursable
      expenses
                    
                    
                    6,981
                    
                    
                    
                    6,333Amortization of favorable
      leases
                    
                    
                    (487
                    )
                    
                    
                    (491
                    )Amortization of unfavorable
      leases
                    
                    
                    198
                    
                    
                    
                    200Total
                    
                    $
                    15,978
                    
                    
                    $
                    15,345
 
 INTEREST INCOME
 
 Interest income is recognized when the
earnings process is complete.
 
 INCOME TAXES
 
 The Company intends to elect to be taxed
as a Real Estate Investment Trust (“REIT”) under the Internal Revenue Code of
1986, as amended.  As a REIT, the Company generally is entitled to a
tax deduction for dividends paid to its stockholders, thereby effectively
subjecting the distributed net income of the Company to taxation at the
stockholder level only.  The Company must comply with a variety of
restrictions to maintain its status as a REIT.  These restrictions
include the type of income it can earn, the type of assets it can hold, the
number of stockholders it can have and the concentration of their ownership, and
the amount of the Company’s taxable income that must be distributed
annually.
 
  F-11
  FSP
50 South Tenth Street Corp.
 Notes
to Consolidated Financial Statements
 
 2.
              Summary
      of Significant Accounting Policies
(continued)
 
 NET INCOME PER SHARE
  The Company follows SFAS No. 128
"Earnings per Share", which specifies the computation, presentation and
disclosure requirements for the Company's net income per share. Basic net income
per share of Preferred Stock is computed by dividing net income by the weighted
average number of shares of Preferred Stock outstanding during the period.
Diluted net income per share of Preferred Stock reflects the potential dilution
that could occur if securities or other contracts to issue shares were exercised
or converted into shares.  There were no potential dilutive shares
outstanding at December 31, 2008 or 2007. Subsequent to the completion of the
offering shares of Preferred Stock, the holders of Common Stock are not entitled
to share in any income nor in any related dividend.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In September 2006, the Financial
Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value
Measurements”, and in February 2008 amended SFAS No. 157 with FASB Staff
Position SFAS 157-1 (“FSP FAS 157-1”), “Application of FASB Statement No. 157 to
FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13” and was amended later with FASB Staff Position SFAS 157-2, “
Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). SFAS 157 defines
fair value, establishes a framework for measuring fair value in GAAP and
provides for expanded disclosure about fair value measurements. SFAS 157 is
applied prospectively, including to all other accounting pronouncements that
require or permit fair value measurements. FSP FAS 157-1 amends SFAS 157 to
exclude from the scope of SFAS 157 certain leasing transactions accounted for
under Statement of Financial Accounting Standards No. 13, “Accounting for
Leases” for purposes of measurements and classifications. SFAS No. 157 and FSP
FAS 157-1 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years.  The adoption of SFAS No. 157 and FSP FAS 157-1 did not have a
material impact on the Company’s financial position, operations or cash
flows.  FSP FAS 157-2 amends SFAS 157 to defer the effective date of
SFAS 157 for all non-financial assets and non-financial liabilities except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis to fiscal years beginning after November 15,
2008.  The Company is currently assessing the potential impact that
the adoption of FSP FAS 157-2 will have on our financial position, results of
operations or cash flows.
 
 In February 2007, the FASB issued SFAS
No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities —
Including an amendment of FASB Statement No. 115”, which permits entities to
choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value and
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The adoption of this standard did not have an impact on the Company’s financial
position, results of operations or cash flows.
 
 In May 2008, the FASB issued SFAS No.
162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS No.
162).  SFAS No. 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with GAAP in the United States (the GAAP hierarchy).  SFAS
No. 162 is effective 60 days following the SEC’s approval of the Public Company
Accounting Oversight Board (PCAOB) amendments to AU Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting
Principles.  The Company is currently evaluating the impact of SFAS
No. 162 on the Company’s consolidated financial statements.
 
 3.
              LoanPayable
 
 The Company has a loan agreement (the
“Loan”) outstanding withBank of America, N.A.in the amount of
$76,200,000.Loan payments are interest-only until
the Loan matures andbears
interest at the fixed rate of 5.287% per annum.The Loan is secured by the
Property.The
Loan was entered into on December 21, 2006 and matures on January 1,
2012, with the entire
principal balance due on that date.Interest expense for the years ended
December 31, 2008 and 2007 was $4,096,000 and $4,083,000,
respectively.
 
 
  F-12
  FSP
50 South Tenth Street Corp.
 Notes
to Consolidated Financial Statements
 
 3.
              LoanPayable(continued)
 
 The Loanagreement includes restrictions on
property liens and requires compliance with various financial
covenants.  Financial covenants include the requirementthatthe Company deposit all rents or other
revenue from theProperty to alockboxaccount with thelenderand provide periodic
reporting.  The
Loan agreement has certain restrictions on the Company’s ability to incur
debt.The
Company was in compliancewithallloan covenants as ofDecember 31, 2008 and2007.
 
 4.
              Income
      Taxes
 
 The Companyhas elected to be taxedas a REIT under Sections 856-860 of the
Internal Revenue Code of 1986, as amended.  In order to qualify as a
REIT, the Company is required to distribute at least 90% of its taxable income
tostockholdersand to meet certain asset and income
tests as well as certain other requirements.  The Company will
generally not be liable for federal income taxes, provided it satisfies these
requirements.  Even as a qualified REIT, the Company is subject to
certain state and local taxes on its income and property.
 
 The
Company’s adoption of the provisions of FASB Interpretation No. 48 “Accounting
for Uncertainty in Income Taxes”, (“FIN 48”) effective January 1, 2007 did not
result in recording a liability, nor was any accrued interest and penalties
recognized with the adoption of FIN 48.  Accrued interest and
penalties will be recorded as income tax expense, if the Company records a
liability in the future.  The Company’s effective tax rate was not
affected by the adoption of FIN 48.  The Company files income tax
returns in the U.S federal jurisdiction and the state of
Minnesota.  The statute of limitations for the Company’s income tax
returns is generally three years and as such, the Company’s returns that remain
subject to examination would be from 2006 and thereafter.
 
 For
the period ended December 31, 2006, the Company incurred a net operating loss
for income tax purposes of approximately $4,166,000 that can be carried forward
until it expires in the year 2026.
 
 At
December 31, 2008, the Company’s net tax basis of its real estate assets was
$119,771,000.
 
 The
following schedule reconciles net income to taxable income subject to
distribution requirements:
 
 Year Ended December
      31,(in
    thousands)
                    
                    2008
                    
                    
                    2007Net income
                    
                    $
                    1,334
                    
                    
                    $
                    1,207Add:   Book
      depreciation and amortization
                    
                    
                    3,601
                    
                    
                    
                    3,607Amortization
      of favorable real estate leases
                    
                    
                    487
                    
                    
                    
                    491Deferred
      rent
                    
                    
                    (21
                    )
                    
                    
                    19Less:  Tax depreciation
      and amortization
                    
                    
                    (3,716
                    )
                    
                    
                    (3,715
                    )Amortization
      of unfavorable real estate leases
                    
                    
                    (198
                    )
                    
                    
                    (200
                    )Straight-line
      rents
                    
                    
                    (138
                    )
                    
                    
                    (253
                    )Taxable
    income
                    
                    $
                    1,349
                    
                    
                    $
                    1,156
 
 The following schedule summarizes the
tax components of the distributions paid for the year ended December
31,:
  
 (dollars in
      thousands)
                      
                      2008
                      
                      
                      2007Preferred
                      
                      
                      %
                      
                      
                      Preferred
                      
                      
                      %Ordinary
    income
                      
                      $
                      1,354
                      
                      
                      
                      27
                      %
                      
                      $
                      1,277
                      
                      
                      
                      32
                      %Return of
      Capital
                      
                      
                      3,630
                      
                      
                      
                      73
                      %
                      
                      
                      2,775
                      
                      
                      
                      68
                      %Total
                      
                      $
                      4,984
                      
                      
                      
                      100
                      %
                      
                      $
                      4,052
                      
                      
                      
                      100
                      %
 
  F-13
  FSP
50 South Tenth Street Corp.
 Notes
to Consolidated Financial Statements
 
 5.
              Capital
      Stock
 
 PREFERRED
STOCK
 
 Generally,
each holder of shares of Preferred Stock is entitled to receive ratably all
dividends, if any, declared by the Board of Directors out of funds legally
available.  The right to receive dividends is non-cumulative, and no
right to dividends shall accrue by reason of the fact that no dividend has been
declared in any prior year.  Each holder of shares of Preferred Stock
will be entitled to receive, to the extent that funds are available therefore,
$100,000 per share of Preferred Stock, before any payment to the holder of
Common Stock, out of distributions to stockholders upon liquidation, dissolution
or the winding up of the Company; the balance of any such funds available for
distribution will be distributed among the holders of shares of Preferred Stock
and the holder of Common Stock, pro rata based on the number of shares held by
each; provided, however, that for these purposes, one share of Common Stock will
be deemed to equal one-tenth of a share of Preferred Stock.
 
 In
addition to certain rights to remove and replace directors, the holders of a
majority of the then outstanding shares of Preferred Stock shall have the
further right to approve or disapprove a proposed sale of the Property, the
merger of the Company with any other entity and amendments to the corporate
charter.  A vote of the holders of not less than 66.67% of then
outstanding shares of Preferred Stock is required for the issuance of any
additional shares of capital stock other than the remaining 840 shares of
authorized but unissued Preferred Stock.  Holders of shares of
Preferred Stock have no redemption or conversion rights.
 
 COMMON
STOCK
 
 Franklin
Street Properties Corp. (“Franklin Street”) is the sole holder of the Company’s
Common Stock.  Franklin Street has the right to vote to elect the
directors of the Company and to vote on all matters, subject to the voting
rights of the Preferred Stock set forth above.  Subsequent to the
completion of the offering of the shares of Preferred Stock in January 2007,
Franklin Street, as the holder of Common Stock, was not entitled to share in any
earnings nor any related dividend.
 
 6.
              Related
      Party Transactions
 
 The
following is a summary of related party transactions that occurred with Franklin
Street and its subsidiaries for the years ended December 31, 2008 and
2007:
 
 We have in the past engaged in and
currently engage in transactions with a related party, Franklin Street and its
subsidiaries FSP Investments LLC and FSP Property Management LLC (collectively,
“FSP”).  We expect to continue to have related party transactions with
FSP in the form of management fees paid to FSP to manage the Company on behalf
of our stockholders.  FSP Property Management LLC currently provides
the Company with asset management and financial reporting
services.  The asset management agreement between the Company and FSP
Property Management LLC requires the Company to pay FSP Property Management LLC
a monthly fee equal to one percent (1%) of the gross revenues of the
Property.  The asset management agreement between the Company and FSP
Property Management LLC may be terminated by either party without cause at any
time, upon at least thirty (30) days written notice, effective at the end of the
notice period.  For the years ended December 31, 2008 and 2007,
management fees paid were $161,000 and $154,000,
respectively.
 
 FSP is the sole holder of the Company’s
one share of Common Stock that is issued and outstanding.  Subsequent
to the completion of the private placement of the Preferred Stock in January
2007, Franklin Street has not been entitled to share in any earnings or any
dividend related to the Common Stock of the
Company.
  The related party transactions described
below are not expected to significantly affect the results of operations,
financial position, or liquidity for fiscal year 2009 or future
periods.
 
 We paid acquisition fees of $125 to FSP
for the year ended December 31, 2007.Such fees were included in the cost of
the real estate.  Subsequent to the completion of the final closing of
the sale of shares of Preferred Stock, which occurred on January 9, 2007, no
acquisition fees have been paid to FSP.
  F-14
  FSP 50 South Tenth Street
Corp.
 Notes toConsolidatedFinancial Statements
 
 6.
              Related
      Party Transactions (continued)
 
 We paid syndication fees of $2,000 to
FSP for the year ended December 31, 2007 for services related to syndication of
the Preferred Stock, which were for its efforts to identify potential accredited
investors and subsequentlycomplete the sale of Preferred Stock to
them.  Subsequent
to the completion of the final closing of the sale of shares of Preferred Stock,
which occurred on January 9, 2007, no syndication fees will be paid to
FSPunless the Company
issues some of its 840additional authorized shares of
Preferred Stock.
 
 We paid commitment fees of $2,000 to FSP
for the year ended December 31, 2007 for obtaining the Acquisition Mortgage Loan
on the Property.  This amount is included as
an interest expense in the financial statements.  Subsequent to the
completion of the final closing of the sale of shares of Preferred Stock, which
occurred on January 9, 2007, no commitment fees have been paid to
FSP.
 
 7.
              Commitments
      and Contingencies
 
 The
Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:
 
 Year Ending(in
    thousands)
                        December 31,
                        
                        Amount2009
                        
                        $
                        8,7332010
                        
                        
                        8,2542011
                        
                        
                        7,6562012
                        
                        
                        7,3392013
                        
                        
                        7,274Thereafter
                        
                        
                        5,135$
                        44,391
 
 In
addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.
 
 Upon acquiring the commercial rental
property on November 8, 2006, the Company was assigned the lease agreements
between the seller of the Property and the existing tenants.
 
 8.
              Segment
      Reporting
 
 The Company operates in one industry
segment – real estate ownership of commercial property.As of December 31, 2008 and 2007,
theCompany owned and
operated a twelve-storymulti-tenantofficeand retail buildingin that one
segment.
 
 9.
              Accounts
      Payable and Accrued Expenses
 
 Accounts
payable and accrued expenses consist of the components shown below:
 
 December
31,(in
    thousands)
                  
                  2008
                  
                  
                  2007Deferred rental
      income
                  
                  $
                  923
                  
                  
                  $
                  1,124Accrued operating
      expenses
                  
                  
                  195
                  
                  
                  
                  133Due to
    tenants
                  
                  
                  143
                  
                  
                  
                  65Accounts payable and other accrued
      expenses
                  
                  
                  121
                  
                  
                  
                  111Total
                  
                  $
                  1,382
                  
                  
                  $
                  1,433
 
 10.
              SubsequentEvent
 
 On
January 16, 2009, the Board of Directors of the Company declared a cash
distribution of $1,225,000 payable on February 20, 2009 to stockholders of
record on January 30, 2009.
 
  F-15
  SCHEDULE
III
 
 FSP
50 South Tenth Street Corp.
 Real
Estate and Accumulated Depreciation
 December
31, 2008
 (in
thousands)
 Initial
      Cost
                          
                          Historical
      CostsDescription
                          Encumbrances
                          Land
                          Buildings
                            Improvements
                              and
      Equipment
                          Costs
                              Capitalized
                              (Disposals)
                              Subsequent
      to
                              Acquisition
                          
                          Land
                          Buildings
                            Improvements
                              and
                              Equipment
                          Total
      (1)
                          Accumulated
                              Depreciation
                          Total
      Costs,
                              Net
      of
                              Accumulated
                              Depreciation
                          Depreciable
                              Life
                              (Years)
                          Date
      of
                              Acquisition(in
      thousands)50 South Tenth Street,Minneapolis,MN
                          $76,200
                          $21,974
                          $97,321
                          $79
                          
                          $21,974
                          $97,400
                          $119,374
                          $5,422
                          $113,952
                          5-39
                          2006
 
 (1)
              Construction
      of the building was completed in 2001 and the aggregate cost for Federal
      Income Tax purposes is $127,536.
 
  F-16
  FSP
50 South Tenth Street Corp.
 
 The
following table summarizes the changes in the Company’s real estate investments
and accumulated depreciation:
 
 December
31,
                  
                  
                  December
31,(in
    thousands)
                  
                  2008
                  
                  
                  2007Real estate investments, at
      cost:Balance,
      beginning of year
                  
                  $
                  119,327
                  
                  
                  $
                  119,295Improvements
                  
                  
                  47
                  
                  
                  
                  32Balance, end of
      year
                  
                  $
                  119,374
                  
                  
                  $
                  119,327Accumulated
      depreciation:Balance,
      beginning of year
                  
                  $
                  2,916
                  
                  
                  $
                  416Depreciation
                  
                  
                  2,506
                  
                  
                  
                  2,500Balance,
      end of year
                  
                  $
                  5,422
                  
                  
                  $
                  2,916
 
   F-17